Summary
Atlassian opened fiscal 2026 with $1,432.6 million in total revenue, up 20.6% from $1,187.8 million in the prior-year quarter. Cloud revenue grew 26% year over year, while Data Center revenue grew 11% and Marketplace and other grew 4%. Gross profit reached $1,174.6 million, and gross margin of 82.0% edged up from 81.7% a year earlier. Management credited paid seat expansion, higher average revenue per user, cross-sell of additional products, and Data Center to Cloud migrations for the top-line gain.
Profitability told a messier story. GAAP operating loss widened to $96.3 million from $32.0 million, and operating margin slipped to negative 6.7% from negative 2.7%. The swing came largely from $55.7 million of restructuring charges tied to a customer support reduction and an office lease consolidation, which cut 4 percentage points from operating margin and added $0.21 to the loss per diluted share. Net loss narrowed to $51.9 million from $123.8 million, helped by $18.8 million of other income, net, mostly unrealized gains on public equity investments. Diluted loss per share was $0.20, compared with $0.48. On a non-GAAP basis, which strips out stock-based compensation, intangible amortization, and restructuring, operating income was $322.7 million and operating margin held at 23%, while non-GAAP net income of $275.7 million worked out to $1.04 per diluted share.
Cash generation improved. Operating cash flow was $128.7 million, up 59.9% year over year. Free cash flow, which subtracts capital expenditures from that figure, was $114.6 million, up 54%. Capital expenditures rose 129.4% to $14.1 million. Total deferred revenue of $2.28 billion was up 13.3%, and remaining performance obligations reached $3.3 billion, up 43.5%, as customers signed more large, multi-year cloud commitments. Current RPO grew 30% to $2.4 billion.
The quarter carried a heavy strategic load. Atlassian announced Ascend, a program to move remaining Data Center customers to cloud, alongside an end-of-life plan that stops selling term licenses to new customers in March 2026 and to existing customers in March 2028, with maintenance ending in March 2029. The company closed its purchase of The Browser Company of New York for about $610 million on October 20, 2025 and agreed to buy DX for roughly $1.0 billion, a deal expected to close in the second quarter of fiscal 2026. AI adoption kept climbing, with more than 3.5 million monthly active users of AI capabilities, up 50% quarter over quarter, and 2.4 million workflow automations run by Rovo agents over the last six months. Customers spending more than $10,000 in Cloud ARR totaled 53,017, up 13%. Headcount ended at 14,089, up 276 from the prior quarter. The board also authorized a new $2.5 billion buyback, and CFO Joe Binz will retire on June 30, 2026.
Guidance points to sequential improvement. For the second quarter of fiscal 2026, Atlassian targets GAAP gross margin of about 85.0% and non-GAAP gross margin of about 87.0%, with GAAP operating margin of about negative 5.0% against a non-GAAP operating margin of about 24.5%. For the full fiscal year 2026, the company models total revenue growth of approximately 20.8%, including an expected benefit of approximately 3.2 percentage points from the Data Center end-of-life revenue recognition timing. Full-year Cloud revenue growth is guided to about 22.5%, Data Center revenue growth to about 20.0%, and Marketplace and other revenue growth to about 5.0%. GAAP gross margin for the full fiscal year is expected to be about 84.0% and non-GAAP gross margin about 86.5%, while GAAP operating margin is guided to about negative 2.0% and non-GAAP operating margin to about 25.5%. The main risks sit in execution. The multi-year Data Center migration shifts revenue between periods, the Browser Company acquisition is expected to be slightly dilutive to fiscal 2026 operating margin, AI processing costs rise as Rovo usage spreads, and management continues to apply risk adjustments for macroeconomic uncertainty and for potential disruption from the evolution of its go-to-market motion.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.43B | $1.38B | +3.5% | $1.19B | +20.6% |
| Gross profit | $1.17B | $1.15B | +2.1% | $970.2M | +21.1% |
| Gross margin | 82.0% | 83.1% | -1.1 pp | 81.7% | +0.3 pp |
| Research & development | $756.0M | $700.7M | +7.9% | $603.1M | +25.4% |
| Sales & marketing | $336.4M | $314.4M | +7.0% | $252.4M | +33.3% |
| General & administrative | $178.5M | $163.3M | +9.3% | $146.6M | +21.8% |
| Total operating expenses | $1.27B | $1.18B | +7.9% | $1.00B | +26.8% |
| Operating income (loss) | -$96.3M | -$28.5M | -238.3% | -$32.0M | -201.3% |
| Operating margin | -6.7% | -2.1% | -4.7 pp | -2.7% | -4.0 pp |
| Net income (loss) | -$51.9M | -$23.9M | -117.0% | -$123.8M | +58.1% |
| Net margin | -3.6% | -1.7% | -1.9 pp | -10.4% | +6.8 pp |
| Diluted EPS | -$0.20 | -$0.09 | -$0.11 | -$0.48 | +$0.28 |
| Customers | 300,000 | — | — | 300,000 | ±0.0% |
Risks
In September 2025, Atlassian announced plans to end-of-life its Data Center deployment offering: beginning March 2026 it will no longer sell term licenses to new customers, it will stop selling term licenses and expansions to existing customers in March 2028, and it plans to end maintenance and support for on-premises versions in March 2029. This transition may create quarterly financial fluctuations and affect guidance as Data Center customers change renewal and Cloud migration timing, with discount incentives expected similar to the prior Server migration.
Atlassian is investing heavily in AI, including Rovo, and offers Rovo at no additional cost to premium, enterprise, and standard edition customers across Jira, Confluence, Jira Service Management and Teamwork Collection. The company expects these AI investments to continue to negatively impact operating margins in the near term, while competition in AI and reliance on third-party AI models add execution and cost risk.
In the three months ended September 30, 2025, Atlassian initiated a resource rebalancing and exited certain leased floors, recording $55.7 million in total restructuring charges, including $27.9 million of severance and other termination benefits and $26.3 million of lease-related impairment charges. These actions contributed to GAAP operating loss widening to $96.34 million from $31.98 million in the prior-year quarter and operating margin down to -6.7% from -2.7%.
Atlassian announced that its President will be stepping down effective December 31, 2025, and its Chief Financial Officer will be stepping down effective June 30, 2026, following the earlier transition of a former Co-Chief Executive Officer to an advisory role and recent appointments of a Chief Revenue Officer and Chief Product and AI Officer. This turnover in key executive roles could disrupt execution and make retaining highly skilled personnel more difficult.
Atlassian acquired The Browser Company of New York Inc. on October 20, 2025 for approximately $610 million and entered a definitive agreement in September 2025 to acquire A Software Company for approximately $1.0 billion, expected to close in the second quarter of fiscal 2026. Integrating these acquisitions may divert management attention, disrupt operations, and fail to achieve expected benefits.
The markets for Atlassian's solutions are intensely competitive, and competitors may incorporate AI into their offerings more successfully, gain superior access to AI technologies, or achieve higher market acceptance of their AI solutions. Some competitors have greater resources, larger sales forces, and broader distribution agreements, which could pressure pricing and Atlassian's market position.
Global economic and geopolitical volatility, including trade policy changes, tariffs, and conflicts in Ukraine and the Middle East, could reduce demand, elongate sales cycles, increase operating costs, and lead to delayed collections. Atlassian noted it has seen revenue growth from existing customers moderate and stock price volatility may continue.
SaaS KPIs
All quarters →Total customers
Non-GAAP Operating Margin
Free Cash Flow Margin
Free Cash Flow
Remaining performance obligations (RPO)
Summary, forecast, risks and KPIs are extracted from Atlassian Corp's SEC filings for Q1 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.