TEAM 10-K & 10-Q changes, risk factors and insider trading

•Our historical rapid growth makes it difficult to evaluate our future prospects, and we may not be able to sustain our revenue growth rate or achieve long-term profitability in the future.

•If we are not ableunable to develop or package new apps, agents and enhancements to our existing offerings that achieve market acceptance and that keep pace with technological developments, our business and results of operations could be harmed.

•Privacy concerns and laws,laws as well as evolving regulation of cloud computing, AI appsproducts and services, cross-border data transfer restrictions,transfers and other domestic or foreign regulations may limit the use and adoption of our services and adversely affect our business and results of operation.

•The dual class structure of our common stock has the effect of concentrating voting control with certain stockholders, in particular, our Co-Founders and their affiliates, which will limit our other stockholders’ ability to influence the outcome of important transactions, including a change in control.

Our historical rapid growth makes it difficult to evaluate our future prospects, and we may not be able to sustain our revenue growth rate or achieve long-term profitability in the future.

We have experienced rapid growth in recent years and our historical growth rate should not be considered indicative of our future performance and may decline in the future. This rapid growth also makes it more challenging to evaluate our future prospects. Our revenue growth rate has fluctuated in prior periods and, in future periods, our revenue could grow more slowly than it has in the past or decline for a number of reasons, including any reduction in demand for our apps, agents and platforms; increase in competition; challenges relating to collecting accounts receivable or collection periods; seasonality in the timing of our sales; the duration of our sales contracts; limitations on our ability to, or any decision not to, increase pricing,pricing; slowerchallenges, thanaccounting anticipated adoption ofimpacts, or trends associated with the migration to our Cloud offerings; failure to capitalize on growth opportunities; contraction in our overall market; or impact from broader macroeconomic factors. We make assumptions regarding the risks and uncertainties associated with our growth as we plan and operate our business. If our assumptions are incorrect or change, or if we do not address risks successfully, our operating and financial results could differ materially from our expectations, our growth rates may slow, and our business would suffer.

In addition, we expect our expenses to continue to increase substantially in the near term, particularly as we continue to make significant investments in research and development and technology infrastructure for our Cloud offerings, expand our operations globallyglobally, expand our sales infrastructure, and develop new apps, agents and features for, and enhancements of, our existing apps and agents, including our AI offerings. As a result of these significant investments, and in particular stock-based compensation associated with our growth, we have not inconsistently the past and may not in the future be able to achieveachieved profitability as determined under U.S. generally accepted accounting principles (“GAAP”). The additional expenses we will incur may not lead to sufficient additional revenue to maintain historical revenue growth rates and achieve long-term profitability.

The markets for our solutions are fragmented, rapidly evolving, highly competitive, and have relatively low barriers to entry. We face competition from a wide range of companies in each of the markets we serve, including from both large technology vendors and smaller companies that offer project management, collaboration, and developer tools; both cloud vendors targeting enterprise service management teams and legacy vendors that offer service desk solutions; and both large technology vendors that offer a suite of products and smaller companies offering point solutions for team collaboration. We also face competition from AI-native companies and emerging startups that leverage generative AI and large language models as the core foundation of their architecture, offering highly specialized, autonomous, or automated solutions that may bypass traditional business process workflows or displace established user interfaces. Some of our competitors have also made acquisitions to offer a more comprehensive product or service offering, which may allow them to compete more effectively with our offerings. We expect this trend to continue as companies attempt to strengthen or maintain their market positions in an evolving industry. Following such consolidations, companies may create more compelling product offerings and be able to offer more attractive pricing options, making it more difficult for us to compete effectively.

Many of our current and potential competitors have greater resources than we do, with established marketing relationships, larger enterprise sales forces, access to larger customer bases, pre-existing customer relationships, and major distribution agreements with consultants, system integrators, and resellers. Our competitors, particularly our competitors with greater financial and operating resources, may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, or customer requirements. With the adoption of new technologies, including AI, the evolution of our apps, agents, and Collections, and new market entrants, we expect competition to intensify in the future. For example, our competitors may develop more effective AI products, more successfully incorporate AI into their offerings and sales strategy, gain or leverage superior access to certain AI technologies, or achieve higher market acceptance of their AI solutions. In addition, as we continue to expand our focus into new use cases or other offerings beyond software development teams, we expect competition to increase. Pricing pressures and increased competition generally could result in reduced sales, reduced margins, losses, or the failure of our offerings to achieve or maintain more widespread market acceptance, any of which could harm our business, results of operations, and financial condition. Additionally, some current and potential customers, particularly large organizations, have elected, and more may in the future elect, to develop or acquire their own internal collaboration and productivity software tools that would reduce or eliminate the demand for our solutions.

We are investing in AI across the company and increasingly building out our AI-powered offerings, including apps, agents, and features like our Rovo platform apps. We expect AI apps, agents and features, both those we develop and those developed by third parties, to continue to be important to our offerings and our operations over time, but there can be no assurances that we will effectively develop, implement or market AI agents and features or that we will realize the desired or anticipated benefits from AI. We bear significant development and operational costs in building and supporting our AI tools and offerings, and expect these investments to continue to negatively impact our operating margins in the near term. Developing, maintaining, and deploying these technologies involves substantial risks, and we cannot guarantee that they will improve our offerings or provide benefits to our customers or business. As our business and offerings evolve to incorporate additional AI capabilities, we may be unable to effectively monetize our AI offerings or determine new methods for capitalizing on these opportunities. For example, we have made Rovo available to our premium and enterprise edition Jira, Confluence, and Jira Service Management customers at no additional cost to themour premium, enterprise, and expect to do so for our standard edition customers inacross theJira, nearConfluence, future.Jira Service Management, and Teamwork Collection. If strategies like this are not successful in helping us win new customers and retain and expand within existing customers, we may not be able to offset the investments we have made in these technologies, which would adversely impact our results of operations and financial condition.

Additionally, AI technology and services is a highly competitive and rapidly evolving market. Our competitors or other third parties may incorporate AI into their products and offerings more quickly or more successfully than we can. Our ability to compete in this space will also depend in part on our ability to attract and retain employees with AI expertise. We also rely on certain third-party AI models, products, and integration providers. Such providers may be prohibited from offering certain models or technologies in jurisdictions in which we operate, may terminate their relationships with us, or otherwise cease to make certain models or technologies available to us, or may make certain models or technologies more expensive for us to use. Additionally, it is possible that an increased prevalence of AI may impact the work practices of software teams, IT operations and support teams, leadership, and business teams, and therefore our market opportunity. Any of the foregoing could adversely affect our business, reputation, or financial results.

While a substantial majority of our business was historically generated from customers using Server products, which are no longer available, and Data Center products, over time, our Cloud offerings have become more central to our distribution model.model, We expectand this trend towill continue in the future. WeTo aresupport directingthis transition, we have directed a significant portion of our financial and operating resources to implement robust Cloud offerings and to migrate our existing customers to our Cloud offerings, andwhich this transition is affecting and will continue to affectimpact our results of operations, revenue recognition practices, and financial condition. For example, due to the higher fees associated with hosting our Cloud infrastructure, we have seen and expect to continue to see increased expenses and lower margins as customers transition to Cloud. Our strategy to provide our AI tools at no or low cost to the majority of our Cloud customers may further increase these hosting costs without corresponding revenue increases. Revenues recognized from our Cloud offerings are also typically lower in the initial year compared to our Data Center offerings, which may impact our near-term revenue growth rates and margins. We may also be subject to additional competitive and pricing pressures for our Cloud offerings compared to our Data Center offerings, which could harm our business. In our migration from Server, we offered discounts to certain of our enterprise-level Server customers as an incentive, which impacted our near-term revenue growth, and we may offer similar discounts in the future. If our Data Center customers do not migrate to our Cloud offerings in the future or migrate more slowly than we anticipate, our revenue growth and profitability may be negatively impacted. If our Cloud offerings do not develop at the rate as we expect, if we are unable to continue to scale our systems to meet the requirements of successful, large Cloud offerings, or if we lose customers currently using our Data Center products due to our increased focus on our Cloud offerings, our business, results of operations and financial condition could be harmed.

If we are not ableunable to develop or package new apps, agents and enhancements to our existing offerings that achieve market acceptance and that keep pace with technological developments, our business and results of operations could be harmed.

Our ability to attract new customers and retain and increase revenue from existing customers depends in large part on our ability to enhance and improve our existing offerings, to introduce and package compelling new apps or agents that reflect the changing nature of our markets.markets, and to capitalize our apps, agents, and services, particularly our AI offerings, in new ways. The success of any enhancement to our offerings depends on several factors, including timely completion and delivery, competitive pricing, adequate quality testing, integration with existing technologies and our platform, and overall market acceptance. Any new apps or agents that we develop may not be introduced in a timely or cost-effective manner, may contain bugs or other defects, or may not achieve the market acceptance necessary to generate significant revenue.

The markets for our offerings are subject to rapid technological change, evolving industry standards, and changing regulations, as well as changing customer needs, requirements, and preferences. These are all uncertain and we cannot predict the consequences, effects, or introduction of new, disruptive, emerging technologies or the manner and pace at which our markets develop over time, and our ability to compete in these markets depends on predicting and adapting to these changing circumstances. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis, and anticipating these factors requires that we allocate significant resources without any guarantee that any such investments and efforts will result in initial or enhanced adoption of our offerings in the marketplace. For example, with the development of next-generation solutions, including AI solutions, we have and expect to continue to commit significant resources to developing new AI apps and agents and other enhancements incorporating AI, and there is no guarantee that our investments and efforts will result in wider adoption of our offerings in the marketplace. If new technologies emerge that can deliver competitive products and services at lower prices, more efficiently, more reliably, more conveniently or more securely or if new products are introduced into the market that could render any of our existing offerings obsolete, such technologies and products could adversely impact our ability to compete effectively and may lead to customers reducing or terminating their usage of our offerings.

