Atlassian
Subscription SaaS (Cloud) + term-license Data Center + Marketplace app take-rate; product-led bottom-up distribution with low-touch sales, expanding up-market into enterprise.
Earnings, margins, COGS & capex
FY2025 delivered $5.22B revenue (~20% growth), $1,415.5M free cash flow (27% margin), non-GAAP net income $975.9M -- but a $256.7M GAAP net loss driven by stock comp. Q3 FY26 marked a growth re-acceleration to +32% (cloud +29%, data center +44% on the Server end-of-life migration wave plus pull-forward of purchasing into the quarter), 89% non-GAAP gross margin, 34% non-GAAP operating margin, and RPO up 37% to ~$4.0B. Management raised FY2026 to ~24% total growth and ~29% non-GAAP operating margin.
Income statement — where each revenue dollar goes
% of revenueOf every $1 of revenue, ~17¢ is cost of goods and ~80¢ operating expense, leaving ~3¢ of operating profit (~25¢ net).
Revenue trend
Margins
Up YoY; GAAP ~83% (FY25)
Up YoY; FY26 guided ~29%
Negative on SBC; improving
Rising
Loss narrowing YoY (FY24 -$300.5M)
COGS structure
COGS is dominated by cloud hosting/infrastructure (AWS), customer support, and third-party payment/partner costs; scale and cloud efficiency pushed non-GAAP gross margin to ~89% (GAAP ~83% per the FY25 10-K). Asset-light -- no material inventory or manufacturing.
Capex
Minimal (~$45M FY2025, under 1% of revenue). Compute runs on AWS rather than owned data centers, so FCF conversion is high and capex is not a growth constraint.
Latest earnings
Beat -- revenue $1,787M vs ~$1,698M consensus (+5.2%); non-GAAP EPS $1.75 vs ~$1.34 est (+31%). Shares jumped ~28-30% on the print.
Raised FY2026 to ~24% total revenue growth (from ~22%) and ~29% non-GAAP operating margin, with Cloud growth lifted to ~26.5%.
- Total revenue
- $1,787M (+32% YoY)
- Cloud revenue
- $1,132M (+29%)
- Data Center revenue
- $560.7M (+44%; partly Server-EOL + pull-forward)
- Non-GAAP EPS
- $1.75 (vs $0.97 PY)
- Non-GAAP net income
- $456.5M
- Free cash flow
- $561.3M (31% margin)
- Remaining performance obligations
- $3,996M (+37% YoY)
- Non-GAAP gross margin
- ~89%
Growth drivers
- Server-to-Cloud/Data Center migration (Server EOL Feb 2024) driving Data Center +44% -- boosted in Q3 by end-of-life revenue recognition, pricing, and pull-forward of customer purchasing from future periods (a portion of this quarter's strength is borrowed from later quarters, per the Q3 shareholder letter)
- Enterprise up-market motion — larger deals, higher per-seat and cross-product attach (Jira + Confluence + JSM)
- Cross-sell and expansion: Jira Service Management (ITSM), Loom (async video), Compass, Bitbucket
- AI monetization via Rovo / Atlassian Intelligence adding paid AI tiers and agentic features
- Price increases and edition mix-shift (Premium/Enterprise cloud editions)
- Marketplace ecosystem take-rate on third-party apps
Reported financials — SEC EDGAR
Audited GAAP figures pulled from SEC filings · latest filing 2026-08-14. The audited primary-source spine — not financial advice.
Revenue — annual (GAAP)
Margins & balance sheet — FY’26
Bull & bear
A high-margin, mission-critical software platform re-accelerating to ~30% growth with ~$1.4B+ FCF, now trading near the low end of its historical valuation -- a rare growth-at-a-reasonable-price setup in SaaS if the AI and enterprise motions compound.
- Q3 FY26 re-acceleration (+32% revenue, RPO +37%) plus raised FY26 guidance signals demand is broadening, not stalling
- ~89% non-GAAP gross margin and ~31% FCF margin give enormous operating leverage as growth scales
- At ~$20B market cap on ~$1.4B FCF, the stock trades ~14x FCF -- cheap for a 24%+ grower with these margins; multiple compression has already happened
- Deep embeddedness of Jira/Confluence + Marketplace network effects make displacement slow and costly for customers
- Rovo/AI adds a monetizable layer on top of an installed base of 300k+ customers with minimal incremental CAC
- Founder alignment and a consistent cloud-migration playbook that has executed for years
Seat-based collaboration software is squarely in the blast radius of AI-driven productivity -- Microsoft can bundle competitors for free, GAAP profitability is masked by heavy dilution, and the Data Center tailwind is temporary, so the current re-acceleration may not persist.
