What changed in this filing

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Item 1A. Risk Factors

2025-05-02 compared with 2025-01-31 · 119 added, 102 removed, 747 unchanged (23% of the section changed)

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• Our quarterly results have fluctuated in the past and may fluctuate significantly in the future and may not fully reflect the underlying performance of our business.

• Our use of generative AI and machine learning in our products, platform, and business, as well as our potential failure to effectively implement, use, and market these technologies, may result in reputational harm or liability, or could otherwise adversely affect our business.

• Our development and use of generative AI and machine learning in our products, platform, and business, as well as our potential failure to effectively implement, use, and market these technologies, may result in reputational harm or liability, or could otherwise adversely affect our business.

• We may encounter challenges to our business as we transition our business to focusing more on our Cloud offerings.

• Our business depends on our customers renewing their subscriptions and purchasing additional licenses or subscriptions from us, and any decline in our customer retention or expansion could harm our future results of operations.

• If we are not able to develop new products and enhancements to our existing products that achieve market acceptance and that keep pace with technological developments, our business and results of operations could be harmed.

• If we are not able to develop or package new products and enhancements to our existing products that achieve market acceptance and that keep pace with technological developments, our business and results of operations could be harmed.

• If we fail to effectively manage our growth, our business and results of operations could be harmed.

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As lower cost or free products are introduced by our competitors, our ability to generate new customers could be harmed.

• We may encounter challenges as we develop our enterprise sales force.

• We may encounter challenges as we develop our enterprise sales force and enterprise sales strategy.

• If our security controls are compromised, leading to unauthorized or inappropriate access to customer data, our products could be perceived as insecure, and such perception may result in the loss of existing customers, hinder our ability to attract new ones, and expose us to significant liabilities.

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Our historical rapid growth makes it difficult to evaluate our future prospects, and we may not be able to sustain our revenue growth rate or achieve profitability in the future.

We have experienced rapid growth in recent years and such growth rate should not be considered indicative of our future performance and may decline in the future.

We have experienced rapid growth in recent years and our historical growth rate should not be considered indicative of our future performance and may decline in the future.

This rapid growth also makes it more challenging to evaluate our future prospects.

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challenges relating to collecting accounts receivable or collection periods;

seasonality in the timing of our sales;

the duration of our sales contracts;

limitations on our ability to, or any decision not to, increase pricing, slower than anticipated adoption of or migration to our Cloud offerings;

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generally accepted accounting principles (“GAAP”).

The additional expenses we will incur may not lead to sufficient additional revenue to maintain historical revenue growth rates and profitability.

The additional expenses we will incur may not lead to sufficient additional revenue to maintain historical revenue growth rates and achieve profitability.

The continuing global economic and geopolitical volatility, and measures taken in response, could harm our business and results of operations.

Large-scale international events in recent years, such as the COVID-19 pandemic and geopolitical instability and war in regions including Ukraine and the Middle East, have negatively impacted the global economy, disrupted global supply chains, and created significant volatility and disruption of financial markets.

There was recently also a period of historically high inflation, which caused the Federal Reserve and other global central banks to tighten monetary policy, including issuing a series of interest rate hikes.

Large-scale international events in recent years, such as the COVID-19 pandemic, geopolitical instability and war in regions including Ukraine and the Middle East, and economic uncertainty regarding the imposition of and changes in trade policies (including trade wars, tariffs or other trade restrictions or the threat of such actions), have negatively impacted or may in the future negatively impact the global economy, including by disrupting global supply chains and creating volatility and disruption of financial markets.

There was recently also a period of historically high inflation, which caused the Federal Reserve and other global central banks to tighten monetary policy, including

issuing a series of interest rate hikes.

This contributed to the failures of certain banking institutions and otherwise uncertain economic conditions.

Our business depends on demand for business software applications generally and for collaboration software solutions in particular.

The market adoption of our products and our revenue is dependent on the number of users of

our products.

The market adoption of our products and our revenue is dependent on the number of users of our products.

The continuing global economic and geopolitical volatility and uncertainty has and may continue to cause us and our customers to experience decreased demand for our products and services, increases in our operating costs (including our labor costs), reduced liquidity, and limits on our ability to access credit or otherwise raise capital.

They could reduce the number of personnel providing development or engineering services, decrease technology spending, including the purchasing of software products, adversely affect demand for our products, affect our ability to accurately forecast our future results, cause some of our paid customers or suppliers to file for bankruptcy protection or go out of business, impact expected spending from new customers or renewals, expansions or reductions in paid seats from existing customers, negatively impact collections of accounts receivable, result in elongated sales cycles, and otherwise harm our business, results of operations, and financial condition.

This volatility could cause our customers to reduce the number of personnel providing development or engineering services, decrease technology spending, including the purchasing of software products, adversely affect demand for our products, affect our ability to accurately forecast our future results, cause some of our paid customers or suppliers to file for bankruptcy protection or go out of business, impact expected spending from new customers or renewals, expansions or reductions in paid seats from existing customers, negatively impact collections of accounts receivable, result in elongated sales cycles, and otherwise harm our business, results of operations, and financial condition.

In particular, we have revenue exposure to customers who are small- and medium-sized businesses.

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With the adoption of new technologies, such as AI and machine learning, the evolution of our products, and new market entrants, we expect competition to intensify in the future.

For example, our competitors may more successfully incorporate AI into their products, gain or leverage superior access to certain AI technologies, or achieve higher market acceptance of their AI solutions.

In addition, as we continue to expand our focus into new use cases or other product offerings beyond software development teams, we expect competition to increase.

For example, our competitors may develop more effective AI products, more successfully incorporate AI into their offerings and sales strategy, gain or leverage superior access to certain AI technologies, or achieve higher market acceptance of their AI solutions.

In addition, as we

continue to expand our focus into new use cases or other products beyond software development teams, we expect competition to increase.

