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Atlassian (TEAM +19%) is attracting many buyers to its team today as shares rocket to their best levels since April following an impressive beat-and-raise in Q1. The collaboration software developer was coming off a dismal quarter, headlined by weak Q1 (Sep) revenue guidance and disappointing FY25 (Jun) financial targets.

A main point of contention last quarter was that TEAM forecasted FY25 revenue growth of approximately +16%, several points below its longer-term +20% goal. Management commented on the gap, noting that macroeconomic challenges and unfavorable yr/yr comparisons would create some headwinds in the short term. However, TEAM remained confident in reaching at least +20% growth in the years following.

• TEAM overcame these short-term hurdles quickly, delivering decent-sized top and bottom-line beats in Q1. The company lifted its EPS by 18% yr/yr and revenue by 21% to $1.19 bln. AI played a pivotal role in the quarter, with TEAM's AI-powered product, Rovo, garnering meaningful customer interest. The company's focus on serving enterprises has also helped boost its quarterly performance, especially given the current economic environment, which creates disproportionate problems for smaller organizations.
• The outsized strength in Q1 numbers is shoring up TEAM's confidence in the year ahead. The company raised its FY25 revenue growth outlook to +16.5-17.0%.
• The macroeconomic environment remains an issue, though. TEAM acknowledged that companies, particularly small and medium-sized organizations, continue to scrutinize their budgets. However, AI is proving to be a considerable growth driver, increasing organizations' interest in adopting the technology.

TEAM's Q1 report was a major confidence boost for investors. Demand for AI is unrelenting, acting as rocket fuel for TEAM as it looks to regain lost ground from an all-time high posted in late 2021. Unless demand for AI wavers, TEAM remains positioned to continue clearing near-term macroeconomic hurdles and reaccelerate growth over the next few years.