Customer Metrics - As of September 30, 2025, the company had more than 300,000 customers, with 53,017 customers generating over $10,000 in annualized recurring revenue from Cloud offerings [119]. - The number of customers with greater than $10,000 in Cloud ARR increased from 51,978 in June 2025 to 53,017 in September 2025 [120]. Financial Performance - Total revenues for the three months ended September 30, 2025, increased by $244.8 million, or 21%, compared to the same period in 2024, reaching $1,432.6 million [139]. - Subscription revenues rose by $242.6 million, or 21%, driven by paid seat expansion and price increases, totaling $1,374.5 million for the period [140]. - Non-GAAP net income for the three months ended September 30, 2025, was $275.7 million, compared to $199.7 million in the same period of 2024 [172]. - Free cash flow for the three months ended September 30, 2025, was $114.6 million, an increase of $40.3 million compared to the same period in 2024, primarily due to higher net cash provided by operating activities [121]. - Free cash flow for the three months ended September 30, 2025, was $114.6 million, up from $74.3 million in the same period of 2024 [173]. Revenue and Cost Structure - Subscription revenues are expected to continue to be the primary driver of revenue growth, particularly from Cloud offerings, with fluctuations based on customer buying patterns [125]. - Cost of revenues increased by $40.3 million, or 19%, primarily due to restructuring charges of $31.6 million, resulting in a total cost of $257.9 million [143]. - The company anticipates an increase in costs of revenues as it continues to invest in its cloud-based infrastructure to support Cloud customers [128]. - Gross margin is expected to remain approximately flat, driven by optimization of Cloud infrastructure costs, despite a revenue mix shift from Data Center to Cloud offerings [129]. Expenses - Research and development expenses grew by $152.9 million, or 25%, totaling $756.0 million, mainly due to increased compensation expenses [144]. - Marketing and sales expenses increased by $84.0 million, or 33%, reaching $336.4 million, attributed to higher compensation and advertising costs [145]. - General and administrative expenses rose by $31.9 million, or 22%, totaling $178.5 million, primarily due to increased compensation and legal fees [146]. - The company recorded restructuring charges totaling $55 million for the three months ended September 30, 2025, including $27.9 million in severance and termination benefits [113]. Cash Flow and Investments - Net cash provided by operating activities increased by $48.2 million to $128.7 million for the three months ended September 30, 2025, compared to $80.5 million in the same period of 2024 [158]. - Net cash used in investing activities rose by $42.0 million to $60.7 million for the three months ended September 30, 2025, primarily due to strategic investments and acquisitions [159]. - Net cash used in financing activities increased by $66.1 million to $252.8 million for the three months ended September 30, 2025, mainly due to stock repurchases [160]. - The company repurchased approximately 1.4 million shares of Class A Common Stock for about $249.9 million at an average price of $180.74 per share during the three months ended September 30, 2025 [164]. - The company has $921.3 million remaining for repurchase under the 2024 Repurchase Program as of September 30, 2025 [164]. - The company acquired The Browser Company of New York Inc. for approximately $610 million, funded through existing cash [166]. - A definitive agreement was made to acquire A Software Company for approximately $1.0 billion, expected to close in the second quarter of fiscal year 2026 [167]. Other Financial Metrics - Other income increased by $38.2 million, or 197%, resulting in a net income of $18.8 million, compared to a loss of $19.4 million in the prior year [147]. - Interest income increased by $1.3 million, or 4%, totaling $29.8 million, due to higher investment income from increased cash balances [148]. - Interest expense rose by $1.3 million, or 18%, totaling $8.6 million, primarily due to the amortization of interest rate swap contracts [149]. - The provision for income taxes decreased by $98.1 million, primarily due to changes in the mix of earnings and losses in foreign jurisdictions [150]. - As of September 30, 2025, the company had cash and cash equivalents totaling $2.3 billion and marketable securities of $456.0 million [157]. Strategic Changes - The company plans to end-of-life its Data Center deployment offering, ceasing sales of term licenses to new customers in March 2026 and to existing customers in March 2028 [111]. - Research and development expenses focus on building new apps and AI agents, enhancing Cloud infrastructure, and advancing artificial intelligence capabilities [131]. - Restructuring charges included stock-based compensation expense related to the rebalancing of resources for the three months ended September 30, 2025 [175]. - There have been no material changes to market risk from the information presented in the Annual Report on Form 10-K for the year ended June 30, 2025 [176].

