Key Stats
- Current price: $89 (May 1, 2026, post-earnings close, +30% on the day)
- Q3 FY2026 revenue: $1.79B, +32% YoY
- Q3 FY2026 adjusted EPS: $1.75, +80% YoY
- TIKR model price target: $139 (mid case)
- Implied upside: ~56% over 4 years (11% annualized IRR)
Atlassian Q3 FY2026 Earnings Breakdown
Atlassian stock (TEAM) surged 30% after the company reported Q3 FY2026 revenue of $1.79B, a 32% increase year over year and the company’s sharpest top-line growth in at least six quarters.
Adjusted EPS came in at $1.75, up 80% from $0.97 in the year-ago period.
Cloud revenue crossed $1.1B for the first time and accelerated to 29% growth year over year, up from 23% the prior quarter, according to CEO and Co-Founder Mike Cannon-Brookes on the Q3 FY2026 earnings call.
The acceleration was driven by two forces: cross-sell expansion into the Teamwork Collection and continued seat growth in standalone Jira, both of which outperformed expectations in the quarter.
Rovo, Atlassian’s AI product, is compounding usage at over 20% month over month, and customers using Rovo are growing their ARR at roughly twice the rate of non-Rovo customers, according to Cannon-Brookes on the call.
Data center revenue beat by approximately $50 million in the quarter, driven by pull-forward purchasing from large enterprise customers who face multi-year cloud migrations, according to CFO James Chuong on the Q3 FY2026 earnings call.
RPO grew 37% year over year to $4.0B; normalized for ASC 606 timing effects, RPO growth would have been above 40% and CRPO above 30%, according to Chuong.
The Service Collection crossed $1B in ARR in the quarter, and Atlassian recorded its largest-ever quarter for competitive displacements from a major ITSM provider.
Net revenue retention remained above 120% for the third or fourth consecutive quarter, per Cannon-Brookes on the call.
No formal FY2027 guidance was provided; management indicated it will be shared at the Q4 August earnings call.
Atlassian Stock Financial Performance
The income statement tells a revenue acceleration story overlaid on a shallow but widening operating loss, as top-line momentum outpaces the pace at which Atlassian is converting that growth to GAAP profitability.
Total revenues climbed from $1.13B in Q1 FY2025 to $1.36B, $1.38B, $1.43B, $1.59B, and $1.79B in the most recent quarter, with YoY growth stepping up from 14% in Q4 FY2025 to 32% in Q3 FY2026.
Gross margin expanded steadily over the same period, rising from 81% to 85%, as cloud mix and infrastructure efficiencies offset rising COGS.
Gross profit in Q3 FY2026 reached $1.52B, up 34% year over year from $1.14B.
GAAP operating income remained in loss territory at ($60M), with an operating margin of (3%), though this is primarily a function of accelerating R&D investment rather than underlying deterioration.
On an adjusted basis, EBIT reached $607M with a 34% margin, up from a 26% adjusted margin in the year-ago period.
Chuong noted on the call that the company is prioritizing reinvestment in AI and enterprise go-to-market while maintaining “a very disciplined fiscal approach,” framing durable profitable growth as a stated strategic priority alongside enterprise and AI.
What Does the Valuation Model Say?
The TIKR model places Atlassian stock at a mid-case price target of $139, implying 56% upside from the current price of $89 over 4.2 years at an annualized IRR of 11%.
The model assumes a revenue CAGR of 15% and a net income margin of 24% in the mid case, against Atlassian’s 1-year historical revenue growth of 20% and net income margin of 18%.
Q3’s 32% revenue growth and accelerating cloud momentum create a scenario where current model assumptions could prove conservative if the AI and enterprise expansion sustains into FY2027.
The risk/reward picture is stronger coming out of Q3 than it was going in: the data center pull-forward was disclosed and quantified at $50M, which removes an overhang, and cloud reacceleration is now confirmed rather than projected.
At $89, Atlassian stock is priced well below the model’s mid-case estimate, and the Q3 print closes the most significant execution question investors had entering the quarter.
The investment argument for Atlassian stock hinges on whether 29% cloud growth can hold once the $50M data center pull-forward laps.
Rovo adoption is compounding at 20%+ monthly, and Rovo customers are growing ARR at twice the rate of non-users, pointing to a durable AI-led upsell engine beneath the headline number.
The Service Collection crossing $1B in ARR alongside record competitive displacements signals that Atlassian stock is taking share in a market well beyond core ITSM.
On the other side, large DC customers are moderating seat expansion as they prepare to migrate, FY2027 guidance has not been issued, and the revenue contribution from over 10 consumption-based AI meters remains unquantified in reported results.
Should You Invest in Atlassian Corporation?
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