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DATE

Thursday, April 30, 2026 at 5 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer and Co-Founder — Michael Cannon-Brookes
  • Chief Financial Officer — [James]
  • Head of Investor Relations — Martin Lam

TAKEAWAYS

  • Total Revenue -- $1.8 billion, growing 32% year over year, supported by strong expansion in key strategic areas.
  • Cloud Revenue -- Surpassed $1.1 billion and accelerated to 29% year-over-year growth.
  • Remaining Performance Obligations (RPO) -- Rose 37% year over year to $4 billion.
  • Rovo AI Usage -- "AI Rovo credit usage is growing more than 20% month over month," and customers using Rovo "are growing their ARR at roughly two times the rate of customers who are not using Rovo."
  • Data Center Upfront License Revenue -- CFO James reported, "we recognized approximately $50 million more in upfront term license revenue," primarily due to a combination of deal pull-forward and March's pricing change.
  • Largest-Ever Competitive Displacements -- Michael Cannon-Brookes said, "This is our largest-ever quarter for competitive displacements from a major ITSM provider," citing share gains as customers transition away from legacy systems.
  • Net Revenue Retention (NRR) -- Maintained north of 120%, "even ticked up again for, I think, the third or fourth quarter in a row," indicating persistent customer expansion.
  • Service Collection Annual Recurring Revenue (ARR) -- Surpassed $1 billion, marking a significant segment milestone.
  • Seat Expansion Drivers -- Growth attributed to cross-sell in Collections, especially Teamwork Collection, and continued seat expansion in core Jira standalone offerings; no evidence cited of seat compression.
  • Cloud Migration Pace -- Remains on track, with management reiterating an anticipated mid- to high-single-digit contribution to cloud growth from migrations.
  • Regional Performance -- EMEA recognized as a standout region for Service Collection expansion with increased strategic and enterprise-level wins.
  • Customer Adoption -- 75% of the Fortune 500 reportedly use Service Collection, and 60% employ it outside of IT functions.
  • Collections Pricing Dynamics -- Teamwork Collection customers receive "10x more credits on Rovo versus the standalone subscription" and use more than twice as many credits per user as standalone subscribers.
  • Third-Party Integration -- Rovo and the Teamwork Graph power both native and third-party agent integrations across Atlassian and external platforms.
  • Data Center Revenue Visibility -- Management plans to disclose "historical subscription ARR" in the upcoming Investor Forum to counteract revenue lumpiness tied to license recognition timing.

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RISKS

  • CFO James warned of "lumpiness in that pull-forward effect in data center," noting its impact on "the timing of reported revenue, RPO, and CRPO."
  • For data center customers transitioning to cloud, James stated, "we now expect a more muted level of data center expansion from these customers going forward as they prepare to move to cloud."

SUMMARY

Management attributed accelerated revenue and cloud growth to surging enterprise adoption, rapid expansion in AI usage, and major share gains from legacy competitors. The call highlighted strong Rovo usage growth, significantly higher ARR from AI-engaged customers, and sustained net revenue retention exceeding 120%. CFO James outlined material upfront data center license revenue driven by a pricing catalyst and customer migrations, but cautioned on forward data center expansion and uneven revenue recognition timing. Upcoming Investor Forum disclosures are intended to clarify underlying subscription ARR trends amid these accounting effects.

  • Customer commitments deepened in both cloud and data center, but those planning cloud migrations are moderating seat expansion ahead of platform transition.
  • AI-enabled automation in service and teamwork offerings is driving new cross-sell and seat growth, especially within strategic enterprise segments.
  • Management repeatedly cited platform context and the Teamwork Graph as central to value creation, competitive displacement, and AI cost reduction.
  • The company is leveraging both seat-based and consumption-based pricing models, with Teamwork Collection seen as a leading vector for AI feature adoption.
  • Pricing policy remains flexible, with management emphasizing adaptation to evolving customer requirements and diverse usage patterns.
  • Ongoing investment in R&D and engineering efficiency has enabled expansion at scale without raising platform operating costs.

