Can Atlassian's Enterprise Adoption Drive Higher Revenue Growth?

Atlassian Corporation’s TEAM enterprise adoption is rapidly increasing, positioning the company to accelerate recurring revenue growth through larger enterprise contracts, expanding cloud adoption and higher cross-selling opportunities. In the third quarter of fiscal 2026, remaining performance obligations (RPO) rose 37% year over year to $4 billion as major enterprises, including Siemens Energy, BBC, Rheinmetall and Wayfair, expanded their commitments and signed larger, longer-term contracts. This growing enterprise traction enhances revenue visibility and strengthens Atlassian's position as a strategic software partner for large organizations.

The company's cloud business continues to benefit from this momentum. Cloud revenues increased 29% year over year to more than $1.1 billion in the reported fiscal quarter, driven primarily by Jira seat expansion and greater adoption of Teamwork Collection and other enterprise offerings.

Artificial intelligence (AI) is emerging as another important growth catalyst. Customers using Rovo are growing annual recurring revenue at roughly twice the rate of non-Rovo users, while AI credit usage is increasing more than 20% month over month. Meanwhile, Service Collection has become a significant revenue driver, surpassing $1 billion in annual recurring revenues with more than 30% growth. Adoption has expanded beyond IT into HR, finance and legal functions, broadening Atlassian's addressable market.

Management also reported its largest-ever competitive displacement from a legacy IT service management provider, reflecting increasing enterprise preference for Atlassian's AI-native platform and integrated system of work. The Zacks Consensus Estimate projects fiscal 2027 revenue growth of 13.3%, suggesting analysts also expect enterprise adoption and platform expansion to continue supporting revenue growth.

Atlassian's Enterprise Growth Faces Pressure From Rivals

Monday.com MNDY and ServiceNow NOW are emerging as formidable rivals, competing with Atlassian to drive enterprise adoption, deepen customer spending and accelerate AI-led monetization.

Like Atlassian, MNDY is targeting large enterprises through platform consolidation, governance and AI-driven workflows. It is accelerating monetization with consumption-based AI pricing, expanding enterprise contracts and cross-selling multiple products while leveraging its AI work platform to deepen customer spending. These strengths position MNDY to challenge Atlassian's enterprise expansion and recurring revenue growth.

While Atlassian focuses on collaboration and developer workflows, NOW competes with a broader AI-native enterprise platform spanning IT, CRM, HR and security. The company combines workflow orchestration, governance, Context Engine and hybrid pricing to drive enterprise-wide adoption and larger contracts, while strategic acquisitions expand monetization opportunities. These advantages make NOW a formidable challenger to Atlassian's enterprise growth ambitions.

TEAM’s Price Performance, Valuation & Estimates

TEAM shares have plummeted 62.4% in the past year, substantially underperforming both the Zacks Computer & Technology sector's 39.4% gain and the Internet – Software industry's 18.4% decline.

TEAM’s One-Year Price Performance

Image Source: Zacks Investment Research

From a valuation standpoint, Atlassian trades at a forward 12-month price-to-sales ratio of 3.05X, well below the sector’s average of 6.62X. It has a Value Score of D.

TEAM’s Valuation

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for TEAM’s fiscal 2027 earnings is currently pegged at $6.07 per share, which remains unchanged over the past 30 days. The projected figure reflects year-over-year earnings growth of 10.8%.

Image Source: Zacks Investment Research

TEAM stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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