Atlassian Corp

Previous wording

Our primary products include Jira for planning and project management, Confluence for content creation and sharing, Jira Service Management for team service, management and support applications, Loom for asynchronous video collaboration, and Rovo for unlocking organizational knowledge. Together, our connected portfolio of products form integrated solutions and, when deployed in the cloud, provide customers all the benefits of analytics, automation, and AI, along with integrations with thousands of third-party apps as a solution that is deeply entrenched in how teams collaborate and how organizations run. The Atlassian platform is the common technology foundation for our products that drives connection between teams, information, and workflows. It allows work to flow seamlessly across tools, automates the mundane so teams can focus on what matters, and enables better decision-making based on the data customers choose to put into our products.

Current wording

Our primary products include Jira for planning and project management, Confluence for content creation and sharing, and Jira Service Management for team service, management and support applications. Together, our connected portfolio of products form integrated solutions and, when deployed in the cloud, provide customers all the benefits of analytics, automation, and AI, along with integrations with thousands of third-party apps as a solution that is deeply entrenched in how teams collaborate and how organizations run. The Atlassian platform is the common technology foundation for our products that drives connection between teams, information, and workflows. It allows work to flow seamlessly across tools, automates the mundane so teams can focus on what matters, and enables better decision-making based on the data customers choose to put into our products.

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 are subject to risks and exposures from the evolving macroeconomic environment, including the effects of rising inflation, and increases in interest rates, political instability, and geopolitical tensions. We monitor the direct and indirect impacts of these circumstances on our business and financial results. 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, inflationary pressures, interest rate policy, political instability, and geopolitical tensions. We monitor the direct and indirect impacts of these circumstances on our business and financial results. 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 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.

Current wording

We have a history of successfully growing both our total customer base and the spend per customer through growth in users, higher average price per user 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

As of September 30, 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.

Current wording

As of December 31, 2024, we had more than 300,000 customers. If we include 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. 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.

Previous wording

Free cash flow decreased by $88.9 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The decrease in free cash flow was primarily attributable to a decrease in net cash provided by operating activities and an increase in capital expenditures. The decrease in net cash provided by operating activities was primarily attributable to an increase in cash paid to employees, including higher annual employee bonus payments, cash paid to suppliers, and cash used to pay income taxes, partially offset by an increase in cash received from customers.

Current wording

Free cash flow decreased by $30.6 million during the six months ended December 31, 2024 as compared to the six months ended December 31, 2023. 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 and vendors, partially offset by an increase in cash received from customers.

Previous wording

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

Current wording

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

Previous wording

There have been no significant changes to our critical accounting policies and estimates during the three months ended September 30, 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 2024.

Current wording

There have been no significant changes to our critical accounting policies and estimates during the three and six months ended December 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 2024.

Previous wording

Total revenues increased $210.0 million, or 21%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Growth in total revenues was primarily attributable to increased demand for our products from existing customers. Of total revenues recognized in the three months ended September 30, 2024, over 90% were attributable to sales to customer accounts existing on or before June 30, 2024.

Current wording

Total revenues increased $226.4 million, or 21%, in the three months ended December 31, 2024 compared to the three months ended December 31, 2023. Growth in total revenues was primarily attributable to increased demand for our products from existing customers. Of total revenues recognized in the three months ended December 31, 2024, over 90% were attributable to sales to customer accounts existing on or before September 30, 2024.

Previous wording

Subscription revenues increased $280.0 million, or 33%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase in subscription revenues was primarily attributable to paid seat expansion from our existing customers, migrations and price increases.

Current wording

Subscription revenues increased $281.1 million, or 30%, in the three months ended December 31, 2024 compared to the three months ended December 31, 2023. The increase in subscription revenues was primarily attributable to paid seat expansion from our existing customers, price increases, and migrations.

Previous wording

Other revenues decreased $70.0 million, or 56%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease in other revenues was primarily attributable to a decrease of $75.5 million in maintenance revenue due to the end of support for our Server offerings.

Current wording

Other revenues decreased $54.7 million, or 43%, in the three months ended December 31, 2024 compared to the three months ended December 31, 2023. The decrease in other revenues was primarily attributable to a decrease of $66.2 million in maintenance revenue due to the end of support for our Server offerings.

Previous wording

Research and development expenses increased $121.4 million, or 25%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The overall increase was primarily attributable to an increase of$105.8 million in compensation expenses for employees (which includes an increase of$43.0 million instock-based compensation).

Current wording

Research and development expenses increased $143.4 million, or 27%, in the three months ended December 31, 2024 compared to the three months ended December 31, 2023. The overall increase was primarily attributable to an increase of$133.2 million in compensation expenses for employees (which includes an increase of$72.5 million instock-based compensation).

Previous wording

Marketing and sales expenses increased $58.8 million, or 30%, for thethree months ended September 30, 2024 compared to thethree months ended September 30, 2023. The overall increase was primarily attributable to an increase of $34.9 million in compensation expenses for employees (which includes an increase of $3.7 million in stock-based compensation), and an increase of$17.9 million in advertising and marketing event expenses.

