The Australian Growth portfolio returned -0.03% in May, behind the benchmark index which rose +0.5%.

Atlassian was the highlight, with its share price rebounding +57% in the month. It delivered another standout result, where it beat and raised guidance for the 7th consecutive quarter. Cloud revenue grew +29% driven by paid seat expansion within existing customers, cross-sell of its new Service Collection and Teamwork Collection bundles, Data Center to Cloud migrations, and price rises. Adoption of its AI products including its Rovo AI Agents continued to accelerate, as evidenced through the growth of its Teamwork Collection and Service Collection bundles, with Service Collection's ARR increasing 30%+ year-on-year. Rovo customers grew revenue at twice the rate of non-Rovo customers. Its forward order book grew +37% and gives us confidence revenue will continue to grow strongly.

Brambles (-27%) was our lowlight as it unexpectedly cut its FY26 earnings guidance. FY26 revenue growth is now forecast at +2–3% constant currency (“CC”) (previously +3–4%) and EBIT growth at +3–5% CC (previously +8–11%). The downgrade has been driven by an unfortunate confluence of events. The key catalyst has been unexpected constraints in subcontractor pallet repair capacity in the central and northeastern parts of its US service centre network. This has occurred at a time of increased demand and as Brambles has been lifting repair quality (requiring more repair time) to better meet customer requirements. The company is incurring additional costs (more pallet relocations, adding repair capacity) as it endeavours to restore service levels and pallet availability. The direct result is a US$40m increase in operating expenditure. Pallet shortages are also meaning that some customers are having their pallets rationed and Bramble’s new customer initiatives have been placed on hold. This accounts for the reduced sales growth guidance and is a further US$20m hit to previously forecast FY26 EBIT. Furthermore, the company incurred an extra US$60m of capital expenditure due to the purchase of around 2 million additional pallets to reduce shortages. These higher US costs, volume growth limitations, and extra capex will continue into H1 FY27, but Brambles expects capacity constraints to be resolved by the end of that half. The company’s already healthy guidance for FY26 free cash flow before dividends has been lifted slightly, and the strength of its financial position is reflected in a further US$400m on-market share buyback to commence when the current US$400m buyback concludes in the next few weeks. The market’s reaction to the downgrade was severe. A$6b (-20%) was wiped off its equity value on the day. We see this as a significant over-reaction to a readily fixable short-term problem. We regard Brambles as a high-quality company that is attractively priced and not subject to AI disruption.