In recent years, we have focused on strategically growing our sales force to expandsell directly to large and deepen our relationships with our largest existing customers, particularly in the enterprise segment.customers. As our sales force continues to develop, we may encounter challenges in identifying, recruiting, training, and retaining a qualified sales force, and we expect this growth to require significant time, expense, and attention. Expanding our sales infrastructure also has impacts on our cost structure and results of operations, and we may have to reduce other expenses, such as our research and development expenses, in order to accommodate a corresponding increase in marketing and sales expenses while maintaining positive free cash flow.

As our enterprise sales teamsmotion grow,grows, we face increased costs, longer sales cycles, greater competition, and less predictability in completing our sales. Since the sales cycles for our enterprise offerings are multi-phased and complex, it can be unpredictable when a given sales cycle will close. For enterprise customers, the evaluation process may be longer and more involved, and require us to invest more in educating our customers about our apps, agents, Collections, services, and solutions, particularly because the decision to use our offerings is often an enterprise-wide decision. We may be required to submit more robust proposals, participate in extended proof-of-concept evaluation cycles, and engage in more extensive contract negotiations. In addition, our enterprise customers often demand more complex configurations and additional integration services and product features. Adverse macroeconomic conditions have in the past, and may in the future, cause delays in our enterprise customers’ purchasing decisions. Due to these factors, we often must devote greater sales support to certain potential enterprise customers, which increases our costs and time required, without assurance that potential customers will ultimately purchase our solutions. We also may be required to devote more resources to implementation, which increases our costs, without assurance that customers receiving these services will renew at the same level or at all. Additionally, our revenue from enterprise customers may be affected by seasonality in sales cycles, extended collection cycles, potential deferral of revenue, and alternative licensing arrangements. We expect to see these impacts increase as we grow our enterprise sales motion. An increase in enterprise sales contracts could also increase our number of or mix of multi-year sales contracts, which can also have an impact on our revenue cycles.

Our business model for low-touch customers is based in part on attracting a high volume of customers through free trials, limited free versions, and affordable starter licenses. For example, we have traditionally offered entry-level or free pricing for certain offerings to small teams at a price that typically does not require capital budget approval and that is orders-of-magnitude less than the price of traditional enterprise software. This approach is intended to drive trial, adoption, and initial expansion organically within organizations, through low-touch customer service, high product quality, and transparent pricing arrangements. However, if users do not perceive sufficient value in upgrading from free or entry-level offerings or if users do not become, or influence others to become, paying customers, we may not realize the intended benefits of this strategy. Any decrease in our customers’ satisfaction with our offerings, either as a result of our own actions or due to factors outside of our control, could also harm word-of-mouth referrals and our brand. Historically, a majority of users do not convert from free trials or limited free versions to paid apps or products, and our strategy also relies on these users influencing broader adoption within their organizations. Additionally, we have historically increased and will continue to increase prices from time to time, which may also hurt the efficacy of this strategy.

Our ability to compete may be adversely affected as competitors introduce lower-cost or free alternatives, making it more difficult to acquire new customers. Some customers may also view our offerings as discretionary purchases, which can reduce demand, especially during periods of economic uncertainty. If we are unable to sell our softwareofferings in high volume, or if our free trial and affordable pricing strategies do not result in sufficient conversion to paid customers, our business, results of operations, and financial condition could be harmed.

We have established relationships with certain solution partners to distribute our products. We believe that continued growth in our business is dependent upon identifying, developing, and maintaining strategic relationships with our existing and potential solution partners that can drive substantial revenue and provide additional value-added services to our customers. For fiscal year 2025,2026, we derived over 50% of our revenue from channel partners’ sales efforts. At times in fiscal year 2025, one solution partner has represented more than 10% of our total accounts receivable.

Our apps, agents and products must integrate with a variety of network, hardware, and software platforms, and we need to continuously modify and enhance our apps, agents, and products to adapt to changes in hardware, software, networking, browser, and database technologies. In particular, we have developed our apps, agents, and products to be able to easily integrate with third-party applications, including the applications of software providers that compete with us, through the interaction of application programming interfaces (“APIs”)., model context protocol (“MCP”), and connectors. In general, we rely on the fact that the providers of such software systems continue to allow us access to theirthese APIstools to enable these customer integrations. To date, we have not relied on long-term written contracts to govern our relationship with these providers. Instead, we are subject to the standard terms and conditions for application developers of such providers, which govern the distribution, operation, and fees of such software systems, and which are subject to change by such providers. From time to time, certain providers may claim we have failed to meet these standard terms and conditions. Our business could also be harmed if any provider:

•discontinues or limits our access to its APIs,APIs or connectors, due to a claim of breach of terms and conditions or for any other reason;

We may also be subject to privacy risks in connection with the third-party data we collect and process through APIsthese tools and, in some instances, customers may find our administrative controls for such data use inadequate. As with any data processing, there are privacy considerations for the data we collect and process from third-party sources, and customers may seek more controls in our products around third-party integrations. We believe a significant component of our value proposition to customers is the ability to optimize and configure our apps, agents, and products with these third-party applications through our respective APIs.applications. If we are not permitted or able to integrate with these and other third-party applications in the future, demand for our offerings could decline and our business and results of operations could be harmed.

In addition, an increasing number of organizations and individuals within organizations are utilizing mobile devices to access the internet and corporate resources and to conduct business. We have designed and continue to design mobile applications to provide access to our apps, agents, and products through these devices. If we cannot provide effective functionality through these mobile applications as required by organizations and individuals that widely use mobile devices, we may experience difficulty attracting and retaining customers. Failure of our apps, agents, and products to operate effectively with future infrastructure platforms and technologies could also reduce the demand for our offerings, resulting in customer dissatisfaction and harm to our business. If we are unable to respond to changes in a cost-effective manner, our apps, agents, and products may become less marketable, less competitive, or obsolete and our results of operations could be harmed.

Our deeply interconnected portfolio of apps, AI agents, and Collections, each with discrete value propositions, delivers solutions for software teams, IT operations and support teams, leadership,leadership and business teams. We’veAs putan AI-first company, we have embedded AI atcapabilities theacross centerevery surface of our portfolioplatform, enabling organizations to enhanceorchestrate teamworkwork for userseffectively across ourboth appshuman and CollectionsAI for all teams.teammates. These apps, agents, and Collections are all built on the Atlassian Cloud Platform and data model: a common technology foundation that seamlessly connects teams, information, context, and workflows throughout an organization.

We generate revenues primarily in the form of subscription fees. Subscription revenues consist primarily of fees earned from subscription-based arrangements for providing customers the right to use our software apps in a cloud-based-infrastructurecloud-based infrastructure that we provide (“Cloud offerings”). We also sell on-premises term license agreements for our Data Center products (“Data Center offerings”), consisting of software licensed for a specified period and support and maintenance services that are bundled with the license for the term of the license period. Subscription revenues also include subscription-based agreements for our premier support services. From time to time, we make changes to our apps and product offerings, prices, and pricing plans for our offerings, which may impact the growth rate of our revenue, and our deferred revenue balances, remaining performance obligations, and customer retention. Subscription revenue, through our Cloud and Data Center offerings, results in a large recurring revenue base.

Free cash flow decreased by $96.5 million for fiscal year 2025 remained approximately flat as2026 compared to fiscal year 2024.2025. The slight decrease in free cash flow was primarily attributable to ana increase in capital expenditures offset by an increasedecrease in net cash provided by operating activities. The increasedecrease in net cash provided by operating activities was primarily attributable to an increase in cash received from customers, offsetdriven by an increase in cash paid to suppliersemployees, and employees.including

Other revenues primarily include fees received for sales of third-party apps in the Atlassian Marketplace. Advisory services and training services are also included in other revenues. RevenueRevenues from the sale of third-party apps via Atlassian Marketplace is recognized on the date of product delivery given that all of our obligations have been met at that time and on a net basis as we function as the agent in the relationship. Revenues from advisory services is recognized over the time period that the customer has access to the service. Revenues from consulting and training is recognized over time as the services are performed.

Cost of revenues primarily consists of expenses related to third-party hosting fees, including expenses related to our Cloud infrastructure and AI inference incurred through our customer’s usage of our AI tools, compensation expenses for our employees, including stock-based compensation, hosting our cloud infrastructure, which includes third-party hosting fees and depreciation associated with computer equipment, payment processing fees, consulting and contractors costs associated with our customer support and infrastructure service teams, amortization of acquired intangible assets, such as the amortization of the cost associated with an acquired company’s developed technology, certainpayment ITprocessing programfees, expenses,consulting and contractors costs associated with our customer support and infrastructure service teams, and facilities and related overhead costs. To support our cloud-based infrastructure, we utilize third-party managed hosting facilities.

We expect cost of revenues to increase as we continue to invest in our cloud-based infrastructure and AI to support our Cloud customers.customers and their related AI usage.

Research and development expenses consist primarily of compensation expenses for our employees, including stock-based compensation, facilities and related overhead costs, third-party hosting fees, including expenses related to our Cloud infrastructure and AI inference, and consulting and contractor costs associated with our software development teams, and certain IT program expenses.teams. We continue to focus our research and development efforts on building new apps,apps and AI agents and products,agents, adding new features and services, integrating acquired technologies, increasing functionality, enhancing our cloudCloud infrastructure, and advancing our artificial intelligence capabilities.

