Atlassian's cloud growth slows down and puts pressure on share price

"Atlassian's share price took a hit, even though the company clearly outperformed analysts' expectations. Investors reacted mainly to signs that growth in cloud activities is leveling off, a development that outweighed the strong quarterly figures. In the second quarter of fiscal year 2026, which ended on December 31, Atlassian exceeded expectations in terms of both revenue and profit. Revenue continued to grow strongly, while adjusted earnings per share were also higher than in the same period a year earlier."

"Underlying growth in the cloud segment remains strong. The number of customers spending more than $10,000 per year on cloud subscriptions increased again. Atlassian is also in a solid financial position, with significant free cash flow and a well-filled cash position at the end of the quarter. This gives the company room to continue investing in product development and innovation. An important focus area in this regard is artificial intelligence."

"Atlassian recently expanded its AI assistant Rovo significantly, with new capabilities aimed at automating and supporting work within organizations. The assistant is being used in more and more places within the Atlassian ecosystem and now attracts millions of active users per month. According to management, AI is playing an increasingly central role in the company's strategy. Looking ahead, Atlassian expects total revenue to continue to rise in the coming quarters, particularly thanks to cloud and data center service"

Atlassian exceeded analysts' expectations for revenue and adjusted earnings per share in the second quarter of fiscal 2026, demonstrating continued demand for its collaboration software. Revenue growth remained strong year-over-year, and the customer base spending over $10,000 annually on cloud subscriptions increased. Investors focused on the outlook, with management forecasting slower cloud revenue growth next quarter compared with prior ~26% pace, prompting profit-taking and a nearly four percent share decline. The company maintains significant free cash flow and cash reserves, enabling continued investment in product development. Artificial intelligence, including an expanded AI assistant Rovo with millions of monthly users, is a strategic priority.

Read at Techzine Global