Pricing pressures and increased competition generally could result in reduced sales, reduced margins, losses, or the failure of our products to achieve or maintain more widespread market acceptance, any of which could harm our business, results of operations and financial condition.

Additionally, some current and potential customers, particularly large

organizations, have elected, and may in the future elect, to develop or acquire their own internal collaboration and productivity software tools that would reduce or eliminate the demand for our solutions.

Additionally, some current and potential customers, particularly large organizations, have elected, and may in the future elect, to develop or acquire their own internal collaboration and productivity software tools that would reduce or eliminate the demand for our solutions.

Our products seek to serve multiple markets, and we are subject to competition from a wide and varied field of competitors.

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• significant security breaches, technical difficulties, or interruptions to our products or the third-party products on which we rely;

• our increased focus on our Cloud offerings, including customer migrations to our Cloud products;

• our increased focus on our Cloud offerings, including customer migrations to our Cloud platform;

• our ability to incorporate artificial intelligence solutions and features into our products, platform and business;

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• the impact of U.S.

and international political and social unrest, armed conflict, natural disasters, climate change, diseases and pandemics, and any associated economic downturn, on our results of operations and financial performance;

• seasonality in our operations;

and international political and social unrest, changes in trade policies, armed conflict, natural disasters, climate change, diseases and pandemics, and any associated economic downturn, on our results of operations and financial performance;

• seasonality in our sales cycle and other operations;

• the impact of new accounting pronouncements and associated system implementations;

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As such, we believe that quarter-to-quarter comparisons of our revenue, results of operations, and cash flows may not be meaningful and should not be relied upon as an indication of future performance.

Our use of generative AI and machine learning in our products, platform, and business, as well as our potential failure to effectively implement, use, and market these technologies, may result in reputational harm or liability, or could otherwise adversely affect our business.

We have incorporated and expect to continue to incorporate AI and machine learning solutions, products and features, including generative AI solutions, products and features, into our products, platform, and business, which act on data-driven insights derived from both first and third-party applications.

AI and machine learning solutions, products and features may become more important to our operations or to our future growth over time.

There can be no assurance that the use of AI and machine learning solutions, products and features will enhance our products or services, produce intended results, or be beneficial to our business, including our efficiency or profitability, and we may fail to properly implement or market our AI and machine learning solutions, products and features.

Our development of and use of generative AI and machine learning in our products, platform, and business, as well as our potential failure to effectively implement, use, and market these technologies, may result in reputational harm or liability, or could otherwise adversely affect our business.

We are building and incorporating AI and machine learning solutions, products and features, including generative AI solutions, products and features, into our products, platform, and business, which act on data-driven insights derived from both first and third-party applications.

We expect AI and machine learning solutions, products and features to become more important to our operations or to our future growth over time.

There can be no assurance that the use of AI and machine learning solutions, products and features will enhance our offerings, produce intended results, or be beneficial to our business, including our efficiency or profitability.

We may fail to effectively develop AI and machine learning solutions, products and features or properly implement or market our AI and machine learning solutions, products and features, and our monetization strategy for our AI and machine learning solutions, product and features may not be effective.

Our investments in AI solutions, products, and features have and may continue to negatively impact our operating margins until we are able to increase revenue enough to offset these investments.

Our competitors or other third parties may incorporate AI into their products, offerings, and solutions more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.

In addition, suppliers of the third-party AI models we use in our products and platform could terminate their relationship with us, be prohibited from offering certain models in jurisdictions where we operate or otherwise cease to make certain models available to us, or make certain models more expensive for us to use.

Our ability to effectively implement and market our AI products, solutions and features will also depend, in part, on our ability to attract and retain employees with AI expertise, and we expect significant competition for professionals with such skills and technical knowledge.

Additionally, our use of AI and machine learning technologies may expose us to additional claims, demands, and proceedings by private parties and regulatory authorities and subject us to legal liability as well as brand and reputational harm.

There are significant risks involved in utilizing AI and machine learning technologies, and in particular, generative AI technologies.

For example, AI and machine learning algorithms may be flawed, insufficient, or of poor quality, reflect unwanted forms of bias, or contain other errors or inadequacies, any of which may not easily be detectable.

In addition, third-party AI model, product and integration providers we use in our products and platform could terminate their relationships with us, be prohibited from offering certain models or technologies in jurisdictions where we operate or otherwise cease to make certain models or technologies available to us, or make certain models or technologies more expensive for us to use.

Our ability to effectively develop, implement and market our AI products, solutions and features will also depend, in part, on our ability to attract and retain employees with AI expertise, and we expect significant competition for professionals with such skills and technical knowledge.

Additionally, our development and use of AI and machine learning technologies may expose us to additional claims, demands, and proceedings by private parties and regulatory authorities and subject us to legal liability as well as brand and reputational harm.

There are significant risks involved in developing and utilizing AI and machine learning technologies, and in particular, generative AI technologies.

For example, AI and machine learning algorithms we develop or use may be flawed, insufficient, or of poor quality, reflect unwanted forms of bias, or contain other errors or inadequacies, any of which may not easily be detectable.

AI and machine learning technologies have also been known to produce false or “hallucinatory” inferences or outputs.

Further, inappropriate or controversial data practices by developers and end-users, or other factors adversely affecting public opinion regarding the use of AI and machine learning, could impair the acceptance of AI and machine learning solutions, including those incorporated into our products and services.

If the AI and machine learning tools incorporated into our products and platform, or the content generated by such tools, is harmful, biased, inaccurate, defamatory, discriminatory or controversial, our results of operations could suffer, including due to legal, competitive and reputational harm.

If the AI and machine learning tools we develop or otherwise incorporate into our products and platform, or the content generated by such tools, is harmful, biased, inaccurate, defamatory, discriminatory or controversial, our results of operations could suffer, including due to legal, competitive and reputational harm.

Our customers may be less likely to utilize our AI and machine learning tools or may cease using our products or platform altogether.

