Atlassian Q4 Earnings Beat Estimates, Revenues Increase Y/Y

TEAM’s revenues increased 27.6% year over year to $1.77 billion, surpassing the Zacks Consensus Estimate by 6.5%.

TEAM's Subscription Business Continues to Drive Growth

Subscription revenues remained the primary growth engine, increasing 28.1% year over year to $1.68 billion, reflecting continued customer adoption of Atlassian's recurring software offerings and AI-powered platform.

Other revenues were $85.3 million, up 18.8% year over year, supported by marketplace-related and other offerings that complement the company's subscription-centric business model.

Cloud Momentum Accelerates, Data Center Remains Strong

Cloud revenues climbed 30.8% year over year to $1.21 billion, benefiting from continued cloud migrations, enterprise expansion and growing adoption of Atlassian's AI-enabled platform capabilities.

Data Center revenues rose 21.3% year over year to $461.9 million, while Marketplace and other revenues increased 20.1% to $91.1 million. Management noted continued enterprise demand for its platform alongside customers' growing deployment of AI agents powered by the Teamwork Graph.

TEAM Doubles Down on AI and Enterprise Platform

Artificial intelligence remained central to Atlassian's strategy during the quarter. Management highlighted that its MCP Server and Teamwork Graph CLI surpassed one million monthly active users, more than doubling in a single quarter. The company said the Teamwork Graph provides enterprises with contextual data that enables AI agents to deliver more accurate and productive workflows.

The company also introduced new agentic software development capabilities in Jira, expanded AI governance controls, launched Isolated Cloud into general availability and extended HIPAA compliance to Rovo. Atlassian noted that enterprises continue to deepen their commitment to its open platform, with Subscription ARR reaching $6.61 billion, up 23% year over year, while remaining performance obligations increased 44% to $4.82 billion.

Atlassian Highlights Enterprise and AI Momentum

Management emphasized that enterprise demand remained robust, supported by record levels of large customer agreements and growing adoption of AI-powered offerings. During the quarter, Atlassian signed its largest enterprise deal to date and noted that more than 80% of Fortune 500 companies now use Rovo. The company also welcomed Ken Exner as chief product officer, Enterprise and Emerging, to lead strategy across several enterprise-focused product collections.

Unlike the prior quarter, Atlassian did not provide formal quarterly or fiscal 2027 revenue guidance in the earnings release. Instead, management highlighted continued momentum across enterprise adoption, AI innovation and platform expansion while emphasizing its focus on delivering durable, profitable growth.

Atlassian’s Gross and Operating Profits Rise

On a non-GAAP basis, gross profit increased 32.7% year over year to $1.57 billion, while gross margin expanded 400 basis points to 89% from 85% in the year-ago quarter.

On a non-GAAP basis, operating income increased to $636 million from $336 million a year earlier, while operating margin expanded to 36% from 24%.

Management attributed the improvement to strong revenue growth and continued operational discipline as it invests for durable long-term growth.

TEAM Generates Healthy Cash Flow

As of June 30, 2026, Atlassian held $1.24 billion in cash and cash equivalents. Long-term debt was $989.6 billion.

Cash generation remained robust. Operating cash flow was $479 million during the quarter, while free cash flow totaled $475 million, representing a free-cash-flow margin of 27%.

Atlassian Issues Q1 and Fiscal 2027 Outlook

For the first quarter of fiscal 2027, the company expects total revenues in the range of $1,705 million to $1,715 million. Within that outlook, management expects Cloud revenue growth of approximately 28.5% year over year, while Data Center revenues are projected to decline approximately 4% and Marketplace and other revenues are expected to grow approximately 12.5%.

The company also guided a non-GAAP gross margin of approximately 87% and non-GAAP operating margin of approximately 28.5%.

For fiscal 2027, Atlassian expects Subscription ARR growth of approximately 18% year over year and total revenue growth of approximately 13%. The company projects Cloud revenue growth of approximately 25.5%, while Data Center revenues are expected to decline approximately 17% and Marketplace and other revenues are anticipated to increase approximately 12%.

Atlassian released guidance for non-GAAP gross margin of approximately 86.5% and non-GAAP operating margin of approximately 25%, reflecting continued investment alongside a focus on profitable growth.

Zacks Rank and Stocks to Consider

At present, TEAM carries Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Lumentum LITE, Applied Materials AMAT and Analog Devices ADI, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Lumentum have surged 123% year to date. The Zacks Consensus Estimate for LITE’s fiscal 2026 earnings is pegged at $8.19 per share, up 5 cents over the past 30 days, indicating an increase of 297.6% year over year.

Shares of Applied Materials have jumped 107.9% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.14 per share, up 3 cents over the past 30 days, indicating a rise of 28.9% year over year.

Analog Devices’ shares have surged 39.2% year to date. The Zacks Consensus Estimate for ADI’s fiscal 2026 earnings is pegged at $12.42 per share, up 10 cents over the past 30 days, indicating an increase of 33.9% year over year.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research