INDUSTRY GLOSSARY

  • ITSM (IT Service Management): Enterprise software practices and tools designed to manage IT services, typically including incident, problem, and service request management.
  • Teamwork Graph: Atlassian's proprietary contextual platform that connects knowledge, work, people, and code to enhance collaboration and AI outcomes across the enterprise.
  • Rovo: Atlassian's AI-powered assistant embedded across its platform, offering search, automation, and agent features integrated with core products and third-party tools.
  • CRPO (Current Remaining Performance Obligations): A subset of RPO focused on unfulfilled revenue obligations due within the next twelve months under ASC 606 accounting standards.
  • Collections: Bundled Atlassian product suites, such as Service Collection and Teamwork Collection, aimed at expanding capabilities and increasing cross-sell opportunities.
  • Term License Revenue: Revenue recognized upfront from multi-year or time-limited software license agreements, distinct from recurring subscription revenue.
  • NRR (Net Revenue Retention): A metric showing the percentage of recurring revenue retained from existing customers, including upsells and expansions but excluding new business.

Full Conference Call Transcript

Martin Lam: On the call with me today, we have Atlassian Corporation's CEO and Co-Founder, Michael Cannon-Brookes, and Chief Financial Officer, [inaudible]. Earlier today, we published a shareholder letter and press release with our financial results and commentary for our third quarter fiscal year 2026. The shareholder letter is available on the Investor Relations section of our website, where you will also find our other earnings-related materials, including the earnings press release and supplemental investor data sheet. As always, our shareholder letter contains management's insight and commentary for the quarter, so during the call today, we will have brief opening remarks, then focus our time on Q&A. This call will include forward-looking statements.

Forward-looking statements involve known and unknown risks, uncertainties, and assumptions. If any such risks or uncertainties materialize, or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management's beliefs and assumptions only as of the date such statements are made. We undertake no obligation to update or revise such statements should they change or to speak to their current status.

Further information on these and other factors that could affect our business performance and financial results is included in filings we make with the Securities and Exchange Commission from time to time, including the section titled Risk Factors in our most recently filed annual and quarterly reports. During today's call, we will also discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and are not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial measures is available in our shareholder letter, earnings release, and investor data sheet on the Investor Relations section of our website.

We would like to allow as many of you to participate in Q&A as possible, so, out of respect for others on the call, please take one question at a time. With that, I will now turn the call over to Michael Cannon-Brookes for opening remarks.

Michael Cannon-Brookes: Thank you all for joining us today. As you have already read in our shareholder letter, we delivered some incredible Q3 results. 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. And RPO grew 37% year over year to $4 billion. These are largely thanks to our team's excellent execution and clear momentum across our key strategic priorities: Enterprise, AI, and the System of Work. This quarter, some of the world's largest enterprises, including Siemens Energy, Ryman Tile, and Wayfair, deepened and broadened their commitments to Atlassian Corporation.

In AI, we continue to add millions of monthly active users to Rovo, and our AI Rovo credit usage is growing more than 20% month over month. Customers using Rovo are also growing their ARR at roughly two times the rate of customers who are not using Rovo, contributing to our strong cloud outperformance and expansion in the quarter. And more and more enterprises are embracing our platform-wide vision, using Atlassian Corporation's System of Work to see the full picture of their organization. This is because the Teamwork Graph connects knowledge, work, people, and code, giving our customers one of the richest enterprise context graphs in the world.

Context is a clear differentiator for us, and we are seeing this as our competitive momentum builds. This is our largest-ever quarter for competitive displacements from a major ITSM provider. We are taking share from rivals as customers move away from legacy systems and choose Atlassian Corporation for a more modern, AI-native, and much better-value service platform. As I have said before, I believe AI is one of the best things that has ever happened to Atlassian Corporation. In a world where humans will run teams of agents, context is the only anchor to avoid chaos, and we believe that companies who prioritize context will become truly AI-native.

