Part I [Business](index=4&type=section&id=Item%201.%20BUSINESS) Atlassian provides team collaboration software on its Cloud Platform, serving over 300,000 customers globally through a product-led growth model and a dual sales motion - Atlassian's mission is to unleash the potential of every team through its team collaboration software, which serves over **300,000 customers** worldwide, including over **80% of the Fortune 500**[18](index=18&type=chunk)[21](index=21&type=chunk) - The company's strategy is built around a 'system of work' delivered through apps, AI agents, and Collections on the Atlassian Cloud Platform, which features a unified data model called the Teamwork Graph[23](index=23&type=chunk)[26](index=26&type=chunk)[28](index=28&type=chunk) - A significant portion of the workforce is dedicated to innovation, with over **50% of employees** involved in research and development activities as of June 30, 2025[44](index=44&type=chunk) - The go-to-market strategy employs a dual 'flywheel' and 'sales-led' motion, using a low-touch, self-service approach for initial customer acquisition and a sales force for large enterprise expansion[48](index=48&type=chunk)[49](index=49&type=chunk) - As of June 30, 2025, the company had **13,813 full-time employees** and has adopted a distributed work model called 'Team Anywhere'[65](index=65&type=chunk)[75](index=75&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20RISK%20FACTORS) The company faces various business, technology, and financial risks, including intense competition, data security threats, and the concentrated voting power from its dual-class stock structure - The company's rapid historical growth makes future prospects difficult to evaluate, and it may not sustain its revenue growth rate or achieve GAAP profitability due to significant investments in R&D and cloud infrastructure[86](index=86&type=chunk)[87](index=87&type=chunk) - The markets for Atlassian's solutions are intensely competitive, with rivals ranging from large technology vendors to smaller, specialized companies, some with greater resources[91](index=91&type=chunk)[92](index=92&type=chunk) - A majority of revenue is derived from Jira, Confluence, and Jira Service Management, making the company's success highly dependent on the continued market acceptance of these key products[121](index=121&type=chunk) - Security breaches or unauthorized access to customer data could lead to loss of business, reputational damage, and significant liabilities, and the company has experienced security incidents in the past[135](index=135&type=chunk)[137](index=137&type=chunk) - The dual-class stock structure concentrates approximately **85% of voting power** with holders of Class B Common Stock, primarily the company's co-founders, limiting the ability of Class A stockholders to influence corporate matters[216](index=216&type=chunk) [Unresolved Staff Comments](index=48&type=section&id=Item%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[248](index=248&type=chunk) [Cybersecurity](index=48&type=section&id=Item%201C.%20CYBERSECURITY) Atlassian implements a cybersecurity risk management program based on NIST frameworks, overseen by the CTrO and CISO with board-level oversight, encompassing risk assessments and incident response - The cybersecurity program is designed and assessed based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF) and Secure Software Development Framework (SSDF)[250](index=250&type=chunk) - Oversight is managed by the Chief Trust Officer (CTrO) and Chief Information Security Officer (CISO), who report on risks to the Audit Committee quarterly and the full board of directors at least biannually[251](index=251&type=chunk)[253](index=253&type=chunk) - The risk management program includes risk assessments, a dedicated security team, use of external service providers, employee training, incident response playbooks, and a third-party risk management process[255](index=255&type=chunk) [Properties](index=52&type=section&id=Item%202.%20PROPERTIES) Atlassian's principal offices are leased facilities in Sydney, Australia, and the San Francisco Bay Area, supplemented by other leased offices globally - The company's principal offices are leased facilities in Sydney, Australia (**146,000 sq. ft.**) and the San Francisco Bay Area, California (**147,000 sq. ft.