Enterprise, AI & Cloud Growth Ahead But Already Priced In 🏗️

Catalysts

AI Integration (Atlassian Intelligence & Rovo)

Atlassian is strongly positioned to leverage AI to increase workforce efficiency, particularly in large enterprises and is actively embedding AI across its product suite. In 2024 it introduced Atlassian Rovo, an AI teammate that uses Atlassian’s “teamwork graph” to help enterprise users find information across their tools and act on insights quickly. Meanwhile, the company’s built-in Atlassian Intelligence features (e.g. AI-powered summaries, chat assistance) are gaining heavy traction – customers are interacting with Atlassian’s AI features 25× more than last year. These AI enhancements make Atlassian’s tools more indispensable and are already helping build deeper customer relationships and faster content creation & consumption.

Product Expansion, Cross-Sell & Upsell

Atlassian continues to expand its product portfolio and tiers, which increases revenue per customer. The company achieved a record number of $1M+ contracts in recent quarters as it attracted larger clients to its Enterprise edition (which grew 40% YoY, nearly double overall growth). Its Premium tier also grew 40%, showing success in upselling existing users to higher-priced plans. Cross-selling multiple products into the same customer base is a key lever: Atlassian’s cloud revenue grew 30% recently, driven not only by user growth but also by cross-sell of additional products and higher ARPU (average revenue per user). As an example, a Jira Software customer might adopt Confluence, Trello, or the new Atlas and Rovo offerings, steadily increasing their spend. The broad lineup (work management, DevOps, IT service management, knowledge management, etc.) gives Atlassian ample room to deepen each customer’s usage. Furthermore, tiered pricing (Free, Standard, Premium, Enterprise) provides avenues to upsell teams as their needs scale.

Cloud Migration & Pricing Tailwinds

Atlassian is midway through a major cloud migration that is boosting revenue growth. It is phasing out on-premise server licenses, pushing customers to Cloud subscriptions (or its Data Center product). About 28% of Atlassian’s revenue still comes from on-premise customers, a pool that management is actively moving to the cloud. Cloud editions typically generate more recurring revenue per customer due to higher list prices and the ease of adding users/features. Indeed, Atlassian noted that its 30% cloud revenue growth was fueled by migrations and seat expansion within existing customers. The shift to cloud also enables Atlassian to roll out new features (like Atlassian Intelligence) faster and justify pricing increases for the added value. Atlassian has implemented price hikes in recent years on certain tiers, and the combination of more users on cloud and periodic price increases directly lifts its ARPU. In summary, as remaining server customers migrate (often on higher price plans) and cloud users expand usage, Atlassian should see an accretive boost to revenue growth.

Enterprise Market Expansion

Historically, Atlassian’s strength was in small and mid-sized teams with a self-serve model, but it is now aggressively expanding into large enterprises. This is evidenced by the surge in $1M+ enterprise deals and strong uptake of Enterprise-tier products. Atlassian is also targeting new use-cases in big organizations (e.g. IT service management via Jira Service Management, and knowledge management via Rovo) that put it in more direct competition with enterprise software incumbents. The opportunity is huge – Atlassian estimates it is less than 10% penetrated into a $67 billion serviceable market. In other words, the company’s current ~$5 billion annual revenue is a drop in the bucket of its potential. Successfully tailoring its products for enterprise-scale deployments (with security, governance, and admin features) and building out its sales/channel partnerships can unlock a much larger customer base than the SMB segment. Early signs are positive: the Enterprise edition growth (40% YoY) and big contract wins indicate that Atlassian’s land-and-expand model can work in the enterprise arena. If Atlassian continues to gain traction with Fortune 500 companies, this could sustain high growth for years even as its traditional SMB market matures.

Assumptions

Revenue Growth

Based on analyst consensus and industry trends, Atlassian’s revenue is expected to maintain a strong double-digit growth trajectory. Analysts forecast revenue growth around 15–20% annually in the coming years. In FY2024 Atlassian delivered $4.36B revenue (23% YoY) and is projected to reach ~$5.28B in FY2025. Consensus estimates see revenue around $7.6B by FY2027. Looking further to 2030, I assume Atlassian can grow revenue roughly in line with the mid-teens analyst forecast, with potential upside from the AI and enterprise catalysts. This yields an estimated revenue in the ~$11–12 billion range by 2030. Such growth is underpinned by Atlassian’s expanding addressable market and multiple growth levers (new products, cloud conversion, user expansion). It’s worth noting Atlassian’s own long-term target: even after doubling in size, it would still be capturing under 20% of its identified market opportunity, leaving room for sustained growth beyond five years.

Profit Margins

I expect Atlassian’s profitability to improve significantly as revenue scales. The business has extensive operating leverage, where increases in revenue outpace increases in costs. This was evident recently when a 4% top-line beat translated into a 27% bottom-line beat. Atlassian’s cloud model carries high gross margins (~81–84% GAAP vs non-GAAP ) and its R&D and S&M expenses grow more slowly once a product is developed and widely adopted. Currently, Atlassian is roughly breakeven on a GAAP basis (net margin ~-7% as of end 2024 due to heavy stock-based comp), but on an adjusted basis it already generates strong operating profits (FY2025 non-GAAP operating margin ~21.5% expected). As revenue doubles over the next five years, I assume Atlassian can expand its net profit margin into the 20–25% range by 2030. This assumes the company balances growth investments with cost discipline, something management has indicated by rebalancing spend toward high-growth areas and moderating hiring. Analyst projections reflect this margin scaling: Atlassian’s earnings are forecast to grow ~49% annually, far outpacing revenue growth of ~15%, implying substantial margin expansion. By 2030, a net margin in the mid-20s% would yield annual net income on the order of ~$3 billion (on $12B revenue) – a dramatic rise from today’s levels, driven by both revenue growth and efficiency gains from the cloud transition (e.g. one unified platform to maintain) and larger customer accounts.

