TEAM · Atlassian
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $193.74
Note written ·
Price against the kill line
22.6% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $193.74, on record since 11 November 2026. The shares are down 5.3% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $193.74, the 50-day average of closes on 11 November 2026, which would show the shares leading the S&P 500 again and prove this call wrong; fiscal second-quarter cloud revenue growth of 30% or more, against the about 27% guide, would do the same.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 6 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 1,772
- Revenue, change on a year (%)
- +23.7
- Gross margin (%)
- 85.2
- Operating margin (%)
- 10.7
- Free cash flow, four quarters ($M)
- 1,667
- Net cash, cash less debt ($M)
- 131
- Price to earnings (×)
- 434.0
- Enterprise value to sales (×)
- 5.6
All filed numbers
What Atlassian reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 1,772 | +23.7 | 85.2 | 10.7 |
| first filed | 1,767 | +27.6 | 86.5 | 11.9 |
| first filed | 1,787 | +31.7 | 85.3 | −3.1 |
| first filed | 1,586 | +23.3 | 85.0 | −3.0 |
| first filed | 1,433 | +20.6 | 82.0 | −6.7 |
| first filed | 1,384 | +22.3 | 83.1 | −2.1 |
| Pre-tax income ($M) | 170 |
| Net income ($M) four quarters: 88.8 | 90.7 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −2.3 |
| Operating cash flow ($M) | 1,693 |
| Capital spending ($M) | 25.9 |
| Free cash flow ($M) | 1,667 |
| Cash and short-term investments ($M) | 1,121 |
| Debt ($M) non-current long-term debt | 990 |
| Net cash, cash less debt ($M) | 131 |
| Deferred revenue ($M) +4.9% on a year | 2,394 |
| Backlog, orders not yet delivered ($M) +42.4% on a year | 4,700 |
| Receivables ($M) | 812 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 911 |
| Market value ($M) | 38,525 |
| Enterprise value, market value plus net debt ($M) | 38,395 |
| Enterprise value to sales (×) | 5.6 |
| Enterprise value to operating income (×) | 129.9 |
| Price to earnings (×) | 434.0 |
| Price to book value (×) | 42.3 |
| Free-cash-flow yield (%) | 4.3 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 3.7% of shares outstanding sold short, 4.0 days of average trading to cover, +7.2% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $4.0M | $2.3M |
| 12 monthsfrom | $4.3M | $97.8M |
The thesis
Atlassian's shares look more likely to lag the S&P 500 than lead it over the next three months. On 5 November 2026 the company guided cloud growth down to about 27%, which ended the market's hope that growth would keep speeding up. The fiscal second-quarter report, estimated for about 4 February 2027, is the next result that can show whether that outlook was cautious.
The quarter itself beat. Revenue was $1,772 million, up 24%, against an outlook of $1,705–1,715 million. Cloud revenue was $1,302 million, up 31%, against a guide of about 28.5% (Atlassian release). Adjusted earnings of $1.65 a share beat the $1.44 estimate, Benzinga reported.
The outlook drove the price. The shares closed at $183.29 on 5 November 2026, before the release, and at $153.68 on 6 November 2026. In the next three sessions they closed between $148.60 and $154.90, ending at $152.44 on 11 November 2026.
The rating is Low because brokers marked their targets down after the report, and no company result is due before about 4 February 2027 to change that. Benzinga reported seven target cuts between 6 November 2026 and 9 November 2026. The close of $152.44 on 11 November 2026 is 33.7% below the 52-week intraday high of $229.96 set on 22 October 2026. The price already reflects slower growth, and every target published after the report still sits above it.
Bullish and bearish views on Atlassian Corporation
The bull case on Atlassian Corporation (TEAM), in brief: cloud growth beat the company's guide. The bear case: cloud growth is guided to slow.
Bull case
- Cloud growth beat the company's guide. Cloud revenue rose 31% in the quarter to 30 September 2026, against the about 28.5% guided on 6 August 2026. Chief financial officer James Chuong said on the 5 November 2026 call that hybrid deals moved "slightly more revenue" to Data Center and slightly less to cloud.
