Summary
Atlassian opened fiscal 2025 with revenue of $1,187.8 million, up 21.5% from the prior-year quarter. Gross profit rose 21.3% to $970.2 million. The company still posted a GAAP operating loss of $32.0 million, which widened from the prior-year quarter. Net loss widened to $123.8 million. Diluted net loss per share was negative $0.48. Gross margin was 81.7%, down 0.1 percentage points. Operating margin was negative 2.7%, down 0.8 percentage points. Deferred revenue climbed 34.1% to $2.01 billion, and remaining performance obligations rose 35.3% to $2.30 billion. Operating cash flow was $80.49 million, down 51.8%. Capital expenditures were $6.15 million, up 67.6%.
On a non-GAAP basis, operating income was $268.1 million and operating margin was 23%. Non-GAAP net income was $199.7 million, and non-GAAP diluted net income per share was $0.77. Free cash flow was $74.3 million, down 54%, with a free cash flow margin of 6%. Atlassian ended the quarter with 46,844 customers generating more than $10,000 in Cloud annualized recurring revenue, up 17% year over year. Headcount was 12,501, an increase of 344 from the prior quarter. Product momentum included the general availability of Rovo, the company's AI-powered knowledge product, plus Atlassian Focus and premium editions of Jira Product Discovery, Compass, and Guard. Confluence surpassed 100,000 customers, and Jira Service Management had over 55,000 customers. Atlassian also announced a new share repurchase program of up to $1.5 billion and named Brian Duffy as Chief Revenue Officer, effective January 1, 2025.
Management framed the quarter as a solid start. Guidance for the second quarter of fiscal 2025 points to Cloud revenue growth of approximately 25.5%, Data Center revenue growth of approximately 27.5%, and Marketplace and other revenue growth of approximately 8.0%. On the profitability side, non-GAAP gross margin is expected to be approximately 84.0% and non-GAAP operating margin approximately 21.0% for that quarter. For the full fiscal year 2025, total revenue growth year over year is expected to be in the range of 16.5% to 17.0%. Cloud revenue growth is expected to be approximately 24.0%, Data Center approximately 20.5%, and Marketplace and other approximately 5.0%. Full-year non-GAAP gross margin is expected to be approximately 83.5%, and non-GAAP operating margin is expected to be in the range of 22.0% to 22.5%.
The outlook assumes difficult comparisons tied to Server end-of-support dynamics. Atlassian called out three pressures: event-driven Data Center and Marketplace outperformance in the third quarter of fiscal 2024, the roll-off of fiscal 2024 Server migration benefits in both Data Center and Cloud, and the cessation of Server maintenance revenue. Management also cited macroeconomic uncertainty that could affect paid seat expansion, cross-sell, upsell to higher-value editions, and customer retention. The company continues to allow for execution risk in its enterprise go-to-market motion. It also faces the lapping of the Loom acquisition, with Cloud revenue growth expected to decelerate in the second half of the year. Atlassian is investing in research and development and sales to support enterprise, AI, and its System of Work strategy. Those investments lifted operating expenses and contributed to the GAAP operating loss, even as non-GAAP profitability remained positive.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2025 | Q4 FY2024 | QoQ | Q1 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.19B | $1.13B | +5.0% | $977.8M | +21.5% |
| Gross profit | $970.2M | $914.1M | +6.1% | $799.7M | +21.3% |
| Gross margin | 81.7% | 80.8% | +0.9 pp | 81.8% | -0.1 pp |
| Research & development | $603.1M | $589.1M | +2.4% | $481.7M | +25.2% |
| Sales & marketing | $252.4M | $239.6M | +5.3% | $193.6M | +30.4% |
| General & administrative | $146.6M | $152.3M | -3.7% | $143.3M | +2.3% |
| Total operating expenses | $1.00B | $981.0M | +2.2% | $818.6M | +22.4% |
| Operating income (loss) | -$32.0M | -$67.0M | +52.2% | -$18.9M | -69.5% |
| Operating margin | -2.7% | -5.9% | +3.2 pp | -1.9% | -0.8 pp |
| Net income (loss) | -$123.8M | -$196.9M | +37.1% | -$31.9M | -288.2% |
| Net margin | -10.4% | -17.4% | +7.0 pp | -3.3% | -7.2 pp |
| Diluted EPS | -$0.48 | -$0.76 | +$0.28 | -$0.12 | -$0.36 |
| Customers | 300,000 | 300,000 | ±0.0% | 265,000 | +13.2% |
Risks
Atlassian is incorporating generative AI and machine learning into products like Rovo, but the filing states AI investments have and may continue to negatively impact operating margins until revenue offsets them. Competitors may incorporate AI more quickly, and third-party AI model suppliers could terminate relationships or raise prices.
The shift from Server and Data Center to Cloud continues, and other revenues decreased $70.0 million, or 56%, in FY2025 Q1 compared to FY2024 Q1, primarily due to a $75.5 million decrease in maintenance revenue after Server end of support. The filing expects gross margin to modestly decrease due to the Cloud mix shift and higher hosting costs.
Provision for income taxes increased $72.7 million, or 347%, in FY2025 Q1 compared to FY2024 Q1, primarily due to the change in mix of earnings and losses in foreign jurisdictions. The global minimum tax framework is effective for fiscal year 2025 and may increase the effective tax rate and cash tax payments in future years.
One former Co-Chief Executive Officer stepped down from his executive officer role and the former Chief Sales Officer stepped down, both effective August 31, 2024. The company has no employment agreements requiring executives to stay, and competition for AI and product engineering talent is intense.
The markets are intensely competitive and fragmented, with competitors including Microsoft, IBM, Alphabet, ServiceNow, GitLab, and others. Many current and potential competitors have greater resources, and some may offer lower cost or free products, making it difficult for Atlassian to generate new customers and maintain pricing.
Atlassian derives a majority of its revenue from Jira and Confluence, so market acceptance of these two products is critical to its success. The company also derived over 50% of fiscal year 2024 revenue from channel partners' sales efforts, and those partners are independent and may market competing products.
Operating cash flow decreased 51.8% to $80.5 million in FY2025 Q1 compared to FY2024 Q1, and free cash flow decreased $88.9 million over the same period. The decline was primarily due to higher cash paid to employees, suppliers, and income taxes, which may limit funding for growth, debt repayment, or repurchases.
The filing cites continuing global economic and geopolitical volatility, including inflation, interest rate changes, and conflicts in Ukraine and the Middle East, which could reduce demand, elongate sales cycles, and harm collections. Atlassian has revenue exposure to small- and medium-sized businesses that may reduce or delay spending.
Atlassian has experienced security breaches and inappropriate access to systems in the past, and third-party apps on the Atlassian Marketplace have caused disruptions. The remote-first work environment and increased AI use may heighten cybersecurity risks and lead to customer data loss or reputational harm.
Evolving privacy and AI regulations, including the EU Digital Services Act with fines up to 6% of total annual worldwide turnover, and cross-border data transfer restrictions may increase compliance costs and limit adoption of Atlassian's services. The filing also notes uncertainty around AI legal frameworks.
SaaS KPIs
All quarters →Total customers
Non-GAAP Operating Margin
Free Cash Flow Margin
Free Cash Flow
Customers with greater than $10,000 in Cloud ARR
Deferred revenue
Summary, forecast, risks and KPIs are extracted from Atlassian Corp's SEC filings for Q1 FY2025 (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.