Atlassian Corp
For the period ended Dec 31, 2025. Filed Feb 6, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2025 · Filed Feb 6, 2026
TEAM$153.68-16.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-10-31.
0001650372-25-000068
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-02-06.
0001650372-26-000011
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 122 previous paragraphs and 139 current paragraphs.
79 unchanged; 30 reworded; 20 added; 13 removed; 0 previous and 10 current paragraphs rearranged.
Tables are not compared: 17 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
In the second quarter of fiscal 2026, we completed the acquisitions of The Browser Company of New York Inc. (“BCNY”) and A Software Company (“DX”). We believe integrating these technologies into our offerings will enhance customer value. BCNY has built a browser for enterprises optimized for SaaS applications in the AI-era. DX offers market-leading engineering intelligence that provides leaders with data-driven insights to understand how their investments are helping teams accelerate and improve their work and enhances the value of the offerings in our Collections.
Current report
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, vendors, and cash paid for income taxes, partially offset by an increase in cash received from customers.
Current report
Business Combinations
Current report
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 growth, discount rate, and technology migration curves. These assumptions are inhere ntly 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.
Current report
Cost of revenues increased $14.6 million, or 7%, in the three months ended December 31, 2025 compared to the three months ended December 31, 2024. The overall increase was primarily attributable to an increase of $23.0 million in hosting fees and an increase of $9.6 million in amortization expense, partially offset by a decrease of $13.6 million in compensation expense for employees (which includes a decrease of $2.9 million in stock-based compensation) and a decrease of $4.0 million in consulting and other professional fees.
Current report
Research and development expenses increased $146.3 million, or 22%, in the three months ended December 31, 2025 compared to the three months ended December 31, 2024. The overall increase was primarily attributable to anincrease of$141.8 million in compensation expenses for employees (which includes anincrease of$64.6 million instock-based compensation).
Current report
General and administrative expenses increased $24.7 million, or 15%, in thethree months ended December 31, 2025 compared to thethree months ended December 31, 2024. The overall increase was primarily attributable to an increase of $16.7 million in compensation expense for employees, an increase of $2.5 million in software subscription related expense and an increase of $1.7 million in professional service fees.
Current report
Other Expense, net
Current report
Other expense, net increased $5.6 million, or 69%, in the three months ended December 31, 2025, compared to the three months ended December 31, 2024. The overall increase in other expense was primarily attributable to an increase of $6.5 million in realized loss on strategic investments.
Current report
Benefit from Income Taxes
Current report
Benefit from income taxes increased $4.1 million for the three months ended December 31, 2025, as compared to the three months ended December 31, 2024. The increase was primarily attributable to 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 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.
Current report
Six Months Ended December 31, 2025 and 2024
Current report
Revenues
Current report
Other revenues increased $7.7 million, or 6%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024. The increase in other revenues was primarily attributable to an increase of $7.9 million in marketplace revenue.
Current report
Interest Income
Current report
Interest income decreased$6.2 million, or 12% in the six months ended December 31, 2025 compared to the six months ended December 31, 2024. The decrease was primarily attributable to a decrease in our portfolio yield due to declining interest rates.
Current report
Interest Expense
Current report
Interest expense increased$6.6 million, or 45%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024. The increasewas primarily attributable to the amortization of interest rate swap contracts.
Current report
Not meaningful
Current report
Net cash provided by operating activities decreased by $125.9 million for the six months ended December 31, 2025, compared to the six months ended December 31, 2024. 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.
Removed paragraphs (13)
Previous report
Cost of Revenues
Previous report
Operating Expenses
Previous report
Research and Development
Previous report
Marketing and Sales
Previous report
General and Administrative
Previous report
Cost of Revenues
Previous report
Operating Expenses
Previous report
Research and Development
Previous report
Marketing and Sales
Previous report
General and Administrative
Previous report
Net cash provided by operating activities increased by $48.2 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The net increase was primarily attributable to an increase in cash received from customers, partially offset by an increase in cash paid to employees and vendors.
