Atlassian Corp

Previous wording

Our deeply interconnected portfolio of apps, AI agents, and Collections, each with discrete value propositions, delivers solutions for software teams, IT operations and support teams, leadership, and business teams. We’ve put AI at the center of our portfolio to enhance teamwork for users across our apps and Collections for all teams. These apps, agents, and Collections are all built on the Atlassian Cloud Platform and data model: a common technology foundation that seamlessly connects teams, information, and workflows throughout an organization.

Current wording

Our deeply interconnected portfolio of apps, AI agents, and Collections, each with discrete value propositions, delivers solutions for software teams, IT operations and support teams, leadership and business teams. As an AI-first company, we have embedded AI capabilities across every surface of our platform, enabling organizations to orchestrate work effectively across both human and AI teammates. These apps, agents, and Collections are all built on the Atlassian Cloud Platform and data model: a common technology foundation that seamlessly connects teams, information, context, and workflows throughout an organization.

Previous wording

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

Current wording

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

Previous wording

As of June 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. No single customer contributed more than 5% of our total revenues during fiscal year 2025.

Current wording

As of June 30, 2026, we had more than 350,000 customers. If we include single-user accounts and organizations that have only adopted our free or starter offerings, the active use of our offerings extends well beyond our total customer base. Through the extensive use of our software, we are able to reach a vast number of users, gather insights to refine our offerings, and generate growing revenue by expanding within our total customer base. Customers with greater than $10,000 in Cloud ARR represent the majority of our Cloud revenue. No single customer contributed more than 5% of our total revenues during fiscal year 2026.

Previous wording

Free cash flow for fiscal year 2025 remained approximately flat as compared tofiscal year 2024. The slight decrease in free cash flow was primarily attributable to an increase in capital expenditures offset by 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, offset by an increase in cash paid to suppliers and employees.

Current wording

Free cash flow decreased by$96.5 million for fiscal year 2026 compared to fiscal year 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 driven by an increase in cash paid to employees, including payments made under restructuring plans, vendors, and a decrease in interest received, partially offset by an increase in cash received from customers.

Previous wording

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

Current wording

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

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. To support our cloud-based infrastructure, we utilize third-party managed hosting facilities.

Current wording

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

Previous wording

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

Current wording

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

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 decline slightly, driven by the mechanical drag on total revenue growth in fiscal year 2027 as we lap the greater upfront term license revenue recognized in fiscal year 2026, revenue mix shift from Data Center offerings to Cloud offerings and increases in cost of revenues to support our increasing number of Cloud customers and their related AI usage, partially offset by the continued optimization of our Cloud infrastructure and support costs.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Total revenues increased $856.7 million, or 20%, in fiscal year 2025 compared to fiscal year 2024. Growth in total revenues was primarily attributable to increased demand for our offerings from existing customers. Of total revenues recognized in fiscal year 2025, over 90% was attributable to sales to customer accounts existing on or before June 30, 2024.

Current wording

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

Previous wording

Subscription revenues increased $1.0 billion, or 26%, in fiscal year 2025 compared to fiscal year 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 $1.3 billion, or 27%, in fiscal year 2026 compared to fiscal year 2025. The increase in subscription revenues was primarily attributable to paid seat expansion from our existing customers and price increases.

Previous wording

Cost of revenues increased $91.4 million, or 11%, in fiscal year 2025 compared to fiscal year 2024. The overall increase was primarily attributable to an increase of $32.5 million in hosting fees paid to third-party providers, an increase of $25.7 million in compensation expense for employees (which includes an increase of $11.3 million in stock-based compensation), and an increase of $18.2 million in software subscription costs.

Current wording

Cost of revenues increased $102.0 million, or 11%, in fiscal year 2026 compared to fiscal year 2025. The overall increase was primarily attributable to an increase of $87.0 million in hosting fees paid to third-party providers, and an increase of $38.4 million in amortization expense, partially offset by a decrease of $56.2 million in compensation expense for employees (which includes a decrease of $12.6 million in stock-based compensation), and a decrease of $19.6 million in fees paid for consulting and other professional services. In addition, we recorded restructuring charges of $53.2 million in fiscal year 2026, which were comprised of $46.6 million of severance and other termination benefits, and $6.6 million of impairment charges for lease and leasehold improvements.

