Atlassian makes its case: Context is our strategic moat

Atlassian's third quarter earnings made that case that agentic AI is good for the company, SaaSpocolypse fears are overblown and context is king.

The company reported better-than expected results with revenue growth of 32% to $1.8 billion. Mike Cannon-Brookes, Atlassian’s CEO, said customers were signing bigger deals and its core units all showed strong growth. Cloud revenue in the fiscal third quarter checked in at $1.1 billion, up 29%.

Atlassian projected fourth quarter revenue of $1.65 billion to $1.67 billion with cloud revenue of about 25.5%. For fiscal 2026, Atlassian is projecting revenue growth of 24%. The company noted that data center customers pulled forward spending to transition to the cloud.

Cannon-Brookes made the case that AI is a boon for Atlassian. Rovo, Atlassian's AI assistant, is driving usage. Rovo customers are growing annual recurring revenue at 2x the rate of non-Rovo customers. In addition, Rovo customers' AI credit usage is growing more than 20% month over month.

Atlassian's platform revolves around its Service Collection, which includes Jira Service Management, Customer Service Management and Assets, and Teamwork Collection, which includes Jira, Confluence and Loom.

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The two platforms combined add up to a context layer that makes AI agents smarter. "By connecting work, knowledge, people, and code in the Teamwork Graph, our customers benefit from one of the richest enterprise context graphs in the world," said Cannon-Brookes. "The Teamwork Graph gives a complete view of an organization, pulling in context from connected third-party tools, and is further enriched by MCP use, which is doubling month-over-month."

In the Atlassian shareholder letter, Cannon-Brookes made the following points.

• Service Collection customers who use AI tools resolve issues 13% faster than non-AI users.
• Service Collection is driving 50% of agentic automation runs across the Atlassian platform.
• More than 60% of Service Collection instances are for non-IT functions such as HR, legal, finance and marketing teams.
• Atlassian is winning ITSM deals. "This quarter was our largest ever for competitive displacements from a major ITSM provider, with broad-based momentum and strong wins across all segments," said Cannon-Brookes.

The context play

Speaking on Atlassian's earnings call, Cannon-Brookes said Atlassian's platform is driving context. He said:

"More and more enterprises are embracing our platform-wide vision using Atlassian 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're saying this is our competitive momentum built. In a world where human will run teams of agents, context is the only anchor to avoid chaos. And we believe the companies that prioritizes context will come truly AI native."

The bet is that AI agent usage will scale and context will matter more because more context means less tokens and lower costs.

Atlassian at its Team '26 conference is expected to announce more features to the Teamwork Graph to build context. Returns on AI agents will be a big theme.

"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, everything put together in the knowledge that we have about your business, but you also get cheaper answers. Those are cheaper answers because you use far less tokens to get to an answer in the same amount of time and fundamentally using less tokens and 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," said Cannon-Brookes.