Previous report
On October 20, 2025, we acquired 100% of the outstanding equity of The Browser Company of New York Inc. (“BCNY”), the company behind the Dia and Arc browsers. Under the terms of the agreement, we acquired BCNY for approximately $610 million. Total purchase price consideration was composed of approximately $488.3 million in cash, which was funded through our existing cash balance, and the remainder in the form of shares of our Class A Common Stock, which are subject to continued vesting provisions.
Previous report
In September 2025, we entered into a definitive agreement to acquire A Software Company (“DX”), a leader in engineering intelligence. Under the terms of the agreement, we will acquire DX for approximately$1.0 billion, inclusive of DX’s cash balance, subject to customary adjustments. Total consideration will be comprised of cash and shares of our Class A Common Stock, which are subject to continued vesting provisions. We expect to fund the cash consideration through existing cash balances. We anticipate the transaction to close in the second quarter of fiscal year 2026, subject to customary closing conditions, including required regulatory approvals.
Reworded paragraphs (30)
Previous wording
During the three months ended September 30, 2025, we initiated a rebalancing of resources resulting in the elimination of certain roles. These actions were part of our initiatives to reduce additional capacity no longer necessary due to the increased ability, accessibility, performance, stability, and supportability of our products. As a result, we recorded severance and other termination benefits of $27.9 million and stock-based compensation of $1.4 million for the affected employees for the three months ended September 30, 2025.
Current wording
During the first quarter of fiscal 2026, we initiated a rebalancing of resources, resulting in the elimination of certain roles. These actions were part of our initiatives to reduce additional capacity no longer necessary due to the increased ability, accessibility, performance, stability, and supportability of our products. As a result, we recorded severance and other termination benefits of $27.9 million and stock-based compensation of $1.4 million for the affected employees for the six months ended December 31, 2025.
Previous wording
In addition, during the three months ended September 30, 2025, we exited certain floors of a leased property, which we plan to sublease, in order to optimize our real estate footprint. As a result, we recorded impairment charges for the related operating lease right-of-use assets and leasehold improvements of $26.3 million for the three months ended September 30, 2025.
Current wording
In addition, during the first quarter of fiscal 2026, we exited certain floors of a leased property, which we plan to sublease, in order to optimize our real estate footprint. As a result, we recorded impairment charges for the related operating lease right-of-use assets and leasehold improvements of $26.3 million for the six months ended December 31, 2025.
Previous wording
A summary of restructuring charges for the three months ended September 30, 2025 by major activity type is as follows (in thousands):
Current wording
A summary of restructuring charges for the six months ended December 31, 2025 by major activity type is as follows (in thousands):
Previous wording
The execution of these actions, including cash payment of the severance and other termination benefits related liabilities, is expected to be substantially completed as of December 31, 2025. Refer to Note 14, “Restructuring,” in the notes of our condensed consolidated financial statements for additional information.
Current wording
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.
Previous wording
As of September 30, 2025, we had more than 300,000 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.
Current wording
As of December 31, 2025, 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.
Previous wording
Free cash flow increased by $40.3 million during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase in free cash flow was primarily attributable to an increase in net cash provided by operating activities. 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 employees and vendors.
Current wording
Free cash flow decreased by $174.1 million during the three months ended December 31, 2025, as compared to the three months ended December 31, 2024. 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, vendors, and cash paid for income taxes, partially offset by an increase in cash received from customers.
Previous wording
Cost of revenues primarily consists of expenses related to 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, certain IT program expenses, and facilities and related overhead costs.
Current wording
Cost of revenues primarily consists of expenses related to hosting our cloud infrastructure, which includes third-party hosting fees and depreciation associated with computer equipment, compensation expenses for our employees, including stock-based compensation, 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, certain IT program expenses, and facilities and related overhead costs.
Previous wording
We expect gross margin to be approximately flat, driven by the optimization of Cloud infrastructure costs, offset by the revenue mix shift from Data Center offerings to Cloud offerings.
