Atlassian Corporation (TEAM) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
Atlassian's earnings call highlights strong AI-driven demand and strategic customer engagement, with significant cloud migration and seat expansion. Despite some management vagueness on monetization timing, the overall sentiment is positive due to multiyear deals and robust revenue growth from AI initiatives. The Q&A section reinforces this with positive analyst sentiment and confidence in long-term growth. Although there are no specific mentions of market cap or additional partnerships, the overall positive sentiment and strategic focus indicate a likely stock price increase.
Key Financial Performance
Annual Run Rate Revenue Surpassed $6 billion, no year-over-year change or reasons mentioned.
Cloud Revenue Delivered first ever $1 billion quarter, up 26% year-over-year, driven by strong enterprise sales execution and momentum across the business.
Remaining Performance Obligations (RPO) Grew 44% year-over-year to $3.8 billion, attributed to strong enterprise momentum and customer adoption.
Deals Greater than $1 Million ACV Closed a record number, nearly doubling year-over-year, as enterprises standardized on Atlassian's system of work.
AI Monetization Driver (Teamwork Collection) More than 1,000 customers upgraded in less than 3 quarters, purchasing over 1 million seats, driven by demand for AI platform and credits.
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Operating Highlights
AI capabilities: Rovo surpassed 5 million monthly active users of AI capabilities. AI is transforming the way work gets done, and Atlassian is benefiting as a business. AI code generation tools lead to 5% more tasks created with Jira, 5% higher monthly active users, and 5% faster expansion of Jira seats.
Teamwork Collection: More than 1,000 customers upgraded to the Teamwork Collection, purchasing over 1 million seats. This is Atlassian's main AI monetization driver.
Enterprise adoption: Record number of deals greater than $1 million ACV in Q2, nearly doubling year-over-year. Enterprises like Cisco, Expedia, Reddit, and Synchrony Financial rely on Atlassian for critical business processes.
Customer base: Over 350,000 customers, including more than 80% of the Fortune 500 and 60% of the Forbes AI 50, are using Atlassian's system of work.
Revenue growth: Surpassed $6 billion in annual run rate revenue. Delivered first-ever $1 billion cloud revenue quarter, up 26% year-over-year. RPO grew 44% year-over-year to $3.8 billion.
AI-driven results: AI investments are creating a differentiated customer experience, leveraging over 100 billion objects and connections in the Teamwork Graph. Enterprise-grade security and compliance enable secure scaling of AI capabilities.
AI and system of work transformations: Atlassian is focusing on AI and system of work transformations, positioning itself as a strategic partner for the biggest businesses in the world.
Long-term investments: Years of investment in product, R&D, and GTM are paying off, creating a unique distribution engine and enabling seamless delivery of AI-driven experiences.
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Risk or Challenges
Forward-looking statements: The company acknowledges that forward-looking statements involve risks, uncertainties, and assumptions. If these risks or uncertainties materialize, or if assumptions prove incorrect, results could differ materially from expectations.
Regulatory and compliance risks: The company highlights the importance of enterprise-grade security, data governance, permissioning capabilities, and compliance. Any failure in these areas could impact customer trust and operational scalability.
AI integration and adoption: While AI is seen as a growth driver, challenges in AI adoption, integration into workflows, and delivering consistent value to customers could pose risks.
Customer concentration: The company relies on large enterprises, including 80% of the Fortune 500, for significant revenue. Any loss of key customers or failure to meet their expectations could impact financial performance.
Market competition: The company operates in a competitive market, and failure to maintain its differentiated offerings or respond to competitors could affect its market position.
Economic uncertainties: Broader economic conditions could impact customer spending and the company's ability to achieve its financial targets.
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Guidance & Outlook
Future AI-driven growth: Atlassian is seeing significant momentum in AI adoption, with over 5 million monthly active users of its AI capabilities. Customers using AI code generation tools are expanding their Jira seats 5% faster than those who do not use these tools. The company expects AI to continue transforming work processes and driving business growth.
Enterprise adoption and revenue growth: Atlassian closed a record number of deals greater than $1 million ACV in Q2, nearly doubling year-over-year. Over 1,000 customers have upgraded to the Teamwork Collection, purchasing more than 1 million seats. The company anticipates continued growth in enterprise adoption and revenue.
Long-term AI investments: Atlassian's decade-long investments in enterprise-grade security, data governance, and compliance are expected to enable secure scaling of AI capabilities. These investments are projected to enhance customer trust and adoption of AI-driven solutions.