**) as of June 30, 2025[258](index=258&type=chunk) [Legal Proceedings](index=52&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS) The company is involved in ordinary course legal proceedings, with management not expecting a material adverse effect on its financial position - Atlassian is party to litigation in the ordinary course of business but does not expect the outcomes to have a material adverse effect on its financial position[259](index=259&type=chunk) [Mine Safety Disclosures](index=52&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[260](index=260&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=52&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Atlassian's Class A Common Stock trades on Nasdaq under 'TEAM', with no foreseeable dividends, and the company actively engages in share repurchases - The company's Class A Common Stock is traded on The Nasdaq Global Select Market under the symbol 'TEAM'[262](index=262&type=chunk) - Atlassian does not anticipate declaring or paying any cash dividends in the foreseeable future, intending to retain earnings for business expansion and its share repurchase program[224](index=224&type=chunk)[264](index=264&type=chunk) Issuer Purchases of Equity Securities (Q4 FY2025) | Period | Total Number of Shares Purchased (thousand) | Average Price Paid Per Share ($) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (thousand) | | :--- | :--- | :--- | :--- | | April 2025 | 741 | 205.14 | 1,408,566 | | May 2025 | 685 | 213.69 | 1,262,175 | | June 2025 | 448 | 203.12 | 1,171,238 | | **Total** | **1,874** | | | - In September 2024, the Board authorized a new **$1.5 billion** share repurchase program, which commenced in April 2025 after the completion of the previous **$1.0 billion** program[271](index=271&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=Item%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Atlassian's FY2025 total revenue grew 20% to $5.22 billion, driven by subscription and cloud revenue, while reporting a GAAP operating loss and net loss amidst increased R&D and marketing investments Fiscal Year 2025 vs 2024 Revenue Performance | Revenue Type | FY 2025 (million) | FY 2024 (million) | $ Change (million) | % Change | | :--- | :--- | :--- | :--- | :--- | | Subscription | $4,930.6 | $3,924.4 | $1,006.2 | 26% | | Other | $284.7 | $434.2 | ($149.5) | -34% | | **Total Revenues** | **$5,215.3** | **$4,358.6** | **$856.7** | **20%** | Key Business Metrics | Metric | As of June 30, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | Customers with > $10,000 in Cloud ARR | 51,978 | 45,842 | | Free Cash Flow (FY) | $1,415.5M | $1,415.6M | - The **20% increase** in total revenue was primarily driven by increased demand from existing customers, who accounted for over **90% of the revenue** recognized in fiscal year 2025[310](index=310&type=chunk) - Research and development expenses increased **22% to $2.7 billion**, representing **51% of total revenue**, primarily due to a **$462.7 million increase** in employee compensation expenses[315](index=315&type=chunk) - Marketing and sales expenses rose **29% to $1.1 billion**, driven by higher employee compensation and a **$74.9 million increase** in advertising and marketing program expenses[316](index=316&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=66&type=section&id=Item%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK) The company faces market risks from foreign currency exchange rates and interest rates, mitigating currency exposure with hedging programs and having fixed-rate senior notes to limit debt interest rate risk - The company is exposed to foreign exchange risk as a substantial majority of sales are in U.S. dollars, while a large percentage of expenses are in other currencies, primarily the Australian dollar, Indian rupee, Euro, and British pound[348](index=348&type=chunk)[349](index=349&type=chunk) - Atlassian utilizes a cash flow hedging program with foreign currency forward contracts to manage this risk, where a hypothetical **10% strengthening or weakening** of the U.S. dollar would change the fair value of these contracts by **$102.2 million** as of June 30, 2025[350](index=350&type=chunk)[354](index=354&type=chunk) - Interest rate risk exists for the company's **$2.5 billion** in cash and cash equivalents and **$424.3 million** in short-term investments, though a sensitivity analysis showed a **100 basis point change** in rates would not materially impact their market value[355](index=355&type=chunk) - The company's outstanding senior notes totaling approximately **$985.6 million** have fixed annual interest rates, mitigating economic interest rate exposure on these debt obligations[356](index=356&type=chunk) [Financial Statements and Supplementary Data](index=68&type=section&id=Item%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) The audited consolidated financial statements for FY2025 show total assets of $6.04 billion, total liabilities of $4.70 billion, a net loss of $256.7 million on $5.22 billion revenue, and details on key accounting policies and financial position - The independent registered public accounting firm, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of June 30, 2025[361](index=361&type=chunk)[373](index=373&type=chunk) Consolidated Balance Sheet