This article first appeared on GuruFocus.
Atlassian (NASDAQ:TEAM), the workplace software company behind Jira and Confluence, delivered a blockbuster fiscal fourth quarter that sent its shares soaring about 32.8% during Friday's regular session. Revenue jumped 28% year over year to $1.77 billion, powered by 31% cloud growth as customers continued shifting workloads to its platform. AI is also becoming a meaningful growth engine, with more than 1 million monthly active users now using Atlassian's AI features after adoption more than doubled during the quarter.
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The company's bottom line improved just as dramatically. GAAP net income reached $139 million, compared with a $24 million loss a year ago, while adjusted operating income surged to $636 million from $336 million, lifting the adjusted operating margin to 36% from 24%. Free cash flow totaled $475 million, equal to 27% of revenue. Full-year revenue climbed 26% to $6.57 billion, and Atlassian swung from a $130 million GAAP operating loss to a $10 million operating profit. Adding to the bullish narrative, Chief Executive Mike Cannon-Brookes plans to buy up to $250 million of Atlassian stock, putting more of his own capital behind the company's long-term strategy.
The chart makes the valuation story hard to ignore. TEAM is trading around $146 while the GF Value estimate sits near $284, implying the shares are roughly 49% below their estimated fair value. That discount alone is not a reason to buy, but it becomes much more compelling when paired with accelerating cloud growth, rapidly expanding margins and rising AI adoption. If Atlassian can keep turning AI engagement into higher customer spending instead of just more usage, today's valuation could look far more attractive in hindsight.