Summary
Atlassian reported total revenue of $977.8 million for its fiscal 2024 first quarter ended September 30, 2023, up 21.1% from the prior-year quarter. Gross profit rose 19.7% to $799.7 million, while gross margin slipped to 81.8%, down 0.9 percentage points. The company posted a GAAP operating loss of $18.9 million, which narrowed from the prior-year quarter, and operating margin was -1.9%, up 2.3 percentage points. Net loss widened to $31.9 million, and diluted EPS was -$0.12. The operating loss narrowed even as the net loss grew. Lower other income and a higher tax provision drove the bottom-line deterioration. Those items sit outside the core operating trend that management highlighted.
On a non-GAAP basis, operating income was $224.9 million and operating margin was 23%, up from 18% in the prior-year quarter. Non-GAAP net income was $169.0 million, and non-GAAP diluted EPS was $0.65. The gap between GAAP and non-GAAP results remains wide, largely because of stock-based compensation and amortization of acquired intangible assets. Operating cash flow was $167.0 million, up 80.6%, and capital expenditures were $3.67 million, down 77.8%. Free cash flow, a non-GAAP measure, was $163.3 million, up 115%. Deferred revenue rose 28.0% to $1.50 billion, and remaining performance obligations increased 30.8% to $1.70 billion. Those balances point to a healthy pipeline of committed customer spending. The company noted that free cash flow is typically lowest in the first quarter because of employee bonus payments.
Operationally, Atlassian ended the quarter with 40,103 customers that have more than $10,000 in Cloud annualized recurring revenue, an increase of 18% year-over-year. Total customers exceeded 265,000. Headcount was 11,151, up 14% from a year earlier. The company launched Compass into general availability and made AI-powered virtual agent capabilities available in Jira Service Management. It also announced two acquisitions: AirTrack, an IT data quality management provider, and Loom, a video messaging platform, for approximately $975 million, including about $880 million in cash and the remainder in equity awards. The Loom deal is expected to close in the third quarter of fiscal 2024 and is excluded from guidance. Those product moves aim to deepen the platform and support expansion within the existing base. Cloud migrations and enterprise adoption remain central to the strategy.
Guidance for the second quarter of fiscal 2024 points to Cloud revenue growth of 25.5% to 27.5% year-over-year and Data Center revenue growth of approximately 33%. Non-GAAP operating margin is targeted at approximately 21.0%. For the full fiscal year 2024, the company expects Cloud revenue growth of 25% to 30% and Data Center revenue growth of approximately 31%, with non-GAAP operating margin of approximately 20.0% and non-GAAP gross margin of approximately 83.5%. Gross margin is expected to decrease over the course of fiscal 2024 because of the Cloud mix shift. Management called out several risks: macroeconomic headwinds that weigh on paid seat expansion and free-to-paid conversion, variability in Server migrations ahead of the February 2024 end of support, and a revenue mix shift to Cloud that pressures gross margin. The company also said Server revenue will be zero in the fourth quarter of fiscal 2024. A discrete tax payment of approximately $60 million related to transfer pricing is expected to affect free cash flow margin in the second quarter. Atlassian finalized an advance pricing agreement with the Australian Taxation Office and made a cash tax payment of approximately $60.5 million in October 2023. The Loom acquisition and integration add execution risk, and the guidance excludes any contribution from Loom.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $977.8M | $939.1M | +4.1% | $807.4M | +21.1% |
| Gross profit | $799.7M | $769.3M | +4.0% | $668.0M | +19.7% |
| Gross margin | 81.8% | 81.9% | -0.1 pp | 82.7% | -0.9 pp |
| Research & development | $481.7M | $474.9M | +1.4% | $399.0M | +20.7% |
| Sales & marketing | $193.6M | $202.6M | -4.5% | $160.1M | +20.9% |
| General & administrative | $143.3M | $142.2M | +0.8% | $142.9M | +0.3% |
| Total operating expenses | $818.6M | $819.7M | -0.1% | $702.0M | +16.6% |
| Operating income (loss) | -$18.9M | -$50.4M | +62.6% | -$34.0M | +44.5% |
| Operating margin | -1.9% | -5.4% | +3.4 pp | -4.2% | +2.3 pp |
| Net income (loss) | -$31.9M | -$59.0M | +45.9% | -$13.7M | -132.0% |
| Net margin | -3.3% | -6.3% | +3.0 pp | -1.7% | -1.6 pp |
| Diluted EPS | -$0.12 | -$0.23 | +$0.11 | -$0.05 | -$0.07 |
| Customers | 265,000 | 260,000 | +1.9% | 240,000 | +10.4% |
Risks
MD&A states weakening macroeconomic conditions, rising inflation, interest rate increases, Russia's invasion of Ukraine, and remaining COVID-19 effects impacted results. Growth from existing customers and free-to-paid conversion moderated beginning in fiscal year 2023 and continued through the current quarter.
