Atlassian Corp (TEAM)

CIK: 0001650372. SIC: 7372 Services-Prepackaged Software. Latest 10-K as of: 2025-08-15.

SIC breadcrumb: Services > Business Services > SIC 7372 Services-Prepackaged Software

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1650372. Latest filing source: 0001650372-25-000036.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-08-15. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001650372.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-01. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001650372.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001650372-26-000027.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-01. Report date: 2026-03-31.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and the information contained in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended June 30, 2025, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on August 15, 2025.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “plan,” “should,” “estimate,” or “continue,” and similar expressions or variations, but these words are not the exclusive means for identifying such statements. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results and timing expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. Except as may be required by law, we assume no obligation to update these forward-looking statements or the reasons that results could differ from these forward-looking statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Overview

Our mission is to unleash the potential of every team.

Atlassian’s team collaboration software enables organizations to connect all teams through a system of work that unlocks productivity at scale.

Our deeply interconnected portfolio of apps, AI agents, and products, 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, a carefully curated set of apps and agents designed to solve complex tasks. 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.

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.

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

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

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investments are helping teams accelerate and improve their work and enhances the value of the offerings in our Collections.

Economic Conditions

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, changes in trade policies, 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.

Restructuring

During the first quarter of fiscal year 2026, we initiated a restructuring plan (“July 2025 Plan”) to reduce additional capacity no longer necessary due to the increased ability, accessibility, performance, stability, and supportability of our products. The July 2025 Plan is substantially completed as of March 31, 2026.

During the third quarter of fiscal year 2026, we initiated a restructuring plan (“March 2026 Plan”) to accelerate building the future of teamwork in the AI era. This includes self-funding further investment in key strategic priorities, such as AI and enterprise sales, reorganizing our teams to move with more focus and speed across the Atlassian System of Work, and optimizing for long-term operational efficiency and sustainability. The execution of the March 2026 Plan, including cash payment of severance and other termination benefits related liabilities, is expected to be substantially completed by the end of fiscal year 2026.

As a result, we recorded total severance and other termination benefits of $198.1 million and stock-based compensation of $1.4 million for the affected employees for the nine months ended March 31, 2026.

In addition, we exited certain leased properties, which we plan to sublease, in order to optimize our real estate footprint. As a result, we recorded total impairment charges for the related operating lease right-of-use assets and leasehold improvements of $80.0 million for the nine months ended March 31, 2026.

A summary of restructuring charges for the nine months ended March 31, 2026 by major activity type is as follows (in thousands):

Severance and Other Termination Benefits

Stock-based Compensation

Lease Consolidation

Total

Cost of revenue

$

44,541 

$

1,432 

$

6,647 

$

52,620 

Research and development

104,972 

— 

35,650 

140,622 

Marketing and sales

24,423 

— 

26,421 

50,844 

General and administrative

24,120 

— 

11,303 

35,423 

Total

$

198,056 

$

1,432 

$

80,021 

$

279,509 

Refer to Note 14, “Restructuring,” in the notes of our condensed consolidated financial statements for additional information.

Key Business Metrics

We utilize the following key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.

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Customer Base

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 apps or 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 with a small footprint by either adopting our free editions or purchasing a single app or 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.

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

As of March 31, 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.

The following table sets forth our number of customers with greater than $10,000 in Cloud ARR as of the dates presented:

As of

March 31, 2025

June 30, 2025

September 30, 2025

December 31, 2025

March 31, 2026

Number of customers with greater than $10,000 in Cloud ARR

50,715 

51,978 

53,017 

55,369 

55,913 

Free Cash Flow

Free cash flow is a non-GAAP financial measure that we calculate as net cash provided by operating activities less net cash used in investing activities for capital expenditures. Management considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used to fund our commitments, repay our debt, and for strategic opportunities, such as reinvesting in our business, making strategic acquisitions, and strengthening our financial position. Free cash flow is not a measure calculated in accordance with GA

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization. Confidence: high. Filing date: 2025-08-15. Report date: 2025-06-30.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section of our Annual Report on Form 10-K discusses our financial condition and results of operations for fiscal years 2025 and 2024, and year-to-year comparisons between fiscal years 2025 and 2024, in accordance with U.S. generally accepted accounting principles (“GAAP”). A discussion of our financial condition and results of operations for the fiscal year 2023 and year-to-year comparisons between fiscal years 2024 and 2023 that is not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended 2024, filed on August 16, 2024.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing under “Financial Statements and Supplementary Data” in Item 8 in this Annual Report on Form 10-K. As discussed in the section titled “Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” under Part I, Item 1A in this Annual Report on Form 10-K.

