Atlassian Q2 Earnings Surpass Expectations, Revenues Rise Y/Y

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]