We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Key Reasons to Buy Atlassian Stock Despite 37% YTD Decline
Read MoreHide Full Article
Key Takeaways
Atlassian's RPO jumped 37% YoY to $4B in Q3 FY26.
TEAM's Rovo users are expanding ARR at nearly twice the rate of non-Rovo customers.
TEAM trades at 3.54X forward P/S, below sector and software peer valuation levels.
Atlassian Corporation (TEAM - Free Report) has seen a sharp fall in its stock price, declining 37.4% year to date (YTD), significantly underperforming the Zacks Computer and Technology sector’s growth of 23.5% and the Zacks Internet – Software industry’s drop of 6.3%.
TEAM’s underperformance reflects concerns over AI-investment execution risk, sizable restructuring-related margin pressure, moderating Data Center expansion trends and uncertainty surrounding the long-term cloud migration transition. These factors appear to be dampening the company's otherwise strong revenue growth and AI adoption momentum.
Atlassian stock has also underperformed its software peers, including Autodesk (ADSK - Free Report) , Gitlab (GTLB - Free Report) and MongoDB (MDB - Free Report) . In the year-to-date period, Autodesk, GitLab and MongoDB shares have declined by a more modest 22.5%, 17.6% and 12.3%, respectively.
TEAM Stock’s Performance
Image Source: Zacks Investment Research
However, we believe the dip offers a massive opportunity for investors to buy the stock. Atlassian’s long-term prospects remain bright, supported by its AI-native platform strategy, increasing enterprise adoption and growing monetization of AI capabilities through Rovo and Collections. Let’s dig deep to find out more.
Growing Backlog and Enterprise Wins Aid Atlassian
Atlassian’s enterprise strategy is emerging as a key long-term growth driver. The company’s Remaining Performance Obligations (RPO) climbed 37% year over year to $4 billion in the third quarter of fiscal 2026, reflecting strong demand and increasing visibility into future revenues. Large organizations such as Siemens Energy, BBC, Rheinmetall and Wayfair expanded their commitments during the quarter, underscoring Atlassian’s growing relevance among global enterprises seeking secure, scalable and governance-rich workflow platforms.
The company is benefiting from customers signing larger and longer-duration agreements while broadening adoption across its System of Work platform. Management noted that enterprises are increasingly connecting teams, workflows, knowledge and AI capabilities through Atlassian’s platform, driving deeper engagement and expansion. This momentum is also evident in cloud adoption, with customers continuing to expand seats across core products and embrace higher-value offerings such as Service Collection and Teamwork Collection.
Looking ahead, Atlassian’s focus on enterprise customers, combined with its AI-powered platform and growing backlog, positions it to generate durable recurring revenue growth. The company’s ability to secure larger commitments from global enterprises strengthens its competitive position and provides a solid foundation for long-term expansion.
AI-Powered Rovo Strengthens Atlassian’s Prospects
Atlassian’s AI strategy is rapidly evolving into a meaningful growth engine, with Rovo emerging as a key driver of customer expansion and platform monetization. The company continues to add millions of monthly active Rovo users, while AI credit consumption is growing more than 20% month over month, indicating increasing adoption of higher-value AI workflows. Importantly, customers using Rovo are growing their annual recurring revenue (ARR) at roughly twice the rate of non-Rovo customers, highlighting the platform’s ability to drive deeper engagement and higher spending. Teamwork Collection customers are also using about twice as many AI credits and deploying twice as many agents as comparable standalone customers.
Atlassian is strengthening Rovo’s capabilities through innovations such as Rovo Service, Rovo Dev and expanded integrations with third-party applications and Google Cloud’s Gemini models. Powered by the Teamwork Graph, Rovo delivers context-rich AI experiences that help automate workflows, improve productivity and enhance decision-making. As enterprises increasingly embrace AI-native operations, Rovo appears well-positioned to become a significant long-term revenue contributor while reinforcing Atlassian’s competitive advantage across its platform ecosystem.
TEAM’s Earnings Estimates Show Positive Trend
The positive revision to the earnings forecast indicates analysts' growing confidence in Atlassian's prospects.
The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $5.48 per share, up 17.1% over the past 60 days, indicating 48.91% year-over-year growth.
The consensus estimate for first-quarter fiscal 2027 earnings is pegged at $1.28 per share, up 10.3% over the past 60 days, indicating 23.08% year-over-year growth.
TEAM’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 21.47%.
Atlassian is currently trading at a forward 12-month P/S multiple of 3.54X, below the sector's average of 7.02X and the S&P 500’s average of 5.25X.
At 3.54X P/S, TEAM is trading at a valuation much lower than its closest peers, such as Autodesk, Gitlab and MongoDB, which trade at substantially richer multiples of 5.75X, 4.5X and 9.69X, respectively.
Atlassian's discounted valuation is supported by its accelerating cloud growth, expanding enterprise adoption and rising AI monetization through Rovo. The company’s differentiated Teamwork Graph, growing Service Collection business and strong backlog of long-term enterprise contracts position it for durable revenue growth.
Price/Sales Ratio (F12M)
Image Source: Zacks Investment Research
Conclusion: TEAM Is a Buy
Despite a year-to-date decline, Atlassian's strong enterprise momentum, expanding AI-driven monetization through Rovo, growing backlog and improving earnings outlook reinforce its long-term growth story. Trading at a significant discount to peers, TEAM offers an attractive entry point for investors seeking exposure to a high-quality software company with durable growth prospects, making the stock a compelling buy now.
