Atlassian Reports Strong Q2 Earnings, Beats Estimates
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy TEAM?
Source: Benzinga
- Significant Revenue Growth: Atlassian reported Q2 revenue of $1.59 billion, surpassing analyst expectations of $1.54 billion, with a year-over-year increase of 23%, showcasing the company's robust performance in cloud services.
- Improved Profitability: Adjusted earnings per share reached $1.22, exceeding the analyst estimate of $1.14, while operating income hit $430.2 million, with an operating margin rising from 26% last year to 27%, reflecting effective cost control and efficiency improvements.
- Strong Cash Flow: The company generated $177.8 million in operating cash flow and $168.5 million in free cash flow during the quarter, ending with $1.6 billion in cash and cash equivalents, providing ample funding for future investments.
- Optimistic Outlook: Atlassian expects Q3 revenue to range between $1.689 billion and $1.697 billion, with cloud revenue projected to grow around 23%, and has raised its fiscal 2026 sales outlook to $6.362 billion, indicating strong confidence in future growth.
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Analyst Views on TEAM
Wall Street analysts forecast TEAM stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for TEAM is 235.57 USD with a low forecast of 185.00 USD and a high forecast of 320.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
23 Analyst Rating
19 Buy
4 Hold
0 Sell
Strong Buy
Current: 105.040
Low
185.00
Averages
235.57
High
320.00
Current: 105.040
Low
185.00
Averages
235.57
High
320.00
About TEAM
Atlassian Corporation is a provider of team collaboration and productivity software. The Company specializes in software development, work management, and enterprise service management software, which enables enterprises to connect their business and technology teams with an artificial intelligence (AI)-powered system of work. Its interconnected portfolio of apps, AI agents, and Collections, each with discrete value propositions, delivers solutions for software teams, IT operations and support teams, leadership, and business teams. Its apps, agents, and Collections are all built on the Atlassian Cloud Platform and data model: a common technology foundation that connects teams, information, and workflows throughout an organization. Its apps include Jira, Confluence, Loom, Jira Service Management, Rovo, Bitbucket, Compass, Jira Product Discovery, Jira Align, Focus and Talent. It offers team collaboration products on its Data Center deployment option. It operates the Dia and Arc browsers.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Revenue Growth Outlook: Atlassian raised its fiscal 2026 revenue growth forecast to approximately 22%, up from the previous 20.8%, reflecting strong confidence in demand for enterprise software services amid increasing AI adoption by clients.
- Cloud Revenue Milestone: The company achieved its first-ever quarter with over $1 billion in cloud revenue, growing 26% year-over-year, with customer count surpassing 350,000, indicating the competitive strength and appeal of its cloud services in the market.
- User Engagement Surge: Rovo surpassed 5 million monthly active users, demonstrating clients' strong reliance on its team management and data analysis tools, further solidifying Atlassian's market position in the enterprise software sector.
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- Improved Profitability: Adjusted earnings per share reached $1.22, exceeding the analyst estimate of $1.14, while operating income hit $430.2 million, with an operating margin rising from 26% last year to 27%, reflecting effective cost control and efficiency improvements.
- Strong Cash Flow: The company generated $177.8 million in operating cash flow and $168.5 million in free cash flow during the quarter, ending with $1.6 billion in cash and cash equivalents, providing ample funding for future investments.
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- Strong Enterprise Sales: The company recorded over 1,000 customers upgrading to the Teamwork Collection in Q2, purchasing more than 1 million seats, indicating a strong preference for standardizing on the Atlassian system, thereby reinforcing its market position.
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- Cloud Revenue Milestone: The company achieved its first-ever quarter with over $1 billion in cloud revenue, growing 26% year-over-year, with customer count surpassing 350,000, indicating the competitive strength and appeal of its cloud services in the market.
- User Engagement Surge: Rovo surpassed 5 million monthly active users, demonstrating clients' strong reliance on its team management and data analysis tools, further solidifying Atlassian's market position in the enterprise software sector.
- Cash Flow Decline: Despite reporting second-quarter revenue of $1.59 billion, exceeding market expectations, free cash flow fell by approximately 51% to $168.5 million, which may exert pressure on investor confidence and impact stock performance.
See More
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- Significant Revenue Growth: Atlassian reported Q2 revenue of $1.59 billion, surpassing analyst expectations of $1.54 billion, with a year-over-year increase of 23%, showcasing the company's robust performance in cloud services.
- Improved Profitability: Adjusted earnings per share reached $1.22, exceeding the analyst estimate of $1.14, while operating income hit $430.2 million, with an operating margin rising from 26% last year to 27%, reflecting effective cost control and efficiency improvements.
- Strong Cash Flow: The company generated $177.8 million in operating cash flow and $168.5 million in free cash flow during the quarter, ending with $1.6 billion in cash and cash equivalents, providing ample funding for future investments.
- Optimistic Outlook: Atlassian expects Q3 revenue to range between $1.689 billion and $1.697 billion, with cloud revenue projected to grow around 23%, and has raised its fiscal 2026 sales outlook to $6.362 billion, indicating strong confidence in future growth.
See More
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- Weak Labor Market Signals: Challenger's report revealed a staggering 117.8% year-over-year increase in job cuts for January, totaling 108,435, the highest for January since 2009, while initial jobless claims rose by 22,000 to 231,000, highlighting vulnerabilities in the US labor market that could hinder economic recovery.
- Bitcoin Plunge: Bitcoin (^BTCUSD) plummeted over 12% to a 1.25-year low, reflecting deepening negative momentum in the cryptocurrency market, with approximately $2 billion flowing out of Bitcoin ETFs in the past month, signaling a decline in investor confidence.
- Earnings Season Impact: Despite 150 S&P 500 companies set to report earnings this week, market focus on economic data intensifies, with S&P 500 earnings expected to grow by 8.4% in Q4, yet overall market sentiment remains suppressed by recent economic weakness.
See More
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- Record Cloud Revenue: Atlassian achieved its first-ever $1 billion cloud revenue quarter in Q2, representing a 26% year-over-year increase, which signifies robust growth in its cloud business and is expected to further drive future revenue expansion.
- Strong Enterprise Sales: The company recorded over 1,000 customers upgrading to the Teamwork Collection in Q2, purchasing more than 1 million seats, indicating a strong preference for standardizing on the Atlassian system, thereby reinforcing its market position.
- Accelerated AI Adoption: Rovo surpassed 5 million monthly active users, demonstrating the rapid adoption of AI capabilities that are transforming work processes and directly driving business growth and customer demand.
- Long-Term Growth Confidence: Management reaffirmed a target of over 20% compounded annual revenue growth through FY27, along with a commitment to maintain a non-GAAP operating margin above 25%, reflecting confidence in future market opportunities.
See More
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- Reddit Stock Surge: Reddit's stock rose 4% after its fourth-quarter earnings exceeded expectations, coupled with a $1 billion share buyback program, which is expected to boost investor confidence and enhance future shareholder returns.
- Molina Healthcare Loss: Molina Healthcare posted an adjusted loss of $2.75 per share, leading to a 33% decline in shares, primarily due to pressures from Medicaid premium adjustments and Medicare costs, with full-year revenue projected at $44.5 billion, below the $46.55 billion forecasted by analysts.
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