0001650372-26-000027
SEC filingRevenue growth of 32% driven by Cloud and Data Center, but GAAP net loss widened due to restructuring costs.
For the three months ended March 31, 2026, Atlassian reported total revenue of $1.79 billion, a 32% increase compared to $1.36 billion in the same period last year. Subscription revenue, which accounts for 95% of total revenue, grew 33% to $1.70 billion, driven by paid seat expansion from existing customers and price increases. Gross margin improved to 85% from 84%, benefiting from revenue mix shift and cloud infrastructure optimization, partially offset by higher hosting fees and amortization.
Operating loss widened to $56.3 million (from $12.5 million), primarily due to $223.8 million in restructuring charges related to the March 2026 Plan and July 2025 Plan. Excluding these charges, non-GAAP operating income was $607.2 million, representing a 34% margin. Net loss was $98.4 million, compared to a loss of $70.8 million in the prior year, impacted by the restructuring charges and a lower income tax benefit. Free cash flow decreased 12% to $561.3 million, reflecting higher cash payments for restructuring and employee costs.
Cloud revenue grew 29% YoY to $1.13 billion, driven by seat expansion and price increases. Data Center revenue surged 44% YoY to $560.7 million, as customers continued to purchase term licenses ahead of the planned end-of-life (no new customer sales after March 2026, and maintenance ending in March 2029). Marketplace and other revenue increased 7% to $93.8 million, primarily from marketplace revenue growth. Geographically, Americas grew 32%, EMEA 34%, and Asia Pacific 25%, reflecting broad-based demand.
Management expects subscription revenue, particularly from Cloud offerings, to remain the primary growth driver. The company is executing two restructuring plans: the July 2025 Plan (substantially complete) and the March 2026 Plan (expected to be substantially complete by end of fiscal 2026), aimed at reallocating resources toward AI and enterprise sales. The Data Center end-of-life transition is expected to impact future revenue mix, with Cloud becoming an even larger share. No specific forward guidance was provided in this MD&A section.
As of March 31, 2026, Atlassian held $1.1B in cash and equivalents with no marketable securities, down from $2.5B at June 30, 2025, primarily due to acquisition spend and share repurchases. Total debt stands at $0.99B (unamortized discount of $10.9M), comprising $500M 5.250% notes due 2029 and $500M 5.500% notes due 2034. Shareholders' equity is $0.88B, negatively impacted by $1.5B in buybacks and accumulated deficit of $5.9B. Deferred revenue totaled $2.4B, while remaining performance obligations (RPO) reached $4.0B, with 69% expected to be recognized over the next 12 months.
During the nine months ended March 31, 2026, Atlassian entered into additional non-cancelable purchase commitments of approximately $3.0B, with contractual terms ranging from two to six years, covering cloud services and marketing contracts. No further detail on timing breakdown was provided. Operating lease commitments remain materially consistent with prior year, though the company recorded $61.2M in impairment charges on right-of-use assets due to facility consolidation restructuring.
Capital allocation was heavily weighted toward share repurchases: $1.0B in Q3 FY2026 alone (11.8M shares at avg. $85.04), and $1.5B year-to-date (14.5M shares at avg. $100.51). In October 2025, the Board authorized a new $2.5B repurchase program, with $2.2B remaining as of March 31, 2026. No dividends were declared. Debt activity was limited to amortization of discount; no new issuance or repayment. Capital expenditures totaled $29.6M (0.6% of sales), down slightly from prior year.
Atlassian operates as a single reportable segment. For Q3 FY2026, total revenue was $1.79B, up 31.7% YoY. Geographic breakdown: Americas $838.7M (47%), EMEA $763.4M (43%), Asia Pacific $184.9M (10%). Deployment mix: Cloud $1.13B (63%), Data Center $0.56B (31%), Marketplace & other $93.8M (5%). The company announced end-of-life for Data Center offerings, with no new term license sales to new customers as of March 2026.
For the nine months ended March 31, 2026, Atlassian reported a net loss of $192.9M, yet generated $874.0M in operating cash flow. This divergence is primarily due to large non-cash charges: stock-based compensation of $1,212.1M and depreciation/amortization of $101.2M. However, operating cash flow declined 19.4% year-over-year from $1,085.1M, driven by unfavorable working capital changes, particularly a $96.8M decrease in deferred revenue and a $121.8M increase in accounts receivable.
Capital expenditures remained modest at $29.6M (capex intensity ~3.4% of operating cash flow), indicating a low capital-intensive business model. Free cash flow (operating cash flow minus capex) was $844.4M, but this was far exceeded by $1,441.2M in share repurchases, resulting in negative free cash flow coverage of capital returns.
Investing activities consumed $800.4M, largely due to $1,228.9M spent on business combinations, partially offset by proceeds from sales of marketable securities. Financing activities were dominated by share repurchases, with no dividends paid. The overall cash position declined by $1,376.9M during the period.
Anomalies include a $53.6M impairment charge for leases in the current period (none in prior), and a significant swing in deferred income taxes from a $1.2M benefit to a $37.6M charge. The large working capital outflows in prepaid expenses and other assets ($135.1M) also warrant attention.