Atlassian Defies SaaSpocalypse With 35% Surge as AI Becomes Growth Driver, Not Threat

Atlassian defies the 'SaaSpocalypse' with a 39% surge

Atlassian was meant to be a victim of the "SaaSpocalypse", the fear that AI would gut software companies. Its results, and a $250m bet by its own founder, argue the opposite. Atlassian reported fourth-quarter results on Thursday, and they were strong. Revenue rose 28% to $1.77bn, ahead of forecasts. Cloud revenue grew 31%. The company turned a $28m operating loss a year ago into a $211m operating profit, its first in more than two years. Adjusted earnings of $1.87 a share beat the $1.50 analysts expected. The reaction was violent. The stock jumped as much as 39% after hours, on course for its best day since Atlassian listed in 2015. Chief executive Mike Cannon-Brookes went further, saying he would buy up to $250m of shares on the open market. The stock had fallen 32% this year. The SaaSpocalypse, briefly The gloom has a name. For much of 2026, investors have feared a "SaaSpocalypse": the idea that AI would let firms build their own tools and gut software-as-a-service. Atlassian, whose Jira and Confluence run inside much of corporate IT, was caught in the sell-off. The fear is not baseless. HubSpot fell 19% the same week on weak guidance. Atlassian's answer to "AI will replace us" is "AI needs us". It is reframing 25 years of workplace data as a "Teamwork Graph", a map of who does what across a company, now more than 200 billion objects. Cannon-Brookes calls it the edge. "In the AI era, context is the edge but it's hard to build and can't be hired," he said. There is a number behind the pitch. Atlassian's MCP server, which lets AI agents from Claude to ChatGPT plug into a customer's work, passed one million monthly users. That more than doubled in a quarter. As agents take on more of the execution, Atlassian argues, the value shifts to whoever holds the context. The catch Not everything sparkled. Atlassian guided to revenue growth of about 13% next year, a sharp slowdown from a prior path near 24%. Its Data Center product, the on-premise version, is set to shrink about 17% as the company pushes customers to the cloud. Growth is cooling even as the AI story heats up. The AI tailwind cuts both ways. In March, Atlassian cut about 1,600 jobs, a tenth of its staff, in its own AI pivot. And the debate over whether AI makes teams genuinely faster is far from settled. Atlassian's quarter is a strong data point, not a verdict. Still, the signal is hard to ignore. A software company left for dead has posted record demand, turned a profit, and watched its founder put $250m on the table. If this is the SaaSpocalypse, Atlassian is not behaving like a casualty.

Atlassian soars as the 'SaaSpoclypse' and tokenomics crises fail to prevent a strong year-end with context as king

What 'SaaSpocalypse'? By any reckoning, Atlassian exits its current fiscal year performing so much better than recent events might have led many pessimists to predict. Even the short-termists on Wall Street have no room for weeping and wailing as a 35% in the firm's post-earnings share price testified. But only a few months ago Atlassian was among those firms supposedly served a 'death notice' by the rise of the AI frontier firms and their models that were, according to the meme, going to rip the heart and soul out of the traditional software and SaaS sectors, sending stocks tumbling, including Atlassian's. And around the same time that this doom, gloom, and delusional despondency was kicking in, Atlassian laid off around ten percent of its global workforce, some 1,600 staffers. But only a few months later and the firm just handed in Q4 fiscal '26 revenue of $1.8 million, up 28% year-on-year, while net income of $139 million replaced a loss of $24 million a year ago. For the full year 2026, the firm still turned in a net loss of $54 million, but this was way down on last year's net loss of $257 million, while full year revenue was up 26% year-on-year to $6.6 billion. Growth All told, it was, according to CEO Michael Cannon-Brookes, "an incredible fiscal year for Atlassian" who says: I've met more than 60 customers over the last six weeks and five different countries around the world and the Teamwork Graph and AI comes up in every single conversation I've had. The firm's Rovo AI tech is now used by over 80% of the Fortune 500, he says:: Customers are getting real value from the AI embedded directly into their workflows, and it's translating into direct growth in our business. Customers are committing more deeply to the Atlassian platform because of the value delivered. We're seeing longer customer commitments, larger deals, stronger seat expansion, great cross-sell momentum and higher ARR (Annual Recurring Revenue). In the latest earnings data, that shows up in the form of the number of $3 million ARR customers growing 50% year-on-year and the number of $5 million ones up even more at 70%. Cannon-Brookes says: People want front fast answers from their AI across Teamwork Graph, across our enterprise search architecture, which is now the best in the world in terms of giving you answers across your knowledge estate, whether that's to a person or human or whether that's to an agent or something clearing in that manner from an AI perspective. Our ability to blend models, our ability to manage traffic costs over time is truly phenomenal. We get better at it every quarter. Tokenomics too As well as putting the 'SaaSpocalypse' myth to bed once and for all - look, we can all dream! - Atlassian also has its own spin on the current tokenomics crisis that has afflicted so many enterprises unexpectedly presented with unexpectedly high AI spend bills. Atlassian's answer, according toCannon-Brookes: We believe models will keep improving and organizations will hire that intelligence by the token. A context, their internal knowledge, experience and memory is much harder for organizations to build and it cannot be hired. With the Teamwork Graph, we have 25 years of deep data about work. That's enabled us to build one of the best context graphs that exist for enterprise knowledge, now spanning over 200 billion objects and connections. For agents grounded in the Teamwork Graph, organizations can see up to 44% more accurate answers while consuming 48% fewer tokens. In short, it enables to get customers' results from their AI that are cheaper better and faster. The advantage here is context, he goes on: Fundamentally, the better answers, the quality of information across all those applications we can give to your agents, the less token they consume and the less time it takes