Atlassian's Cloud Strength, AI Momentum, Enterprise Deals Impress Analysts

Wall Street analysts rerated Atlassian Corp TEAM and raised their price targets on the stock after its upbeat quarterly print Thursday.

• JMP Securities analyst Patrick Walravens reiterated Atlassian with a Market Perform.
• Raymond James analyst Adam Tindle maintained Atlassian with an Outperform and raised the price target from $250 to $330.
• Truist Securities analyst Joel Fishbein reiterated Atlassian with a Buy and raised the price target from $300 to $350.
• Keybanc analyst Jason Celino maintained Atlassian with an Overweight and raised the price target from $315 to $365.
• Cantor Fitzgerald analyst Thomas Blakey reiterated Atlassian with a Neutral and raised the price target from $264 to $304.
• Scotiabank analyst Nick Altmann maintained Atlassian with a Sector Perform and raised the price target from $250 to $330.

Also Read: Stryker’s Strategic Moves Impress Analysts, Spine Implant Sale and NARI Deal Set to Drive Future Growth

JMP Securities: Walravens rerated Atlassian after it reported better-than-expected fiscal second-quarter 2025 results. The company posted adjusted EPS of $0.96 (consensus $0.76) on total revenue of $1.286 billion (consensus $1.240 billion), reflecting 21% year-over-year growth, flat with last quarter.

Cloud revenue reached $847 million, up 30% year-over-year, well ahead of guidance of 25.5%. This marked a slight decline from 31% last quarter but exceeded the consensus estimate of 26%.

Data Center revenue totaled $362 million, increasing 32% year-over-year, down from 38% last quarter but surpassing the consensus of 28%.

Billings came in ahead of expectations at $1.470 billion (consensus $1.378 billion), representing 21% year-over-year growth.

Walravens projected third-quarter revenue of $1.35 billion and EPS of 88 cents.

Raymond James: Tindle rerated after Atlassian’s quarterly results that featured a continuation of elite Cloud growth at scale, and guidance above the analyst’s buy-side bogeys suggests durability.

The analyst’s recent upgrade was predicated on a combination of macro indicators with a detailed NRR build that suggested Cloud growth could ultimately end closer to mid/high 20% than the initial low-20% guidance, which is materializing.

An incremental focus on Enterprise customers provides both risk and opportunity as mid-market-focused tech companies attempting to grow in Enterprise can ultimately destroy unit economics and incremental capital investment. Tindle intends to monitor material changes in contribution margin but noted that initial customer acquisition tends to be costly.

Atlassian has landed 85% of the Fortune 500, and this $14 billion opportunity unfolds alongside a new CRO with roots at SAP.

In the longer term, the AI opportunity Tindle spotlighted through sensitivity analysis on Rovo is gaining momentum, with 1 million+ monthly active users of Rovo and Atlassian Intelligence features. The analyst’s prior concern with Atlassian’s AI strategy was that it drove up customer acquisition cost (CAC) with an indeterminate impact on long-term value (LTV), meaning incremental customer economics were worsening. However, gross margin has continued to outperform, and Atlassian is showing incremental operating leverage during this ramp-up period.

The introduction of paid SKUs for AI has become an increased focus and a positive step toward the monetization of AI, which could be very meaningful over time with proper execution. This also has potential positive impacts on Atlassian’s valuation multiple, and Tindle noted little reason to make a valuation call here based on the longer-term potential.

Tindle projected third-quarter revenue of $1.35 billion and EPS of 92 cents.

Truist Securities: Atlassian’s second-quarter 2025 release delivered a substantial upside to Fishbein’s top and bottom line estimates. Atlassian called out stability in the SMB segments that had challenged the business in prior years, as well as traction with their enterprise sales motion and new product offerings. Fishbein noted that the company has established a solid foundation, and more can go right to drive upside to expectations through the year.

Fishbein projected third-quarter revenue of $1.35 billion and EPS of 90 cents.

Keybanc: Atlassian reported another strong quarter of Cloud and DC outperformance, driven by continued stabilization in SMB and paid seat expansions, solid enterprise execution, and migration activity. Significantly, the magnitude of the 2025 Cloud guidance raise to 26.5% (250 bps raise) was most impressive.

Given the upcoming release of certain blockers (such as FedRAMP), the narrowing of feature/price gaps between DC and Cloud, and the improvement of enterprise motion, Celino noted that the momentum for Cloud is just getting started.

Celino projected third-quarter revenue of $1.35 billion and EPS of 91 cents.

Cantor Fitzgerald: Blakey’s rerating followed a solid fiscal second-quarter 2025 report and fiscal third-quarter outlook driven by strong Enterprise, AI, and pricing. Cloud revenue was partially driven by better-than-expected seat expansion and migrations, and seat expansion has also stabilized in SMB.

The company reiterated its prudent posture on guidance, and Blakey noted that third-quarter 2025 Q/Q growth appears to be increasingly conservative. In addition to macro as a reason for conservatism, new CRO (January 2025) and strong ‘mega deals’ in the fiscal second quarter could be additional reasoning around the fiscal third-quarter top-line guide.

Blakey projected third-quarter revenue of $1.35 billion and EPS of 91 cents.

Scotiabank: After a choppy start to software earnings season, Atlassian’s strong results stand out and likely provide investors with some comfort around software end market dynamics. Atlassian continues to post more significant upside to Cloud, though its prudent approach to guidance continues.

Macro-wise, the company noted the environment was stable Q/Q, though seat expansion and migration activity exceeded expectations. Atlassian posted its best quarter of $1 million ACV deals and noted 1 million MAUs for its AI features and products.

Ultimately, two clean quarters of Cloud upside and management leaving room for further upside in the second half should help the shares continue to work. Altmann is getting increasingly comfortable with the story and found the 40% Y/Y growth in Premium & Enterprise and heightened Cloud adoption driven by Atlassian’s new AI capabilities, perhaps the most underappreciated aspect of the print.

Altmann projected third-quarter revenue of $1.35 billion.

Price Action: TEAM stock is up 13.1% at $310.95 at last check Friday.

Also Read:

• F5 Sees Big Wins in Multi-Cloud, AI Security, and IT Refresh, Analysts Forecast More Upside

Photo: Shutterstock