EPS of $-0.15 increased by 54.6% from previous year
Gross margin of 82.7%
Net income of -38.21M
"Scaled past $5 billion in annual run rate revenue, with subscription revenue growing 30% year-over-year, and more than 1 million monthly Atlassian Intelligence users driving AI-powered value; AI interactions are up more than 25x YoY." - Mike Cannon-Brookes
Atlassian delivered a solid QQ2 2025 performance characterized by accelerating revenue growth fueled by cloud adoption and AI-enabled products, alongside continued enterprise execution. Revenue rose to $1.287B in Q2 2025, up ~21% YoY and ~8% QoQ, with gross profit of $1.063B and a robust gross margin around 83%. Despite a cloud-led mix shift pressuring operating margins, the company posted a net loss of $38.2M and a negative but improving operating margin of about -4.5%, underscoring the company’s ongoing transition from a primarily on-premises/data-center posture to a higher-growth cloud ecosystem. Management underscored the scale of the AI stack (Atlassian Intelligence, Rovo) and the Loom video collaboration product as key accelerants for monetization and premium/enterprise adoption. The enterprise go-to-market engine is expanding with hundreds of new sales reps and a record cadence of large deals, including more than 500 customers spending $1M+ in ARR. The company remains confident in long-term profitability and margins, with guidance signaling stable near-term margins and a pathway to >25% non-GAAP operating margin in FY2027. The combination of a broad platform (Jira, Confluence, Trello, JSM, Jira Align, Bitbucket, Forge, etc.), significant AI investments, and a growing enterprise customer base positions Atlassian to reach its long-term aspiration of $10B+ in revenue, albeit with a measured, risk-aware approach to near-term profitability and timing of cloud profitability improvements.
Key Performance Indicators
Revenue
1.29B
QoQ: 8.31% | YoY:21.35%
Gross Profit
1.06B
82.66% margin
QoQ: 9.60% | YoY:22.85%
Operating Income
-57.48M
QoQ: -79.75% | YoY:-17.16%
Net Income
-38.21M
QoQ: 69.13% | YoY:54.77%
EPS
-0.15
QoQ: 68.75% | YoY:54.55%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $1.2866B in Q2 2025, YoY +21.35%, QoQ +8.31% (consistent with a cloud-mix acceleration and AI-driven upsell).
Operating Income: -$57.48M; Operating Margin -4.47% (YoY and QoQ deterioration reflecting investments in enterprise GTM, AI development, and cloud-scale infrastructure).
Net Income / EPS: Net income -$38.21M; Net income margin -2.97%; EPS -$0.15 (diluted -$0.15).
Cash flow and liquidity: Net cash provided by operating activities $351.9M; Free cash flow $342.6M; Cash at end of period $2.218B; Net debt = -$0.973B (net cash).
Financial Highlights
Summary of key QQ2 2025 metrics and trend drivers:
- Revenue: $1.2866B in Q2 2025, YoY +21.35%, QoQ +8.31% (consistent with a cloud-mix acceleration and AI-driven upsell).
- Gross Profit: $1.0633B; Gross Margin ~0.827 (83%), YoY gross profit growth ~22.9%, QoQ ~9.6%.
- Operating Income: -$57.48M; Operating Margin -4.47% (YoY and QoQ deterioration reflecting investments in enterprise GTM, AI development, and cloud-scale infrastructure).
- Net Income / EPS: Net income -$38.21M; Net income margin -2.97%; EPS -$0.15 (diluted -$0.15).
- Cash flow and liquidity: Net cash provided by operating activities $351.9M; Free cash flow $342.6M; Cash at end of period $2.218B; Net debt = -$0.973B (net cash).
- Balance sheet: Total assets $5.446B; Total liabilities $4.227B; Total stockholders’ equity $1.220B. Current ratio 1.24; Cash and cash equivalents $2.218B; Long-term debt ~$986.8M; Cloud-related revenue mix continuing to grow.
- Capital allocation: Free cash flow generation supports ongoing investments in R&D and sales/marketing; share repurchases negative in the data, but net debt remains negative (net cash).