Previous wording

Research and development expenses increased $485.2 million, or 22%, in fiscal year 2025 compared to fiscal year 2024. The overall increase was primarily attributable to an increase of $462.7 million in compensation expenses for employees (which includes an increase of $225.0 million instock-based compensation).

Current wording

Research and development expenses increased $599.9 million, or 22%, in fiscal year 2026 compared to fiscal year 2025. The overall increase was primarily attributable to an increase of $439.4 million in compensation expenses for employees (which includes an increase of $206.5 million in stock-based compensation). In addition, we recorded restructuring charges of $144.4 million in fiscal year 2026, which were comprised of $108.8 million of severance and other termination benefits, and $35.6 million of impairment charges for lease and leasehold improvements.

Previous wording

Marketing and sales expenses increased $257.0 million, or 29%, forfiscal year 2025 compared to fiscal year 2024. The overall increase was primarily attributable to an increase of$163.0 million in compensation expenses for employees(which includes an increase of $30.9 million in stock-based compensation), and an increase of $74.9 million in advertising and marketing program expenses.

Current wording

Marketing and sales expenses increased $406.6 million, or 36%, for fiscal year 2026 compared to fiscal year 2025. The overall increase was primarily attributable to an increase of $225.3 million in compensation expenses for employees (which includes an increase of $38.1 million in stock-based compensation), and an increase of $78.5 million in advertising and marketing program expenses. In addition, we recorded restructuring charges of $51.5 million in the fiscal year 2026, which were comprised of $26.4 million of impairment charges for lease and leasehold improvements, and $25.1 million of severance and other termination benefits.

Previous wording

Other expense, net increased $19.4 million, or 63% infiscal year 2025 compared to fiscal year 2024. The overall increase was primarily attributable to an increase of$9.2 million in expense related to our share of loss from an equity method investment and an increase of$7.0 millionin contributions to the Atlassian Foundation.

Current wording

Other expense, net decreased $41.7 million, or (83)%, in fiscal year 2026 compared to fiscal year 2025. The overall decrease in other expense was primarily attributable to an increase of $25.3 million in net gains on public and private equity investments and a decrease of $20.4 million in expenses related to our share of loss from an equity method investment.

Previous wording

Interest income increased$15.7 million, or 16% in fiscal year 2025 compared to fiscal year 2024. The increase was primarily attributable to an increase in investment income as a result of increased investment balances.

Current wording

Interest income decreased $42.6 million, or 38%, in fiscal year 2026 compared to fiscal year 2025. The decrease was primarily attributable to a decrease in investment income as a result of decreased invested cash balances and declining interest rates.

Previous wording

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

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

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 wording

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.

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. We are currently evaluating the future impact of these tax law changes on our consolidated financial statements.

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. The legislation has multiple effective dates, with certain provisions effective in fiscal 2026 and others in the subsequent years. The changes had an immaterial impact on our provision for income taxes for our fiscal year 2026. We will continue to monitor any developments and guidance related to OBBBA.

Previous wording

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 2025. As of June 30, 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.

Current wording

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 June 30, 2026, the global minimum tax did 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.

Previous wording

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

Current wording

As of June 30, 2026, we had cash and cash equivalents totaling $1.2 billion and accounts receivables totaling $1.3 billion. 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 increased by $12.2 million for fiscal year 2025, compared to fiscal year 2024. The net increase was primarily attributable to an increase in cash received from customers, partially offset by an increase in cash paid to suppliers and employees.

Current wording

Net cash provided by operating activities decreased by $107.3 million for fiscal year 2026, compared to fiscal year 2025. The net decrease was primarily attributable to an increase in cash paid to employees, including payments made under restructuring plans, vendors, and a decrease in interest received, partially offset by an increase in cash received from customers.