If we do not have sufficient rights to use the output of such AI and machine learning tools, or the data or other material or content on which the AI and machine learning tools we use rely, we also may incur liability through the violation of applicable laws and regulations, third-party intellectual property, privacy, rights of publicity, or other rights, or contracts to which we are a party.

If we do not have sufficient rights to use the output of any third-party AI and machine learning tools, or the data or other material or content on which the AI and machine learning tools we otherwise use rely, we also may incur liability through the violation of applicable laws and regulations, third-party intellectual property, privacy, rights of publicity, or other rights, or contracts to which we are a party.

In addition, we are subject to the risks of new or enhanced governmental or regulatory scrutiny, litigation, or other legal liability, ethical concerns, negative consumer perceptions as to automation and AI and machine learning technologies, any of which could adversely affect our business, reputation, or financial results.

The technologies underlying AI and machine learning and their uses are subject to a variety of laws and regulations related to online services, intermediary liability, intellectual property rights, privacy, rights of publicity, data security and data protection, consumer protection, competition and equal opportunity laws, and are expected to be subject to increased regulation and new laws or new applications of existing laws and regulations.

AI and machine learning technologies are the subject of ongoing review by various federal, state and foreign governments and regulators, which are applying, or are considering applying, their platform moderation, privacy, rights of publicity, data security and data protection laws and regulations to such technologies or are implementing, or are considering implementing, general legal frameworks for the appropriate use of AI and machine learning.

AI and machine learning

technologies are the subject of ongoing review by various federal, state and foreign governments and regulators, which are applying, or are considering applying, their platform moderation, privacy, rights of publicity, data security and data protection laws and regulations to such technologies or are implementing, or are considering implementing, general legal frameworks for the appropriate use of AI and machine learning.

For example, the European Union’s AI Act puts new requirements on providers of AI technologies that providers will need to be address in alignment with various deadlines.

As the legal, regulatory, and policy environments around AI and machine learning evolve, we may become subject to new legal and regulatory obligations in connection with our use of AI and machine learning technology, which could require us to make significant changes to our policies and practices, necessitating expenditure of significant time, expense, and other resources.

We may not be able to anticipate how to respond to rapidly evolving legal frameworks, and we may

have to expend resources to adjust our offerings in certain jurisdictions if the legal frameworks on AI and machine learning products are not consistent across jurisdictions.

We may not be able to anticipate how to respond to rapidly evolving legal frameworks, and we may have to expend resources to adjust our offerings in certain jurisdictions if the legal frameworks on AI and machine learning products are not consistent across jurisdictions.

Accordingly, it is not possible to predict all of the risks related to the use of AI and machine learning technologies that we may face, and changes in laws, rules, directives, and regulations governing the use of AI and machine learning technologies may adversely affect our ability to use or sell these technologies or subject us to legal liability.

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Further, revenues from our Cloud offerings are typically lower in the initial year compared to our Data Center offerings, which may impact our near-term revenue growth rates and margins, and we incur higher or additional costs to supply our Cloud offerings, such as fees associated with hosting our Cloud infrastructure.

We have and expect to continue to see increased expenses and lower margins due such hosting costs increasing in this transition.

We have and expect to continue to see increased expenses and lower margins due to such hosting costs increasing in this transition.

Our strategy to provide our AI tools at no or low cost to the majority of our Cloud customers may further increase these hosting costs without corresponding revenue increases.

Additionally, we offered discounts to certain of our enterprise-level Server customers to incentivize migration to our Cloud offerings, which impacted our near-term revenue growth.

Our revenue growth rates and profitability may also be negatively impacted by Server customers that did not transition to our Cloud or Data Center offerings or Data Center customers that do not migrate to our Cloud offerings in the future.

If our Cloud offerings do not develop as quickly as we expect, if we are unable to continue to scale our systems to meet the requirements of successful, large Cloud offerings, or if we lose customers currently using our Data Center products due to our increased focus on our Cloud offerings or our inability to successfully migrate them to our Cloud products, our business could be harmed.

We are directing a significant portion of our financial and operating resources to implement robust Cloud offerings for our products and to migrate our existing customers to our Cloud offerings, but even if we continue to make these investments, we may be unsuccessful in growing or implementing our Cloud offering that competes successfully against our current and future competitors and our business, results of operations, and financial condition could be harmed.

We are directing a significant portion of our financial and operating resources to implement robust Cloud offerings and to migrate our existing customers to our Cloud offerings, but even if we continue to make these investments, we may be unsuccessful in growing or implementing our Cloud offering that competes successfully against our current and future competitors and our business, results of operations, and financial condition could be harmed.

Our business depends on our customers renewing their subscriptions and purchasing additional licenses or subscriptions from us, and any decline in our customer retention or expansion could harm our future results of operations.

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Some of our customers have elected not to renew their agreements with us in the past and it is difficult to accurately predict long-term customer retention.

Our customer retention and expansion may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our products, new market entrants, our product support, our prices and pricing plans, the prices of competing software products, reductions in our customers’ spending levels, new product releases and changes to the packaging of our product offerings, mergers and acquisitions affecting our customer base, our increased focus on our Cloud offerings, our decision to end the sale of new perpetual licenses for our products, or the effects of global economic conditions and any related impacts on us or our customers, partners and suppliers.

Our customer retention and expansion may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our products, new market entrants, our product support, our prices and pricing plans, the prices of competing software products, reductions in our customers’ spending levels, new product releases, changes to the packaging of our product offerings (including our purchasable collections and the product packaging and pricing of our AI offerings), mergers and acquisitions affecting our customer base, our increased focus on our Cloud offerings, our decision to end the sale of new perpetual licenses for our products, or the effects of global economic conditions and any related impacts on us or our customers, partners and suppliers.

Additionally, we may be unable to timely address any retention issues with specific customers, which could harm our results of operations.

If our customers do not purchase additional licenses or renew their subscriptions, renew on less favorable terms, or fail to add more users, our revenue may decline or grow less quickly, which could harm our future results of operations and prospects.

