Atlassian’s share price took a hit, even though the company clearly outperformed analysts’ expectations. Investors reacted mainly to signs that growth in cloud activities is leveling off, a development that outweighed the strong quarterly figures.
In the second quarter of fiscal year 2026, which ended on December 31, Atlassian exceeded expectations in terms of both revenue and profit. Revenue continued to grow strongly, while adjusted earnings per share were also higher than in the same period a year earlier. This underscored the company’s continued strong demand for its collaboration software.
However, investors’ focus was not on the results for the past quarter, but mainly on the outlook. Atlassian is seeing a slowdown in the growth of its cloud revenue. Whereas the company previously achieved growth of around 26 percent, it is expecting a slower pace for the coming quarter. That was reason enough for investors to take profits, leading to a share price decline of almost four percent.
Solid financial position
Underlying growth in the cloud segment remains strong. The number of customers spending more than $10,000 per year on cloud subscriptions increased again. Atlassian is also in a solid financial position, with significant free cash flow and a well-filled cash position at the end of the quarter. This gives the company room to continue investing in product development and innovation.
An important focus area in this regard is artificial intelligence. Atlassian recently expanded its AI assistant Rovo significantly, with new capabilities aimed at automating and supporting work within organizations. The assistant is being used in more and more places within the Atlassian ecosystem and now attracts millions of active users per month. According to management, AI is playing an increasingly central role in the company’s strategy.
Looking ahead, Atlassian expects total revenue to continue to rise in the coming quarters, particularly thanks to cloud and data center services. Growth figures remain healthy, but the slower pace in the cloud is a signal to which the market is reacting sharply.
This reaction is part of a broader trend. Tech investors are currently sensitive to anything that points to declining growth, especially when combined with concerns about the impact of AI on traditional software models. At the same time, industry leaders such as Nvidia CEO Jensen Huang point out that fears that AI will completely displace existing software companies are exaggerated. For Atlassian, the challenge for now seems to lie mainly in convincing investors that cloud growth will remain structurally strong enough.