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Atlassian Corporation
Technology | Software - Application
⚡ Executive Summary
📊 The Bottom Line
Atlassian Corporation is a leading provider of collaboration software, offering a robust suite of products like Jira and Confluence that are integral to team productivity. The company's focus on cloud migration and AI integration positions it well within its market, despite current unprofitability. Its business model, driven by subscriptions, indicates strong recurring revenue potential.
⚖️ Risk vs Reward
With a current price of US$118.18, Atlassian trades significantly below the average analyst target of US$229.58. This suggests substantial upside potential if the company can execute on its growth strategies and improve profitability. However, risks related to intense competition and market cycle extensions warrant careful consideration, balancing potential gains against inherent volatility.
🚀 Why TEAM Could Soar
- • Continued cloud migration by enterprise customers could accelerate recurring revenue growth, boosting margins as high-cost on-premise deployments decrease.
- • Successful integration and monetization of AI features across its product suite (e.g., Rovo) could unlock new value propositions and drive broader adoption, expanding its total addressable market.
- • Strategic acquisitions or partnerships in niche collaboration software markets could consolidate its position, broaden its offerings, and capture new customer segments.
⚠️ What Could Go Wrong
- • Increased competition from larger technology players or nimble startups could lead to pricing pressure and market share erosion, impacting revenue growth and profitability.
- • A prolonged economic downturn could cause businesses to cut software spending, leading to extended sales cycles and reduced demand for Atlassian's collaboration tools.
- • Execution risks related to new product development and AI feature rollouts could fail to meet customer expectations, hindering adoption and increasing development costs without proportional revenue gains.
🏢 Company Overview
💰 How TEAM Makes Money
- • Atlassian provides collaboration software globally, helping organizations improve team connectivity and productivity through various work management systems.
- • Its core offerings include project management platforms like Jira, knowledge-sharing workspaces such as Confluence, and asynchronous video communication tools like Loom.
- • The company also specializes in IT and HR service management with Jira Service Management, and offers AI-powered search, chat, and agent capabilities through Rovo.
- • Additional products range from source code management (Bitbucket) and developer portals (Compass) to product idea roadmap tools (Jira Product Discovery) and enterprise agility solutions (Jira Align).
🎯 WHY THIS MATTERS
Atlassian's diversified product portfolio, catering to various team functions from development to HR, creates a strong network effect and encourages broader platform adoption within organizations. This integrated approach fosters customer stickiness, driving recurring revenue through its subscription-heavy business model. The company's ability to cross-sell and up-sell its comprehensive suite is critical to its long-term growth and market position.
⭐ Competitive Advantage: What Makes TEAM Special
1. Ecosystem Lock-in
Atlassian's suite of collaboration tools, including Jira, Confluence, and Bitbucket, forms a tightly integrated ecosystem. Once teams adopt multiple Atlassian products, the cost and complexity of switching to a competitor increase significantly due to data migration, workflow disruption, and retraining. This deep integration fosters high customer retention and provides a substantial barrier to entry for new competitors.
2. Developer & IT Mindshare
Atlassian has built strong brand loyalty and trust within the developer and IT communities, making its products the de facto standard for project management and service desks. This widespread adoption creates a powerful virality, as individual teams and developers often introduce Atlassian tools into new organizations. This entrenched position is difficult for competitors to dislodge without a radically superior offering.
3. Marketplace & Extensibility
The Atlassian Marketplace allows third-party developers to create and sell apps that extend the functionality of Atlassian's core products. This rich ecosystem of add-ons enhances the value proposition, customizability, and stickiness of the platform. It also offloads development costs, creating a continuous stream of innovation that further differentiates Atlassian from competitors and deepens its moat.
🎯 WHY THIS MATTERS
These distinct advantages collectively reinforce Atlassian's market position by creating a powerful combination of product stickiness, brand recognition within key user bases, and a vibrant ecosystem. This allows the company to maintain pricing power and defend against competitive threats, supporting long-term profitability and sustainable growth in the dynamic software market.
👔 Who's Running The Show
Michael Cannon-Brookes
Co-Founder, CEO & Director
Michael Cannon-Brookes, 46, co-founded Atlassian in 2002. As CEO, he has been instrumental in scaling the company from a startup to a global leader in collaboration software. His leadership has focused on product innovation and expanding the company's cloud offerings, driving its strategic vision in the competitive technology landscape. He received US$54,240 in total pay for fiscal year 2025.
⚔️ What's The Competition
The collaboration software market is highly competitive and fragmented, with numerous players offering specialized and generalized tools. Atlassian faces competition from large technology companies with broad product suites, as well as smaller, agile startups focusing on specific niches. Competition primarily revolves around product features, ease of integration, scalability, and pricing models, particularly in the cloud-based subscription space. The market is constantly evolving with new entrants and innovations.
📊 Market Context
- Total Addressable Market - The global collaboration software market is projected to grow significantly, driven by remote work trends and digital transformation initiatives.
- Key Trend - The shift towards integrated, AI-powered collaboration platforms is the most important trend, emphasizing efficiency and automation.
