Atlassian shares dropped over 17% in after-hours trading following a forecast of slower subscription growth. The company expects annual recurring revenue growth to decelerate to approximately 18.5% by the end of the fiscal year, compared to the 22.5% growth reported for the quarter ending September 30.
For the first quarter of fiscal 2027, Atlassian reported revenue of $1.772 billion, a 24% year-over-year increase, exceeding analyst expectations of $1.71 billion. Adjusted earnings per share reached $1.65, surpassing the projected $1.43. Net income was $91 million, while free cash flow rose to $463 million.
Cloud revenue grew 31% to $1.302 billion, while the Data Center product line, set for retirement in March 2029, saw growth slow to 5% with $391 million in revenue. Subscription annual recurring revenue reached $6.812 billion, and remaining performance obligations rose 44% to $4.746 billion.
The company returned $581 million to shareholders through buybacks. Over 87% of enterprise cloud customers now utilize Rovo, the company's AI assistant. Additionally, the Service Collection bundle surpassed $1 billion in annual recurring revenue across more than 70,000 customers.
Atlassian projects second-quarter revenue between $1.825 billion and $1.835 billion. The company raised its full-year revenue growth forecast to approximately 13.75%, noting that total revenue growth is expected to accelerate in fiscal 2028.
