Key Takeaways:
Atlassian shares jumped 92.2% in August after fiscal Q4 revenue beat estimates, powered by AI-integrated subscription growth and a record backlog.
The company guided fiscal 2027 total revenue growth of 13%, cloud growth of 25.5%, and subscription ARR growth of 18%, ahead of Wall Street's expectations, according to its earnings release.
For the quarter ended June 30, revenue rose 28% year over year to $1.77 billion, beating the $1.66 billion consensus. Adjusted EPS climbed 98% to $1.87, above the $1.50 analysts expected. Cloud revenue grew 31% to $1.2 billion, while subscription ARR rose 23% to $6.6 billion. Remaining performance obligations jumped 44% to $4.8 billion, a measure of contractually obligated revenue not yet recognized that points to future growth.
Atlassian reported an all-time record quarter for deals worth $1 million, $3 million, and $5 million or more in annual contract value. ARR from $3 million customers grew more than 50% year over year, while $5 million deals jumped 70%.
The results helped dispel the narrative that AI would eliminate the need for Atlassian's collaboration software, which includes Trello, Jira, and Confluence. The company's Rovo AI helps customers find information, interact with data, and automate workflows. Rovo-assisted actions surged 50% quarter over quarter, with Rovo users completing 20% more work items in Jira and creating or editing 25% more Confluence pages than non-users.
The adoption data suggests AI is making Atlassian's products stickier rather than displacing them, a central worry that had weighed on software stocks through the year. Analysts rushed to revise their financial models after the quarter, producing a wave of upgrades, positive initiations, and price target increases that fueled the stock's momentum. The 92.2% August gain dwarfed the S&P 500's 2.6% advance, according to data supplied by S&P Global Market Intelligence.
The surge lifted Atlassian's valuation to 28 times next year's expected earnings, no longer a bargain but reasonable for a company with a $48 billion market cap. The stock closed August near $190, up from a 52-week low of $56.01. The strong backlog and growing subscription base underpin the forward outlook, and investors will watch whether Rovo adoption keeps lifting engagement metrics into the fiscal 2027 reporting cycle.
This article is for informational purposes only and does not constitute investment advice.
