Workflow
Jira Service Management
icon
Search documents
Atlassian (TEAM) - 2025 Q4 - Earnings Call Transcript
2025-08-07 22:02
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]
Atlassian (TEAM) - 2025 Q4 - Earnings Call Transcript
2025-08-07 22:00
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]
Atlassian (TEAM) - 2025 Q3 - Earnings Call Transcript
2025-05-01 21:00
Financial Data and Key Metrics Changes - Total revenue for Q3 2025 reached $1.4 billion, with cloud revenue growing 25% year over year and a free cash flow margin of 47% [6][10]. - Gross margins improved to 86%, exceeding prior guidance, driven by price increases and engineering investments [40][41]. Business Line Data and Key Metrics Changes - Cloud revenue growth was primarily driven by increased adoption of premium enterprise editions, which rose over 40% year on year [14]. - Data center growth was mainly attributed to pricing, offset by strong migrations to cloud and fewer multiyear agreements [24][25]. Market Data and Key Metrics Changes - The company achieved FedRAMP Moderate Authorization for U.S. Federal Government customers, expanding its cloud platform offerings [9]. - Over 300,000 customers, including major enterprises like Mercedes and SAP, utilize Atlassian's solutions [9]. Company Strategy and Development Direction - Atlassian is focusing on integrating AI capabilities into its core products, with Robo being central to this strategy [7][10]. - The company aims to scale to $10 billion in revenue and beyond, leveraging its strategic priorities in enterprise solutions and AI advancements [10]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a 20% compound annual growth rate (CAGR) through FY 2027, despite macroeconomic uncertainties [18][19]. - The company is adapting to longer deal cycles due to the complexity of enterprise deals, which is seen as a natural evolution rather than a macroeconomic issue [28]. Other Important Information - The introduction of the Teamwork Collection is expected to simplify purchasing for customers and drive long-term revenue growth [69][70]. - The isolated cloud offering is designed to meet the needs of large and complex organizations, providing dedicated resources [76]. Q&A Session Summary Question: Impact of embedding Robo on near-term revenue growth - Management noted that embedding Robo is expected to enhance user adoption and long-term growth potential, despite potential short-term revenue trade-offs [14][15]. Question: Cloud revenue growth and deal timing - Management acknowledged that enterprise deals were back-end loaded, impacting Q3 cloud revenue growth, but expected recognition in Q4 [23]. Question: Transition to annualized data center agreements - Management indicated that the change in agreement duration would lead to better cloud revenue growth contributions in FY 2026 and FY 2027 [36]. Question: Gross margin and efficiency gains - Management highlighted that gross margins of 86% were driven by price increases and efficient cloud infrastructure management, with expectations for continued improvements [40][41]. Question: Effect of tariffs on customer businesses - Management reported no significant macro impact from tariffs, emphasizing a strong pipeline and customer demand for cloud upgrades [54][55]. Question: CRO transition and go-to-market strategy - Management confirmed that the new CRO is adapting well, and the go-to-market strategy continues to evolve to meet customer needs [86][87].
Atlassian (TEAM) - 2025 Q3 - Earnings Call Transcript
2025-05-01 21:00
Financial Data and Key Metrics Changes - The company reported total revenue of $1.4 billion for Q3, with cloud revenue growing by 25% year over year and a free cash flow margin of 47% for the quarter [8][20][41] - Gross margins reached 86%, exceeding prior guidance, driven by price increases and engineering investments [41][43] Business Line Data and Key Metrics Changes - Cloud revenue growth was impacted by enterprise deals landing later than expected, affecting the growth rate recognized in Q3 [25][48] - Data center growth was primarily driven by pricing, offset by strong migrations to cloud and fewer multiyear agreements [26][27] Market Data and Key Metrics Changes - The company achieved FedRAMP Moderate Authorization for U.S. Federal Government customers, expanding its cloud platform offerings [10] - Over 300,000 customers, including major enterprises like Mercedes and SAP, utilize Atlassian's solutions [10] Company Strategy and Development Direction - The company is focusing on embedding AI capabilities into core products, aiming for user expansion and maximizing adoption [15][16] - The strategic goal is to scale to $10 billion in revenue and beyond, leveraging advancements in AI and enterprise solutions [11][20] Management's Comments on Operating Environment and Future Outlook - Management remains confident in achieving a 20% compound annual growth rate (CAGR) through FY '27, despite macroeconomic uncertainties [21][67] - The company is adapting its go-to-market strategy to better serve enterprise customers, reflecting a shift in customer mix and needs [86][88] Other Important Information - The introduction of the Teamwork Collection is seen as a long-term growth driver, simplifying purchasing behavior for customers [68][70] - The company is committed to maintaining structural efficiency gains and optimizing cloud costs while expanding its AI capabilities [42][81] Q&A Session Summary Question: Impact of AI adoption on revenue growth - Management noted that AI adoption is still in early stages, with many enterprises experimenting and cautious about deployment [91][92] Question: Changes in go-to-market strategy with new CRO - The company is continuously evolving its go-to-market strategy to adapt to customer needs and market dynamics, with the new CRO bringing valuable experience [86][89] Question: Effect of tariffs on customer businesses - Management indicated that the business remains healthy and customers are eager to upgrade to the cloud, with no significant macro impacts observed [54][55]
ServiceNow vs. Atlassian: Which ITSM Provider Has Greater Upside?
ZACKS· 2025-04-02 15:55
Core Insights - The competitive landscape in IT Service Management (ITSM) is evolving due to the rise of agentic AI, with predictions that by 2029, 80% of general customer issues will be resolved autonomously, leading to a 30% cost reduction [2] Company Analysis: ServiceNow (NOW) - ServiceNow's Now Platform integrates Now Assist, its AI solution, enhancing productivity across various domains such as CRM, HR, and IT [3] - The company has a strong partner ecosystem, including Amazon, NVIDIA, Microsoft, and DXC Technology, which aids in expanding its offerings [4] - As of Q4 2024, ServiceNow had 2,109 customers with over $1 million in annual contract value, reflecting a 14% year-over-year growth [5] - ServiceNow's subscription revenue is projected to be between $12.635 billion and $12.675 billion for 2025, indicating an 18.5% to 19% increase from 2024 [12] - The consensus estimate for ServiceNow's 2025 earnings has declined by three cents to $16.21 per share, suggesting a 16.45% growth over 2024 [15] - ServiceNow shares have dropped 23.5% year-to-date, impacted by unfavorable forex and a back-end loaded federal business [9][12] Company Analysis: Atlassian (TEAM) - Atlassian has integrated AI features across its major products, resulting in over one million monthly active users engaging with these features daily [6] - The company reported a 40% year-over-year increase in sales for its Premium and Enterprise editions, driven by higher-value AI-infused products [6] - Atlassian's partnership with Microsoft-backed OpenAI enhances its product capabilities, particularly in Confluence and Jira Service Management [7] - The company closed a record number of deals worth over $1 million in Q2 of fiscal 2025, indicating strong enterprise penetration [8] - Atlassian expects revenues to grow by 18.5% to 19% year-over-year in fiscal 2025, with a non-GAAP gross margin of 84.5% and an operating margin of 23.5% [13] - The consensus estimate for Atlassian's 2025 earnings is $3.47 per share, reflecting an 18.43% increase over fiscal 2024 [14] Valuation Comparison - Both companies are considered overvalued, with Atlassian trading at a forward Price/Sales ratio of 9.6X, compared to ServiceNow's 12.23X [17] Conclusion - Atlassian's strategy of leveraging AI for enterprise growth positions it favorably, while ServiceNow faces potential volatility in its growth trajectory due to external factors [20]