Atlassian Corp

Previous wording

Our products help teams organize, discuss and complete shared work — delivering superior outcomes for their organizations.

Current wording

Our products help teams plan, track and execute shared work — delivering superior outcomes for their organizations.

Previous wording

Our mission is possible with a deep investment in product development to create and refine high-quality and versatile products that users love. We make our products affordable for organizations of all sizes, transparently share our pricing online for most of our products, and generally do not follow the practice of ad hoc discounting that is typical in the enterprise software industry. We aim to grow our customer base, targeting every organization, regardless of size, industry, or geography. This allows us to operate at unusual scale for an enterprise software company, with customers across virtually every industry sector in approximately 200 countries as of December 31, 2023. Our customers range from small organizations that have adopted one of our products for a small group of users, to over two-thirds of the Fortune 500, many of which use a combination of our products across thousands of users.

Current wording

Our mission is possible with a deep investment in product development to create and refine high-quality and versatile products that users love. We make our products affordable for organizations of all sizes, transparently share our pricing online for most of our products, and generally do not follow the practice of ad hoc discounting that is typical in the enterprise software industry. We aim to grow our customer base, targeting every organization, regardless of size, industry, or geography. This allows us to operate at unusual scale for an enterprise software company, with customers across virtually every industry sector in approximately 200 countries as of March 31, 2024. Our customers range from small organizations that have adopted one of our products for a small group of users, to over eighty percent of the Fortune 500, many of which use a combination of our products across thousands of users.

Previous wording

We generate revenues primarily in the form of subscription and maintenance fees. Subscription revenues consist primarily of fees earned from subscription-based arrangements for providing customers the right to use our software in a cloud-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 product offerings, prices and pricing plans for our products which may impact the growth rate of our revenue, our deferred revenue balances, and customer retention.

Current wording

We generate revenues primarily in the form of subscription and maintenance fees. Subscription revenues consist primarily of fees earned from subscription-based arrangements for providing customers the right to use our software in a cloud-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 product offerings, prices and pricing plans for our products which may impact the growth rate of our revenue, our deferred revenue balances, and customer retention. Subscription revenue, through our Cloud and Data Center offerings, results in a large recurring revenue base.

Previous wording

Maintenance provides our customers with access to unspecified future updates, upgrades and enhancements and technical product support on an if-and-when-available basis for perpetual license products purchased and operated by our customers on their premises (“Server offerings”). Maintenance revenue combined with our subscription revenue business, through our Cloud and Data Center offerings, results in a large recurring revenue base. In each of the past three fiscal years, more than 80% of our total revenues have been of a recurring nature from subscription and maintenance fees.

Current wording

Maintenance provides our customers with access to unspecified future updates, upgrades and enhancements and technical product support on an if-and-when-available basis for perpetual license products purchased and operated by our customers on their premises (“Server offerings”). We no longer sell perpetual licenses or upgrades for our Server offerings and generally ended maintenance and support for these Server offerings in February 2024, subject to limited exceptions for some enterprise customers that have signed an agreement for our Cloud offerings. We have helped our customers transition to other versions of our products with our migration tools and programs, customer support teams, and pricing and packaging options. Maintenance revenue no longer constitutes a material portion of our recurring revenue base after February 2024. In each of the past three fiscal years, more than 80% of our total revenues have been of a recurring nature from subscription and maintenance fees.

Previous wording

Our results of operations may vary based on the impact of changes in the global economy on us or our customers. Our business depends on demand for business software applications generally and for collaboration software solutions in particular. We believe that weakening macroeconomic conditions, in part due to rising inflation, increases in interest rates, Russia’s invasion of Ukraine and remaining effects of the COVID-19 pandemic, have impacted our results of operations during the three and six months ended December 31, 2023. Primarily, we have seen growth in paid seat expansion from existing customers moderate beginning in fiscal year 2023 and continue through the reporting period. We believe the moderation in growth in paid seat expansion from existing customers was largely due to customers impacted by weakening economic conditions. The extent to which these risks ultimately impact our business, results of operations, and financial position will depend on future developments, which are uncertain and cannot be predicted at this time.

