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, and over 350,000 customers, including 55,369 with Cloud ARR above $10,000.

• Remaining Performance Obligations (RPO) grew 44% year-over-year to $3.8 billion, reflecting strong enterprise sales and deeper customer commitments, with acceleration for the third consecutive quarter.

• Record number of $1 million+ ACV deals closed, nearly doubling year-over-year, driven by enterprise adoption and AI-powered offerings.

• The company completed acquisitions of The Browser Company of New York Inc. for $488.3 million and A Software Company for $720.4 million, expanding its product portfolio and AI capabilities.

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

Financial highlights

• Subscription revenue rose 24% year-over-year to $1.51 billion for the quarter; Cloud revenue reached $1.07 billion, up 26% year-over-year.

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

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

• Gross margin improved to 85% GAAP and 88% non-GAAP, up from 83% in the prior year quarter.

• Cash and cash equivalents plus marketable securities totaled $1.6 billion at quarter end.

Outlook and guidance

• Management reaffirmed confidence in long-term Cloud growth and midterm outlook of 20%+ revenue CAGR through FY 2027.

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

• GAAP operating margin for FY26 expected at (3.0%) and non-GAAP operating margin at 25.5%.

• Short-term guidance for FY 2026 remains conservative and risk-adjusted, with margin pressure from AI investments and restructuring.

• The company believes existing liquidity and credit facilities are sufficient for at least the next 12 months.