- Atlassian reported Q3 FY2025 total revenue of $1.3567 billion, marking double-digit YoY growth with cloud revenue up 25% YoY and a robust free cash flow margin of 47% for the quarter. Management reiterated a long-term growth framework anchored in enterprise expansion, rapid AI integration (Rovo), and the System of Work, positioning Atlassian to scale toward its $10B revenue ambition and beyond.
- The quarter showcased a strong cash generation profile (net cash from operating activities of $652.7M and free cash flow of $638.3M) alongside a solid balance sheet (cash and cash equivalents of $2.661B; net cash position implying meaningful liquidity headroom). However, GAAP operating income was slightly negative at this quarter level, underscoring ongoing investments in cloud scale, AI, and go-to-market enhancements as Atlassian migrates customers toward cloud-first solutions.
- Management signaled confidence in achieving >20% CAGR in revenue through FY2027, driven by cloud/data center optimization, AI-enabled products, and the Teamwork Collection, while acknowledging near-term execution risk and longer deal-cycle durations in enterprise sales. The company highlighted FedRAMP Moderate authorization, Government Cloud, and Isolated Cloud as key milestones enabling broader enterprise penetration, especially in regulated sectors.
- Competitive positioning remains favorable versus peers due to higher gross margins, strong FCF, and a compelling AI/value proposition, though Atlassian faces typical sectoral headwinds from macro uncertainty and migration timing. Investors should monitor AI adoption velocity, cloud migration uptake, and the cadence of large, complex enterprise deals as primary drivers of the next leg of growth.