Current wording

Our results of operations may vary based on the impact of changes in the global economy on us or our customers. Our business depends on demand for business software applications generally and for collaboration software solutions in particular. We are subject to risks and exposures from the evolving macroeconomic environment, including the effects of rising inflation, increases in interest rates, and increases in geopolitical tensions. We monitor the direct and indirect impacts of these circumstances on our business and financial results. We have seen expansion from existing customers moderate in recent quarters, particularly amongst our small and medium-sized customers. The extent to which these risks ultimately impact our business, results of operations, and financial position will depend on future developments, which are uncertain and cannot be predicted at this time.

Previous wording

We have a history of successfully growing both our total customer base and the spend per customer through growth in users, purchase of new licenses, and adoption of new products. We believe our ability to attract new customers is critical, and expanding within the existing customer base is the primary driver of our success as a business. Typically, new customers begin their journey with Atlassian products with a small footprint by either adopting our free editions or purchasing a single product for a limited number of users. We are focused on continuing to grow our total customer base, specifically on growing the number of customers with more than $10,000 in annualized recurring revenue from our Cloud offerings (“Cloud ARR”), as it measures our ability to successfully expand within our existing customer base.

Current wording

We have a history of successfully growing both our total customer base and the spend per customer through growth in users, purchase of new licenses, and adoption of new products. We believe our ability to attract new customers is critical, and expanding within the existing customer base is the primary driver of our success as a business. Typically, new customers begin their journey with Atlassian products with a small footprint by either adopting our free editions or purchasing a single product for a limited number of users. We are focused on continuing to grow our total customer base, specifically the number of customers with more than $10,000 in annualized recurring revenue from our Cloud offerings (“Cloud ARR”), as it measures our ability to successfully expand within our existing customer base.

Previous wording

Cloud ARR greater than $10,000 using the same definition as total customers with the distinction of having an active Cloud subscriptionand 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 U.S. generally accepted accounting principles (“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 products, if the product deployments share a unique domain name, we only include the customer once for purposes of calculating a customer.

Current wording

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 subscriptionand 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 U.S. generally accepted accounting principles (“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 products, if the product deployments share a unique domain name, we only include the customer once for purposes of calculating a customer.

Previous wording

As of December 31, 2023, we had over 302,000 customers, which includes the addition of approximately 33,000 customers from the acquisition of Loom. Including single user accounts and organizations who have only adopted our free or starter products, the active use of our products extends well beyond our total customer base. With these customers using our software today, 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.

Current wording

As of March 31, 2024, we had more than 300,000 customers. Including single user accounts and organizations who have only adopted our free or starter products, the active use of our products extends well beyond our total customer base. With these customers using our software today, 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.

Previous wording

Free cash flow increased by $137.8 million during the three months ended December 31, 2023 as compared to the three months ended December 31, 2022. The increase in free cash flow was primarily attributable to an increase in net cash provided by operating activities, partially offset by an increase in capital expenditures. The increase in net cash provided by operating activities was primarily attributable to an increase in cash received from customers, partially offset by an increase in cash paid to suppliers and employees and cash used to pay income taxes.

Current wording

Free cash flow increased by $205.2 million during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase in free cash flow was primarily attributable to an increase in net cash provided by operating activities, partially offset by an increase in capital expenditures. The increase in net cash provided by operating activities was primarily attributable to an increase in cash received from customers, partially offset by an increase in cash paid to suppliers and employees and cash used to pay income taxes.

Previous wording

Free cash flow increased by $225.1 million during the six months ended December 31, 2023 as compared to the six months ended December 31, 2022. The increase in free cash flow was primarily attributable to an increase in net cash provided by operating activities and a decrease in capital expenditures. The increase in net cash provided by operating activities was primarily attributable to an increase in cash received from customers, partially offset by an increase in cash paid to suppliers and employees and cash used to pay income taxes.

Current wording

Free cash flow increased by $430.3 million during the nine months ended March 31, 2024 as compared to the nine months ended March 31, 2023. The increase in free cash flow was primarily attributable to an increase in net cash provided by operating activities and a decrease in capital expenditures. The increase in net cash provided by operating activities was primarily attributable to an increase in cash received from customers, partially offset by an increase in cash paid to suppliers and employees and cash used to pay income taxes.

Previous wording

We expect subscription revenue to increase and continue to be our primary driver of revenue growth as our customers continue to migrate to our Cloud and Data Center offerings. We no longer sell perpetual licenses or upgrades for our Server offerings and we will generally end maintenance and support for these Server offerings in February 2024. Migrating our larger customers to our subscription offerings continues to be one of our most important priorities ahead of Server end of support in February 2024. Consistent with our strategy, our Server business is expected to contract as Server customers migrate to our Cloud and Data Center offerings and Maintenance revenue is expected to be immaterial after the Server end of support date.