If we are not able to develop new products and enhancements to our existing products that achieve market acceptance and that keep pace with technological developments, our business and results of operations could be harmed.

Our ability to attract new customers and retain and increase revenue from existing customers depends in large part on our ability to enhance and improve our existing products and to introduce compelling new products that reflect the changing nature of our markets.

The success of any enhancement to our products depends on several factors, including timely completion and delivery, competitive pricing, adequate quality testing, integration with existing technologies and our platform, and overall market acceptance.

If we are not able to develop or package new products and enhancements to our existing offerings that achieve market acceptance and that keep pace with technological developments, our business and results of operations could be harmed.

Our ability to attract new customers and retain and increase revenue from existing customers depends in large part on our ability to enhance and improve our existing products and to introduce and package compelling new products that reflect the changing nature of our markets.

The success of any enhancement to our offerings depends on several factors, including timely completion and delivery, competitive pricing, adequate quality testing, integration with existing technologies and our platform, and overall market acceptance.

Any new product that we develop may not be introduced in a timely or cost-effective manner, may contain bugs or other defects, or may not achieve the market acceptance necessary to generate significant revenue.

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The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis, and anticipating these factors requires that we allocate significant resources without any guarantee that any such investments and efforts will result in initial or enhanced adoption of our products in the marketplace.

For example, with the development of next-generation solutions that utilize new and advanced features, including AI and machine learning, we have and expect to continue to commit significant resources to developing new products and enhancements incorporating AI and machine learning, and there is no guarantee that our investments and efforts will result in wider adoption of our products in the marketplace.

For example, with the development of next-generation solutions, including AI and machine learning solutions, we have and expect to continue to commit significant resources to developing new AI and machine learning products and other enhancements incorporating AI and machine learning, and there is no guarantee that our investments and efforts will result in wider adoption of our products in the marketplace.

If new technologies emerge that can deliver competitive products and services at lower prices, more efficiently, more reliably, more conveniently or more securely or if new products are introduced into the market that could render our existing products obsolete, such technologies and products could adversely impact our ability to compete effectively and may lead to customers reducing or terminating their usage of our products.

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In fiscal years 2024 and 2023, our research and development expenses were 50% and 53% of our revenue, respectively.

If we do not spend our research and development budget efficiently or effectively on compelling innovation and technologies, our business could be harmed and we may not realize the expected benefits of our strategy.

If we do not spend our research and development budget efficiently or effectively on compelling innovation and technologies, our

business could be harmed and we may not realize the expected benefits of our strategy.

Moreover, research and development projects can be technically challenging and expensive.

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Users may not perceive value in the additional benefits and services we offer beyond our free trials or limited free versions and, historically, a majority of users never convert to a paid version of our products from these free trials or limited free versions or upgrade beyond the starter license.

Our marketing strategy also depends in part on persuading users who use free trials, limited free versions or starter licenses of our products to convince others within their organization to purchase and deploy our products.

Our marketing strategy also depends in part on persuading users who use free trials, limited free versions or starter licenses of our products

to convince others within their organization to purchase and deploy our products.

To the extent that these users do not become, or lead others to become, customers, we will not realize the intended benefits of this marketing strategy, and our ability to grow our business could be harmed.

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For example, we offer entry-level or free pricing for certain products for small teams at a price that typically does not require capital budget approval and is orders-of-magnitude less than the price of traditional enterprise software.

As a result, our software is frequently purchased by first-time customers to solve

specific problems and not as part of a strategic technology purchasing decision.

As a result, our software is frequently purchased by first-time customers to solve specific problems and not as part of a strategic technology purchasing decision.

We have historically increased, and will continue to increase, prices from time to time.

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If we are unable to sell our software in high volume, across new and existing customers, our business, results of operations and financial condition could be harmed.

We may encounter challenges as we develop our enterprise sales force.

We may encounter challenges as we develop our enterprise sales force and enterprise sales strategy.

In recent years, we have focused on strategically growing our sales force to expand and deepen our relationships with our existing customers, particularly in the enterprise.

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Expanding our sales infrastructure also has impacts on our cost structure and results of operations, and we may have to reduce other expenses, such as our research and development expenses, in order to accommodate a corresponding increase in marketing and sales expenses while maintaining positive free cash flow.

As our sales teams grow, we may face increased costs, longer sales cycles, greater competition, and less predictability in completing our sales.

As our enterprise sales teams grow, we may face increased costs, longer sales cycles, greater competition, and less predictability in completing our sales.

Since the sales cycles for our enterprise offerings are multi-phased and complex, it can be unpredictable when a given sales cycle will close.

For enterprise customers, the evaluation process may be longer and more involved, and require us to invest more in educating our customers about our products, services, and solutions, particularly because the decision to use our products, services, and solutions is often an enterprise-wide decision.

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We also may be required to devote more resources to implementation, which increases our costs, without assurance that customers receiving these services will renew or renew at the same level.

Since the sales cycles for our enterprise offerings are multi-phased and complex, it is often unpredictable when a given sales cycle will close.

Our revenue from enterprise customers may be affected by longer-than-expected sales and implementation cycles, extended collection cycles, potential deferral of revenue, and alternative licensing arrangements.

Additionally, our revenue from enterprise customers may be affected by seasonality in sales cycles, extended collection cycles, potential deferral of revenue, and alternative licensing arrangements.

We may experience these impacts more as we grow our enterprise sales motion.

An increase in enterprise sales contracts could also increase our number of or mix of multi-year sales contracts, which can also have an impact on our revenue cycles.

Additionally, our existing and future pricing and packaging strategies for enterprise and other customers for our existing and future service offerings may not be accepted by customers.

For example, we offer certain apps and agents in purchasable “collections” and we have limited experience with determining the optimal pricing and terms for such packaging.

Our adoption of, or failure to adapt, changes to our pricing and packaging strategies, as well as the timing and manner of such changes, may harm our business, results of operations and financial condition.

