Atlassian (NASDAQ:TEAM) reported what CEO and co-founder Mike Cannon-Brookes described as “incredible” fiscal third-quarter 2026 results, pointing to accelerating cloud growth, expanding backlog, and increasing customer adoption of the company’s AI offerings. Management said the quarter’s performance reflected momentum across its strategic priorities in enterprise adoption, AI, and its “system of work” platform vision.
Quarterly results: revenue up 32% to $1.8 billion
Cannon-Brookes said total revenue grew 32% year-over-year to $1.8 billion. Cloud revenue surpassed $1.1 billion and accelerated to 29% year-over-year growth, while remaining performance obligations (RPO) increased 13% year-over-year to $4 billion.
AI and the Teamwork Graph: “better, faster, and cheaper” outcomes
A major theme on the call was how Atlassian’s AI capabilities—particularly Rovo—tie into what the company calls the Teamwork Graph, which connects “knowledge, work, people, and code.” Cannon-Brookes said the company continues to add “millions of monthly active users” to Rovo and that AI Rovo credit usage is growing more than 20% month-over-month.
He also said customers using Rovo are “growing their ARR at roughly two times the rate” of customers not using Rovo, which he said contributed to the quarter’s cloud outperformance and expansion. In response to a question from Morgan Stanley analyst Keith Weiss about AI costs and token usage, Cannon-Brookes said Atlassian’s approach can reduce token consumption and therefore lower the cost to generate AI outputs.
“Those are cheaper answers because you use far less tokens to get to an answer in the same amount of time,” Cannon-Brookes said, adding that using fewer tokens “reduces your cost of AI or allows you to do far more AI investment.” He also previewed “a lot of huge announcements coming up next week at Team ’26” related to the Teamwork Graph and context-driven AI.
William Blair analyst Arjun Bhatia asked how Atlassian positions Rovo relative to third-party agents. Cannon-Brookes described Rovo as “the AI part of the Atlassian platform that shows up in all of our surfaces,” including Jira and Confluence, as well as in other agent platforms. He said Atlassian has also shipped features to enable third-party agents—citing examples such as Gamma, Canva, Cursor, and Claude Code—to surface in Atlassian contexts while using the Teamwork Graph “at the core.”
Cloud acceleration driven by cross-sell and seat expansion; “no signal of seat compression”
In response to questions about cloud acceleration and Jira seat trends, CFO James Chuong said the company’s cloud performance was driven primarily by cross-sell and seat expansion, rather than data center migrations. Chuong said data center migrations were “in line with our expectations” and that the company still expects migrations to contribute “mid to high single digits” to cloud growth.
On cross-sell, Chuong said Atlassian saw outperformance in its collections business—particularly the Teamwork Collection, which includes Jira, Confluence, Loom, and Rovo. He said the Teamwork Collection is currently “the best vehicle” for customers to buy and unlock AI and agent capabilities across the platform and noted that customers are upgrading due to increased AI credits, with “10x more credits on Rovo versus the standalone subscription.”
Chuong also said Atlassian is seeing “continued seat expansion in our core Jira standalone offering,” which he suggested reflects Jira’s role as a system of record for workflows in an AI-enabled environment, including governance, permissions, and audit trails.
Mizuho analyst Gregg Moskowitz asked about fears of potential seat compression. Cannon-Brookes said Atlassian is not seeing that dynamic.
“We are not seeing any signal of seat compression from customers,” he said. “If anything, we are seeing the opposite.” He pointed to “strong expansion numbers,” cross-sell into collections, and continued AI usage, and added that the company’s net revenue retention (NRR) remained “north of 120” and “ticked up again” for what he believed was the third or fourth quarter in a row.
Service Collection momentum and competitive displacements
Cannon-Brookes also highlighted competitive momentum in service management. He said the quarter represented Atlassian’s “largest ever quarter for competitive displacements from a major ITSM provider,” as customers move away from “legacy systems” in favor of “a more modern, AI-native” platform.
In discussing what is driving displacement wins, Cannon-Brookes emphasized several factors, including speed of deployment, user experience, comprehensiveness of organizational data in the Teamwork Graph, and AI capabilities used in automation and workflows. He also said the company is expanding beyond ITSM into broader employee service management.
Among the metrics cited, Cannon-Brookes said 75% of the Fortune 500 use the Service Collection and that 60% of Service Collection customers use it outside of IT, including HR, marketing, and other functions. He added that Atlassian crossed a $1 billion ARR milestone in the Service Collection business, which he said was “worth celebrating.” He also said Atlassian is “only just getting started in customer service,” and noted a “great quarter” in that area as well.
Barclays analyst Raimo Lenschow asked how meaningful ITSM momentum is and what is driving it. Cannon-Brookes said strength is showing up across regions, including a “great quarter in EMEA,” and reiterated that role-blurring across teams and unified context are supporting broader service use cases. He also mentioned AI-driven capabilities ranging from “AIOps in the IT area” to broader Rovo use, as well as adoption of Atlassian’s MCP servers and CLI interfaces, which he said help customers access the context graph embedded in their service offerings.
Data center dynamics: upfront revenue pull-forward and disclosure plans
Chuong spent significant time addressing Atlassian’s data center revenue dynamics following its previously announced data center end-of-life plan. He said the Q3 revenue beat was “primarily driven by recognizing greater than expected upfront term license revenue” in the quarter, and noted that Q3 had the company’s “largest expiry base.”
Chuong laid out several observations:
- Cloud migration: “On track and continues as expected,” still expected to contribute mid to high single digits to cloud growth.
- Data center retention: “Remain incredibly robust,” and “actually outperforming our expectations in the quarter.”
- Large-customer behavior: Some large customers with complex, multi-year migrations pulled forward purchasing and expansion activity into Q3 from future periods.
Chuong said a pricing change in March “further catalyzed this dynamic,” resulting in approximately $50 million more upfront term license revenue recognized in Q3 than the company expected. He also said customers actively planning and transitioning to the cloud are moderating seat expansion compared to historical trends, even as retention remains high. As these pull-forward dynamics play out, he cautioned that timing affects reported revenue, RPO, and current RPO (CRPO), creating “lumpiness.”
To help investors understand those timing effects, Chuong said Atlassian plans to “enhance our disclosures and share historical subscription ARR” at an investor forum during the Team ’26 conference. Separately, he said it was too early to discuss fiscal 2027 guidance and that the company would provide guidance in August with Q4 earnings.
Chuong also offered context on backlog metrics, saying that “when we normalize for the impact of ASC 606,” Atlassian’s RPO would have been “north of 40%” in Q3 and CRPO would have been “north of 30% year-over-year,” which he said was more consistent with recent trends and supported the strength of the company’s backlog.
In closing remarks, Cannon-Brookes thanked analysts and participants, and pointed investors to the upcoming Team ’26 conference in Anaheim, where he said Atlassian will make additional announcements and host an investor forum.
About Atlassian (NASDAQ:TEAM)
Atlassian Corporation Plc is a software company headquartered in Sydney, Australia, best known for developing collaboration, project management and software development tools. Founded in 2002 by Mike Cannon-Brookes and Scott Farquhar, Atlassian grew from a small engineering-focused team into a publicly traded company after its initial public offering in 2015. The company serves a global customer base that spans small teams to large enterprises across technology, financial services, government and other sectors.
Atlassian’s product portfolio centers on tools designed to help teams plan, build and support software and business processes.
