Atlassian stock soars 23% after crushing Q3 earnings and revenue forecasts
Atlassian shares surged in premarket trading after the company reported strong third-quarter results for fiscal 2026. The software firm beat both earnings and revenue expectations, prompting a 23% jump in its stock price before markets opened. The company posted earnings per share (EPS) of $1.75, well above the $1.33 analysts had predicted. Revenue also exceeded forecasts, reaching $1.787 billion compared to the $1.696 billion consensus. Cloud revenue grew by 29% year-over-year, outperforming estimates by 4.5%.
Despite the strong earnings, free cash flow fell short of expectations by 31%. This shortfall was attributed to restructuring-related cash payments. Meanwhile, gross margin improved to 84%, slightly ahead of the 83% consensus. Atlassian’s Service Collection, a key product line, surpassed $1 billion in annual recurring revenue. This segment grew by over 30% year-over-year. The company also raised its full-year revenue growth guidance to 24%, up from previous projections. Following the results, several analysts increased their price targets. Cantor Fitzgerald lifted its target to $107, while KeyBanc maintained a $130 target. Additionally, remaining performance obligations climbed 37% year-over-year to $4.0 billion.
The earnings report has boosted investor confidence, reflected in the sharp rise in share price. With stronger-than-expected revenue growth and an improved gross margin, Atlassian appears well-positioned for the rest of the fiscal year. Analysts will likely continue monitoring free cash flow as restructuring efforts progress.