Current wording

We expect subscription revenue to increase and continue to be our primary driver of revenue growth as our customers continue to migrate to our Cloud and Data Center offerings. We no longer sell perpetual licenses or upgrades for our Server offerings and we generally ended maintenance and support for these Server offerings in February 2024. Consistent with our strategy, our Server business has continued to contract as Server customers migrate to our Cloud and Data Center offerings, and maintenance revenue is expected to be immaterial after the Server end of support date.

Previous wording

Research and development expenses consist primarily of compensation expense for our employees, including stock-based compensation, consulting and contractor costs associated with our software development teams, facilities and related overhead costs, and certain IT program expenses. We continue to focus our research and development efforts on building new products, adding new features and services, integrating acquired technologies, increasing functionality, enhancing our cloud infrastructure and developing our mobile capabilities.

Current wording

Research and development expenses consist primarily of compensation expenses for our employees, including stock-based compensation, consulting and contractor costs associated with our software development teams, facilities and related overhead costs, and certain IT program expenses. We continue to focus our research and development efforts on building new products, adding new features and services, integrating acquired technologies, increasing functionality, enhancing our cloud infrastructure and developing our mobile capabilities.

Previous wording

Marketing and sales expenses consist primarily of compensation expense for our employees, including stock-based compensation, marketing and sales programs, consulting and contractor costs, facilities and related overhead costs, and certain IT program expenses. Marketing programs consist of advertising, promotional events, corporate communications, brand building and product marketing activities such as online lead generation. Sales programs consist of activities and teams focused on 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 products across their organizations and helping product evaluators learn how they can use our tools most effectively.

Current wording

Marketing and sales expenses consist primarily of compensation expenses for our employees, including stock-based compensation, marketing and sales programs, consulting and contractor costs, facilities and related overhead costs, and certain IT program expenses. Marketing programs consist of advertising, promotional events, corporate communications, brand building and product marketing activities such as online lead generation. Sales programs consist of activities and teams focused on 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 products across their organizations and helping product evaluators learn how they can use our tools most effectively.

Previous wording

General and administrative expenses consist primarily of compensation expense for our employees, including stock-based compensation, for finance, legal, human resources and information technology personnel, facilities and related overhead costs, consulting and contractor costs, certain IT program expenses, and other corporate expenses.

Current wording

General and administrative expenses consist primarily of compensation expenses for our employees, including stock-based compensation, for finance, legal, human resources and information technology personnel, facilities and related overhead costs, consulting and contractor costs, certain IT program expenses, and other corporate expenses.

Previous wording

We incurred a net loss during the three and six months ended December 31, 2023, primarily attributable to continued investments, particularly in research and development personnel to drive continued product innovation, as well as infrastructure to support our Cloud offerings.

Current wording

We earned a net income during the three months ended March 31, 2024, primarily attributable to strong growth in subscription revenues. We incurred a net loss during the nine months ended March 31, 2024, primarily attributable to continued investments, particularly in research and development personnel to drive continued product innovation, as well as infrastructure to support our Cloud offerings.

Previous wording

There have been no other significant changes to our critical accounting policies and estimates during the three and six months ended December 31, 2023, 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 2023.

Current wording

There have been no other significant changes to our critical accounting policies and estimates during the three and nine months ended March 31, 2024, 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 2023.

Previous wording

Total revenues increased $187.4 million, or 21%, in the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Growth in total revenues was primarily attributable to increased demand for our products from both new and existing customers. Of total revenues recognized in the three months ended December 31, 2023, over 90% was attributable to sales to customer accounts existing on or before September 30, 2023.

Current wording

Total revenues increased $273.7 million, or 30%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Growth in total revenues was primarily attributable to increased demand for our products from both new and existing customers. Of total revenues recognized in the three months ended March 31, 2024, over 90% was attributable to sales to customer accounts existing on or before December 31, 2023.

Previous wording

Subscription revenues increased $221.0 million, or 31%, in the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The increase in subscription revenues was primarily attributable to additional subscriptions from our existing customer base, and customers migrating to subscription services for our Cloud offerings and term-based licenses for our Data Center offerings. Subscription revenue generated from the acquisition of Loom was not material during the three months ended December 31, 2023.

