Wall Street analysts project Atlassian’s cloud subscription revenue to increase by approximately 25% year-over-year in Q2 (ended December 2025), driven by continued migration from on-premises products. Cloud annual recurring revenue (ARR) is forecast to reach roughly $2.3 billion, up from $1.84 billion a year earlier, as new customer additions and higher average contract values from enterprise deals offset slowing maintenance revenue. The consensus view calls for total cloud user count to surpass 75 million monthly active users, a rise of nearly 18% sequentially, underscoring sustained enterprise uptake of Jira and Confluence in regulated industries such as financial services and healthcare.

Analysts anticipate that Atlassian’s AI-powered capabilities, including automated ticket routing and code-review bots, will bolster revenue per seat by approximately 10% from the prior quarter. Surveys of channel partners indicate that over 30% of new Jira Service Management clients in the December quarter selected at least one AI add-on, suggesting incremental annual contract values near $5,000 per instance. Management commentary on analyst calls has highlighted a 40% increase in utilization of AI features among existing Premium and Enterprise customers, a metric closely watched as a leading indicator for upsell conversion rates.

Street estimates place Atlassian’s non-GAAP operating margin for Q2 between 15% and 17%, compared with 14% in the year-ago period, as higher-margin cloud revenue and disciplined R&D investment offset increased spending on data center infrastructure. Free cash flow is projected at approximately $400 million, reflecting improvements in accounts receivable days outstanding (down to 55 days from 62) and ongoing reductions in deferred revenue deferrals. Analysts note that a sustained FCF conversion rate above 30% of total revenue could trigger multiple re-rating opportunities, given the company’s track record of returning capital through share repurchases and bolt-on M&A in the AI space.