Atlassian stock jumps 30% on strong margins, lower growth outlook

Atlassian shares jumped more than 30% Friday after the software maker reported stronger-than-expected profits and guided next year’s revenue growth lower—but investors focused on margins, not speed. The collaboration-software company posted fiscal fourth-quarter revenue of $1.77 billion, up 28% from a year ago, and swung from an operating loss to a 12% GAAP operating margin. Its cloud revenue, the engine of growth, climbed 31% to $1.2 billion, while customers locked in more long-term contracts, pushing remaining performance obligations up 44% to $4.8 billion.

The market rewarded discipline over speed. Atlassian has spent years growing fast while burning cash under GAAP accounting. This quarter, for the first time, it turned profitable at the operating line, posting $211 million in income and $139 million in net income, or $0.55 per share. Non-GAAP margins hit 36%, earnings per share rose 91%, and free cash flow grew 32% to $475 million. Management also guided fiscal 2027 subscription ARR growth to about 18%, down from 23% in fiscal 2026, and total revenue growth to roughly 13%, half the 26% pace in fiscal 2026. Most companies would get punished for softer forecasts, but Atlassian’s focus on profitability overshadowed the slower top-line outlook.

Investors saw a clear path from years of losses to sustainable GAAP profits. Over the past two years, the company’s annual operating margin improved from negative 3% to about 0.2% and is now targeting around 4.5% for fiscal 2027. Chief financial officer James Chuong emphasized turning “top-line strength into operational discipline,” pointing to the 12% GAAP margin in the quarter as proof of durable growth. The slower revenue guide reflects timing shifts—like reduced perpetual license sales—not weaker demand. Cloud and long-term contracts remain strong, signaling customer confidence even as growth moderates.

What happens next could hinge on whether margins keep expanding without sacrificing momentum. Analysts and shareholders will watch how Atlassian balances disciplined cost control with investment in product and sales. If profits continue rising while cloud revenue growth stays above 30%, the stock’s premium may hold. But if growth slows further or competition heats up, the market’s patience could wear thin. For now, the message is clear: investors are betting on profits, not just scale.