- The full-year outlook still rose. On 5 November 2026 the company raised its fiscal 2027 cloud growth outlook to about 26% from 25.5%. It raised subscription annual recurring revenue (ARR) growth to about 18.5% from 18%. Chuong called the approach "prudent", citing macroeconomic and geopolitical uncertainty.
- Net retention stayed above 120%. Chief executive Mike Cannon-Brookes put net retention "well over sort of the 120 mark" on 5 November 2026. The release reports more than $1 billion of Service Collection ARR.
- Profit and cash improved. The operating margin under generally accepted accounting principles (GAAP) was 11% in the quarter, against negative 7% a year earlier. Free cash flow was $463 million, and the cash flow statement shows $588 million of share repurchases.
- Every post-report target sits above the price. Guggenheim reiterated Buy and $280 on 6 November 2026, Investing.com reported, and attributed the cloud softness to large customers asking for hybrid deployments. Benzinga reported Oppenheimer and BTIG at $240 (6 November 2026), Citigroup at $220 and Barclays at $210 (9 November 2026).
- The chief executive has a purchase plan. The company disclosed on 6 August 2026 that Cannon-Brookes plans to buy up to $250 million of Class A shares under a Rule 10b5-1 trading plan.
Bear case
- Cloud growth is guided to slow. On 5 November 2026 the company guided fiscal second-quarter cloud growth to about 27%. On the call, Mizuho's Gregg Moskowitz called that about 4 points of deceleration. The full-year outlook of about 26% is lower than both quarters.
- Subscription growth is guided lower. Subscription ARR rose 23% to $6,812 million at 30 September 2026, against a fiscal 2027 outlook of about 18.5%. Moskowitz cited a "meaningful decline" over the next three quarters, partly because the comparisons get tougher.
- Brokers cut their targets sharply. Benzinga reported that Wells Fargo cut its target to $200 on 6 November 2026, from $270 on 28 October 2026. Truist cut to $200 from $250 and Oppenheimer to $240 from $275 on 6 November 2026, and Citigroup cut to $220 from $245 on 9 November 2026.
- The raise was small beside the beat. Benzinga reported that the fiscal 2027 revenue outlook rose to $7.476 billion from $7.426 billion. Chuong said the first-quarter beat included $20 million from cloud and $33 million from Data Center, the latter helped by timing effects.
- Contracted revenue slipped from June. Company releases show remaining performance obligations of $4,746 million at 30 September 2026. That is up 44% year over year but below the $4,817 million reported at 30 June 2026.
- Margins are guided down. The adjusted operating margin was 32% in the first quarter, and the company guided about 26% for the second. The GAAP margin is guided to about 4.5%, down from 11%.
- Usage pricing adds no revenue soon. Cannon-Brookes said on 5 November 2026 that charging for usage, which starts in early December, "is not a near-term revenue driver." The fiscal 2027 outlook assumes no meaningful usage revenue.
Price setup
The drop after the report has held. FourWeekMBA cited an after-hours quote of $148.03 on 5 November 2026. Regular trading then closed at $153.68 on 6 November 2026, $154.90 on 9 November 2026, $148.60 on 10 November 2026 and $152.44 on 11 November 2026. The shares have stayed in that range since the report, without recovering toward the pre-report closes of $189.88 on 4 November 2026 and $183.29 on 5 November 2026.
Moving averages frame the case. As of 11 November 2026, the shares closed far below their 50-day moving average and above the 200-day moving average of $119.49. The 3-month change is −8.2%, against a reference close of $165.98 on 13 August 2026.
The longer chart shows how much of the year's gain remains. The 52-week closing low was $57.15 on 10 April 2026, and the October high came just before the report. The lowest targets published after the report are $190, from Piper Sandler on 6 November 2026 and Jefferies on 7 November 2026, Benzinga reported. Both are above the last close.
Catalysts ahead
- ~1 December 2026 (est.): Usage-based pricing enforcement begins in early December, according to Mike Cannon-Brookes on the 5 November 2026 call. Gives the first customer response to AI usage charges, though management assumes no meaningful usage revenue in fiscal 2027.