them to get to an equivalent quality enter. Customers are seeing that. It's based on all of the structured and unstructured workflows we have from those customers over the last 25 years...It's an amazingly powerful story, especially in an age where all of the customers are asking about token costs and AI spend. It's an incredibly powerful story about how we can actually connect their organizational knowledge, their history, directly to those AI agents and give them a cost and performance, better quality answers and cheaper answers. So, is the Teamwork Graph now essentially a defensive moat for Atlassian? Cannon-Brookes prefers to see it as a "unique differentiator" arguing that: Context is obviously very hard to build. This is a non-trivial problem...I don't think it's as simple as every organization will have one graph and we're done. I think most organizations will have three to five large-scale knowledge graphs, and we intend to be one of those three. My take In an AI-driven world, the need for collaboration at the enterprise scale, tracking, planning, managing work, it's actually increasing. And Atlassian is a mission-critical platform here, helping our customers orchestrate their teams, their agents, their workflows, to really unlock that value in AI, and driving real ROI and real outcomes here. An undeniably good showing from Atlassian to cheer Wall Street at the end of another week that has seen AI sentiment continue to be a heady mix of disappointment at CapEx realism from vendors and ongoing rapacious greed for the winnings that AI is supposed to drop into the laps of investors. Atlassian has played a steady and pragmatic strategy in this long game and, as Cannon-Brookes points out, holds quite the hand when it comes to the enterprise data cards that so many end user are finding they lack on their AI journeys - and which far too many vendors are scrabbling around trying to conjure up. The trick now for the company is surely one of 'more of the same, but better' and expectations management. Revenue growth will almost certainly slow down, possibly by as much as 50%, over the coming year and the fickle-minded of Wall Street won't remember that they were warned! But one thing of note - Cannon-Brookes is putting his money where his mouth is, announcing his intent to make open market purchases of about $250 million in Atlassian stock. For now, a great year-end.

Atlassian soars as profitable quarter reduces AI fears

Nasdaq-listed software giant Atlassian's revenue has continued to climb as it booked its first quarterly operating profit in over two years, with investors showing a major shift in view on the company's battle to find its place in the artificial intelligence era. Shares soared 35 per cent in extended trading on Thursday (EDT) as total revenue for the fourth quarter of fiscal year grew $US1.7 ($2.4) billion, up 28 per cent from the previous corresponding period. Net income for the quarter was $US139 million on a generally accepted accounting principles basis - the first since mid-2024.

Atlassian Shares Rose 35%: A Blowout Q4 2026 Earnings Report - Atlassian (NASDAQ:TEAM)

Here's what actually drove the move, and what traders and investors should watch next. The Q4 Earnings Report Atlassian released its fourth-quarter and full fiscal year 2026 results after market close on August 6, 2026. The top-line and bottom-line numbers were better than expected. In short, the Atlassian stock rise wasn't random -- A combination of a "beat-and-raise" print is historically one of the most reliable catalysts for a fast gap-up in growth-software stocks. The AI Narrative Behind the Atlassian Stock Rally Beyond the raw numbers, Atlassian leaned hard into its AI positioning. Management highlighted that Jira's new AI-native features (coordinate coding agents and are bundled free into existing Jira Cloud plans) are driving adoption. The company also pointed to its "Teamwork Graph" and MCP server usage surpassing one million MAU (more than 2x in a single quarter). The market has rewarded credible AI stories all through 2026. So investors now had a growth story to attach to the earnings beat, not just a one-time numbers surprise. Technical and Positioning Factors Part of the size of the move also reflects market positioning rather than fundamentals alone. TEAM had been trading near multi-month lows heading into the print, meaning sentiment and short interest were both stretched to the bearish side. Once the beat-and-raise hit the tape, buyers rushed in. Short-covering added to the move too, and that combination tends to make the first spike bigger. Five-minute intraday charts on August 7 showed the stock holding above $145 with repeated pushes through $150 (a pattern that suggests sustained dip-buying rather than a single speculative spike). The Risks: What Could Cap the Rally A few factors argue for caution before chasing the move: What to Watch Next Here is my plan: Conclusion The Atlassian stock rise is driven by fundamental factors, not speculative hype. A truly strong quarter that exceeded expectations, accelerating cloud growth, and a compelling track record of AI product success, combined with overly inflated bearish sentiment, have driven significant growth. However, the stock now trades on high expectations. GAAP losses persist, and long-term growth is slowing. The next few quarters, especially cloud and AI revenue, will decide whether this rally holds or fades. Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Atlassian just flipped Wall Street's AI fear on its head

For much of the last two years, Wall Street's primary concern about enterprise software has been the commoditization of workplace applications by artificial intelligence. If AI assistants can write code, summarize meetings, manage projects and automate procedures, why would organizations pay high fees for traditional software platforms? Investors got an entirely different answer in Atlassian's most recent quarterly earnings. The manufacturer of Jira, Confluence, and other workplace communication software reported another solid earnings report that outperformed Wall Street estimates and gave bullish guidance, Barron's noted. More crucially, executives viewed AI as a consumer adoption enabler, not a threat to their company model. The results point to a developing trend in corporate software: Organizations already at the heart of workplace productivity might be among the largest winners from AI, not the biggest losers. Investors reacted similarly, pushing Atlassian shares significantly higher after earnings as analysts re-evaluated both growth estimates and the company's long-term AI