Atlassian forecasts 13.75% revenue growth in 2027; shares fall 10.9%
Key Facts
Atlassian shares fell 10.9% at 9:50 a.m. Eastern time on Nov. 6, as forecasts for slower growth overshadowed first-quarter fiscal 2027 results that beat analysts’ estimates. The company reported results on Nov. 5, posting revenue of $1.772 billion for the quarter ended Sept. 30, 2026, up 24% from $1.433 billion in the same period a year earlier. Atlassian forecast revenue growth of about 13.75% for fiscal 2027, less than half the pace achieved in the first quarter. It also forecast slower growth in annual recurring revenue, with cloud and data center products following different trajectories. The share price move reflects investors’ response to the gap between strong current results and the path the company has set for the rest of the year.
On a quarterly basis, adjusted earnings per share were $1.65, topping analysts’ estimate of $1.43, while revenue was $1.77 billion against a consensus estimate of $1.71 billion, according to Investing.com. Quarterly revenue rose 24% year over year, from $1.433 billion to $1.772 billion, according to Atlassian’s shareholder letter. But the forecast for annual revenue growth of about 13.75% compares with the first quarter’s 24% increase, showing the expected scale of the slowdown in overall growth. Annual recurring revenue growth was 22.5% in the first quarter, according to the company’s letter, while Investing.com reported a rate of 23% for the quarter when comparing it with the annual outlook. In either case, the forecast growth rate for this revenue stream falls to about 18.5% in fiscal 2027.
Cloud metrics and future obligations offer a more detailed picture of current demand. Cloud revenue grew 30.5% year over year in the first quarter, according to the shareholder letter, while remaining performance obligations rose to $4.7 billion, an increase of more than 44%, and current performance obligations increased 28%. The figures put strong cloud growth and accumulated contractual obligations alongside the company’s forecast for slower overall growth in the fiscal year. The CEO said Atlassian is focused on AI, enterprise and the “system of work,” and on delivering durable, profitable growth. The company links its strategic direction to these priorities as its outlook points to faster cloud growth and a contraction in data center.
The company forecast cloud revenue growth of about 26% in fiscal 2027, compared with a decline of about 16% in Data Center revenue, according to Investing.com. This comes amid an announced timetable to end support for affected Data Center products in stages, starting on March 30, 2026, with the products reaching end of life on March 28, 2029, according to Atlassian. For the nearer term, the company expects revenue of between $1.83 billion and $1.84 billion in the second quarter of fiscal 2027. The guidance includes expected cloud revenue growth of about 27% and a decline of about 14% in Data Center revenue. The second-quarter guidance gives investors a near-term indicator for tracking the divergence between the two businesses, while the expected annual decline in data center remains part of the announced shift in the revenue model.
Chief Financial Officer James Chung said the company will face tougher year-over-year comparisons in the second half of fiscal 2027. The forecast for cloud revenue growth of about 27% in the second quarter is also below the 31% pace achieved in the first quarter, Investing.com reported. The expected slowdown in cloud comes alongside an anticipated decline in Data Center revenue, putting the revenue mix and growth pace under investors’ scrutiny in the coming quarters. TEAM shares closed at $183.29 on Nov. 5, according to EL7 data, the close of the session before trading on Nov. 6. At 9:50 a.m. Eastern time on Nov. 6, the stock was down 10.9%, according to Investing.com.