Atlassian stock jumped more than 30% in after‑hours trading on Thursday after the Australian software firm reported a stronger‑than‑expected fourth‑quarter fiscal 2026 and lifted its outlook for the coming year.
Quarterly results beat expectations
For the quarter that ended June 30, Atlassian posted adjusted earnings of $1.87 per share, up from $0.98 a year earlier. Revenue rose 28% to $1.766 billion, surpassing analysts’ forecasts of $1.50 per share and $1.66 billion in revenue. Cloud revenue led the growth, reaching $1.213 billion, a 31% increase year‑over‑year. Data Center sales also rose, climbing 21% to $461.9 million.
Subscription annual recurring revenue (ARR) hit $6.606 billion, up 23% from the prior year, while remaining performance obligations—a metric for contracted but unrecognized revenue—jumped 44% to $4.817 billion. The firm turned a profit on an unadjusted basis, posting operating income of $211 million compared with an operating loss of $28 million a year earlier. Net income was $139 million, reversing a $24 million loss.
Free cash flow for the quarter stood at $475 million. Full‑year revenue reached $6.572 billion, a 26% increase, and adjusted earnings per share rose to $5.85 from $3.68 in fiscal 2025. Despite the profit, the company still reported an unadjusted net loss of $54 million, narrowed from $257 million a year before.
Cloud momentum and AI adoption
Cloud growth accelerated after a period of slowing expansion. The firm now expects cloud revenue to rise 25.5% in fiscal 2027, up from a 23% projection made in February. Data Center revenue is forecast to decline about 17% as the firm shifts focus to its cloud offerings.
Usage of Atlassian’s Model Context Protocol server and its Teamwork Graph command‑line tool more than doubled, surpassing one million monthly active users. Calls to the Model Context Protocol rose more than 400% from the third quarter. The AI assistant, Rovo, is now employed by over 80% of Fortune 500 companies, and assisted actions grew more than 50% sequentially.
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Chief Executive Mike Cannon‑Brookes said, “In the AI era, context is the edge but it’s hard to build and can’t be hired.” He added that the company’s 25 years of connecting teams give customers “one of the best context graphs for orchestrating agentic workflows.”
From a practical standpoint, the rapid adoption of Rovo and the surge in Model Context Protocol usage suggest that large enterprises are increasingly relying on Atlassian’s AI‑driven tools to streamline collaboration and automate routine tasks.
This shift could reduce the need for manual coordination and free up staff for higher‑value work, especially in organizations that have already integrated Atlassian’s suite into daily processes.
Guidance and leadership changes
Atlassian forecast first‑quarter revenue of $1.705 billion to $1.715 billion, above the roughly $1.665 billion analysts had expected. For the full fiscal 2027 year, the company projects overall revenue growth of about 13% and subscription ARR growth of 18%.
Co‑founder and CEO Cannon‑Brookes disclosed a plan to purchase up to $250 million of Atlassian Class A stock under a Rule 10b5‑1 trading plan. The firm also announced a new chief product officer for enterprise and emerging markets, Ken Exner, who joined on Aug. 4 after roles at Amazon Web Services and Elastic N.V.
Investors responded positively to the earnings beat and the upbeat outlook, as reflected in the stock’s sharp after‑hours rally. The ability to turn a profit on an unadjusted basis and to post sizable free cash flow may further bolster confidence among shareholders.