promise. AI feels less like a replacement for Atlassian's products and more like a feature being built into them, allowing customers to automate operations while staying inside the company's software ecosystem. That dynamic could become one of the largest competitive advantages for enterprise software companies in the coming few years. The market's reaction suggests investors increasingly agree with that assessment, according to Business Insider. Atlassian says AI is helping expand its enterprise opportunity The headline stats were stunning all by themselves. Revenue and profitability beat analyst estimates, and management provided projections pointing to ongoing demand from enterprise clients in an uncertain macroeconomic climate. But perhaps the largest takeaway was the management's remark regarding artificial intelligence. Rather than portraying AI as a disruptive force that may put pressure on pricing or lower demand for software, executives described it as another capacity that made Atlassian's products more useful to customers. AI-powered features continue to roll out across Jira, Confluence, and other cloud services to automate documentation, software development workflows, and project management chores. That matters because Atlassian's business relies so strongly on being deeply embedded in customer processes, Investing.com confirmed. With each new AI capability, switching costs rise, and the company drives more adoption of the platform. The message to investors was important. While a lot of software equities have traded the last two years on the premise that generative AI might ultimately squeeze margins and erode competitive moats, Atlassian's results imply the reverse is happening. As firms invest more substantially in AI, they seem willing to invest more heavily in platforms that can organize work around these artificial intelligence systems. Bloomberg / Getty Images Wall Street may be rethinking the enterprise software trade Atlassian's earnings are coming at a pivotal moment for software investors. For months, analysts have been arguing about whether AI agents could lower demand for many office software subscriptions. Recent reports from a variety of corporate software firms have instead shown organizations continuing to spend aggressively on productivity platforms while at the same time ramping up their AI expenditures. Those trends are not incompatible. If anything, AI might increase the need for centralized collaboration software, since enterprises would need a common platform to coordinate employees, projects, and autonomous agents. Key takeaways from Atlassian's earnings * Atlassian reported quarterly revenue and earnings above Wall Street expectations, Reuters reported. * Management highlighted continued enterprise demand across its software platform. * AI features are expanding across Jira, Confluence, and other cloud products. * Executives described AI as an opportunity to strengthen customer adoption, rather than replace existing software. * Investors responded positively, sending shares sharply higher following the earnings report. * Analysts increasingly view enterprise AI as complementary to established software platforms instead of disruptive to them. That stance gives firms like Atlassian a chance to monetize AI with premium capabilities without giving up the subscription economics that investors love. The company's cloud-first strategy also lets it deliver AI capability more quickly than many traditional software competitors. There's still some macroeconomic uncertainty, but Atlassian increasingly appears like an infrastructure provider for enterprise AI adoption, not a victim of it. That difference could become increasingly crucial for investors evaluating which software businesses are best positioned for the next wave of AI spending. Rather than validating the bear argument, Atlassian's last quarter may have punctured one of Wall Street's most persistent preconceptions about enterprise software. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published August 9, 2026 at 6:17 PM.

Atlassian at Technology Leadership Forum 2026: cloud and AI gains By Investing.com

Atlassian (TEAM) used Tuesday, 11 August 2026, at the Technology Leadership Forum 2026 to outline a business that is growing fast in cloud, expanding in AI and reaching deeper into the enterprise, while also navigating accounting noise and a long migration away from data center infrastructure. Management said the company ended fiscal 2026 with five straight quarters of cloud acceleration, but it also flagged margin effects from revenue-recognition changes and a compensation mix shift that will shape fiscal 2027 results. Key Takeaways * Cloud growth stayed strong, led by upgrades to Teamwork Collection and cross-sell into Service Collection. * Subscription ARR rose 23% in the fourth quarter of fiscal 2026, with fiscal 2027 guidance for 18% growth. * Atlassian expects GAAP operating margin to reach 4.5% in fiscal 2027, up from roughly break-even at the end of fiscal 2026. * AI products and the Teamwork Graph are gaining traction, with Rovo and MCP users growing ARR at 2x the rate of non-users. * Enterprise sales momentum remains strong, with RPO up 44% and large-customer cohorts expanding quickly. Financial Results Atlassian said fiscal 2026 closed with strong momentum across the cloud business, marking five consecutive quarters of acceleration. The company pointed to continued demand for its subscription products and a growing mix of customers beyond traditional software teams. * Subscription ARR grew 23% year over year in the fourth quarter of fiscal 2026. * Initial fiscal 2027 guidance calls for 18% year-over-year Subscription ARR growth. * GAAP operating margin guidance for fiscal 2027 is 4.5%, compared with essentially 0% at the end of fiscal 2026. * Non-GAAP margin trends were affected by accounting and compensation items. * Atlassian said ASC 606 changes created about 4 points of margin benefit in fiscal 2026 because of upfront revenue recognition on data center subscriptions. * For fiscal 2027, the company expects about 3 points of headwind from a shift in compensation mix from cash to equity. Management said the new Subscription ARR metric, introduced in May at the investor forum, is meant to give investors a clearer view of the business as the company moves from data center to cloud. The metric helps smooth out timing effects and migration-related volatility. The company's revenue growth of 26% over the last twelve months reflects the strength of this cloud transition, while its impressive gross profit margin of 85.6% underscores the scalability of its