With Atlassian Corporation, our customers are not just choosing software, they are choosing the kind of company that they want to become. This is a time of significant change in our industry, and we are moving forward with strong conviction and discipline. We are focused on executing, delivering customer value, and driving durable, profitable growth. With that, I will pass the call to the operator for Q&A.

Operator: We will now begin the question-and-answer session. If you have a question, please press star followed by the one on your phone. If you would like to withdraw from the queue, please press star followed by the two. Your first question comes from Arjun Bhatia from William Blair. Please go ahead. Your first question comes from Keith Weiss from Morgan Stanley. Please go ahead.

Keith Weiss: Excellent. Thank you, guys, for taking the question, and congratulations on a really solid Q3 print. It is great to see all these investments and all this innovation really starting to come to fruition within the numbers. I think that is important in getting investors more confident in the stock. I think another important part—and, Mike, you do a good job of this—is helping people better understand how the existing software that Atlassian Corporation brings to the equation plus AI brings a better result.

There is one line in the shareholder letter that I thought was really interesting: when you are talking about the Teamwork Graph and how it makes the AI investments not just smarter—we have been talking a lot about context and how it makes the AI better—you are also talking about cheaper and more valuable. So, one, I was hoping you could dig into that and how the Teamwork Graph and the broader system lowers the cost of these AI investments, particularly as we are hearing more and more pushback on these credit costs really starting to rise and the total cost starting to get really big.

And then maybe as a follow-up for James, again, in the shareholder letter, you mentioned data center outperformance driven by some pull-forward of some deals from future quarters. Any kind of view you could give us into what that means for FY 2027 and what we should be expecting from data center in the year ahead? Thank you, guys.

Michael Cannon-Brookes: Sure. Thanks for the question, Keith. The Teamwork Graph and the Atlassian Corporation platform are certainly delivering amazing results to customers. You can see that customers using Rovo are growing their ARR at twice the rate of non-Rovo customers. Their credit usage continues to grow strongly—we are showing results of over 20% month on month—and they are upgrading to the Teamwork Collection to get more of those credits included in the base offering, and also using many more agents. That agent usage is, I think, what you are referring to—whether that agent usage is Rovo agents or whether there are other platforms' agents that are accessing Atlassian Corporation's context through the Teamwork Graph.

That usage is increasing markedly, and that is the compounding effect of intelligence for customers as models continue to get better. But to really accelerate a business, the intelligence compounding is only one aspect. What you also need is the context: your knowledge; your work and projects and goals; understanding of your people—your org chart, their skills, and everything else—as well as knowledge of the code. We have a lot of huge announcements coming up next week at Team 26 around this area. What you are seeing in the Teamwork Graph is the world's best context graph across all aspects of the business.

Whether that is the service team, a marketing team, a technology team, or a business team, bringing that context to bear in all of those AI surfaces is what is most important. Now, when we say it makes it better, faster, and cheaper—why is that? We have a lot of statistics and proof points that not only do you get higher-quality AI answers because of our search, the Teamwork Graph, and everything we have put together in the knowledge we have about your business, but you also get cheaper answers.

Those are cheaper answers because you use far fewer tokens to get to an answer in the same amount of time, and fundamentally, using fewer tokens reduces your cost of AI or allows you to do far more AI investment, whichever way you look at it. So customers are seeing that. You are seeing that in their usage, and it has been showing up in our financial results. I will now turn it over to James for the second half.

James: Thanks, Keith. On the data center side, the Q3 revenue beat, as we mentioned, was primarily driven by recognizing greater-than-expected upfront term license revenue within the quarter. Since our announcement of the data center end of life back in September, we have had a couple of quarters now to better understand the signals we are seeing from customers in terms of their buying behaviors, especially with Q3 being the largest expiry base for us. Let me unpack that a bit more. First, I would say that the migration to cloud is on track and continues as expected. We are pleased with what we are seeing there, and we still expect that to contribute mid- to high-single digits to cloud growth.