Highlights (as of June 30) | Account | 2025 (billion) | 2024 (billion) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $2.51 | $2.18 | | Total current assets | $3.89 | $3.08 | | Goodwill | $1.30 | $1.29 | | **Total Assets** | **$6.04** | **$5.21** | | **Liabilities & Equity** | | | | Deferred revenue, current | $2.23 | $1.81 | | Total current liabilities | $3.18 | $2.61 | | Long-term debt | $0.99 | $0.99 | | **Total Liabilities** | **$4.70** | **$4.18** | | **Total Stockholders' Equity** | **$1.35** | **$1.03** | Consolidated Statement of Operations Highlights (Fiscal Year Ended June 30) | Account | 2025 (million) | 2024 (million) | | :--- | :--- | :--- | | Total revenues | $5,215.3 | $4,358.6 | | Gross profit | $4,320.5 | $3,555.1 | | Total operating expenses | $4,450.8 | $3,672.2 | | Operating loss | ($130.4) | ($117.1) | | **Net loss** | **($256.7)** | **($300.5)** | | Net loss per share | ($0.98) | ($1.16) | Consolidated Statement of Cash Flows Highlights (Fiscal Year Ended June 30) | Account | 2025 (million) | 2024 (million) | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,460.4 | $1,448.2 | | Net cash used in investing activities | ($342.3) | ($963.7) | | Net cash used in financing activities | ($782.6) | ($408.2) | | **Net increase in cash** | **$335.6** | **$74.2** | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=108&type=section&id=Item%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) This item is not applicable to the company - Not applicable[537](index=537&type=chunk) [Controls and Procedures](index=108&type=section&id=Item%209A.%20CONTROLS%20AND%20PROCEDURES) As of June 30, 2025, the CEO and CFO concluded the company's disclosure controls and internal control over financial reporting were effective, with no material changes during the quarter - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[538](index=538&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of June 30, 2025, based on the COSO framework[539](index=539&type=chunk) [Other Information](index=108&type=section&id=Item%209B.%20OTHER%20INFORMATION) A board member adopted a Rule 10b5-1 trading plan to purchase up to $1.075 million of Class A Common Stock through August 2026 - A board member, Scott Belsky, adopted a Rule 10b5-1 trading plan on May 29, 2025, to purchase up to **$1,075,000** of Class A Common Stock[543](index=543&type=chunk) [Disclosures Regarding Foreign Jurisdictions That Prevent Inspections](index=109&type=section&id=Item%209C.%20DISCLOSURES%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable to the company - None[544](index=544&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=109&type=section&id=Item%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2025 Annual Meeting Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2025 Annual Meeting of Stockholders[546](index=546&type=chunk) [Executive Compensation](index=109&type=section&id=Item%2011.%20EXECUTIVE%20COMPENSATION) Information concerning executive compensation is incorporated by reference from the 2025 Annual Meeting Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2025 Annual Meeting of Stockholders[547](index=547&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=109&type=section&id=Item%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information regarding security ownership is incorporated by reference from the 2025 Annual Meeting Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2025 Annual Meeting of Stockholders[548](index=548&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=109&type=section&id=Item%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Information on related party transactions and director independence is incorporated by reference from the 2025 Annual Meeting Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2025 Annual Meeting of Stockholders[549](index=549&type=chunk) [Principal Accountant Fees and Services](index=109&type=section&id=Item%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Information detailing fees paid to the principal accountant is incorporated by reference from the 2025 Annual Meeting Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2025 Annual Meeting of Stockholders[550](index=550&type=chunk) Part IV [Exhibit and Financial Statement Schedule](index=110&type=section&id=Item%2015.%20EXHIBIT%20AND%20FINANCIAL%20STATEMENT%20SCHEDULE) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including governance documents, debt agreements, and compensation plans - This item lists all financial statements, schedules, and exhibits filed with the Form 10-K, including governance documents, debt indentures, and executive compensation plans[553](index=553&type=chunk)[554](index=554&type=chunk) [Form 10-K Summary](index=114&type=section&id=Item%2016.%20FORM%2010-K%20SUMMARY) The company has not provided a summary for Form 10-K under this item - None[559](index=559&type=chunk)