subscription model. According to InvestingPro analysis, which tracks 17 analysts who have recently revised their earnings upwards, Atlassian appears undervalued at current levels -- placing it among stocks on the most undervalued list. InvestingPro subscribers gain access to over 15 additional exclusive tips and comprehensive financial metrics for TEAM. * Service Collection passed $1 billion in ARR in the third quarter and accelerated in the fourth quarter. * Service Collection grew north of 30% year over year. * More than 60% of Service Collection use cases are outside IT. * Record Performance Obligation, or RPO, grew 44% year over year. Operational Updates Atlassian said cloud outperformance came mainly from two areas: strong upgrades to Teamwork Collection and cross-sell into Service Collection. Teamwork Collection gives customers access to the broader Atlassian platform and 10x the amount of Rovo AI credits, which management said has become a key reason for upgrades. * Teamwork Collection is helping drive upgrades because it includes 10x Rovo credits. * Service Collection is benefiting from cross-sell and broader enterprise use. * Paid seat expansion is continuing across both software developers and knowledge workers. * About two-thirds of Jira users are knowledge workers. * More than 70% of Confluence users are knowledge workers. Martin Lamb, head of investor relations, said the company's user base is broadening beyond software development teams into business functions such as HR, marketing, legal and finance. That shift suggests Atlassian's products are becoming more central to enterprise workflows. The company also said its Teamwork Graph is improving the efficiency and quality of AI output. * Teamwork Graph delivers 48% more efficient token usage. * It also delivers 44% better results, according to the company. * The system uses context from Jira, Confluence, team relationships and prior decisions. Atlassian said Service Collection is seeing more use of Rovo agentic automations. * Rovo agentic automations in Service Collection have increased 3x over the past six months. * Use cases include service request triage and employee service workflows. The company also highlighted its Model Context Protocol server, or MCP, as another sign of product stickiness and AI relevance. * The MCP server has more than 1 million monthly active users. * MCP users create 4x more Jira work items. * MCP users also create 4x more Confluence pages. * Customers using MCP grow ARR at 2x the rate of non-users. Management said Rovo-adopting customers also grow ARR at 2x the rate of customers that do not adopt Rovo. It described this as evidence that the platform remains mission critical even when customers also use third-party AI agents, including Claude agents. Enterprise Sales and Customer Mix Atlassian said its go-to-market transformation under Brian Duffy, vice president of sales, is producing stronger enterprise traction. The company said it has only 400 quota-carrying enterprise sales representatives, which it views as a small base relative to its customer count. * The enterprise sales team has about 400 quota-carrying representatives. * Atlassian serves about 350,000 customers. * Management sees room for meaningful sales-team expansion. The company said the land-and-expand model remains central to its growth. It often starts with small teams of 20 to 50 people and then expands across the wider organization. * Customers spending more than $3 million a year grew 50% year over year. * Customers spending more than $5 million a year grew 70% year over year. * These cohorts were cited as signs of stronger enterprise execution. Atlassian also noted that its data center end-of-life transition is creating quarter-to-quarter variability in purchasing patterns. In the third quarter, some buying was pulled forward from the fourth quarter because of data center pricing changes and restrictions on new customers. AI Strategy and Monetization Management framed AI as a product and monetization opportunity, but said the company is still focused first on customer value. The main monetization path remains upgrades to Teamwork Collection, which provides more Rovo credits and broader platform access. * Rovo credit enforcement begins in fiscal 2027. * The company expects the main monetization motion to be Teamwork Collection adoption rather than overage charges. * Consumption-based pricing is expected to become a larger part of AI monetization over time. Atlassian said the Teamwork Graph gives it an edge over AI tools that focus mainly on individual productivity. The company argued that its contextual data on requirements, implementation, customer feedback and iteration helps it produce better results than systems that search blindly across an organization. In the question-and-answer session, management said the Teamwork Graph supports better token efficiency and better outcomes because it understands how teams work and what decisions have already been made. Q&A Highlights Analysts asked about labor arbitrage, AI engineering and the company's pricing flexibility. Atlassian responded that its contextual data and Teamwork Graph are key differentiators and that its bundling model gives customers more predictable pricing than per-user consumption charges. * On labor arbitrage and AI engineering, management said the Teamwork Graph is a competitive advantage. * On consumption pricing, the company said Teamwork Collection offers predictable pricing and higher average revenue per user. * On ARR deceleration versus cloud revenue acceleration, management pointed to quarter-to-quarter variability from compensation changes and cloud migration incentives. * On enterprise sales catalysts, the company cited 44% RPO growth and strong growth in large-spending customer cohorts. * On land size, management said it usually enters accounts through small teams of 20 to 50 people. Management said the third quarter saw some pull-forward demand from the fourth quarter because of data center pricing changes. It also linked some of the margin and ARR noise to changes in compensation and migration timing, rather than to a change in demand trend. Future Outlook Atlassian's outlook points to continued cloud migration, broader enterprise adoption and a more disciplined path to profitability. * Subscription ARR is expected to grow 18% year over year in fiscal 2027, based on initial guidance. * GAAP operating margin is expected to reach 4.5% in fiscal 2027. * The company plans to keep expanding its enterprise sales force from a relatively small base. * Service Collection is positioned for further growth across IT and