Atlassian Shares Jump on Strong FY26 Q1 Earnings

"Atlassian (NASDAQ: TEAM) delivered a solid quarter that rewarded patient investors. The stock climbed 4.2% intraday to $164.87 after the company reported Q1 FY26 results that beat on both earnings and revenue. EPS came in at $1.04 against a $0.84 estimate, while revenue hit $1.43 billion versus $1.40 billion expected. The real story, though, sits in the operational turnaround. Atlassian swung from a $32 million operating loss in the prior year to $322.7 million in non-GAAP operating income. That's the kind of inflection that matters."

"Cloud revenue expanded 26% year over year to $998 million, now representing roughly 70% of total revenue. That growth rate is meaningful in a software market where most mature players settle into the high teens. AI adoption is moving faster than many expected. The company's AI capabilities reached 3.5 million monthly active users in the quarter, up 50% sequentially. That's not just a feature anymore. It's becoming a material part of the product experience."

"Gross profit expanded to $1.17 billion, up 21% year over year, with margins holding steady at a healthy 82%. Operating cash flow jumped 60% to $128.7 million, and free cash flow landed at $114.6 million. Cash on the balance sheet grew 36% to $2.8 billion. These aren't flashy numbers, but they signal real operational discipline taking hold. Restructuring Costs Cloud the Picture GAAP results tell a different story. Operating loss hit $96.3 million, driven by restructuring charges that depressed margins by 4 percentage points."

Atlassian reported Q1 FY26 results with non-GAAP EPS of $1.04 and revenue of $1.43 billion, beating estimates. The company swung from a $32 million operating loss a year earlier to $322.7 million in non-GAAP operating income. Cloud revenue grew 26% to $998 million, comprising roughly 70% of total revenue, while AI features reached 3.5 million monthly active users, up 50% sequentially. Gross profit rose to $1.17 billion with an 82% margin. Operating cash flow increased 60% to $128.7 million and free cash flow reached $114.6 million. GAAP operating loss was $96.3 million after restructuring charges, and capital expenditures rose to $14.1 million.

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