Summary
Atlassian closed its fiscal second quarter with revenue of $1.06 billion, up 21.5% from the prior-year quarter. Gross profit rose 20.8% to $865.57 million. The operating loss narrowed to $49.06 million, and the net loss narrowed to $84.47 million. Diluted EPS was -$0.33, an improvement of $0.47. Gross margin slipped to 81.6%, down 0.5 percentage points, while operating margin improved to -4.6%, up 6.7 percentage points. The company also cited record billings and its first $1 billion revenue quarter.
Cash generation was a clear positive. Operating cash flow was $289.59 million, up 92.4%. Capital expenditures were $5.33 million, up 32.0% as a cash outflow. Deferred revenue rose 29.8% to $1.65 billion, and remaining performance obligations rose 35.7% to $1.90 billion. For the first six months of the fiscal year, revenue was $2.04 billion, up 21.3%. Operating cash flow for the same six-month period was $456.55 million, up 87.9%. Capital expenditures fell 56.2% to $9.00 million. The six-month gross margin was 81.7%, down 0.7 percentage points, and the six-month operating margin was -3.3%, up 4.6 percentage points.
Operational momentum was strong. Atlassian ended the quarter with over 302,000 customers, including 42,864 customers with more than $10,000 in Cloud ARR, up 18% year over year. The Loom acquisition closed on November 30 and added approximately 33,000 customers and 326 customers with more than $10,000 in Cloud ARR. Migrations to Cloud in the quarter increased more than 2x year over year. Atlassian Intelligence, Compass, and Virtual Agents reached general availability. Jira Product Discovery surpassed 4,000 paying customers. Jira Work Management usage grew nearly 50% year over year. Headcount was 11,423, up 6%. The company said the rate at which customers convert from free instances to paid plans stabilized relative to prior quarters. Atlassian was also named a Leader in The Forrester Wave: Enterprise Service Management, Q4 2023.
Guidance points to continued growth but with moving pieces. For the third quarter of fiscal 2024, total revenue is expected between $1,085 million and $1,105 million. Non-GAAP operating margin is targeted at approximately 19.5%. Cloud revenue growth is expected between 30.0% and 32.0%, and Data Center revenue growth is expected at approximately 35.0%. For the full fiscal year 2024, Cloud revenue growth is guided to 28.5% to 30.5%, Data Center revenue growth to approximately 36.0%, and non-GAAP operating margin to 20.5% to 21.0%. Management still assumes a range of macroeconomic scenarios in the second half, with the main impact on paid seat expansion in existing customers. The Server end-of-support date in February 2024 is a wildcard. Atlassian assumes some remaining Server customers will move to Cloud, the majority will move to Data Center, and some will not migrate in fiscal 2024. Server revenue is expected to be zero in the fourth quarter of fiscal 2024. Data Center revenue growth is expected to decelerate in the second half. Gross margins are expected to decrease in the second half because of the continued revenue mix shift to Cloud. Loom is expected to remain slightly dilutive in fiscal 2024 and fiscal 2025. Other risks include weaker paid seat expansion in SMB, a mix shift from monthly to annual subscriptions, and broader macroeconomic pressure from rising inflation, increases in interest rates, Russia's invasion of Ukraine, and remaining effects of COVID-19.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.06B | $977.8M | +8.4% | $872.7M | +21.5% |
| Gross profit | $865.6M | $799.7M | +8.2% | $716.8M | +20.8% |
| Gross margin | 81.7% | 81.8% | -0.1 pp | 82.1% | -0.5 pp |
| Research & development | $536.8M | $481.7M | +11.4% | $473.7M | +13.3% |
| Sales & marketing | $220.5M | $193.6M | +13.9% | $186.2M | +18.4% |
| General & administrative | $157.3M | $143.3M | +9.8% | $156.1M | +0.8% |
| Total operating expenses | $914.6M | $818.6M | +11.7% | $816.0M | +12.1% |
| Operating income (loss) | -$49.1M | -$18.9M | -160.0% | -$99.2M | +50.6% |
| Operating margin | -4.6% | -1.9% | -2.7 pp | -11.4% | +6.7 pp |
| Net income (loss) | -$84.5M | -$31.9M | -164.9% | -$205.0M | +58.8% |
| Net margin | -8.0% | -3.3% | -4.7 pp | -23.5% | +15.5 pp |
| Diluted EPS | -$0.33 | -$0.12 | -$0.21 | -$0.80 | +$0.47 |
| Customers | 302,000 | 265,000 | +14.0% | 250,000 | +20.8% |
Risks
Weakening macroeconomic conditions, inflation and higher interest rates have moderated growth in paid seat expansion from existing customers beginning in fiscal 2023 and continuing through the quarter ended December 31, 2023. MD&A states this was largely due to customers impacted by weakening economic conditions, which could reduce renewals or spending.
Atlassian will generally end maintenance and support for Server offerings in February 2024, and it no longer sells perpetual licenses or upgrades for Server. Maintenance revenue decreased 35% in the three months ended December 31, 2023 and 33% in the six months ended December 31, 2023, and failure of customers to migrate to Cloud or Data Center by February 2024 could negatively impact revenue growth and profitability.
Customers generally do not enter long-term contracts and primarily have monthly or annual terms, so retention and expansion can decline due to satisfaction, competition, pricing, or reduced customer spending. The company has already seen growth in paid seat expansion from existing customers moderate.
A majority of revenue is derived from Jira Software and Confluence, so market acceptance of these products is critical. Competition, lower-cost alternatives, or failure to meet customer demands could harm results.
The markets are fragmented, rapidly evolving and highly competitive with low barriers to entry, and competitors include Microsoft, IBM, Alphabet, ServiceNow, Gitlab and others with greater resources. AI adoption and new entrants may intensify competition and pricing pressure.
Atlassian is building AI and machine learning into its products, which may increase research and development costs and expose it to evolving AI regulation and reputational or legal liability. The European Commission has agreed the first such AI framework, and failure to implement AI responsibly may slow adoption.
The business depends on executive officers and key employees, and the Chief Revenue Officer stepped down effective December 31, 2023. Recruiting senior product engineering personnel with AI and machine learning backgrounds is challenging, and the March 2023 rebalancing may adversely affect retention.
Atlassian acquired Loom, Inc. on November 30, 2023, and integration may disrupt the business, divert management, and fail to achieve expected benefits. Loom added approximately 33,000 customers and 326 customers with greater than $10,000 in Cloud ARR, but subscription revenue from Loom was not material in the three months ended December 31, 2023.
The Credit Facility includes a $1 billion term loan and a $500 million revolver with financial and non-financial covenants and floating SOFR-based interest. Interest expense increased 20% in the three months ended December 31, 2023 and 32% in the six months ended December 31, 2023 due to higher interest rates, and default could accelerate indebtedness.
Global operations subject tax, transfer pricing, anti-bribery, export control and other regulations. Atlassian finalized an APA with the ATO covering tax years ended June 30, 2019 to June 30, 2025 and made a cash tax payment of approximately $60.5 million during the six months ended December 31, 2023.
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
Non-GAAP Operating Income
Deferred revenue
Summary, forecast, risks and KPIs are extracted from Atlassian Corp's SEC filings for Q2 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.