Marketing and sales expenses consist primarily of compensation expenses for our employees, including stock-based compensation, marketing and sales program expenses, consulting and contractor costs, facilities and related overhead costs, and certain IT program expenses. Marketing programs consist of advertising, promotional events, such as user conferences, sponsorships, corporate communications, brand buildingbuilding, and marketing activities such as online lead generation. Sales programs consist of activities and teams focused on direct sales to customers, supporting our solution partners and resellers, tracking channel sales activity, supporting and servicing our customers by helping them optimize their experience and expand the use of our offerings across their organizationsorganizations, and helping product evaluators learn how they can use our tools most effectively.

While our significant accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies” to the notes to our consolidated financial statements, the following accounting policies involve a greater degree of judgment and complexity. Accordingly, these are the accounting policies that we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

We allocate the transaction price for each contract to each performance obligation based on the relative standalone selling price (“SSP”) for each performance obligation. We use judgment in determining the SSP for products and services. We typically determine an SSP range for our products and services, which is reassessed on a periodic basis or when facts and circumstances change. For all performance obligations we are able to determine SSP based on theWhen observable prices ofare available for products or services sold separately in comparable circumstances to similar customers.customers, we use those prices to determine SSP. In instances where performance obligations do not have observable standalone sales, we utilize available information that may include market conditions, pricing strategies, the life of the software, and other observable inputs to estimate the price we would charge if the products and services were sold separately.

In the multiple tax jurisdictions in which we operate, our tax returns are subject to routine audit by the Internal Revenue Service, Australian Taxation Office (“ATO”), and other taxation authorities. These audits at times may produce alternative views regarding certain tax positions taken in the year(s) of review. As a result, we record uncertain tax positions, which require recognition at the time when it is deemed more likely than not that the position in question will be upheld. Although management believes that the judgment and estimates involved are reasonable and that the necessary provisions have been recorded, changes in circumstances or unexpected events could adversely affect our financial position, results of operations, and cash flows.

Total revenues increased $856.7$1.4 million,billion, or 20%,26%, in fiscal year 20252026 compared to fiscal year 2024.2025. Growth in total revenues was primarily attributable to increased demand for our offerings from existing customers. Of total revenues recognized in fiscal year 2025,2026, over 90% was attributable to sales to customer accounts existing on or before June 30, 2024.2025.

Other revenues decreasedincreased $149.5$25.4 million, or 34%,9%, in fiscal year 20252026 compared to fiscal year 2024.2025. The decreaseincrease in other revenues was primarily attributable to aan decreaseincrease of $171.9$21.4 million in maintenancemarketplace revenue due to the end of support from our Server offerings in fiscal year 2024.revenue.

Cost of revenues increased $91.4$102.0 million, or 11%, in fiscal year 20252026 compared to fiscal year 2024.2025. The overall increase was primarily attributable to an increase of $32.5$87.0 million in hosting fees paid to third-party providers, and an increase of $25.7$38.4 million in amortization expense, partially offset by a decrease of $56.2 million in compensation expense for employees (which includes ana increasedecrease of $11.3$12.6 million in stock-based compensation), and ana increasedecrease of $18.2$19.6 million in softwarefees subscriptionpaid costs.for consulting and other professional services. In addition, we recorded restructuring charges of $53.2 million in fiscal year 2026, which were comprised of $46.6 million of severance and other termination benefits, and $6.6 million of impairment charges for lease and leasehold improvements.

Research and development expenses increased $485.2$599.9 million, or 22%, in fiscal year 20252026 compared to fiscal year 2024.2025. The overall increase was primarily attributable to an increase of $462.7$439.4 million in compensation expenses for employees (which includes an increase of $225.0$206.5 million in stock-based compensation). In addition, we recorded restructuring charges of $144.4 million in fiscal year 2026, which were comprised of $108.8 million of severance and other termination benefits, and $35.6 million of impairment charges for lease and leasehold improvements.

Marketing and sales expenses increased $257.0$406.6 million, or 29%,36%, for fiscal year 20252026 compared to fiscal year 2024.2025. The overall increase was primarily attributable to an increase of $163.0$225.3 million in compensation expenses for employees (which includes an increase of $30.9$38.1 million in stock-based compensation), and an increase of $74.9$78.5 million in advertising and marketing program expenses. In addition, we recorded restructuring charges of $51.5 million in the fiscal year 2026, which were comprised of $26.4 million of impairment charges for lease and leasehold improvements, and $25.1 million of severance and other termination benefits.

General and administrative expenses increased $36.4$107.7 million, or 6%,17%, in fiscal year 20252026 compared to fiscal year 2024.2025. The overall increase was primarily attributable to an increase of $40.6$59.2 million in compensation expenses for employees (which includes an increase of $13.5$10.9 million in stock-based compensation). In addition, we recorded restructuring charges of $36.1 million in fiscal year 2026, which were comprised of $24.8 million of severance and other termination benefits, and $11.3 million of impairment charges for lease and leasehold improvements.

Other expense, net increaseddecreased $19.4$41.7 million, or 63%(83)%, in fiscal year 20252026 compared to fiscal year 2024.2025. The overall increasedecrease in other expense was primarily attributable to an increase of $9.2$25.3 million in expensenet gains on public and private equity investments and a decrease of $20.4 million in expenses related to our share of loss from an equity method investment and an increase of $7.0 million in contributions to the Atlassian Foundation.investment.

Interest income increaseddecreased $15.7$42.6 million, or 16%38%, in fiscal year 20252026 compared to fiscal year 2024.2025. The increasedecrease was primarily attributable to ana increasedecrease in investment income as a result of increaseddecreased investmentinvested balances.cash balances and declining interest rates.

Interest expense decreasedincreased $3.5$18.9 million, or 10%,62%, in fiscal year 20252026 compared to fiscal year 2024.2025. The decreaseincrease was primarily attributable to athe decreaseamortization inof interest expenserate onswap our outstanding debt as a result of the issuance of the Notes (as defined below) and repayment of the Term Loan (as defined below) in the fourth quarter of fiscal year 2024.contracts.

The provision for income taxes decreased by $57.3$81.9 million in fiscal year 20252026 compared to fiscal year 2024.2025. This decrease was primarily drivenattributable byto athe reduction in income tax expense in Australia, which resulted from a decreasechange in valuation allowance expense,on partiallyAustralian offsetdeferred bytax anassets increaserelated into non-deductibledeferred stock-basedrevenue compensation expense.recognition.

Our future effective annual tax rate may be materially impacted by the expense or benefit from tax amounts associated with our foreign earnings that are taxed at rates different from the U.S. federal statutory rate, level of profit before tax, accounting for uncertain tax positions, business combinations, changes in our valuation allowances to the extent sufficient positive evidence becomes available, closure of statute of limitations or settlement of tax audits, and changes in tax laws.

We recognize the tax benefit of an uncertain tax position only if we conclude it is more likely than not that the position is sustainable upon examination by the taxing authority, based on the technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority. We believe we have provided adequate reserves for income tax uncertainties in all open tax years.

On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act (“OBBBA”), which includes, among other provisions, changes to the U.S. corporate income tax system such as allowing the immediate expensing of qualifying domestic research and development costs and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. CertainThe legislation has multiple effective dates, with certain provisions areeffective effectivein fiscal 2026 and others in the subsequent years. The changes had an immaterial impact on our provision for usincome beginningtaxes infor our fiscal year 2026. We arewill currentlycontinue evaluatingto themonitor futureany impactdevelopments ofand theseguidance taxrelated lawto changes on our consolidated financial statements.OBBBA.

As of June 30, 2025,2026, we had cash and cash equivalents totaling $2.5$1.2 billion, short-term investments totaling $424.3 millionbillion and accounts receivables totaling $778.3$1.3 million.billion. Since our inception, we have primarily financed our operations through cash flows generated by operations and corporate debt.

Net cash provided by operating activities increaseddecreased by $12.2$107.3 million for fiscal year 2025,2026, compared to fiscal year 2024.2025. The net increasedecrease was primarily attributable to an increase in cash receivedpaid fromto customers,employees, including payments made under restructuring plans, vendors, and a decrease in interest received, partially offset by an increase in cash paidreceived tofrom suppliers and employees.customers.

Net cash used in investing activities decreasedincreased by $621.4$464.6 million for fiscal year 2025,2026, compared to fiscal year 2024.2025. The net decreaseincrease was primarily attributable to aan decreaseincrease in cash consideration paid for acquisitions, net of cash acquired, of approximately $833.5$1.2 million,billion, partially offset by an increase in net outflowsinflows of $170.0$689.8 million related to marketable securities activity, and an increase in net outflowsinflows of $30.4$49.4 million related to strategic investment activity. Net cash used in financing activities increased by $1.0 billion for fiscal year 2026, compared to fiscal year 2025. The net cash used in financing activities was primarily attributable to an increase in repurchases of Class A Common Stock of $1.0 billion.

In JanuarySeptember 2023,2024, the Board of Directors authorized a program to repurchase up to $1.0$1.5 billion of our outstanding Class A Common Stock (the “20232024 Repurchase Program”). The 2024 Share Repurchase Program commenced in April 2025 following completion of the previous share repurchase program. The 2024 Repurchase Program was completed in March 2026. In SeptemberOctober 2024,2025, the Board of Directors authorized a new program under which we may repurchase up to an additional $1.5$2.5 billion of our outstanding Class A Common Stock (the “20242025 Repurchase Program” and, together with the 20232024 Repurchase Program, the “Repurchase Programs”). The 20242025 Repurchase Program commenced in AprilMarch 20252026 following the completion of the 20232024 Repurchase Program. The 2024 Share Repurchase Program does not have a fixed expiration date, may be suspended or discontinued at any time, and does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.

