Collaboration software company Atlassian (NASDAQ: TEAM) announced better-than-expected revenue in Q1 CY2026, with sales up 31.7% year on year to $1.79 billion. The company expects next quarter’s revenue to be around $1.66 billion, close to analysts’ estimates. Its non-GAAP profit of $1.75 per share was 31% above analysts’ consensus estimates.
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Atlassian (TEAM) Q1 CY2026 Highlights:
- Revenue: $1.79 billion vs analyst estimates of $1.7 billion (31.7% year-on-year growth, 5.4% beat)
- Adjusted EPS: $1.75 vs analyst estimates of $1.34 (31% beat)
- Adjusted Operating Income: $607.2 million vs analyst estimates of $472.6 million (34% margin, 28.5% beat)
- Lifted full-year guidance across the board (revenue growth, cloud revenue growth, adjusted operating margin)
- Operating Margin: -3.1%, down from -0.9% in the same quarter last year
- Free Cash Flow Margin: 31.4%, up from 10.6% in the previous quarter
- Billings: $1.77 billion at quarter end, up 15.6% year on year
- Market Capitalization: $18.59 billion
“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,” said Mike Cannon-Brookes, Atlassian’s CEO and co-Founder.
Company Overview
Started by two Australian university friends who funded their startup with credit cards, Atlassian (NASDAQ: TEAM) provides software tools that help teams plan, track, collaborate, and share knowledge across organizations.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Atlassian’s 25.9% annualized revenue growth over the last five years was solid. Its growth beat the average software company and shows its offerings resonate with customers, a helpful starting point for our analysis.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Atlassian’s annualized revenue growth of 21.9% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Atlassian reported wonderful year-on-year revenue growth of 31.7%, and its $1.79 billion of revenue exceeded Wall Street’s estimates by 5.4%. Company management is currently guiding for a 19.7% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 15.9% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and suggests the market is baking in some success for its newer products and services.
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Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Atlassian’s billings punched in at $1.77 billion in Q1, and over the last four quarters, its growth slightly outpaced the sector as it averaged 15.8% year-on-year increases. This alternate topline metric grew slower than total sales, meaning the company recognizes revenue faster than it collects cash - a headwind for its liquidity that could also signal a slowdown in future revenue growth. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Atlassian is extremely efficient at acquiring new customers, and its CAC payback period checked in at 19 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Atlassian more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
Key Takeaways from Atlassian’s Q1 Results
This was a strong beat and raise quarter. We enjoyed seeing Atlassian beat analysts’ revenue expectations this quarter. The company also beat adjusted operating profit expectations handily. Lastly, Atlassian lifted full-year guidance across the board (revenue growth, cloud revenue growth, adjusted operating margin). Overall, this quarter was great amid low expectations. The stock traded up 13.5% to $77.83 immediately after reporting.
Is Atlassian an attractive investment opportunity at the current price? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
