Key Highlights

• Shares traded at $157.00 pre-market, down 14.35% from the $183.29 prior close.

• First-quarter Revenue grew 24% to $1.8 billion.

• Second-quarter cloud growth is guided to about 27%, down from 31%.

• Free Cash Flow was $463 million, a 26% margin.

Atlassian (NASDAQ:TEAM) shares were sharply lower in pre-market trading on Friday, November 6, at $157.00, down 14.35%, after the company reported first-quarter fiscal 2027 results that beat estimates but came with second-quarter cloud growth guidance below the first-quarter pace. Revenue rose 24% to $1.8 billion against an estimate of $1.7 billion, and adjusted EPS was $1.65 against $1.39.

The Sydney-headquartered company develops collaboration, work management and developer tools, including Jira, Confluence, Jira Service Management, Trello, Bitbucket, Loom and the AI-driven Rovo. It serves more than 300,000 customers, including over 80% of the Fortune 500, and has about 13,300 employees.

Cloud Revenue, ARR and Cash Flow in the First Quarter

Cloud revenue grew 31% to $1.3 billion, and subscription ARR grew 30% to $1.4 billion. GAAP operating Margin was 11%, free cash flow was $463 million and gross margin was 85.2%, despite higher AI usage costs.

Remaining performance obligations grew 44% to $4.7 billion, and current RPO grew 28%. Customers spending more than $1 million grew well north of 30%, and net retention was well over 120%. More than 3,000 customers are on the Teamwork collection, up 7x, and the Service collection has passed 70,000 customers.

Second-Quarter Cloud Growth Guided to 27% From 31%

Second-quarter cloud growth is guided to about 27%, down from 31%, and fiscal 2027 subscription ARR growth to 18.5%. Management cited the lapping of the DX Acquisition in the second quarter, tougher second-half comparisons, macro and geopolitical uncertainty, and ASC 606 timing on Data Center pull-forwards.

Data center migrations contributed mid to high single digits to cloud revenue growth. Hybrid deployments split revenue between data center and cloud, so cloud came in modestly below expectations while data center beat by $33 million. The cloud beat was $20 million.

Rovo Adoption and Public Sector Milestones

Management said 87% of enterprise cloud customers use Rovo, and human-agent collaborations exceed 10 million per month, double the level six months earlier. The company does not monetize the new Amp collaboration layer directly, and usage-based pricing enforcement begins in early December with no meaningful revenue assumed in fiscal 2027. Public sector milestones include IL5 submission by July 2028, FedRAMP High submission in January 2029 and Rovo on Government Cloud in June 2027.

Usage-Based Pricing in December and Cloud Growth Are the Next Reference Points

Guggenheim kept a $280 target and Canaccord a $175 target. Shares fell 3.47% on Thursday to $183.29 in a session when the Nasdaq-100 fell about 6%. The next reference points are the 27% second-quarter cloud growth guide and the December start of usage-based pricing enforcement.