Overview

Our mission is to unleash the potential of every team.

Atlassian’s team collaboration software enables organizations to connect all teams through a system of work that unlocks productivity at scale.

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

48

common technology foundation that seamlessly connects teams, information, and workflows throughout an organization.

We generate revenues primarily in the form of subscription fees. Subscription revenues consist primarily of fees earned from subscription-based arrangements for providing customers the right to use our software apps in a cloud-based-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.

Economic Conditions

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, changes in trade policies, 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.

Key Business Metrics

We utilize the following key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.

Customer Base

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 apps or 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 with a small footprint by either adopting our free editions or purchasing a single app or 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.

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

As of 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.

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The following table sets forth our number of customers with greater than $10,000 in Cloud ARR as of the dates presented:

As of

June 30, 2023

June 30, 2024

June 30, 2025

Number of customers with greater than $10,000 in Cloud ARR

38,726 

45,842 

51,978 

Free Cash Flow

Free cash flow is a non-GAAP financial measure that we calculate as net cash provided by operating activities less net cash used in investing activities for capital expenditures. Management considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used to fund our commitments, repay our debt, and for strategic opportunities, such as reinvesting in our business, making strategic acquisitions, and strengthening our financial position. Free cash flow is not a measure calculated in accordance with GAAP and should not be considered in isolation from, or as a substitute for financial information prepared in accordance with GAAP, such as GAAP net cash provided by operating activities. In addition, free cash flow may not be comparable to similarly titled metrics of other companies due to differences in the methods of calculation. The following table presents a reconciliation of net cash provided by operating activities to free cash flow for the periods presented (in thousands):

Fiscal Year Ended June 30,

2025

2024

Net cash provided by operating activities

$

1,460,393 

$

1,448,159 

Less: Capital expenditures

(44,850)

(32,577)

Free cash flow

$

1,415,543 

$

1,415,582 

Free cash flow for fiscal year 2025 remained approximately flat as compared to fiscal 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.

For more information about net cash provided by operating activities, please see “Liquidity and Capital Resources.”

Components of Results of Operations

Sources of Revenues

Subscription Revenues

Subscription revenues consist primarily of fees earned from subscription-based arrangements for providing customers the right to use our software in a cloud-based-infrastructure that we provide. We also sell on-premises term license agreements for our Data Center offerings, which consist of software licensed for a specified period and include 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. Subscription revenues are driven primarily by the number and size of active licenses, the type of deployment, and the price of the licenses. Our subscription-based arrangements generally have a contractual term of one to twelve months. For Cloud offerings, subscription revenue is recognized ratably as services are performed, commencing with the date the service is made available to customers. For Data Center offerings, we recognize revenue upfront for the portion that relates to the delivery of the term license, and the support and related revenue is recognized ratably as the services are delivered over the term of the arrangement. Premier support consists of subscription-based arrangements for a higher level of support across different deployment options, and revenue is recognized ratably as the services are delivered over the term of the arrangement.

Other Revenues

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

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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.

We expect subscription revenue to increase and continue to be our primary driver of revenue growth. Maintenance revenue related to our Server offerings is immaterial after the Server end of support date in fiscal year 2024, and has been classified in other revenues within our Consolidated Statements of Operations for all periods presented.

Cost of Revenues

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.

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

We allocate stock-based compensation based on the expense category in which the employee works. We allocate overhead such as information technology costs, rent and occupancy charges in each expense category based on headcount in that category. As such, general overhead expenses are reflected in cost of revenues and operating expense categories.

Gross Profit and Gross Margin

Gross profit is total revenues less total cost of revenues. Gross margin is gross profit expressed as a percentage of total revenues. Gross margin can fluctuate from period to period as a result of changes in product mix.

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.

Operating Expenses

Our operating expenses are classified as research and development, marketing and sales, and general and administrative. For each functional category, the largest component is compensation expenses, which include salaries, bonuses, stock-based compensation, and employee benefit costs.

Research and Development

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.

Marketing and Sales

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

General and Administrative

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

Income Taxes

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

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenues and expenses during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.

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

Revenue Recognition

Our contracts with customers often include promises to transfer multiple products and services to a customer.