Market leadership and customer base: Atlassian serves over 350,000 customers, including more than 80% of the Fortune 500 and 60% of the Forbes AI 50. The company expects to maintain its leadership position and expand its customer base by delivering integrated and secure AI solutions.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How have customer conversations changed recently, and what is driving the motion towards Atlassian?
A:Customer conversations have become more strategic, with customers seeking partners to help them navigate AI. Atlassian's AI capabilities are driving upgrades to the cloud and adoption of the Teamwork Collection. Customers are signing multiyear deals, showing confidence in Atlassian's platform for the future.
Q:What is Atlassian's perspective on pricing and its evolution over the next 1 to 3 years?
A:Atlassian believes its current seat-based pricing model is delivering value to customers, as evidenced by strong RPO and NRR numbers. While there are consumption-based offerings, the company sees predictable pricing as preferred by customers. Atlassian continues to manage costs effectively, including AI costs, and sees its pricing philosophy as a key driver of adoption.
Q:What are Atlassian's thoughts on Anthropic Cowork as a competitive alternative to Jira?
A:Atlassian views Anthropic as a partner and sees opportunities for integration rather than competition. Atlassian's Teamwork Graph and integration capabilities differentiate its offerings, and the company believes in the importance of human-AI collaboration. Atlassian continues to focus on integrating with various tools to enhance customer workflows.
Q:How confident is Atlassian in achieving its medium-term revenue growth targets despite challenges in the Data Center segment?
A:Atlassian remains confident in its long-term Cloud growth guide and expects healthy revenue growth driven by enterprise AI, system of work strategies, and cross-sell opportunities. The company sees significant opportunities in AI and its Cloud platform to drive growth over the next two years.
Q:When does Atlassian expect to see monetization improvements from AI and other initiatives?
A:Atlassian believes it is already seeing monetization improvements, as evidenced by accelerating RPO and Cloud revenue growth. AI is a key driver for customers upgrading to the Cloud and adopting the Teamwork Collection. The company expects continued improvement rather than a singular moment of change.
Q:How does Atlassian view its position in enabling developers to use different AI models and coding agents?
A:Atlassian sees its strength in adapting and delivering new AI models to customers through its applications. The company supports multiple AI models and agent platforms, allowing customers to integrate their preferred tools. Atlassian focuses on solving human problems and enabling collaboration, which drives increased usage of its products.
Q:How is migration activity from Data Center to Cloud progressing, and what is its impact on revenue?
A:Cloud migrations are progressing well, contributing a mid-to-high single-digit impact to Cloud revenue growth rates. Atlassian expects this trend to continue for the full year.
Q:What is driving seat expansion for Atlassian, and how sustainable is this growth?
A:Seat expansion is broad-based across tech and non-tech users, with stable rates across enterprise and SMB segments. Growth is driven by the Teamwork Collection, AI capabilities, and expansion into business teams like HR and Finance. Collaboration and viral activity contribute to sustainable growth.
Q:How does Atlassian view the impact of AI code generation tools on Jira usage?
A:AI code generation tools are leading to increased Jira usage, with companies using these tools expanding Jira usage 5% higher than others. This is driven by increased collaboration, complexity, and the creation of more software, which generates more Jira issues and workflows.
Q:What is the current state of Atlassian's Service Collection, and how is it performing?
A:The Service Collection is Atlassian's fastest-growing product, with over 65,000 customers and 50% of the Fortune 500. Growth is driven by non-IT use cases, asset management, and the adoption of AI agents. The company sees significant opportunities in HR, Finance, and other business teams.
Q:How does Atlassian view the pricing dynamics between Data Center and Cloud?
A:Atlassian believes its Cloud pricing reflects the value delivered through innovation and remains competitive. The company takes a deliberate approach to pricing changes in the Data Center to incentivize Cloud migration while ensuring competitive pricing relative to alternatives.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific timeline for when monetization improvements from AI and other initiatives would lead to a step change in revenue growth. While they emphasized ongoing improvements and confidence in long-term growth, they did not provide detailed clarity on the timing or specific metrics for these improvements.
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Earnings Word Cloud
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The earnings call summary and Q&A session highlight strong financial performance, AI-driven growth, enterprise adoption, and market leadership. Positive factors include record high revenue, robust cross-sell growth, and strategic investments in AI and data governance. The announcement of data collection changes and competitive displacements further support a positive outlook. Although data center revenue recognition may be lumpy, overall sentiment is positive, with strong enterprise adoption and growth in the Service Collection. The absence of management avoiding direct answers also supports a positive sentiment.
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Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
