Atlassian Corporation (TEAM Quick QuoteTEAM - Free Report) posted third-quarter fiscal 2026 non-GAAP earnings of $1.75 per share, which increased 80.4% year over year and beat the Zacks Consensus Estimate by 33.6%.

Atlassian beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 15%.

TEAM’s revenues rose 31.7% from the year-ago quarter to $1.79 billion, surpassing the Zacks Consensus Estimate by 5.52%.

TEAM's Subscription Mix Drives Top-Line Growth

Subscription revenues remained the clear engine in the quarter, reaching $1.70 billion. This continued the company’s multiyear shift toward recurring revenues as customers expand usage across its core products and newer collections.

Other revenues contributed $88.1 million. While smaller in scale, this line still adds diversification through marketplace-related and other offerings, supporting overall revenue durability in a model increasingly centered on subscriptions.

Atlassian Expands Cloud While Data Center Spikes

By deployment, Cloud continued to lead the business, with growth accelerating to 29% year over year. Management tied the performance to paid seat expansion, cross-sell of AI-enhanced collections and ongoing migrations, as customers deepen engagement across Jira and the broader platform.

Data Center revenues climbed to $560.7 million, up 44.3% year over year, while Marketplace and other revenues were $93.8 million, up 7%. The company attributed the Data Center strength primarily to the impact of its Data Center end-of-life revenue recognition dynamics and pull-forward in customer purchasing, partially offset by continued migrations to Cloud.

TEAM Leans Into AI With Rovo and Collections

AI remained central to the quarter’s narrative. In the shareholder letter, Atlassian pointed to continued adoption of Rovo, with AI credit usage rising more than 20% month over month and customers using Rovo growing ARR at roughly twice the rate of those who do not.

Collections continue to serve as an on-ramp for platform expansion. Service Collection surpassed $1 billion in annual recurring revenues and is growing more than 30% year over year, supported by AI capabilities threaded across Jira Service Management, Customer Service Management, Assets and Rovo. Management also highlighted stronger agentic automation activity across the platform, with Service Collection driving a large share of those runs.

Atlassian Margin Picture Skewed by Restructuring

Profitability looked very different depending on the lens. On a GAAP basis, Atlassian reported an operating loss of $56.3 million and an operating margin of (3%), reflecting significant restructuring charges tied to resource rebalancing and office lease consolidation.

On a non-GAAP basis, operating income was $607.2 million and operating margin expanded to 34%, up from 26% a year ago. Management credited revenue outperformance and operating leverage, while noting that the quarter’s restructuring actions are part of a sharper focus on durable, profitable growth.

TEAM Cash Flow, Buybacks and Balance Sheet

As of March 31, 2026, the company held $1.1 billion in cash, cash equivalents, and marketable securities compared to $1.6 billion at the end of the previous quarter.

Cash generation remained a highlight. Operating cash flow was $567.5 million and free cash flow was $561.3 million, translating to a 31% free-cash-flow margin for the quarter.

Capital returns were meaningful as well. Atlassian repurchased 11.8 million shares for $1.0 billion during the quarter, and management indicated $2.2 billion remained under its repurchase authorization. Ending cash and cash equivalents stood at $1.1 billion.

Atlassian Lifts Full-Year View, Sets Q4 Targets

For fourth-quarter fiscal 2026, the company expects total revenues to be in the range of $1,653 million to $1,661 million. The Zacks Consensus Estimate for the fourth quarter of fiscal 2026 revenues is pegged at $1.66 billion, indicating growth of 20% year over year.

Within that outlook, management expects Cloud revenue growth of approximately 25.5% year over year, Data Center revenue growth of approximately 8.5%, and Marketplace and other revenue growth of approximately 6.5%.

For fiscal 2026, Atlassian raised its total revenue growth view to approximately 24% year over year and lifted its Cloud revenue growth outlook to approximately 26.5%. The Zacks Consensus Estimate for fiscal 2026 revenues and earnings is pegged at $6.35 billion and $4.71, respectively.

The company also guided to a non-GAAP gross margin of about 88.0% and a non-GAAP operating margin of about 29.0% for the full year, underscoring a balance of continued investment with expanding profitability.

TEAM Zacks Rank & Stocks to Consider

TEAM currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector include Analog Devices (ADI Quick QuoteADI - Free Report) , Advanced Energy (AEIS Quick QuoteAEIS - Free Report) and Arista Networks (ANET Quick QuoteANET - Free Report) , each currently carrying a Zacks Rank 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Analog Devices have gained 41.3% in the year-to-date period. Analog Devices is set to report the second quarter of fiscal 2026 results in May. 20.

Shares of Advanced Energy have gained 76.3% in the year-to-date period. Advanced Energy is slated to report first-quarter 2026 results in May. 4.

Arista Networks shares have surged 26.1% in the year-to-date period. Arista Networks is set to report first-quarter 2026 results on May 5.