Atlassian shares gained 92.2% in August, far outpacing the S&P 500's 2.6% gain, after the company posted fiscal fourth-quarter results that beat Wall Street's estimates. Strong cloud and subscription growth, plus rising adoption of its Rovo AI tools, drove the rebound and pushed analysts to raise their price targets.
Atlassian's stock jumped 92.2% in August, according to data from S&P Global Market Intelligence, dwarfing the S&P 500's 2.6% gain over the same stretch. The enterprise software maker's fiscal fourth-quarter results, released in the period, dispelled fears that AI would erode demand for its workplace tools.
Results beat expectations across the board
For the quarter ended June 30, revenue grew 28% year over year, topping analysts' consensus estimate of $1.66 billion. Adjusted earnings per share soared 98% to $1.87, well above the $1.50 analysts had projected.
Cloud revenue, which covers products such as Trello, Jira, and Confluence, rose 31% to $1.2 billion. Subscription annual recurring revenue climbed 23% to $6.6 billion, while remaining performance obligation — revenue under contract but not yet recognized — jumped 44% to $4.8 billion. The quarter also set a record for large deals. ARR from customers spending $3 million or more grew more than 50% year over year. Deals worth $5 million or more jumped 70%.
AI adoption strengthened rather than weakened demand
Investors had worried that AI tools would let companies bypass Atlassian's software altogether. Instead, the company's Rovo AI assistant, which helps customers search information, interact with data, and automate workflows, saw usage accelerate. Rovo-assisted actions surged 50% quarter over quarter. Users of the tool completed 20% more work items in Jira than non-users. They also created or edited 25% more Confluence pages than non-users.
Wall Street raised its targets, but growth is set to slow
Following the results, analysts rushed to revise their models, producing a wave of upgrades, positive initiations, and higher price targets that helped fuel the stock's momentum. For fiscal 2027, Atlassian forecast total revenue growth of 13%, cloud growth of 25.5%, and subscription ARR growth of 18% — targets that came in ahead of Wall Street's expectations even though they mark a slowdown from the most recent quarter.
The rally has also lifted Atlassian's valuation. The stock is no longer a screaming bargain, but at 28 times next year's expected earnings, the price remains reasonable given the company's growth and backlog.
Source: Fool
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