Group 1 - The article discusses the positive outlook for Atlassian (NASDAQ: TEAM), with a previous rating of "buy" based on the belief that the company will achieve its $10 billion revenue target by FY29 [1] - The author highlights the involvement of Amrita, who leads a family office fund focused on sustainable, growth-driven companies, indicating a trend towards investments that maximize shareholder equity [1] - Amrita's background includes experience in high-growth supply-chain start-ups and venture capital, emphasizing her expertise in maximizing returns and user acquisition strategies during the pandemic [1] Group 2 - The article mentions that Amrita's newsletter, The Pragmatic Optimist, has gained recognition as a top finance newsletter, reflecting a growing interest in accessible financial literacy [1] - The focus on democratizing financial literacy suggests a shift in the investment landscape towards more inclusive and understandable financial strategies [1]

Group 1 - The Q2 earnings season is revealing a trend of declining investor confidence amid a volatile 2025 [1] - Gary Alexander has extensive experience in technology sectors, contributing insights that shape industry themes [1] Group 2 - The article emphasizes the importance of understanding market dynamics and investor sentiment during earnings reports [1]

Core Insights - Atlassian (TEAM) reported strong fiscal Q4 2025 results, with non-GAAP earnings per share of 98 cents, exceeding the Zacks Consensus Estimate by 18.1% and reflecting a 48.5% increase from the previous year [1][2] Financial Performance - Fiscal Q4 revenues increased by 22% year over year to $1.38 billion, surpassing the Zacks Consensus Estimate by 2.3%, driven by growth in Atlassian Government Cloud and AI adoption [2][4] - Subscription revenues rose 22.8% year over year to $1.31 billion, while Other revenues increased by 14.5% to $71.8 million [3] - Cloud revenues reached $927.7 million, up 25.7% year over year, and Data Center revenues rose 16.6% to $380.8 million [4] - Non-GAAP gross profit increased by 25.1% year over year to $1.18 billion, with a gross margin of 85.3%, up 190 basis points from the prior year [5] Operating Metrics - Non-GAAP operating income grew by 51% year over year to $335.9 million, with an operating margin improvement of 460 basis points to 24.3% [5] - The company generated $375.3 million in operating cash flow and $360.3 million in free cash flow during the quarter [6] Future Guidance - For Q1 fiscal 2026, Atlassian projects revenues between $1.395 billion and $1.403 billion, with a non-GAAP gross margin of 84.5% and an operating margin of 20.5% [7] - For fiscal 2026, the company expects revenue growth of 18% year over year, with a projected gross margin of 85.5% and an operating margin of 24% [8]

Core Insights - Atlassian reported $1.38 billion in revenue for the quarter ended June 2025, marking a year-over-year increase of 22.3% [1] - The earnings per share (EPS) for the same period was $0.98, up from $0.66 a year ago, representing a significant improvement [1] - The reported revenue exceeded the Zacks Consensus Estimate of $1.35 billion by 2.25%, while the EPS surpassed the consensus estimate of $0.83 by 18.07% [1] Financial Performance Metrics - The number of customers reached 300,000, slightly below the two-analyst average estimate of 309,244 [4] - Subscription revenues totaled $1.31 billion, exceeding the eight-analyst average estimate of $1.29 billion, with a year-over-year change of 22.8% [4] - Other revenues amounted to $71.81 million, surpassing the average estimate of $66.66 million, reflecting a year-over-year increase of 14.5% [4] - Cloud revenues were reported at $927.73 million, exceeding the estimated $906.32 million, with a year-over-year growth of 25.7% [4] - Data Center revenues reached $380.78 million, slightly above the estimated $379.45 million, showing a year-over-year increase of 16.6% [4] - Marketplace and other revenues were $75.84 million, exceeding the six-analyst average estimate of $65.53 million, representing a year-over-year change of 13.3% [4] Stock Performance - Atlassian's shares have returned -16% over the past month, contrasting with the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Atlassian closed FY 2025 with revenue exceeding $5.2 billion and free cash flow of over $1.4 billion, achieving a balanced rule of 40 plus performance [8] - Free cash flow for the quarter was $360 million, down 13% year over year, primarily due to strong collections in the prior year [25][26] - The remaining performance metrics indicate a strong foundation for future growth, with a cloud net revenue retention rate of 120% [9] Business Line Data and Key Metrics Changes - The Teamwork platform now serves