We derive a majority of our revenue from Jira and Confluence.

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Demand for these products and our other products is affected by a number of factors, many of which are beyond our control, such as continued market acceptance of our products by customers for existing and new use cases, the timing of development and release of new products, features, functionality and lower cost alternatives introduced by our competitors, technological changes and developments within the markets we serve, and growth or contraction in our addressable markets.

If we are unable to continue to meet customer demands or to achieve more widespread market acceptance of our products, our business, results of operations, and financial condition could be harmed.

If we are unable to continue to meet customer

demands or to achieve more widespread market acceptance of our products, our business, results of operations, and financial condition could be harmed.

Seasonality may cause fluctuations in our revenue.

As we grow our enterprise sales motion and derive a greater percentage of revenues from enterprise customers, we believe we have and may continue to see seasonality in terms of the timing of when we enter into customer agreements.

Seasonality effects may cause variability in revenue growth rates in certain quarters and within quarters.

We believe we may have experienced in the past and may experience in the future seasonality effects due to enterprise customer budget cycles and our internal commission plans and quotas for our enterprise sales force.

Our revenues fluctuate quarterly, and seasonality effects may cause additional fluctuations in our quarterly financial results.

These fluctuations may adversely affect the market price of our Class A Common Stock.

We recognize certain revenue streams over the term of our subscription contracts.

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We may also be unable to reduce our cost structure in line with a significant deterioration in sales.

In addition, a significant majority

of our costs are expensed as incurred, while a significant portion of our revenue is recognized over the life of the agreement with our customer.

In addition, a significant majority of our costs are expensed as incurred, while a significant portion of our revenue is recognized over the life of the agreement with our customer.

As a result, increased growth in the number of our customers could continue to result in our recognition of more costs than revenue in the earlier periods of the terms of certain of our customer agreements.

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In addition, as we continue to grow our operations and reach a global and vast customer base, we need to be able to provide efficient product support that meets our customers’ needs globally at scale.

The number of our customers has grown significantly and that has put additional pressure on our product support organization.

The number of our

customers has grown significantly and that has put additional pressure on our product support organization.

End customers may also reach out to us requesting support for third-party apps sold on the Atlassian Marketplace.

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For fiscal year 2024, we derived over 50% of our revenue from channel partners’ sales efforts.

As of December 31, 2024, one solution partner represented more than 10% of our total accounts receivables.

At times in fiscal year 2025, one solution partner has represented more than 10% of our total accounts receivables.

Successfully managing our indirect channel distribution efforts is a complex process across the broad range of geographies where we do business or plan to do business.

If any solution partners fail to pay us under the terms of our agreements, including any delays in payment, or we are otherwise unable to collect on our accounts receivable from these solution partners, we may be adversely affected both from the inability to collect amounts due

and the cost of enforcing the terms of our contracts, including litigation.

Additionally, our solution partners are independent businesses we do not control.

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Our reputation could also be adversely impacted by, among other things, any failure or perceived failure in our social and environmental practices, public pressure from investors or policy groups to change our policies, or customer perceptions of our marketing efforts, sponsorship arrangements, social media or any statements made by us, our executives and employees, agents or other third parties.

Our sponsorship relationships and partnerships may also subject us to negative publicity as result of any actual or alleged conduct by, or consumers’ perceptions of, our partners or individuals and entities associated with such organizations, which could have an adverse effect on our reputation and brand.

Our sponsorship relationships and partnerships may also subject us to negative publicity as result of any actual or alleged conduct by, or consumers’ perceptions of,

our partners or individuals and entities associated with such organizations, which could have an adverse effect on our reputation and brand.

Our sponsorship relationships and partnerships and the general promotion of our brand requires us to make substantial expenditures.

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Certain of these incidents have resulted in unauthorized access to certain data processed through our products.

Our products are at risk for future breaches and inappropriate access, including, without limitation, inappropriate access that may be caused by errors or breaches that may occur as a result of third-party action, or employee, vendor or contractor error or malfeasance, and other causes.

and other causes.

We have in the past been, and may in the future be, a target of security threats, including from state actors.

While these incidents have not materially affected our business, reputation or financial results, there is no guarantee they will not in the future.

Third parties may also utilize our products and platforms for malicious purposes, such as to upload abhorrent content or host malware, which could result in reputational harm to us and negatively impact our business.

Additionally, the ongoing Russian invasion of Ukraine may result in a heightened threat environment and create unknown cyber risks, including increased risk of retaliatory cyber-attacks from Russian actors against non-Russian companies.

Third parties have in the past and may in the future also utilize our products and platforms for malicious purposes, such as to upload abhorrent content or host malware, which could result in reputational harm to us and negatively impact our business.

Our remote-first “Team Anywhere” work environment may pose additional data security risks.

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For instance, we rely on third-party partners to develop apps on the Atlassian Marketplace that connect with and enhance our Cloud offerings for our customers.

These apps may not meet the same quality standards that we apply to our own development efforts and have in the past, and may in the future, contain bugs, vulnerabilities, or defects that pose data security risks to our customer or lead to the unauthorized access of user data.

Our ability to mandate security standards and ensure compliance by these third parties may be limited.

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Complying with such numerous and complex regulations in the event of a data security breach would be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and additional liability.

We may also be contractually required to notify customers or other counterparties of a security incident, including a data security breach.

We are also contractually required to notify customers or other counterparties of certain security incidents, including certain data security breaches.

Regardless of our contractual protections, any actual or perceived data security breach, or breach of our contractual obligations, could harm our reputation and brand, expose us to potential liability or require us to expend significant resources on data security and in responding to any such actual or perceived breach.

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It may become increasingly difficult to maintain and improve our performance, especially during peak usage times and as our products and websites become more complex and our user traffic increases.

If our products and websites are unavailable, if our users are unable to access our products within a reasonable amount of time, or at all, or if our information technology systems for our business operations experience disruptions, delays or deficiencies, our business could be harmed.