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.

Income Taxes

We account for income taxes using the asset and liability method. We recognize deferred tax assets and liabilities for the future tax consequences attributable to (i) temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and (ii) operating loss and tax credit carryforwards. Deferred tax assets are recognized subject to management’s judgment that realization is more likely than not applicable to the periods in which we expect the temporary difference will reverse. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not expected to be realized. Future realization of deferred tax assets ultimately depends on the existence of sufficient taxable income within the carryback or carryforward periods available under the applicable tax law. We regularly review the deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. Our judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute our business plans and tax planning strategies. Should there be a change in the ability to recover deferred tax assets, our income tax provision would increase or decrease in the period in which the assessment is changed.

In the multiple tax jurisdictions in which we operate, our tax returns are subject to routine audit by the Internal Revenue Service, Australian Taxation Office (“ATO”), and other taxation authorities. These audits at times may

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produce alternative views regarding certain tax positions taken in the year(s) of review. As a result, we record uncertain tax positions, which require recognition at the time when it is deemed more likely than not that the position in question will be upheld. Although management believes that the judgment and estimates involved are reasonable and that the necessary provisions have been recorded, changes in circumstances or unexpected events could adversely affect our financial position, results of operations, and cash flows.

New Accounting Pronouncements Pending Adoption

The impact of recently issued accounting standards is set forth in Note 2, “Summary of Significant Accounting Policies,” of the notes to our consolidated financial statements.

53

Results of Operations

The following table sets forth our results of operations for the periods indicated (in thousands, except for percentages of total revenues):

Fiscal Year Ended June 30,

2025

% of Total Revenues

2024

% of Total Revenues

Revenues:

Subscription

$

4,930,604 

95 

%

$

3,924,389 

90 

%

Other

284,700 

5 

434,214 

10 

Total revenues

5,215,304 

100 

4,358,603 

100 

Cost of revenues

894,851 

17 

803,495 

18 

Gross profit

4,320,453 

83 

3,555,108 

82 

Operating expenses:

Research and development

2,669,312 

51 

2,184,111 

50 

Marketing and sales

1,134,535 

22 

877,497 

20 

General and administrative

646,998 

12 

610,577 

14 

Total operating expenses

4,450,845 

85 

3,672,185 

84 

Operating loss

(130,392)

(2)

(117,077)

(2)

Other income (expense), net

(50,277)

(1)

(30,916)

(1)

Interest income

112,324 

2 

96,663 

2 

Interest expense

(30,550)

(1)

(34,077)

(1)

Loss before provision for income taxes

(98,895)

(2)

(85,407)

(2)

Provision for income taxes

(157,792)

(3)

(215,112)

(5)

Net loss

$

(256,687)

(5)

%

$

(300,519)

(7)

%

Fiscal Years Ended June 30, 2025 and 2024

Revenues

Fiscal Year Ended June 30,

(in thousands, except percentage data)

2025

2024

$ Change

% Change

Subscription

$

4,930,604 

$

3,924,389 

$

1,006,215 

26 

%

Other

284,700 

434,214 

(149,514)

(34)

Total revenues

$

5,215,304 

$

4,358,603 

$

856,701 

20 

%

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.

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.

Other revenues decreased $149.5 million, or 34%, in fiscal year 2025 compared to fiscal year 2024. The decrease in other revenues was primarily attributable to a decrease of $171.9 million in maintenance revenue due to the end of support from our Server offerings in fiscal year 2024.

Total revenues by deployment options were as follows:

54

Fiscal Year Ended June 30,

 (in thousands, except percentage data)

2025

2024

$ Change

% Change

Cloud

$

3,447,427 

$

2,698,899 

$

748,528 

28 

%

Data Center

1,467,167 

1,208,498 

258,669 

21 

Server

— 

177,645 

(177,645)

(100)

Marketplace and other

300,710 

273,561 

27,149 

10 

Total revenues

$

5,215,304 

$

4,358,603 

$

856,701 

20 

%

Total revenues by geography were as follows:

Fiscal Year Ended June 30,

 (in thousands, except percentage data)

2025

2024

$ Change

% Change

Americas

$

2,516,901 

$

2,125,434 

$

391,467 

18 

%

EMEA

2,123,971 

1,750,910 

373,061 

21 

Asia Pacific

574,432 

482,259 

92,173 

19 

Total revenues

$

5,215,304 

$

4,358,603 

$

856,701 

20 

%

Cost of Revenues

Fiscal Year Ended June 30,

(in thousands, except percentage data)

2025

2024

$ Change

% Change

Cost of revenues

$

894,851 

$

803,495 

$

91,356 

11 

%

Gross margin

83 

%

82 

%

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.

