Software developer's shares soar: it denied a 'software apocalypse' in its quarterly report

Shares of Australian-American enterprise software developer Atlassian jumped 30% in trading on Friday, Ma. 1. The company beat Wall Street's expectations for last quarter's results, reporting strong growth in its cloud business and data center revenue. Atlassian was one of the companies hit by the selloff amid the "software apocalypse." Is its stock worth buying now?

Shares of software developer Atlassian rose 30% on Friday, reaching $89.64 at the peak. The company said its revenue rose 32% year-over-year to $1.79 billion in the third quarter of fiscal 2026, which ended March 31. Analysts polled by LSEG had forecast $1.69 billion, CNBC reported . Adjusted earnings per share came in at $1.75 versus expectations of $1.32.

Revenue from Atlassian's cloud business rose 29% to $1.13 billion. Analysts, according to FactSet, expected $1.08 billion, CNBC reports. Revenue from data centers was $561 million versus a forecast of $515 million. In the report, the company raised its full-year revenue forecast for its cloud and data center businesses: it now expects growth of 26.5% and 21.5%, respectively.

On a GAAP basis, Atlassian posted a net loss of $98.39 million, or $0.38 per share, in the quarter. The loss increased 39% year-on-year.

Atlassian shares have been among the hardest hit by the "software apocalypse" this year: the securities are now 46% cheaper than they were at the beginning of 2026 (and that's taking into account the rally on Friday), CNBC explains. Investors feared that AI agents from OpenAI and Anthropic would replace the products of software developers, so they began selling off shares of software companies. Their executives responded by saying that key business indicators had not deteriorated, the channel notes.

In March, Atlassian cut about 10 percent of its workforce, or about 1,600 jobs, saying the move would allow the company to "self-fund further investments in AI and enterprise sales while strengthening its financial profile." Atlassian CEO Mike Cannon-Brooks told CNBC on Thursday that the company saw "incredible strength" in its business during the quarter, and that concerns pressuring the broader software sector may be exaggerated.

"We're seeing employment numbers remain consistently strong in areas that investors have been concerned about, so I'm not sure those concerns are being realized," Cannon-Brooks said on CNBC. - They're certainly not being realized in Atlassian's performance - in terms of how our customers continue to expand their use of our software as a strategic partner for their business."

BTIG analysts wrote in a research note Friday that Atlassian's Teamwork Collection product, which bundles a suite of applications, "stands out as a meaningful growth driver" as customers shift to higher rates to get more AI credits, CNBC reports. BTIG recommends buying Atlassian shares.

"While it will take more time and consistent strategy execution to confidently say that the risk of AI negatively impacting companies has been removed, this report shows that Atlassian is turning that threat into a clear competitive advantage by leveraging the unique context of its Teamwork Graph," BTIG said in a note, as quoted by CNBC. - We expect this fundamental momentum to ensure continued growth."

According to MarketWatch, a majority of the 34 analysts tracking Atlassian securities advise them to buy: 27 have assigned Buy and Overweight ratings. Another seven recommend to keep in the portfolio (Hold). There is no advice to sell the stock. The Wall Street consensus target price is nearly $128 per Atlassian share, up 86.6% from the closing price on April 30.

This article was AI-translated and verified by a human editor