The business depends on customers renewing subscriptions and maintenance plans and purchasing additional licenses or subscriptions. Customers generally have monthly or annual terms rather than long-term contracts, and MD&A says growth from existing customers moderated, with further retention or expansion decline possible.
Atlassian plans to end maintenance and support for Server offerings in February 2024, and failure to migrate customers to Cloud or Data Center offerings may negatively impact revenue growth and profitability. Maintenance revenues decreased 31% and Server revenues decreased 31% in the three months ended September 30, 2023.
Atlassian is building AI and machine learning into its products, which introduces legal, ethical, reputational, and cost risks. New AI regulations and higher computing costs could increase research and development expenses and pressure profit margin as generative AI expands into product offerings.
In October 2023, a known state threat actor was actively exploiting a vulnerability in the Server and Data Center offerings of Confluence, requiring a patch and work with affected customers. The remote-first Team Anywhere environment and third-party Atlassian Marketplace apps add further data security risk.
The markets are intensely competitive with relatively low barriers to entry, and competitors include Microsoft, IBM, Alphabet, ServiceNow, Gitlab, and others. Lower cost or free products from competitors could harm Atlassian's ability to generate new customers and create pricing pressure.
Atlassian derives a majority of its revenue from Jira Software and Confluence, so market acceptance of these products is critical. Demand can be affected by competition, technological changes, and growth or contraction in addressable markets.
In October 2023, Atlassian entered a definitive agreement to acquire Loom for approximately $975 million, including about $880 million in cash. Integration may disrupt the business, divert management attention, and fail to achieve expected benefits.
Atlassian depends on executive officers and key employees, and announced in August 2023 that its Chief Revenue Officer will step down effective December 31, 2023. Competition for engineers with AI and machine learning backgrounds is intense, and the March 2023 rebalancing may harm retention.
The March 2023 plan reduced global headcount by approximately 5% and reduced office space. The restructuring may not achieve anticipated operational efficiencies, could cost more than expected, and could disrupt operations or cause unplanned attrition.
In October 2023, Atlassian finalized an advanced pricing agreement with the Australian Taxation Office and made a cash tax payment of approximately $60.5 million. Future effective tax rates may be materially impacted by foreign earnings taxed at different rates, uncertain tax positions, and changes in tax laws.
The Credit Facility carries a floating interest rate based on SOFR, and interest expense increased 47% in the three months ended September 30, 2023 compared to the prior-year period due to increased interest rates. Debt covenants and the overall debt level may limit flexibility in obtaining financing or pursuing other business opportunities.
SaaS KPIs
All quarters →Total customers
Non-GAAP Operating Margin
Free Cash Flow Margin
Free Cash Flow
Customers with >$10,000 in Cloud ARR
Non-GAAP Gross Margin
Summary, forecast, risks and KPIs are extracted from Atlassian Corp's SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.