If our products or websites are unavailable, if our users are unable to access our products within a reasonable amount of time, or at all, or if our information technology systems for our business operations experience disruptions, delays or deficiencies, our business could be harmed.

We may be subject to regulations that require us to report extended services outages to governmental authorities and customers.

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Any loss of the right to use any of these services could result in decreased functionality of our products until equivalent technology is either developed by us or, if available from another provider, is identified, obtained and integrated into our infrastructure.

To the extent that we do not effectively address capacity constraints, upgrade our systems as needed, and

continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business, results of operations and financial condition could be harmed.

To the extent that we do not effectively address capacity constraints, upgrade our systems as needed, and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business, results of operations and financial condition could be harmed.

Real or perceived errors, failures, vulnerabilities, or bugs in our products or in the products on Atlassian Marketplace could harm our business and results of operations.

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In addition, U.S.

state data privacy laws, such as the California Consumer Privacy Act as amended by the California Privacy Rights Act (“CPRA”), and laws that have recently passed and/or gone into effect in many other states similarly impose new obligations on us and many of our customers, potentially as both businesses and service providers.

state data privacy laws, such as the California Consumer Privacy Act as amended by the California Privacy Rights Act (“CPRA”), and laws that have recently passed and/or gone into effect

in many other states similarly impose new obligations on us and many of our customers, potentially as both businesses and service providers.

In the European Economic Area (“EEA”) and the UK, data privacy laws and regulations, such as the European Union General Data Protection Regulation (“EU GDPR”) and United Kingdom General Data Protection Regulation and Data Protection Act 2018 (collectively, the “UK GDPR,” and, together with the EU GDPR, the “GDPR”), impose comprehensive obligations directly on Atlassian as both a data controller and a data processor, as well as on many of our customers, in relation to our collection, processing, sharing, disclosure and other use of personal data.

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Recent European court and regulator decisions are driving increased attention to cookies and similar tracking technologies.

provided by customers and others, and for defamation and other torts arising from information provided by customers and others.

In addition, various safe harbors have historically been provided to those who hosted content provided by others, such as safe harbors from monetary damages for copyright infringement arising from copyrighted content provided by customers and others, and for defamation and other torts arising from information provided by customers and others.

There is an increasing demand for repealing or limiting these safe harbors by either judicial decision or legislation.

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By way of further example, statutory damages available through a private right of action for certain data breaches under the CPRA and potentially other U.S.

states’ laws, may increase our and our customers’ potential liability and the demands our customers place on us.

states’ laws, may increase our and our customers’

potential liability and the demands our customers place on us.

As another example, jurisdictions are considering legal frameworks on AI, which is a trend that may increase now that the first such framework has entered into force in the EU;

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We may be unaware of the intellectual property rights of others that may cover some or all of our technology, or technology that we obtain from third parties.

Furthermore, the intellectual property ownership and license rights, including copyright, surrounding AI technologies and the data used for training such technologies has not been fully addressed by courts or national or local laws or regulations, and the use or adoption of third-party AI technologies into our products and services may result in exposure to claims of copyright infringement or other intellectual property misappropriation.

Furthermore, the legal issues, including copyright and related rights, surrounding AI technologies and the data used for training such technologies or otherwise used as inputs into such technologies has not been fully addressed by courts or national or local laws or regulations, and the use or adoption of AI technologies into our products and services may result in exposure to claims of copyright infringement, other intellectual property misappropriation, or other related claims.

Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty or license payments, prevent us from offering our products or using certain technologies, require us to implement expensive workarounds, refund fees to customers or require that we comply with other unfavorable terms.

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Our success and ability to compete depend in part upon our intellectual property.

We primarily rely on a combination of patent, copyright, trade secret and trademark laws, trade secret protection and confidentiality or license agreements with our employees, customers, business partners and others to protect our intellectual property rights.

However, the steps we take to protect our intellectual property rights may be inadequate.

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If we determine that any of our more significant investments have experienced a decline in value, we may be required to record an impairment, which could be material and negatively impact our financial results.

In addition, we have in the past, and may in the future, continue to deploy material investments in individual companies in which we have previously invested, resulting in the increasing concentration of risk in a small number of companies.

addition, we have in the past, and may in the future, continue to deploy material investments in individual companies in which we have previously invested, resulting in the increasing concentration of risk in a small number of companies.

Partial or complete loss of investment capital of these individual companies could be material to our financial statements.

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for the tax years ended June 30, 2019 to June 30, 2025 that resulted in us making a tax payment of $117.4 million.

We will continue to pursue advanced pricing arrangements in Australia and other jurisdictions to proactively

manage and mitigate the risk of transfer pricing disputes with tax authorities.

We will continue to pursue advanced pricing arrangements in Australia and other jurisdictions to proactively manage and mitigate the risk of transfer pricing disputes with tax authorities.

In addition, in the ordinary course of our business we are subject to tax audits from various taxing authorities.

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dollar, which exposes us to foreign currency exchange rate fluctuations.

A large percentage of our expenses are denominated in the Australian dollar and the Indian rupee, and fluctuations in these currencies could have a material negative impact on our results of operations.

A large percentage of our expenses are denominated in the Australian dollar, the Indian rupee, and the British pound sterling and fluctuations in these currencies could have a material negative impact on our results of operations.

Moreover, our subsidiaries, other than our U.S.

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If we are deemed to be an investment company under the Investment Company Act of 1940, our results of operations could be harmed.

Under Sections 3(a)(1)(A) and (C) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), a company generally will be deemed to be an “investment company” for purposes of the Investment Company Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding, or trading in securities and it owns or proposes to acquire investment

securities having a value exceeding 40% of the value of its total assets (exclusive of U.S.

government securities and cash items) on an unconsolidated basis.

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We rely on certain third parties to support our sales and regulatory compliance efforts and can be held liable for their corrupt or other illegal activities, even if we do not explicitly authorize or have actual knowledge of such activities.