Current wording

Subscription revenues increased $310.7 million, or 41%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase in subscription revenues was primarily attributable to additional subscriptions from our existing customer base, and customers migrating to subscription services for our Cloud offerings and term-based licenses for our Data Center offerings.

Previous wording

Maintenance revenues decreased $36.9 million, or 35%, in the three months ended December 31, 2023 compared to the three months ended December 31, 2022. We no longer offer upgrades to perpetual licenses beginning February 2022, and will generally end maintenance and support for these products in February 2024.

Current wording

Maintenance revenues decreased $64.7 million, or 69%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. We no longer offer upgrades to perpetual licenses beginning February 2022, and generally ended maintenance and support for these products in February 2024.

Previous wording

Other revenues increased $3.3 million, or 6%, in the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The increase in other revenues was primarily attributable to an increase of $4.2 million in revenue from sales of third-party apps through our Atlassian Marketplace.

Current wording

Other revenues increased $27.7 million, or 46%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase in other revenues was primarily attributable to an increase of $25.4 million in revenue from sales of third-party apps through our Atlassian Marketplace.

Previous wording

Cost of revenues increased $38.6 million, or 25%, in the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The overall increase was primarily attributable to an increase of $22.0 million in hosting fees paid to third-party providers, and an increase of $12.2 million in compensation expense for employees (which includes an increase of $0.7 million in stock-based compensation).

Current wording

Cost of revenues increased $44.8 million, or 27%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The overall increase was primarily attributable to an increase of $33.3 million in hosting fees paid to third-party providers, and an increase of $10.4 million in compensation expense for employees.

Previous wording

Research and development expenses increased $63.1 million, or 13%, in the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The overall increase was primarily attributable to an increase of$72.1 million in compensation expenses for employees (which includes an increase of$18.5 million instock-based compensation) partially offset by a decrease of $14.1 million in contractor costs and professional service fees.

Current wording

Research and development expenses increased $54.1 million, or 10%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The overall increase was primarily attributable to an increase of$87.5 million in compensation expenses for employees (which includes an increase of$28.3 million instock-based compensation), partially offset byrestructuring charges of $43.3 million recorded during the three months ended March 31, 2023.

Previous wording

Other expense, net decreased $2.1 million, or 31%, in thethree months ended December 31, 2023, compared to thethree months ended December 31, 2022. The decrease in other expense was primarily attributable to a decrease of $4.2 million in losses related to our private held equity investments.

Current wording

Other expense, net increased $10.0 million, or 1,065%, in thethree months ended March 31, 2024, compared to thethree months ended March 31, 2023. The increase in other expense was primarily attributable to an increase of $4.5 million related to our share of loss from an equity method, and higher contribution to Atlassian Foundation.

Previous wording

Interest income increased $13.6 million, or 152% in the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The increase was primarily attributable to an increase in investment income as a result of increased investment balances and increased interest rates.

Current wording

Interest income increased $6.4 million, or 42% in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase was primarily attributable to an increase in investment income as a result of increased investment balances and increased interest rates.

Previous wording

Interest expense increased $1.5 million, or 20% in the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The increase was primarily attributable to an increase in interest expense from our Credit Facility (as defined below) as a result of increased interest rates.

Current wording

Interest expense increased $0.5 million, or 6% in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase was primarily attributable to an increase in interest expense from our Credit Facility (as defined below) as a result of increased interest rates.

Previous wording

We reported an income tax provision of $65.3 million on pretax loss of $51.1 million for the six months ended December 31, 2023, as compared to an income tax provision of $108.5 million on pretax loss of $110.2 million for the six months ended December 31, 2022. The income tax provision for the six months ended December 31, 2023 primarily reflects a decrease in the recognition of reserves for uncertain tax positions and the partial release of valuation allowance of certain U.S. federal and state deferred tax assets as a result of the addition of deferred tax liabilities acquired from Loom, see Note 7, “Business Combinations,” for additional information.

Current wording

We reported an income tax provision of $7.0 million on pretax income of $19.8 million for the three months ended March 31, 2024, as compared to an income tax provision of $53.6 million on pretax loss of $155.4 million for the three months ended March 31, 2023. The decrease in the income tax provision for the three months ended March 31, 2024 was primarily attributable to a decrease in the recognition of reserves for uncertain tax positions.

