Analyst(s): Futurum Research
Publication Date: November 9, 2026

Atlassian’s customers are buying broader software bundles as they bring artificial intelligence (AI) agents into everyday work. Hybrid deployments are helping larger enterprises commit to cloud migrations in stages.

What Is Covered in This Article:

• Atlassian’s Q1 FY 2027 financial results
• Rovo adoption drives collection upgrades
• Service Collection expands beyond IT
• Hybrid contracts phase cloud migrations
• Guidance and Final Thoughts

The News: Atlassian Corporation (Nasdaq: TEAM) reported Q1 FY 2027 revenue of $1.77 billion, up 24% year over year (YoY). Revenue exceeded Wall Street consensus of $1.72 billion and prior company guidance of $1,705 million to $1,715 million. Cloud revenue rose 31% YoY to $1.30 billion, Data Center revenue rose 4.8% to $390.71 million, and Marketplace and other revenue rose 27% to $78.98 million. Non-GAAP operating income increased 78.4% YoY to $575.82 million, and non-GAAP operating margin rose to 32% from 23%. Non-GAAP net income rose 53.6% YoY to $423.49 million, and non-GAAP diluted earnings per share rose 58.7% to $1.65.

“Enterprise AI has hit an inflection point. Model power is table stakes. The advantage goes to platforms that bring people and AI agents together with shared context, deep collaboration, and confidence in the outcome,” said Mike Cannon-Brookes, Atlassian’s chief executive officer and co-founder. “That’s what we’ve built. Our Teamwork Graph gives agents the context of how work actually gets done, and AMP brings them into teams as accountable teammates.”

Atlassian Q1 FY 2027: Rovo Adoption Drives Teamwork Collection Upgrades

Analyst Take: Atlassian is using AI to sell more of its existing software to customers that already manage projects in Jira or document decisions in Confluence. The Teamwork Graph gives agents access to the context behind those projects and decisions, while Teamwork Collection gives customers more capacity to run them. Service Collection extends that approach to departments that handle requests and approvals outside information technology (IT). For competitors, the contest is increasingly over where teams assign and audit work as agents take on more of it.

Rovo Adoption Drives Teamwork Collection Upgrades

More than 3,000 customers had upgraded to Teamwork Collection, seven times the year-ago count, and the bundle includes ten times as many Rovo credits. Collection customers ran twice as many agents and expanded their Jira and Confluence seats faster than standalone customers. Deep Rovo adopters grew annual recurring revenue (ARR) at more than twice the rate of customers with lighter usage, making paid expansion a better measure of commercial traction than activation alone. Atlassian introduced its Agentic Multiplayer Protocol (AMP) at Team ’26 Europe, embedding agents with distinct identities, scoped permissions, and audit trails in tools where employees already assign and review work. Its platform now records more than 10 million human-agent collaborations per month, double the level six months earlier. The bundle’s pricing power will depend on whether those interactions become routine enough for customers to pay for more capacity at renewal.

Service Collection Expands Beyond IT

Service Collection surpassed 70,000 customers, and its ARR grew more than 30% YoY to over $1 billion. Seat growth from competitive displacements exceeded 40% YoY, showing that the product is gaining ground in existing service operations as well as serving new workflows. Customers are extending service management into departments such as human resources and finance, where approvals and requests can use the same underlying workflows as IT. Pairing Jira Service Management with Assets lets service teams connect requests to the systems or equipment involved, while Rovo can draw on that context. That shared setup gives Atlassian a way to sell into additional departments within accounts it already serves. For incumbent service management vendors, defending the IT help desk may leave adjacent service workflows open to Atlassian.

Hybrid Contracts Phase Cloud Migrations

Data Center migrations contributed a mid- to high-single-digit number of percentage points to Cloud revenue growth. Several large customers signed hybrid commitments that let them move workloads over multiple years. Atlassian splits revenue between Cloud and Data Center on those contracts without charging customers twice, so a signed cloud commitment can support Data Center revenue before the workload moves. The US General Services Administration’s OneGov agreement gives federal agencies a path to Atlassian Government Cloud. Atlassian plans to submit for Impact Level 5 authorization in July 2028, six months earlier than previously planned, leaving a period in which some regulated workloads still face authorization constraints. For complex accounts, the pace of workload transfers will determine how quickly those commitments translate into Cloud revenue.

Guidance and Final Thoughts

Atlassian guided Q2 FY 2027 revenue to $1.825 billion to $1.835 billion, with the $1.83 billion midpoint slightly above Wall Street consensus of $1.82 billion. Cloud revenue is expected to grow approximately 27% YoY, while Marketplace and other revenue is projected to increase 20% and Data Center revenue to decline 14%. Management expects a Q2 non-GAAP operating margin of approximately 26% and a non-GAAP gross margin of 86.5% for both Q2 and FY 2027. For the full year, Atlassian raised its total revenue growth outlook to approximately 13.75% from 13%, Cloud revenue growth to 26% from 25.5%, and non-GAAP operating margin to 25.5% from 25%, while projecting subscription ARR growth of 18.5%.

Atlassian’s growth opportunity increasingly rests on converting AI engagement into higher subscription spending while expanding the range of workflows managed on its platform. Teamwork Collection upgrades and faster ARR growth among deep Rovo adopters indicate that AI usage is becoming commercially relevant, although the durability of that relationship will depend on continued consumption and renewals. Service Collection’s expansion beyond IT provides another route into existing enterprise accounts, while hybrid contracts help larger customers commit to Cloud without requiring immediate migration of every workload. However, the projected Data Center decline and tougher Cloud comparisons make sustained seat expansion, collection upgrades, and migration execution increasingly important. The key indicators will be whether Rovo adoption continues to support higher customer spending and whether hybrid commitments translate into Cloud revenue on schedule, allowing Atlassian to sustain growth beyond the initial wave of AI-driven upgrades.

See the full press release on Atlassian’s Q1 FY 2027 financial results on the company website.

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Other Insights From Futurum:

Atlassian Fuses the Agent Work Surface, Workflow, and Control Plane Into Jira

Atlassian Bets the Work Surface on Governed Agentic Workflows

Atlassian Q4 FY 2026: Can Rovo Turn AI Usage Into Durable Growth?

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