During fiscal year 2025,2026, we repurchased approximately 4.019.1 million shares of our Class A Common Stock for approximately $780.7$1.8 millionbillion at an average price per share of $196.02$94.31 through the Repurchase Programs. The 1% excise tax instituted by the Inflation Reduction Act is excluded in the total repurchase cost and average price paid. All repurchases were made in open market transactions. As of June 30, 2025,2026, $1.2$1.9 billion of our Class A Common Stock remained available for repurchase under the 20242025 Repurchase Program. Refer to Note 14,16, “Stockholders'Stockholders’ Equity,” to our consolidated financial statements for additional information.

We believe that our existing cash and cash equivalents, together with cash generated from operations, and borrowing capacity from the 2024 Credit Facility will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our other future cash requirements will depend on many factors including our growth rate, the timing and extent of spend on research and development efforts, investment in AI, employee headcount, marketing and sales activities, investment in enterprise sales, payments to tax authorities, acquisitions of additional businesses and technologies, the introduction of new software and services offerings, enhancements to our existing software and services offerings and the continued market acceptance of our offerings.

In addition to the measures presented in our consolidated financial statements, we regularly review other measures that are not presented in accordance with GAAP, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts, and make strategic decisions. The key measures we consider are non-GAAP gross profit and non-GAAP gross margin, non-GAAP operating income and non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share, and free cash flow (collectively, the “Non-GAAP Financial Measures”). These Non-GAAP Financial

Large-scale international events in recent years, such as the geopolitical instability and war in regions including Ukraine and the Middle East and economic uncertainty regarding the imposition of and changes in trade policies (including trade wars, tariffs or other trade restrictions or the threat of such actions), have negatively impacted or may in the future negatively impact the global economy, including by disrupting global supply chains and creating volatility and disruption of financial markets. These impacts, as well as economic uncertainty from market, interest rate, and inflation volatility, have and may continue to cause us to experience decreased demand for our products and services, increases in our operating costs (including our labor costs), reduced liquidity, and limits on our ability to access credit or otherwise raise capital.

Additionally, AI technology and services is a highly competitive and rapidly evolving market. Our competitors or other third parties may incorporate AI into their products and offerings more quickly or more successfully than we can. Our ability to compete in this space will also depend in part on our ability to attract and retain employees with AI expertise. We also rely on certain third-party AI models, products, and integration providers. Such providers may be prohibited from offering certain models or technologies in jurisdictions in which we operate, may terminate their relationships with us, or otherwise cease to make certain models or technologies available to us, or may make certain models or technologies more expensive for us to use. Additionally, it is possible that an increased prevalence of AI may impact the work practices of software teams, IT operations and support teams, leadership, and business teams, and therefore our market opportunity. Any of the foregoing could adversely affect our business, reputation, or financial results.

In September 2025, we announced plans to end-of-life our Data Center deployment offering via our Atlassian Ascend initiative. BeginningAs inof March 2026, we will no longer sell term licenses to new customers, and we will stop selling term licenses and expansions to existing customers in March 2028. Subject to limited exceptions, we plan to end maintenance and support for these on-premises versions of our products in March 2029. If we are unable to offer the systems, security capabilities, or controls our Data Center customers require to migrate to our Cloud offerings, or if our customers otherwise choose not to migrate, our revenue growth and profitability will be negatively impacted. The Atlassian Ascend initiative may impact purchasing patterns among our Data Center customers in ways that create fluctuations in our quarterly financial results and impactsimpact the guidance we issue, including decisions regarding sizes of Data Center product renewals, expansions, timing of Cloud upgrades or decisions not to renew or upgrade. In our migration from Server, we offered discounts to certain of our enterprise-level Server customers as an incentive, which impacted our near-term revenue growth, and we will offer similar incentives in connection with Atlassian Ascend. Additionally, we may also be subject to additional competitive and pricing pressures for our Cloud offerings compared to our Data Center offerings, which could harm our business. Revenues recognized from our Cloud offerings are also typically lower in the initial year compared to our Data Center offerings, which may impact our near-term revenue growth rates and margins.

The markets for our offerings are subject to rapid technological change, evolving industry standards, and changing regulations, as well as changing customer needs, requirements, and preferences. These are all uncertain and we cannot predict the consequences, effects, or introduction of new, disruptive, emerging technologies or the manner and pace at which our markets develop over time, and our ability to compete in these markets depends on predicting and adapting to these changing circumstances. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis, and anticipating these factors requires that we allocate significant resources without any guarantee that any such investments and efforts will result in initial or enhanced adoption of our offerings in the marketplace. For example, with the development of next-generation solutions, including AI solutions, we have committed and expect to continue to commit significant resources to developing new AI apps and agents and other enhancements incorporating AI, and there is no guarantee that our investments and efforts will result in wider adoption of our offerings in the marketplace. If new technologies emerge that can deliver competitive products and services at lower prices, more efficiently, more reliably, more conveniently or more securely or if new products are introduced into the market that could render any of our existing offerings obsolete, such technologies and products could adversely impact our ability to compete effectively and may lead to customers reducing or terminating their usage of our offerings.

We have experienced and expect to continue to experience rapid growth, both in terms of employee headcount and number of customers, which has placed, and may continue to place, significant demands on our management, operational, and financial resources. We operate globally and sell our offerings to customers in over 200 countries and territories. Further, we have employees in Australia, Canada, France, Germany, India, Japan, the Netherlands, New Zealand, the Philippines, Poland, Singapore, South Korea, Turkey, the U.S., and the United Kingdom (the “UK”), and many of our employees have been with us for relatively shorter tenures. We plan to continue to invest in and grow our team and to expand our operations into other countries in the future, which will place additional demands on our resources and operations. As our business expands across numerous jurisdictions, we may experience difficulties, including in hiring, training, and managing a diffuse and growing employee base.

In recent years, we have focused on strategically growing our sales force to expandsell directly to large and deepen our relationships with our largest existing customers, particularly in the enterprise segment.customers. As our sales force continues to develop, we may encounter challenges in identifying, recruiting, training, and retaining a qualified sales force, and we expect this growth to require significant time, expense, and attention. Expanding our sales infrastructure also has impacts on our cost structure and results of operations, and we may have to reduce other expenses, such as our research and development expenses, in order to accommodate a corresponding increase in marketing and sales expenses while maintaining positive free cash flow.

As our enterprise sales teamsmotion grow,grows, we face increased costs, longer sales cycles, greater competition, and less predictability in completing our sales. Since the sales cycles for our enterprise offerings are multi-phased and complex, it can be unpredictable when a given sales cycle will close. For enterprise customers, the evaluation process may be longer and more involved, and require us to invest more in educating our customers about our apps, agents, Collections, services, and solutions, particularly because the decision to use our offerings is often an enterprise-wide decision. We may be required to submit more robust proposals, participate in extended proof-of-concept evaluation cycles, and engage in more extensive contract negotiations. In addition, our enterprise customers often demand more complex configurations and additional integration services and product features. Adverse macroeconomic conditions have in the past, and may in the future, cause delays in our enterprise customers’ purchasing decisions. Due to these factors, we often must devote greater sales support to certain enterprise customers, which increases our costs and time required, without assurance that potential customers will ultimately purchase our solutions. We also may be required to devote more resources to implementation, which increases our costs, without assurance that customers receiving these services will renew at the same level or at all. Additionally, our revenue from enterprise customers may be affected by seasonality in sales cycles, extended collection cycles, potential deferral of revenue, and alternative licensing arrangements. We expect to see these impacts increase as we grow our enterprise sales motion. An increase in enterprise sales contracts could also increase our number of or mix of multi-year sales contracts, which can also have an impact on our revenue cycles.

Our business model for low-touch customers is based in part on attracting a high volume of customers through free trials, limited free versions, and affordable starter licenses. For example, we have traditionally offered entry-level or free pricing for certain offerings to small teams at a price that typically does not require capital budget approval and that is orders-of-magnitude less than the price of traditional enterprise software. This approach is intended to drive trial, adoption, and initial expansion organically within organizations, through low-touch customer service, high product quality, and transparent pricing arrangements. However, if users do not perceive sufficient value in upgrading from free or entry-level offerings or if users do not become, or influence others to become, paying customers, we may not realize the intended benefits of this strategy. Any decrease in our customers’ satisfaction with our offerings, either as a result of our own actions or due to factors outside of our control, could also harm word-of-mouth referrals and our brand. Historically, a majority of users do not convert from free trials or limited free versions to paid apps or products, and our strategy also relies on these users influencing broader adoption within their organizations. Additionally, we have historically increased and will continue to increase prices from time to time, which may also hurt the efficacy of this strategy.

We may also be subject to privacy risks in connection with the third-party data we collect and process through APIs and, in some instances, customers may find our administrative controls for such data use inadequate. As with any data processing, there are privacy considerations for the data we collect and process from third-party sources, and customers may seek more controls in our products around third-party integrations. We believe a significant component of our value proposition to customers is the ability to optimize and configure our apps, agents, and products with these third-party applications through our respective APIs. If we are not permitted or able to integrate with these and other third-party applications in the future, demand for our offerings could decline and our business and results of operations could be harmed.

We have completed a number of acquisitions and strategic investments and continue to evaluate and consider additional strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products, and other assets in the future. For example, we acquired Loom, Inc. in fiscal year 2024 and both The Browser Company of New York Inc. and A Software Company in the second quarter of fiscal year 2026. We also from time to time enter into strategic relationships with other businesses to expand our offerings, which could involve preferred or exclusive licenses, additional channels of distribution, discount pricing, or investments in other companies.

We believe that a critical contributor to our success has been our corporate values, which we believe foster innovation, teamwork, and an emphasis on customer-focused results. In addition, we believe that our values create an environment that drives and perpetuates our product strategy and low-cost distribution approach. As we undergo growth in our customers and employee base and maintain a remote-first “Team Anywhere” work environment, we may find it difficult to maintain our corporate values. Any failure to preserve our values could harm our future success, including our ability to retain and recruit personnel, innovate and operate effectively, and execute on our business strategy.