Although we take precautions to prevent violations of these laws, our exposure for violating these laws increases as our international presence expands and as we increase sales and operations in additional jurisdictions.

Although we take precautions to prevent violations of these laws, our exposure for violating these

laws increases as our international presence expands and as we increase sales and operations in additional jurisdictions.

Finally, as we expand our products and services and evolve our business models, we may become subject to additional government regulation or increased regulatory scrutiny.

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and in other jurisdictions in which we operate) may adopt new laws or regulations, change existing regulations, or their interpretation of existing laws or regulations may differ from ours.

For example, the regulation of emerging technologies that are incorporated into our offerings, such as AI and machine learning, is still an evolving area, and it is possible that we could become subject to new regulations that negatively impact our plans, operations and results.

For example, the regulation of emerging technologies that we develop and are otherwise incorporated into our offerings, such as AI and machine learning, is still an evolving area, and it is possible that we could become subject to new regulations that negatively impact our plans, operations and results.

Additionally, many jurisdictions across the world are currently considering, or have already begun implementing, changes to antitrust and competition laws, regulations or their enforcement to enhance competition in digital markets and address practices by certain digital platforms that they perceive to be anticompetitive, which may impact our ability to invest in, acquire or enter into joint ventures with other entities.

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Investors’ and others’ expectations and scrutiny of our performance relating to environmental, social and governance efforts may impose additional costs and expose us to new risks.

There is an increasing focus from certain investors, regulators, customers, employees, other stakeholders concerning environmental, social and governance matters (“ESG”).

There is an increasing focus from certain investors, regulators, customers, employees, and other stakeholders concerning environmental, social and governance (“ESG”) matters.

Any failure to meet the ESG standards set by various constituencies may damage our reputation or otherwise harm our business or financial condition.

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We voluntarily publish an annual Sustainability Report, which describes, among other things, the measurement of our greenhouse gas emissions and our efforts to reduce emissions.

In addition, our Sustainability Report provides highlights of how we are supporting our workforce, including our efforts to promote diversity, equity, and inclusion.

In addition, our Sustainability Report provides highlights of how we are supporting our workforce.

Our disclosures on these matters, or a failure to meet evolving stakeholder expectations for ESG practices and reporting, may potentially harm our reputation and customer relationships.

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If we fail to satisfy the expectations of investors, customers, employees and other stakeholders or our initiatives are not executed as planned, our business, financial condition, results of operations, and prospects could be adversely affected.

Alternatively, any negative perceptions of our pursuit of any ESG or diversity, equity, and inclusion initiatives could also result in adverse impacts, including potential stakeholder engagement or litigation.

Alternatively, any negative perceptions of any perceived insufficient or overdone pursuit of any ESG initiatives could also result in adverse impacts, including potential stakeholder engagement or litigation or other proceedings.

Risks Related to Ownership of Our Class A Common Stock

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Shares of our Class B Common Stock have ten votes per share and shares of our Class A Common Stock have one vote per share.

As of December 31, 2024, stockholders who hold our Class B Common Stock collectively hold approximately 86% of the voting power of our outstanding share capital and in particular, entities affiliated with our Co-Founders, Michael Cannon-Brookes and Scott Farquhar, collectively hold approximately 86% of the voting power of our outstanding share capital.

As of March 31, 2025, stockholders who hold our Class B Common Stock collectively hold approximately 86% of the voting power of our outstanding share capital and in particular, entities affiliated with our Co-Founders, Michael Cannon-Brookes and Scott Farquhar, collectively hold approximately 86% of the voting power of our outstanding share capital.

The holders of our Class B Common Stock will collectively continue to control a majority of the combined voting power of our capital stock and therefore be able to control substantially all matters submitted to our stockholders for approval so long as the outstanding shares of our Class B Common Stock represent at least 10% of all shares of our outstanding Class A Common Stock and Class B Common Stock in the aggregate.

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• additional shares of Class A Common Stock being sold into the market by us or our existing stockholders or the anticipation of such sales;

• the existence of our Share Repurchase Programs (as defined below) and purchases made pursuant to the Share Repurchase Programs or any failure to repurchase shares as planned, including failure to meet expectations around the timing, price or amount of share repurchases, and any reduction, suspension or termination of the Share Repurchase Programs;

• the existence of our 2024 Share Repurchase Program (as defined below) and purchases made pursuant to the 2024 Share Repurchase Program or any failure to repurchase shares as planned, including failure to meet expectations around the timing, price or amount of share repurchases, and any reduction, suspension or termination of the 2024 Share Repurchase Program;

• cyber-security and privacy breaches;

• lawsuits threatened or filed against us;

• general economic conditions and macroeconomic factors, such as inflationary pressures, recession or financial institution instability;

• economic uncertainty regarding, or any impacts from, the imposition of and changes in trade policies, including trade wars, tariffs or other trade restrictions or the threat of such actions;

• other general economic conditions and macroeconomic factors, such as inflationary pressures, recession or financial institution instability;

• other events or factors, including those resulting from geopolitical risks, natural disasters, climate change, diseases and pandemics, or incidents of terrorism or war, such as in the Middle East and Ukraine, as well as responses to any of these events

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federal court.

This case has

been dismissed, but it is possible there could be other securities litigation in the future that subjects us to substantial costs, diverts resources and the attention of management from operating our business, and harms our business, results of operations and financial condition.

This case has been dismissed, but it is possible there could be other securities litigation in the future that subjects us to substantial costs, diverts resources and the attention of management from operating our business, and harms our business, results of operations and financial condition.

Substantial future sales of our common stock could cause the market price of our Class A Common Stock to decline.

The market price of our Class A Common Stock could decline as a result of substantial sales of shares of our Class A Common Stock, particularly sales by our directors, executive officers and significant stockholders, or the perception in the market that holders of a large number of shares intend to sell their shares.