over 300,000 customers, with significant growth in enterprise sales and a record number of deals over $1 million in annual contract value (ACV) [8][9] - The AI Now user base reached 2.3 million, reflecting a 50% increase from the previous quarter [9] - Core applications such as Jira, Confluence, and Jira Service Management are growing in line or faster than total company revenue, indicating strong demand [11] Market Data and Key Metrics Changes - The company reported a 38% year-over-year increase in the remaining performance obligation (RPO) balance, reaching $3.3 billion, with 74% expected to be recognized as revenue in the next twelve months [42][43] - Data center to cloud migrations increased by 60% year over year, showcasing strong customer commitment to the cloud platform [42][69] Company Strategy and Development Direction - Atlassian is focusing on serving enterprise customers, delivering AI innovations, and enhancing collaboration through its system of work [9][11] - The partnership with Google Cloud is a significant step in Atlassian's multi-cloud strategy, aimed at accelerating cloud transformation and AI solution delivery [10] - The company is committed to long-term growth, with a target of 20% compounded annual growth from FY 2024 through FY 2027 [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain growth despite macroeconomic uncertainties, emphasizing the importance of AI and enterprise transformations [33][34] - The management team highlighted that they are not seeing any negative impacts from the integration of code-generating AI tools on their product usage [16][21] - The company anticipates continued strong performance in the enterprise segment, with a robust pipeline of large deals and ongoing improvements in customer success operations [67][72] Other Important Information - Anu, the President of Atlassian, will transition away from her role in December after nearly twelve years, with management expressing gratitude for her contributions [11][12] - The company is investing heavily in R&D and sales to support its strategic priorities, which include enterprise cloud, AI, and system of work [100] Q&A Session Summary Question: Concerns about tool generation tools and developer roles - Management clarified that they are not seeing any negative impact on growth rates or adoption rates of their technical products despite market concerns [16][21] Question: Free cash flow trajectory for 2026 - Free cash flow for FY 2025 was flat at around $1.4 billion, with expectations for correlation to non-GAAP operating income trends moving forward [25][27] Question: Potential inflection points for revenue growth - Management highlighted multiple growth levers, including paid seat expansion, cross-sell, upsell, and new customer growth, with AI providing additional opportunities [33][34] Question: Guidance for data center segment growth - Management noted that Q1 guidance reflects a seasonal decline due to a smaller expiration base and headwinds from prior programmatic changes [76][78] Question: Driving wall-to-wall deployments in enterprises - Management emphasized ongoing consolidation efforts and the growth of business user segments as key strategies to increase penetration in non-technical roles [80][82]

Financial Data and Key Metrics Changes - Atlassian reported over $5.2 billion in revenue and over $1.4 billion in free cash flow for FY 2025, achieving a balanced rule of 40 plus performance [6][10] - Free cash flow for the quarter was $360 million, down 13% year over year, primarily due to strong collections in the prior year [24][25] - The company achieved a cloud net revenue retention rate of 120% [7] Business Line Data and Key Metrics Changes - The Teamwork platform now serves over 300,000 customers, with significant growth in AI usage, reaching 2.3 million AI users, a 50% increase from the previous quarter [6][7] - Core applications such as Jira, Confluence, and Jira Service Management are growing in line or faster than total company revenue [10] - The Teamwork collection has exceeded expectations since its launch, contributing to strong revenue growth [10] Market Data and Key Metrics Changes - Atlassian's enterprise sales teams executed a record number of deals greater than $1 million in annual contract value (ACV), more than doubling year over year [6][10] - Data center to cloud migrations increased by 60% year over year, indicating strong customer commitment to the cloud platform [42][69] Company Strategy and Development Direction - The company is focusing on serving the enterprise, delivering AI innovations, and connecting teams through the Atlassian system of work [7][10] - A partnership with Google Cloud aims to enhance the AI-powered Teamwork platform and accelerate cloud transformation [8][10] - Atlassian is committed to a long-term