non-IT workflows. * Rovo agentic automation is expected to expand further in service request triage, employee service and customer service. * Platform consolidation across the 350,000-customer base remains a central opportunity. * Data center migration to cloud will continue to affect accounting and buying patterns over the coming years. Management said it will keep focusing on customer value first, with monetization following through higher stickiness, faster seat expansion and adoption of higher-tier products. The stock has responded positively to the company's execution, posting a 37.7% return over the past week and a 74.6% gain over six months. With analysts forecasting EPS of $5.50 for fiscal 2027 -- a sharp turnaround from the current -$0.21 -- the path to profitability appears increasingly clear. For investors seeking deeper insights into Atlassian's transformation, InvestingPro offers a comprehensive Pro Research Report that distills complex financial data into actionable intelligence, available for TEAM and over 1,400 other US equities. Atlassian's message at the Technology Leadership Forum 2026 was clear: cloud growth is still strong, AI products are gaining traction, and enterprise expansion remains early. Investors, however, will need to look past accounting effects and migration timing to assess the underlying trend. Refer to the full transcript below for more details. Full transcript - Technology Leadership Forum 2026: Jason Celino, Software Analyst, KeyBanc: We can go ahead and get started since we're starting a little late. Most of you know me. My name's Jason Celino. I'm one of the software analysts here at KeyBanc. Great pleasure welcoming back Martin Lamb, Head of IR for Atlassian. First, big congrats on the quarter. Excellent Q4 full-year results. There seems to be some significant momentum in the business right now. It's great to see the numbers reflect that. On the cloud side, specifically, you've seen five straight quarters of acceleration. You're consistently pointing to paid seat expansion and cross-sells, the primary drivers of the growth. Maybe can you just unpack those elements and explain what's driving this consistency? Martin Lamb, Head of Investor Relations, Atlassian: Yeah. No, thanks for having me, Jason. Yeah, we're really pleased with the strong Q4 results to end our fiscal 2026. I think what you're seeing is customers really value and understand the value of the overall Atlassian platform with the Teamwork Graph, which is a living contextual layer underlying the platform, as well as our overall system of work, a basically living system of record and system of work to actually drive those workflows with four organizations. To Jason's point, we had a really strong quarter on the cloud side of things, and that outperformance was really driven by two things. It's actually consistent with what we saw in Q3, so it's good to see that consistency carry through, but it's driven by strong upgrades in cross-sell to our Teamwork Collection, which is basically customers being able to purchase the entire Atlassian platform. Primarily for additional Rovo credits. You get 10x the amount of Rovo credits with the Teamwork Collection, so customers are upgrading for that additional AI capability, as well as cross-sell motion into our Service Collection. So that was really great to see. All the while, we're starting to continue to see strong seat expansion across our core products of Jira and Confluence, which I think highlights the importance of collaboration and teamwork and coordination in this AI era. We've talked about, for quite some time, in the AI era, the need to track, manage, plan, and all your work across your organization. That doesn't change, and I think you're starting to see that continue to play out with the strong cross-sell momentum, AI purchasing on Teamwork Collection, with that strong seat expansion on our core products of Jira and Confluence. I think it's notable that the strong seat expansion was across both software development and knowledge workers. So at our investor forum, we recently shared about two-thirds of users on Jira and over two-thirds, more like 70%, on Confluence, are knowledge workers and non-software developers. That trend continued across this quarter where that net new seat expansion happened across both those vectors, so that continues to be really healthy across both segments. Jason Celino, Software Analyst, KeyBanc: Okay. Excellent. I do want to touch on that, but maybe just falling out on some of the numbers stuff first. Margins for the coming year, you are modeling a little bit of contraction. There are some moving pieces here. Maybe can you just talk about some of the headwinds and some of the views on hiring? Martin Lamb, Head of Investor Relations, Atlassian: Sure. Actually, I would point you to probably GAAP operating margins. I think that is where we are increasingly focused. We have talked about one of our strategic priorities along with enterprise AI in our system of work is to drive durable, profitable growth. Part of that is to accelerate our path to GAAP profitability and expand on GAAP operating margins over time. I think you actually saw that in this past quarter, where we delivered GAAP profitability in Q4 and had strong GAAP operating margins. For next fiscal year, we are guiding to 4.5% GAAP operating margins, which is an expansion relative to how we ended fiscal 2026, which was basically flat or 0% operating margin. That is great to see that progress and reflective of the discipline that we are having on that side as we charge and accelerate that path towards GAAP profitability and margin expansion. I think you are quoting non-GAAP operating margins, and there are a couple different dynamics for you to consider on the non-GAAP side of things. Earlier in fiscal 2026, we announced the end of life of our data center product. With that comes pretty significant ASC 606 changes where we are recognizing more upfront revenue on the sales of our data center subscriptions, and that drove approximately 4 points of margin benefit in fiscal 2026. So we are recognizing significantly more upfront. That basically fell to the bottom line immediately. It is just all timing of revenue recognition, and so that was a tailwind to fiscal 2026 non-GAAP operating margin by about 4 points. I think if you compare that to fiscal 2027 and kind of normalize for those effects, plus I spoke earlier about trying to be more disciplined, not only from a headcount perspective, but also how we think and issue equity to our employees. So we are changing the compensation mix between cash and equity for certain