Use of our products involves the storage, transmission, and processing of our customers’ proprietary data, including potentially personal or identifying information. Unauthorized or inappropriate access to, or security breaches of, our products could result in unauthorized or inappropriate access to data and information, and the loss, compromise or corruption of such data and information. In the event of a security breach, we could suffer loss of business, severe reputational damage, adversely affecting customer or investor confidence, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations, significant costs for remediation, and other liabilities. In addition, we rely on third-party service providers to host or otherwise process some of such data, and any failure by a third party, or any other entity in our collective supply chain, to prevent or mitigate data security breaches or improper access to, or use, acquisition, disclosure, alteration, or destruction of, such data could have similar adverse consequences for us. We have incurred and expect to incur significant expenses to prevent security breaches, including costs related to deploying additional personnel and protection technologies, training employees, and engaging third-party solution providers and consultants. Our errors and omissions insurance, covering certain security and privacy damages and claim expenses, may not be sufficient to compensate for all liabilities we may incur.

As we further transition to selling our apps, agents, and products via our Cloud offerings, continue to collect more personal and sensitive information, and operate in more countries, our risks continue to increase and evolve. For instance, we rely on third-party partners to develop apps on the Atlassian Marketplace that connect with and enhance our Cloud offerings for our customers. These apps may not meet the same quality standards that we apply to our own development efforts and have in the past, and may in the future, contain bugs, vulnerabilities, or defects that pose data security risks to our customers or lead to the unauthorized access of user data. Our ability to mandate security standards and ensure compliance by these third parties may be limited. Additionally, our products may be subject to vulnerabilities in the third-party software on which we rely. We have in the past identified a vulnerability in an open source software application we used and similar incidents may occur in the future and could have a material adverse effect on our business. We are likely to face increased risks that real or perceived vulnerabilities of our systems could seriously harm our business and our financial performance, by tarnishing our reputation and brand and limiting the adoption of our products.

Data security breach incidents also expose us to liability under various laws and regulations across jurisdictions and increase the risk of litigation and governmental or regulatory investigation. Due to concerns about data security and integrity, a growing number of legislative and regulatory bodies have adopted breach notification and other requirements in the event that information subject to such laws is disclosed without authorization, accessed by unauthorized persons, lost or deleted, or otherwise impacted by a security breach. There may be additional regulations regarding the security of such data in the future. Additionally, we may need to notify customers, governmental authorities, and/or other affected individuals with respect to such incidents. For example, laws in the EU and UK and all 50 U.S. states may require businesses to provide notice to customers, governmental authorities, and/or other individuals whose personal information has been impacted by a data security breach. Complying with such numerous and complex regulations in the event of a data security breach would be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and additional liability. We are also contractually required to notify customers or other counterparties of certain security incidents, including certain data security breaches. Regardless of our contractual protections, any actual or perceived data security breach, or breach of our contractual obligations, could harm our reputation and brand, expose us to potential liability, or require us to expend significant resources on data security and in responding to any such actual or perceived breach.

If our apps, agents, products or websites are unavailable, if our users are unable to access our apps, agents, products or websites within a reasonable amount of time, or at all, or if our information technology systems for our business operations experience disruptions, delays or deficiencies, our business could be harmed. We may be subject to regulations that require us to report extended services outages to governmental authorities and customers. Moreover, we provide service level commitments under certain of our paid customer cloud contracts, pursuant to which we guarantee specified minimum availability. If we fail to meet these contractual commitments, we could be obligated to provide credits for future service, or face contract termination with refunds of prepaid amounts related to unused subscriptions, which could harm our business, results of operations, and financial condition. From time to time, we have granted, and in the future will continue to grant, credits to paid customers pursuant to, and sometimes in addition to, the terms of these agreements. For example, we have in the past incurred costs associated with offering service level credits and other concessions to certain customers who experienced outages across their use of our offerings. It is possible that large-scale outages in the future could materially and adversely impact our results of operations or financial condition. Further, disruptions, data loss and corruption, outages, and other performance problems in our cloud infrastructure may cause customers to delay or halt their transition to our Cloud offerings, to the detriment of our increased focus on our Cloud offerings, which could harm our business, results of operations and financial condition.

Errors, failures, vulnerabilities, or bugs may occur in our offerings, especially when updates are deployed or new apps, agents, or products are rolled out. Our solutions are often used in connection with large-scale computing environments with different operating systems, system management software, equipment, and networking configurations, which may cause errors, failures of apps, agents, or products, or other negative consequences in the computing environment into which they are deployed. In addition, deployment of our products into complicated, large-scale computing environments may expose errors, failures, vulnerabilities, or bugs in our apps, agents, or products. Any such errors, failures, vulnerabilities, or bugs have in the past not been, and in the future may not be, found until after they are deployed to our customers. Real or perceived errors, failures, vulnerabilities, or bugs in our apps, agents or products have and could result in negative publicity, impacts to the confidentiality, integrity or availability of customer data, loss of or unauthorized access to customer data, loss of or delay in market acceptance of our offerings, loss of competitive position, or claims by customers for losses sustained by them, all of which could harm our business and results of operations.

As our Cloud offerings continue to become more central to our distribution model, particularly in light of Projectour Ascend,Data Center end-of-life plans, we may face additional privacy risks, including risks stemming from regulation of cloud computing. For example, the transition to Cloud offerings may be impacted by emerging EU cloud sovereignty requirements that could disadvantage our Cloud offerings in public sector organizations and regulated industries. We may also be subject to increased data security risks as customers increasingly transition from self-managed environments to our Cloud platform.

We are also subject to evolving privacy laws on cookies, tracking technologies and e-marketing. For example, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 establishes certain requirements for commercial email messages and specifies penalties for the transmission of commercial email messages that are intended to deceive the recipient as to source or content. In addition, certain states and foreign jurisdictions, such as Australia, Canada, and the European Union (“EU”), have enacted laws that regulate sending email, and some of these laws are more restrictive than U.S. laws. The placement of certain cookies or similar tracking technologies on an individual’s device and subsequent use are subject to consent requirements in certain jurisdictions, including several U.S. states, the European Union and United Kingdom. In particular, recent European court and regulator decisions are driving increased attention to compliance with these requirements, and companiesthere in our industry havehas been named inactive civil litigation alleging improper data collection via these technologies.technologies in our industry.

We monitor the regulatory, judicial, and legislative environment and have invested in addressing these developments. These new laws may require us to make additional changes to our practices and services to enable us or our customers to meet the new legal requirements, and may also increase our potential liability exposure through new or higher potential penalties for noncompliance. In addition, changes to penalties, fines, and action related to data breaches could impact our potential liability exposure. Record-breaking enforcement actions globally have shown that regulators wield their right to impose substantial fines for violations of technology regulations, and these enforcement actions could result in guidance from regulators that would require changes to our current compliance strategy.

The costs of compliance with, and other burdens imposed by, privacy laws, regulations and standards may limit the use and adoption of our services, reduce overall demand for our services, make it more difficult to meet expectations from our commitments to customers and our customers’ users, lead to significant fines, penalties or liabilities for noncompliance, impact our reputation, or slow the pace at which we close sales transactions, in particular where customers request specific warranties and unlimited indemnity for noncompliance with privacy laws, any of which could harm our business. We have adopted and continue to adopt data residency in certain territories. These services may enhance our ability to attract and retain customers operating in the relevant jurisdictions, but may also increase the cost and complexity of supporting those customers, the scope of our residency offering may not align with customer needs, and our customers may request similar offerings in other territories. Our data residency controls may at times fail, exposing us to fines, penalties, civil actions, or other harm.

Further, any failure or perceived failure by us to comply with our posted privacy policies, our privacy-related obligations to users or other third parties, or any other legal obligations or regulatory requirements relating to privacy, data protection or information security may result in governmental investigations or enforcement actions, litigation, claims or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our users to lose trust in us, and otherwise materially and adversely affect our reputation and business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations and policies that are applicable to the businesses of our users may limit the adoption and use of, and reduce the overall demand for, our platform. Additionally, if third parties we work with violate applicable laws, regulations or agreements, such violations may put our users’ data at risk, could result in governmental investigations or enforcement actions, fines, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our users to lose trust in us and otherwise materially and adversely affect our reputation and business. Further, public scrutiny of, or complaints about, our data handling or data protection practices, may also lead to increased regulatory scrutiny or cause our customers to seek alternative products or services. Complaints about the practices of technology companies in general, even if unrelated to our business or operations, may also lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities, which may increase our costs and risks.

We have been and may be sued by third parties for alleged infringement or misappropriation of their intellectual property rights.

There is considerable patent and other intellectual property development activity in our industry. Our future success depends in part on not infringing upon or misappropriating the intellectual property rights of others. We have received, and may receive in the future, communications and lawsuits from third parties, including practicing entities and non-practicing entities, claiming that we are infringing upon or misappropriating their intellectual property rights, including patents, copyrights, trade secrets, and trademarks, and we may be found to be infringing upon or misappropriating such rights. We may be unaware of the intellectual property rights of others that may cover some or all of our technology, or technology that we obtain from third parties. Furthermore, the legal issues, including copyright and related rights, surrounding AI technologies and the data used for training such technologies or otherwise used as inputs into such technologies has not been fully addressed by courts or national or local laws or regulations, and the use or adoption of AI technologies into our apps and services may result in exposure to claims of copyright infringement, other intellectual property infringement or misappropriation, or other related claims. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty or license payments, prevent us from offering our products or using certain technologies, require us to implement expensive workarounds, refund fees to customers or require that we comply with other unfavorable terms. In the case of infringement, or misappropriation caused by technology that we obtain from third parties, any indemnification or other contractual protections we obtain from such third parties, if any, may be insufficient to cover the liabilities we incur as a result of such infringement or misappropriation. We may also be obligated to indemnify our customers or business partners in connection with any such claims or litigation and to obtain licenses, modify our products or refund fees, which could further exhaust our resources. Even if we were to prevail in the event of claims or litigation against us, any claim or litigation regarding our intellectual property could be costly and time-consuming and divert the attention of our management and other employees from our business operations and disrupt our business.

