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Atlassian Corp Plc (NASDAQ:TEAM) shares surged 18% in after-hours trading on Thursday after the team collaboration software provider reported better-than-expected second-quarter results and issued an upbeat revenue forecast.

The company posted adjusted earnings per share of $0.96, significantly beating analyst estimates of $0.62. Revenue for the quarter came in at $1.29 billion, surpassing the consensus expectation of $1.23 billion and marking a 21% increase YoY.

Subscription revenue, a key metric for the company, grew 30% YoY to $1.21 billion. Atlassian ended the quarter with 49,449 customers with over $10,000 in Cloud annualized recurring revenue, up 15% from the previous year.

"The Atlassian System of Work is resonating with enterprises all over the globe," said Mike Cannon-Brookes, Atlassian's CEO and co-Founder. "By infusing AI throughout our world-class cloud platform, we're empowering all teams to accelerate collaboration and unlock organizational knowledge."

Looking ahead, Atlassian provided strong guidance for the third quarter, projecting revenue between $1.345 billion and $1.353 billion, above the analyst consensus of $1.32 billion.

The company's CFO, Joe Binz, attributed the strong performance to "strong enterprise sales execution" across both Cloud and Data Center offerings. He added that the momentum reinforces Atlassian's conviction in its investments in key strategic priorities.

Atlassian's free cash flow for the quarter was $342.6 million, representing a robust free cash flow margin of 27%.

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