Core Viewpoint - The sell-off in software stocks is considered overdone by Nvidia's CEO Jensen Huang, who argues that the market has overreacted to concerns about AI disrupting the software industry [1][5]. Software Industry Overview - The S&P North American Technology Software Index has declined 30% from its peak, entering bear market territory, driven by fears surrounding AI's impact on software companies [1]. - Huang believes that AI tools will complement existing software rather than replace it, suggesting that the current market sentiment is illogical [5]. Attractive Software Stocks - **Microsoft (MSFT)**: Stock down 27% from its high, currently trading at 26 times earnings, with adjusted earnings up 24% last quarter and a 160% increase in paid copilot seats [6]. - **Datadog (DDOG)**: Stock down 47% from its high, trading at 53 times adjusted earnings, with adjusted earnings increasing 20% last quarter despite high R&D spending [7]. - **AppLovin (APP)**: Stock down 52% from its high, trading at 45 times earnings, with earnings up 96% last quarter [8]. - **Atlassian (TEAM)**: Stock down 70% from its high, trading at 22 times earnings, with adjusted earnings increasing 27% last quarter [9]. - **HubSpot (HUBS)**: Stock down 73% from its high, trading at 25 times earnings, with adjusted earnings up 22% last quarter [9]. Market Outlook - While software stocks may continue to decline in the near term, long-term investors are likely to benefit from purchasing stocks at reasonable prices, anticipating significant earnings growth over the next five years [10].

Core Viewpoint - Atlassian Corp (NASDAQ:TEAM) is recognized as one of the best revenue growth stocks to buy, with a maintained Buy rating and a price target of $230 by Canaccord Genuity analyst David Hynes [1][3] Group 1: Valuation and Market Performance - The current stock price of Atlassian is under pressure due to sector-wide multiple compression and concerns related to AI, despite the company's strong business performance and resilient growth [3] - Analyst Hynes highlights a disconnect between Atlassian's valuation and its fundamentals, suggesting that the stock is undervalued [3] Group 2: Revenue Growth Potential - Hynes anticipates that Atlassian's fiscal Q2 revenue growth will exceed guidance, which could lead to an increase in full-year cloud revenue targets [3] - The company is expected to enhance its revenue run rate through strategic moves in pricing, product upgrades, cross-selling, and new consumption models [3] Group 3: Market Sentiment and Price Target Adjustments - Recent months have seen research firms lowering their price targets for Atlassian, with notable reductions from UBS (from $185 to $145), BofA (from $200 to $170), Baird (from $230 to $170), Mizuho (from $245 to $225), and TD Cowen (from $205 to $175) [3] Group 4: Company Overview - Atlassian is an enterprise software company that provides team collaboration and productivity tools, including products like Jira Software, Confluence, Jira Service Management, and Loom [3]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-37651 Atlassian Corporation (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Emplo ...

Core Insights - Atlassian (TEAM) reported Q2 fiscal 2026 earnings of $1.22 per share, exceeding the Zacks Consensus Estimate of $1.12, and up from $0.96 per share a year ago, marking a 20.67% earnings surprise over the last four quarters [1][9] Financial Performance - Revenues for the quarter ended December 2025 were $1.59 billion, surpassing the Zacks Consensus Estimate by 3%, compared to $1.29 billion in the same quarter last year [2][9] - Subscription revenues increased by 24.3% year over year to $1.51 billion, driven by strong Cloud migrations, paid seat expansion, and enterprise adoption [3][9] - Cloud revenues reached $1.07 billion, up 26% year over year, while Data Center revenues rose 20% to $435.6 million [4] - Non-GAAP gross profit was $1.39 billion, with a non-GAAP gross margin of 88%, an increase of 300 basis points from the prior year [4] Operating Metrics - Non-GAAP operating income increased to $430.2 million, with a non-GAAP operating margin of 27%, up 100 basis points year over year [5][9] - The company held $1.6 billion in cash, cash equivalents, and marketable securities as of December 31, 2025, generating $177.8 million in operating cash flow and $168.5 million in free cash flow during the quarter [6] Future Guidance - For Q3 fiscal 2026, Atlassian projects revenues between $1.689 billion and $1.697 billion, indicating a 21% year-over-year growth, with a non-GAAP gross margin expected to remain at 88% [7] - The Zacks Consensus Estimate for Q3 fiscal 2026 earnings is $1.29, reflecting a 33% year-over-year growth, while total revenue growth for fiscal 2026 is anticipated to be approximately 22% [8]