Our agreements with customers and other third parties may include indemnification or other provisions under which we agree to indemnify or otherwise be liable to them for losses suffered or incurred as a result of claims of intellectual property infringement, damages caused by us to property or persons, or other liabilities relating to or arising from our products or other acts or omissions. The term of these contractual provisions often survives termination or expiration of the applicable agreement. Large indemnity payments or damage claims from contractual breach could harm our business, results of operations and financial condition. Any dispute with a customer with respect to such obligations could have adverse effects on our relationship with that customer and other current and prospective customers, reduce demand for our products, damage our reputation and harm our business, results of operations and financial condition.

Our success and ability to compete depend in part upon our intellectual property. We primarily rely on a combination of patent, copyright, trade secret and trademark laws, trade secret protection and confidentiality or license agreements with our employees, customers, business partners and others to protect our intellectual property rights. However, the steps we take to protect our intellectual property rights may be inadequate. We make business decisions about when to seek patent protection for a particular technology and when to rely upon trade secret protection, and the approach we select may ultimately prove to be inadequate. Even in cases where we seek patent protection, there is no assurance that the resulting patents will effectively protect every significant feature of our products. In addition, we believe that the protection of our trademark rights is an important factor in product recognition, protecting our brand and maintaining goodwill and if we do not adequately protect our rights in our trademarks from infringement, any goodwill that we have developed in those trademarks could be lost or impaired, which could harm our brand and our business. In any event, in order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights.

We generally recognize subscription revenue from customers ratably over the terms of their contracts. As a result, a significant portion of the revenue we report in each quarter is derived from the recognition of deferred revenue relating to subscription plans entered into during previous quarters. Consequently, a decline in new or renewed licenses and subscriptions or any challenges relating to accounts receivable collections or collection periods in any single quarter may only have a small impact on our revenue results for that quarter. However, such a decline will negatively affect our revenue in future quarters. Accordingly, the effect of significant downturns in sales and market acceptance of our offerings, and potential changes in our pricing policies or rate of expansion or retention, may not be fully reflected in our results of operations until future periods. For example, the impact of economic uncertainties may cause customers to request concessions, including better pricing, which may not be reflected immediately in our results of operations. In addition, customers have in the past and may continue in the future slow their rate of expansion or edition upgrades or reduce their number of licenses. Changes in the terms of our customer contracts, product lifecycles and the adoption and application of accounting principles relating to revenue recognition also impact our results.

We may require additional capital to respond to business opportunities, challenges, acquisitions, a decline in the level of revenue for our offerings, or other unforeseen circumstances. We may not be able to timely secure debt or equity financing on favorable terms, or at all. This inability to secure additional debt or equity financing could be exacerbated in times of economic uncertainty and tighter credit. For example, during periods of higher interest rates, as has occurred in recent years in the U.S. and other regions, debt financing may become more expensive. The 2024 Credit Facility and the indenture governing our Notes (each defined below) contain certain restrictive covenants and any future debt financing obtained by us could involve restrictive covenants relating to financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we raise additional funds through issuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer significant dilution in their percentage ownership of Atlassian. Any new equity or debt securities we issue could also have rights, preferences, and privileges senior to those of holders of our Class A Common Stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited.

In May 2024, we issued $500 million aggregate principal amount of 5.250% senior notes due 2029 (the “2029 Notes”) and $500 million aggregate principal amount of 5.500% senior notes due 2034 (together with the 2029 Notes, the “Notes”). In August 2024, we amended and restated our prior credit facility to eliminate the senior unsecured delayed-draw term loan facility and provide for a $750 million senior unsecured revolving credit facility (the “2024 Credit Facility”). As of DecemberMarch 31, 2025,2026, we had no outstanding revolving loans under the Credit Facility.

Our Credit Facility requires compliance with various financial and non-financial covenants, including affirmative covenants relating to the provision of periodic financial statements, compliance certificates and other notices, maintenance of properties and insurance, payment of taxes and compliance with laws and negative covenants, including, among others, restrictions on the incurrence of certain indebtedness, granting of liens and mergers, dissolutions, consolidations and dispositions. The Credit Facility also provides for a number of events of default, including, among others, failure to make a payment, bankruptcy, breach of a covenant or representation and warranty, default under material indebtedness (other than the Credit Facility), change of control and judgment defaults. The indentures governing our Senior Notes contain certain negative covenants, including a limitation on liens and a limitation on sale/leaseback covenants.

We continue to have the ability to incur additional debt, subject to the limitations in our Credit Facility and the indentures governing our Senior Notes. Our level of debt could have important consequences to us, including the following:

Privately held companies in which we invest have undertaken in the past and others may in the future undertake, an initial public offering. We may also decide to invest in companies in connection with or as part of such company’s initial public offering or other transactions directly or indirectly resulting in it being publicly traded. Therefore, our investment strategy and portfolio have also expanded in the past to include public companies. In certain cases, our ability to sell these investments may be constrained by contractual obligations to hold the securities for a period of time after a public offering, including market standoff agreements and lock-up agreements.

We are subject to tax in the U.S., Australia, and various other jurisdictions. Significant judgment is often required in the determination of our worldwide provision for (benefit from) income taxes. Our effective tax rate could be impacted by changes in our earnings and losses in countries with differing statutory tax rates, changes in transfer pricing, changes in operations, changes in nondeductible expenses, changes in excess tax benefits of stock-based compensation expense, changes in the valuation of deferred tax assets and liabilities and our ability to utilize them, the applicability of withholding taxes, effects from acquisitions, and changes in accounting principles and tax laws. Any changes or uncertainty in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions could also materially impact our income tax liabilities. Our intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions. The relevant revenue and taxing authorities may disagree with positions we have taken generally, or our determinations as to the value of assets sold or acquired, or income and expenses attributable to specific jurisdictions. For example, during fiscal year 2024, we entered into a unilateral advanced pricing arrangement with the Australian Taxation Office (“ATO”) in relation to our transfer pricing arrangements between Australia and the U.S. for the tax years ended June 30, 2019 to June 30, 2025 that resulted in us making a tax payment of $117.4 million. If that arrangement is not renewed with similar or better terms, it may result in additional tax liabilities in the future. We will continue to pursue advanced pricing arrangements in Australia and other jurisdictions to proactively manage and mitigate the risk of transfer pricing disputes with tax authorities. In addition, in the ordinary course of our business we are subject to tax audits from various taxing authorities. Although we believe our tax positions are appropriate, the final determination of any future tax audits could be materially different from our income tax provisions, accruals and reserves. If such a disagreement were to occur, we could be required to pay additional taxes, interest, and penalties, which could result in one-time tax charges, a higher effective tax rate, reduced cash flows and lower overall profitability of our operations.

Tax laws in the U.S. and in foreign jurisdictions are subject to change. For example, in July 2025, the U.S. government enacted The One Big Beautiful Bill Act (“OBBBA”) which includes a broad range of tax reform provisions that may affect our financial results. The OBBBA includes, among other provisions, the allowance of immediate expensing of qualifying domestic research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act, which was signed into law in 2017. The Inflation Reduction Act (“IRA”), signed into law in 2022, includes various corporate tax provisions including an alternative corporate minimum tax on applicable corporations. The IRA tax provisions may become applicable to us in future years, which could result in additional taxes, a higher effective tax rate, reduced cash flows and lower overall profitability of our operations.

In March 2018, the EC proposed a series of measures aimed at ensuring a fair and efficient taxation of digital businesses operating within the EU. As collaborative efforts by the OECD and EC continue, some countries have unilaterally moved to introduce their own digital service tax or equalization levy to capture tax revenue on digital services more immediately. Notably, France, Italy, Austria, Spain, the UK, and Turkey have enacted this tax, generally 2% on specific in-scope sales above a revenue threshold. The EU and the UK have established a mandate that focuses on the transparency of cross-border arrangements concerning at least one EU member state through mandatory disclosure and exchange of cross-border arrangements rules. The mandate is further extended to include certain domestic arrangements in Poland. These regulations (known as MDR in the UK and Poland and DAC 6 in the other EU countries) require taxpayers to disclose certain transactions to the tax authorities resulting in an additional layer of compliance and requiring careful consideration of the tax benefits obtained when entering into transactions that need to be disclosed.

In September 2025, we announced plans to end-of-life our Data Center deployment offering. BeginningAs inof March 2026, we will no longer sell term licenses to new customers, and we will stop selling term licenses and expansions to existing customers in March 2028. Subject to limited exceptions, we also plan to end maintenance and support for on-premises versions of our products in March 2029. In order to support customers who face unique requirements or challenges, we will offer an approximately three-year extended maintenance period for certain customers.

During the first quarter of fiscal year 2026, we initiated a rebalancingrestructuring ofplan resources,(“July resulting2025 in the elimination of certain roles. These actions were part of our initiativesPlan”) to reduce additional capacity no longer necessary due to the increased ability, accessibility, performance, stability, and supportability of our products. AsThe aJuly result,2025 wePlan recordedis severancesubstantially andcompleted other termination benefitsas of $27.9 million and stock-based compensation of $1.4 million for the affected employees for the six months ended DecemberMarch 31, 2025.2026.

In addition, during the first quarter of fiscal 2026, we exited certain floors of a leased property,properties, which we plan to sublease, in order to optimize our real estate footprint. As a result, we recorded total impairment charges for the related operating lease right-of-use assets and leasehold improvements of $26.3$80.0 million for the sixnine months ended DecemberMarch 31, 2025.2026.

