Atlassian Says AI Tailwind Is Building as Cloud Growth and Rovo Adoption Accelerate

Key Points

• AI adoption is accelerating: Rovo-assisted actions rose 50% quarter over quarter, agentic automations tripled in six months, and 80% of Fortune 500 companies use Rovo. Atlassian plans to begin charging for certain metered AI capabilities in December.
• Cloud momentum remains strong: Fiscal fourth-quarter revenue increased 28% to $1.8 billion, while cloud growth accelerated to 31%. Data Center-to-cloud migrations remain a major opportunity, with migrated customers spending an average of 1.75 times more after three years.
• Enterprise expansion supports the outlook: Atlassian is growing its salesforce and sees cross-selling potential across its product collections, particularly Jira and Service Collection. Management is targeting a positive 4.5% GAAP operating margin in fiscal 2027 while continuing to invest in AI.

Atlassian NASDAQ: TEAM CFO James Chuong told investors at Citi’s TMT conference that artificial intelligence is becoming a tailwind for the company, citing increased adoption of its Rovo AI capabilities, expanding cloud usage and demand for its bundled product collections.

Chuong, who said he had been in the CFO role for about five and a half months, said his early experience has largely reinforced the company’s existing strategy. Atlassian’s priorities include AI, its “system of work” strategy, enterprise expansion and durable profitable growth, he said.

“AI is going to be a tailwind for Atlassian,” Chuong said, pointing to the company’s Teamwork Graph, which connects enterprise work, context and workflows across its platform. He said the graph can power AI use cases across organizations rather than only individual productivity tools.

Recent Results and Cloud Momentum

Chuong highlighted Atlassian’s fiscal fourth-quarter results, including $1.8 billion in revenue, up 28% year over year. Annual recurring revenue grew 23%, while remaining performance obligations rose 44%, he said.

Standalone seat growth in Jira, Confluence and Jira Service Management exceeded the company’s expectations during the quarter, according to Chuong. He also said revenue growth reaccelerated in Atlassian’s Service Collection business.

Cloud revenue growth accelerated from 26% to 31% in the fourth quarter, driven primarily by customer expansion and cross-selling, Chuong said. He said the company continues to see growth in both individual applications and its Teamwork Collection, which was introduced within the past year.

The Data Center-to-cloud migration also remains a multiyear growth opportunity, he said. Atlassian has found that customers who migrate from Data Center to cloud spend, on average, 1.75 times more after three years than they did previously. Cloud customers can access additional applications, collections, Rovo AI and the Teamwork Graph, capabilities that are not available in Data Center, Chuong said.

Atlassian expects Data Center customers to require substantial support during their cloud transitions because many have extensive customizations. Chuong said the company’s solution partners, global systems integrators and marketplace vendors will remain important to managing those migrations and helping customers adopt cloud capabilities.

Collections and Enterprise Opportunity

Chuong said Atlassian has five collections across the company, including Teamwork Collection, Service Collection, Software Collection and Product Collection. The collections are designed around work performed by different parts of an organization, rather than solely around individual software products.

• Jira is a $2.5 billion ARR business with about 150,000 customers.
• Service Collection recently surpassed $1 billion in ARR and is growing more than 30% year over year.
• Confluence is a $1.5 billion business with 100,000 customers.

He said the company sees significant cross-sell potential between Jira’s 150,000 customers and Service Collection’s 65,000 customers. Atlassian’s cohort of customers generating more than $3 million in ARR grew 50% year over year to about 164 customers, while its more-than-$5-million ARR cohort grew 70% to roughly 69 customers.

Chuong also sought to address concerns that AI could reduce the need for software-development seats. Lower costs of coding and building software are resulting in more innovation, more software being built and additional seats, he said. He added that Atlassian’s user base extends well beyond developers: 65% of Jira users are knowledge workers who are not software engineers, while the comparable figures are close to 70% for Confluence and above 70% for Jira Service Management and Service Collection.

AI Adoption and Monetization

Teamwork Collection is currently the primary way customers purchase and deploy AI from Atlassian, Chuong said. The package includes Confluence, Loom and Jira and provides customers with 10 times more Rovo credits. He said the company has intentionally offered generous credits to reduce barriers to AI adoption and usage.

According to Chuong, 80% of Fortune 500 companies use Rovo. Rovo-assisted actions increased 50% quarter over quarter, a measure he said reflects users asking the system to complete tasks rather than simply conduct searches or chats.

Atlassian is also seeing increasing agent usage. Agentic automations in Service Collection have tripled over the past six months, Chuong said. Monthly active users of MCP servers and command-line interface tools have surpassed 1 million, while MCP calls have increased 400% quarter over quarter. MCP-driven creation of Jira items and Confluence pages has grown fourfold, he said.

The company plans to begin enforcing consumption on those metered capabilities in December. Simple queries into the Teamwork Graph will not be charged, Chuong said, while longer-horizon or more complex use cases that draw on the graph will consume credits.

Customers using Rovo have ARR growth that is twice as high as comparable customers not using the AI product, according to Chuong. Teamwork Collection customers also develop and deploy twice as many agents and use twice as many Rovo credits, he said.

Profitability and Fiscal 2027 Outlook

Chuong said Atlassian has invested heavily in research and development to build an enterprise-grade cloud offering and its AI architecture. The company is seeking to offset AI-related costs through platform optimization and by working with seven model providers and more than 70 models across its platform.

He acknowledged that growing use of Rovo credits could pressure gross margins, but said Atlassian is focused on GAAP operating profitability. The company has guided for a positive 4.5% GAAP operating margin in fiscal 2027.

Atlassian is continuing to add enterprise sales capacity, with its salesforce growing from about 115 representatives two to three years ago toward 400, Chuong said. The company also plans continued investment in AI. Internally, 99% of Atlassian employees use Rovo, and the company has deployed 15,000 agents that collectively complete about 40 tasks per day, he said.

For fiscal 2027, Chuong said execution in sales capacity, Teamwork Collection adoption and Service Collection adoption could provide upside to subscription ARR performance. He said the company is balancing those opportunities against macroeconomic and fiscal-policy uncertainty.

About Atlassian (NASDAQ:TEAM)

Atlassian Corporation develops collaboration, productivity and workflow software for software development, information technology, business and other teams. Its products are designed to help organizations plan projects, manage work, share knowledge, improve service delivery and coordinate across departments.

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

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