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TEAM Q1 Earnings Beat Estimates on Cloud Growth and Margin Gains
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Key Takeaways
TEAM reported Q1 fiscal 2027 earnings of $1.65 per share, up 58.7% year over year.
Atlassian's Cloud revenues grew 30.5%, while non-GAAP operating margin expanded to 32.5% from 22.5%.
TEAM raised fiscal 2027 revenue growth guidance to 13.75%.
Atlassian Corporation (TEAM - Free Report) reported non-GAAP earnings of $1.65 per share for the first quarter of fiscal 2027, which increased 58.7% year over year. The figure beat the Zacks Consensus Estimate by 18.7%, supported by Cloud growth and improved operating leverage.
Revenues rose 23.7% year over year to $1.77 billion and surpassed the Zacks Consensus Estimate by 3.6%. Subscription annual recurring revenue (ARR) advanced 22.5% to $6.81 billion, reflecting customer expansion and cross-selling of Cloud offerings.
TEAM's Subscription Business Sustains Growth
By revenue type, subscription revenues grew 23.5% year over year to $1.70 billion from $1.37 billion, remaining the company's primary revenue source. Atlassian benefited from customer expansion across its core products and broader adoption of its software collections.
Other revenues increased 28% to $74.33 million from $58.05 million a year earlier. Separately, Atlassian Marketplace surpassed $7 billion in lifetime sales since its inception in 2012, supported by more than 6,000 apps, integrations and agents.
Atlassian Corporation PLC Price, Consensus and EPS Surprise
By deployment option, Cloud revenues climbed 30.5% year over year to $1.30 billion from $997.71 million. Management highlighted seat expansion in Jira and Confluence, cross-selling of Teamwork Collection and Service Collection, and continued Cloud migrations.
Data Center revenues rose 4.8% to $390.71 million, supported by customer retention during multi-year migrations. Marketplace and other revenues increased 27% to $78.98 million, benefiting from better-than-expected marketplace app sales.
TEAM Expands Its AI Collaboration Platform
At Team '26 Europe, Atlassian introduced the Agentic Multiplayer Protocol, designed to let AI agents collaborate alongside employees with assigned identities, permissions and audit trails. The company positioned its Teamwork Graph as the shared context connecting human and agent workflows.
Its rebuilt MCP Server now spans more than 220 tools and serves more than 2 million monthly users, handling over 15 million daily tool calls. Atlassian also expanded its OpenAI partnership to connect ChatGPT and Codex with enterprise work context.
Atlassian Deepens Enterprise Customer Adoption
Service Collection surpassed 70,000 customers and $1 billion in ARR, with recurring revenues growing more than 30% year over year. Seat growth from competitive displacements exceeded 40%, highlighting demand for service management beyond traditional IT teams.
Teamwork Collection surpassed 3,000 upgraded customers, a sevenfold increase from a year earlier. Remaining performance obligations increased 44.4% to $4.75 billion, reflecting larger and longer customer commitments. More than 87% of enterprise Cloud customers now use Rovo.
TEAM Benefits From Sharper Operating Leverage
Non-GAAP gross profit rose 25.2% year over year to $1.55 billion. Gross margin expanded to 87.2% from 86.2%, aided by cloud infrastructure optimization and more efficient AI model routing.
Non-GAAP operating income climbed 78.4% to $575.82 million from $322.69 million, while operating margin improved to 32.5% from 22.5%. Management cited revenue outperformance and moderated hiring as contributors to the margin expansion.
On a GAAP basis, operating expenses increased just 4% to $1.32 billion despite a 16% rise in marketing and sales spending. Operating income reached $188.79 million against an operating loss of $96.34 million a year earlier.
Atlassian Generates Strong Cash Flow
Operating cash flow increased 264% year over year to $468.53 million, while free cash flow rose 303.6% to $462.55 million. Free cash flow margin was 26%, benefiting primarily from strong customer collections.
As of Sept. 30, 2026, Atlassian held $1.12 billion in cash and cash equivalents against $990.05 million in long-term debt. The company repurchased 3.3 million shares during the quarter, returning $581 million to shareholders, with $1.3 billion in repurchase authorization remaining.
TEAM Raises Fiscal 2027 Growth Outlook
For the second quarter of fiscal 2027, Atlassian expects revenues of $1,825 million to $1,835 million. Cloud revenues are projected to grow approximately 27%, while Data Center revenues are expected to decline 14% and Marketplace and other revenues to rise 20%. Non-GAAP gross and operating margins are forecast at 86.5% and 26%, respectively.
For fiscal 2027, management raised its total revenue growth outlook to 13.75% from 13%, Cloud growth to 26% from 25.5%, and Subscription ARR growth to 18.5% from 18%. The company now expects a 16% decline in Data Center revenues and 15% growth in Marketplace and other revenue.
Atlassian also increased its non-GAAP operating margin target to 25.5% from 25%, while retaining a gross margin target of 86.5%. Management noted that Data Center purchases pulled forward by its previously announced March 2029 end-of-life plan will weigh on fiscal 2027 comparisons.
Advanced Energy Industries shares have lost 11.4% in the year-to-date period. The Zacks Consensus Estimate for Advanced Energy Industries’ 2026 earnings indicates a year-over-year increase of 75%. Estimates have remained unchanged for the past 30 days.
Shares of Telos have lost 6.5% year to date. The Zacks Consensus Estimate for Telos’ 2026 earnings suggests a year-over-year rise of 66.7%. Estimates have been revised downward in the past 30 days.
ASE Technology’s shares have surged 84.6% year to date. The Zacks Consensus Estimate for ASE Technology’s 2026 earnings indicates year-over-year growth of 129.8%. Estimates have been revised upward in the past seven days.
