Atlassian maintains margins with 5M Rovo users as CEO defends AI strategy amid stock decline

Atlassian swears it can deliver AI without blowing out costs

Atlassian has assured investors it can add AI to its services without blowing out its costs or shrinking margins. CEO Mike Cannon-Brookes used the company's Thursday earnings call to reveal Atlassian now has five million users of its Rovo agentic AI offering and suggested that investors in the company might worry that costs would blow out as a result. "We're able to deliver those five million Rovo seats and continue to improve gross margin," he reassured. "That's a huge achievement on behalf of our engineering teams, but it shows that we can manage those AI costs inside for the vast majority of customers." Atlassian runs entirely in public clouds, and Cannon-Brookes' remarks suggest optimizing its operations, rather than high prices, is the reason it's kept margins stable. Which isn't great news for cloud operators, as it suggests at least one SaaS giant has found a way to add AI to its offerings without spending much more. The Australian collaborationware company is, however, sending more business to big clouds by ditching its on-prem datacenter products. CFO Joe Binz said Atlassian "saw very healthy cloud migrations in Q2" and Cannon-Brookes pointed to the company winning $1 billion of revenue from cloud products for the first time in this quarter. The CEO also batted away suggestions that Atlassian, like other SaaS companies, is susceptible to attack by AI. "I'm convinced AI is great for Atlassian. Others think software is dead," he wrote in his shareholder letter [PDF]. " In this environment, it seems that noise swamps signal, nuance gets lost," he added. On the earnings call, he expanded on that point by saying Atlassian customers still want its wares. "When I talk to customers, they believe that we're helping them through a lot of that noise," he said. "Enterprise customers want a platform they can trust. They need it to be compliant and secure and all the things they've always needed." And they're spending more with Atlassian to get those things: Cannon-Brookes said the company continues to see customers adopt more of its stack and commit to using it for longer. He also shrugged off suggestions that Anthropic, which recently previewed a product called "Claude Cowork" that competes with Jira, is a threat because the new AI product will need to access information stored in Atlassian's software. It's not all rosy for Atlassian because Cannon-Brookes declared himself "frustrated" by Atlassian's share price, which has fallen 70 percent in the last twelve months, and fell two more points in after-hours trading. The company is therefore accelerating the pace of stock buybacks. "We believe our shares are significantly undervalued," Cannon-Brookes said. Q2 revenue landed at $1.6 billion, up 23 percent year over year. Operating losses narrowed from Q2 2025's $57.5 million to $47.7 million. ® When The Register started work on this story, we accessed the company's shareholder letter and were a little startled that its opening sentence read "We had a fantastic Q2. We're building a f**king great business." We closed that tab and later loaded the letter again to find it had a new filename and the text had changed to "We're building a bloody great business." Outlets who covered the company before we completed this story record the executive F-bomb.

Atlassian CEO Says AI Positive for Company as Tech Shares Fall

Cannon-Brookes said the company is continuing to spend significant money on research and development in artificial intelligence, with R&D spending for the quarter at $826 million. AI has been one of the best things to happen to Atlassian Corp., Chief Executive Officer Mike Cannon-Brookes said, as shares fell in the US in late Thursday trading following the company's second-quarter results, amid a broader AI-driven tech sector slump. "There's a lot of noise in the market, there's no doubt about that," he told Bloomberg Television in an interview. "I've been very public, I think that AI is one of the best things that's ever happened to Atlassian, that ever happened to my part of the software industry." Atlassian shares fell more than 8% in late trading in New York and have fallen more than 62% in the year to date. Cannon-Brookes said the company is continuing to spend significant money on research and development in artificial intelligence. R&D spending for the quarter was about 22.5% above estimates at $826 million, as the company invested heavily on AI and its Rovo product. AI Race Sends Big Tech's Capital Spending to Stratospheric High "We've always been a business that is long on R&D," he said in the interview. "In the current AI era that we're in, it's incredibly dangerous to be spending a small amount on R&D if you're trying to adapt." When asked on an earnings call about market concerns about AI's impact on the software sector, Cannon-Brookes said all of the conversations with customers in the past year had been "incredibly positive," pointing to the increase in long-term customer commitments in the past year.