Current wording
We expect gross margin to increase modestly, driven by optimization of our Cloud infrastructure and support costs, partially offset by the revenue mix shift from Data Center offerings to Cloud offerings.
Previous wording
There have been no significant changes to our critical accounting policies and estimates during the three months ended September 30, 2025, 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.
Current wording
There have been no other significant changes to our critical accounting policies and estimates during the three and six months ended December 31, 2025, 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.
Previous wording
Total revenues increased $244.8 million, or 21%, in the three months ended September 30, 2025 compared to the three months ended September 30, 2024. 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 September 30, 2025, over 90% was attributable to sales to customer accounts existing on or before June 30, 2025.
Current wording
Total revenues increased $299.9 million, or 23%, in the three months ended December 31, 2025 compared to the three months ended December 31, 2024. 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 December 31, 2025, over 90% was attributable to sales to customer accounts existing on or before September 30, 2025.
Previous wording
Subscription revenues increased $242.6 million, or 21%, in the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase in subscription revenues was primarily attributable to paid seat expansion from our existing customers and price increases.
Current wording
Subscription revenues increased $294.4 million, or 24%, in the three months ended December 31, 2025 compared to the three months ended December 31, 2024. The increase in subscription revenues was primarily attributable to paid seat expansion from our existing customers and price increases.
Previous wording
Other revenues increased $2.2 million, or 4%, in the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase in other revenues was primarily attributable to an increase of $3.0 million in marketplace revenue.
Current wording
Other revenues increased $5.4 million, or 7%, in the three months ended December 31, 2025 compared to the three months ended December 31, 2024. The increase in other revenues was primarily attributable to an increase of $4.9 million in marketplace revenue.
Previous wording
Interest income increased $1.3 million, or 4% in the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily attributable to an increase in investment income as a result of increased invested cash balances.
Current wording
Interest income decreased $7.5 million, or (29)% in the three months ended December 31, 2025, compared to the three months ended December 31, 2024. The decrease was primarily attributable to a decrease in investment income as a result of decreased invested cash balances.
Previous wording
Interest expense increased $1.3 million, or 18% in the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The increase was primarily attributable to the amortization of interest rate swap contracts.
Current wording
Interest expense increased $5.2 million, or 72% in the three months ended December 31, 2025 compared to the three months ended December 31, 2024. The increase was primarily attributable to the amortization of interest rate swap contracts.
Previous wording
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 income tax benefit for the three months ended September 30, 2025 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.
Current wording
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 income tax benefit for the three and six months ended December 31, 2025 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.
Previous wording
Cost of revenues increased $40.3 million, or 19%, in the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The overall increase was primarily attributable to restructuring charges of $31.6 million, which were composed of $29.2 million of severance and other termination benefits, and $2.4 million related to impairment charges for a lease and leasehold improvements, as well as an increase of $14.4 million in hosting fees.
Current wording
Cost of revenues increased $54.9 million, or 12%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024. The overall increase was primarily attributable to an increase of $37.4 million in hosting fees paid to third-party providers. In addition, we recorded restructuring charges of $31.6 million in the 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 was partially offset by a decrease of $6.8 million in fees paid for consulting and other professional services.
Previous wording
Research and development expenses increased $152.9 million, or 25%, in the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The overall increase was primarily attributable to anincrease of$136.5 million in compensation expenses for employees (which includes anincrease of$53.0 million instock-based compensation). In addition, we recorded restructuring charges of$12.1 million in the three months ended September 30, 2025 related to impairment charges for a lease and leasehold improvements.
Current wording
Research and development expenses increased $299.2 million, or 23%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024. The overall increase was primarily attributable to anincrease of $278.3 million in compensation expenses for employees (which includes anincrease of $117.6 million instock-based compensation). In addition, we recorded restructuring charges of $12.1 million in thesix months ended December 31, 2025, related to impairment charges for a lease and leasehold improvements.
