Atlassian's 13.75% Guidance Blends 26% Cloud Growth With a Data Center Decline
Atlassian guided cloud up about 26% and Data Center down about 16% for fiscal 2027, a blend of 13.75%, up from about 13%. Shares fell about 16% after hours.
TL;DR
- Atlassian grew fiscal first-quarter revenue 24% to $1.772 billion and guided the full year to about 13.75% growth.
- The 13.75% mostly measures the Data Center wind-down, since cloud is still guided to grow about 26%.
- Watch whether second-quarter cloud growth lands near the 27% Atlassian guided while Data Center falls about 14%.
On November 5, Atlassian reported fiscal first-quarter revenue of $1.772 billion, up 24%, with cloud revenue up 31% to $1.302 billion. The same release put full-year revenue growth at about 13.75%. Shares fell about 16% after hours to $154.00.
Read as one number, the outlook looks like demand falling away. Atlassian's targets for each line show where the slowdown comes from. Cloud is guided to grow about 26% for the year. Data Center, which Atlassian no longer sells to new customers, is guided to shrink about 16%. The 13.75% mostly measures that wind-down, while cloud is still guided in the mid-20s.
Data Center has a published end date
Atlassian's move to cloud-only came with a fixed timeline, The Register reported when it was announced:
- March 30, 2026: no new Data Center subscriptions.
- March 30, 2028: no new licenses for existing customers.
- March 28, 2029: end of life.
Data Center is guided to fall about 16% for the year and about 14% in the second quarter. In the first quarter it still grew, to $390.7 million from $372.6 million a year earlier. On the earnings call, the CFO tied part of that to hybrid deployments, which put "slightly more revenue on Data Center and slightly less on Cloud this quarter." Data Center retention was also stronger than Atlassian expected.
Atlassian raised the outlook after cloud beat its own guidance
Atlassian lifted its fiscal 2027 revenue target to about 13.75% from about 13%, according to 24/7 Wall St. Cloud went to about 26% from 25.5%, and the expected Data Center decline narrowed to about 16% from 17%. In August, Atlassian guided first-quarter cloud growth to about 28.5% and delivered 31%.
Cloud growth leaned on accounts Atlassian already had, as we covered on November 6. The CFO put Data Center migrations at mid-to-high single digits of cloud growth. Much of the rest came from expansion:
- Service Collection passed $1 billion in ARR while growing above 30%.
- Customers spending more than $1 million grew more than 30%, per the release.
- Customers that moved from Data Center to cloud raised total spend by an average of 1.75 times after three years, the CFO said.
Cloud is slowing as well
Subscription ARR is guided to slow from 23% growth to about 18.5% by year-end. It counts cloud and Data Center together, and the release says contract timing can move it. Mizuho analyst Gregg Moskowitz said the second-quarter cloud guidance implies about four points of slowing, more than Atlassian's outlook implied 90 days earlier, according to 24/7 Wall St. The CFO gave three reasons:
- a prudent stance on macro uncertainty
- tougher comparisons after growth accelerated in the second half of fiscal 2026
- lapping the DX acquisition starting in the second quarter
On the call, an analyst raised a Data Center pull-forward before the March 2026 cutoff. Management didn't use that framing.
Independent consultant Rodney Nissen estimates Data Center customers pay about 28% more on average after moving to cloud, The Register reported. Some customers on Atlassian's forum said they would leave rather than migrate. Migrations add to cloud growth only while Data Center customers remain to move, and that pool closes by March 2029.
Cloud dropping from 31% in the first quarter to about 26% for the year is a slowdown, but nothing in the targets puts cloud demand near 13.75%. For the second quarter, Atlassian guided revenue to $1.825 billion to $1.835 billion, with cloud up about 27% and Data Center down about 14%.
A blended target during a forced migration tracks the shutdown
If second-quarter cloud growth lands near 27% while Data Center falls about 14%, the slowdown in the total follows the end-of-life plan and cloud held up. If cloud comes in under 27% while migrations still add mid-to-high single digits, the slowdown has reached expansion in existing accounts. Data Center was $390.7 million of the $1.772 billion Atlassian reported in the first quarter, about 22% of revenue.
slightly more revenue on Data Center and slightly less on Cloud this quarter.
Atlassian's second-quarter guidance is $1.825 billion to $1.835 billion in revenue, with cloud up about 27% and Data Center down about 14%.