As of December 31, 2024, we had 163,081,602 outstanding shares of Class A Common Stock and 98,977,705 outstanding shares of convertible Class B Common Stock.

As of March 31, 2025, we had 165,150,665 outstanding shares of Class A Common Stock and 98,008,049 outstanding shares of convertible Class B Common Stock.

We have also registered shares of Class A Common Stock that we issue under our employee equity incentive plans.

These shares may be sold freely in the public market upon issuance.

We cannot guarantee that any Share Repurchase Program will be fully consummated or that it will enhance long-term stockholder value.

We cannot guarantee that our Share Repurchase Program will be fully consummated or that it will enhance long-term stockholder value.

Repurchases of shares of our Class A Common Stock could also increase the volatility of the trading price of our Class A Common Stock and could diminish our cash reserves.

In January 2023, our board of directors authorized a share repurchase program to repurchase up to $1.0 billion of our outstanding Class A Common Stock (the “2023 Share Repurchase Program”).

In September 2024, our 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 Share Repurchase Program,” and together with the 2023 Share Repurchase Program, the “Share Repurchase Programs”).

The 2024 Share Repurchase Program will commence following completion of the 2023 Share Repurchase Program.

The 2024 Share Repurchase Program commenced in April 2025 following completion of the 2023 Share Repurchase Program.

Under the 2024 Share Repurchase Programs, stock repurchases may be made from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, in accordance with applicable securities laws and other restrictions.

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 acquire any amount of Class A Common Stock.

The timing, manner, price, and amount of any repurchases will be determined by us at our discretion and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations.

We cannot guarantee that any Share Repurchase Program will be fully consummated or that it will enhance long-term stockholder value.

The Share Repurchase Programs could also affect the trading price of our Class A Common Stock and increase volatility, and any announcement of a reduction, suspension or termination of the Share Repurchase Program may result in a decrease in the trading price of our Class A Common Stock.

and other considerations.

We cannot guarantee that the 2024 Share Repurchase Program will be fully consummated or that it will enhance long-term stockholder value.

The 2024 Share Repurchase Program could also affect the trading price of our Class A Common Stock and increase volatility, and any announcement of a reduction, suspension or termination of the program may result in a decrease in the trading price of our Class A Common Stock.

In addition, repurchasing our Class A Common Stock could diminish our cash and cash equivalents and marketable securities available to fund working capital, repayment of debt, capital expenditures, strategic acquisitions, investments, or business opportunities, and other general corporate purposes.

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and (b) the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause or causes of action arising under the Securities Act, including all causes of action asserted against any defendant to such complaint.

Any person or entity purchasing or otherwise acquiring any interest in any security of the Company will be deemed to have notice of and consented to these provisions.

Any person or entity purchasing or otherwise acquiring any

interest in any security of the Company will be deemed to have notice of and consented to these provisions.

Nothing in our amended and restated certificate of incorporation or amended and restated bylaws precludes stockholders that assert claims under the Exchange Act, from bringing such claims in federal court to the extent that the Exchange Act confers exclusive federal jurisdiction over such claims, subject to applicable law.

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A key element of our strategy is to operate globally and sell our products to customers around the world.

Operating globally requires significant resources and management attention and subjects us to regulatory,

economic, geographic, and political risks.

Operating globally requires significant resources and management attention and subjects us to regulatory, economic, geographic, and political risks.

In particular, our global operations subject us to a variety of additional risks and challenges, including:

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• difficulties in repatriating or transferring funds from, or converting currencies in certain countries;

• weak economic conditions in any country or region in which we operate or sell our products, including due to rising inflation or hyperinflation, such as recently occurred in Turkey, and related interest rate increases, or general political and economic instability around the world, including in the Middle East and Ukraine;

• economic conditions relating to general political and economic instability around the world, including in the Middle East and Ukraine, and uncertainty regarding or any impacts from the imposition of and changes in trade policies, including trade wars, tariffs or other trade restrictions or the threat of such actions;

• differing labor standards, including restrictions related to, and the increased cost of, terminating employees in some countries;

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Although we have implemented policies and procedures designed to ensure compliance with these regulations and policies, there can be no assurance that all of our employees, contractors, business partners and agents will comply with these regulations and policies.

Violations of

laws, regulations or key control policies by our employees, contractors, business partners, or agents could result in delays in revenue recognition, financial reporting misstatements, enforcement actions, reputational harm, disgorgement of profits, fines, civil and criminal penalties, damages, injunctions, other collateral consequences, or the prohibition of the importation or exportation of our products and could harm our business, results of operations, and financial condition.

Violations of laws, regulations or key control policies by our employees, contractors, business partners, or agents could result in delays in revenue recognition, financial reporting misstatements, enforcement actions, reputational harm, disgorgement of profits, fines, civil and criminal penalties, damages, injunctions, other collateral consequences, or the prohibition of the importation or exportation of our products and could harm our business, results of operations, and financial condition.

We depend on our executive officers and other key employees and the loss of one or more of these employees or the inability to attract and retain highly skilled employees could harm our business.

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From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business.

For example, one of our former Co-Chief Executive Officers stepped down from his executive officer role and into an advisory role, effective August 31, 2024, and our former Chief Sales Officer stepped down from his role, effective August 31, 2024.

For example, one of our former Co-Chief Executive Officers stepped down from his executive officer role and into an advisory role, effective August 31, 2024.

We do not have employment agreements with our executive officers or other key personnel that require them to continue to work for us for any specified period and, therefore, they are able to terminate their employment with us at any time.

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As we grow our business, the need for business continuity planning and disaster recovery plans will grow in significance.

If we are unable to develop adequate plans to ensure that our business functions continue to operate

during and after a disaster, disease or pandemic, or catastrophic event, or if we are unable to successfully execute on those plans, our business and reputation could be harmed.

If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a disaster, disease or pandemic, or catastrophic event, or if we are unable to successfully execute on those plans, our business and reputation could be harmed.

Climate change may have a long-term impact on our business.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors