Atlassian Corporation (TEAM) proved Friday that enterprise software demand remains healthy, posting second-quarter results that beat expectations across the board. Shares rose modestly in premarket trading after the productivity software maker reported numbers that suggest its cloud migration story is still working.

The Numbers That Matter

Atlassian delivered revenue of $1.59 billion for the quarter, comfortably ahead of the $1.54 billion analysts were expecting. Adjusted earnings came in at $1.22 per share, also topping the Street's $1.14 estimate.

Total revenue climbed 23% compared to the same period last year, powered primarily by cloud revenue growth of 26% year-over-year. That cloud performance is particularly notable because it marks the first time the company has crossed $1 billion in cloud revenue in a single quarter—a milestone that shows how successfully Atlassian has shifted its business model.

Profitability improved alongside revenue growth. Adjusted operating income reached $430.2 million, up from $335.1 million a year earlier. The operating margin expanded to 27% from 26% in the prior year quarter.

On the cash front, Atlassian generated $177.8 million in cash flow from operations and $168.5 million in free cash flow during the period. The company ended the quarter with $1.6 billion in cash, cash equivalents, and marketable securities.

What Management Is Saying

"We closed out Q2 with incredible momentum across the Atlassian platform and achieved some impressive milestones along the way. We delivered our first-ever $1 billion Cloud revenue quarter, which grew 26% year-over-year, crossed 350,000 customers, and Rovo surpassed 5 million monthly active users," said Mike Cannon-Brookes, Atlassian's CEO and co-founder.

Looking Ahead

The guidance tells an optimistic story. For the third quarter, Atlassian expects revenue between $1.689 billion and $1.697 billion, well above the consensus estimate of $1.650 billion. The company projects cloud revenue growth of around 23% in the quarter, with Data Center revenue growth expected to hit approximately 33.5% year-over-year.

For the full fiscal 2026, Atlassian raised its sales outlook to a range of $6.300 billion to $6.362 billion, with cloud revenue growth anticipated at about 24.3%.

TEAM Price Action: Atlassian shares were up 1.12% at $99.51 during premarket trading on Friday. The stock is trading near its 52-week low of $97.93.