Atlassian Corporation Class A

Atlassian earns money mainly through recurring subscription fees for its cloud software, plus term licenses bundled with support for customers still running self-managed versions, plus a smaller stream of fees from facilitating third-party app sales through its marketplace, training and advisory work. In most periods, the large majority of this revenue comes from accounts that were already customers before that period began, rather than from new sign-ups. CompanyGraph also observes that, over a period of several years, what customers owe the company has grown faster than the revenue it recognizes, a growing gap between billing and collection.

Atlassian's way of growing is shared by a fairly large number of other software companies that also earn recurring subscription revenue protected by switching costs, so growing through renewal and expansion rather than one-off sales is not unique to it. Within that shape, CompanyGraph reads its growth as coming mainly from expanding what existing customers already use and pay for and from adding new customers through its own product and distribution, rather than from adding physical capacity. Revenue growth has not always moved together with profit: in more than one recent year, net income was negative even as revenue continued to grow.

Atlassian depends on outside cloud infrastructure to run and distribute its software, naming Amazon Web Services as its cloud provider, alongside a number of other named third-party providers it uses for specific functions such as data processing and artificial intelligence features. It also depends on continuing access to other companies' software interfaces under terms that are not long-term contracts, and on hiring specialized engineering talent in a competitive market. More broadly, CompanyGraph's map of the economy places it downstream of a number of supplying industries.

A very large number of organizations across most industries and of varying sizes use Atlassian's products, including government agencies, and no single customer accounts for a large share of its revenue. Beyond its direct customers, CompanyGraph's map of the economy shows its output feeding into a small number of other industries.

Atlassian's business shares its basic shape with a sizeable group of other software companies that also earn recurring subscription revenue protected by switching costs, so this structure by itself is not unusual. Within that shape, Atlassian points to its own combination of product breadth, integration between its tools, ease of adoption, and the reach of its marketplace of third-party add-ons as what differentiates it, and its reported pattern of existing customers spending more over time is consistent with those tools becoming more embedded in daily work. CompanyGraph cannot say whether competitors are able to reproduce this particular combination.

Atlassian's own disclosures show that the large majority of its revenue in any period comes from customers it already had, and that existing cloud customers tend to spend more over time rather than less, a pattern consistent with a customer base that renews and expands rather than leaves, even though its subscription terms themselves run for relatively short periods rather than locking customers in contractually. Some of its products also carry a specific government security authorization that certain public-sector customers require before they can buy software at all, which ties those particular customers to vendors that hold it.

In its own account of what limits its growth, Atlassian points to the difficulty of hiring enough senior product-engineering staff with relevant software, cloud and artificial-intelligence experience, and to the need to keep expanding and upgrading its own cloud infrastructure and systems to keep pace with demand. The company frames both as constraints on how fast it can grow rather than as problems it is currently failing to manage.

In its own filings, Atlassian names as its most significant risks whether it can keep growing revenue and reach sustained profitability, broad economic and geopolitical instability, intense competition, uncertainty over the payoff from its own investment in artificial intelligence, the work of moving its remaining customers to cloud delivery, and its dependence on customers renewing and expanding their subscriptions. It also depends on continued access to third-party infrastructure and to other companies' software interfaces under terms it does not control through long-term contracts.

Atlassian operates under export-control, sanctions and data-privacy regimes across the jurisdictions it serves, including rules specific to selling to the United States government, and it must hold a specific government security authorization to compete for some public-sector work. Its revenue is also exposed to movements in several foreign currencies because it operates and prices in markets outside the United States, an exposure it partially offsets with hedging. The company also names broad economic and geopolitical volatility and intense competition among the forces it sees acting on it from outside.