A summary of restructuring charges for the sixnine months ended DecemberMarch 31, 20252026 by major activity type is as follows (in thousands):

The execution of these actions, including cash payment of the severance and other termination benefits related liabilities, was substantially completed as of December 31, 2025. Refer to Note 14, “Restructuring,” in the notes of our condensed consolidated financial statements for additional information.

We define the number of total customers at the end of any particular period as the number of organizations with unique domains with an active subscription for two or more seats. We define the number of customers with Cloud ARR greater than $10,000 using the same definition as total customers, with the distinction of having an active Cloud subscription and greater than $10,000 in Cloud ARR. We define Cloud ARR as the annualized recurring revenue run-rate of Cloud subscription agreements at a point in time. We calculate Cloud ARR by taking the Cloud monthly recurring revenue (“Cloud MRR”) run-rate and multiplying it by 12. Cloud MRR for each month is calculated by aggregating monthly recurring revenue from committed contractual amounts at a point in time. Cloud ARR and Cloud MRR should be viewed independently of revenue and do not represent our revenue under GAAP, as they are operational metrics that can be affected by contract start and end dates and renewal rates. While a single customer may have distinct departments, operating segments, or subsidiaries with multiple active licenses or subscriptions of our apps, if the app deployments share a unique domain name, we only include the customer once for purposes of calculating a customer.

As of DecemberMarch 31, 2025,2026, we had more than 350,000 customers. If we include single-user accounts and organizations that have only adopted our free or starter offerings, the active use of our offerings extends well beyond our total customer base. Through the extensive use of our software, we are able to reach a vast number of users, gather insights to refine our offerings, and generate growing revenue by expanding within our total customer base. Customers with greater than $10,000 in Cloud ARR represent the majority of our Cloud revenue.

Free cash flow decreased by $133.8 million during the six months ended December 31, 2025 as compared to the six months ended December 31, 2025. The decrease in free cash flow was primarily attributable to a decrease in net cash provided by operating activities. The decrease in net cash provided by operating activities was primarily attributable to an increase in cash paid to employees, including payments made under restructuring plans, vendors, and cash paid for income taxes, partially offset by an increase in cash received from customers.

In September 2025, we announced plans to end-of-life our Data Center deployment offering. BeginningAs inof March 2026, we will no longer sell term licenses to new customers, and we will stop selling term licenses and expansions to existing customers in March 2028. Subject to limited exceptions, we plan to end maintenance and support for these on-premises versions of our products in March 2029.

We expect cost of revenues to increase as we continue to invest in our cloud-based infrastructure and AI to support our Cloud customers.customers and their increased usage of Rovo.

Provision for (benefit from) income taxes consists primarily of income taxes related to federal, state, and foreign jurisdictions where we conduct business.

The allocation of the purchase price in a business combination requires management to make significant estimates in determining the fair value of acquired assets and assumed liabilities, especially with respect to intangible assets. The excess of the purchase price in a business combination over the fair value of these tangible and intangible assets acquired and liabilities assumed is recorded as goodwill. Critical assumptions used to estimate the fair value of intangible assets include projected revenue, revenue growth, and discount rate, and technology migration curves.rate. These assumptions are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. We evaluate these estimates and assumptions as new information is obtained and may record adjustments to the fair value of the tangible and intangible assets acquired and liabilities assumed, but not later than one year from the acquisition date.

There have been no other significant changes to our critical accounting policies and estimates during the three and sixnine months ended DecemberMarch 31, 2025,2026, as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Results of Operations included in our Annual Report on Form 10-K for fiscal year 2025.

Three Months Ended DecemberMarch 31, 20252026 and 20242025

Total revenues increased $299.9$430.3 million, or 23%,32%, in the three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 2024.2025. Growth in total revenues was primarily attributable to increased demand for our offerings from existing customers. Of total revenues recognized in the three months ended DecemberMarch 31, 2025,2026, over 90% was attributable to sales to customer accounts existing on or before SeptemberDecember 30,31, 2025.

Subscription revenues increased $294.4$426.0 million, or 24%,33%, in the three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 2024.2025. The increase in subscription revenues was primarily attributable to paid seat expansion from our existing customers and price increases.

Other revenues increased $5.4$4.2 million, or 7%,5%, in the three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 2024.2025. The increase in other revenues was primarily attributable to an increase of $4.9$3.1 million in marketplace revenue.

Cost of revenues increased $14.6$43.1 million, or 7%,20%, in the three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 2024.2025. The overall increase was primarily attributable to an increase of $23.0$28.1 million in hosting fees and an increase of $9.6$14.6 million in amortization expense, partially offset by a decrease of $13.6$15.9 million in compensation expense for employees (which includes a decrease of $2.9 million in stock-based compensation)employees, and a decrease of $4.0$4.3 million in fees paid for consulting and other professional fees.services. In addition, we recorded restructuring charges of $21.0 million in the three months ended March 31, 2026, which were comprised of $16.7 million of severance and other termination benefits, and $4.3 million of impairment charges for lease and leasehold improvements.

Research and development expenses increased $146.3$241.6 million, or 22%,35%, in the three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 2024.2025. The overall increase was primarily attributable to an increase of $141.8$101.9 million in compensation expenses for employees (which includes an increase of $64.6$50.2 million in stock-based compensation). In addition, we recorded restructuring charges of $128.5 million in the three months ended March 31, 2026, which were comprised of $105.0 million of severance and other termination benefits, and $23.5 million of impairment charges for lease and leasehold improvements.

Marketing and sales expenses increased $104.5$143.2 million, or 38%,48%, for the three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 2024.2025. The overall increase was primarily attributable to an increase of $64.0$68.5 million in compensation expenses for employees (which includes an increase of $12.2$10.1 million in stock-based compensation), and an increase of $29.7$12.7 million in advertising and marketing program expenses. In addition, we recorded restructuring charges of $42.6 million in the three months ended March 31, 2026, which were comprised of $24.4 million of severance and other termination benefits, and $18.2 million of impairment charges for lease and leasehold improvements.

General and administrative expenses increased $24.7$46.2 million, or 15%,27%, in the three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 2024.2025. The overall increase was primarily attributable to an increase of $16.7$18.3 million in compensation expense for employees,employees (which includes an increase of $2.5$4.6 million in softwarestock-based subscriptioncompensation), relatedpartially expenseoffset andby andecrease increasein office expense. In addition, we recorded restructuring charges of $1.7$31.5 million in professionalthe servicethree fees.months ended March 31, 2026, which were comprised of $24.0 million of severance and other termination benefits, and $7.5 million of impairment charges for lease and leasehold improvements.

Other expense, net increaseddecreased $5.6$9.9 million, or 69%,67%, in the three months ended DecemberMarch 31, 2025,2026, compared to the three months ended DecemberMarch 31, 2024.2025. The overall increasedecrease in other expense was primarily attributable to ana increasedecrease of $6.5$5.2 million in realizedexpense related to our share of loss onfrom strategican investments.equity method investment, and an increase in net foreign currency transaction gains.

Interest income decreased $7.5$15.2 million, or (29)%55% in the three months ended DecemberMarch 31, 2025,2026, compared to the three months ended DecemberMarch 31, 2024.2025. The decrease was primarily attributable to a decrease in investment income as a result of decreased invested cash balances.balances and declining interest rates.

Interest expense increased $5.2$6.3 million, or 72%81% in the three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 2024.2025. The increase was primarily attributable to the amortization of interest rate swap contracts.

BenefitProvision fromfor Income Taxes

BenefitProvision fromfor income taxes increaseddecreased $4.1$27.9 million for the three months ended DecemberMarch 31, 2025,2026, as compared to the three months ended DecemberMarch 31, 2024.2025. The increasedecrease was primarily attributable to the partialchange release ofin valuation allowance on certain U.S.Australian deferred tax assets resultingrelated from the recognition of additionalto deferred taxrevenue liabilities in connection with the business combinationsrecognition and the change in the mix of earnings and losses in foreign jurisdictions. See Note 7, “Business Combinations,” and Note 17, “Income Taxes,” of the notes to our condensed consolidated financial statements for additional information.

On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act (“OBBBA”), which includes, among other provisions, changes to the U.S. corporate income tax system such as allowing the immediate expensing of qualifying domestic research and development costs and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective for us beginning in fiscal year 2026. The changes had an immaterial impact on our provision for income tax benefittaxes for the three and sixnine months ended DecemberMarch 31, 20252026 and we currently do not anticipate these changes to have a material impact on our results for fiscal year 2026. We will continue to monitor any developments and guidance related to OBBBA.

The Organization for Economic Co-operation and Development introduced a framework for a global minimum corporate income tax of 15% known as the Global Anti-Base Erosion rules. This legislation has been enacted in certain jurisdictions where we operate and is effective for our fiscal year 2026. As of DecemberMarch 31, 2025,2026, the global minimum tax does not have a significant impact on our financial statements. As additional jurisdictions enact legislation, transitional rules lapse, and other provisions of the global minimum tax legislation become effective, our effective tax rate and cash tax payments may increase in future years.

SixNine Months Ended DecemberMarch 31, 20252026 and 20242025

Total revenues increased $544.6$974.9 million, or 22%,25%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 2024.2025. Growth in total revenues was primarily attributable to increased demand for our products from existing customers. Of total revenues recognized in the sixnine months ended DecemberMarch 31, 2025,2026, over 90% was attributable to sales to customer accounts existing on or before June 30, 2025.

Subscription revenues increased $537.0$963.0 million, or 23%,27%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 2024.2025. The increase in subscription revenues was primarily attributable to paid seat expansion from our existing customers and price increases.

