Atlassian Corp Plc (NASDAQ:TEAM) delivered a strong set of fiscal second-quarter results, comfortably beating market expectations and pushing its shares up nearly 2% in U.S. premarket trading on Friday.
The collaboration software group reported adjusted earnings of $1.22 per share for the quarter ended December 31, 2025, far ahead of the $0.73 analysts had forecast. Revenue climbed 23% year on year to $1.59 billion, well above the consensus estimate of $1.21 billion.
Cloud revenue, a key focus for investors, rose to $1.07 billion, marking Atlassian’s first quarter with cloud sales above the $1 billion mark and representing 26% annual growth. However, the company’s outlook for the third quarter pointed to a deceleration in cloud revenue growth to around 23%, a detail that appeared to temper enthusiasm despite the overall earnings beat.
“We closed out Q2 with incredible momentum across the Atlassian platform and achieved some impressive milestones along the way,” said Mike Cannon-Brookes, Atlassian’s CEO and co-Founder. “Companies from the largest enterprises in the world, to the most innovative startups, rely on the Atlassian platform every day.”
Chief financial officer Joe Binz highlighted continued demand visibility, saying, “With RPO up 44% year-over-year to $3.8 billion, our investments across enterprise, AI and system of work are yielding results and deeper, long-term customer commitments to the Atlassian platform.”
Looking ahead, Atlassian guided for third-quarter revenue of between $1.689 billion and $1.697 billion, exceeding the Street’s $1.65 billion consensus. Remaining performance obligations stood at $3.81 billion at quarter-end, up 44% from a year earlier, pointing to a solid pipeline of future revenue.
“We think the results show the Data Center transition is going to plan, and demand for its products remain stable,” said Bank of America analyst Koji Ikeda in a note.
“However, with a lot of moving pieces to the revenue model, and the AI disruption bear thesis overhanging the software sector, we don’t think the results alone are enough to drive shares meaningfully higher,” he added.
Ikeda cut his price target on Atlassian to $150 from $170. Separately, Wolfe Research analyst Alex Zukin said “F2Q results showed steady execution supportive of durable cloud revenue growth,” but also lowered his target price to $135 from $160.
At the end of the quarter, Atlassian counted 55,369 customers generating more than $10,000 in cloud annualized recurring revenue, an increase of 12% year on year. The company reaffirmed its full-year revenue growth outlook of around 22%.