Previous wording
Marketing and sales expenses increased $84.0 million, or 33%, for thethree months ended September 30, 2025 compared to thethree months ended September 30, 2024. The overall increase was primarily attributable to an increase of $45.8 million in compensation expenses for employees (which includes an increase of $8.0 million in stock-based compensation), and anincrease of$21.2 million in advertising and marketing program expenses. In addition, we recorded restructuring charges of $8.2 million in the three months ended September 30, 2025 related to impairment charges for a lease and leasehold improvements.
Current wording
Marketing and sales expenses increased $188.6 million, or 36%, for thesix months ended December 31, 2025, compared to thesix months ended December 31, 2024. The overall increase was primarily attributable to an increase of$109.8 million in compensation expenses for employees(which includes anincrease of $20.2 million in stock-based compensation), and anincrease of $50.9 million in advertising and marketing program expenses. In addition, we recorded restructuring charges of$8.2 million in thesix months ended December 31, 2025, related to impairment charges for a lease and leasehold improvements.
Previous wording
General and administrative expenses increased $31.9 million, or 22%, in thethree months ended September 30, 2025 compared to thethree months ended September 30, 2024. The overall increase was primarily attributable to an increase of $19.6 million in compensation expense for employees (which includes an increase of $2.2 million in stock-based compensation), and an increase of $4.4 million in legal fees. In addition, we recorded restructuring charges of $3.7 million in the three months ended September 30, 2025 related to impairment charges for a lease and leasehold improvements.
Current wording
General and administrative expenses increased $56.6 million, or 18%, in thesix months ended December 31, 2025 compared to thesix months ended December 31, 2024. The overall increase was primarily attributable to an increase of$36.4 million in compensation expenses for employees (which includes an increase of$2.2 million in stock-based compensation) and an increase of$6.2 million inprofessional service fees. In addition, we recorded restructuring charges of $3.7 million in thesix months ended December 31, 2025, related to impairment charges for a lease and leasehold improvements.
Previous wording
Other income (expense), net increased $38.2 million, or 197%, in the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The overall increase in other income (expense) was primarily attributable to an increase of $24.7 million in unrealized gains on public equity investments and a decrease of $15.3 millionin expense related to our share of loss from an equity method investment.
Current wording
Other income (expense), net increased $32.7 million, or 119% in the six months ended December 31, 2025 compared to the six months ended December 31, 2024. 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 million in expenses related to our share of loss from an equity method investment.
Previous wording
Provision for (benefit from) income taxes decreased $98.1 million for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The decrease was primarily attributable to the change in the mix of earnings and losses in foreign jurisdictions. See Note 17, “Income Taxes,” of the notes to our condensed consolidated financial statements for additional information.
Current wording
Provision for (benefit from) income taxes decreased $102.2 million for the six months ended December 31, 2025, as compared to the six months ended December 31, 2024. The decrease was primarily attributable to the change in the mix of earnings and losses in foreign jurisdictions 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.
Previous wording
As of September 30, 2025, we had cash and cash equivalents totaling $2.3 billion, marketable securities totaling $456.0 million, andaccounts receivable totaling $536.9 million. Since our inception, we have primarily financed our operations through cash flows generated by operationsand corporate debt.
Current wording
As of December 31, 2025, we had cash and cash equivalents totaling $1.2 billion, marketable securities totaling $407.9 million, andaccounts receivable totaling $911.9 million. Since our inception, we have primarily financed our operations through cash flows generated by operationsand corporate debt.
Previous wording
Net cash used in investing activities increased by $42.0 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The net increase was primarily attributable to an increase in net outflows of $23.3 million related to our strategic investment and marketable security activity and an increase in cash consideration paid for acquisitions, net of cash acquired of approximately $10.7 million.
Current wording
Net cash used in investing activities increased by $1,074.2 million during the six months ended December 31, 2025, compared to the six months ended December 31, 2024. The net increase was primarily attributable to an increase in cash consideration paid for acquisitions, net of cash acquired of approximately $1,223.9 million.
