Are customers evaluating Rovo against other agents, or is it an easy add-on due to integration with Atlassian's platform?

Mike stated Rovo is the AI part of the Atlassian platform, accessible both within Atlassian products and via third-party agents (Google, Salesforce, foundation models) that leverage Atlassian's Teamwork Graph. He emphasized R&D efforts ensure Rovo delivers better, cheaper, faster results, leading to strong customer adoption and ARR growth. “Think of Rovo as the AI part of the Atlassian platform that shows up in all of our surfaces, whether those surfaces are on the Atlassian platform inside of Jira or Confluence, in our chat app from the mobile and the desktop or whether those surfaces are in other agent platforms.”

Given fears of seat compression, what are the drivers of strong seat expansion in Jira and collections, and is this sustainable?

James attributed cloud outperformance to cross-sell in collections (especially Teamwork Collection for AI credits) and continued seat expansion in standalone Jira. Mike affirmed no signal of seat compression, citing high R&D, the Teamwork Graph blurring team boundaries, and expansion into non-technical roles as drivers of durable growth. “We are not seeing any signal of seat compression from customers. If anything, we are seeing the opposite. We are seeing strong expansion numbers, strong cross-sell numbers between collections, strong usage of AI and strong commitment to the Atlassian platform.”

What is driving the increasing rate of competitive displacements, particularly in the Service Collection?

Mike highlighted the quality of software, ease of getting started, strong user experience, comprehensiveness of data via the Teamwork Graph, and AI-forward features that enable cheaper, quicker, better service operations. He noted strength in mid-market and enterprise, non-IT use cases, and the $1 billion ARR milestone for Service Collection. “It was our largest quarter ever for those. And it's because, again, I would go to the quality of the software, the state with which you can get up and running on the Service Collection continues to be a strength.”

TEAM

Atlassian (TEAM) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q3 FY26)· Information Technology· Apr 30, 2026

Source: earnings call transcript

Executive summary

Atlassian Q3 FY26 — Strong Cloud Growth and AI Monetization

Atlassian delivered a strong quarter driven by robust cloud growth, significant RPO expansion, and increasing AI monetization through its Rovo platform. The company highlighted its Teamwork Graph as a key differentiator, enabling better, cheaper, and faster AI outcomes for customers, leading to record competitive displacements. Management remains focused on durable profitable growth and strategic investments in AI and enterprise.

Highlights

Total revenue grew 32% year-over-year to $1.8 billion.
Cloud revenue surpassed $1.1 billion and accelerated to 29% growth year-over-year.
Remaining Performance Obligation (RPO) grew 37% year-over-year to $4 billion, or north of 40% when normalized for ASC 606.
Customers using Rovo are growing their ARR at roughly 2x the rate of non-Rovo customers.
Achieved the largest ever quarter for competitive displacements from a major ITSM provider.

Concerns

Approximately $50 million in data center upfront term license revenue was pulled forward into Q3 FY26 from future periods, creating lumpiness in reported revenue.

Guidance & targets

Category	Target	Timeline	Confidence
Cloud growth contribution from DC migrations	mid- to high single digits medium materiality	ongoing	Medium
Data Center expansion	more muted level medium materiality	going forward	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Cloud Cloud revenue surpassed $1.1 billion and accelerated to 29% growth year-over-year.	$1.1B	29%	—	—
Service Collection Achieved a milestone of passing $1 billion in ARR, driven by strong performance across regions, non-IT use cases, and AI features. ARR: $1B	—	—	—	—

TEAM operating KPIs by quarter

TEAM operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Mar 2026 Q3 FY26	Jun 2026 Q4 FY26	Change vs prior quarter
Remaining performance obligation (RPO)	$4B Cloud revenue surpassed $1.1 billion and accelerated to 29% growth year-over-year, and RPO grew again 37% year-over-year to $4 billion. Source: earnings call transcript	$4.8B RPO grew 44% year-over-year to $4.8 billion, and we delivered a GAAP operating margin of 12%. Source: earnings call transcript	+20%
Net revenue retention rate	120%+ Similarly, you can see that NRR maintained north of 120% and even ticked up again for, I think, the third or fourth quarter in a row. Source: earnings call transcript	120%+ And coming off a quarter where RPO landed at 44% year-on-year NRR was north of 120%. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total RPO $4B Q3 FY26

up 37% YoY

Total RPO (normalized for ASC 606) north of 40% Q3 FY26

YoY growth

Normalized for the impact of ASC 606, which smooths out revenue recognition timing effects.

