Atlassian 2025 Q3 Earnings Misses Targets with Net Income Plunging 655%

Atlassian (TEAM) reported its fiscal 2025 Q3 earnings on May 01st, 2025. The results fell short of expectations, with the company experiencing a significant decline in net income. Despite a 14% year-over-year revenue increase, Atlassian's net loss widened compared to the previous year. The company's guidance suggests an in-line performance for the next quarter, with anticipated revenue growth driven by its cloud offerings.

Revenue
Atlassian's total revenue for Q3 2025 reached $1.36 billion, marking a 14% increase from the previous year. Subscription services were the primary driver, generating $1.273 billion, while other revenue streams contributed $83.84 million.

Earnings/Net Income
In Q3 2025, Atlassian experienced a significant downturn, posting a loss of $0.27 per share, contrasting sharply with the $0.05 profit per share in Q3 2024. The net loss amounted to $70.81 million, a sharp decline from the $12.75 million net income reported in the previous year. This reflects a considerable deterioration in earnings performance.

Post-Earnings Price Action Review
Historically, Atlassian's stock price has responded negatively to earnings report metrics such as revenue, net income, and EPS. A comprehensive backtest of earnings report metrics across the market indicated a negative impact on returns, with a maximum return of only -0.11% over the same period. These findings suggest that despite fluctuations in revenue and earnings, the overall market response remains subdued, leading to less favorable post-earnings price movements for Atlassian's stock.

CEO Commentary
Mike Cannon-Brookes, CEO and co-founder of Atlassian, expressed immense pride in the company's focus on innovation and the positive reactions from customers and partners. He highlighted significant revenue growth, driven by long-term investments in their Cloud platform and the integration of Rovo's AI capabilities. Cannon-Brookes noted the resonance of their vision for human-AI collaboration with customers and emphasized a commitment to executing their mission of maximizing team potential.

Guidance
The company expects to balance operational discipline with continued investment in strategic areas such as enterprise solutions, AI, and the Atlassian System of Work to drive future growth. The leadership remains optimistic about advancing Cloud revenue growth and its impact on overall business performance.

Additional News
Recently, Atlassian announced the appointment of Karen Dykstra to its Board of Directors, bringing over 30 years of financial leadership experience. This follows Enrique Salem's departure after serving since 2013. In addition, Atlassian has entered into a landmark partnership with Williams Racing, forming Atlassian Williams Racing to integrate its AI-powered collaboration software across the team's operations. Furthermore, Atlassian and Amazon Web Services (AWS) have entered into a strategic collaboration agreement to enhance enterprise cloud migration and AI capabilities, aiming to streamline migrations significantly and enhance cloud offerings.