Current wording

Marketing and sales expenses increased $51.4 million, or 23%, for thethree months ended December 31, 2024 compared to thethree months ended December 31, 2023. The overall increase was primarily attributable to an increase of $33.0 million in compensation expenses for employees (which includes an increase of $5.1 million in stock-based compensation), and an increase of$12.5 million in advertising and marketing event expenses.

Previous wording

General and administrative expenses increased $3.3 million, or 2% in thethree months ended September 30, 2024 compared to thethree months ended September 30, 2023. The overall increase was primarily attributable to an increase of $3.1 million in compensation expense for employees (which includes an increase of $2.5 million in stock-based compensation).

Current wording

General and administrative expenses increased $11.4 million, or 7%, in thethree months ended December 31, 2024 compared to thethree months ended December 31, 2023. The overall increase was primarily attributable to an increase of $13.6 million in compensation expense for employees (which includes an increase of $7.5 million in stock-based compensation).

Previous wording

Interest income increased $3.3 million, or 13% in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily attributable to an increase in investment income as a result of increased investment balances.

Current wording

Interest income increased $3.0 million, or 13% in the three months ended December 31, 2024 compared to the three months ended December 31, 2023. The increase was primarily attributable to an increase in investment income as a result of increased investment balances.

Previous wording

Interest expense decreased $1.7 million, or 18% in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was primarily attributable to a decrease in interest expense on 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.

Current wording

Interest expense decreased $1.7 million, or 19% in the three months ended December 31, 2024 compared to the three months ended December 31, 2023. The decrease was primarily attributable to a decrease in interest expense on 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.

Previous wording

Provision for income taxes increased $72.7 million for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. The increase was primarily attributable to the change in the mix of earnings and losses in foreign jurisdictions. See Note 14, “Income Taxes,” of the notes to our condensed consolidated financial statements for additional information.

Current wording

Provision for income taxes decreased $53.3 million for the three months ended December 31, 2024, as compared to the three months ended December 31, 2023. The decrease was primarily attributable to the change in the mix of earnings and losses in foreign jurisdictions. See Note 14, “Income Taxes,” of the notes to our condensed consolidated financial statements for additional information.

Previous wording

Cost of revenues increased $39.6 million, or 22%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The overall increase was primarily attributable to an increase of $22.5 million in hosting fees paid to third-party providers, an increase of $6.2 million in compensation expense for employees (which includes an increase of $1.4 million in stock-based compensation), and an increase of $4.3 million in amortization from acquired intangible assets.

Current wording

Cost of revenues increased $68.2 million, or 18%, in the six months ended December 31, 2024 compared to the six months ended December 31, 2023. The overall increase was primarily attributable to an increase of $33.6 million in hosting fees paid to third-party providers, an increase of $13.5 million in compensation expense for employees (which includes an increase of $5.2 million in stock-based compensation), and an increase of $7.4 million in amortization from acquired intangible assets.

Previous wording

Other expense, net increased $11.1 million, or 133%, in thethree months ended September 30, 2024, compared to thethree months ended September 30, 2023. The increase in other expense was primarily attributable to an increase of $8.5 million related to our share of loss from an equity method investment, and an increase of $1.9 million in contributions to the Atlassian Foundation.

Current wording

Other expense, net increased $14.5 million, or 111% in the six months ended December 31, 2024 compared to the six months ended December 31, 2023. The increase was primarily attributable to an increase of $8.5 million in expense related to our share of loss from an equity method investment and an increase of $3.8 million in contributions to the Atlassian Foundation.

Previous wording

As of September 30, 2024, we had cash and cash equivalents totaling $2.1 billion, marketable securities totaling $161.4 million andaccounts receivables totaling $484.1 million. Since our inception, we have primarily financed our operations through cash flows generated by operationsand corporate debt.

Current wording

As of December 31, 2024, we had cash and cash equivalents totaling $2.2 billion, marketable securities totaling $251.6 million andaccounts receivables totaling $695.7 million. Since our inception, we have primarily financed our operations through cash flows generated by operationsand corporate debt.

Previous wording

Net cash provided by operating activities decreased by $86.5 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The net decrease was primarily attributable to an increase in cash paid to employees, including higher annual employee bonus payments, cash paid to suppliers, and cash used to pay income taxes, partially offset by an increase in cash received from customers.

Current wording

Net cash provided by operating activities decreased by $24.2 million for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. The net decrease was primarily attributable to an increase in cash paid to employees and vendors, partially offset by an increase in cash received from customers.

Previous wording

Net cash used in investing activities decreased by $38.2 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The net decrease was primarily attributable to a decrease in net outflows of $71.8 million related to marketable securities activity, partially offset by an increase in net outflows of $26.1 million related to strategic investment activity and an increase in cash outflows for acquisitions, net of cash acquired, of approximately $5.0 million.

