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Atlassian: Atlassian's FY2025 Earnings: Strong Performance Driven by AI and Cloud Momentum

Atlassian reported a strong FY2025, with revenue growing to $5.2 billion and free cash flow reaching $1.4 billion. The company's Rule of 40 performance was impressive, driven by a record number of deals over $1 million in ACV in Q4, up over 2x year-over-year. EPS came in at $0.98, beating estimates of $0.834. Michael Cannon-Brookes, CEO, highlighted the company's ability to deliver balanced growth, with 2.3 million AI users, up 50% from last quarter.

TEAM

USD 161.98

1.52%

A-Score: 4.7/10

Publication date: August 7, 2025

Full Report

Author: Analystock.ai

📋 Highlights
  • Revenue and Free Cash Flow FY25 revenue of $5.2B and free cash flow of $1.4B, achieving Rule of 40+ performance.
  • Large Deals Growth Record Q4 deals >$1M ACV surged 2x YoY, reflecting enterprise adoption momentum.
  • AI Adoption Expansion AI users reached 2.3M, up 50% from previous quarter, driven by Teamwork Collection growth.
  • RPO Balance Strength Record $3.3B RPO balance, up 38% YoY, with 74% expected to convert to revenue within 12 months.
  • Cloud Migration Progress Data Center to Cloud migrations grew 60% YoY, contributing mid-single-digit growth to FY26 revenue guidance.

AI-Driven Growth and Cloud Momentum

The company's AI capabilities and integrations with third-party apps have been key drivers of growth. The Teamwork Collection has seen incredibly strong momentum, exceeding expectations. Atlassian's partnership with Google Cloud will further accelerate its cloud transformation and deliver advanced AI solutions to millions more users worldwide. As Cannon-Brookes noted, "In the AI-era, we believe the need for collaboration increases significantly as more people are able to create and more ideas can be brought to life, creating a huge opportunity for Atlassian."

Enterprise Go-to-Market and Cloud Migration

The company's enterprise go-to-market strategy has been successful, with a record RPO balance of $3.3 billion, up 38% year-over-year. 74% of the RPO balance will be recognized as revenue in the next 12 months, up 29% year-over-year. Atlassian expects a mid-single-digit contribution to Cloud guidance in FY2026, driven by the complexity of Data Center migrations and the remaining customers on Data Center taking time to migrate to Cloud.

Valuation Metrics

Atlassian's valuation metrics suggest that the market has high expectations for the company's continued growth. With a P/E Ratio of 330.58, P/B Ratio of 32.25, and P/S Ratio of 8.92, the company's stock is trading at a premium. The Free Cash Flow Yield of 3.28% and ROIC of -5.42% also indicate that investors are willing to pay up for Atlassian's growth potential.

Atlassian's A-Score