Second is that the retention rates on our data center business remain incredibly robust, in fact actually outperforming our expectations in the quarter. Third, for some of our largest customers with more complex migrations, they remain committed to transitioning to cloud, but it is going to be a multiyear journey for them. They have deep customizations and change management—it is going to take these customers time. Often, many of these have tens of thousands of users, some with over 100,000 users. In this category of customers, we saw a pull-forward of purchasing and expansion activity into Q3 from future periods, and we also had a pricing change in March that further catalyzed this dynamic.

As a result, that drove greater-than-expected upfront term license revenue recognized in the quarter. Relative to our expectations for Q3, we recognized approximately $50 million more in upfront term license revenue. That is consistent with some of the trends we have been seeing since our end-of-life announcement in September, but more pronounced in Q3 given the size of the expiry base and the pricing catalyst I mentioned. Lastly, the cohort of data center customers that are actively planning and transitioning to cloud—we are seeing these customers moderate their seat expansion versus historical trends.

Retention rates remain incredibly high, but we now expect a more muted level of data center expansion from these customers going forward as they prepare to move to cloud. We still see really nice uplift when customers move from data center to cloud. Net-net, our largest strategic customers continue to deepen their commitment to Atlassian Corporation, whether that is on data center or cloud, and we are working hard to meet them where they are and help them accelerate that transition so they can unlock all the AI and agentic capabilities in cloud.

With these dynamics playing out across the year on data center, with Q4 yet to play out where revenue recognition is being pulled into FY 2026 from FY 2027, we recognize that there is lumpiness in that pull-forward effect in data center, and that impacts the timing of reported revenue, RPO, and CRPO. Internally, of course, we look at a variety of metrics to performance manage our business, including a really healthy ARR.

Next week, at our Investor Forum during Team 26, to help guide investors through the revenue recognition timing dynamics on the data center side, we will look to enhance our disclosures and share historical subscription ARR, which will help normalize some of those timing effects and help everyone better understand the underlying strength of the overall business. All up, we feel really good about our execution and the runway we still have ahead of us, with more to share next week at the Team event and the Investor Forum.

Operator: Your next question comes from Arjun Bhatia from William Blair. Please go ahead.

Arjun Bhatia: Hey, guys. Sorry about that, but congrats on the strong quarter here. I was curious on Rovo and how you are thinking about positioning that against some of the third-party agents. It seems like you are having a lot of success in your existing customer base. Are customers evaluating other agents against Rovo, or is this an easy add-on given how integrated it is into the rest of the platform with Jira and Confluence and JSM and the rest of the suite?

Michael Cannon-Brookes: Thanks, Arjun. There are a lot of places that customers can access Rovo—that is the simplest way to phrase it. Think of Rovo as the AI part of the Atlassian Corporation platform that shows up in all of our surfaces, whether those surfaces are on the Atlassian Corporation platform—inside of Jira or Confluence, in our chat app, on mobile, on desktop—or whether those surfaces are in other agent platforms, be that from Google, Salesforce, or any of the foundation model vendors. We want to make sure that Atlassian Corporation's workflows, processes, and the Teamwork Graph show up wherever is most relevant for the customer.

That has required us for a number of years to push through a huge amount of really hard R&D work to make sure that our context graph in the Teamwork Graph is the best out there. It has the most amount of context about your organization, it is the most deeply connected, and we do the inference up front to make sure that you get those cheaper and faster results we talked about—better-quality answers at lower cost that let you run your engines faster. That is an amazing offering to customers, and they are realizing that, whether it happens on the Atlassian Corporation platform or off the Atlassian Corporation platform.

We want to make sure that customers see value in the platform overall. There is no doubt that agents existing in native contexts in our automation framework—if you have a huge amount of business processes running through Jira or the Service Collection—the agents that are natively integrated have the largest access to that platform, and they are right in the sidebar, they appear in the Jira UI. That is a huge advantage.

