Summary
Atlassian's fiscal 2024 third quarter revenue reached $1.19 billion, up 29.9% year over year from the prior-year quarter. Gross profit was $975.7 million, up 30.7%, and gross margin was 82.1%, up 0.5 percentage points. GAAP operating income was $17.8 million for the quarter, a swing from an operating loss a year earlier, and operating margin was 1.5%, up 19.1 percentage points. Net income was $12.8 million, or $0.05 per diluted share, compared with a net loss in the prior-year quarter. The results landed alongside a leadership change: co-founder Scott Farquhar will step down as co-CEO effective August 31, 2024, while co-founder Mike Cannon-Brookes continues as CEO.
Cash generation was the standout. Operating cash flow for the quarter was $565.4 million, up 60.5%. Capital expenditures, which the company reports as a cash outflow, were $10.5 million, up 290.9%. Free cash flow, a non-GAAP measure, was $554.9 million, up 59%, and free cash flow margin was 47%. Deferred revenue was $1.96 billion, up 39.9% from the prior-year quarter, and remaining performance obligations were $2.30 billion, up 43.8%. The company tied the deferred revenue growth to more annual and multi-year agreements.
Cloud adoption stayed at the center of the story. Atlassian ended the quarter with more than 300,000 customers using Cloud products. Customers with greater than $10,000 in Cloud ARR totaled 44,336, up 19% year over year. Paid Server users reached zero after support for Server products ended in February 2024. The company also acquired Optic, an API documentation and management company, shipped Confluence whiteboards into general availability, and said the Atlassian Marketplace passed $4 billion in lifetime sales since 2012, with more than 1,800 partners and more than 5,700 apps and integrations. Atlassian Intelligence had more than 30,000 customers enabling it, with monthly active users up 3x since general availability in December 2023. Weekly users in Confluence report saving over 45 minutes a week on average, and 77% report saving time with AI search. Headcount was 11,902, up 479 from the prior quarter.
Guidance covers the fourth quarter of fiscal 2024. Management expects Cloud revenue growth of approximately 32% year over year, with migrations driving approximately 10 points. Data Center revenue growth is guided to 40% to 42%, and the company said revenue recognition from third-quarter billings benefits that figure by approximately 15 points. Server revenue is expected to be zero. Other revenue, mostly Marketplace, is expected to be roughly flat year over year. GAAP gross margin is guided to approximately 81.0% and non-GAAP gross margin to approximately 83.5%. GAAP operating margin is guided to approximately negative 7.0% and non-GAAP operating margin to approximately 18.5%. Diluted share count is still expected to increase by less than 2% in fiscal 2024.
Those targets carry real caveats. The outlook assumes neither improvement nor deterioration in macroeconomic conditions, and management expects paid seat expansion in the SMB segment to remain challenged. Gross margin is expected to keep declining year over year on the mix shift to Cloud. The flagship Team 24 conference falls in the fourth quarter and drives quarter-to-quarter seasonality in operating expenses. A profit this quarter against negative GAAP operating margin guidance next quarter shows how thin the GAAP result still is, even as non-GAAP profitability holds. The company also flagged risks around cloud migrations, integration of acquisitions such as Loom and Optic, and the broader economic backdrop. Strong Data Center and Marketplace app sales in the quarter were driven mainly by partners in EMEA, and management does not guide similar event-driven purchasing to repeat.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.19B | $1.06B | +12.2% | $915.5M | +29.9% |
| Gross profit | $975.7M | $865.6M | +12.7% | $746.8M | +30.7% |
| Gross margin | 82.0% | 81.7% | +0.4 pp | 81.6% | +0.5 pp |
| Research & development | $576.5M | $536.8M | +7.4% | $522.3M | +10.4% |
| Sales & marketing | $223.8M | $220.5M | +1.5% | $220.9M | +1.3% |
| General & administrative | $157.6M | $157.3M | +0.2% | $165.1M | -4.5% |
| Total operating expenses | $957.9M | $914.6M | +4.7% | $908.4M | +5.5% |
| Operating income (loss) | $17.8M | -$49.1M | +136.3% | -$161.6M | +111.0% |
| Operating margin | 1.5% | -4.6% | +6.1 pp | -17.6% | +19.1 pp |
| Net income (loss) | $12.8M | -$84.5M | +115.1% | -$209.0M | +106.1% |
| Net margin | 1.1% | -8.0% | +9.0 pp | -22.8% | +23.9 pp |
| Diluted EPS | $0.05 | -$0.33 | +$0.38 | -$0.81 | +$0.86 |
| Customers | 300,000 | 302,000 | -0.7% | 250,000 | +20.0% |
Risks
MD&A states expansion from existing customers has moderated in recent quarters, particularly among small and medium-sized customers, and cites rising inflation, interest rates and geopolitical tensions. The risk factors note revenue exposure to SMB customers who may delay spending or request price concessions under deteriorating economic conditions.
The filing expands on competitors potentially incorporating AI more successfully, gaining superior access to AI technologies, or achieving higher market acceptance of their AI solutions. It also warns that uncertainty around generative AI may require costly investment in proprietary datasets and models and increase the cost profile of offerings, while the EU's completed AI regulatory framework may raise R&D burden.
Maintenance and support for Server offerings generally ended in February 2024, and maintenance revenue decreased $64.7 million, or 69%, in the three months ended March 31, 2024. The filing warns that if remaining Server customers do not transition to Cloud or Data Center, revenue growth and profitability may be negatively impacted, and the mix shift to Cloud is expected to decrease gross margin.
Atlassian announced on April 25, 2024 that one co-Chief Executive Officer intends to step down into an advisory role effective August 31, 2024. The filing also notes intense competition for senior product engineering personnel, particularly with AI and machine learning backgrounds, and that the March 2023 rebalancing may adversely affect retention.
As of March 31, 2024, $975.0 million was outstanding under the Term Loan Facility, which matures in October 2025 and bears a floating SOFR-based rate. Interest expense increased $0.5 million, or 6%, in the three months ended March 31, 2024, and covenants may limit flexibility in obtaining additional financing or pursuing other opportunities.
The filing states Atlassian derives a majority of revenue from Jira Software and Confluence, making market acceptance of these two products critical. Demand is subject to factors beyond the company's control, including lower-cost alternatives introduced by competitors and changing customer needs.
Customers have no obligation to renew, generally do not enter long-term contracts (primarily monthly or annual terms), and may renew on less favorable terms or with fewer users. Retention and expansion can decline due to pricing, competing products, or the increased focus on Cloud offerings.
Atlassian finalized an Advance Pricing Arrangement with the Australian Tax Office covering fiscal years 2019 through 2025 and made a cash tax payment of approximately $60.5 million during the nine months ended March 31, 2024. The company continues to maintain a full valuation allowance on U.S. federal, U.S. state, and Australian deferred tax assets.
The markets are described as fragmented, rapidly evolving, and having relatively low barriers to entry, with competitors including Microsoft, IBM, Alphabet, ServiceNow, and others. Competitors with greater financial and operating resources may respond more quickly or offer more attractive pricing, potentially reducing sales and margins.
A purported securities class action complaint was filed against Atlassian and certain officers in U.S. federal court in February 2023. Involvement in this or other securities litigation could subject the company to substantial costs and divert management resources from operating the business.
SaaS KPIs
All quarters →Total customers
Non-GAAP Operating Margin
Free Cash Flow Margin
Free Cash Flow
Non-GAAP Gross Margin
Customers with greater than $10,000 in Cloud ARR
Summary, forecast, risks and KPIs are extracted from Atlassian Corp's SEC filings for Q3 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.