TenQ

The Atlassian story

Atlassian makes Jira and Confluence for tracking work and sharing knowledge, and faces the question of whether customers will move from Data Center to its cloud platform while sustaining growth and profitability.

Written from Atlassian's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $178.54share price, last close
  • $45.2Bmarket value
  • 17/36TenQ Score checks passed

The story in brief

  • Cloud leads growth. Cloud revenue rose 31% to $1,213 million in the quarter to June 2026, while subscription annual recurring revenue reached $6,606 million, up 23%.
  • Profitability remains uneven. Atlassian achieved a 12% GAAP operating margin in the quarter to June 2026, but fiscal 2026 ended with a 0.2% operating margin and a $54 million net loss.
  • Transition slows the outlook. For fiscal 2027, Atlassian expects approximately 13.0% total revenue growth, with approximately 25.5% cloud growth alongside a Data Center revenue decline of approximately (17.0%).

What drives the business

  • Atlassian is shifting from individual collaboration products to connected apps and AI agents on its cloud platform, with the Data Center retirement announced in September 2025 moving customers away from hosting its software themselves.
  • Jira, Confluence and the broader portfolio serve more than 350,000 customers, including NASA, Rivian, Deutsche Bank, United Airlines and Bosch, and reach over 85% of the Fortune 500.
  • Self-service adoption brings teams into the products, while enterprise sales teams expand those relationships through additional users, higher editions and Collections that bundle apps with Rovo AI capabilities.
  • The Teamwork Graph connects organizational knowledge and workflows across applications, and its CLI and Atlassian's MCP server surpassed one million monthly active users in the quarter to June 2026, more than doubling in a single quarter.
  • Remaining performance obligations reached $4,817 million, up 44%, in the quarter to June 2026, alongside total revenue of $1,766 million, up 28%.

What the price assumes

TenQ's reverse DCF does not yield a measurable growth assumption because its negative cash flow and operating earnings premise conflicts with fiscal 2026 free cash flow of $1,319 million and operating income of $10 million.

At $178.54, Atlassian trades at 6.9x sales against revenue growth of 26.0% over the last twelve months and an annual pace of 23.0% over the last three years.

Its free cash flow yield of 2.9% falls below the TenQ check's 3.0% bar, leaving a distinction between strong revenue growth and the cash return represented by the price.

What could change the story

  • The Data Center transition could hurt revenue and profitability if customers do not migrate or Atlassian cannot meet their systems and security requirements.
  • Offering Rovo at no additional cost to certain customers and granting migration incentives could limit near-term revenue growth and make quarterly results less consistent.
  • AI-native competitors and customers building internal collaboration tools could reduce demand even as usage of Atlassian's AI integrations expands.
  • Stock compensation of $1.6 billion exceeded free cash flow of $1.3 billion over the last twelve months, while the 0.2% operating margin fell short of the TenQ sector benchmark of 11.0%.
  • Atlassian also fails TenQ's near-term liquidity and interest coverage checks, with $1.2 billion in cash and short-term investments against $990 million in total debt.

What to watch next

  • For the first quarter of fiscal 2027, Atlassian expects revenue of $1,705 million to $1,715 million, approximately 28.5% cloud revenue growth and a Data Center revenue decline of approximately (4.0%).
  • Subscription annual recurring revenue growth against fiscal 2027 guidance of approximately 18.0% will help show whether cloud migrations and broader product adoption are sustaining recurring business.
  • GAAP operating margins against guidance of approximately 6.5% for the first quarter of fiscal 2027 and approximately 4.5% for fiscal 2027 will show whether profitability persists beyond the quarter to June 2026.

Sources

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