Atlassian (TEAM) Q3 2026 earnings summary

Executive summary

• Q3 FY26 revenue grew 32% year-over-year to $1.8 billion, driven by strong cloud and enterprise demand, with Cloud revenue up 29% to $1.13 billion.

• Net loss for the quarter was $98.4 million, reflecting higher operating expenses and $223.8 million in restructuring charges.

• Major enterprise customers deepened relationships, with Service Collection surpassing $1 billion in ARR and competitive displacements at record highs.

• AI initiatives, including Rovo and new product launches, are driving significant ARR growth and customer engagement.

• Completed acquisitions of The Browser Company of New York Inc. and A Software Company, expanding AI and engineering intelligence offerings.

Financial highlights

• Subscription revenue increased 33% year-over-year to $1.70 billion, with Cloud revenue at $1.13 billion, up 29% year-over-year.

• GAAP operating margin was (3%) due to $223.8 million in restructuring charges; non-GAAP operating margin was 34%.

• Free cash flow for the quarter was $561.3 million, with a free cash flow margin of 31%.

• Cash and cash equivalents totaled $1.1 billion as of March 31, 2026.

• Gross margin was 85% for the quarter, up from 84% in the prior year.

Outlook and guidance

• Cloud migration remains on track, expected to drive mid to high single-digit growth as Data Center offerings are phased out.

• Q4 FY26 revenue expected between $1,653 million and $1,661 million; cloud revenue growth projected at ~25.5% year-over-year.

• FY26 total revenue growth expected at ~24.0% year-over-year; cloud revenue growth at ~26.5%.

• Gross margin expected to remain flat as Cloud mix increases and infrastructure investments continue.

• More detailed guidance and ARR disclosures to be provided at the upcoming investor forum.