At the same time, we have shipped a series of features that allow third-party agents—from Gamma and Canva to Cursor and Claude, coding in each of our different types of teams—to surface in Atlassian Corporation’s context, whether that is on a Confluence whiteboard or in a Jira work item, but they all use the Teamwork Graph at the core. We certainly get evaluated against other platforms. Customer reaction is amazing. We have done a phenomenal amount of R&D to give great-quality answers. We see that in the increasing usage of our Rovo platform on and off Atlassian Corporation—both of which benefit us—and you can see that in customers increasing their seat expansion rates as well as using our AI technology.

All AI is not built equal. We build fantastic AI, and we get it into customers' hands. That is what is most important.

Operator: Your next question comes from Gregg Steven Moskowitz from Mizuho. Please go ahead, Gregg.

Gregg Steven Moskowitz: Thank you, James. Welcome to Atlassian Corporation. Mike, you may recall my high level of frustration one quarter ago when, after what I felt was a pretty good quarter of acceleration, your shares proceeded to go materially lower or continued to go materially lower. I do not want to minimize that there is a lot more work to be done—clearly this is an impressive result. My question relates to a comment in the shareholder letter that strong seat expansion in Jira was a key driver of cloud revenue acceleration this quarter. Given that there is so much fear about meaningful seat compression at Atlassian Corporation being on the horizon, can you unpack the drivers of the seat growth for us?

And secondly, is this a dynamic that you think can be durable?

James: Great. Thanks for the question on that. On the cloud side, we again saw strong performance, reaccelerating to 29% year over year. Maybe I will start with the fact that data center migrations to cloud were in line with our expectations and not the real contributor to that $50 million beat on the print. It is progressing well, and we still expect that to contribute mid- to high-single digits to cloud growth, as we mentioned. The two primary drivers of outperformance were really cross-sell and seat expansion. On the cross-sell side, we saw outperformance in our Collections business across the Service Collection and, in particular, the Teamwork Collection. We have Jira, Confluence, Loom, and Rovo.

Right now, Teamwork Collection is the best vehicle for our customers to buy and unlock AI and all the agent capabilities across the Atlassian Corporation platform. Customers are upgrading to TWC because of the increased AI credits—we are giving 10x more credits on Rovo versus the standalone subscription—and I am sure Mike can touch a little bit more on some of the progress we are seeing there. Importantly, we are seeing growth in TWC while also seeing continued seat expansion in our core Jira standalone offering. That really speaks to how, in the AI-driven, agent world, Jira and the platform remain core to enabling customers to manage their workflows and collaboration to fully unlock the value of AI.

Whether it is TWC or standalone Jira offerings, we are launching a ton of new value, enabling our customers to deploy agents to do the work, capture that agent activity alongside work history, with full permissions, audit trails, and admin governance. There is a lot of great traction here, as you can see in our Q3 print.

Michael Cannon-Brookes: Gregg, thanks for calling it out. I hope we have been very consistent on our views. 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 Corporation platform. Many competitive wins and a huge amount of consolidation happening into the Teamwork Collection. We have a lot of green lights in a lot of different places. Similarly, you can see that our NRR maintained north of 120% and even ticked up again for, I think, the third or fourth quarter in a row. We have a lot of reasons why that is.

Firstly, I would point to high R&D investment and great-quality software. That does matter. We build amazing applications that deliver great value for our customers. Secondly, the context we have in the Teamwork Graph and the critical business processes continue—with AI—to blur the boundaries between teams and roles. That means our platform and our offering between service teams on one side that connect to finance and HR, marketing, and through to technology teams, business teams, and leadership teams—the same context across all of those teams allows us to expand into those non-technical roles at an increasing rate. That shows why we are getting that seat expansion in different Collections and areas, and the continued strength in our business.

Fundamentally, customers are opting for more and more workflows on the Atlassian Corporation platform.

Operator: Your next question comes from Brent Thill from Jefferies. Please go ahead.

Brent Thill: Mike, you called out the largest competitive replacements. What are you seeing? What is driving this now where you are seeing that increasing rate?