Previous wording

Our effective tax rate substantially differed from the U.S. statutory income tax rate of 21.0% primarily attributable to non-deductible stock-based compensation in certain foreign jurisdictions, research and development tax credits and incentives, full valuation allowances in the U.S. and Australia, the recognition of reserves for uncertain tax positions, and different tax rates in foreign jurisdictions such as Australia. See Note 15, “Income Taxes,” to the notes to our condensed consolidated financial statements for additional information.

Current wording

Our effective tax rate substantially differed from the U.S. statutory income tax rate of 21.0% primarily attributable to non-deductible stock-based compensation in certain foreign jurisdictions, full valuation allowances in the U.S. and Australia, research and development tax credits and incentives, the recognition of reserves for uncertain tax positions, and different tax rates in foreign jurisdictions such as Australia. See Note 15, “Income Taxes,” to the notes to our condensed consolidated financial statements for additional information.

Previous wording

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 federal statutory rate, level of profit before tax, accounting for uncertain tax positions, business combinations and 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.

Current wording

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 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.

Previous wording

Total revenues increased $357.8 million, or 21%, in the six months ended December 31, 2023 compared to the six months ended December 31, 2022. Growth in total revenues was primarily attributable to increased demand for our products from both new and existing customers. Of total revenues recognized in the six months ended December 31, 2023, over 90% was attributable to sales to customer accounts existing on or before June 30, 2023.

Current wording

Total revenues increased $631.5 million, or 24%, in the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. Growth in total revenues was primarily attributable to increased demand for our products from both new and existing customers. Of total revenues recognized in the nine months ended March 31, 2024, over 90% was attributable to sales to customer accounts existing on or before June 30, 2023.

Previous wording

Subscription revenues increased $422.0 million, or 31%, in the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The increase in subscription revenues was primarily attributable to additional subscriptions from our existing customer base, and customers migrating to cloud-based subscription services and term-based licenses for our Data Center products. Subscription revenue generated from the acquisition of Loom was not material during the six months ended December 31, 2023.

Current wording

Subscription revenues increased $732.7 million, or 35%, in the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. The increase in subscription revenues was primarily attributable to additional subscriptions from our existing customer base, and customers migrating to cloud-based subscription services and term-based licenses for our Data Center products.

Previous wording

Maintenance revenues decreased $71.9 million, or 33%, in the six months ended December 31, 2023 compared to the six months ended December 31, 2022. We no longer offer upgrades to perpetual licenses beginning February 2022, and will generally end maintenance and support for these products in February 2024.

Current wording

Maintenance revenues decreased $136.6 million, or 44%, in the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. We no longer offer upgrades to perpetual licenses beginning February 2022, and generally ended maintenance and support for these products in February 2024.

Previous wording

Other revenues increased $7.7 million, or 8%, in the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The increase in other revenues was primarily attributable to an increase of $8.5 million in revenue from sales of third-party apps through our Atlassian Marketplace.

Current wording

Other revenues increased $35.4 million, or 22%, in the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. The increase in other revenues was primarily attributable to an increase of $34.0 million in revenue from sales of third-party apps through our Atlassian Marketplace.

Previous wording

Cost of revenues increased $77.2 million, or 26%, in the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The overall increase was primarily attributable to an increase of $35.8 million in hosting fees paid to third-party providers, and an increase of $30.6 million in compensation expense for employees (which includes an increase of $6.9 million in stock-based compensation).

Current wording

Cost of revenues increased $122.0 million, or 26%, in the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. The overall increase was primarily attributable to an increase of $69.1 million in hosting fees paid to third-party providers, and an increase of $50.0 million in compensation expense for employees (which includes an increase of $7.4 million in stock-based compensation).

Previous wording

Research and development expenses increased $145.8 million, or 17%, in the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The overall increase was primarily attributable to an increase of $166.3 million in compensation expenses for employees (which includes an increase of $58.9 million instock-based compensation), partially offset by a decrease of $27.3 million in contractor costs and professional services fees.

Current wording

Research and development expenses increased $200.0 million, or 14%, in the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. The overall increase was primarily attributable to an increase of $254.0 million in compensation expenses for employees (which includes an increase of $87.2 million instock-based compensation), partially offset byrestructuring charges of$43.3 million recorded during the nine months ended March 31, 2023, anda decrease of $30.4 million in contractor costs and professional services fees.

Previous wording

Marketing and sales expenses increased $34.3 million, or 18%, for thethree months ended December 31, 2023, compared to thethree months ended December 31, 2022. The overall increase was primarily attributable to an increase of $25.3 million in compensation expenses for employees(which includes an immaterial increase in stock-based compensation), and an increase of$7.1 million in advertising and marketing event expenses.