Previous wording

Net cash used in investing activities decreased by $621.4 million for fiscal year 2025, compared to fiscal year 2024. The net decrease was primarily attributable to a decrease in cash consideration paid for acquisitions, net of cash acquired, of approximately $833.5 million, partially offset by an increase in net outflows of $170.0 million related to marketable securities activity, and an increase in net outflows of $30.4 million related to strategic investment activity.

Current wording

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

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 the 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 Share Repurchase Program commenced in April 2025 following completion of the previous share repurchase program. The 2024 Repurchase Program was completed in March 2026. In October 2025, the Board of Directors authorized a new program under which we may repurchase up to an additional $2.5 billion of our outstanding Class A Common Stock (the “2025 Repurchase Program” and, together with the 2024 Repurchase Program, the “Repurchase Programs”). The 2025 Repurchase Program commenced in March 2026 following completion of the 2024 Repurchase Program.

Previous wording

During fiscal year 2025, we repurchased approximately 4.0 million shares of our Class A Common Stock for approximately $780.7 million at an average price per share of $196.02 through the Repurchase Programs. All repurchases were made in open market transactions. As of June 30, 2025, $1.2 billion of our Class A Common Stock remained available for repurchase under the 2024 Repurchase Program. Refer to Note 14, “Stockholders' Equity,” to our consolidated financial statements for additional information.

Current wording

During fiscal year 2026, we repurchased approximately 19.1 million shares of our Class A Common Stock for approximately $1.8 billion at an average price per share of $94.31 through the Repurchase Programs. The 1% excise tax instituted by the Inflation Reduction Act is excluded in the total repurchase cost and average price paid. All repurchases were made in open market transactions. As of June 30, 2026, $1.9 billion of our Class A Common Stock remained available for repurchase under the 2025 Repurchase Program. Refer to Note 16, “Stockholders’ Equity,” to our consolidated financial statements for additional information.

Previous wording

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

Current wording

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

Previous wording

Measures, which may be different from similarly titled non-GAAP measures used by other companies, provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations. Management believes that tracking and presenting these Non-GAAP Financial Measures provides management, our board of directors, investors and the analyst community with the ability to better evaluate matters such as: our ongoing core operations, including comparisons between periods and against other companies in our industry; our ability to generate cash to service our debt and fund our operations; and the underlying business trends that are affecting our performance.

Current wording

In addition to the measures presented in our consolidated financial statements, we regularly review other measures that are not presented in accordance with GAAP, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts, and make strategic decisions. The key measures we consider are non-GAAP gross profit and non-GAAP gross margin, non-GAAP operating income and non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share, and free cash flow (collectively, the “Non-GAAP Financial Measures”). These Non-GAAP Financial Measures, which may be different from similarly titled non-GAAP measures used by other companies, provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations. Management believes that tracking and presenting these Non-GAAP Financial Measures provides management, our board of directors, investors and the analyst community with the ability to better evaluate matters such as: our ongoing core operations, including comparisons between periods and against other companies in our industry; our ability to generate cash to service our debt and fund our operations; and the underlying business trends that are affecting our performance.

Previous wording

•Non-GAAP gross profit and non-GAAP gross margin. Excludes expenses related to stock-based compensation and amortization of acquired intangible assets.

Current wording

•Non-GAAP gross profit and non-GAAP gross margin. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, and restructuring charges.

Previous wording

•Non-GAAP operating income and non-GAAP operating margin. Excludes expenses related to stock-based compensation and amortization of acquired intangible assets.

Current wording

•Non-GAAP operating income and non-GAAP operating margin. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, and restructuring charges.

Previous wording

•Non-GAAP net income and non-GAAP net income per diluted share. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, gain on a non-cash sale of a controlling interest of a subsidiary, and the related income tax adjustments.

Current wording

•Non-GAAP net income and non-GAAP net income per diluted share. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, restructuring charges, and the related income tax effects of these items.

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 years 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.

Current wording

(2) 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.