Current wording

Net cash used in investing activities decreased by $788.9 million during the six months ended December 31, 2024, compared to the six months ended December 31, 2023. The net decrease was primarily attributable to a decrease in cash consideration paid for acquisitions, net of cash acquired of approximately $839.8 million, partially offset by an increase in net outflows of $37.1 million related to strategic investment activity.

Previous wording

Net cash used in financing activities increased by $120.9 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The net increase was primarily attributable to an increase in repurchases of Class A Common Stock of $117.7 million.

Current wording

Net cash used in financing activities increased by $75.8 million for the six months ended December 31, 2024, compared to the six months ended December 31, 2023. The net increase was primarily attributable to an increase in repurchases of Class A Common Stock of $85.2 million.

Previous wording

During the three months ended September 30, 2024, we repurchased and subsequently retired approximately 1.1 million shares of our Class A Common Stock for approximately $183.9 million at an average price per share of $162.57. All repurchases were made in open market transactions. As of September 30, 2024, we were authorized to purchase a remaining $267.9 million and $1.5 billion of our Class A Common Stock under the 2023 Share Repurchase Program and 2024 Share Repurchase Program, respectively.

Current wording

During the three and six months ended December 31, 2024, we repurchased and subsequently retired approximately 0.4 million and 1.5 million shares of our Class A Common Stock for approximately $68.4 million and $252.3 million at an average price per share of $185.95 and $168.30, respectively. All repurchases were made in open market transactions. As of December 31, 2024, we were authorized to purchase a remaining $199.6 million and $1.5 billion of its Class A Common Stock under the 2023 Share Repurchase Program and 2024 Share Repurchase Program, respectively.

Previous wording

Our principal commitments consist of contractual commitments for our cloud services platform and other infrastructure services, and obligations under leases for office space including obligations for leases that have not yet commenced. There were no material changes outside the ordinary course of business to our contractual obligations disclosed in our Annual Report on Form 10-K for fiscal year 2024.

Current wording

Our principal commitments consist of contractual commitments for our cloud services platform and other infrastructure services, and obligations under leases for office space including obligations for leases that have not yet commenced. Refer to Note 10, “Commitments and Contingencies,”to our condensed consolidated financial statements for additional information.

Previous wording

The following table presents a reconciliation of our Non-GAAP Financial Measures to the most comparable GAAP financial measure for the three months ended September 30, 2024 and 2023 (in thousands, except percentage and per share data):

Current wording

The following table presents a reconciliation of our Non-GAAP Financial Measures to the most comparable GAAP financial measure for the three and six months ended December 31, 2024 and 2023 (in thousands, except percentage and per share data):

Previous wording

(1) We utilize a fixed long-term projected non-GAAP tax rate in our computation of the non-GAAP income tax adjustments in order to provide better consistency across interim reporting periods. In projecting this long-term non-GAAP tax rate, we utilized a three-year financial projection that excludes the direct and indirect income tax effects of the other non-GAAP adjustments reflected above. Additionally, we considered our current operating structure and other factors such as our existing tax positions in various jurisdictions and key legislation in major jurisdictions where we operate. For fiscal year 2025, we determined the projected non-GAAP tax rate to be 26%. This fixed long-term projected non-GAAP tax rate eliminates the effects of non-recurring and period specific items which can vary in size and frequency. Examples of the non-recurring and period specific items include but are not limited to changes in the valuation allowance related to deferred tax assets, effects resulting from acquisitions, and unusual or infrequently occurring items. We will periodically re-evaluate this long-term rate, as necessary, for significant events. The rate could be subject to change for a variety of reasons, for example, significant changes in the geographic earnings mix or fundamental tax law changes in major jurisdictions where we operate.

Current wording

(1) We utilize a fixed long-term projected non-GAAP tax rate in our computation of the non-GAAP income tax adjustments in order to provide better consistency across interim reporting periods. In projecting this long-term non-GAAP tax rate, we utilized a three-year financial projection that excludes the direct and indirect income tax effects of the other non-GAAP adjustments reflected above. Additionally, we considered our current operating structure and other factors such as our existing tax positions in various jurisdictions and key legislation in major jurisdictions where we operate. For fiscal year 2025 and 2024, we determined the projected non-GAAP tax rate to be 26% and 27%, respectively. This fixed long-term projected non-GAAP tax rate eliminates the effects of non-recurring and period specific items which can vary in size and frequency. Examples of the non-recurring and period specific items include but are not limited to changes in the valuation allowance related to deferred tax assets, effects resulting from acquisitions, and unusual or infrequently occurring items. We will periodically re-evaluate this long-term rate, as necessary, for significant events. The rate could be subject to change for a variety of reasons, for example, significant changes in the geographic earnings mix or fundamental tax law changes in major jurisdictions where we operate.

Previous wording

(2) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three months ended September 30, 2024 and September 30, 2023 because the effect would have been anti-dilutive.

Current wording

(2) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three and six months ended December 31, 2024 and 2023 because the effect would have been anti-dilutive.