Other revenues increased $7.7$11.9 million, or 6%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 2024.2025. The increase in other revenues was primarily attributable to an increase of $7.9$11.0 million in marketplace revenue.

Cost of revenues increased $54.9$98.0 million, or 12%,15%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 2024.2025. The overall increase was primarily attributable to an increase of $37.4$65.5 million in hosting fees paid to third-party providers.providers, Inand addition,an we recorded restructuring chargesincrease of $31.6$24.0 million in theamortization six months ended December 31, 2025, which were composed of $29.2 million of severance and other termination benefits, and $2.4 million of impairment charges for a lease and leasehold improvements. The increase wasexpense, partially offset by a decrease of $6.8$33.1 million in compensation expense for employees (which includes a decrease of $5.9 million in stock-based compensation), and a decrease of $11.1 million in fees paid for consulting and other professional services. In addition, we recorded restructuring charges of $52.6 million in the nine months ended March 31, 2026, which were comprised of $46.0 million of severance and other termination benefits, and $6.6 million of impairment charges for lease and leasehold improvements.

Research and development expenses increased $299.2$540.8 million, or 23%,27%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 2024.2025. The overall increase was primarily attributable to an increase of $278.3$380.2 million in compensation expenses for employees (which includes an increase of $117.6$167.8 million in stock-based compensation). In addition, we recorded restructuring charges of $12.1$140.6 million in the sixnine months ended DecemberMarch 31, 2025,2026, relatedwhich towere comprised of $105.0 million of severance and other termination benefits, and $35.6 million of impairment charges for a lease and leasehold improvements.

Marketing and sales expenses increased $188.6$331.8 million, or 36%,40%, for the sixnine months ended DecemberMarch 31, 2025,2026, compared to the sixnine months ended DecemberMarch 31, 2024.2025. The overall increase was primarily attributable to an increase of $109.8$178.3 million in compensation expenses for employees (which includes an increase of $20.2$30.3 million in stock-based compensation), and an increase of $50.9$63.6 million in advertising and marketing program expenses. In addition, we recorded restructuring charges of $8.2$50.8 million in the sixnine months ended DecemberMarch 31, 2025,2026, relatedwhich towere comprised of $26.4 million of impairment charges for a lease and leasehold improvements.improvements, and $24.4 million of severance and other termination benefits.

General and administrative expenses increased $56.6$102.8 million, or 18%,21%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 2024.2025. The overall increase was primarily attributable to an increase of $36.4$54.6 million in compensation expenses for employees (which includes an increase of $2.2$6.8 million in stock-based compensation) and an increase of $6.2 million in professional service fees.. In addition, we recorded restructuring charges of $3.7$35.4 million in the sixnine months ended DecemberMarch 31, 2025,2026, relatedwhich towere comprised of $24.1 million of severance and other termination benefits, and $11.3 million of impairment charges for a lease and leasehold improvements.

Other income (expense), net increased $32.7$42.6 million, or 119%101% in the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 2024.2025. The overall increase in other income was primarily attributable to an increase of $24.7 million in unrealized gains on public equity investments and a decrease of $15.3$20.4 million in expenses related to our share of loss from an equity method investment.

Interest income decreased $6.2$21.5 million, or 12%26% in the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 2024.2025. The decrease was primarily attributable to a decrease in ourinvestment portfolioincome yieldas duea toresult of decreased invested cash balances and declining interest rates.

Interest expense increased $6.6$12.9 million, or 45%,58%, in the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 2024.2025. The increase was primarily attributable to the amortization of interest rate swap contracts.

Provision for (Benefit from) Income Taxes

Provision for (benefit from) income taxes decreased $102.2$130.1 million for the sixnine months ended DecemberMarch 31, 2025,2026, as compared to the sixnine months ended DecemberMarch 31, 2024.2025. The decrease was primarily attributable to the the change in valuation allowance on Australian deferred tax assets related to deferred revenue recognition, the change in the mix of earnings and losses in foreign jurisdictionsjurisdictions, and the partial release of valuation allowance on certain U.S. deferred tax assets resulting from the recognition of additional deferred tax liabilities in connection with the business combinations. See Note 7, “Business Combinations,” and Note 17, “Income Taxes,” of the notes to our condensed consolidated financial statements for additional information.

On July 4, 2025, the U.S. government enacted OBBBA, which includes, among other provisions, changes to the U.S. corporate income tax system such as allowing the immediate expensing of qualifying domestic research and development costs and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective for us beginning in fiscal year 2026. The changes had an immaterial impact on our provision for income tax benefittaxes for the three and sixnine months ended DecemberMarch 31, 20252026 and we currently do not anticipate these changes to have a material impact on our results for fiscal year 2026. We will continue to monitor any developments and guidance related to OBBBA.

The Organization for Economic Co-operation and Development introduced a framework for a global minimum corporate income tax of 15% known as the Global Anti-Base Erosion rules. This legislation has been enacted in certain jurisdictions where we operate and is effective for our fiscal year 2026. As of DecemberMarch 31, 2025,2026, the global minimum tax does not have a significant impact on our financial statements. As additional jurisdictions enact legislation, transitional rules lapse, and other provisions of the global minimum tax legislation become effective, our effective tax rate and cash tax payments may increase in future years.

As of DecemberMarch 31, 2025,2026, we had cash and cash equivalents totaling $1.2$1.1 billion, marketable securities totaling $407.9 million,billion and accounts receivable totaling $911.9$907.4 million. Since our inception, we have primarily financed our operations through cash flows generated by operations and corporate debt.

Net cash provided by operating activities decreased by $125.9$211.1 million for the sixnine months ended DecemberMarch 31, 2025,2026, compared to the sixnine months ended DecemberMarch 31, 2024.2025. The net decrease was primarily attributable to an increase in cash paid to employees, vendors, and cash paid for income taxes, partially offset by an increase in cash received from customers.

Net cash used in investing activities increased by $1,074.2$593.1 million during the sixnine months ended DecemberMarch 31, 2025,2026, compared to the sixnine months ended DecemberMarch 31, 2024.2025. The net increase was primarily attributable to an increase in cash consideration paid for acquisitions, net of cash acquired of approximately $1,223.9$1.2 million.billion, partially offset by an increase in net inflows of $578.8 million related to marketable securities activity, and an increase in net inflows of $50.8 million related to strategic investment activity.

Net cash used in financing activities increased by $194.3$1.1 millionbillion for the sixnine months ended DecemberMarch 31, 2025,2026, compared to the sixnine months ended DecemberMarch 31, 2024.2025. The net increase was primarily attributable to an increase in repurchases of Class A Common Stock of $197.4$1.1 million.billion.

As of DecemberMarch 31, 2025,2026, we had $500.0 million aggregate principal amount of 5.250% senior notes due 2029 (the “2029 Notes”) and $500.0 million aggregate principal amount of 5.500% senior notes due 2034 (the “2034 Notes,” and together with the 2029 Notes, the “Notes”). The 2029 Notes and the 2034 Notes will mature on May 15, 2029, and May 15, 2034, respectively. Interest on the Notes will beis paid semi-annually in arrears on May 15 and November 15 of each year, starting from November 15, 2024.

On August 12, 2024, Atlassian US, Inc.’s prior credit facility was amended and restated to provide for a $750 million senior unsecured revolving credit facility (the “2024 Credit Facility”). We may repay outstanding loans under the 2024 Credit Facility at any time, without premium or penalty, and we have an option to request an increase of $250 million in certain circumstances. The 2024 Credit Facility replaced our prior credit facility entered into in October 2020, which provided for a $1$1.0 billion senior unsecured delayed-draw term loan facility (the “Term Loan”) and a $500$500.0 million senior unsecured revolving credit facility. The 2024 Credit Facility matures in August 2029. As of DecemberMarch 31, 2025,2026, there were no borrowings under the 2024 Credit Facility. Refer to Note 10, “Debt,” to our condensed consolidated financial statements for additional information.

In September 2024, the Board of Directors authorized a program to repurchase up to $1.5 billion of our outstanding Class A Common Stock (the “2024 Repurchase Program”). The 2024 Repurchase Program commenced in April 2025 following completion of the prior repurchase program. The 2024 Repurchase Program was completed in March 2026. In October 2025, the Board of Directors authorized a new program under which we may repurchase up to an additional $2.5 billion of the Company’s outstanding Class A Common Stock (the “2025 Repurchase Program” and, together with the 2024 Repurchase Program, the “Repurchase Programs”). The 2025 Repurchase Program willcommenced commencein March 2026 following completion of the 2024 Repurchase Program. The Repurchase Programs do not have a fixed expiration date, may be suspended or discontinued at any time, and do not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.

During the three and sixnine months ended DecemberMarch 31, 2025,2026, we repurchased and subsequently retired approximately 1.311.8 million and 2.714.5 million shares of Class A Common Stock for approximately $200.4$1.0 millionbillion and $450.3$1.5 millionbillion at an average price per share of $156.74$85.04 and $169.21,$100.51, respectively. The 1% excise tax as a result of the Inflation Reduction Act is excluded in the total repurchase cost and average price paid. All repurchases were made in open market transactions. As of DecemberMarch 31, 2025,2026, $720.9 million and $2.5$2.2 billion of Class A Common Stock remained available for repurchase under the 2024 Share Repurchase Program and 2025 Share Repurchase Program, respectively.Program.

We believe that our existing cash and cash equivalents, together with cash generated from operations, and borrowing capacity from the 2024 Credit Facility will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our other future cash requirements will depend on many factors including our growth rate, the timing and extent of spend on research and development efforts, investment in AI, employee headcount, marketing and sales activities, investment in enterprise sales, payments to tax authorities, acquisitions of additional businesses and technologies, the introduction of new software and services offerings, enhancements to our existing software and services offerings and the continued market acceptance of our offerings.