Collaboration software company Atlassian (NASDAQ: TEAM) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 27.6% year on year to $1.77 billion. Guidance for next quarter’s revenue was optimistic at $1.71 billion at the midpoint, 2.8% above analysts’ estimates. Its non-GAAP profit of $1.87 per share was 24.5% above analysts’ consensus estimates.
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Atlassian (TEAM) Q2 CY2026 Highlights:
- Revenue: $1.77 billion vs analyst estimates of $1.66 billion (27.6% year-on-year growth, 6.4% beat)
- Adjusted EPS: $1.87 vs analyst estimates of $1.50 (24.5% beat)
- Adjusted Operating Income: $636.3 million vs analyst estimates of $510.8 million (36% margin, 24.6% beat)
- Revenue Guidance for Q3 CY2026 is $1.71 billion at the midpoint, above analyst estimates of $1.66 billion
- Operating Margin: 11.9%, up from -2.1% in the same quarter last year
- Free Cash Flow Margin: 26.9%, down from 31.4% in the previous quarter
- Billings: $2.02 billion at quarter end, up 34.7% year on year
- Market Capitalization: $28.76 billion
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 performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Atlassian’s sales grew at a solid 25.8% compounded annual growth rate over the last five years. Its growth surpassed the average software company and shows its offerings resonate with customers, a great starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Atlassian’s annualized revenue growth of 22.8% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Atlassian reported robust year-on-year revenue growth of 27.6%, and its $1.77 billion of revenue topped Wall Street estimates by 6.4%. Company management is currently guiding for a 19.4% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 11% over the next 12 months, a deceleration versus the last two years. This projection doesn’t excite us and suggests its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.
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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 $2.02 billion in Q2, and over the last four quarters, its growth was impressive as it averaged 20.5% 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 represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
Atlassian’s recent customer acquisition efforts haven’t yielded returns as its CAC payback period was negative this quarter, meaning its incremental sales and marketing investments outpaced its revenue. The company’s inefficiency indicates it operates in a competitive market and must continue investing to grow.
Key Takeaways from Atlassian’s Q2 Results
We were impressed by how significantly Atlassian blew past analysts’ billings expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 37.4% to $151.57 immediately following the results.
Atlassian may have had a good quarter, but does that mean you should invest right now? 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).
