Atlassian Q1 Earnings Surpass Expectations, Revenues Rise Y/Y

Atlassian TEAM came out with first-quarter fiscal 2026 earnings of $1.04 per share, which beat the Zacks Consensus Estimate of 83 cents. This compares to earnings of 77 cents per share a year ago.

Over the last four quarters, the company has surpassed earnings estimates in each of the four quarters, with an earnings surprise of 19.9%.

Atlassian posted revenues of $1.43 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.40%. The company reported revenues of $1.19 billion in the year-ago quarter.

Atlassian’s Q1 FY26 Details

Segment-wise, Subscription revenues rose 21.8% year over year to $1.37 billion, reflecting continued strength in Cloud migrations and multi-year enterprise deals. Our estimate for Subscription revenues was pegged at $1.33 billion.

Atlassian’s Other revenues (including perpetual license revenues) declined 19.1% year over year to $58.1 million, impacted by the ongoing phase-out of Data Center and Server-related sales. Our estimate for Other revenues was pegged at $70.4 million.

Atlassian Corporation PLC Price, Consensus and EPS Surprise

Atlassian Corporation PLC price-consensus-eps-surprise-chart | Atlassian Corporation PLC Quote

During the fiscal first quarter, Cloud revenues were $997.7 million, up 26% year over year. Data Center revenues rose 11% to $372.6 million, while Marketplace and Services revenues reached $62.2 million, up 4% year over year.

Our estimates for Cloud, Data Center, and Marketplace and Services revenues was pegged at $969 million, $362 million, and $66.6 million, respectively.

The company’s non-GAAP gross profit rose 23.7% year over year to $1.23 billion, with a non-GAAP gross margin of 86%, up 200 basis points from the prior-year quarter.

TEAM’s non-GAAP operating income increased 20.3% year over year to $323 million, driven by strong Cloud growth, enterprise migrations, and disciplined cost control. Non-GAAP operating margin remained steady at 23%.

TEAM’s Balance Sheet

At the end of the first quarter of fiscal 2026, the company held $2.8 billion in cash, cash equivalents, and short-term investments, down from $2.94 billion at the end of the prior quarter.

TEAM generated $129 million in operating cash flow and $115 million in free cash flow during the quarter.

TEAM’s Q2 and FY26 Guidance

For the second quarter of fiscal 2026, the company projects revenues in the range of $1.535-$1.543 billion. The Zacks Consensus Estimate is pegged at $1.51 billion, indicating year-over-year growth of 17.9%.

Non-GAAP gross margin is expected to be 87%, while the non-GAAP operating margin is projected at 24.5%.

For fiscal 2026, Atlassian expects revenues to grow approximately 20.8% year over year. The Zacks Consensus Estimate is pegged at $6.15 billion, indicating year-over-year growth of 17.9%.

Non-GAAP gross margin for fiscal 2026 is expected to be 86.5%, while the non-GAAP operating margin is projected at 25.5%.

TEAM’s Zacks Rank and Stocks to Consider

Currently, TEAM carries a Zacks Rank #3 (Hold).

Impinj PI, Credo Technology Group CRDO and Amphenol APH are some better-ranked stocks that investors can consider in the Zacks Computer and Technology sector. Impinj, Credo Technology Group and Amphenol sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Impinj’s full-year 2025 earnings is pegged at $1.98 per share, revised upward by four cents over the past 30 days and suggests a year-over-year decline of 6.2%. Impinj shares have soared 63.7% year to date.

The consensus estimate for Credo Technology Group’s fiscal 2026 earnings has been revised upward by a cent over the past 30 days to $2.04 per share, suggesting an increase of 191.4% year over year. Credo Technology Group shares have rallied 133.9% year to date.

The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings has been revised upward to $3.22 per share from $3.03 per share over the past seven days, reflecting 70.4% year-over-year growth. Amphenol shares have risen 95.7% year to date.

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This article originally published on Zacks Investment Research (zacks.com).

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Source Zacks-com