Current wording

Marketing and sales expenses increased $70.7 million, or 12%, for thenine months ended March 31, 2024, compared to thenine months ended March 31, 2023. The overall increase was primarily attributable to an increase of$78.3 million in compensation expenses for employees(which includes an increase of $7.8 million in stock-based compensation), and an increase of $9.1 million in advertising and marketing event expenses, partially offset byrestructuring charges of$24.2 million recorded during the nine months ended March 31, 2023.

Previous wording

Other income (expense), net decreased $35.5 million, or 158% in thesix months ended December 31, 2023 compared to thesix months ended December 31, 2022. The decrease was primarily attributable to a decrease in other income of$43.1 million from a non-cash sale of a controlling interest of a subsidiary that occurred during the six months ended December 31, 2022, and an increase in other expense of$6.8 million related to our share of loss from an equity method investment, partially offset by a decrease of$11.5 million in mark-to-market adjusted losses related to our publicly held equity securities, and a decrease of$6.0 millionin losses related to our private held equity investments.

Current wording

Other income (expense), net decreased $45.6 million, or 211% in thenine months ended March 31, 2024 compared to thenine months ended March 31, 2023. The decrease was primarily attributable to a decrease in other income of$43.1 million from a non-cash sale of a controlling interest of a subsidiary that occurred during nine months ended March 31, 2023, and an increase in other expense of$11.3 million related to our share of loss from an equity method investment, partially offset by a decrease of$9.7 million in mark-to-market adjusted losses related to our publicly held equity securities, and a decrease of$6.0 millionin losses related to our private held equity investments.

Previous wording

Interest income increased$33.7 million, or 239% in the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The increase was primarily attributable to an increase in investment income as a result of increased investment balances and increased interest rates.

Current wording

Interest income increased$40.1 million, or 137% in the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. The increase was primarily attributable to an increase in investment income as a result of increased investment balances and increased interest rates.

Previous wording

Interest expense increased$4.3 million, or 32%, in the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The overall increase was primarily attributable to an increase in interest expense from our Credit Facility (as defined below) as a result of increased interest rates.

Current wording

Interest expense increased$4.8 million, or 22%, in the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023. The overall increase was primarily attributable to an increase in interest expense from our Credit Facility (as defined below) as a result of increased interest rates.

Previous wording

We reported an income tax provision of $44.4 million on pretax loss of $40.1 million for the three months ended December 31, 2023, as compared to an income tax provision of $100.5 million on pretax loss of $104.5 million for the three months ended December 31, 2022. The income tax provision for the three months ended December 31, 2023 primarily reflects a decrease in the recognition of reserves for uncertain tax positions and the partial release of valuation allowance of certain U.S. federal and state deferred tax assets as a result of the addition of deferred tax liabilities acquired from Loom, see Note 7, “Business Combinations,” for additional information.

Current wording

We reported an income tax provision of $72.3 million on pretax loss of $31.3 million for the nine months ended March 31, 2024, as compared to an income tax provision of $162.1 million on pretax loss of $265.7 million for the nine months ended March 31, 2023. The decrease in the income tax provision for the nine months ended March 31, 2024 was primarily attributable to a decrease in the recognition of reserves for uncertain tax positions and the partial release of valuation allowance as a result of Loom acquisition. See Note 7, “Business Combinations,” for additional information.

Previous wording

As part of our ongoing collaborative and cooperative relationship with the Australian Taxation Office (“ATO”), we finalized an Advanced Pricing Arrangement (“APA”) with respect to our transfer pricing arrangements between Australia and the U.S. that covers the tax years ended June 30, 2019 to June 30, 2025. Under the terms of the APA, the intellectual property that has been developed and maintained in Australia will remain in Australia. The APA will provide more clarity and certainty in Atlassian’s future tax outcomes. Pursuant to the terms of the agreement, we made a cash tax payment of approximately $60.5 million during the three months ended December 31, 2023.

Current wording

We finalized an Advanced Pricing Arrangement with the Australian Tax Office with respect to our transfer pricing arrangements between Australia and the U.S. that covers the tax years ended June 30, 2019 to June 30, 2025. Pursuant to the terms of the agreement, we made a cash tax payment of approximately $60.5 million during the nine months ended March 31, 2024.