Atlassian Corporation (NASDAQ: TEAM) closed fiscal 2026 with a blowout quarter. Revenue hit $1.77 billion, beating the Street by over $100 million. Non-GAAP diluted EPS of $1.87 crushed the $1.49 consensus estimate by 25%. GAAP operating margin swung to 12% from negative 2% a year ago. The headlines are strong. The real story is a company that has finally found sustained profitability while its cloud business accelerates.
Cloud revenue grew 31% year over year to $1.21 billion, accelerating from 29% in Q3 and 26% in each of the two prior quarters. That acceleration is the key metric. Atlassian pointed to seat expansion in core Jira and Confluence and cross-sell momentum with Service Collection and Teamwork Collection. Subscription ARR reached $6.6 billion, up 23% year over year. Remaining performance obligations (RPO) jumped 44% to $4.8 billion. The company logged record numbers of $1 million-plus, $3 million-plus, and $5 million-plus annual contract value deals, including its largest enterprise deal ever with a major consumer technology company.
The GAAP profitability milestone is striking. Operating income was $211 million, against a $28 million loss in the year-ago period. Non-GAAP operating margin hit 36%, up from 24% a year ago, driven by revenue outperformance, better-than-expected gross margin, and lower hiring costs after the Q3 restructuring. Even after paying roughly $70 million in severance, the company generated $475 million in free cash flow, a 32% increase year over year. Atlassian has found its operating rhythm.
CEO Mike Cannon-Brookes announced a plan to buy back up to $250 million of Class A shares, a clear confidence signal. The company also appointed Ken Exner, a former AWS and Elastic executive, as Chief Product Officer for Enterprise and Emerging. His mandate: lead product strategy across four collections and focus on security, governance, and compliance for public sector and enterprise customers.
FY27 guidance adds nuance. Total revenue growth is expected to be approximately 13%, a sharp deceleration from the 28% in Q4 and 26% for the full fiscal year. Cloud revenue is guided to grow 25.5%, still strong but below the Q4 exit rate. Data Center revenue is expected to decline 17%, reflecting the pull-forward of term license revenue after the end-of-life announcement in September 2025. Non-GAAP operating margin is guided to 25%, down from 30% in FY26, partly due to a compensation mix shift toward more cash and less equity.
This guidance tempering is not a weakness signal. It reflects the math of lapping the Data Center pull-forward and deliberate investment in AI and enterprise sales. The company expects total revenue growth to re-accelerate in FY28 as those effects fade. Management is signaling caution, not retreat.
Watch next: whether the cloud acceleration sustains into FY27, how fast Data Center migrations to cloud proceed, and if the new CPO can maintain the product velocity that drove this year's results. The buyback and GAAP profitability give the stock a floor. The guidance implies a growth reset investors will need to digest.