Michael Cannon-Brookes: Thanks, Brent. Yes, we had a great quarter for competitive displacements, especially in the Service Collection. We continue to be incredibly strong in the mid-market area. As you can see from many years of investment in the enterprise pillars of our business, we are starting to grow really strongly in the enterprise strategic segments, across service management in particular. That is not just in ITSM—although in ITSM we are growing strongly—it is in broader employee service management. We now see that 75% of the Fortune 500 use our Service Collection, and 60% of Service Collection customers use us outside of IT—in HR, in marketing, and other areas. This is a fantastic example of why we are getting those competitive displacements.

It was our largest quarter ever for those. It is because of the quality of the software, the speed with which you can get up and running on the Service Collection, the high level of user experience quality, the comprehensiveness of our data and the Teamwork Graph, and bringing that to bear in the Service Collection fundamentally allows you to operate those services cheaper, get quicker and better answers because we have access to a better knowledge graph across your organization. Our AI continues to win every which way. We are incredibly AI-forward. It is one of the largest areas of usage of agents in automations and automated workflows because it allows those service teams to run more quickly.

We are only just getting started in customer service and had a great quarter in that area as well. Our asset management platform—Assets—moving into the platform as a whole as part of that overall Teamwork Graph is an incredibly strong customer story. We are really excited about how we keep taking share in that space, and $1 billion ARR is a great milestone. We thought it was worth celebrating. That is a fantastic milestone for that business while continuing to grow incredibly fast.

Operator: Your next question comes from Analyst from BTIG. Please go ahead.

Analyst: Hey there. Thanks for taking the question. Mike, it is great to see the AI momentum here. I would be curious if you could share what drove the decision to announce the data collection changes you are making and what you are looking forward to from a product capability perspective on the other side of it. Thanks.

Michael Cannon-Brookes: Thanks for the question. Atlassian Corporation continues to be incredibly driven by its values and its long-term philosophy. I say that because our data collection—the largest part of that—is clarifying exactly how it is that we use customer data, what the data is in the different segments. I think we have an absolutely world-class policy there. We are as clear as any vendor out there about what the different categories of data are, where they are used, what the benefit is to the customer, and what their options are. Think of it broadly as a large clarification of what happens at different points and the value that is delivered to the customer from those.

The increasing usage of AI allows us to build ever more powerful features. We are seeing a lot of customers—if you look at the Dev Experience business, for example—one of the greatest advantages is being able to see how my engineering organization compares to others in my industry, or to others of my size, etc., and this requires a lot of those changes. Similarly, the usage of different types of SaaS tools is how we build the Teamwork Graph.

It is all about that “open company, no bullshit,” being very clear with customers about what it is, what the advantages and trade-offs are, and we have had a really positive customer response because we put trust and openness at the core of that relationship and explain to them what they get from that. Those usage patterns of customers are incredibly important to building fantastic software, which is our highest-level goal.

Operator: Your next question comes from Raimo Lenschow from Barclays. Please go ahead.

Raimo Lenschow: Perfect. Thank you. In your letter, you talk a lot about momentum in ITSM. Can you talk a little bit about what you are seeing there, what is driving it, and how scaled up customers are—how meaningful is this for you? Thank you.

Michael Cannon-Brookes: We are seeing great momentum in the Service Collection. As I mentioned earlier, we are celebrating the milestone of passing $1 billion ARR. We try in the shareholder letters to put a different focus each quarter. Last quarter, you saw us talking about the 1 million seats and 1,000 customers less than six months into that offering, showing the momentum in that area—that continues. This quarter, we chose to focus on the service portion because of the milestone that it passed, which is a great milestone. The strength we are seeing is across regions.

We had a great quarter in EMEA in the business, and also in the Service Collection, with a lot of large wins in that region and increasing strategic and enterprise-level customers. We are seeing strong non-IT use cases in the Service Collection. The blurring of roles is really important to understand in the Atlassian Corporation platform and business. Instead of one tool for the IT team, one tool for employees, and one tool for the HR team, our ability to connect teams in an organization is really powerful as organizations become increasingly service-driven.