Core Insights - Atlassian's performance in Q2 fiscal 2026 was driven by enterprise execution, cloud momentum, and AI adoption, with a record number of deals over $1 million in annual contract value nearly doubling year-over-year [2][3] - The company surpassed $6 billion in annual run rate revenue and achieved its first-ever $1 billion Cloud revenue quarter, with cloud revenue increasing by approximately 26% year-over-year [4][6] - Remaining performance obligations (RPO) grew by 44% year-over-year to $3.8 billion, indicating strong multi-year customer commitments [4][8] AI and Monetization - AI is a significant monetization driver for Atlassian, with over 5 million monthly active users of its AI capabilities and more than 1,000 customers upgrading to the Teamwork Collection, purchasing over 1 million seats [4][6] - The Teamwork Collection has become the main AI monetization driver, with customers citing AI capabilities as a reason for upgrading [6][7] Enterprise Growth and Customer Engagement - The company is experiencing accelerating enterprise momentum, with a record number of deals exceeding $1 million in annual contract value [3][4] - Customer conversations have evolved to focus on strategic partnerships, with clients deploying Atlassian's AI features into millions of workflows monthly [7][8] Pricing and Revenue Strategy - Atlassian's pricing strategy remains seat-based, with a focus on delivering value and predictable pricing for customers [9][10] - The company believes there is room for further pricing adjustments due to ongoing innovation and competitive positioning [10] Cloud Migration and Service Collection - Healthy cloud migrations contributed to mid- to high-single-digit impacts on cloud revenue growth rates [11] - The Service Collection is expanding beyond IT into areas like HR and finance, with significant growth in non-IT use cases [12][13] Future Outlook - Management reiterated confidence in achieving medium-term targets of over 20% compounded annual revenue growth and a 25%+ non-GAAP operating margin by FY 2027 [14]

AI has been one of the best things to happen to Atlassian, CEO Mike Cannon-Brookes said, as shares fell in the US in late Thursday trading following the company’s second-quarter results, amid a broader AI-driven tech sector slump https://t.co/UN3u5ah7n7 ...

Core Insights - Atlassian reported quarterly earnings of $1.22 per share, exceeding the Zacks Consensus Estimate of $1.12 per share, and showing an increase from $0.96 per share a year ago, resulting in an earnings surprise of +9.19% [1] - The company achieved revenues of $1.59 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 3.00%, and up from $1.29 billion year-over-year [2] Financial Performance - Over the last four quarters, Atlassian has consistently surpassed consensus EPS estimates, achieving this four times [2] - The company has also topped consensus revenue estimates four times in the last four quarters [2] - The current consensus EPS estimate for the upcoming quarter is $1.29, with expected revenues of $1.64 billion, and for the current fiscal year, the estimate is $4.78 on $6.3 billion in revenues [7] Market Position - Atlassian shares have declined approximately 35.2% since the beginning of the year, contrasting with the S&P 500's gain of 0.5% [3] - The Zacks Industry Rank places the Internet - Software sector in the top 38% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] Future Outlook - The sustainability of Atlassian's stock price movement will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The estimate revisions trend for Atlassian was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6]

Financial Data and Key Metrics Changes - The company closed Q2 with an annual run rate revenue surpassing $6 billion, achieving its first-ever $1 billion Cloud revenue quarter, which is a 26% year-over-year increase [7] - Remaining Performance Obligations (RPO) grew 44% year-over-year to $3.8 billion, indicating strong future revenue visibility [7] - The Cloud Net Revenue Retention (NRR) rate is above 120%, marking the third consecutive quarter of growth [20][32] Business Line Data and Key Metrics Changes - The Teamwork Collection saw over 1 million seats sold in under nine months, driven by AI capabilities and customer upgrades [10][23] - The Service Collection is experiencing significant growth, with over 65,000 customers and a year-on-year growth rate exceeding 60% in the enterprise segment [68] Market Data and Key Metrics Changes - The company reported a record number of deals greater than $1 million Annual Contract Value (ACV) in Q2, nearly doubling year-over-year [10] - The company is seeing broad-based seat expansion across both tech and non-tech users, particularly in business functions like HR and finance [54][56] Company Strategy and Development Direction - The company is focused on leveraging AI to enhance customer workflows and drive efficiency, positioning itself as a strategic partner for enterprises undergoing digital transformation [8][11] - The company aims to continue expanding its market presence by tapping into large opportunities in enterprise, AI, and System of Work strategies [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory, emphasizing the importance of AI in driving customer engagement and satisfaction [11][39] - Despite market noise, management believes that the fundamentals remain strong, with customers seeking reliable and efficient platforms [16][20] Other Important Information - The company is committed to maintaining a competitive pricing strategy while delivering value through innovation and R&D investments [76] - The company is exploring partnerships with AI tool providers to enhance its offerings and integrate new capabilities into its platform [27][28] Q&A Session Summary Question: Changes in customer conversations and AI's impact - Management noted that customer conversations have become more strategic, with clients increasingly seeking AI capabilities as a reason to upgrade to the Teamwork Collection [14] Question: Pricing evolution and customer preferences - Management indicated that current pricing models are delivering value, and customers prefer predictable, seat-based pricing, which aligns with their ROI expectations [20][22] Question: Medium to long-term prospects of competitive alternatives - Management views new AI tools as opportunities for partnership rather than direct competition, emphasizing the unique value of their Teamwork Graph [26][28] Question: Seat expansion breakdown - Management reported broad-based seat expansion across various business functions, with a notable increase in non-tech users adopting the Teamwork Collection [54][56] Question: Migration activity from Data Center to Cloud - Management confirmed healthy Cloud migrations contributing mid- to high-single-digit impacts to Cloud revenue growth rates [50] Question: Growth trajectory of the Service Collection - Management highlighted that the Service Collection is their fastest-growing product, with significant adoption in non-IT use cases [68][71] Question: Pricing strategy for Data Center and Cloud - Management stated that they will ensure any price changes on Data Center align with their strategy to incentivize Cloud upgrades while remaining competitively priced [76][80]

