After a year of brutal selling on fears AI would erode demand for its tools, Atlassian flipped the script with a blowout quarter and upgraded guidance. Shares jumped over 27% after hours in New York, briefly touching about USD87 before settling near USD85, adding roughly USD3 billion to the software group’s market value. Investors who had punished the stock by around 70% over 12 months on AI concerns now saw a company positioning itself as an AI winner rather than a casualty.
The latest quarter to March 31 showed third quarter revenue climbing 32% year on year to about USD1.79 billion, above Wall Street’s USD1.69 billion forecast compiled by LSEG and FactSet. Cloud revenue increased 29% to around USD1.13 billion while data centre sales also accelerated, helping lift total growth.
Adjusted non GAAP profit rose to roughly USD456.5 million from USD261.5 million a year earlier, with diluted adjusted earnings of USD1.75 per share beating estimates of USD1.33. Atlassian now guides fourth quarter revenue of USD1.653 billion to USD1.661 billion, implying about 24% full year growth versus its previous 22% outlook, according to Reuters.
AI adoption is becoming a core growth engine across Atlassian’s customer base rather than a threat to its business model. Users of its Rovo AI tool are expanding recurring revenue at about twice the pace of customers not using Rovo, and AI credit consumption is rising more than 20% month on month.
The Service Collection bundle, which includes IT, HR and customer service management tools, surpassed USD1 billion in annual recurring revenue, growing over 30% year on year. Enterprise customers using Atlassian’s AI capabilities are resolving issues around 13% faster than those operating without them, a tangible productivity lift that supports higher value longer term contracts.
The rebound comes despite Atlassian still posting a GAAP loss, and reflects a deliberate pivot toward self funded AI and enterprise expansion. GAAP net loss widened to USD98.4 million from USD70.8 million a year earlier, largely due to USD223.8 million in restructuring charges tied to March’s 10% workforce reduction, which cut about 1,600 roles, roughly 30% in Australia.
Management has said the cost savings from that restructuring are being recycled into AI and enterprise sales investments, a shift reflected in non GAAP operating margin expanding to 34% from 26%. Remaining performance obligations climbed 37% year on year to about USD4 billion, and point to a larger backlog of committed revenue as customers sign bigger, longer deals and standardise more work on Atlassian’s platform.
