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Atlassian NASDAQ: TEAM executives highlighted what they described as strong second-quarter fiscal 2026 performance, driven by enterprise execution, cloud momentum, and increasing adoption of the company’s AI capabilities. In prepared remarks and during Q&A, CEO and Co-Founder Mike Cannon-Brookes and CFO Joe Binns repeatedly pointed to accelerating remaining performance obligations (RPO), expanding enterprise deal activity, and continued progress in cloud migrations and AI monetization.
Quarter highlights: run-rate milestone, cloud growth, and RPO acceleration
Cannon-Brookes said the company “surpassed $6 billion in annual run rate revenue” and delivered its “first-ever $1 billion Cloud revenue quarter,” with cloud revenue up 26% year-over-year. He also said RPO grew 44% year-over-year to $3.8 billion, calling it a “vote of confidence” from customers signing multi-year commitments.
The CEO emphasized enterprise traction, stating Atlassian closed a record number of deals greater than $1 million in annual contract value (ACV) during the quarter and that the number of those deals “nearly doubl[ed] year-over-year again.” He cited large customers including Cisco, Expedia, Reddit, and Synchrony Financial as relying on Atlassian to power “critical business processes and workflows.”
AI adoption and the Teamwork Collection as key drivers
Management framed AI as a major catalyst for customer upgrades and longer-term commitments. Cannon-Brookes said Rovo surpassed 5 million monthly active users of Atlassian’s AI capabilities and described AI as “the best thing to happen to Atlassian.”
He attributed Atlassian’s AI differentiation to several factors, including the scale of the company’s “Teamwork Graph,” which he said contains “well more than 100 billion objects and connections across first- and third-party tools,” and the company’s long-term investments in enterprise-grade security, data governance, permissioning, and compliance.
On monetization, Cannon-Brookes said the Teamwork Collection has become the company’s “main AI monetization driver.” He noted that in less than three quarters, more than 1,000 customers upgraded to the Teamwork Collection, purchasing more than 1 million seats to gain access to more AI capabilities and credits. During Q&A, he also said AI capabilities are being cited directly by customers as reasons to move to the Teamwork Collection and to upgrade to cloud.
Customer conversations shifting to strategic partnerships
Responding to questions about how buyer conversations have evolved, Cannon-Brookes said discussions have moved “to a higher level than we’ve ever been having them before,” with customers looking for “strategic partners to help them through AI.” He said customers are deploying Atlassian’s AI features—such as chat and agents—into “millions of workflows” per month, and that they are seeing value more quickly.
He also pointed to the company’s accelerating RPO growth as evidence that customers are making longer-term bets, describing multi-year deals as customers choosing a platform not just for 2026, but for “2027, 2028, and 2029.”
Pricing approach: seat-based remains central, with hybrid elements
On pricing strategy, Cannon-Brookes said the company’s current pricing is “delivering” for customers and argued that price is “not a huge part” of customer conversations, while acknowledging customers still want to understand value. He said customers in Atlassian’s category tend to prefer “understandable, predictable pricing,” which has typically been seat-based, and described the number of people collaborating as the “best proxy” for value “at the moment.”
He also addressed concerns about AI costs, pointing to gross margin improvement while delivering AI usage at scale. At the same time, he noted Atlassian already operates with a hybrid model that includes consumption-based offerings such as Forge, additional AI credits beyond limits, and Bitbucket Pipelines.
Binns later added that Atlassian believes it has “plenty of headroom for further pricing,” given the pace of innovation and that prices remain “significantly below many of our software peers and competitors across our portfolio.” On Data Center pricing, Binns said any changes would be made in a “deliberate and planful approach” designed to provide incentives for customers to upgrade to cloud.
Cloud migrations, seat expansion, and Service Collection momentum
On cloud migrations, Binns said Atlassian saw “very healthy Cloud migrations” in Q2, contributing a “mid- to high-single-digit impact” to cloud revenue growth rates. He said the company continues to expect migrations to drive a mid- to high-single-digit contribution to cloud revenue growth for the full year.
On seat expansion, Binns said expansion was “broad-based” across both technical and non-technical users and that the company is making progress with business users, “particularly with the TWC product.” He added that seat expansion rates across enterprise and SMB have remained stable for “four to six quarters.”
Cannon-Brookes expanded on the company’s push beyond software teams, describing the “System of Work” as an effort to grow into the broader knowledge worker population. He said the Service Collection is seeing growth beyond traditional IT and operations into HR and finance, and noted Atlassian launched a customer service application within the Service Collection during the quarter.
Asked specifically about Jira Service Management (JSM), Cannon-Brookes said the Service Collection passed 65,000 customers, reached 50% of the Fortune 500, and that the enterprise side grew over 60% year-over-year. He also said more than two-thirds of Service Collection customers are using it for non-IT use cases. He added that in the last six months, more than 40% of agentic workflows built were in Service Collection customers and service workflows, calling service a natural area for deploying AI agents.
Looking ahead, management reiterated confidence in Atlassian’s medium-term targets. Binns said there was “no change” to the company’s outlook calling for “20%+ compounded annual revenue growth through FY 2027,” as well as a “25%+ non-GAAP operating margin commitment in FY 2027,” while adding that near-term guidance for FY 2026 continues to be conservative and risk-adjusted.
About Atlassian NASDAQ: TEAM
Atlassian Corporation Plc is a software company headquartered in Sydney, Australia, best known for developing collaboration, project management and software development tools. Founded in 2002 by Mike Cannon-Brookes and Scott Farquhar, Atlassian grew from a small engineering-focused team into a publicly traded company after its initial public offering in 2015. The company serves a global customer base that spans small teams to large enterprises across technology, financial services, government and other sectors.
Atlassian’s product portfolio centers on tools designed to help teams plan, build and support software and business processes.
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