Atlassian (NASDAQ:TEAM) shares jumped more than 30% on Friday after the software maker posted fourth-quarter revenue and cloud growth that topped analyst estimates and issued a stronger-than-expected cloud revenue outlook for fiscal 2027.
Revenue for the quarter came in at $1.8 billion, up 28% from a year earlier and above the $1.66 billion analysts had expected.
Cloud revenue rose 31% to $1.2 billion, while subscription annual recurring revenue climbed 23% to $6.6 billion. Remaining performance obligations, a measure of contracted future revenue, grew 44% to $4.8 billion.
For fiscal 2027, Atlassian (NASDAQ:TEAM) guided for cloud revenue growth of about 25.5%, ahead of consensus, while forecasting total revenue growth of roughly 13% and a decline of about 17% in data center revenue. The company guided subscription ARR growth of about 18% for the year.
Operating cash flow rose 28% to $479 million, and free cash flow increased 32% to $475 million.
Jefferies raised its price target on the stock to $200, citing accelerating backlog growth and what it called a cheap valuation relative to peers. The brokerage pointed to cross-selling from Atlassian (NASDAQ:TEAM)'s Service Collection and Teamwork Collection products, along with seat expansion within Jira and Confluence, as drivers of the beat.
Jefferies also noted Atlassian signed its largest-ever deal with a major consumer technology company during the quarter, which analysts said pushed back against concerns that artificial intelligence tools could erode demand for the company's software. The brokerage said usage of Atlassian's AI product, Rovo, rose 50% quarter over quarter.
Atlassian's CEO Mike Cannon-Brookes has said total revenue growth is expected to trough before reaccelerating in fiscal 2028. Cannon-Brookes has also been purchasing shares under a 10b5-1 trading plan, with Jefferies estimating the total at $250 million.
“We think (the) CEO's purchase signals confidence and that stock at 17x FCF is still reasonable,” analysts added.