- Persistent GAAP losses and heavy stock-based comp mean real economics are diluted; 'non-GAAP profitability' overstates owner earnings
- The +44% Data Center growth is inflated by Server end-of-life revenue recognition and pull-forward of purchasing from future periods -- a non-recurring bump that flatters the current growth optic and borrows from later quarters
- Microsoft's GitHub, Azure DevOps, Planner and Loop can bundle Atlassian-adjacent functionality at near-zero marginal cost to the customer
- AI-native tools (Linear, Notion, Monday) win on speed and UX where Jira/Confluence are seen as heavy and expensive
- If AI reduces developer headcount, per-seat pricing faces structural pressure -- the core monetization model is exposed
- The stock's steep drawdown from prior highs (to mid-cap index status) reflects genuine market skepticism about long-term growth durability, not just sentiment
What it is worth
Blend of EV/Sales, P/FCF, and reverse-DCF sanity check on a high-margin ~24% grower with ~$1.4B FCF.
Growth decelerates as the Server-migration + pull-forward tailwind fades and AI compresses seat pricing; multiple stays depressed or de-rates further, with GAAP dilution capping per-share value near or below current levels.
Multiple holds near ~3-4x revenue / ~14-16x FCF; value compounds with ~20-24% FCF growth -- mid-teens+ annual return from current levels without a re-rating.
Re-rating toward ~6-8x revenue / ~20-25x FCF if ~25%+ growth and AI monetization prove durable and GAAP profitability inflects -- implying meaningful upside from ~$85.
At ~$20B market cap on ~$5.2B FY25 revenue (~$7B run-rate off the Q3 quarter) and ~$1.4B FCF, TEAM trades roughly ~3x forward revenue and ~14x FCF -- a steep discount to its own history and to high-growth SaaS peers, reflecting market doubt about growth durability and AI disruption. Net cash is roughly neutral (~$1.14B cash, $0 marketable securities, vs ~$989M debt), so EV ~= market cap. The debate is whether ~89% gross margins + re-acceleration justify a re-rating, or whether seat-based SaaS deserves a permanently lower multiple.
SWOT
Strengths
- Category-defining products (Jira, Confluence) deeply embedded in software and IT team workflows -- high switching costs
- ~89% non-GAAP gross margins and ~27-31% FCF margins; efficient product-led distribution keeps CAC low
- 300,000+ customers and a large Marketplace ecosystem creating network effects
- Growth re-accelerated to +32% in Q3 FY26 with RPO +37%, showing durable demand and enterprise traction
- Founder-led (Mike Cannon-Brookes, sole CEO since co-founder Scott Farquhar stepped down Aug 2024) with a strong long-term cloud/AI strategy
Weaknesses
- Persistent GAAP net losses driven by very high stock-based compensation -> ongoing shareholder dilution
- Dual-class structure concentrates control with the co-founders, limiting outside shareholder influence
- Data Center strength is partly a one-time Server-migration + pull-forward tailwind (purchasing pulled from future periods) that will fade as customers move to cloud
- Marketplace/other revenue growth is slow (~7%), and heavy reliance on the developer/IT budget cycle
- Complexity and pricing of Jira/Confluence create openings for lighter-weight competitors
Opportunities
- AI (Rovo, agents, Atlassian Intelligence) as a new paid layer across the entire portfolio
- Enterprise and government up-market expansion; larger multi-product platform deals
- Cross-sell of newer products -- JSM (ITSM vs ServiceNow), Loom, Compass, Guard/security
- International expansion and continued cloud migration of the remaining on-prem base
- Consolidation of point tools into a single work-management + DevOps platform
Threats
- Microsoft (GitHub Copilot, Azure DevOps, Planner/Loop, Teams) bundling competitive tooling at scale
- AI-native and modern challengers (Linear, Notion, Monday, Asana) attacking Jira/Confluence UX and price
- Generative AI potentially compressing seat-based SaaS pricing / reducing headcount that drives per-seat revenue
- Macro/IT budget cyclicality and slower developer hiring
- Valuation de-rating risk — stock already down heavily from prior highs (52-week high ~$223 vs ~$85 now) on growth-durability fears
Moats, dependencies & bottlenecks
Moats
Jira and Confluence hold years of a team's issues, docs, workflows, and integrations; migrations are painful and rarely undertaken.