Lastly, we have a huge amount of AI features that are delivering real value—from AIOps in IT to diagnose and fix problems more quickly, through to how you can use Rovo as a broad platform—and increasing adoption by customers of our MCP servers and our CLI interfaces. We will talk a lot more about this next week, but especially in the Service Collection, you are seeing that enabling customers to get access to the context graph that is built in their service offerings, which lets them get fantastic results, a better value proposition, and execute more quickly and at lower cost.

Operator: Your next question comes from Aleksandr Zukin from Wolfe Research. Please go ahead.

Arsenije Matovic: Hi. This is Arseni on for Alex. Mike, what is working best with customers when adopting Service and Teamwork Collections that is driving that stronger cross-sell and gross contribution in cloud? And then a brief follow-up for James: when thinking about next year and data center revenue growth, will we get more color on how data center ARR is trending or a DC ARR figure exiting the year to better understand core growth when we lap some of these tougher comparison periods next year? Thanks.

Michael Cannon-Brookes: Thanks, Arsenije. What is working best? It is all working really well. I think I have covered the Teamwork Graph and the data we have. The speed of adoption and user experience are key—we have customers that have 500-plus different service desks turning around their organization. The ability to get new service desks up and running with all of the data from your organization to create incredibly efficient offerings for your finance team, operations and workplace teams, and HR teams is going really well. It is because of our investment in user experience overall.

We continue to grow strongly in the HRSM space—in service management around HR and other business functions—and that continues to be a source of strength for the Service Collection. Our traditional connectivity between the dev team and the IT team—between your technology team and your business teams—has always been a historical source of strength for Jira Service Management. We have seen that continue to deepen and improve with the Service Collection because both of those teams are getting more AI-driven.

That AI-driven nature and our ability to connect different teams across the organization with a single context graph and a single AI offering—and take that offering out to all of the other products that the customer uses—makes all of those service-driven parts of their business quicker to operate and faster to run. We are seeing strength across the board. Lastly, our newest addition to the Service Collection—Customer Service Management—is seeing huge success. We gave the statistic that more than 70% AI resolution rates are being hit internally across hundreds of thousands of conversations in our internal adoption of Customer Service Management.

It lets us run our business more efficiently, and customers are seeing that too as the customer service offering continues to roll out with a fantastic set of features.

James: Hey, Arseni. Thanks for the question. As it relates to FY 2027, it is too early to discuss any guide at this point. We will, of course, provide that guidance in August at our Q4 earnings. As it relates to ARR, as I mentioned earlier, we are seeing lumpiness in revenue recognition in the year on the data center side. Next week, we are going to share some of the historical subscription ARR for the overall business to help smooth out those timing updates. I think that will give folks a better understanding of the underlying strength in the business.

As a reminder, for the data center end-of-life announcement, we began to recognize greater upfront term license revenue, and that results in greater upfront revenue recognition in the period, with a corresponding drawdown in RPO and, in particular, CRPO. It is worth sharing that when we normalize for the impact of ASC 606, our RPO would have been north of 40% year over year in Q3, and our CRPO would have been north of 30% year over year in Q3—much more in line with recent trends—and again underscores the strength of the backlog we are continuing to build.

Operator: Your next question comes from Fatima Boolani from Citi. Please go ahead.

Fatima Boolani: Good afternoon. Thank you for taking my questions. Mike, I wanted to ask you about thoughts on diversifying some of your pricing strategy. Collections have been a huge step in the direction of consolidating adjacent capabilities into a more intuitive selling motion, but a lot of your peers in the broader enterprise software complex are testing the path of usage-based pricing. What do you think about that approach and how pertinent it could be for the Service Collection, for instance? To the extent you are A/B testing any of this with certain products, I would love the perspective.