Core Viewpoint - Atlassian Corporation (NASDAQ:TEAM) is identified as a stock with exponential growth potential heading into 2026, despite a recent downgrade in price target by TD Cowen analyst Derrick Wood from $220 to $205, maintaining a "Neutral" rating [1][2]. Group 1: Analyst Insights - The analyst's neutral stance is supported by consistent demand trends and a strong revenue outlook for the upcoming quarter, aided by recent revenue recognition changes and M&A activities [2]. - Concerns exist regarding Atlassian's new go-to-market strategies and AI positioning, which require time to demonstrate effectiveness [3]. - The transition away from Data Center licenses and related revenue recognition changes are noted as potential risks [3]. Group 2: Investment Management Perspective - Artisan Partners highlighted Atlassian as a top detractor in their Q2 2025 investor letter, citing disappointing quarterly results due to delays in signing large enterprise contracts [4]. - Other headwinds include tariff pressures on customers' software budgets and the potential impact of AI on knowledge worker jobs, although long-term profit cycle remains unchanged [4]. - The hiring of a new chief revenue officer in late 2024 is seen as a move to enhance senior management talent in sales, marketing, and R&D [4]. Group 3: Market Positioning - Despite acknowledging Atlassian's potential, some analysts believe that certain AI stocks present greater upside potential with less downside risk [5].

Core Insights - The company reported strong volume and revenue growth driven by the Britvic acquisition, with successful integration and synergy realization [2] - Despite a challenging consumer environment, solid underlying volume and revenue growth was achieved in Western Europe, along with sequential improvement in Asia [2] - The company has taken decisive actions to adjust its cost base to protect earnings growth and ensure continued investments in the business [2] - Full-year earnings guidance has been maintained [2] Group Headlines - The Britvic acquisition and consolidation of Gorkha Brewery contributed significantly to the group's performance [3]

Core Viewpoint - Atlassian forecasts second-quarter revenue above estimates, driven by strong demand for its enterprise software services as businesses upgrade to integrate artificial intelligence [1] Group 1 - The company is betting on robust demand for its software solutions, indicating a positive outlook for revenue growth [1] - The anticipated revenue increase is attributed to businesses' efforts to modernize their operations and incorporate AI technologies [1]

Core Insights - Atlassian reported FY26 Q1 earnings with total revenue of $1.4 billion, reflecting a year-over-year increase of 21% [1] - Cloud revenue reached $998 million, marking a year-over-year growth of 26% [1] Financial Performance - Total revenue: $1.4 billion, up 21% year-over-year [1] - Cloud revenue: $998 million, up 26% year-over-year [1]

