Atlassian Q4 Earnings Surpass Expectations, Revenues Rise Y/Y

Atlassian TEAM reported fourth-quarter fiscal 2025 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Its non-GAAP earnings per share of 98 cents beat the Zacks Consensus Estimate by 18.1%. The figure jumped 48.5% from the year-ago quarter’s non-GAAP earnings of 66 cents per share.

TEAM’s fiscal fourth-quarter revenues climbed 22% year over year to $1.38 billion and beat the Zacks Consensus Estimate by 2.3%. The top line was primarily driven by robust paid growth in Atlassian Government Cloud and Isolated Cloud and momentum in AI-adoption.

Atlassian has an impressive record of beating earnings estimates. TEAM surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, with the surprise being 19.9%.

Atlassian Corporation PLC Price, Consensus and EPS Surprise

Atlassian Corporation PLC price-consensus-eps-surprise-chart | Atlassian Corporation PLC Quote

Atlassian’s Q4 Details

Segment-wise, Subscription revenues rose 22.8% year over year to $1.31 billion, reflecting the continued transition to cloud services. Our estimate for Subscription revenues was pegged at $1.28 billion.

 Atlassian’s Other revenues (including perpetual license revenues) increased 14.5% year over year to $71.8 million. Our estimate for Other revenues was pegged at $73.5 million.

During the fiscal fourth quarter, Cloud revenues were $927.7 million, up 25.7% year over year. Data Center revenues rose 16.6% to $380.8 million, while Marketplace and Services revenues reached $75.8 million, up 13.3% year over year. 

Our revenue estimates for Cloud, Data Center, and Marketplace and Services were pegged at $907.7 million, $380.5 million, and $66.5 million, respectively.

The company’s non-GAAP gross profit rose 25.1% year over year to $1.18 billion, with a non-GAAP gross margin of 85.3%, up 190 basis points from the prior year.

TEAM’s non-GAAP operating income increased 51% year over year to $335.9 million. This strong performance was driven by solid growth in Cloud and disciplined cost control across business units. Non-GAAP operating margin improved 460 basis points to 24.3%.

TEAM’s Balance Sheet

At the end of fourth-quarter fiscal 2025, the company held $2.94 billion in cash, cash equivalents, and short-term investments, down from $3 billion at the end of the prior quarter.

TEAM generated $375.3 million in operating cash flow and $360.3 million in free cash flow during the quarter. During fiscal 2025, it generated operating and free cash flows of $1.46 billion and $1.42 billion, respectively.

TEAM’s Q1 and FY26 Guidance

For the first quarter of fiscal 2026, the company projects revenues in the range of $1.395-$1.403 billion. The Zacks Consensus Estimate is pegged at $1.40 billion.

Non-GAAP gross margin is expected to be 84.5%, while the non-GAAP operating margin is projected at 20.5%.

For fiscal 2026, Atlassian expects its revenues to grow 18% year over year. The Zacks Consensus Estimate for the same has been pegged at $6.1 billion, indicating year-over-year growth of 17.61%.

Non-GAAP gross margin for fiscal 2026 is expected to be 85.5%, while the non-GAAP operating margin is projected at 24%.

Zacks Rank and Stocks to Consider

Currently, TEAM carries a Zacks Rank #4 (Sell).

Some better-ranked stocks that investors can consider in the Zacks Internet - Software industry are Bumble BMBL, F5 FFIV and Reddit Inc. RDDT, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Bumble’s 2025 earnings has been revised upwards by a penny to $1.05 per share in the past 30 days, implying a year-over-year increase of 2.2%. Bumble shares have lost 21% year to date.

The Zacks Consensus Estimate for F5’s fiscal 2025 earnings has been revised upwards to $15.26 per share over the past seven days and suggests a year-over-year increase of 14.1%. F5 shares have gained 26.1% year to date.

The Zacks Consensus Estimate for Reddit’s 2025 earnings has been revised upwards to $1.81 per share in the past seven days, calling for a 154.4% year-over-year increase. Reddit shares have risen 29.6% year to date.

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This article originally published on Zacks Investment Research (zacks.com).

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