NEW YORK – Atlassian Corporation (NASDAQ:TEAM) delivered a blockbuster end to its fiscal year, sending shares up 35.35% to close at $149.07 on Friday. The surge came after the company reported fiscal fourth-quarter results that beat analyst expectations on both the top and bottom lines, while also providing an optimistic outlook for the coming fiscal year.
The stock, which had closed at $110.12 the previous day, traded in a range of $139.30 to $153.13 during Friday's session on heavy volume of 20.1 million shares. The rally pushed the company's market capitalization significantly higher, reflecting renewed investor confidence in its cloud-centric growth strategy.
Quarterly Results Exceed Expectations
For the fiscal fourth quarter, Atlassian reported total revenue of $1.766 billion, comfortably surpassing the LSEG consensus estimate of $1.66 billion. Adjusted earnings came in at $1.87 per share, well above the analyst forecast of $1.50.
The company also posted a dramatic improvement in profitability. GAAP operating income swung to a positive $211 million, compared to a loss of $28 million in the same period last year. GAAP net income also turned positive, reaching $139 million versus a loss of $24 million a year earlier.
Cloud Revenue Drives Growth
Cloud revenue, a key metric for the company's future, grew 31% year-over-year, outpacing the overall revenue growth of 28%. This acceleration in the cloud segment underscores the successful transition of its customer base to subscription-based offerings.
Remaining performance obligations (RPO), a measure of future revenue under contract, rose 44% to $4.82 billion, providing strong visibility into near-term revenue. The company's free cash flow also remained robust, with a margin of 27%.
Fiscal 2027 Outlook: Cloud-First Strategy
Looking ahead, Atlassian's fiscal 2027 guidance highlights a clear strategic shift. The company targets total revenue growth of approximately 13%, with cloud revenue expected to grow 25.5%. Meanwhile, Data Center revenue is projected to decline 17%, reflecting the ongoing migration of customers to the cloud.
This widening gap between cloud and Data Center performance is a deliberate move, as CEO Mike Cannon-Brookes emphasized the importance of context in the AI era. The company's MCP server and Teamwork Graph command-line tool have already surpassed one million monthly active users, signaling strong adoption of its AI-powered collaboration tools.
CEO Stock Purchase Plan
In a show of confidence, Cannon-Brookes announced plans to purchase up to $250 million of Class A shares through a trading plan. At Friday's closing price, this would represent approximately 1.68 million shares, or about 0.64% of the company's diluted weighted-average share count for fiscal 2026. However, the purchases will not begin until after a mandatory cooling-off period, and any completed transactions will be disclosed in Form 4 filings as required by the SEC.
Analyst Reactions Mixed
Following the earnings report, several analysts raised their price targets on Atlassian, though the range remains wide. Oppenheimer increased its target from $110 to $200, the highest among those listed, while BTIG moved to $180 from $130 and Truist to $160 from $100. KeyCorp reaffirmed its Overweight rating with a target of $185.
These targets imply potential upside of 7.3% to 34.2% from Friday's close, suggesting that while the earnings beat resolved near-term demand concerns, the debate over valuation continues.
Risks and Key Levels to Watch
Despite the strong results, risks remain. The company's overall revenue growth is expected to slow to 13% in fiscal 2027, down from 26% in fiscal 2026. This deceleration, combined with the planned 17% decline in Data Center revenue, means that the cloud segment must continue to perform strongly to meet targets.
Investors will be watching whether the stock can hold above Friday's low of $139.30, which marks the bottom of the post-earnings trading range and sits 6.6% below the closing price. A sustained move above this level would signal that the market is confident in the company's execution capabilities.