Financial Data and Key Metrics Changes - Total revenue for Q1 FY2026 grew 21% year-over-year to $1.4 billion [5] - Cloud revenue increased by 26% year-over-year to $998 million [5] - Remaining Performance Obligations (RPO) accelerated by 42% year-over-year to $3.3 billion [5] Business Line Data and Key Metrics Changes - The Teamwork Collection has driven a double-digit percentage increase in users and upgrades to higher-value additions [6][7] - Over 3.5 million monthly active users of AI capabilities, up over 50% since last quarter [6] Market Data and Key Metrics Changes - Over 300,000 customers, including major companies like Databricks and Ford, are utilizing Atlassian's AI-enabled cloud platform [5] - The company has seen significant cloud migrations from data center, positively impacting revenue recognition timing [12] Company Strategy and Development Direction - The company is focusing on enterprise, AI, and the system of work as strategic priorities [5] - The transition from data center to cloud is being managed thoughtfully, with a strong emphasis on customer readiness and partner engagement [19][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver against long-term growth targets, reiterating a 20% CAGR growth rate [14][45] - The management highlighted the importance of AI in driving demand for cloud offerings and enhancing customer collaboration [6][8] Other Important Information - The company is committed to maintaining a conservative and risk-adjusted outlook for organic growth drivers outside of migrations [12] - The management emphasized the importance of governance and controls in AI technology for enterprise customers [44] Q&A Session Summary Question: Clarification on total revenue guidance for the full year - Management explained that stronger-than-expected cloud migrations from data center positively impacted the business, but revenue recognition timing differences led to a slight decline in organic revenue growth outlook [11][12] Question: Insights on cloud migration playbook - Management shared that the partner and customer reactions to cloud migration have been positive, and they have learned valuable lessons from past migrations [18][19] Question: Update on go-to-market strategy and changes - Management noted that the go-to-market team is executing well, with significant progress in signing large deals across various sectors [66] Question: Impact of AI on customer engagement and product adoption - Management highlighted that customers using AI coding tools are expanding their paid seats on Jira at a faster rate than those who are not [36][37] Question: Clarification on cloud revenue guidance - Management confirmed that the increase in cloud revenue outlook is primarily due to stronger migration performance and outperformance in Q1 [72]

Financial Performance - Total revenue for Q1 FY26 was $1,433 million, representing a 21% increase year-over-year[1] - The company reported a net loss of $51.9 million, with a net loss per diluted share of $0.20, which includes restructuring charges of $55.7 million[3] - Total revenues for the three months ended September 30, 2025, were $1,432,553, a 20.6% increase from $1,187,781 in the same period of 2024[27] - Subscription revenue reached $1,374,502, up from $1,131,948, reflecting a growth of 21.4% year-over-year[27] - The net loss for the quarter was $51,870, an improvement from a net loss of $123,769 in the same quarter of 2024[27] - Operating loss for the quarter was $96,337, compared to an operating loss of $31,978 in the same period last year[27] - Non-GAAP net income for Q3 2025 was $275,651, compared to $199,700 in Q3 2024, marking a 38% increase[38] - GAAP net loss per share for Q3 2025 improved to $(0.20) from $(0.48) in Q3 2024[38] - Non-GAAP net income per share for Q3 2025 was $1.04, up from $0.77 in Q3 2024, representing a 35% increase[38] Cloud Revenue - Cloud revenue reached $998 million, up 26% year-over-year, with over 3.5 million monthly active users of AI capabilities, a 50% increase quarter-over-quarter[2] - Cloud revenue was $997,708, representing a 25.9% increase compared to $792,306 in the prior year[34] - Atlassian ended Q1 FY26 with 53,017 customers generating over $10,000 in Cloud annualized recurring revenue, a 13% increase year-over-year[6] - Financial targets for Q2 FY26 include total revenue expected between $1,535 million and $1,543 million, with Cloud revenue growth projected at approximately 22.5%[10] Cash Flow and Margins - Cash flow from operations was $129 million, and free cash flow was $115 million, with a free cash flow margin of 8%[3] - Free cash flow for the quarter was $128,715, compared to $80,492 in the same quarter of 2024, indicating a significant increase[32] - Free cash flow for Q3 2025 was $114,603, significantly higher than $74,341 in Q3 2024, indicating a 54% rise[38] - Non-GAAP gross margin for Q3 2025 was 86%, up from 84% in Q3 2024[38] Acquisitions and Product Development - Atlassian announced the acquisition of The Browser Company of New York to enhance its AI capabilities and reimagine the browser for knowledge work[6] - The company launched Atlassian Ascend to support customers' transition to the Cloud and plans to phase out Data Center products[6] Restructuring and Liabilities - The company incurred restructuring charges totaling $55,678 during the quarter, primarily related to severance and lease consolidation[36] - Total current assets decreased to $3,627,120 from $3,891,237 as of June 30, 2025[30] - Total liabilities decreased to $4,341,564 from $4,696,316 as of June 30, 2025[30] Operating Margins - GAAP operating margin was (7%), while non-GAAP operating margin stood at 23%[3] - GAAP operating loss for Q3 2025 was $(96,337), compared to $(31,978) in Q3 2024[38] - Non-GAAP operating income for Q3 2025 was $322,686, an increase from $268,050 in Q3 2024, reflecting a 20% growth[38]

