Business

Atlassian beats revenue predictions as losses grow – and investors are happy

- November 1, 2024 3 MIN READ
Mike Cannon-Brookes
Atlassian CEO Mike Cannon-Brookes
  • Q1 FY25 revenue of US$1.19bn, up 21%
  • Subscription revenue of US$1.13bn, up 33%
  • US$123.8m net loss, up 300%
  • Operating loss of $32m
  • FY25 revenue growth expected at 16.5-17%.
  • $1.5bn share buyback planned
Atlassian beat its own revenue growth predictions in the first quarter of the new financial year (Q1, FY25), but its losses also continue to grow amid predictions of slowing growth.

The Sydney-based workplace software company had a strong September quarter under cofounder Mike Cannon-Brookes as sole CEO, with total revenue rising 21% on 12 months ago to US$1.19 billion on top-end predictions of $1.16bn.

Subscription revenue grew by 33% to US$1.13bn, beating the company’s prediction of 27%, and the market appeared happy with the results, with Atlassian (NASDAQ: TEAM) shares popping more than 17% in after-hours trade, from US$188.54 at Thursday’s close to above $220.

News of a US$1.5 billion share buyback program may have added to the ebullience, while Atlassian has also found a new chief revenue officer, SAP veteran Brian Duffy, who clocks on from January 1, 2025, after 18 years at the German multinational, where he rose to be SAP’s president of cloud and was most recently CEO of SoftwareOne.

But alongside the growth story, Atlassian continues its long-standing tradition of losses, which have jumped year-on-year. The net loss for the September quarter was US$123.8 million, around 300% higher than the $31.9m net loss for Q1, FY24. The net loss per diluted share rose to $0.48 in Q1 FY25, from -$0.12 in the corresponding quarter 12 months ago.

The operating loss grew to US$32.0 million in Q1, compared to an operating loss of $18.9m in Q1 FY24. The operating margin loss rose to (3%) this quarter, compared with (2%) 12 months ago.

Cash flow from operations sat at US$80.5m with free cash flow of $74.3m, with Atlassian ending the September quarter  with US$2.2 billion in cash, cash equivalents and marketable securities.

Atlassian CFO Joe Binz said the 2025 fiscal years was “off to a solid start”.

“We continue to focus our investment and execution against our key strategic priorities of serving the enterprise, delivering AI innovation, and further bringing together technology and business teams with the Atlassian System of Work,” he said.

In his quarterly letter to shareholders, his first since cofounder Scott Farquhar stepped down as co-CEO, Mike Cannon-Brooks said he’s “pleased with the progress we’ve made” in the quarter and “optimistic about the significant opportunities ahead”, even as the business predicts slower revenue growth for FY2025, with total revenue expected in the range of 16.5-17%, and cloud revenue growth of 24%.

“Our years of effort in building a world-class cloud platform are paying off, particularly in the AI era. Our System of Work philosophy is increasingly being adopted by technology-driven organisations, and our products continue to be the cornerstone for how millions of teams get work done,” he said.

“It’s the unique combination of the Atlassian platform, our System of Work philosophy, our AI strategy and our portfolio of products that gives me confidence in our ability to achieve our mission of unleashing the potential of every team.”

Cannon-Brookes pointed to the company’s focus on artificial intelligence (AI) deployment in its products, launching Rovo, an AI-powered product with advanced enterprise search capabilities and agents to help solve complex problems and handle repetitive tasks on the Atlassian platform and other SaaS applications.

“Through the power of our R&D engine, we’re not just marketing AI, we’re shipping it. I’m thrilled our team was able to launch Rovo, our latest product built for the AI era, into general availability just five months since its announcement,” Cannon-Brookes said.

“We’re delivering differentiated value for customers through the power of Atlassian’s cloud platform and our Teamwork Graph – enabling teams to unlock organisational knowledge at scale across both first-party and third-party applications.”

Atlassian expects Q2 revenue to be in the range of US$1.233bn and $1.241bn,  with cloud revenue growing by 25.5% and data centre revenue up 27.5%. The December quarter operating margin is expected to be approximately (10.0%) on a GAAP basis and approximately 21.0% on a non-GAAP basis.

The operating margin for the 2025 financial year is expected to be in the range of (5.5%) to (5.0%) on a GAAP basis and in the range of 22.0% to 22.5% on a non-GAAP basis.

 

Atlassian’s September quarter, FY2025 results. Source: Atlassian

 

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