- Key leverage and efficiency metrics: Gross margin expansion due to cloud pricing and mix; operating margin constrained by investment in enterprise go-to-market and AI stack; cash conversion and working capital metrics relatively stable.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.29B
21.35%
8.31%
Gross Profit
1.06B
22.85%
9.60%
Operating Income
-57.48M
-17.16%
-79.75%
Net Income
-38.21M
54.77%
69.13%
EPS
-0.15
54.55%
68.75%
Key Financial Ratios
currentRatio
1.24
grossProfitMargin
82.7%
operatingProfitMargin
-4.47%
netProfitMargin
-2.97%
returnOnAssets
-0.7%
returnOnEquity
-3.13%
debtEquityRatio
1.02
operatingCashFlowPerShare
$1.35
freeCashFlowPerShare
$1.31
priceToBookRatio
52.12
priceEarningsRatio
-415.87
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights from the QQ2 2025 earnings call:
- Strategy and AI leadership: Management emphasized AI as a core driver of growth, noting Atlassian Intelligence features surpassed 1 million monthly active users and AI interactions up more than 25x YoY, with Rovo and AutoDev capabilities highlighting a scalable AI stack that fuels monetization in Premium/Enterprise SKUs. Mike Cannon-Brookes stated the company is investing in AI, enterprise scale, and the system of work to push toward a $10B revenue trajectory.
- Enterprise momentum and GTM: The company cited a record number of deals >$1M ACV for Q2, with hundreds of new sales reps deployed to accelerate large-account penetration. There is a focus on expanding Jira Work Management + Jira Software adoption to connect business and tech teams within large enterprises. Management highlighted more than 500 customers spending $1M+ and ongoing success in converting enterprise opportunities, underpinned by a broad platform.
- Loom and cloud monetization: Loom continues to deliver value and is a standalone SKU; Loom contributed to cloud revenue growth with an expected ~1.5 percentage point impact on FY25 cloud revenue per guidance. Loom’s AI-enabled video capabilities and searchability contribute to higher adoption and represent a differentiated offering versus traditional collaboration tools.
- Data center to cloud migration and profitability plan: Management discussed a measured migration path (hybrid ELAs) for large customers and reiterated a conservative, risk-adjusted guidance stance for H2 FY2025. They expect Q3 data center revenue growth around 7% YoY, with full-year non-GAAP operating margin near 23.5%, flat vs. prior year, and a long-term target of >25% in FY2027 as cloud adoption accelerates and cost efficiencies improve.
- Customer economics and pricing: The team emphasized a long-run pricing strategy tied to demonstrated value delivered by ongoing R&D and product enhancements, including a shift toward consumption-based elements in certain products. They indicated continued emphasis on price optimization aligned with the value delivered to customers.
- Competitive positioning and data assets: The company underscored its differentiated data graph and enterprise search capabilities as key enablers for AI agents and knowledge work acceleration, arguing Atlassian’s data and platform breadth create a defensible moat in AI-enabled collaboration.
Scaled past $5 billion in annual run rate revenue, with subscription revenue growing 30% year-over-year, and more than 1 million monthly Atlassian Intelligence users driving AI-powered value; AI interactions are up more than 25x YoY.
— Mike Cannon-Brookes
Non-GAAP operating margin is expected to be roughly flat year-over-year at about 23.5% for FY2025, reflecting disciplined management of investments in enterprise GTM, AI, and cloud infrastructure while maintaining the long-term margin trajectory.
— Joe Binz
Forward Guidance
Management’s forward guidance emphasizes a prudent, risk-adjusted stance amid macro uncertainty and the enterprise go-to-market transformation. Notable elements include:
- H2 FY2025 guidance: Q3 data center revenue growth of approximately 7% YoY; overall non-GAAP operating margin around 23.5% for FY2025 (flat YoY). Management reiterated the long-standing target of >25% non-GAAP operating margins in FY2027, supported by ongoing investments in GTM, R&D, AI capabilities, and cloud-scale infrastructure.
- Loom impact: Loom is expected to contribute roughly 1.5 percentage points to FY25 cloud revenue growth, indicating meaningful monetization but not yet fully embedded in all premium/enterprise SKUs.
- AI and enterprise GTM trajectory: The company expects continued acceleration in enterprise AI adoption, expansion into premium/enterprise editions, and increased penetration within large accounts (e.g., >$1M ARR deals). Investors should monitor: (1) cadence of large enterprise wins, (2) evolution of the enterprise overlay GTM model, and (3) competitive dynamics in AI-enabled collaboration.
- Key watch factors: macro volatility impacting SMB seat expansion, the rate of cloud migration from data center, the sustainability of AI-driven monetization, retention of premium/enterprise ARR, and the efficiency of cloud cost optimization to sustain gross margins as cloud mix grows.