growth strategy, targeting a compounded annual growth rate of 20% from FY 2024 to FY 2027 [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve long-term growth targets despite macroeconomic uncertainties [33][34] - The company sees AI as a significant tailwind for business growth, with expectations of increased software creation and collaboration [20][21] - Management highlighted the importance of customer-centric processes and partnerships to drive enterprise growth [71][72] Other Important Information - Anu, the President of Atlassian, will transition away from her role in December after nearly twelve years [10][11] - The company is investing heavily in R&D and sales to support its strategic priorities [101][102] Q&A Session Summary Question: Concerns about tool generation tools and developer roles - Management stated that they are not seeing any negative impact on growth rates or adoption from the integration of code-generating AI tools, and user growth remains healthy [15][16] Question: Free cash flow trajectory for 2026 - Free cash flow for FY 2025 was flat at $1.4 billion, with expectations that cash flow will correlate with non-GAAP operating income trends moving forward [24][25][26] Question: Potential inflection points for revenue growth - Management highlighted multiple growth levers, including paid seat expansion, cross-sell, upsell, and new customer growth, with AI opening up additional opportunities [33][34] Question: Guidance for data center segment growth - Management explained that Q1 guidance reflects a smaller expiration base and headwinds from prior programmatic changes, leading to a cautious outlook [78][79] Question: Driving wall-to-wall deployments in enterprises - Management emphasized ongoing consolidation efforts and the growth of business user segments, indicating strong momentum in expanding usage across non-technical roles [81][84]

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Atlassian reported strong financial performance for both the fourth quarter and the full fiscal year 2025, with total revenue reaching **$1.38 billion** for the quarter (up **22% YoY**) and **$5.2 billion** for the full year (up **20% YoY**), demonstrating improved non-GAAP profitability and generating over **$1.4 billion** in free cash flow [Fourth Quarter Fiscal Year 2025 Financial Highlights](index=1&type=section&id=Fourth%20Quarter%20Fiscal%20Year%202025%20Financial%20Highlights) Q4 FY2025 Key Financial Metrics | Metric | Q4 FY2025 | Q4 FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $1,384.3M | $1,131.6M | +22% | | Subscription Revenue | $1,312.5M | $1,068.9M | +23% | | **GAAP Operating Margin** | (2%) | (6%) | +4 p.p. | | **Non-GAAP Operating Margin** | 24% | 20% | +4 p.p. | | **GAAP Net Loss per Share** | $(0.09) | $(0.76) | Improved | | **Non-GAAP Net Income per Share** | $0.98 | $0.66 | +48% | | **Free Cash Flow** | $360.3M | $413.2M | -13% | [Fiscal Year 2025 Financial Highlights](index=2&type=section&id=Fiscal%20Year%202025%20Financial%20Highlights) Full Year FY2025 Key Financial Metrics | Metric | FY2025 | FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $5.2B | $4.4B | +20% | | **GAAP Operating Margin** | (3%) | (3%) | Flat | | **Non-GAAP Operating Margin** | 25% | 23% | +2 p.p. | | **GAAP Net Loss per Share** | $(0.98) | $(1.16) | Improved | | **Non-GAAP Net Income per Share** | $3.68 | $2.93 | +26% | | **Free Cash Flow** | $1,415.5M | $1,415.6M | Flat | [Business and Operational Highlights](index=2&type=section&id=Recent%20Business%20Highlights) Atlassian achieved significant operational milestones, including expanding its strategic partnership with Google Cloud to enhance AI capabilities and cloud transformation, receiving leadership recognition from Forrester, and introducing new AI-powered tools like 'Talent' and 'Rovo Dev Agent', while growing customers with over **$10,000** in Cloud ARR by **13%** year-over-year - Expanded strategic partnership with Google Cloud to integrate Atlassian's AI-powered platform with Google's AI-optimized infrastructure, advancing its multi-cloud strategy[6](index=6&type=chunk) - Recognized as a Leader in 'The Forrester Wave™' for both Value Stream Management Solutions and DevOps Platforms in Q2 2025[6](index=6&type=chunk) - Introduced new AI-powered tools, including the general availability of the 'Talent' workforce planning app and 'Rovo Dev Agent' in the Command Line Interface (CLI) to accelerate developer workflows[6](index=6&type=chunk) - The number of customers with over **$10,000** in Cloud Annualized Recurring Revenue (ARR) grew to **51,978**, a **13%** increase year-over-year[6](index=6&type=chunk) [Management Changes](index=3&type=section&id=President%20Departure) Atlassian announced the departure of President Anu Bharadwaj, effective December 31, 2025, after nearly **12 years** of instrumental leadership in the company's cloud and platform strategy - President Anu Bharadwaj will be departing Atlassian on December 31, 2025, after a nearly **12-year** tenure where she held key leadership positions including Head of Product and COO[8](index=8&type=chunk) [Financial Outlook (Fiscal Year 2026)](index=3&type=section&id=Financial%20Targets) Atlassian projects a positive fiscal year 2026 outlook with total revenue growth of approximately **18.0%** and Cloud revenue growth of around **21.0%**, anticipating a non-GAAP operating margin of **24.0%** [First Quarter Fiscal Year 2026 Targets](index=3&type=section&id=First%20Quarter%20Fiscal%20Year%202026) Q1 FY2026 Guidance | Metric | Guidance Range / Value | | :--- | :--- | | **Total Revenue** | $1,395M - $1,403M | | Cloud Revenue Growth (YoY) | ~22.5% | | Data Center Revenue Growth (YoY) | ~8.0% | | **GAAP Gross Margin** | ~82.5% | | **Non-GAAP Gross Margin** | ~84.5% | | **GAAP Operating Margin** | ~(5.5%) | | **Non-GAAP Operating Margin** | ~20.5% | [Full Fiscal Year 2026 Targets](index=3&type=section&id=Fiscal%20Year%202026) Full Year FY2026 Guidance | Metric | Guidance Value | | :--- | :--- | | **Total Revenue Growth (YoY)** | ~18.0% | | Cloud Revenue Growth (YoY) | ~21.0% | | Data Center Revenue Growth (YoY) | ~12.5% | | **GAAP Gross Margin** | ~83.5% | | **Non-GAAP Gross Margin** | ~85.5% | | **GAAP Operating Margin** | ~(2.5%) | | **Non-GAAP Operating Margin** | ~24.0% | [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) This section presents Atlassian's detailed unaudited consolidated financial statements, including Statements of Operations, Balance Sheets, and Cash Flows for the fourth quarter and full fiscal year ended June 30, 2025, along with comparative data and revenue breakdown by deployment option [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) FY2025 vs. FY2024 Statement of Operations Summary (GAAP) | Metric (in thousands) | Fiscal Year 2025 | Fiscal Year 2024 | | :--- | :--- | :--- | | **Total Revenues** | $5,215,304 | $4,358,603 | | **Gross Profit** | $4,320,453 | $3,555,108 | | **Operating Loss** | $(130,392) | $(117,077) | | **Net Loss** | $(256,687) | $(300,519) | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Balance Sheet Summary (as of June 30) | Metric (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | **Cash and Marketable Securities** | $2,937,142 | $2,338,903 | | **Total Assets** | $6,041,970 | $5,212,133 | | **Total Liabilities** | $4,696,316 | $4,179,282 | | **Total Stockholders' Equity** | $1,345,654 | $1,032,851 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) FY2025 vs. FY2024 Cash Flow Summary | Metric (in thousands) | Fiscal Year 2025 | Fiscal Year 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $1,460,393 | $1,448,159 | | **Net cash used in investing activities** | $(342,322) | $(963,746) | | **Net cash used in financing activities** | $(782,582) | $(408,217) | | **Net increase in cash** | $335,640 | $74,207 | [Revenues by Deployment Options](index=10&type=section&id=Revenues%20by%20Deployment%20Options) FY2025 Revenue by Deployment Option (in thousands) | Deployment Option | Fiscal Year 2025 | Fiscal Year 2024 | YoY Change | | :--- | :--- | :--- | :--- | | **Cloud** | $3,447,427 | $2,698,899 | +27.7% | | **Data Center** | $1,467,167 | $1,208,498 | +21.4% | | **Marketplace and other** | $300,710 | $273,561 | +9.9% | | **Server** | $0 | $177,645 | -100% | | **Total Revenues** | **$5,215,304** | **$4,358,603** | **+19.7%** | [Reconciliation of GAAP to Non-GAAP Measures](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section details reconciliations of GAAP to non-GAAP financial measures, highlighting adjustments for stock-based compensation and amortization of acquired intangible assets, to clarify performance evaluation metrics for both historical results and future targets [Reconciliation of Historical GAAP to Non-GAAP Results](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Results) FY2025 GAAP to Non-GAAP Reconciliation Summary | Metric (in thousands) | GAAP | Non-GAAP | Key Adjustments (Stock-Based Comp, Amortization) | | :--- | :--- | :--- | :--- | | **Gross Profit** | $4,320,453 | $4,443,978 | +$123,525 | | **Operating (Loss)/Income** | $(130,392) | $1,287,347 | +$1,417,739 | | **Net (Loss)/Income** | $(256,687) | $975,945 | +$1,232,632 (net of tax adjustments) | [Reconciliation of GAAP to Non-GAAP Financial Targets](index=12&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Targets) Q1 FY2026 Margin Guidance Reconciliation | Metric | GAAP Target | Adjustments | Non-GAAP Target | | :--- | :--- | :--- | :--- | | **Gross Margin** | 82.5% | +2.0% | 84.5% | | **Operating Margin** | (5.5%) | +26.0% | 20.5% | Full Year FY2026 Margin Guidance Reconciliation | Metric | GAAP Target | Adjustments | Non-GAAP Target | | :--- | :--- | :--- | :--- | | **Gross Margin** | 83.5% | +2.0% | 85.5% | | **Operating Margin** | (2.5%) | +26.5% | 24.0% |