employees, and certain roles, and that presents a 3-point headwind on fiscal 2027 non-GAAP operating margins. Again, it is just moving compensation mix between cash and equity. So normalizing for those two effects, you actually see non-GAAP operating margins increase. Again, it is a lot of moving pieces, so I actually would probably steer you more towards the GAAP operating margin expansion that I pointed to because that is simpler. It just helps you kind of cut through the noise, and GAAP is frankly where we are focused now as a company. Jason Celino, Software Analyst, KeyBanc: Yeah, that's a good reminder. As a software analyst, GAAP's new to me. New concept. Maybe if we go back to kind of your explanation on the paid seat expansion. One thing that investors have been focusing a lot with a lot of the AI worries has been developer growth and developer headcount and knowledge worker growth and knowledge worker headcount. If we look at different data sources like Indeed's job data, we do a CIO survey and hiring intentions are up. There's a number of other data sources that are also pointing to near-term positive indicators for developers and knowledge workers. What do you think is really catalyzing this? Do you think AI is catalyzing near-term activity, and that this is maybe just a flash in the pan before we eventually see some contraction? We have some members of our KeyBanc IT organization here, and they talked about labor arbitrage with offshore and AI potentially. Help me understand maybe what you think around this. Martin Lamb, Head of Investor Relations, Atlassian: Yeah. I think it's important to note, as I mentioned earlier, that that strong seat expansion or strong seat growth that we saw endure in Confluence is actually across both software development and importantly, non-software development or the knowledge workers. Teams like HR, marketing, legal, finance, saw really good traction there, and that continues to be an area of focus as we focus on penetrating more of the enterprise customers that we have and reaching and serving more of those users. On the software development side, I think it's an indication of ability to create software now with AI is becoming greater than ever, and you're seeing that ability for companies to become software companies. Whether you're a traditional non-tech company, now all of these companies have to drive more digital transformation, create more software, create more digital services as part of their overall strategy, and AI's lowering that cost. You're able to drive a lot more software development. Now, the next part of that challenge is how do you actually make all this increased software move in the direction for value for your customers or for the enterprise's customers? That requires a different level of coordination, right? A lot of the AI capabilities we've seen to date have been focused on personal productivity or individual productivity. Our ticker symbol is TEAM. We've always been focused on teamwork. How do you, again, mentioned earlier, coordinate across your organization? How do you manage, track, and plan work to make sure that we're all moving in unison towards the organization's strategic goals and delivering value to your customers? Because that's actually what ultimately matters as opposed to, again, all these disparate individual tracks happening. I think that highlights what you're seeing play out. Jason Celino, Software Analyst, KeyBanc: Okay. Interesting. Yeah. It's like the narrative changes every quarter. It's like every conversation I have, I feel good or I feel bad, but at the end of the day, the numbers have been pretty good. One thing that you introduced this year is subscription ARR to hopefully smooth out how to view growth at the business, given the model changes with the data center. Maybe just how often do you plan on providing the metric? Do you plan on guiding to it? Just philosophy around some of the forward-leading indicators. Martin Lamb, Head of Investor Relations, Atlassian: Yeah. We introduced subscription ARR back in May at our investor forum for the first time to help investors understand the underlying health and strength of the business and our subscription base. We are, as I mentioned earlier, going through a cloud transition as we sunset our data center offering and migrate customers to the cloud in the coming years. To help normalize for some of the ASC 606 noise that I mentioned earlier, because we now have greater upfront term license revenue recognition on the sale of data center subscriptions and cut through all that accounting noise and timing noise, we've introduced subscription ARR, which again, smooths things out and helps give you a better read on the underlying strength and momentum in the business. That continues to track incredibly well. We are guiding to that for the first time. We came off a quarter where we grew subscription ARR 23% year-over-year. We're guiding initially for fiscal 2027 to end fiscal 2027 of 18% growth year-over-year. That's our initial guide. Obviously, we want to take a prudent approach with that guide. It is a new muscle for us. Again, I think it helps investors understand the entire subscription base, so both data center and cloud, cut through the ASC 606 noise and help you identify or, I guess, cut through the noise of the migrations of people going from data center to cloud. Because I think historically, investors have had outsized focus on, okay, how much of the cloud revenue growth is coming from migrations? Subscription ARR helps normalize for that because if someone moves from data center to cloud, you kind of just see that all within the overall ARR result. Jason Celino, Software Analyst, KeyBanc: Okay. I will take some questions at some point. I do want to keep this interactive. I am not that great of a mathematician, but some other people have noticed that your ARR growth, again, new motion, new muscle memory, but it decelerated a little bit versus the prior quarter, but your cloud revenue accelerated. Anything specific on why that might have happened? Martin Lamb, Head of Investor Relations, Atlassian: Yeah. I would say two things. There is quarter-to-quarter variability in ARR. We are going through an enterprise go-to-market evolution as we continue to scale up our enterprise sales motion. Today, we only have about 400 quota-carrying enterprise sales reps, which is an incredibly low number and I think highlights the opportunity ahead of us as we continue to grow that team. Alongside, we have the cloud migration. With these two dynamics, we are always intentionally or thoughtfully introducing changes into how do