TEAM Q3 2024 Earnings

Call Details

• Call Title: Atlassian Corporation Q3 2024 Earnings Call
• Date: April 25, 2024 at 9:00 PM UTC
• Management Team:
  • Martin Lam (Head of Investor Relations)
  • Scott Farquhar (Chief Executive Officer)
  • Mike Cannon-Brookes (Chief Executive Officer)
  • Joe Binz (Chief Financial Officer)

Call Summary

Financial Performance

• Atlassian reported a milestone quarter and is now a cloud majority company with over 300,000 customers using cloud products.
• The company reported that paid seats in cloud have increased three times since the server end-of-support announcement roughly three and a half years ago.
• Q3 cloud revenue was reported as being in line with guidance while upside this quarter was driven by data center and marketplace performance.
• Paid seed expansion rates remained well below prior year levels, but the quarter-to-quarter deceleration continued to moderate from Q2.
• Data center benefited from migration flows from server and from price expansion, contributing to a reported approximately 10-point benefit to FY24 cloud revenue growth.
• Loom's Q3 revenue was stated to be in line with expectations and Loom is expected to have about a 1.5 points impact on FY24 cloud revenue growth.
• Loom is expected to be slightly dilutive to operating margins in both FY24 and FY25.

Guidance

• The company reiterated FY24 revenue and operating margin guidance assumptions and explicitly included Loom's roughly 1.5 point impact to FY24 cloud revenue growth.
• Management stated they are not assuming any material contribution from remaining unsupported server customers into future data center or cloud revenue in current guidance.
• Joe Binz said data center growth rates are expected to decelerate through FY25 due to migration dynamics and tougher comparables to FY24.
• The migration benefit to cloud revenue growth is expected to decline gradually over time from the approximate 10-point benefit in FY24.
• Management stated they expect a pronounced decrease in migration-related benefit in H2 FY25 and into FY26 as they lap strong server-to-data center migrations.
• No incremental quantitative FY25 guidance detail was disclosed on the call beyond directional statements, with additional detail deferred to the upcoming investor event.