View the Zacks #1 Rank List
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TEAM Q1 Earnings Beat Estimates on Cloud Growth and Margin Gains
Key Takeaways
Atlassian Corporation (TEAM - Free Report) reported non-GAAP earnings of $1.65 per share for the first quarter of fiscal 2027, which increased 58.7% year over year. The figure beat the Zacks Consensus Estimate by 18.7%, supported by Cloud growth and improved operating leverage.
Revenues rose 23.7% year over year to $1.77 billion and surpassed the Zacks Consensus Estimate by 3.6%. Subscription annual recurring revenue (ARR) advanced 22.5% to $6.81 billion, reflecting customer expansion and cross-selling of Cloud offerings.
TEAM's Subscription Business Sustains Growth
By revenue type, subscription revenues grew 23.5% year over year to $1.70 billion from $1.37 billion, remaining the company's primary revenue source. Atlassian benefited from customer expansion across its core products and broader adoption of its software collections.
Other revenues increased 28% to $74.33 million from $58.05 million a year earlier. Separately, Atlassian Marketplace surpassed $7 billion in lifetime sales since its inception in 2012, supported by more than 6,000 apps, integrations and agents.
Atlassian Corporation PLC Price, Consensus and EPS Surprise
Atlassian Corporation PLC price-consensus-eps-surprise-chart | Atlassian Corporation PLC Quote
Atlassian's Cloud Business Outpaces Data Center
By deployment option, Cloud revenues climbed 30.5% year over year to $1.30 billion from $997.71 million. Management highlighted seat expansion in Jira and Confluence, cross-selling of Teamwork Collection and Service Collection, and continued Cloud migrations.
Data Center revenues rose 4.8% to $390.71 million, supported by customer retention during multi-year migrations. Marketplace and other revenues increased 27% to $78.98 million, benefiting from better-than-expected marketplace app sales.
TEAM Expands Its AI Collaboration Platform
At Team '26 Europe, Atlassian introduced the Agentic Multiplayer Protocol, designed to let AI agents collaborate alongside employees with assigned identities, permissions and audit trails. The company positioned its Teamwork Graph as the shared context connecting human and agent workflows.
Its rebuilt MCP Server now spans more than 220 tools and serves more than 2 million monthly users, handling over 15 million daily tool calls. Atlassian also expanded its OpenAI partnership to connect ChatGPT and Codex with enterprise work context.
Atlassian Deepens Enterprise Customer Adoption
Service Collection surpassed 70,000 customers and $1 billion in ARR, with recurring revenues growing more than 30% year over year. Seat growth from competitive displacements exceeded 40%, highlighting demand for service management beyond traditional IT teams.
Teamwork Collection surpassed 3,000 upgraded customers, a sevenfold increase from a year earlier. Remaining performance obligations increased 44.4% to $4.75 billion, reflecting larger and longer customer commitments. More than 87% of enterprise Cloud customers now use Rovo.
TEAM Benefits From Sharper Operating Leverage
Non-GAAP gross profit rose 25.2% year over year to $1.55 billion. Gross margin expanded to 87.2% from 86.2%, aided by cloud infrastructure optimization and more efficient AI model routing.
Non-GAAP operating income climbed 78.4% to $575.82 million from $322.69 million, while operating margin improved to 32.5% from 22.5%. Management cited revenue outperformance and moderated hiring as contributors to the margin expansion.
On a GAAP basis, operating expenses increased just 4% to $1.32 billion despite a 16% rise in marketing and sales spending. Operating income reached $188.79 million against an operating loss of $96.34 million a year earlier.
Atlassian Generates Strong Cash Flow
Operating cash flow increased 264% year over year to $468.53 million, while free cash flow rose 303.6% to $462.55 million. Free cash flow margin was 26%, benefiting primarily from strong customer collections.
As of Sept. 30, 2026, Atlassian held $1.12 billion in cash and cash equivalents against $990.05 million in long-term debt. The company repurchased 3.3 million shares during the quarter, returning $581 million to shareholders, with $1.3 billion in repurchase authorization remaining.
TEAM Raises Fiscal 2027 Growth Outlook
For the second quarter of fiscal 2027, Atlassian expects revenues of $1,825 million to $1,835 million. Cloud revenues are projected to grow approximately 27%, while Data Center revenues are expected to decline 14% and Marketplace and other revenues to rise 20%. Non-GAAP gross and operating margins are forecast at 86.5% and 26%, respectively.
For fiscal 2027, management raised its total revenue growth outlook to 13.75% from 13%, Cloud growth to 26% from 25.5%, and Subscription ARR growth to 18.5% from 18%. The company now expects a 16% decline in Data Center revenues and 15% growth in Marketplace and other revenue.
Atlassian also increased its non-GAAP operating margin target to 25.5% from 25%, while retaining a gross margin target of 86.5%. Management noted that Data Center purchases pulled forward by its previously announced March 2029 end-of-life plan will weigh on fiscal 2027 comparisons.
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 Advanced Energy Industries (AEIS - Free Report) , Telos (TLS - Free Report) and ASE Technology (ASX - Free Report) . Advanced Energy Industries, Telos and ASE Technology sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Advanced Energy Industries shares have lost 11.4% in the year-to-date period. The Zacks Consensus Estimate for Advanced Energy Industries’ 2026 earnings indicates a year-over-year increase of 75%. Estimates have remained unchanged for the past 30 days.
Shares of Telos have lost 6.5% year to date. The Zacks Consensus Estimate for Telos’ 2026 earnings suggests a year-over-year rise of 66.7%. Estimates have been revised downward in the past 30 days.
ASE Technology’s shares have surged 84.6% year to date. The Zacks Consensus Estimate for ASE Technology’s 2026 earnings indicates year-over-year growth of 129.8%. Estimates have been revised upward in the past seven days.