Atlassian Corporation (NASDAQ:TEAM) jumped more than 5% in premarket trading Friday after the team collaboration software provider reported first-quarter fiscal 2026 results that topped Wall Street estimates, powered by accelerating demand for its cloud offerings and growing adoption of artificial intelligence tools.
The company posted adjusted earnings per share of $1.04, beating expectations by $0.20, while revenue rose to $1.43 billion, above the consensus forecast of $1.4 billion. Total revenue increased 21% year-over-year, driven primarily by cloud revenue, which climbed 26% to $998 million. The surge reflected strong enterprise sales execution, continued customer migrations, and momentum from AI integration across Atlassian’s product suite.
A major highlight was the company’s current remaining performance obligations (cRPO), which accelerated 30% year-over-year, signaling robust forward demand.
“Cloud revenue should benefit and continue delivering 20%+ growth with good potential to accelerate,” said Bank of America analysts. “However, we reiterate our Neutral and $200 PO until we have more visibility into what Cloud revenue, Data Center revenue, and total revenue look like beyond FY26,” they added.
Morgan Stanley analysts noted that the strong cloud and cRPO performance “illustrate building momentum at Atlassian,” adding:
“A key component making the Atlassian risk/reward so compelling to us at current levels – we see the bear cases to not only be incorrect, but directionally wrong, and this quarter the management team began providing data points in support of this view.”
The company reported a GAAP operating loss of $96.3 million, resulting in a -7% operating margin, which included $55.7 million in restructuring costs. On a non-GAAP basis, operating income was $322.7 million with a 23% margin, while free cash flow reached $114.6 million or an 8% margin.
“Our relentless pace of AI innovation is driving results as we grew Cloud revenue in Q1 to $998 million, up 26% year-over-year, and surpassed 3.5 million monthly active users of our AI capabilities, up 50% quarter-over-quarter,” said Mike Cannon-Brookes, Atlassian’s CEO and co-founder.
For the second quarter of fiscal 2026, Atlassian expects revenue between $1.535 billion and $1.543 billion, with cloud revenue growth of roughly 22.5% year-over-year. The company also announced a $2.5 billion share repurchase program to follow the completion of its current $1.5 billion authorization.
As part of its cloud-first strategy, Atlassian revealed plans to phase out its Data Center products over the next few years. The company also completed the acquisition of The Browser Company of New York and signed an agreement to acquire engineering intelligence platform DX.
“We’re off to a solid start in FY26, with strong enterprise sales execution and migration momentum driving total revenue to over $1.4 billion,” said Joe Binz, Atlassian’s CFO, who will retire effective June 30, 2026.