TEAM · Atlassian Corporation

Atlassian delivered a strong third quarter for fiscal year 2026, with total revenue growing 32% year-over-year to $1.79 billion, driven by accelerating Cloud revenue growth of 29%. The company highlighted the success of its strategic priorities: Enterprise, AI, and System of Work. A significant milestone was reached as the Service Collection surpassed $1 billion in annual recurring revenue (ARR), growing over 30% year-over-year, which management attributed to AI-native innovation and competitive displacements of legacy ITSM providers. Remaining performance obligations (RPO) increased 37% to $4.0 billion, signaling robust future revenue visibility.

Profitability presented a mixed picture. While GAAP operating margin was negative 3% due to a $223.8 million restructuring charge related to resource rebalancing and lease consolidations, non-GAAP operating margin expanded to 34% from 26% in the prior year period. This divergence underscores the impact of one-time charges on GAAP results while highlighting strong underlying operational leverage. Free cash flow remained robust at $561.3 million, representing a 31% margin.

Management provided forward guidance for the fourth quarter and full fiscal year 2026. For Q4, total revenue is expected to be in the range of $1,653 million to $1,661 million, with non-GAAP operating margin targeted at approximately 30.5%. For the full fiscal year, total revenue growth is expected to be approximately 24%. CEO Mike Cannon-Brookes emphasized the momentum in AI adoption, noting that Rovo customers are growing ARR at twice the rate of non-Rovo customers, reinforcing the company's strategy to integrate AI deeply into its platform.