Operating Expenses

Research and development

Fiscal Year Ended June 30,

(in thousands, except percentage data)

2025

2024

$ Change

% Change

Research and development

$

2,669,312 

$

2,184,111 

$

485,201 

22 

%

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 in stock-based compensation).

Marketing and sales

Fiscal Year Ended June 30,

(in thousands, except percentage data)

2025

2024

$ Change

% Change

Marketing and sales

$

1,134,535 

$

877,497 

$

257,038 

29 

%

Marketing and sales expenses increased $257.0 million, or 29%, for fiscal 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.

General and administrative

Fiscal Year Ended June 30,

(in thousands, except percentage data)

2025

2024

$ Change

% Change

General and administrative

$

646,998 

$

610,577 

$

36,421 

6 

%

55

General and administrative expenses increased $36.4 million, or 6%, in fiscal year 2025 compared to fiscal year 2024. The overall increase was primarily attributable to an increase of $40.6 million in compensation expenses for employees (which includes an increase of $13.5 million in stock-based compensation).

Other expense, net

Fiscal Year Ended June 30,

(in thousands, except percentage data)

2025

2024

$ Change

% Change

Other expense, net

$

(50,277)

$

(30,916)

$

(19,361)

63 

%

Other expense, net increased $19.4 million, or 63% in fiscal 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 million in contributions to the Atlassian Foundation.

Interest income

Fiscal Year Ended June 30,

(in thousands, except percentage data)

2025

2024

$ Change

% Change

Interest Income

$

112,324 

$

96,663 

$

15,661 

16 

%

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.

Fiscal Year Ended June 30,

(in thousands, except percentage data)

2025

2024

$ Change

% Change

Interest expense

$

(30,550)

$

(34,077)

$

3,527 

(10)

%

Interest expense decreased $3.5 million, or 10%, in fiscal year 2025 compared to fiscal year 2024. 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.

Provision for income taxes

Fiscal Year Ended June 30,

(in thousands, except percentage data)

2025

2024

$ Change

% Change

Provision for income taxes

$

(157,792)

$

(215,112)

$

57,320 

(27)

%

Effective tax rate

*

*

*    Not meaningful

The provision for income taxes decreased by $57.3 million in fiscal year 2025 compared to fiscal year 2024. This decrease was primarily driven by a reduction in income tax expense in Australia, which resulted from a decrease in valuation allowance expense, partially offset by an increase in non-deductible stock-based compensation expense.

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.

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.

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

56

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.

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.

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.

Liquidity and Capital Resources

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 operations and corporate debt.

Our cash flows from operating activities, investing activities, and financing activities for fiscal years 2025 and 2024 were as follows:

Fiscal Year Ended June 30,

 (in thousands)

2025

2024

Net cash provided by operating activities

$

1,460,393 

$

1,448,159 

Net cash used in investing activities

(342,322)

(963,746)

Net cash used in financing activities

(782,582)

(408,217)

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash

151 

(1,989)

Net increase in cash, cash equivalents, and restricted cash

$

335,640 

$

74,207 

Our primary source of cash is collections from our customers. Our primary uses of cash from operating activities are general business expenses, including employment expenses, cloud platform and other infrastructure services, income taxes, professional services fees, marketing expenses, software expenses, and facility expenses.

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.

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.

Net cash used in financing activities increased by $374.4 million for fiscal year 2025, compared to fiscal year 2024. The net cash used in financing activities was primarily attributable to an increase in repurchases of Class A Common Stock of $384.2 million, a decrease in proceeds from issuance of The Notes, net of issuance costs of $987.0 million, offset by a decrease in principal payments on our Term Loan of $1.0 billion.

Material Cash Requirements

Debt

57

As of June 30, 2025, we had $500.0 million aggregate principal amount of 5.250% senior notes due 2029 (the “2029 Notes”) and $500.0 million aggregate principal amount of 5.500% senior notes due 2034 (the “2034 Notes” and together with the 2029 Notes, the “Notes”). The Notes will mature on May 15, 2029, and May 15, 2034, respectively. Interest on the Notes is paid semi-annually in arrears on May 15 and November 15 of each year. Refer to Note 10, “Debt,” to our consolidated financial statements for additional information.

