Atlassian — First Quarter Fiscal Year 2027 Earnings Summary

Financial Performance

• Total revenue reached $1,772 million, a 24% year-over-year increase from $1,433 million in Q1 FY2026.
• Cloud revenue was $1,302 million, up 31% year-over-year.
• Subscription ARR totaled $6,812 million, up 23% year-over-year.
• Remaining performance obligations (RPO) were $4,746 million, up 44% year-over-year.
• GAAP operating income was $189 million with an 11% operating margin, compared to a $96 million operating loss and (7%) margin in Q1 FY2026.
• Non-GAAP operating income was $576 million with a 32% operating margin, compared to $323 million and 23% in Q1 FY2026.
• GAAP net income was $91 million ($0.35 per diluted share), compared to a $52 million net loss ($0.20 per diluted share) in Q1 FY2026.
• Non-GAAP net income was $423 million ($1.65 per diluted share), compared to $276 million ($1.04 per diluted share) in Q1 FY2026.
• Free cash flow was $463 million with a 26% free cash flow margin; cash flow from operations was $469 million.
• Cash and cash equivalents totaled $1,121 million at the end of the quarter.
• Long-term debt stood at $990 million.

Guidance and Future Outlook

• Q2 FY2027 total revenue is expected to be between $1,825 million and $1,835 million.
• Q2 FY2027 Cloud revenue growth is expected to be approximately 27.0% year-over-year.
• Q2 FY2027 Data Center revenue growth is expected to decline approximately 14.0% year-over-year.
• Q2 FY2027 Marketplace and other revenue growth is expected to be approximately 20.0% year-over-year.
• Q2 FY2027 GAAP operating margin is expected to be approximately 4.5%; non-GAAP operating margin is expected to be approximately 26.0%.
• Full-year FY2027 Subscription ARR growth is expected to be approximately 18.5% year-over-year.
• Full-year FY2027 total revenue growth is expected to be approximately 13.75% year-over-year.
• Full-year FY2027 Cloud revenue growth is expected to be approximately 26.0% year-over-year.
• Full-year FY2027 Data Center revenue growth is expected to decline approximately 16.0% year-over-year.
• Full-year FY2027 Marketplace and other revenue growth is expected to be approximately 15.0% year-over-year.
• Full-year FY2027 GAAP operating margin is expected to be approximately 5.0%; non-GAAP operating margin is expected to be approximately 25.5%.

Business Segments and Product Lines

• Service Collection surpassed 70,000 customers with over $1 billion in ARR, growing north of 30% year-over-year.
• Service Collection seat growth exceeded 40% year-over-year in competitive displacements.
• Teamwork Collection customers grew 7x year-over-year.
• Agentic Multiplayer Protocol (AMP) was introduced to enable human-agent teamwork with distinct identities and governed authority.
• The Atlassian MCP Server was redesigned to support 220+ tools, using 25% fewer tokens for equivalent work, with over 2 million monthly users.
• New AI-Native Software Development Lifecycle capabilities include Code Context, Jira Agents Dashboard, and DX AI Measurement.
• The Atlassian Marketplace surpassed $7 billion in lifetime sales with over 2,000 partners and 6,000 apps.

Market and Competitive Landscape

• Recognized as a Leader in the 2026 Gartner Magic Quadrant for Collaborative Work Management for the second consecutive year.
• Named a Leader in the 2026 Gartner Magic Quadrant for Marketing Work Management Platforms for the third consecutive year.
• Named a Leader in the 2026 IDC MarketScape for AI-Enabled IT Service Management Software.
• Enterprise AI is described as having hit an inflection point, with model power considered table stakes.
• Atlassian's platform powers over 85% of the Fortune 500 and serves 350,000+ customers worldwide.

Risks and Challenges

• The press release includes standard forward-looking statement risks regarding uncertainties related to platform offerings, AI solutions, anticipated growth, and financial targets.
• Specific risks include potential materialization of known and unknown risks, uncertainties, and assumptions affecting financial results.
• Data Center revenue is projected to decline significantly in the near term (14.0% in Q2 and 16.0% for the full year).

Management Commentary and Tone

• CEO Mike Cannon-Brookes described Q1 as a "strong start" and stated the company is "never been better positioned."
• Management emphasized that the advantage in AI goes to platforms bringing people and agents together with shared context.
• CFO James Chuong highlighted "continued operational discipline" and a commitment to "durable, profitable growth."
• Management noted that customers are increasingly bringing teams, agents, and workflows onto the Atlassian platform.

Other Key Points

• Atlassian accelerated its IL5 submission to July 2028 and plans to submit Rovo for FedRAMP Moderate authorization by June 2027.
• A new OneGov agreement was entered into with the U.S. General Services Administration (GSA) to help federal agencies transition from Data Center to Atlassian Government Cloud.
• An expanded strategic partnership with OpenAI was announced to ground frontier intelligence in enterprise context.
• The company repurchased Class A Common Stock for $588 million during the quarter.
• Atlassian held its largest Team Europe event to date in Amsterdam.