Core Insights - MDA Space Ltd. has been selected by the Canadian Space Agency to conduct an early-phase study for Canada's proposed Lunar Utility Vehicle (LUV) [1][3] Group 1: Project Overview - The study aims to define the LUV mission concept and technology development plan, focusing on mission architecture, technology options, and risk assessments [3] - This initiative follows a successful autonomous lunar surface demonstration by MDA Space at the Canadian Space Agency in December 2024 [3] Group 2: Collaborative Efforts - The project involves collaboration with the Centre de Technologies Avancées BRP – Université de Sherbrooke and the University of Toronto Institute for Aerospace Studies, combining expertise in space systems, vehicle development, and advanced autonomy algorithms [2][5] - MDA Space will integrate MDA SKYMAKER™, a suite of scalable and modular space robotics, to enable autonomous mobility solutions on the lunar surface [4] Group 3: Leadership Statements - The CEO of MDA Space emphasized the importance of this study in shaping Canada's role in lunar exploration and supporting long-term human presence on the Moon [5] - The General Manager of CTA highlighted their expertise in designing rugged vehicles for extreme environments, applicable to lunar mobility challenges [5] - A representative from UTIAS noted the necessity of technical ingenuity and collaboration for developing advanced autonomy in lunar vehicles [5] Group 4: Company Background - MDA Space is a leader in the global space industry with over 55 years of experience, involved in more than 450 missions, and specializes in robotics, satellite systems, and geointelligence [6]

Core Viewpoint - Morgan Stanley's strategy team highlights 15 stocks with short-term catalytic potential, indicating that S&P 500 index earnings growth in Q2 may exceed expectations [1] Earnings Expectations - The market anticipates a 5% year-over-year increase in S&P 500 Q2 earnings per share and over 4% revenue growth, but actual growth may be stronger [1] - The seven major tech companies are expected to see a 14% increase in net profit, while the remaining 493 constituents may experience a 3% decline [1] - Despite analysts lowering earnings expectations from April to May, the earnings revision has rebounded from -25% to approximately 1%, suggesting Q2 earnings will likely exceed expectations, aligning with the historical average of 4%-5% [1] Recommended Stocks - **argenx SE (ARGX.US)**: undervalued R&D pipeline, target price $700 [2] - **Atlassian (TEAM.US)**: continuous revenue growth potential over 20% and expected margin expansion, target price $320 [3] - **Chewy (CHWY.US)**: benefits from marketing and product optimization, expected revenue to maintain or exceed Q1 levels, target price $50 [4] - **CVS Health (CVS.US)**: advantages from competitor store closures and growth in pharmacy benefit management, target price $80 [4] - **DraftKings (DKNG.US)**: potential earnings inflection point in Q2, with actual licensing rates offsetting tax and regulatory pressures, target price $52 [4] - **Eaton Corporation (ETN.US)**: benefits from improved profit margins in U.S. electrical business, target price $375 [5] - **Eli Lilly (LLY.US)**: core products Mounjaro and Zepbound expected to contribute $8.2 billion in revenue, exceeding expectations may lead to 2025 guidance upgrades, target price $1,135 [5] - **F5 (FFIV.US)**: positive outlook due to demand growth in cloud and load balancing products, target price $305 [6] - **NVIDIA (NVDA.US)**: strong end-user demand and accelerated shipments of rack-level products supporting supply-side growth, target price $170 [7] - **Omada Health (OMDA.US)**: operational leverage through technology empowerment and multi-disease sales, target price $25 [8] - **Southwest Airlines (LUV.US)**: potential stock rebound if internal guidance is met and baggage fee impacts are confirmed as limited, target price $38 [9] - **Valley National Bank (VLY.US)**: expected net interest income growth of 3% quarter-over-quarter, target price $11 [10] - **Western Digital (WDC.US)**: undervalued gross margin expansion prospects, target price $85 [11] Cautious Outlook - **National Storage Affiliates Trust (NSA.US)**: cautious due to expected funds from operations (FFO) per share being below market and company guidance, target price $30 [12] - **Teradyne (TER.US)**: revenue and earnings per share forecasts for FY2026 are 7% and 14% below Wall Street expectations, target price $74 [13] Summary - Overall, Morgan Stanley's recommendations combine company fundamentals, industry trends, and market sentiment, providing diversified options for investors [14]