Atlassian Corporation - Class A
Q3 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +5.15%.
Did TEAM Beat Earnings? Q3 2025 Results
Atlassian closed out its fiscal third quarter with a clean beat on both the top and bottom lines, delivering results that reinforced the company's push to position itself as the defining platform for AI-powered teamwork. Non-GAAP EPS of $0.97 topped the $0.93 consensus estimate by 4.85%, while revenue of $1.36 billion edged past expectations by 0.28% and grew 14.1% year-over-year, powered by Cloud revenue expansion of 25% as paid seat growth, higher average revenue per user, and ongoing Data Center-to-Cloud migrations drove the headline figure. The quarter's defining moment came at the Team '25 conference, where Atlassian announced Rovo, its AI solution, would be bundled into all Premium and Enterprise editions of its flagship products at no extra charge, a deliberate trade of near-term revenue for deeper platform adoption. Looking ahead, Atlassian guided Q4 revenue of $1.35 billion to $1.36 billion with a 22% non-GAAP operating margin, projecting full-year revenue growth of approximately 19% while flagging macroeconomic uncertainty as a risk to its enterprise expansion.
- Cloud revenue growth of 25% driven by paid seat expansion, higher ARPU, Data Center to Cloud migrations, and cross-sell
- Subscription revenue growth of 19% year-over-year
- Revenue growth primarily driven by paid seat expansion and higher average revenue per user (ARPU)
- Gross profit and operating income benefited from operational efficiency and disciplined cost management
- Operating cash flow increased 15% year-over-year driven by growth in collections
- Non-GAAP operating expenses lower than expected due to reduced discretionary spending
- GAAP gross margin improved two percentage points driven by higher Cloud gross margin
“I am filled with immense pride as I reflect on Team '25 and our customers' and partners' reactions to our relentless focus on innovation. Our long-term investments in building a world-class Cloud platform have enabled us to advance the Atlassian System of Work and bring Rovo's powerful AI capabilities to the center. Our vision for the future of human-AI collaboration is resonating deeply with customers, and we are more excited than ever to execute on our mission of unleashing the potential of every team.”
Atlassian CEO, on the earnings call
Forward Guidance & Outlook
For Q4 FY25, Atlassian expects total revenue of $1,349 million to $1,359 million. Cloud revenue growth is expected at approximately 23.0% year-over-year, Data Center revenue growth at approximately 16.5%, and Marketplace and other revenue approximately flat. GAAP gross margin is expected at 82.5% and non-GAAP gross margin at 84.5%. GAAP operating margin is expected at approximately (5.0%) and non-GAAP operating margin at approximately 22.0%. Full-year FY25 revenue growth is expected at approximately 19.0%, Cloud revenue growth at approximately 27.0%, and Data Center revenue growth at approximately 21.5%. Full-year non-GAAP operating margins are expected to be about one percentage point higher than FY24. The company noted it is taking a prudent, risk-adjusted approach to guidance given macroeconomic uncertainty, potential risks to paid seat expansion, migrations, cross-sell, upsell, and customer retention, as well as execution risk in the enterprise go-to-market evolution. Diluted share count is expected to increase approximately 2% in FY25.
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Figures from SEC filings and company reports. Not investment advice.