Atlassian Raises FY Guidance After Q3 Revenue Beat

Australian software company Atlassian raised its full-year revenue growth forecast to 24% from 22% on April 30 after third-quarter sales exceeded analyst estimates, according to Reuters. The company reported Q3 revenue of US$1.79 billion versus the US$1.69 billion estimate, and its shares rose nearly 17% in extended trading.

Q3 Performance and Guidance Revision

The stronger-than-expected quarter was driven by demand for AI features, enterprise deals, and customer adoption of cloud and data center products. Atlassian now expects annual revenue to rise approximately 24% instead of the previously guided 22%.

Revenue Drivers and the Data Center Licensing Boost

Part of the revenue beat came from timing-related factors. The company booked approximately US$50 million more in upfront Data Center term license revenue than expected. Some customers accelerated purchases and expansions into the third quarter from later periods, partly driven by a March pricing change.

Management expects this acceleration to moderate, as those customers prepare to transition to Atlassian's cloud products. The company does not anticipate the same level of Data Center expansion from these accounts going forward.

AI as a Sustainable Growth Driver

A more consistent growth engine is Atlassian's Rovo AI tool. Customers using Rovo AI are generating annual recurring revenue at approximately twice the rate of those not using the tool, indicating strong adoption momentum for the company's artificial intelligence capabilities.

Strategic Cloud Migration and Product Bundling

Atlassian's strategic direction is being shaped by its decision to end Data Center product support on March 28, 2029, pushing customers toward cloud migrations. For some of the company's largest customers with complex technology infrastructure, this transition can span years and extends beyond a simple data and application transfer.

The migration process is prompting companies to revisit and simplify core workflows and governance models—the rules and processes used to manage decision-making and oversight—before adopting the new platform. This extended migration cycle creates an opportunity for Atlassian to sell broader bundled suites, such as Teamwork Collection, which the company positions as a unified way to purchase and deploy AI and agent capabilities across its platform.