Atlassian (TEAM) Q2 2026 earnings summary

Executive summary

• Achieved record quarterly revenue of $1.59 billion, up 23% year-over-year, with Cloud revenue surpassing $1 billion for the first time, growing 26% year-over-year.

• Remaining Performance Obligations (RPO) grew 44% year-over-year to $3.814 billion, reflecting strong enterprise sales and deeper customer commitments.

• Ended the quarter with over 350,000 customers and 55,369 with Cloud ARR above $10,000, a 12% increase year-over-year.

• AI adoption surged, with Rovo surpassing 5 million monthly active users and over 1,000 customers upgrading to Teamwork Collection in under three quarters.

• Announced end-of-life for Data Center deployment, shifting focus to Cloud offerings.

Financial highlights

• Cloud revenue reached $1.067 billion in the quarter, up 26% year-over-year; data center revenue was $436 million, up 20% year-over-year.

• GAAP operating margin was (3%) and non-GAAP operating margin was 27% for the quarter.

• Free cash flow was $168.5 million, with a free cash flow margin of 11%.

• Gross margin improved to 85% for the quarter, up from 83% year-over-year.

• Net loss per share was $(0.16) basic and diluted; non-GAAP net income was $320.9 million ($1.22 per diluted share).

Outlook and guidance

• FY26 total revenue growth expected at 22% year-over-year, with cloud revenue growth at 24.3% and data center revenue growth at 20%.

• Q3 FY26 revenue expected between $1,689 million and $1,697 million; cloud revenue growth projected at 23% year-over-year.

• Management expects continued revenue growth driven by Cloud subscriptions, but notes near-term margin pressure from AI investments and restructuring.

• Maintains 25%+ non-GAAP operating margin target for FY 2027.

• The transition away from Data Center offerings may cause fluctuations in quarterly results.