- Quarterly revenue of $1,189 million, up 30% year-over-year
- Quarterly subscription revenue of $1,071 million, up 41% year-over-year
- Quarterly GAAP operating margin of 1% and non-GAAP operating margin of 27%
- Quarterly cash flow from operations of $565 million and free cash flow of $555 million.
Atlassian Corporation (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for its third quarter ended March 31, 2024. Atlassian also announced co-founder Scott Farquhar will step down as co-CEO effective August 31, 2024, with co-founder Mike Cannon Brookes continuing to lead Atlassian as CEO. A shareholder letter was posted on Atlassian’s Work Life blog at http://atlassian.com/blog/announcements/shareholder-letter-q3fy24 and in the Investor Relations section of Atlassian’s website at https://investors.atlassian.com.
Third Quarter Fiscal Year 2024 Earnings Results
“It’s been a milestone quarter for Atlassian,” said Mike Cannon-Brookes, co-founder and co-CEO.
“We’ve delivered $1.2 billion in revenue in Q3, up 30% year-over-year, driven by subscription revenue growth of 41% year-over-year. We drove record free cash flow of $555 million, up 59% year-over-year.
“Today, Atlassian is a cloud-majority company. We have over 300,000 customers using our Cloud products and have seen a 3x increase in paid seats in Cloud since we announced end-of-support for Server three and a half years ago. We have a significant opportunity to drive durable, long-term growth as we continue to execute against our cloud roadmap and deliver innovation across our cloud platform. We’re excited to share more at our flagship customer event next week, Team ’24,” concluded Cannon-Brookes.
CEO Transition
After an incredible 23 years, Scott Farquhar has made the decision to step down as co-CEO to spend more time with his young family, improve the world via philanthropy, and help further the technology industry globally.
“While it’s a difficult decision to step away, I do so knowing Atlassian is exceptionally positioned to take hold of the massive opportunities at its feet. We have a strong leadership team, and great momentum around cloud, enterprise, and now, AI,” said Farquhar.
Cannon-Brookes added, “The contribution Scott has made at Atlassian is impossible to quantify. Starting with just the two of us in 2001, to a global company of over 11,000 employees and over USD $4 billion in annual revenue, Atlassian would not be the company it is today without Scott. I am truly grateful to have had him by my side every day for the last 23 years.”
Scott’s last day as co-CEO will be August 31, 2024. He will continue as an active Board member and assume a special advisor role.
Mike will continue to lead as CEO as Atlassian pursues its mission to unleash the potential of every team and capitalize on its strengths in the AI era. To read Scott’s blog post, visit: https://www.atlassian.com/blog/announcements/scott-farquhar-ceo-transition.
Third Quarter Fiscal Year 2024 Financial Highlights:
On a GAAP basis, Atlassian reported:
Revenue: Total revenue was $1,189.1 million for the third quarter of fiscal year 2024, up 30% from $915.5 million for the third quarter of fiscal year 2023.
Operating Income (Loss) and Operating Margin: Operating income was $17.8 million for the third quarter of fiscal year 2024, compared with operating loss of $161.6 million for the third quarter of fiscal year 2023. Operating margin was 1% for the third quarter of fiscal year 2024, compared with (18%) for the third quarter of fiscal year 2023.
Net Income (Loss) and Net Income (Loss) Per Diluted Share: Net income was $12.8 million for the third quarter of fiscal year 2024, compared with net loss of $209.0 million for the third quarter of fiscal year 2023. Net income per diluted share was $0.05 for the third quarter of fiscal year 2024, compared with net loss per diluted share of $0.81 for the third quarter of fiscal year 2023.
Balance Sheet: Cash and cash equivalents plus marketable securities at the end of the third quarter of fiscal year 2024 totaled $2.1 billion.
On a non-GAAP basis, Atlassian reported:
Operating Income and Operating Margin: Operating income was $316.5 million for the third quarter of fiscal year 2024, compared with operating income of $197.1 million for the third quarter of fiscal year 2023. Operating margin was 27% for the third quarter of fiscal year 2024, compared with 22% for the third quarter of fiscal year 2023.
Net Income and Net Income Per Diluted Share: Net income was $232.5 million for the third quarter of fiscal year 2024, compared with net income of $138.0 million for the third quarter of fiscal year 2023. Net income per diluted share was $0.89 for the third quarter of fiscal year 2024, compared with net income per diluted share of $0.54 for the third quarter of fiscal year 2023.
Free Cash Flow: Cash flow from operations was $565.4 million and free cash flow was $554.9 million for the third quarter of fiscal year 2024. Free cash flow margin for the third quarter of fiscal year 2024 was 47%.
A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below, under the heading “About Non-GAAP Financial Measures.”
Recent Business Highlights:
Atlassian Marketplace Surpasses $4 Billion in Lifetime Sales: The Atlassian Marketplace surpassed $4 billion in lifetime sales since its inception in 2012. More than 1,800 Marketplace partners have created more than 5,700 apps and integrations, delivering additional value and innovation to customers.
Loom Named to Fast Company’s List of World’s Most Innovative Companies 2024: Loom was named to Fast Company’s List of World’s Most Innovative Companies of 2024. In addition to delivering a seamless asynchronous video communication experience, the launch of advanced AI capabilities makes video creation easy with the ability to edit the transcript to say what you want, automatically share your message, and identify calls to action. This recognition is a testament to the dedication of our new Loom teammates, who continue to push the boundaries of the future of work.