you align partners or how do you incentivize those salespeople? When you introduce sales compensation changes and/or motions associated with our cloud transition, that can influence customer purchasing quarter to quarter. So there is quarter-to-quarter variability, so I encourage you to look at the full year dynamics. A perfect example of this was Q3. We spoke about this on our Q3 earnings call. We saw some pull-forward activity from customer purchasing behavior from Q4 into Q3 as a result of us changing pricing on data center. So we do things like data center pricing changes or stop selling data center subscriptions to new customers. All these things are in the vein of moving customers to the cloud and accelerating the cloud migration, but those motions also can shift customer purchasing behavior from quarter to quarter. So again, I think what you are actually pointing to is some of that pull-forward behavior that we pointed out on our Q3 call coming from Q4 into Q3, and again, creating some variability in the Q3 growth rate Jason Celino, Software Analyst, KeyBanc: Okay Martin Lamb, Head of Investor Relations, Atlassian: versus Q4. Jason Celino, Software Analyst, KeyBanc: Okay. Yeah, no, that makes sense. Any questions from the audience? Anyone? Sure. Unidentified speaker, KeyBanc Enterprise: Just a couple out there. I work at KeyBanc Enterprise. We talk a lot about labor arbitrage and maybe some of that moving to AI engineering. When we think about that, we're thinking about the quality of requirements and the quality of some things that are sitting in your system today. Are there opportunities there for you to expand that as AI engineering moves forward, quality requirements, relationships with other, I don't know, AI engineering companies? Martin Lamb, Head of Investor Relations, Atlassian: Yeah. Jason Celino, Software Analyst, KeyBanc: Can you paraphrase the question before you answer that? Martin Lamb, Head of Investor Relations, Atlassian: Yeah. The question, I think, is around really the context and data that lives within our systems. I think earlier I talked about a lot of the AI tools out there today are geared towards personal productivity. What our advantage, I think is in the Teamwork Graph and the context that lives within all the different workflows and our system of work. We have the data. You are talking specifically about engineering, and in that, people document the requirements of what you are trying to build or what you are trying to accomplish. Did the team actually build and accomplish that? What is the customer feedback? How do you iterate on that development? All that context lives within our products like Jira, like Confluence, and I think that is an incredibly important asset for us, especially as an organization like KeyBanc tries to deliver for your customers or your employees internally. I think that is a very valuable asset. That is a very important value proposition of the overall Atlassian platform. We have talked more recently about the Teamwork Graph. It is a living contextual layer that understands relationships and what tools and what people are working on, and again, what they are trying to accomplish as an organization. More importantly, with that context, it delivers better results for people as they utilize AI tools. We have talked about the Teamwork Graph delivers 48% more efficient token usage because then you are not having to have AI kind of blindly search across your organization. You have to understand the contextual relationships across KeyBanc. Secondly, it delivers better results. So 44% better results because you have that understanding of what are your different teams working on, what is the context within Jira, context within Confluence, the decisions made that were previously made, what steps we are trying to drive as an organization. Understanding all that delivers the better, more efficient token results. Jason Celino, Software Analyst, KeyBanc: Maybe that is a good segue. Maybe can you just highlight how you plan on monetizing AI? I know there is Rovo, MCP, CLI, maybe just go into that. Martin Lamb, Head of Investor Relations, Atlassian: Yeah. The primary AI monetization motion or the primary purchasing motion for customers today is upgrading to Teamwork Collection, where you get 10x the amount of Rovo credits. We made the strategic decision about two years ago to thread Rovo, our AI capabilities, throughout the entire platform. With each base subscription, you get a certain allotted number of Rovo credits. As you approach those limits, then you upgrade to the Teamwork Collection, where you get 10x the amount. That is much more customer friendly in this moment in time, where I think customers want that predictability or value that predictability of I get 10x the amount of credits across my entire user base at a higher price point, so we realize higher ARPU as a result. Instead of worrying about Jason's going to chew through X amount of credits, and I have to worry about this power user. It is a fungible pool of Rovo credits spread across my entire organization at 10x the amount. So it is much more predictable and customer friendly, and we are just meeting customers where they are at today. I think over time, consumption-based pricing or usage-based pricing becomes a bigger part of the story. We will actually begin to enforce Rovo credit limits this year. Again, I think the primary motion you are going to see is customers choosing to adopt Teamwork Collection. So I would continue to pay attention to that because that is probably the primary AI monetization motion today. Customers are also, when they adopt Rovo, they of course realize significantly more value. We are seeing Rovo customers grow their ARR at 2x the rate of those that don't adopt Rovo. So back to the concept of delivering value first and foremost to customers, then we will recoup that value back over time. That is via increased stickiness, faster seat expansion, and higher uptiering to higher value additions. Actually, what is also really interesting is we shared a bunch of MCP stats. Even if customers are using third-party agents and tapping into the Atlassian platform via MCP, we are seeing significant growth there. So we have over 1 million monthly active users of our MCP server and Teamwork Graph CLI. Again, wanting to tap into the value of the Teamwork Graph, even if you are using a third-party agent. That is delivering significantly more value to the customer. You are seeing that in their output. So they are driving 4x the amount of Jira issued or Jira work items created via MCP server and Confluence pages created 4x the amount