Atlassian's Data Center revenue to fall 16% as Cloud grows 31%

01Cloud grew 31%; Data Center peaked in the quarter new sales ended

Cloud revenue was US$1,302m in the quarter, up 31% from US$998m. Data Center revenue was US$390.7m against US$372.6m a year earlier, up 5%. Marketplace and other revenue, mostly third-party apps and premier support, was US$79m, up 27%.¹ Atlassian put Data Center’s growth down to customers renewing (“retention”), and said Subscription ARR, up 22.5% to US$6,812m, was held back by “the expected contraction in Data Center as customers expand less ahead of their migration to the Cloud”.²

The longer run shows what this quarter is being compared with. Data Center revenue went from US$336m in the September 2024 quarter to US$561m in the March 2026 quarter, up 44% that quarter, then back to US$391m. In the year to June 2026 it was US$1,830.9m, up 25%, while Cloud brought in US$4,410.6m, up 28%.⁶¹⁰

Data Center is not small. It was 28% of revenue in the last fiscal year and 22% in this quarter, on our arithmetic from the reported figures, and Atlassian’s Marketplace takes a larger cut on third-party Data Center apps than on Cloud ones.²⁶

02How a self-managed licence turns into upfront revenue

A Data Center sale is an “on-premises term license”: software licensed for a set period, with support and maintenance bundled in. Atlassian recognises the licence part of the price upfront, when the term begins, and the support part evenly over the term. Cloud subscriptions are recognised evenly as the service runs.⁶ So a three-year Data Center deal can put much of its value into one quarter, while the same customer on Cloud pays into revenue month by month.

The end-of-life announcement changed the split. For Data Center contracts signed after 8 September 2025, “a higher proportion of total contract value is attributed to the term license component”, so more revenue lands at signing.⁴ Atlassian said that effect alone added about 5.7 percentage points to Data Center growth and about 1.6 points to total growth in its September 2025 quarter.⁴ In the March 2026 quarter, its largest Data Center renewal quarter, growth of 44% was “primarily driven by the DC EOL revenue recognition impact, pricing, pull-forward of customer purchasing into Q3 from future periods, partially offset by continued migrations to Cloud”.⁵

The FY2026 annual report adds a second drag: Cloud revenue is “typically lower in the initial year compared to our Data Center offerings”, which “may impact our near-term revenue growth rates and margins”.⁶ Atlassian also said the timing of Data Center revenue lifted its FY26 non-GAAP operating margin by about four percentage points.²

03The targets went up on 5 November, not down

For the quarter to December, Atlassian expects revenue of US$1,825m to US$1,835m, Cloud growth of about 27% and a Data Center decline of about 14%. For the year to June 2027 it expects revenue growth of about 13.75%, Cloud growth of about 26% and a Data Center decline of about 16%.¹ Each of those full-year targets is higher than in August: revenue from about 13.0%, Cloud from about 25.5%, Data Center from a fall of about 17%, and Subscription ARR growth by the end of the year from 18.0% to 18.5%.² Atlassian said migrations from Data Center will add “mid-to-high single-digits” to Cloud growth this year, and that it expects total growth to “re-accelerate in FY28 as we lap these effects”.²

The market read the same numbers differently. Shares fell more than 17% in extended trading on 5 November, SiliconANGLE reported, as investors focused on Subscription ARR growth slowing to about 18.5% by the end of the year from 22.5% in the quarter; it also reported the stock had nearly doubled between the August results and late October.¹² They were down roughly 16% in premarket trading on 6 November, Investing.com reported, and Truist Securities cut its price target to US$200 from US$250, citing a cautious outlook that “increases scrutiny on the durability of Cloud growth and margin profile”.¹³ The same filing carried a change of Chief Accounting Officer: Gene Liu leaves on 13 November after more than 12 years, and Eli Berkovitch, Box’s Chief Accounting Officer from April 2021 until October 2026, starts on 16 November. The filing says Liu’s decision is not the result of any disagreement with the company.³

04The dates every Data Center customer now runs on

Atlassian’s end-of-life page sets the timetable to the minute. New customers lost the ability to buy Data Center subscriptions or Data Center Marketplace apps on 30 March 2026 at 23:59 PST. Existing customers can keep buying new subscriptions, apps and expansions until 30 March 2028. On 28 March 2029 at 23:59 PST, subscriptions and their Marketplace apps expire and the products become read-only.⁷ Until then Atlassian promises technical support, “security bug-fixes for critical vulnerabilities” and connectors to Atlassian Cloud.⁷

Renewals between those dates are allowed, but they “cannot extend beyond March 28, 2029” and a 12-month renewal that runs past it is prorated. Data stays readable after expiry, but Atlassian “strongly” advises against keeping a read-only instance connected to the internet, since no security fixes follow.⁷ Some customers will be allowed multi-year extensions beyond 28 March 2029 “by exception only”; the annual report describes an extended maintenance period of about three years for certain customers.⁷⁶ Bitbucket and Bamboo Data Center will not reach end of life; their customers move to a Bitbucket Hybrid License that covers both Data Center and Cloud.⁷ Atlassian has done this before: it ended maintenance and support for its older Server products in February 2024.¹¹

05What changes for a customer leaving Data Center

Data Center prices have gone up as the end approaches. From 17 February 2026, list prices for Jira, Confluence and Jira Service Management Data Center rose 15% across all user tiers, and about 25% for Jira customers on older “advantaged” plans, depending on tier; customers could renew early at the old price before that date.⁸ A 500-user Jira Data Center licence went from US$51,000 to US$59,000 a year, and a 500-user Confluence licence from US$32,000 to US$37,000.⁹

Cloud is not cheaper per seat, by Atlassian’s own account: “The per user cost of cloud is higher than Data Center, but what you get for this in cloud is significantly more impactful.” It offers customers buying Cloud Enterprise by June 2027 a possible 10–20% discount on the first year, and qualifying customers a credit for the unused part of their Data Center maintenance.⁷ Cloud also brings metered AI: Atlassian says more than 87% of its enterprise Cloud customers use Rovo², and from 3 December it bills Rovo use beyond the included credits, with the setting that allows it on by default, as we reported in Rovo AI overage is now on by default.