Full Breakdown
Atlassian’s FY2027 Outlook Triggers a 35% After-Hours Stock Surge
8/7/2026, 8:37:59 AM
Core Event
Atlassian (NASDAQ: TEAM) reported fourth-quarter revenue of $1.77 billion, a 28% year-over-year increase, and adjusted earnings of $1.87 per share, surpassing consensus expectations of roughly $1.66 billion in revenue and $1.50 per share. In after-hours trading, the stock jumped more than 35%, climbing to about $149.51 from the regular-session close of $110.17.
Financial Highlights
Cloud revenue rose 31% to $1.21 billion, while overall revenue grew 28% YoY. Subscription annual recurring revenue (ARR) reached $6.61 billion, up 23%, and remaining performance obligations—contracted revenue not yet recognized—expanded 44% to $4.8 billion, nearly double the ARR growth rate. Customers with annual recurring revenue above $3 million increased by over 50% to 164, and those above $5 million grew more than 70% to 69, both company records.
Guidance and Management Commentary
Management guided FY2027 revenue growth to roughly 13%, a slowdown from the approximately 26% growth recorded in FY2026. The outlook hinges on a projected 25.5% increase in cloud revenue contrasted with an expected 17% decline in Data Center revenue. Subscription ARR growth is forecast at about 18%, down from 23% in the prior year, reflecting a tougher comparison after the DX acquisition and a conservative view of enterprise budgets. Non-GAAP operating margin is expected to compress to about 25% in FY2027, down from 30% in FY2026.
Market Reaction and Valuation Impact
The after-hours price movement cleared the roughly $139.70 average analyst target that existed before the release, lifting Atlassian’s valuation to about 5.1 times FY2027 guided revenue, up from 3.8 times at the prior close. The share-price surge occurred despite the slower overall growth guidance, driven by investors’ focus on strong cloud performance and the expanding pool of contracted revenue.
Outlook
Atlassian’s guidance suggests continued emphasis on cloud expansion while anticipating a contraction in legacy Data Center sales. The company’s larger base of high-value customers and growing unrecognized revenue obligations indicate a shift toward longer-term subscription stability, though profitability is projected to narrow as margins compress.
