Atlassian Surpasses Key Revenue Milestones in Q2
Atlassian Corporation Plc (NASDAQ: TEAM) delivered a robust second-quarter performance for fiscal year 2026, marking several significant milestones. The company announced it had exceeded a $6 billion annual run rate and achieved its first $1 billion quarter in Cloud revenue, representing a 26% year-over-year (YoY) increase. Remaining performance obligations (RPO) also surged by 44% YoY to $3.8 billion, indicating a stronger trend in long-term customer commitments.
CEO and Co-Founder Mike Cannon-Brookes described these outcomes as validation of Atlassian’s enterprise strategy and cloud-first approach. He emphasized that the increase in high-value contracts—those with annual contract values (ACV) exceeding $1 million—nearly doubled compared to the previous year. Notable enterprise clients such as Cisco, Reddit, Expedia, and Synchrony Financial were highlighted as key adopters of Atlassian’s solutions.
AI and the Teamwork Collection Drive Enterprise Adoption
Artificial Intelligence (AI) has emerged as a core growth engine for Atlassian. Cannon-Brookes reported that the company’s AI platform, Rovo, now boasts over 5 million monthly active users. He credited AI for transforming customer engagement, calling it “the best thing to happen to Atlassian.”
Central to this AI strategy is the Teamwork Collection, which has become the primary vehicle for AI monetization. Over 1,000 customers have upgraded to the collection, collectively purchasing more than 1 million seats to access advanced AI capabilities and credits. These upgrades are cited as pivotal in shifting customer conversations from pricing to value and strategic partnerships.
Strategic Shifts in Customer Engagement
Discussions with clients have evolved, according to Cannon-Brookes. He noted a shift toward strategic partnership dialogues, particularly around AI implementation. Customers are now embedding Atlassian’s AI tools—like agents and chat features—into millions of workflows each month. This widespread integration is helping customers realize value faster and influences their decision to sign multi-year deals extending into 2029.
“Clients are no longer just buying software—they’re investing in a platform,” said Cannon-Brookes. He pointed to RPO growth as a clear sign that customers are committing to Atlassian for the long haul.
Pricing Strategy Balances Predictability and Flexibility
On the subject of pricing, Atlassian reaffirmed its commitment to simplicity and predictability. The company continues to favor seat-based pricing, which Cannon-Brookes said remains the most effective proxy for value. However, hybrid pricing models are also in place. Products like Forge, Bitbucket Pipelines, and additional AI credits operate on a consumption basis, offering flexibility as customer needs evolve.
CFO Joe Binns added that Atlassian’s pricing remains “significantly below many of our software peers,” giving the company room to adjust prices in the future. He said the approach to Data Center pricing would be deliberate and designed to encourage cloud adoption.
Cloud Migration and Seat Expansion Continue Apace
Healthy momentum in cloud migrations continued in Q2, contributing a mid- to high-single-digit impact to cloud revenue growth. This trend is expected to persist throughout the fiscal year. Seat expansion was “broad-based,” with growth across both technical and non-technical users. Business user adoption, particularly for the Teamwork Collection, demonstrated strong traction.
Cannon-Brookes also spoke about Atlassian’s broader ambition to support knowledge workers beyond software teams. The “System of Work” initiative aims to expand use cases into departments such as HR and finance.
Service Collection Sees Strong Growth
Atlassian’s Service Collection is expanding rapidly, with over 65,000 customers now using the platform. The product has reached 50% penetration among Fortune 500 companies, and enterprise usage grew more than 60% YoY. Interestingly, more than two-thirds of Service Collection users are deploying it for non-IT purposes such as HR and finance workflows.
AI integration into the Service Collection is also progressing. Cannon-Brookes revealed that over 40% of agentic workflows built in the past six months originated from Service Collection users, proving it to be a natural fit for AI deployment.
Outlook Remains Positive with Medium-Term Targets Intact
Looking ahead, Atlassian’s leadership reiterated confidence in its financial targets. The company remains committed to achieving 20%+ compounded annual revenue growth through FY2027 and 25%+ non-GAAP operating margin by the same period. Binns noted that FY2026 guidance remains conservative and risk-adjusted, underscoring the company’s prudent financial planning.
Founded in 2002 and headquartered in Sydney, Australia, Atlassian has grown from a small startup into a global player in collaboration and project management software. With a broad customer base that spans multiple industries, the company continues to focus on innovation, enterprise growth, and AI-driven transformation.
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