- Plausibility and achievability: The company’s guidance remains conservative and risk-adjusted, with a clear path to higher profitability as cloud-scale and GTM investments begin to bear fruit over the next 2–3 years. Investors should monitor data-center to cloud migration progress, Atlassian Intelligence adoption, and the effectiveness of the new enterprise GTM motions in sustaining ARR growth.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
TEAM Focus
82.66%
-4.47%
-3.13%
-415.87%
WDAY
75.40%
4.96%
1.58%
114.13%
CRM
76.80%
19.10%
2.48%
43.65%
INTU
76.40%
15.00%
2.62%
89.40%
SNOW
66.80%
-40.90%
-7.67%
-34.36%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Outlook is cautiously constructive. Atlassian has positioned itself as a platform leader in collaboration and software development with a compelling AI-enabled flywheel. The QQ2 2025 results show meaningful top-line growth driven by cloud adoption and enterprise traction, underpinned by a robust gross margin profile and strong free cash flow generation. The company's strategy—accelerating Atlassian Intelligence, Loom monetization, and a broad enterprise GTM—offers meaningful upside as large deals mature and AI-enabled features deliver higher-value SKUs. However, the near-term profitability is sensitive to the cloud mix shift and GTM investments, and execution risk remains in migrating data-center customers to cloud. Investors should monitor the rate of data-center-to-cloud migrations, the monetization of Loom, the velocity of enterprise deals, and the evolution of the AI stack performance (model updates, data graph density, and search capabilities). Valuation remains elevated relative to traditional software peers, but Atlassian’s growth trajectory and AI-enabled platform moat could justify premium multiples if the company sustains Enterprise ARR expansion and cloud profitability improvements over the next 2–4 quarters and into FY2027.
Key Investment Factors
Growth Potential
Broad platform strategy across Jira, Confluence, Trello, Jira Service Management, and Forge; AI stack (Atlassian Intelligence, Rovo) with a multi-model approach across 30+ models; Loom monetization as a standalone SKU; significant enterprise opportunity with hundreds of $1M+ deals and a large Fortune 500 footprint.
Profitability Risk
Near-term profitability headwinds from cloud mix shift and enterprise GTM investments; macro volatility impacting SMB seat expansion; potential pricing and consumption-based pricing transitions; execution risk in migrating large data center customers to cloud without adverse churn; competitive AI-enabled collaboration offerings.
Financial Position
Healthy liquidity with net cash of approximately $-0.97B (net cash position) and $2.22B cash at hand; strong free cash flow generation ($342.6M) supports ongoing R&D and GTM investments; gross margins around 83% driven by cloud mix, offset by lower cloud margins in a rising cloud revenue mix; leverage remains modest with a balance sheet designed to fund AI and cloud-scale initiatives.
SWOT Analysis
Strengths
Broad, integrated platform with Jira, Confluence, Trello, Jira Service Management, Bitbucket, and Forge; strong $5B+ run-rate revenue milestone and 30% YoY growth in subscription revenue.
Leading AI-enabled collaboration stack (Atlassian Intelligence, Rovo) with extensive data assets ( teamwork graphs ) and a scalable model-agnostic approach (30+ models).
Robust enterprise momentum: >$1M+ ARR deals; hundreds of enterprise reps deployed; large Fortune 500 footprint.
Weaknesses
Near-term profitability pressures due to cloud mix shift and elevated GTM and R&D investments; negative operating income in QQ2 2025.
Significant reliance on enterprise go-to-market execution; data center to cloud migration remains iterative with potential timing risk.
Valuation metrics imply high growth expectations relative to profitability (high price-to-sales and negative earnings in near term).
Opportunities
Monetization of Loom as standalone SKU with cloud revenue uplift and AI-driven engagement; consumption-based pricing experimentation aligned with AI usage and cloud scale.
Expansion of Jira Work Management + Jira Software across large enterprises; cross-sell across entire Atlassian platform leveraging the system of work.
Continued data-aggregation capabilities (enterprise search, teamwork graph) enabling differentiated AI agents and faster ROI for customers.
Threats
Macro uncertainty affecting SMB seat expansion; potential pricing pressure in a competitive software market.
Regulatory/compliance changes in cloud deployments for large enterprises; data privacy and security obligations could impact cloud acceleration.
AI market competition from other software firms delivering agents and copilots with rapid model updates; execution risk in maintaining a competitive edge.
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