Optic Acquisition: Atlassian announced the acquisition of Optic, an Application Programming Interface (API) documentation and management company. Optic provides engineering organizations with native API documentation making it easier for developers to publish accurate API docs, avoid breaking changes, and improve the design of their APIs. Together with Compass, Optic will accelerate our ability to empower engineering teams and improve productivity by helping developers find the documentation they need and ship faster.
Confluence Whiteboards: Atlassian released Confluence whiteboards into general availability. Confluence whiteboards are a freeform way for teams to collaborate, brainstorm, draw, and visualize in a simple, integrated way. Whiteboards allows teams to seamlessly connect individual thoughts and ideas to workflows, by moving from a whiteboard into Jira without even having to change screens.
New Data Residency Regions Unlocked in the Cloud: Atlassian announced multiple new data residency regions available to customers: India, Japan, South Korea, Switzerland, and the United Kingdom. The expansion of data residency availability, now offered in 12 geographies, provides customers with control and flexibility on where they store their cloud data.
Customers with >$10,000 in Cloud ARR: Atlassian ended its third quarter of fiscal year 2024 with 44,336 customers with greater than $10,000 in Cloud annualized recurring revenue (Cloud ARR), an increase of 19% year-over-year.
Achieved Recognition on Fortune’s List of 100 Best Companies to Work For™ 2024: Atlassian was recognized, for the sixth consecutive year, on Fortune’s list of 100 Best Companies to Work For™. This remarkable accomplishment is a testament to the dedication, innovative spirit, and collective effort of all Atlassians who build upon our exceptional culture.
Atlassian Team ’24: Atlassian will hold its flagship Team ’24 conference in Las Vegas from April 30, 2024 through May 2, 2024. Thousands of customers, partners, and Atlassians will come together to talk about teamwork innovation, and hear exciting announcements that advance the way teammates work together through deep human insights and breakthrough technologies. More information on Team ’24 can be found at https://events.atlassian.com/team.
Financial Targets:
Atlassian is providing its financial targets as follows:
Fourth Quarter Fiscal Year 2024:
Total revenue is expected to be in the range of $1,120 million to $1,135 million.
Cloud revenue growth year-over-year is expected to be approximately 32%.
Data Center revenue growth year-over-year is expected to be in the range of 40% to 42%.
Gross margin is expected to be approximately 81.0% on a GAAP basis and approximately 83.5% on a non-GAAP basis.
Operating margin is expected to be approximately (7.0%) on a GAAP basis and approximately 18.5% on a non-GAAP basis.
For additional commentary regarding financial targets, please see Atlassian’s third quarter fiscal year 2024 shareholder letter dated April 25, 2024.
With respect to Atlassian’s expectations under “Financial Targets” above, a reconciliation of GAAP to non-GAAP gross margin and operating margin has been provided in the financial statement tables included in this press release.
Shareholder Letter and Webcast Details:
A detailed shareholder letter is available on Atlassian’s Work Life blog at https://atlassian.com/blog/announcements/shareholder-letter-q3fy24, and the Investor Relations section of Atlassian’s website at https://investors.atlassian.com. Atlassian will host a webcast to answer questions today:
When: Thursday, April 25, 2024 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time).
Webcast: A live webcast of the call can be accessed from the Investor Relations section of Atlassian’s website at https://investors.atlassian.com. Following the call, a replay will be available on the same website.
Atlassian has used, and will continue to use, its Investor Relations website at https://investors.atlassian.com as a means of making material information public and for complying with its disclosure obligations.
About Atlassian
Atlassian unleashes the potential of every team. Our agile & DevOps, IT service management and work management software helps teams organize, discuss, and complete shared work. The majority of the Fortune 500 and over 300,000 companies of all sizes worldwide – including NASA, Audi, Kiva, Deutsche Bank and Dropbox – rely on our solutions to help their teams work better together and deliver quality results on time. Learn more about our products, including Jira Software, Confluence and Jira Service Management at https://atlassian.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. In some cases, you can identify these statements by forward-looking words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate,” or “continue,” and similar expressions or variations, but these words are not the exclusive means for identifying such statements. All statements other than statements of historical fact could be deemed forward looking, including risks and uncertainties related to statements about our products, product features, including AI capabilities, customers, cloud migrations, macroeconomic environment, anticipated growth, outlook, potential benefits and synergies from Loom and other acquisitions, technology, and other key strategic areas, and our financial targets such as total revenue, Cloud and Data Center revenue, and GAAP and non-GAAP financial measures including gross margin and operating margin.
We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.
The achievement or success of the matters covered by such forward-looking statements involves known and unknown risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management’s beliefs and assumptions only as of the date such statements are made.
Further information on these and other factors that could affect our financial results is included in filings we make with the Securities and Exchange Commission (the “SEC”) from time to time, including the section titled “Risk Factors” in our most recently filed Forms 10-K and 10-Q. These documents are available on the SEC Filings section of the Investor Relations section of our website at https://investors.atlassian.com.
About Non-GAAP Financial Measures
In addition to the measures presented in our condensed consolidated financial statements, we regularly review other measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”), defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify tr