via MCP server. They are driving significantly more workflows through the Atlassian platform, which is what we want to see. Ultimately, that increased value to customers comes back to us. So exact same number. Those customers utilizing the MCP server are growing their ARR at 2x the rate of those that don't utilize MCP. So I think it highlights the mission criticality of the Atlassian platform, and it shows that it is complementary too, even if you are using a third-party agent like a Claude agent. Jason Celino, Software Analyst, KeyBanc: Okay. Yeah. Sure. Unidentified speaker: As you think about making the switch over to more consumption revenue, how flexible are you going to be if customers like KeyBanc say, "My bill's gone way up, and I'm not sure if I love this consumption model? Martin Lamb, Head of Investor Relations, Atlassian: Yeah, I think that's where we try to meet customers where they're at, and that's why I think something like Teamwork Collection and that model of bundling 10x the amount of Rovo credits per user gives customers like that you're pointing out a much more predictable model. You're paying a higher RPU on a per-seat basis, and then I get a much more predictable kind of load balance across my user base. Jason Celino, Software Analyst, KeyBanc: Okay. Interesting. I did want to bring up Service Collection a little bit. It is growing really nicely. I think in the third quarter, I think it surpassed $1 billion in ARR. I think in Q4, you noted that it accelerated. Really impressive. Maybe can you just talk about what's driving all the momentum there? Martin Lamb, Head of Investor Relations, Atlassian: Yeah. You're right. In Q3, we disclosed or shared that Service Collection had crossed $1 billion of ARR, growing north of 30% year-over-year. In Q4, we actually saw that accelerate as people continue to consolidate, continue to adopt Service Collection across not only their IT workflows, but also their non-IT workflows. What's interesting, I think, is over 60% of the Service Collection use cases are outside of IT. That's marketing teams or HR teams taking in service requests from the employees and helping drive outcomes for their employees. At the same time, we're seeing 3x increase in Rovo agentic automations in Service Collection, specifically over a six-month period. All the while you're seeing customers increasingly adopt Service Collection across their organization, they're deploying Rovo agents to help triage those service requests. When you think about an HR team getting a ton of inbound requests for their employees asking questions about X, Y, or Z, you're able to deploy a Rovo agent to be that first line of defense and triage and cut out that noise, respond to employees, giving them faster customer service, if you will. Then also for the more critical items that require human judgment, route those to the right expert to be able to address those questions. Whether that's in customer service or employee service, I think we're seeing really strong Rovo adoption across those workflows. Jason Celino, Software Analyst, KeyBanc: Okay. I did want to touch on some of the go-to-market changes. Brian Duffy's been there for 18 months. He's up-leveled the organization. He's adding quota-carrying reps. What's another sales catalyst or something that he was working on this year that we should be thinking about? Martin Lamb, Head of Investor Relations, Atlassian: Yeah, Brian and team have done an incredible job over the past year. He's only been here a little over 18 months, as you noted. We only have 400 quota-carrying sales reps today. We're going to continue to scale that. We shared a couple of different stats at Q4 earnings that highlight the momentum his team have been building over the past year. One is RPO growth grew 44% year-over-year. Incredible to see that kind of strong growth. That's indicative of the customer demand of the Atlassian platform and realizing the criticality of the Atlassian platform in this moment in time, especially for our system of work and the Teamwork Graph. That also speaks to the sales execution that his team is driving in terms of helping customers understand the value of the overall Atlassian platform. At the same time, we're seeing really strong growth in customers spending north of $3 million, north of $5 million. The cohort of customers that spends over $3 million with us annually grew over 50% year-over-year. Customers spending $3 million with us annually grew over 70% year-over-year. Really strong traction with those larger enterprises. I mentioned earlier a couple of different times, we'll continue to scale up our enterprise sales team, especially as we try to drive more of that platform sale into our customer base and try to reach more of these non-software teams within these enterprises because we have 350,000 customers already today. We have a significant opportunity to expand that Atlassian footprint in the same manner that you just saw happen in Q4 of people upgrading to that overall adoption of the Teamwork Collection and the overall adoption of the Atlassian platform, and all the while driving more user expansion across our key products. Jason Celino, Software Analyst, KeyBanc: Okay, perfect. I have one more question, but we'll take this one. Unidentified speaker: What is the high end of your land? What do you land? If the largest customer you are ever going to land, what is the high end? Martin Lamb, Head of Investor Relations, Atlassian: We actually typically land quite small. Our land, we have a very differentiated go-to-market motion where we land with a relatively small team. Sometimes it is 20 or 50-person teams within an organization and then expand from there. I would say actually our lands tend to be quite small. It is a department choosing Jira, choosing Confluence on their own. The opportunity is really via expansion. I mentioned we have 350,000 customers already today. The opportunity is really expanding within those organizations and helping them realize the value of, again, the Atlassian platform that they may not realize today. Jason Celino, Software Analyst, KeyBanc: Okay. I do like to end it with a fun question. Last night at dinner, we did tomato carving station. That was a big hit. It made me think, what is Martin Lamb's favorite food? Martin Lamb, Head of Investor Relations, Atlassian: I like Mexican food. I am partial to Mexican food. Jason Celino, Software Analyst, KeyBanc: Okay. Good thing we're having Mexican for lunch. Anyway, perfect. Thanks everyone. Thanks, Martin Lamb, and have a good rest of the conference. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.