- ~4 February 2027 (est.): Fiscal second-quarter 2027 report, estimated from the 6 August 2026 and 5 November 2026 report dates. Settles whether the about 27% cloud growth guide was cautious or an accurate signal of slowing demand, and whether the fiscal 2027 outlook holds.
What would change the view
A daily close above $193.74, the 50-day average of closes on 11 November 2026, which would show the shares leading the S&P 500 again and prove this call wrong; fiscal second-quarter cloud revenue growth of 30% or more, against the about 27% guide, would do the same.
What it trades with
The report came on a day when the whole market fell. InvestingLive reported that on 5 November 2026 the Nasdaq 100 fell 6.36%, its worst day since 2020, and the S&P 500 fell 4.35%, led by selling in AI and chip stocks. Atlassian closed that session at $183.29, down from $189.88, before its release.
The next session showed the decline was Atlassian's own. Benzinga reported that the Nasdaq 100 rebounded about 2% on 6 November 2026, while Atlassian closed at $153.68. Earlier, the shares fell with ServiceNow and Fortinet on 29 October 2026 and with software broadly on 30 October 2026, on no Atlassian news. If Atlassian falls further while software peers hold steady, that would point to doubt about its own cloud growth. Joint declines would point back to fears that AI will displace software across the sector.
The evidence, claim by claim (8)
- Fiscal first-quarter 2027 revenue was $1,772 million, up 24%; cloud revenue was $1,302 million, up 31%; subscription ARR was $6,812 million, up 23%; remaining performance obligations were $4,746 million, up 44%. Atlassian Q1 FY27 earnings release via Business Wire, 5 November 2026 · as of
- Fiscal second-quarter outlook: revenue $1,825–1,835 million, cloud growth about 27%, Data Center decline about 14%, adjusted operating margin about 26%. Atlassian Q1 FY27 earnings release via Business Wire · as of
- Fiscal 2027 outlook: revenue growth about 13.75%, cloud growth about 26%, subscription ARR growth about 18.5%, Data Center decline about 16%, adjusted operating margin about 25.5%. Atlassian Q1 FY27 earnings release via Business Wire · as of
- GAAP operating margin was 11% against negative 7% a year earlier; free cash flow was $463 million; the cash flow statement shows $588 million of share repurchases. Atlassian Q1 FY27 earnings release via Business Wire · as of
- Chief financial officer James Chuong said the cloud beat was $20 million and the Data Center beat $33 million; Mike Cannon-Brookes put net retention 'well over sort of the 120 mark'. Atlassian Q1 FY27 earnings call transcript, The Motley Fool · as of
- Post-report targets: Wells Fargo $200 (from $270), Truist $200 (from $250), Oppenheimer $240 (from $275), Piper Sandler $190, BTIG $240, Jefferies $190, Citigroup $220 (from $245), Barclays $210. Benzinga analyst headlines, 6 November to 9 November 2026 · as of
- Guggenheim reiterated Buy and a $280 target, saying results fell short of buy-side expectations for further cloud and subscription ARR acceleration. Investing.com, 6 November 2026 · as of
- On 5 November 2026 the Nasdaq 100 fell 6.36%, its worst day since 2020, and the S&P 500 fell 4.35%, led by AI and chip stocks. InvestingLive, 5 November 2026 · as of
Sources
- Atlassian Announces First Quarter Fiscal Year 2027 Results · financialcontent.com ·
- Atlassian (TEAM) Q1 2027 Earnings Call Transcript · fool.com ·
- Guggenheim reiterates Atlassian stock rating on cloud growth · investing.com ·
- Nasdaq 100 suffers worst day since 2020 · investinglive.com ·
- Nasdaq 100 Rebounds 2% After Worst Day Since 2020, Payrolls Smash Estimates: Stock Market Today · benzinga.com
- Atlassian Raised Its Outlook, Then Fell 18% in After-Hours · fourweekmba.com
- Atlassian shares fall 17% as slower subscription growth forecast overshadows earnings beat · siliconangle.com ·
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