And then a quick one for James: there has been a tremendous amount of focus on driving efficiencies in the business and especially leveraging AI to help Atlassian Corporation become even more efficient. What type of qualitative learnings and quantifiable yields are you seeing as you more assertively deploy AI internally? Thank you.

Michael Cannon-Brookes: Hi, Fatima. I will take the first one on pricing, and James can talk about efficiencies next. Our philosophy has always been to meet customers where they are. Customers in general like the way we price our offerings, and we wish to continue to be customer-led and meet them where they are. The largest amount of value we deliver today is through the seat-based pricing model. The Collections have been a major transformation in how we do that. In Teamwork Collection, you are getting a broader amount of value across Jira, Confluence, Loom, and all of the platform apps—Goals and Projects, etc. It gives you access to Rovo, with an increased Rovo credit allowance.

We see Teamwork Collection customers using more than twice as many Rovo credits per user. We want to make sure we are building amazing features that use those Rovo credits such that customers see value in using those credits. They also have more than twice as many active agents. So the Teamwork Collection comes with a larger pool of credits, which customers are using increasingly. That is a leading indicator—Rovo-driven customers have roughly 2x the ARR growth rate of non-Rovo customers—which is a good long-term trend for us. We have a series of consumption- or usage-based pricing meters now.

I think we are over 10 or 12 meters, from Assets to customer service indexed objects, extra Rovo credits, Forge extensibility, Bitbucket Pipelines, and more. We continue to be customer-led in how we approach pricing. As long as customers continue to consume our AI offerings and continue to grow—which I believe they will—we have a great track record. Token usage at 20% month on month is an incredible achievement by our team and shows the value of the offerings we are delivering. Fundamentally, it is about selling the outcome to the customer and then understanding the value they are getting from our software.

You are seeing that in customers broadly increasing the length of their commitment to Atlassian Corporation and increasing their overall dollar-based commitment—you can see that in our strong RPO growth. Normalizing for the ASC 606 revenue recognition, RPO growth was north of 40%. That is customers voting for the long term for the Atlassian Corporation platform, with pricing models continuing to adapt to their needs underneath that. I feel we are really strongly placed.

James: As it relates to margin expansion, we are in a unique opportunity where we are seeing a lot of demand signals, and we are going to continue to reinvest—on the AI side and on the enterprise sales side—where we see a lot of opportunity. At the same time, we will balance that with a very disciplined fiscal approach. You saw that in the shareholder letter, where we elevated driving durable, profitable growth as a strategic priority for the company alongside AI, Enterprise, and System of Work. Margin expansion will come twofold: through efficiencies and by continuing to drive value for our customers on the top line.

Michael Cannon-Brookes: If I might just add on that, we are seeing amazing results from investments in the business. Durable, profitable growth has been a long-term Atlassian Corporation aim. We have run an incredibly capital-efficient business for our entire history. We have had a number of wins across our R&D investments in engineering at scale. You can see that in our continued strength in our COGS numbers and the cost of operating our platform, which is an incredible achievement because that platform is operating with larger customers that are also expanding at larger and larger scale than ever before, and we are running the platform at a cheaper and cheaper rate without reliability hiccups.

That is a huge credit to our engineering team and the work we have done across every level of the stack to continue to build that durable, profitable business. Every reason suggests we should continue to do that in the future, and we are seeing that in the fantastic results we have.

Operator: Thank you. That is all the questions we have time for today. I will now turn the call over to Mike for some closing remarks.

Michael Cannon-Brookes: Thank you, everyone, for joining us on the call today, and thanks to the Atlassian Corporation team for a fantastic quarter. As always, we appreciate the thoughtful questions. I believe one of our long-time friends, Keith Weiss, is retiring after this call. Keith, thank you very much for all the questions over time, in person and virtually. We appreciate your thoughtful questions, especially today. We hope you will join us next week in Anaheim for Team 26. We have a series of incredibly exciting announcements as well as an Investor Forum. Whether we see you online or in person in Anaheim, we will see you next week, and otherwise, hope you have a kick-ass weekend.