Atlassian just reported its Q2 FY26 results, and they’re fascinating on multiple levels:
- $6.4B+ ARR, $1.6 billion in quarterly revenue, up 23%.
- Atlassian is accelerating (albeit modestly) — up from 20% growth
- Their first-ever $1 billion cloud quarter.
- And yet the market “hates it”. The stock is sitting near its 52-week low at ~$98, down about 70% from $326.
- It’s trading at just 4x forward revenues
The entire B2B software sector is getting hammered on fears that AI will eat everyone’s lunch — HubSpot down 39% YTD, Figma down 40%, Salesforce and ServiceNow both crashing.
But Atlassian’s actual numbers tell a very different story from the “software is dead” narrative. There’s no massive AI lift at Atlassian — yet. But there’s no downturn, either. It’s the engine that keeps going at $6B+ ARR.
Here are 5 interesting learnings:
1. RPO Grew 44% to $3.8B — Accelerating, Not Decelerating
This is the single most important number in the quarter and one almost everyone is overlooking. Remaining performance obligations — essentially contracted future revenue — hit $3.8 billion, up 44% year-over-year. Current RPO (the portion to be recognized within 12 months) grew 30% to $2.7 billion.
Here’s what matters: RPO growth is accelerating. Not flattening, not declining. Customers are signing longer, larger deals. The record number of $1M+ ACV deals — nearly 2x year-over-year — is flowing into this number. When RPO growth outpaces revenue growth by this much (44% vs. 23%), it tells you the business is building a larger and larger backlog. That’s not what a company facing existential AI disruption looks like. That’s what a company becoming more strategic to its customers looks like.
Management noted customers are choosing Atlassian not just for 2026, but committing through 2027, 2028, and 2029. At $6B+ in run-rate revenue, that kind of forward commitment acceleration is rare.
2. 600+ Customers Now Above $1M in ARR, Up ~40% YoY — And $1M+ ACV Deals Nearly Doubled
Atlassian was built as a bottoms-up, self-serve, no-sales-team company. That origin story is well known. What’s less appreciated is how dramatically the enterprise motion is now working.
600+ customers above $1M ARR, growing nearly 40%. Record number of $1M+ ACV deals, up almost 2x. The enterprise business in Service Collection alone grew 60% year-over-year in Q2. Deal highlights included Workday, Publicis Groupe, and Synchrony — major enterprises standardizing on Atlassian across business and technical teams.
The latest deal logos tell the story: Audi, Reddit, United Airlines, Royal Caribbean, Roblox, Air France KLM, Domino’s, HarperCollins. These aren’t dev teams experimenting. These are enterprise-wide platform commitments. Atlassian has crossed the chasm from “tool developers love” to “platform the C-suite is buying.” And they did it while keeping their bottoms-up engine running — 350,000+ total customers, including 80% of the Fortune 500.
3. Cloud NRR Hit 120%+ and Is Rising for the Third Straight Quarter — at $4.3B+ in Cloud ARR
Most companies see net revenue retention compress as they scale. The math gets harder — you need more absolute dollars of expansion to maintain the same percentage on a larger base. Atlassian is defying that pattern.
Cloud NRR is now above 120% and has been ticking up for three consecutive quarters. At over $4.3 billion in cloud annualized revenue, that means the existing customer base is generating $800M+ in net organic expansion annually — before a single new logo is signed.
What’s driving it: paid seat expansion (stable rates), cross-sell of additional products (exceeding expectations), customer retention (exceeding expectations), and upgrades to higher-value editions. The CFO specifically called out that seat expansion, cross-sell, and retention all beat plan. The “Collections” bundling strategy is a big part of this — when you sell a customer Jira, Confluence, Loom, and Rovo together, the expansion math changes fundamentally. Which brings us to…
4. Teamwork Collection Passed 1M Seats and 1,000 Customers — Expanding Footprint 10%+ vs. Standalone
Atlassian’s Teamwork Collection — bundling Jira, Confluence, Loom, and Rovo — crossed 1 million seats and 1,000 customers this quarter. Atlassian said it exceeded their own expectations.
But the critical insight is this: Collection customers are buying 10%+ more seats than they were purchasing across standalone products. The bundle doesn’t consolidate spend — it expands it. More people in the organization get access, more teams adopt, more use cases emerge. That’s a pricing and packaging achievement that most companies can’t pull off.
Service Collection (JSM, Assets, Customer Service Management, Rovo) is also working — 65,000+ customers, half the Fortune 500, enterprise business up 60% YoY. And Software Collection (Bitbucket, Compass, Rovo Dev, Pipelines, DX) just launched with a record Q2.
When Synchrony’s VP of Agile Tools talks about empowering 15,000 knowledge workers on a unified platform, or Publicis Groupe’s CPO talks about linking ideas to customer value across global teams — that’s the Collection strategy in action. It turns a point solution into a system of work, and systems of work are much harder to displace.
5. AI Is Driving 5% More Usage Across Jira Customers — Not Replacing Seats
This is the existential question for B2B software right now: does AI cannibalize seats or expand them? Atlassian is providing one of the first real data points at scale, and the answer is clear so far, if not yet quite a game-changer.
Across thousands of Jira customers, those using AI code-generation tools create approximately 5% more tasks in Jira, have 5% higher monthly active usage, and expand seats 5% faster than those that don’t. Rovo — Atlassian’s AI product — surpassed 5 million monthly active users. The Teamwork Graph now has over 100 billion objects and connections, giving Rovo a proprietary data advantage that generic AI tools can’t replicate.
The customer evidence is compelling. Expedia Group hit full Rovo adoption in 8 weeks across 70% of their company and created 200 Rovo agents in 6 weeks. Insurity is targeting 30% reduction in manual work with Teamwork Collection and Rovo. Cisco’s VP of Engineering Operations said having a system of work built on a common data platform is what makes AI effective at scale.
Here’s the counterintuitive logic: AI creates more work to be tracked, not less. When developers ship faster with code-gen, there are more pull requests, more deployments, more incidents, more tickets, more documentation. The orchestration layer — the system of record for all that work — becomes more valuable, not less. Atlassian is betting their entire future on this thesis, and through five million Rovo MAU and improving NRR, the early data supports it.
Meanwhile, the company is managing AI costs within improving margins — non-GAAP gross margin expanded to 88% (up 3 points YoY) and non-GAAP operating margin hit 27% (up 1 point) — even as AI processing costs scale with Rovo usage.
The bottom line: Atlassian is putting up $6.4B run-rate revenue growing 23%, with 44% RPO acceleration, 120%+ NRR improving sequentially, record enterprise deals, AI driving expansion not contraction, and 27% operating margins — trading at roughly 4x forward revenue. The founders are pausing their selling plans for the first time since the IPO and accelerating buybacks 2-3x. Twenty-five analysts have Buy ratings with an average target of $224 vs. a current price of ~$95.
The market is pricing in the narrative that software is dead. The actual metrics say something very different. The gap between the two has rarely been wider in B2B.
Crazy Times, indeed.