Core Insights - Atlassian Corporation (NASDAQ:TEAM) is recognized as a leading AI stock on Wall Street, with Canaccord Genuity maintaining a Buy rating and a price target of $230.00, highlighting its strong market position and strategic initiatives [1][3] - The company is transitioning Data Center customers to Cloud deployments, which is expected to lead to pricing increases and expansion into larger enterprise markets [1][3] - Recent acquisitions are set to enhance Atlassian's platform value proposition and promote greater AI adoption, supported by new consumption-based pricing terms [2][3] Strategic Positioning - The firm expresses a bullish outlook on Atlassian, citing its favorable strategic positioning following recent acquisitions and its near-historically low valuation [3] - Atlassian is a global software company that designs, develops, licenses, and maintains a variety of software products worldwide, indicating a broad market presence [3]

Core Insights - Atlassian (TEAM) is set to report its first-quarter fiscal 2026 results on October 30, with projected revenues between $1.395 billion and $1.403 billion, indicating a year-over-year growth of 17.8% [1][10] Revenue Estimates - The Zacks Consensus Estimate for revenues is $1.40 billion, aligning with Atlassian's projections [1] - Cloud deployment revenues are estimated at $969.1 million, reflecting a 22.3% increase year-over-year, while Data Center deployment revenues are expected to grow 7.9% to $362.2 million [4][10] Earnings Expectations - The consensus estimate for earnings per share has been revised upward to 83 cents, compared to 77 cents in the same quarter last year [2] - Atlassian has consistently surpassed the Zacks Consensus Estimate in the past four quarters, with an average surprise of 19.9% [2] Growth Drivers - The strong adoption of cloud-based offerings and the trend towards digitalization and hybrid work models are expected to positively impact Atlassian's performance [3] - Demand for key products like Jira Software and Confluence Cloud, along with advanced solutions such as Jira Product Discovery Premium, is anticipated to drive growth [5] - The integration of AI features into collaboration software and a partnership with Google Cloud are likely to enhance revenue [6] Challenges - Despite strong demand, Atlassian's performance may be tempered by a soft IT spending environment and macroeconomic challenges, including high interest rates and inflation [7][10]

Core Thesis - Atlassian Corporation is viewed positively due to its foundational role in enterprise collaboration software and its strategic pivot towards AI and video collaboration, despite recent stock declines and competitive pressures [1][5]. Company Overview - Atlassian Corporation, founded in 2002, has established itself as a key player in enterprise collaboration with products like Jira and Confluence, utilized by over 300,000 companies including major clients such as NASA, Netflix, and Spotify [2][3]. - The company's stock was trading at $168.71 as of October 21st, with a forward P/E ratio of 34.01 [1]. Market Position and Challenges - Despite its central role, Atlassian's stock has dropped over 30% year-to-date due to margin pressures, cautious guidance, and increased competition from companies like Microsoft, GitLab, and newer platforms such as Monday.com and Asana [2]. - The company's product-led growth strategy has created a high-switching-cost ecosystem, but this competitive moat is currently being challenged [3]. Strategic Initiatives - Atlassian is implementing a strategic pivot focused on artificial intelligence, video collaboration, and enterprise expansion, including the development of the AI agent Rovo and the acquisition of Loom for video integration [4]. - The company reported $1.36 billion in quarterly revenue, with cloud revenue increasing by 25% year-over-year, and generated $638 million in free cash flow despite GAAP losses due to strategic investments [4]. Investment Opportunity - The investment thesis suggests that Atlassian's AI-driven transformation could unlock new competitive advantages and accelerate growth, presenting a compelling long-term opportunity for investors at the current share price [5].