📊 Valuation & Analysis
📈 Wall Street Summary
Analyst Rating Distribution - 8 Hold, 21 Buy, 4 Strong Buy
8
21
4
12-Month Price Target Range
Low Target
US$145
+23%
Average Target
US$230
+94%
High Target
US$480
+306%
Closing: US$118.18 (30 Jan 2026)
🚀 The Bull Case - Upside to US$480
1. Strong Cloud Growth & AI Integration
High Probability
Atlassian's ongoing transition to cloud-based subscriptions and strategic AI integrations, particularly with its Rovo offering, could significantly accelerate revenue growth and expand profit margins. Increased AI adoption could differentiate products, attracting new enterprise customers and enhancing user productivity.
2. Expanding Total Addressable Market (TAM)
Medium Probability
By continuously expanding its product suite to new functional areas like HR and legal, Atlassian can tap into new segments within existing clients and attract new customers beyond its traditional developer base. This broadens its TAM and diversifies revenue streams.
3. High Customer Retention & Network Effects
High Probability
The deep integration of Atlassian's products creates strong network effects and high switching costs. This inherent customer stickiness ensures a stable and predictable revenue base, allowing for consistent up-selling and cross-selling opportunities within its large existing customer base.
🐻 The Bear Case - Downside to US$145
1. Intensified Competition & Pricing Pressure
Medium Probability
The collaboration software market is highly competitive. Increased rivalry from established tech giants and innovative startups could lead to pricing pressure, reduced market share, and higher customer acquisition costs, ultimately impacting Atlassian's profitability.
2. Economic Downturn Impact on IT Spending
Medium Probability
A significant global economic slowdown could result in reduced IT spending by businesses. This would directly affect Atlassian's subscription growth and new customer acquisition, potentially leading to slower revenue growth or even contractions.
3. Challenges in Cloud Migration & Integration
Medium Probability
While cloud migration is a growth driver, challenges in migrating large enterprise customers or integrating new cloud features could lead to delays, increased costs, and customer dissatisfaction. This could hinder the shift to higher-margin cloud revenue and impact perceived product reliability.
🔮 Final thought: Is this a long term relationship?
Owning Atlassian for a decade hinges on its ability to maintain its ecosystem lock-in and continually innovate in the rapidly evolving collaboration software space. Its strong foundation in developer tools provides a durable moat, but sustained leadership and successful AI integration are crucial. Key challenges include fending off aggressive competition and navigating potential economic headwinds impacting enterprise IT budgets. If management can execute on its cloud and AI strategies while expanding its TAM, TEAM could deliver solid long-term returns, albeit with potential volatility from its growth-oriented nature.
📋 Appendix
Financial Performance
Metric
30 Jun 2025
30 Jun 2024
30 Jun 2023
Income Statement
Revenue
US$5.22B
US$4.36B
US$3.53B
Gross Profit
US$4.32B
US$3.56B
US$2.90B
Operating Income
US$-0.13B
US$-0.12B
US$-0.35B
Net Income
US$-0.26B
US$-0.30B
US$-0.49B
EPS (Diluted)
0.00
-1.16
-1.90
Balance Sheet
Cash & Equivalents
US$2.51B
US$2.18B
US$2.10B
Total Assets
US$6.04B
US$5.21B
US$4.11B
Total Debt
US$1.24B
US$1.25B
US$1.28B
Shareholders' Equity
US$1.35B
US$1.03B
US$0.65B
Key Ratios
Gross Margin
82.8%
81.6%
82.1%
Operating Margin
-2.5%
-2.7%
-9.8%
Return on Equity
-19.08
-29.10
-74.35
Analyst Estimates
Metric
Annual (30 Jun 2026)
Annual (30 Jun 2027)
EPS Estimate
US$4.87
US$5.63
EPS Growth
+32.5%
+15.5%
Revenue Estimate
US$6.3B
US$7.5B
Revenue Growth
+21.0%
+18.4%
Number of Analysts
31
29
Valuation Ratios
| Metric | Value | Description |
|---|---|---|
| Forward P/E | 20.99 | The Forward P/E estimates the stock's valuation based on anticipated future earnings, providing insight into investor expectations for future profitability. |
| Price/Sales (TTM) | 5.70 | The Price/Sales (TTM) ratio measures the market value of a company relative to its total revenue over the past twelve months, often used for companies with inconsistent or negative earnings. |
| Price/Book (MRQ) | 22.57 | The Price/Book (MRQ) ratio compares a company's market price to its book value per share from the most recent quarter, indicating how much investors are willing to pay for its net assets. |
| EV/EBITDA | -653.70 | EV/EBITDA is an enterprise valuation multiple that compares Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization. A negative value here typically indicates negative EBITDA, common for loss-making companies like Atlassian. |
| Return on Equity (TTM) | -0.15 | Return on Equity (TTM) measures the profitability of a company in relation to the equity of its shareholders over the last twelve months, showing how efficiently equity is used to generate profits. |
| Operating Margin | -0.03 | Operating Margin indicates how much profit a company makes from its core operations for every dollar of sales, providing insight into operational efficiency before non-operating items. |