Thousands of third-party apps and Solution Partners increase stickiness and create a two-sided network.
Moderate-Strong Bottom-up adoption by developers yields low CAC and a trusted brand in agile/DevOps tooling.
~89% non-GAAP gross margin funds R&D and AI investment competitors can't easily match at smaller scale.
Dependencies
Cloud infrastructure supplier Atlassian Cloud runs primarily on AWS; hosting is the main COGS line and a concentration/pricing dependency. AWS parent: Amazon (AMZN).
Revenue scales with software team headcount and IT spend; AI-driven headcount changes and macro cycles directly hit per-seat growth.
Strategic transition Converting the on-prem/Data Center base to Cloud must sustain net expansion as the Server-EOL + pull-forward tailwind fades.
Ecosystem partners Third-party apps deepen lock-in; partner health affects enterprise deliverability and stickiness.
Advantages
- Mission-critical, hard-to-rip-out installed base of 300k+ customers
- Best-in-class SaaS unit economics (~89% non-GAAP gross margin, high FCF conversion)
- Multi-product platform (dev + IT + work management + async video) enabling cross-sell
- Efficient product-led growth engine with structurally low customer-acquisition cost
- Founder-led, long-horizon capital allocation and a proven migration playbook
Weaknesses
- Heavy stock-based compensation and GAAP unprofitability / dilution
- Dependence on a temporary Data Center migration + pull-forward tailwind for headline growth
- Exposure of seat-based pricing to AI-driven productivity and headcount compression
- Slow-growing Marketplace/other segment
- Perception of Jira/Confluence as complex and pricey vs modern challengers
Bottlenecks
- Reversing GAAP losses without cutting stock-based comp that funds talent retention
- Sustaining net revenue expansion once the Server-to-Data-Center migration + pull-forward bump rolls off
- Proving AI (Rovo) can be monetized as net-new ARR rather than a retention cost
- Competing on UX/simplicity against AI-native tools while serving complex enterprise needs
- Managing dilution and share count while investing heavily in AI and enterprise sales
Top signals & trends
Top signals
Demand broadening across Cloud and Data Center; backlog build supports forward revenue.
Confidence in the cloud + AI + enterprise motion.
Cheap on the numbers, but reflects real market doubt about growth durability and AI disruption.
Owner earnings and dilution remain a governance/valuation overhang.
A portion of growth is non-recurring and borrowed from later quarters; watch cloud net-expansion as it fades.
Trends
Double-edged: Rovo/Atlassian Intelligence is a monetization opportunity, but AI also threatens seat-based pricing and invites Microsoft/GitHub competition.
Driving Data Center and Cloud growth now; a multi-year but finite tailwind.
Favors Atlassian's multi-product suite over point tools -- if it wins the platform battle.
Shifts mix toward higher-value Premium/Enterprise editions and multi-year commitments.
Market rewards FCF and durable growth; Atlassian's high FCF margin helps but GAAP losses hurt.
Ecosystem & competitor graph
Suppliers feed the company; customers pull from it. Line thickness shows the strength of each tie (supply-chain dependency, customer earnings contribution). Hover to isolate a tie.
Primary cloud infrastructure host for Atlassian Cloud; largest COGS component.
Payment and billing infrastructure for subscriptions and Marketplace (Stripe is private).
Software & IT teams across 300,000+ organizations From startups to large enterprises; land-and-expand from individual teams to org-wide deployments. ~55,900 customers now exceed $10k Cloud ARR.
Growing share of revenue via Premium/Enterprise cloud editions and multi-year commitments.
GitHub (Copilot), Azure DevOps, Planner, Loop, Teams -- the largest structural threat; can bundle competitive functionality at scale.
Enterprise ITSM/workflow platform competing directly with Jira Service Management up-market.
Fast-growing work-management platform competing with Jira/Trello, especially in non-technical teams.
End-to-end DevOps platform competing with Bitbucket and parts of the dev workflow.
Work management for cross-functional teams; overlaps with Jira/Trello use cases.
Slack competes in team collaboration/communication and increasingly workflow automation.
Private. Modern docs/wiki + lightweight project tools; directly pressures Confluence and Jira on UX and price.
Private. AI-native, developer-loved issue tracking that is the sharpest modern challenger to Jira among startups.