View the Zacks #1 Rank List
Image: Bigstock
Key Reasons to Buy Atlassian Stock Despite 37% YTD Decline
Key Takeaways
Atlassian Corporation (TEAM - Free Report) has seen a sharp fall in its stock price, declining 37.4% year to date (YTD), significantly underperforming the Zacks Computer and Technology sector’s growth of 23.5% and the Zacks Internet – Software industry’s drop of 6.3%.
TEAM’s underperformance reflects concerns over AI-investment execution risk, sizable restructuring-related margin pressure, moderating Data Center expansion trends and uncertainty surrounding the long-term cloud migration transition. These factors appear to be dampening the company's otherwise strong revenue growth and AI adoption momentum.
Atlassian stock has also underperformed its software peers, including Autodesk (ADSK - Free Report) , Gitlab (GTLB - Free Report) and MongoDB (MDB - Free Report) . In the year-to-date period, Autodesk, GitLab and MongoDB shares have declined by a more modest 22.5%, 17.6% and 12.3%, respectively.
TEAM Stock’s Performance
Image Source: Zacks Investment Research
However, we believe the dip offers a massive opportunity for investors to buy the stock. Atlassian’s long-term prospects remain bright, supported by its AI-native platform strategy, increasing enterprise adoption and growing monetization of AI capabilities through Rovo and Collections. Let’s dig deep to find out more.
Growing Backlog and Enterprise Wins Aid Atlassian
Atlassian’s enterprise strategy is emerging as a key long-term growth driver. The company’s Remaining Performance Obligations (RPO) climbed 37% year over year to $4 billion in the third quarter of fiscal 2026, reflecting strong demand and increasing visibility into future revenues. Large organizations such as Siemens Energy, BBC, Rheinmetall and Wayfair expanded their commitments during the quarter, underscoring Atlassian’s growing relevance among global enterprises seeking secure, scalable and governance-rich workflow platforms.
The company is benefiting from customers signing larger and longer-duration agreements while broadening adoption across its System of Work platform. Management noted that enterprises are increasingly connecting teams, workflows, knowledge and AI capabilities through Atlassian’s platform, driving deeper engagement and expansion. This momentum is also evident in cloud adoption, with customers continuing to expand seats across core products and embrace higher-value offerings such as Service Collection and Teamwork Collection.
Looking ahead, Atlassian’s focus on enterprise customers, combined with its AI-powered platform and growing backlog, positions it to generate durable recurring revenue growth. The company’s ability to secure larger commitments from global enterprises strengthens its competitive position and provides a solid foundation for long-term expansion.
AI-Powered Rovo Strengthens Atlassian’s Prospects
Atlassian’s AI strategy is rapidly evolving into a meaningful growth engine, with Rovo emerging as a key driver of customer expansion and platform monetization. The company continues to add millions of monthly active Rovo users, while AI credit consumption is growing more than 20% month over month, indicating increasing adoption of higher-value AI workflows. Importantly, customers using Rovo are growing their annual recurring revenue (ARR) at roughly twice the rate of non-Rovo customers, highlighting the platform’s ability to drive deeper engagement and higher spending. Teamwork Collection customers are also using about twice as many AI credits and deploying twice as many agents as comparable standalone customers.
Atlassian is strengthening Rovo’s capabilities through innovations such as Rovo Service, Rovo Dev and expanded integrations with third-party applications and Google Cloud’s Gemini models. Powered by the Teamwork Graph, Rovo delivers context-rich AI experiences that help automate workflows, improve productivity and enhance decision-making. As enterprises increasingly embrace AI-native operations, Rovo appears well-positioned to become a significant long-term revenue contributor while reinforcing Atlassian’s competitive advantage across its platform ecosystem.
TEAM’s Earnings Estimates Show Positive Trend
The positive revision to the earnings forecast indicates analysts' growing confidence in Atlassian's prospects.
The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $5.48 per share, up 17.1% over the past 60 days, indicating 48.91% year-over-year growth.
The consensus estimate for first-quarter fiscal 2027 earnings is pegged at $1.28 per share, up 10.3% over the past 60 days, indicating 23.08% year-over-year growth.
TEAM’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 21.47%.
Atlassian Corporation PLC Price and Consensus
Atlassian Corporation PLC price-consensus-chart | Atlassian Corporation PLC Quote
TEAM Trades at an Attractive Valuation
Atlassian is currently trading at a forward 12-month P/S multiple of 3.54X, below the sector's average of 7.02X and the S&P 500’s average of 5.25X.
At 3.54X P/S, TEAM is trading at a valuation much lower than its closest peers, such as Autodesk, Gitlab and MongoDB, which trade at substantially richer multiples of 5.75X, 4.5X and 9.69X, respectively.
Atlassian's discounted valuation is supported by its accelerating cloud growth, expanding enterprise adoption and rising AI monetization through Rovo. The company’s differentiated Teamwork Graph, growing Service Collection business and strong backlog of long-term enterprise contracts position it for durable revenue growth.
Price/Sales Ratio (F12M)
Image Source: Zacks Investment Research
Conclusion: TEAM Is a Buy
Despite a year-to-date decline, Atlassian's strong enterprise momentum, expanding AI-driven monetization through Rovo, growing backlog and improving earnings outlook reinforce its long-term growth story. Trading at a significant discount to peers, TEAM offers an attractive entry point for investors seeking exposure to a high-quality software company with durable growth prospects, making the stock a compelling buy now.
TEAM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.