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Can Strong Cloud Growth Sustain Atlassian's Revenue Momentum?
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Key Takeaways
Atlassian's cloud revenues rose 31% to $1.2 billion, outpacing 28% total revenue growth in fiscal 2026.
Service Collection's agentic automation more than tripled as customers expanded usage beyond IT teams.
Atlassian expects subscription ARR growth of 18% in fiscal 2027, down from 23% in fiscal 2026.
Atlassian (TEAM - Free Report) is seeing strong momentum in its cloud business, which remains a key driver of overall growth. In the fourth quarter of fiscal 2026, cloud revenues rose 31% year over year to $1.2 billion, faster than the company’s 28% total revenue growth to $1.8 billion. Management said cloud performance was helped by strong cross-sell and seat expansion, while data center-to-cloud migrations remained in line with expectations.
The company is also seeing higher adoption of its collections, particularly Teamwork Collection and Service Collection. Service Collection revenue growth accelerated in the quarter, supported by growing use of AI and agentic automation. Atlassian said agentic automation in Service Collection increased more than threefold as customers expanded usage beyond IT teams into HR, legal, finance and marketing. Teamwork Collection also saw strong demand as customers increased Rovo credits and expanded seats.
Another positive factor is the broader expansion of customers across the Atlassian platform. Management said customers are increasingly consolidating their collaboration tools onto Atlassian, with Teamwork customers having four to five times more paid seats per instance than standalone Jira or Confluence customers. Strong seat growth among both technical users and knowledge workers is helping support cloud revenues and gives Atlassian more opportunities to expand within existing accounts.
Still, sustaining this pace could become more challenging. Atlassian expects subscription ARR growth of 18% in fiscal 2027 compared with 23% in fiscal 2026, as management takes a more cautious view of macroeconomic, fiscal policy and geopolitical uncertainty. Even so, continued cloud adoption, cross-sell and seat expansion could help Atlassian maintain solid revenue growth as it expands its enterprise customer base.
The Zacks Consensus Estimate for TEAM's fiscal 2027 and 2028 revenues indicates year-over-year growth of 13% and 14.8%, respectively.
Atlassian Faces Stiff Competition
Atlassian faces stiff competition from other key players in the cloud software industry such as Salesforce (CRM - Free Report) and ServiceNow (NOW - Free Report) .
Salesforce competes with Atlassian through offerings such as Agentforce, Data Cloud and Slack, which together create a unified ecosystem that connects customer data with integrated AI across systems, apps and devices. In the second quarter of fiscal 2027, Agentforce’s ARR exceeded $1.5 billion, up 240% year over year. Salesforce expects this momentum to continue in fiscal 2027 on the back of robust customer demand for its agentic offerings.
ServiceNow is seeing strong demand for its Agentic AI products as enterprises look to automate more work and improve productivity. The company is expanding AI across IT, customer service, employee service and security. Management said customers now want AI that can complete tasks and deliver clear business value instead of simply assisting employees. This is helping drive adoption of the company's AI offerings. AI annual contract value (ACV) crossed $1 billion during the second quarter of 2026, and ServiceNow expects AI ACV to exceed $1.5 billion by the end of 2026.
TEAM’s Price Performance, Valuation & Estimates
TEAM shares have jumped 18.4% in the year-to-date period compared with the Zacks Internet - Software industry’s return of 2.2%.
TEAM YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Atlassian trades at a forward 12-month price-to-sales ratio of 6.35X compared with the industry’s 4.17X. TEAM has a Value Score of F.
TEAM’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TEAM's fiscal 2027 earnings is pegged at $5.52 per share, unchanged over the past 30 days, indicating a year-over-year decline of 5.6%.
View the Zacks #1 Rank List
Image: Bigstock
Can Strong Cloud Growth Sustain Atlassian's Revenue Momentum?
Key Takeaways
Atlassian (TEAM - Free Report) is seeing strong momentum in its cloud business, which remains a key driver of overall growth. In the fourth quarter of fiscal 2026, cloud revenues rose 31% year over year to $1.2 billion, faster than the company’s 28% total revenue growth to $1.8 billion. Management said cloud performance was helped by strong cross-sell and seat expansion, while data center-to-cloud migrations remained in line with expectations.
The company is also seeing higher adoption of its collections, particularly Teamwork Collection and Service Collection. Service Collection revenue growth accelerated in the quarter, supported by growing use of AI and agentic automation. Atlassian said agentic automation in Service Collection increased more than threefold as customers expanded usage beyond IT teams into HR, legal, finance and marketing. Teamwork Collection also saw strong demand as customers increased Rovo credits and expanded seats.
Another positive factor is the broader expansion of customers across the Atlassian platform. Management said customers are increasingly consolidating their collaboration tools onto Atlassian, with Teamwork customers having four to five times more paid seats per instance than standalone Jira or Confluence customers. Strong seat growth among both technical users and knowledge workers is helping support cloud revenues and gives Atlassian more opportunities to expand within existing accounts.
Still, sustaining this pace could become more challenging. Atlassian expects subscription ARR growth of 18% in fiscal 2027 compared with 23% in fiscal 2026, as management takes a more cautious view of macroeconomic, fiscal policy and geopolitical uncertainty. Even so, continued cloud adoption, cross-sell and seat expansion could help Atlassian maintain solid revenue growth as it expands its enterprise customer base.
The Zacks Consensus Estimate for TEAM's fiscal 2027 and 2028 revenues indicates year-over-year growth of 13% and 14.8%, respectively.
Atlassian Faces Stiff Competition
Atlassian faces stiff competition from other key players in the cloud software industry such as Salesforce (CRM - Free Report) and ServiceNow (NOW - Free Report) .
Salesforce competes with Atlassian through offerings such as Agentforce, Data Cloud and Slack, which together create a unified ecosystem that connects customer data with integrated AI across systems, apps and devices. In the second quarter of fiscal 2027, Agentforce’s ARR exceeded $1.5 billion, up 240% year over year. Salesforce expects this momentum to continue in fiscal 2027 on the back of robust customer demand for its agentic offerings.
ServiceNow is seeing strong demand for its Agentic AI products as enterprises look to automate more work and improve productivity. The company is expanding AI across IT, customer service, employee service and security. Management said customers now want AI that can complete tasks and deliver clear business value instead of simply assisting employees. This is helping drive adoption of the company's AI offerings. AI annual contract value (ACV) crossed $1 billion during the second quarter of 2026, and ServiceNow expects AI ACV to exceed $1.5 billion by the end of 2026.
TEAM’s Price Performance, Valuation & Estimates
TEAM shares have jumped 18.4% in the year-to-date period compared with the Zacks Internet - Software industry’s return of 2.2%.
TEAM YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, Atlassian trades at a forward 12-month price-to-sales ratio of 6.35X compared with the industry’s 4.17X. TEAM has a Value Score of F.
TEAM’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TEAM's fiscal 2027 earnings is pegged at $5.52 per share, unchanged over the past 30 days, indicating a year-over-year decline of 5.6%.
Image Source: Zacks Investment Research
TEAM stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.