Atlassian (NASDAQ:TEAM) Issues Quarterly Earnings Results

Key Points

• Atlassian beat quarterly estimates, reporting $1.65 earnings per share versus $1.39 expected and $1.77 billion in revenue versus $1.71 billion expected. Revenue rose 24% year over year, while free cash flow climbed 304% to $463 million.
• Business indicators were strong: remaining performance obligations increased 44% to $4.7 billion, and cloud revenue grew 31%. Management also cited broad Rovo adoption among enterprise cloud customers, but said AI monetization will come mainly through product collections and expanded usage.
• Shares fell despite the earnings beat as investors weighed an expected slowdown in cloud growth, tougher comparisons, and macroeconomic uncertainty. Management does not expect usage-based pricing to contribute meaningful revenue in FY2027.

Atlassian (NASDAQ:TEAM - Get Free Report) posted its quarterly earnings data on Thursday. The technology company reported $1.65 earnings per share for the quarter, topping the consensus estimate of $1.39 by $0.26, FiscalAI reports. Atlassian had a negative net margin of 0.82% and a positive return on equity of 20.99%. The firm had revenue of $1.77 billion for the quarter, compared to analysts' expectations of $1.71 billion.

Here are the key takeaways from Atlassian's conference call:

• Atlassian reported a strong start to FY2027: revenue rose 24% to $1.8 billion, cloud revenue grew 31%, and free cash flow increased 304% year over year to $463 million, a 26% margin.
• Enterprise demand and customer commitments strengthened, with remaining performance obligations up 44% to $4.7 billion and customers spending more than $1 million annually growing well over 30%. The Teamwork Collection reached more than 3,000 customers, while the Service Collection surpassed 70,000 customers and continued to grow ARR by more than 30%.
• Management highlighted growing AI adoption and positioned the Teamwork Graph and Rovo as drivers of customer expansion: more than 87% of enterprise cloud customers use Rovo, and deep Rovo adopters grow ARR more than twice as fast as light users. The company said its main AI monetization path is through product collections and expanded usage, not near-term usage-based pricing revenue.
• Management’s outlook reflects expected cloud growth deceleration, tougher comparisons in the second half, and uncertainty around macroeconomic and geopolitical conditions. Hybrid migration deals shifted some revenue toward Data Center and away from cloud in the quarter; management said usage-based pricing is not expected to generate meaningful revenue in FY2027.

Atlassian Stock Down 3.5%

Shares of NASDAQ:TEAM traded down $6.59 during trading on Thursday, reaching $183.29. 5,683,762 shares of the company traded hands, compared to its average volume of 5,493,521. The firm has a fifty day simple moving average of $196.69 and a 200 day simple moving average of $119.39. The firm has a market cap of $46.40 billion, a P/E ratio of -964.68, a price-to-earnings-growth ratio of 20.37 and a beta of 1.16. Atlassian has a 1-year low of $56.01 and a 1-year high of $229.96. The company has a quick ratio of 0.78, a current ratio of 0.78 and a debt-to-equity ratio of 0.93.

Insider Transactions at Atlassian

In other news, CFO James Chuong sold 9,054 shares of the company's stock in a transaction on Wednesday, August 19th. The shares were sold at an average price of $172.45, for a total value of $1,561,362.30. Following the transaction, the chief financial officer directly owned 279,218 shares of the company's stock, valued at approximately $48,151,144.10. This represents a 3.14% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which can be accessed through this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CRO Brian Duffy sold 7,617 shares of the stock in a transaction on Friday, August 14th. The stock was sold at an average price of $163.00, for a total value of $1,241,571.00. Following the sale, the executive owned 220,074 shares of the company's stock, valued at approximately $35,872,062. This represents a 3.35% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Over the last ninety days, insiders have sold 22,475 shares of company stock valued at $3,822,643. 37.63% of the stock is owned by insiders.

Analyst Upgrades and Downgrades

Several brokerages have recently commented on TEAM. Wall Street Zen raised Atlassian from a "hold" rating to a "buy" rating in a research report on Sunday, September 13th. Bank of America upped their price target on Atlassian from $175.00 to $210.00 and gave the company a "buy" rating in a research report on Monday, August 31st. Weiss Ratings reissued a "sell (e+)" rating on shares of Atlassian in a research note on Thursday, October 15th. Guggenheim raised their price objective on Atlassian from $165.00 to $280.00 and gave the stock a "buy" rating in a research report on Monday, October 19th. Finally, Wells Fargo & Company lifted their target price on Atlassian from $230.00 to $270.00 and gave the company an "overweight" rating in a research note on Wednesday, October 28th. Twenty-three equities research analysts have rated the stock with a Buy rating, four have assigned a Hold rating and one has issued a Sell rating to the company's stock. Based on data from MarketBeat, the stock presently has an average rating of "Moderate Buy" and a consensus price target of $217.76.

Atlassian News Roundup

Here are the key news stories impacting Atlassian this week:

• Positive Sentiment: Atlassian posted earnings of $1.65 per share, above the $1.39 consensus, and revenue of $1.77 billion, ahead of the $1.71 billion estimate. The company also highlighted 44% growth in remaining performance obligations and a sevenfold year-over-year increase in Teamwork Collection customers. Atlassian Q1 results
• Neutral Sentiment: Atlassian’s guidance reportedly exceeded analyst estimates, but coverage characterized the growth outlook as less compelling than investors wanted—suggesting expectations had risen after the recent run-up in the stock. Seeking Alpha report
• Negative Sentiment: The market’s focus on the growth outlook overshadowed the beat: one report described the shares as dropping sharply despite higher-than-expected revenue, while another highlighted concern over the growth guide. Yahoo Finance report Growth outlook analysis

Atlassian Company Profile

Atlassian Corporation develops collaboration, project-management and workflow software for technology, business and service teams. Its products are designed to help organizations plan projects, manage software development, coordinate work and share knowledge across departments.

Its product portfolio includes Jira for project and issue tracking, Confluence for team collaboration and knowledge management, Jira Service Management for IT and enterprise service workflows, Trello for organizing tasks and projects, Loom for video messaging and screen recording, and Bitbucket for source-code management and collaboration.

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