Atlassian: 27x FCF For A 20% Grower? A Quiet Compounder

I lowered my price target to $400, sure—but still worth adding to the portfolio.

Investment Thesis

Atlassian (TEAM) reiterates to investors that its goal is to deliver 20% CAGR into fiscal 2027. As Atlassian wraps up its fiscal 2025 next month and starts fiscal 2026 in July 2025, Atlassian's big goal is to make teamwork smoother and continue to grow at scale.

The main highlight from this report is that although the business's growth rates right now look pedestrian, they are expected to stabilize at a higher growth rate starting next quarter.

On top of that, given the business has a remarkably strong free cash flow profile, I feel comfortable in using the weakness in its price to buy a little more of this stock.

The takeaway here is that I'm reducing my price target on TEAM to $400 per share by summer 2026, but I'm reiterating that investors would do well to consider this stock, particularly as the business continues to manage its expenses, and together with solid free cash flows, makes the business a very enticing buy.

Important Context

I was away last week as I travelled to Berkshire Hathaway, so I couldn't get to this earnings report in time. This is my updated analysis.

My main takeaway from this earnings report is that Atlassian is a cash printing machine, like few other companies. Right now, they are guiding for around 50% on the Rule of 40%, demonstrating that they are balanced between revenue growth and their free cash flow profile.