Atlassian Earnings: Solid Period Coupled With Disappointing Guidance

Narrow-moat Atlassian reported solid fourth-quarter results, including an upside to our top and bottom-line expectations. While guidance fell short of our model for both the first quarter and the full year for fiscal 2025, the sharp selloff in the aftermarket indicates investors were similarly disappointed. As a result of guidance, we lowered our estimates, particularly for revenue growth, over the next five years. Therefore, we are lowering our fair value estimate to $195 from $225. While we see an upside to the stock from here, we struggle to reconcile the meaningful slowdown in guidance for revenue growth throughout this year, coupled with the acceleration required to hit the firm’s 2027 goal.