Shares of Atlassian Corp. slid nearly 4% in late trading today as cloud revenue growth slowed, despite the Australian collaboration software company reporting revenue and earnings beats in its fiscal 2026 second quarter.
For the quarter that ended on Dec. 31, Atlassian reported adjusted earnings per share of $1.22, up from 96 cents per share in the same quarter of the previous fiscal year, on revenue of $1.586 billion, up 23% year-over-year. Both figures were well ahead of the 73 cents per share and revenue of $1.21 billion expected by analysts.
Atlassian saw customers spending $10,000 or more in cloud annual recurring revenue grow to 55,369, and customers with greater than $10,000 in cloud annualized recurring revenue grow 12% year-over-year.
Free cash flow from operations in the quarter came in at $177.8 million and Atlassian ended the quarter with $1.6 billion in cash, cash equivalents and marketable securities on hand.
Business highlights in the quarter included Atlassian announcing a major expansion of its artificial intelligence assistant Rovo in October that saw the addition of new “AI-powered skills” and developer tools aimed at bringing generative AI deeper into enterprise workflows.
Atlassian framed the update as a “reintroduction to Rovo,” which debuted in May 2024. The enhancements also saw the assistant gain new intelligence and show up in more corners of the company’s ecosystem.
“We closed out Q2 with incredible momentum across the Atlassian platform and achieved some impressive milestones along the way,” co-founder and Chief Executive Mike Cannon-Brookes said in the company’s earnings release. “We delivered our first-ever $1 billion cloud revenue quarter, which grew 26% year-over-year, crossed 350,000 customers and Rovo surpassed 5 million monthly active users.”
For its fiscal third quarter, Atlassian expects total revenue of $1.689 billion to $1.697 billion, cloud revenue to grow 23% year-over-year, data center revenue to jump 33.5% and marketplace and other revenue to grow 5% year-over-year.
For its full year, Atlassian forecasts revenue growth of 22% year-over-year, cloud revenue growth of 24.3%, data center growth of 20%, and marketplace and growth in other products of 6%.
None of those growth figures is unhealthy, but what stood out for investors is that Atlassian’s cloud revenue growth is slowing, as the company had previously seen 26% growth but is now forecasting 23% growth in its third quarter.
Added to the mix are ongoing concerns that software companies, such as Atlassian, may, over time, be replaced by AI. That concern has sent tech stocks sliding this week, despite the likes of Nvidia Corp. CEO Jensen Huang dismissing such fears and calling them illogical.
Image: News/Ideogram
Support our mission to keep content open and free by engaging with theCUBE community. Join theCUBE’s Alumni Trust Network, where technology leaders connect, share intelligence and create opportunities.
- 15M+ viewers of theCUBE videos, powering conversations across AI, cloud, cybersecurity and more
- 11.4k+ theCUBE alumni — Connect with more than 11,400 tech and business leaders shaping the future through a unique trusted-based network.
About News Media
Founded by tech visionaries John Furrier and Dave Vellante, News Media has built a dynamic ecosystem of industry-leading digital media brands that reach 15+ million elite tech professionals. Our new proprietary theCUBE AI Video Cloud is breaking ground in audience interaction, leveraging theCUBEai.com neural network to help technology companies make data-driven decisions and stay at the forefront of industry conversations.