Future Price / Earnings Multiple

In 2030, Atlassian will likely be a more mature (though still growing) software company, so I assume a price-to-earnings (P/E) multiple in the mid-to-upper 20s range for valuation. Today the stock commands a forward P/E above 80× reflecting investor optimism in its growth. It’s unrealistic for an 80× multiple to persist as earnings scale up; I expect multiple compression over time. However, given Atlassian’s high gross margins, sticky customer base, and ongoing growth (possibly still ~10–15% in 2030 and a long runway beyond), it could justifiably trade at a premium to the market. For our 2030 projection I use a ~30× P/E, which is within reason for a quality SaaS company still posting double-digit growth and high returns on equity. I also apply a 10% annual discount rate to translate future value back to 2025. This rate reflects a typical cost of equity for a software company – it’s higher than the risk-free rate to account for execution and competitive risks, but reasonable given Atlassian’s solid balance sheet and cash flows. (If one wanted to be more conservative, a higher discount rate or lower terminal multiple could be used to stress-test the thesis, given the tech sector volatility.)

Risks

Competitive Pressure

Atlassian faces stiff competition across its product lines from other cloud-based collaboration and DevOps tools. Tech giants like Microsoft (which offers rival solutions via Azure DevOps, GitHub, and Teams) and ServiceNow (leader in IT service management) have deep enterprise footholds. Emerging players like Monday.com, Asana, Notion, and others continue to innovate in work management and could encroach on Atlassian’s turf as well. Additionally, the AI features that Atlassian is rolling out are not unique to them – competitors are embedding AI (e.g. GitHub Copilot for developers, Microsoft 365 Copilot for knowledge work) which could diminish Atlassian’s differentiation if it falls behind. The risk is that increased competition could slow Atlassian’s user growth or force it to keep pricing lower. Atlassian must continue to innovate and leverage its ecosystem (e.g. integrations and marketplace apps) to stay ahead of rivals.

Economic & IT Spending Cycles

As an enterprise software provider, Atlassian’s growth is tied to corporate IT budgets. In a downturn or tightening IT spending environment, companies may delay onboarding new software, cut seats/licenses, or downshift editions. Atlassian experienced macro-related headwinds in FY2023, particularly with smaller customers slowing their expansion of user seats and conversions from free tiers. If global economic conditions deteriorate (e.g. recession), Atlassian could see softer growth in user additions or downsells, given that a portion of its client base are startups and SMBs that are more sensitive to economic stress. Even large enterprises might scrutinize software spend, impacting Atlassian’s upsell ambitions. The high valuation of Atlassian’s stock also makes it vulnerable to market sentiment shifts – if interest rates rise or risk appetites fall, high-growth tech stocks often de-rate. A significant risk is that investors may not tolerate any growth slowdown: with the stock priced for robust performance, a miss on revenue or guidance due to macro factors could trigger a sharp correction.

Execution Risks (Enterprise & Product Adoption)

A core assumption in this thesis is that Atlassian will successfully penetrate further into large enterprises and monetize new products (like Rovo and other AI capabilities). Execution is not guaranteed. Selling to enterprise clients often requires stronger salesforce efforts, custom security/compliance features, and top-tier support – areas where Atlassian is still ramping up experience. There is a risk that Atlassian’s traditional low-touch sales model may not translate smoothly to Fortune 500 procurement processes. Moreover, new product launches (e.g. Atlassian Rovo) might not achieve broad adoption if they don’t clearly outperform incumbent solutions or if customers are slow to trust AI for knowledge management. The company’s strategy to focus on cloud migrations, ITSM, and enterprise customers must be executed flawlessly to justify the growth projections. Any missteps – such as a botched cloud transition causing customer churn, integration challenges with acquisitions, or simply an innovation that falls flat – could impair Atlassian’s growth and margin expansion. Lastly, Atlassian’s heavy use of stock-based compensation, while helpful for attracting talent, could lead to share dilution (1–2% per year recently) and might weigh on shareholder returns if not offset; this is a minor risk but worth monitoring as it affects the share count used in valuation.

Conclusion

Based on my assumptions, Atlassian’s market capitalization in 2030 would be about $90 billion, equating to a stock price around $320 (if it earns ~$3B in net profit and the market values it at 30× earnings). This represents a 18.5% total return over 5 years, or roughly 3.5% annually.

Discounting back five years at 10% yields a present value of roughly $200 per share in 2025. At the time of research, Atlassian’s current stock price is in the high-$200s, which means the market is already pricing in considerable growth and profitability expansion.

You must believe Atlassian can exceed the outlined assumptions – or assign it an even higher terminal multiple – to justify significant upside from here.