[Management View]
Atlassian Corporation reported over $5.2 billion in revenue for FY2025, with $1.4 billion in free cash flow. Key strategic priorities include enterprise penetration, AI innovation, and cloud migration. The Teamwork Collection, launched three months ago, exceeded expectations and is driving enterprise adoption. The company also announced a strategic partnership with Google Cloud to integrate AI-powered teamwork solutions.

[Outlook]
Management provided FY2026 guidance with a projected non-GAAP operating margin of 24%, slightly lower than FY2025, but reaffirmed a target of 25% for FY2027. Cloud migration is expected to contribute mid-single-digit growth to FY2026 cloud revenue. Investments in AI, enterprise sales, and R&D will continue to drive long-term growth.

[Financial Performance]
Atlassian achieved a cloud net revenue retention rate of 120% and a 38% YoY increase in remaining performance obligations (RPO) to $3.3 billion. Free cash flow for Q4 FY2025 was $360 million, down 13% YoY due to timing-related factors. Large enterprise deals exceeding $1 million in annual contract value doubled YoY.

[Q&A Highlights]
Question 1: How is Atlassian addressing market concerns about AI tools reducing developer demand?
Answer: CEO Mike Cannon-Brookes emphasized that Atlassian has seen no negative impact on developer seat expansion or product usage. AI tools are increasing productivity and expanding software creation across non-technical roles, which aligns with Atlassian's mission to support collaboration and teamwork. Early data shows that customers integrating AI tools experience faster growth in business user adoption.

Question 2: What is the outlook for free cash flow in FY2026?
Answer: CFO Joe Binz explained that free cash flow correlates with non-GAAP operating income trends. FY2025 cash flow was impacted by timing differences, including upfront billing transitions and bonus payouts. Long-term expectations remain stable, with a 500 basis point difference between non-GAAP operating margin and free cash flow margin.

Question 3: What factors will drive revenue acceleration in FY2027?
Answer: Management reiterated confidence in achieving 20% CAGR from FY2024 to FY2027. Growth levers include paid seat expansion, cross-sell, pricing, and AI-driven opportunities. The Teamwork Collection is a key driver, with large enterprise wins citing AI integration as a core reason for adoption.

Question 4: How did FY2025 close relative to expectations, and what is the framework for FY2026?
Answer: FY2025 ended strongly, with record enterprise deal velocity and robust RPO growth. FY2026 guidance reflects conservatism due to macroeconomic uncertainty and enterprise go-to-market evolution risks. Cloud revenue outperformed expectations, driven by paid seat expansion, cross-sell, and migrations.

Question 5: Will Atlassian launch new AI capabilities in FY2026?
Answer: CEO Mike Cannon-Brookes confirmed ongoing innovation in AI, with new capabilities expected to drive collaboration and usage. AI token usage grew 5x QoQ, and AI features are integrated deeply into the cloud platform, enhancing customer value.

Question 6: What is the outlook for cloud migration contributions in FY2026?
Answer: FY2025 migrations contributed mid-to-high single-digit growth to cloud revenue. FY2026 guidance assumes mid-single-digit contributions due to the complexity of remaining data center migrations. Long-term migration contributions are expected to remain consistent.

Question 7: How is Atlassian evolving its enterprise go-to-market strategy?
Answer: Management highlighted ongoing improvements in customer-centric processes, sales operations, and partner ecosystems. Enterprise transformation is a multi-year journey, with significant progress in FY2025, including large-scale Teamwork Collection wins.

Question 8: Why is Q1 FY2026 data center growth guidance lower?
Answer: CFO Joe Binz explained that Q1 FY2026 has a smaller expiration base and incremental headwinds from one-year deal terms and server end-of-support migrations. These factors contribute to the step-down in growth.

Question 9: How will Atlassian drive wall-to-wall deployments in enterprises?
Answer: CEO Mike Cannon-Brookes emphasized consolidation as a key strategy, supported by broader offerings like the Teamwork Collection and usability improvements in Jira. Business user adoption continues to grow, driven by AI and collaboration tools.

Question 10: What is the monetization timeline for Robo and AI capabilities?
Answer: CFO Joe Binz stated that the focus remains on deployment, usage, and engagement, with monetization as a secondary consideration. AI-driven seat expansion, premium upgrades, and consumption-based pricing are expected to contribute to long-term revenue growth.

Question 11: What are Atlassian's investment priorities for FY2026?
Answer: CFO Joe Binz outlined investments in sales and marketing, R&D, and AI to support enterprise cloud, AI, and system-of-work strategies. Sales hiring exceeded targets, reflecting confidence in enterprise opportunities.

[Sentiment Analysis]
Analysts expressed optimism about Atlassian's growth trajectory, particularly in AI and enterprise segments. Management maintained a confident tone, emphasizing long-term targets and strategic execution.

[Quarterly Comparison]
| Metric | Q4 FY2025 | Q3 FY2025 | YoY Change |
|---------------------------------|-------------------|-------------------|--------------------|
| Revenue | $5.2 billion | $4.9 billion | +6% |
| Free Cash Flow | $360 million | $415 million | -13% |
| RPO | $3.3 billion | $3.0 billion | +38% |
| AI Now Users | 2.3 million | 1.5 million | +50% QoQ |

[Risks and Concerns]
1. Macro uncertainty and potential disruptions from enterprise go-to-market evolution.
2. Complexity of data center migrations may delay cloud revenue contributions.
3. Incremental headwinds from server end-of-support migrations and one-year deal terms.

[Final Takeaway]
Atlassian closed FY2025 with strong financial and operational performance, driven by enterprise expansion, AI innovation, and cloud migration. The Teamwork Collection and AI capabilities are key growth drivers, with large enterprise wins validating the company's strategy. FY2026 guidance reflects conservatism amid macro risks, but management remains confident in achieving long-term growth targets. Investors should monitor progress in enterprise transformation and AI monetization as Atlassian continues to execute on its strategic priorities.