On August 12, 2024, Atlassian US, Inc.’s prior credit facility was amended and restated to provide for a $750 million senior unsecured revolving credit facility (the “2024 Credit Facility”). We may repay outstanding loans under the 2024 Credit Facility at any time, without premium or penalty, and we have an option to request an increase of $250 million in certain circumstances. The 2024 Credit Facility replaced our prior credit facility entered into in October 2020, which provided for a $1.0 billion senior unsecured delayed-draw term loan facility (the “Term Loan”) and a $500 million senior unsecured revolving credit facility. The 2024 Credit Facility matures in August 2029. As of June 30, 2025, there were no borrowings under the 2024 Credit Facility. Refer to Note 10, “Debt,” to our consolidated financial statements for additional information.

Share Repurchase Program

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.

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.

Contractual Obligations

Our principal commitments consist of contractual commitments for 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 9, “Leases,” and Note 11, “Commitments and Contingencies,” to our consolidated financial statements for additional information.

Other Future Obligations

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.

As of June 30, 2025, we are not party to any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.

Non-GAAP Financial Measures

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

58

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.

Our Non-GAAP Financial Measures include:

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

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

•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.

•Free cash flow. Free cash flow is defined as net cash provided by operating activities less capital expenditures, which consists of purchases of property and equipment.

We understand that although these Non-GAAP Financial Measures are frequently used by investors and the analyst community in their evaluation of our financial performance, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. We compensate for such limitations by reconciling these Non-GAAP Financial Measures to the most comparable GAAP financial measures.

The following table presents a reconciliation of our Non-GAAP Financial Measures to the most comparable GAAP financial measure for fiscal years 2025 and 2024 (in thousands, except percentage and per share data):

Fiscal Year Ended June 30,

2025

2024

Gross profit

GAAP gross profit

$

4,320,453 

$

3,555,108 

Plus: Stock-based compensation

83,017 

71,691 

Plus: Amortization of acquired intangible assets

40,508 

36,988 

Non-GAAP gross profit

$

4,443,978 

$

3,663,787 

Gross margin

GAAP gross margin

83%

82%

Plus: Stock-based compensation

2

1

Plus: Amortization of acquired intangible assets

—

1

Non-GAAP gross margin

85%

84%

Operating income

GAAP operating loss

$

(130,392)

$

(117,077)

Plus: Stock-based compensation

1,362,222 

1,081,433 

Plus: Amortization of acquired intangible assets

55,517 

49,748 

Non-GAAP operating income

$

1,287,347 

$

1,014,104 

Operating margin

GAAP operating margin

(3)%

(3)%

Plus: Stock-based compensation

27

25

Plus: Amortization of acquired intangible assets

1

1

Non-GAAP operating margin

25%

23%

Net income

GAAP net loss

$

(256,687)

$

(300,519)

59

Plus: Stock-based compensation

1,362,222 

1,081,433 

Plus: Amortization of acquired intangible assets

55,517 

49,748 

Less: Gain on a non-cash sale of a controlling interest of a subsidiary

— 

(1,378)

Less: Income tax adjustments (1)

(185,107)

(66,875)

Non-GAAP net income

$

975,945 

$

762,409 

Net income per share

GAAP net loss per share - diluted

$

(0.98)

$

(1.16)

Plus: Stock-based compensation

5.15 

4.16 

Plus: Amortization of acquired intangible assets

0.20 

0.19 

Less: Gain on a non-cash sale of a controlling interest of a subsidiary

— 

(0.01)

Less: Income tax adjustments (1)

(0.69)

(0.25)

Non-GAAP net income per share - diluted

$

3.68 

$

2.93 

Weighted-average diluted shares outstanding

Weighted-average shares used in computing diluted GAAP net loss per share

261,787 

259,133 

Plus: Dilution from dilutive securities (2)

3,407 

1,076 

Weighted-average shares used in computing diluted non-GAAP net income per share

265,194 

260,209 

Free cash flow

GAAP net cash provided by operating activities

$

1,460,393 

$

1,448,159 

Less: Capital expenditures

(44,850)

(32,577)

Free cash flow

$

1,415,543 

$

1,415,582 

(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.

(2) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for fiscal years 2025 and 2024 because the effect would have been anti-dilutive.