Atlassian crushes Q3 earnings with 29% cloud revenue growth and $1B milestone
Atlassian has reported strong financial results for the third quarter of fiscal 2026. The software company exceeded earnings and revenue expectations, sending its stock soaring in premarket trading. Key growth drivers included cloud revenue and a major milestone for its Service Collection products. The company’s quarterly revenue reached $1.787 billion, surpassing the $1.696 billion consensus estimate. Cloud revenue climbed 29% year-over-year, outperforming forecasts by 4.5%. Another standout was the Service Collection, which crossed $1 billion in annual recurring revenue and grew over 30% compared to the previous year.
Earnings per share came in at $1.75, well above the $1.33 estimate. Gross margin held steady at 84%, expanding slightly due to cloud infrastructure optimisation and beating expectations by one percentage point. However, free cash flow fell short of consensus by 31%, primarily because of $94 million in restructuring-related cash payments during the quarter. Atlassian also raised its full-year revenue growth guidance from 22% to 24%. Remaining performance obligations increased by 37% year-over-year, reaching $4.0 billion. Following the results, the company’s stock jumped 23% in premarket trading. Several analysts responded by lifting their price targets. Cantor Fitzgerald raised its target to $107, while KeyBanc maintained a $130 target.
The strong quarterly performance has boosted investor confidence in Atlassian. With higher revenue guidance and growing cloud demand, the company’s outlook appears positive. However, restructuring costs have impacted short-term cash flow figures.
