Atlassian shares fall 15.6% after first-quarter results and 2027 outlook
Key Facts
Atlassian shares fell 15.6% on November 6 after the company reported first-quarter fiscal 2027 results, Reuters reported, as the reaction refocused attention on the growth outlook after quarterly results topped analyst estimates. Adjusted earnings per share came in at $1.65, compared with a consensus estimate of $1.43, while revenue reached $1.77 billion, up 24% year over year and ahead of expectations of $1.71 billion. But the company’s forecast for full-year revenue growth of about 13.75% puts the first-quarter pace in the context of a slower period ahead. It also forecast growth of about 18.5% in annual recurring subscription revenue, making the annual expansion outlook a key focus for investors assessing the results.
In its shareholder letter, Atlassian said annual recurring subscription revenue grew 22.5% year over year in the first quarter, cloud revenue rose 30.5%, and remaining performance obligations increased 44.4%. These figures point to strong growth in existing business and contracted demand during the quarter, against the company’s forecast for revenue growth of about 13.75% in fiscal 2027. Revenue grew 24% in the first quarter, a faster pace than the annual forecast, while annual recurring subscription revenue is expected to grow about 18.5% for the year. The company said second-quarter cloud revenue growth would be about 27% year over year, compared with growth of 31% in the first quarter, according to published coverage of the results. That would mark a slowdown in the expected growth rate between the two quarters, alongside slower annual outlooks for revenue and subscriptions.
Atlassian forecast data center revenue to contract about 16% in fiscal 2027 as customers continue moving to cloud services. The company said this trajectory is driven mainly by product end-of-life, customer migration to the cloud and the timing of revenue recognition. Customer migration means the decline in data center revenue is occurring alongside growth in cloud revenue, rather than by itself reflecting the direction of the company’s overall business. Cloud revenue grew 30.5% year over year in the first quarter, according to the shareholder letter, while the full-year data center forecast includes a contraction of about 16%. For the second quarter, the company expects cloud growth of about 27%, compared with a 31% pace in the previous quarter, putting changes in the revenue mix and growth rate among the factors shaping the outlook.
As an indicator of product adoption, Atlassian said more than 3,000 customers moved to Teamwork Collection in the first quarter, a sevenfold increase from the previous year. This came alongside growth of 22.5% in annual recurring subscription revenue and 30.5% in cloud revenue, according to the shareholder letter. Those quarterly indicators do not change the company’s forecast for annual revenue growth of about 13.75% or the expected contraction of about 16% in data center revenue. Chief Financial Officer James Chong said the company would face tougher year-over-year comparisons in the second half of fiscal 2027. The warning places upcoming comparisons in the context of the growth outlook, as customers continue to migrate from data centers to the cloud.
Before the reaction on November 6, TEAM shares closed at $183.29 in the November 5 session, according to EL7 data. The following day, Reuters reported a 15.6% decline after the results, while Investing.com coverage cited a 15.8% drop in premarket trading. That report attributed the move to a sharp slowdown in the forward growth outlook emerging during the first-quarter earnings call, despite quarterly earnings topping expectations. Atlassian scheduled the announcement of its first-quarter fiscal 2027 results for November 5, 2026, according to its investor relations calendar. The company’s figures for the period ahead center on its revenue and subscription growth forecasts for the fiscal year, its cloud growth forecast for the second quarter, and the expected contraction in data center revenue during the year.