Atlassian (NasdaqGS:TEAM) Q2 2026 Earnings call February 05, 2026 05:00 PM ET Company ParticipantsGregg Moskowitz - Managing Director of Enterprise SoftwareItay Kidron - Managing DirectorJason Celino - Managing DirectorJoe Binz - CFOKarl Keirstead - Managing Director of Software Equity ResearchKoji Ikeda - Director of Enterprise Software Equity ResearchMartin Lam - Head of Investor RelationsMike Cannon-Brookes - CEORaimo Lenschow - Managing DirectorRyan MacWilliams - VP of Business Performance and Global Tr ...

Financial Data and Key Metrics Changes - Atlassian closed Q2 with an annual run rate revenue surpassing $6 billion, achieving its first-ever $1 billion cloud revenue quarter, which represents a 26% year-over-year increase [5] - Remaining Performance Obligations (RPO) grew 44% year-over-year to $3.8 billion, indicating strong future revenue visibility [5] Business Line Data and Key Metrics Changes - The cloud revenue segment saw significant growth, contributing to the overall revenue increase, while the Data Center (DC) segment is expected to decline due to tough comparisons [31][30] - The Teamwork Collection, which includes AI capabilities, has seen over 1 million seats sold in under nine months, indicating strong adoption and demand [22] Market Data and Key Metrics Changes - Atlassian reported a net revenue retention (NRR) rate of over 120%, reflecting strong customer loyalty and expansion [19] - The company noted that customers using AI code generation tools experienced a 5% increase in task creation and monthly active users compared to those not using these tools [6][60] Company Strategy and Development Direction - Atlassian is focusing on enterprise, AI, and system-of-work transformations, positioning itself as a strategic partner for large enterprises [5][9] - The company is committed to enhancing its AI capabilities and integrating them into customer workflows, which is seen as a key driver for future growth [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory, emphasizing the importance of AI in driving customer engagement and operational efficiency [9][35] - Despite market noise and concerns, management believes that Atlassian is well-positioned to help customers navigate challenges and improve their business processes [15][16] Other Important Information - Atlassian's service collection is growing rapidly, with over 65,000 customers and significant year-over-year growth in the enterprise segment [67] - The company is recognized as a leader in enterprise service management, with a strong focus on integrating AI into service workflows [69] Q&A Session Summary Question: Changes in customer conversations and AI's impact - Management noted that customer conversations have become more strategic, with clients seeking partnerships to leverage AI capabilities, which are driving upgrades to the Teamwork Collection [12][13] Question: Pricing evolution and customer preferences - Management indicated that current pricing models are delivering value, and customers prefer predictable, seat-based pricing, which aligns with their needs [20][21] Question: Competitive landscape and AI tools - Management acknowledged the emergence of new AI tools but emphasized the unique value of Atlassian's offerings and its integration capabilities with various platforms [25][27] Question: Cloud migration impact on revenue - Management reported healthy cloud migrations contributing mid- to high-single-digit impacts to cloud revenue growth rates [49] Question: Seat expansion dynamics - Management highlighted broad-based seat expansion across both tech and non-tech users, particularly in business functions, indicating strong demand for Atlassian's products [52][56] Question: JSM growth and competitive dynamics - Management confirmed that the service collection is performing well, with significant growth in HR and finance sectors, and emphasized the importance of integrating AI into service workflows [68][69]