Previous wording
Net cash used in financing activities increased by $66.1 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The net increase was primarily attributable to an increase in repurchases of Class A Common Stock of $69.2 million.
Current wording
Net cash used in financing activities increased by $194.3 million for the six months ended December 31, 2025, compared to the six months ended December 31, 2024. The net increase was primarily attributable to an increase in repurchases of Class A Common Stock of $197.4 million.
Previous wording
In January 2023, the Board of Directors authorized a program to repurchase up to $1.0 billion of our outstanding Class A Common Stock (the “2023 Repurchase Program”). In September 2024, the Board of Directors authorized a new program under which we may repurchase up to an additional $1.5 billion of our outstanding Class A Common Stock (the “2024 Repurchase Program” and, together with the 2023 Repurchase Program, the “Repurchase Programs”). The 2024 Repurchase Program commenced in April 2025 following completion of the 2023 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.
Current wording
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. 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 will commence 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.
Previous wording
During the three months ended September 30, 2025, we repurchased and subsequently retired approximately 1.4 million shares of our Class A Common Stock for approximately $249.9 million at an average price per share of $180.74. All repurchases were made in open market transactions. As of September 30, 2025, $921.3 million of our Class A Common Stock remained available for repurchase under the 2024 Repurchase Program.
Current wording
During the three and six months ended December 31, 2025, we repurchased and subsequently retired approximately 1.3 million and 2.7 million shares of Class A Common Stock for approximately $200.4 million and $450.3 million at an average price per share of $156.74 and $169.21, respectively. All repurchases were made in open market transactions. As of December 31, 2025, $720.9 million and $2.5 billion of Class A Common Stock remained available for repurchase under the 2024 Share Repurchase Program and 2025 Share Repurchase Program, respectively.
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, 2025 and 2024 (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, 2025 and 2024 (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 2026 and 2025, we determined the projected non-GAAP tax rate to be 24% and 26%, 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.
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 years 2026 and 2025, we determined the projected non-GAAP tax rate to be 24% and 26%, 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, 2025 and September 30, 2024 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, 2025 and December 31, 2024 because the effect would have been anti-dilutive.
Previous wording
(3) Restructuring charges include stock-based compensation expense related to the rebalancing of resources for the three months ended September 30, 2025.
Current wording
(3) Restructuring charges include stock-based compensation expense related to the rebalancing of resources for the six months ended December 31, 2025.
Rearranged current paragraphs (10)
Current report — wording carried from elsewhere
Marketing and sales expenses increased $104.5 million, or 38%, for thethree months ended December 31, 2025 compared to thethree months ended December 31, 2024. The overall increase was primarily attributable to an increase of $64.0 million in compensation expenses for employees (which includes an increase of $12.2 million in stock-based compensation), and anincrease of$29.7 million in advertising and marketing program expenses.
Current report — wording carried from elsewhere
Total revenues increased $544.6 million, or 22%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024. Growth in total revenues was primarily attributable to increased demand for our products from existing customers. Of total revenues recognized in the six months ended December 31, 2025, over 90% was attributable to sales to customer accounts existing on or before June 30, 2025.
Current report — wording carried from elsewhere
Subscription revenues increased $537.0 million, or 23%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024. The increase in subscription revenues was primarily attributable to paid seat expansion from our existing customers and price increases.
Current report — wording carried from elsewhere
Total revenues by deployment options were as follows:
Current report — wording carried from elsewhere
Total revenues by geography were as follows:
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
A significant amount of our earnings is generated by our Australian subsidiaries. Our future effective tax rates may be adversely affected to the extent earnings are lower than anticipated in countries where we have lower statutory tax rates. Changes in our global operations could result in changes to our effective tax rates, future cash flows, and overall profitability of our operations.
Current report — wording carried from elsewhere
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. Based on the information currently available, we do not anticipate a material change in unrecognized tax benefits in the next 12 months.
Current report — wording carried from elsewhere
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 income tax benefit for the three and six months ended December 31, 2025 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.
Current report — wording carried from elsewhere
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 December 31, 2025, 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.