Atlassian shares surge 25% as AI-driven deals push revenue past expectations

Key facts

• Atlassian shares rose 25% to $85.61 in after-hours trading on Wall Street.
• Adjusted earnings per share hit $1.75, up from $0.97 a year earlier, beating analysts' $0.98 estimate.
• Revenue reached $1.79 billion, up 32% year-over-year, exceeding the expected $1.57 billion.
• Cloud revenue grew 29% to $1.13 billion, accelerating from prior quarters.
• Remaining performance obligations rose 37% to $4 billion.
• Service Collection product line crossed $1 billion in annualized recurring revenue, growing over 30%.
• Net loss was $98.4 million, including $223.8 million in restructuring charges.
• Customer count for cloud ARR over $10,000 increased 10% to 55,913.

A long-awaited turnaround

Atlassian's stock staged a dramatic rally on Friday, surging 25% in after-hours trading to $85.61, after the software company released quarterly results that blew past analyst expectations. The leap reflects growing investor confidence that the Australian-born enterprise software giant is finally on a path to sustained profitability after a decade of losses as a public company. Chief executive Mike Cannon-Brookes framed the results as evidence that the company's strategy is working. "Our strong Q3 results show the power of our strategy in action, with total revenue growing 32% year-over-year to $1.8 billion, as customers sign bigger, longer-term commitments and connect their teams and workflows on our AI-powered platform," he said in the earnings release.

Beating the Street

For its fiscal 2026 third quarter ended March 31, adjusted earnings per share of $1.75, nearly doubling from $0.97 in the same period last year and far surpassing the $0.98 consensus estimate. Revenue came in at $1.79 billion, up 32% year-over-year and well above the $1.57 billion analysts had forecast. The company's cloud revenue rose 29% to $1.13 billion, an acceleration from prior quarters, while remaining performance obligations — a key indicator of future revenue — jumped 37% to $4 billion. On an unadjusted basis, Atlassian posted a net loss of $98.4 million, weighed down by $223.8 million in restructuring charges tied to what the company described as rebalancing resources and consolidating leases.

AI adoption fuels enterprise deals

Atlassian is not alone in riding the AI wave. Alongside the company, Twilio Inc. and Five9 Inc. also posted better-than-expected quarterly results, with all three pointing to artificial intelligence adoption as a driver of accelerating revenue and stronger guidance. Twilio shares gained about 16% and Five9 rose about 18% in after-hours trading. Atlassian's Service Collection product line, which bundles Jira Service Management with its Customer Service Management app and Rovo agents, has crossed $1 billion in annualized recurring revenue and is growing at more than 30% year-over-year. The company ended the quarter with 55,913 customers paying more than $10,000 in cloud annual recurring revenue, up 10% year-over-year.

Twilio and Five9 also shine

adjusted earnings per share of $1.50 for its fiscal first quarter ended March 31, up from $1.14 a year earlier, on revenue of $1.41 billion, up 20% year-over-year. Analysts had expected $1.27 per share on revenue of $1.34 billion. Operating income on a non-adjusted basis surged 366% to $107.7 million from $23.1 million a year earlier. Twilio's dollar-based net expansion rate climbed to 114% from 107%, indicating existing customers are spending more and staying longer. Free cash flow came in at $132.3 million. "Q1 was a milestone quarter for Twilio, marked by our highest revenue and gross profit growth rates in more than three years," said chief executive Khozema Shipchandler, adding that the company has become "a foundational infrastructure layer in the era of AI." Twilio repurchased $253.4 million of its stock during the quarter, with $892 million remaining on a $2 billion authorization.

Outlook and guidance

For its fiscal fourth quarter, Atlassian expects revenue of $1.653 billion to $1.661 billion. The company also raised its full-year revenue growth target to about 24%, with cloud revenue growth of about 26.5%. Twilio guided for second-quarter revenue of $1.42 billion to $1.43 billion, above the $1.39 billion analysts were expecting, and adjusted earnings of $1.27 to $1.32 per share. It raised its full-year revenue growth range to 14% to 15%, up from 11.5% to 12.5%, and lifted its adjusted operating income target to between $1.08 billion and $1.10 billion. The strong guidance from all three companies suggests that enterprise demand for AI-powered software is accelerating, easing fears that the technology might cannibalize existing revenue streams. Atlassian's results, in particular, signal that the company's decade-long struggle to turn a profit may be nearing an end.

The road ahead

Investors will now watch whether Atlassian can sustain its momentum and convert its top-line growth into consistent net income. The restructuring charges that dragged the bottom line this quarter are expected to be temporary, but the company must demonstrate that its cost-cutting measures do not stifle innovation. With AI adoption becoming a central pillar of enterprise software strategy, Atlassian, Twilio, and Five9 are positioning themselves as essential infrastructure providers. The market's enthusiastic response to their earnings suggests that the narrative around AI and profitability is shifting — from fear of disruption to belief in acceleration.

The bottom line

• Atlassian shares surged 25% after beating Q3 earnings estimates, with revenue up 32% to $1.79 billion.
• Adjusted EPS of $1.75 nearly doubled year-over-year, driven by AI-powered enterprise deals.
• Cloud revenue accelerated to 29% growth, and remaining performance obligations hit $4 billion.
• Service Collection product line surpassed $1 billion in annualized recurring revenue, growing over 30%.
• Twilio and Five9 also posted strong results, with AI adoption cited as a key growth driver.
• Atlassian raised its full-year revenue growth target to about 24%, signaling confidence in sustained demand.