Atlassian Shares Fall Over 17% After-Hours Despite Earnings Beat, as Subscription Growth Guidance Slows

Australian collaboration software company Atlassian saw its shares fall more than 17% in after-hours trading following the release of its first-quarter fiscal 2027 results, despite beating analyst expectations across key financial metrics. The sharp decline reflects investor anxiety over a downward revision in future subscription annual recurring revenue (ARR) growth, which overshadowed strong short-term profitability and backlog figures.

For the quarter ended September 30, Atlassian reported adjusted earnings per share of $1.65, up from $1.04 in the same period last year and exceeding the consensus estimate of $1.43. Revenue rose 24% year-over-year to $1.772 billion, surpassing the expected $1.71 billion. This growth was primarily driven by its cloud segment, where revenue increased 31% to $1.302 billion. Conversely, the Data Center product line, which is scheduled for retirement in March 2029, saw growth slow to approximately 5%, with revenue at $391 million, as customers planning their migration to the cloud expanded less rapidly.

The pivotal factor triggering the sell-off was the guidance update. Atlassian now expects subscription ARR growth to decelerate to about 18.5% by the end of the fiscal year, down from the 22.5% rate just reported. Although remaining performance obligations surged 44% to $4.746 billion—supported by larger, multi-year enterprise deals—investors focused heavily on the immediate trajectory of subscription revenue growth. The company also posted net income of $91 million for the second consecutive quarter on an unadjusted basis, with free cash flow rising to $463 million and $581 million returned to shareholders through buybacks.