Atlassian shares slide on slower growth forecast despite 24% revenue jump
By Rohit SharmaMarkets Analyst, Peepals Business
Representative image: RobertGourley / Pixabay
Atlassian's quarterly revenue rose 24% to $1.77 billion, but its forecast of slower subscription growth sent shares down about 15% in premarket trade on November 6.
What Happened
Atlassian, the software company behind workplace tools such as Jira, reported revenue of $1,772 million for the first quarter of its fiscal year 2027 (July to September 2026) on Thursday, 5 November 2026, up 24% from $1,433 million a year earlier and ahead of analysts' estimate of about $1.71 billion. But the company forecast slower growth for the rest of the year, and its shares fell sharply: they were down 14.63% at $156.47 in premarket trading on Friday, 6 November, according to market data cited by Benzinga, with other reports putting the fall between about 16% and 20%.
Key Facts
- Quarterly revenue: $1,772 million, up 24% year on year.
- Cloud revenue: up 31%, to about $1.3 billion.
- Subscription annual recurring revenue (ARR): up 23% to $6.8 billion.
- Adjusted earnings per share: $1.65, against a consensus estimate of about $1.43.
- Free cash flow: $463 million, a 26% margin; GAAP operating income $189 million, an 11% margin.
- Full-year outlook: subscription ARR growth of about 18.5% and total revenue growth of about 13.75%.
- Second-quarter outlook: cloud revenue up about 27%, while revenue from Data Center, the software customers run on their own servers, falls about 14%.
Why It Matters
Atlassian sells project-tracking and collaboration software used by software and business teams around the world, including in India. Its results are watched as a signal of how much companies are spending on such tools, and of how artificial intelligence is changing that spending.
The quarter was strong by most measures, but investors focused on the future. Subscription ARR, a measure of the yearly value of contracts, grew 23% in the quarter, yet the company expects it to grow only about 18.5% for the full year. Total revenue growth is guided at about 13.75%, little more than half the 24% just reported. Part of the slowdown is planned: Atlassian is moving customers from its Data Center product to the cloud, so one revenue line shrinks as the other grows. But large customers are moving more slowly than hoped. According to analysts at Guggenheim, very large enterprise customers are committing to multi-year migrations and asking for mixed set-ups during the move, which kept second-quarter cloud growth guidance a little below expectations.
Atlassian's management said it remains confident in cloud adoption and customer demand, including for its AI features, but investors focused on the slower growth forecast and marked the stock down sharply.
Peepals calculation: Revenue grew from $1,433 million to $1,772 million, an increase of $339 million, or about 23.7% (339 ÷ 1,433 ≈ 0.237), which the company rounds to 24%. The guidance implies subscription ARR growth slowing by 4.5 percentage points over the year (23 − 18.5), and total revenue growth falling to about 57% of the first-quarter pace (13.75 ÷ 24 ≈ 0.57). Cloud growth is guided to ease from 31% to about 27% in the second quarter, a drop of about 4 points. Our calculation from the reported figures.
| Measure | Q1 FY2027 actual | Outlook |
|---|---|---|
| Total revenue growth | 24% | about 13.75% for FY2027 |
| Subscription ARR growth | 23% | about 18.5% for FY2027 |
| Cloud revenue growth | 31% | about 27% in Q2 |
| Data Center revenue | not given here | down about 14% in Q2 |
Impact
Short-term: The share fall shows how sharply markets punish software firms that signal slower growth, even after a strong quarter.
Long-term: Atlassian's shift from on-premises software to the cloud, and how AI changes the number of users companies pay for, will shape its growth and that of similar enterprise software makers.
Who is affected: Companies and IT teams that rely on Atlassian's tools, investors in enterprise software stocks, and technology staff whose work runs on these platforms.
What to watch next: Atlassian's second-quarter results, against its forecast of about 27% cloud growth and a 14% fall in Data Center revenue.
Key Takeaway
Atlassian beat estimates with 24% revenue growth, but a forecast of slower subscription growth sent its shares down by around 15% or more.
Questions and Answers
Why did Atlassian stock fall after strong results?
Because the company forecast slower growth: subscription ARR growth of about 18.5% for fiscal 2027, down from 23% in the quarter, and total revenue growth of about 13.75%.
What were Atlassian's Q1 fiscal 2027 results?
Revenue rose 24% to $1,772 million, cloud revenue rose 31%, and adjusted earnings per share were $1.65, above the estimate of about $1.43.
What is Atlassian's Data Center business?
It is the version of Atlassian's software that customers run on their own servers. The company is moving customers to its cloud products, and expects Data Center revenue to fall about 14% in the second quarter.
How much did Atlassian shares fall?
Reports differ: about 14.6% in premarket trading according to one, and between about 16% and 20% according to others.
Disclaimer: Prepared by the Peepals newsroom from publicly available sources with AI assistance. Information is accurate to the best of our knowledge at the time of publication and may change. Images may be representative. Not professional advice. Report an error via our contact page.
By Rohit Sharma, Markets AnalystCovers Markets Watch and more for Peepals Business. All stories by Rohit Sharma
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Rohit Sharma is a pen name of the Peepals Global Editorial Team, which researches, fact-checks and publishes every story. The portrait is an illustration.