Current RPO (normalized for ASC 606) north of 30% Q3 FY26

YoY growth

Normalized for the impact of ASC 606, which smooths out revenue recognition timing effects.

Deals & partnerships

Siemens Energy Deepened and broadened commitment to Atlassian

One of the world's largest enterprises deepened its commitment to Atlassian.

Rheinmetall Deepened and broadened commitment to Atlassian

One of the world's largest enterprises deepened its commitment to Atlassian.

Wayfair Deepened and broadened commitment to Atlassian

One of the world's largest enterprises deepened its commitment to Atlassian.

Risks & headwinds

Data Center revenue recognition lumpiness Q3 FY26 from future periods (FY27)

approximately $50 million pull-forward

Mitigation:Will enhance disclosures and share historical subscription ARR at Team '26 to help normalize timing effects and better understand underlying business strength.

What to watch in Q4 FY26

FY27 Guidance

Q4 earnings (August)

Current Not yet provided

Target Full FY27 guidance

Why it matters

Provides full-year outlook for revenue, margins, and other key metrics, crucial for investment thesis.

it's too early to discuss any guide at this point, we'll, of course, provide that guidance out in August, our Q4 earnings.

Find out whether TEAM delivers this. Inve re-checks your case every morning.

Q&A highlights

How does the Teamwork Graph lower AI costs by reducing token usage, and what does the data center revenue pull-forward mean for FY27?

Mike explained that the Teamwork Graph provides superior context, leading to higher quality AI answers with fewer tokens, thus reducing costs. James detailed that a $50M pull-forward in data center term license revenue occurred in Q3 due to large customer complex migrations and a March pricing change, impacting FY27 timing.

“Those are cheaper answers because you use far less tokens to get to an answer in the same amount of time and fundamentally using less tokens and reduces your cost of AI or allows you to do far more AI investment, whichever way you look at it.”

asked by Keith Weiss · answered by Michael Cannon-Brookes

2 min read 6 chapters

Detailed narrative

AI and Teamwork Graph as a Differentiator

Atlassian's Teamwork Graph, which connects knowledge, work, people, and code, is highlighted as a core differentiator for its AI strategy. This context-rich platform enables AI investments to be "smarter, cheaper, and more valuable" by using fewer tokens for higher quality answers, thus reducing AI costs or allowing for greater investment.

The company believes that in an AI-native world, context is the only anchor to avoid chaos.

Rovo's Impact on Customer Growth

The AI platform, Rovo, is seeing significant adoption, with millions of monthly active users and credit usage growing over 20% month-over-month. Customers utilizing Rovo are experiencing roughly double the ARR growth rate compared to non-Rovo customers, contributing to strong cloud expansion and demonstrating the value of Atlassian's AI offerings.

Rovo is designed to be accessible both within Atlassian products and via third-party agents leveraging the Teamwork Graph.

Data Center Migration and Revenue Dynamics

The migration of Data Center customers to the cloud is progressing as expected, contributing mid- to high single-digit cloud growth. However, a pull-forward of approximately $50 million in upfront term license revenue from future periods into Q3 FY26 occurred. This was catalyzed by large customer complex migrations and a March pricing change, introducing lumpiness in reported revenue, RPO, and cRPO.

The company plans to enhance disclosures to normalize these timing effects.

Strong Seat Expansion and Cross-Sell

Contrary to market fears of seat compression, Atlassian observed strong seat expansion in Jira and robust cross-sell within its collections, particularly the Teamwork Collection. This is attributed to high R&D investment, the blurring of team boundaries by AI, and the platform's ability to expand into non-technical roles. The Net Revenue Retention (NRR) remained north of 120% and ticked up again, indicating strong customer commitment.

Competitive Displacements in Service Collection

The quarter marked Atlassian's largest ever for competitive displacements, especially in the Service Collection, which also passed $1 billion in ARR. This success is driven by the quality of software, ease of adoption, strong user experience, comprehensive data integration via the Teamwork Graph, and AI-forward features that enable more efficient service operations.

The company is taking share from legacy systems by offering a modern, AI-native, and better-value service platform.

Durable Profitable Growth and Operational Efficiency

Atlassian emphasized its commitment to durable profitable growth as a strategic priority, balancing reinvestment in AI and enterprise sales with fiscal discipline. The company highlighted its capital-efficient business model and strong COGS numbers, indicating that the platform is operating at a cheaper and cheaper rate even with larger customers and increasing scale, without reliability issues.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.