Atlassian shares dip as cloud growth expected to slow despite earnings beat

Investing.com -- Atlassian Corp Plc (NASDAQ: TEAM) reported second-quarter earnings that significantly exceeded analyst expectations, but shares tumbled 3.4% in after-hours trading Thursday as investors focused on projections of slowing cloud revenue growth.

The team collaboration software provider posted adjusted earnings per share of $1.22 for its fiscal second quarter ended December 31, 2025, handily beating the analyst estimate of $0.73. Revenue surged to $1.59 billion, well above the consensus estimate of $1.21 billion and up 23% YoY.

Cloud revenue, a key metric for the company, reached $1.07 billion in the quarter, marking Atlassian's first-ever $1 billion cloud revenue quarter with 26% YoY growth. However, the company's guidance for the third quarter indicated cloud revenue growth would slow to approximately 23%, which appears to have concerned investors despite strong overall performance.

"We closed out Q2 with incredible momentum across the Atlassian platform and achieved some impressive milestones along the way," said Mike Cannon-Brookes, Atlassian's CEO and co-Founder. "Companies from the largest enterprises in the world, to the most innovative startups, rely on the Atlassian platform every day."

For the third quarter, Atlassian forecasts revenue between $1.689 billion and $1.697 billion, exceeding the analyst consensus of $1.65 billion. The company also reported remaining performance obligations of $3.81 billion, up 44% YoY, indicating strong future revenue potential.

Joe Binz, Atlassian's CFO, noted, "With RPO up 44% year-over-year to $3.8 billion, our investments across enterprise, AI and system of work are yielding results and deeper, long-term customer commitments to the Atlassian platform."

The company ended the quarter with 55,369 customers with greater than $10,000 in cloud annualized recurring revenue, representing 12% YoY growth. Atlassian maintained its full-year revenue growth forecast of approximately 22%.

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