Atlassian Corp 10-Q

ITEM 1. Financial Statements ATLASSIAN CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value and share data) (Unaudited) December 31, 2025 June 30, 2025 Assets Current assets: Cash and cash equivalents $ 1,158,122 $ 2,512,874 Marketable securities 407,932 424,268 Accounts receivable, net 911,915 778,302 Prepaid expenses and other current assets 297,437 175,793 Total current assets 2,775,406 3,891,237 Non-current assets: Property and equipment, net 97,952 105,118 Operating lease right-of-use assets 126,475 169,127 Strategic investments 209,979 221,942 Intangible assets, net 494,959 244,840 Goodwill 2,305,132 1,304,445 Deferred tax assets 25,433 3,762 Other non-current assets 125,045 101,499 Total assets $ 6,160,381 $ 6,041,970 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 231,654 $ 222,092 Accrued expenses and other current liabilities 603,850 681,601 Deferred revenue, current portion 2,230,427 2,227,002 Operating lease liabilities, current portion 50,696 50,164 Total current liabilities 3,116,627 3,180,859 Non-current liabilities: Deferred revenue, net of current portion 201,082 254,252 Operating lease liabilities, net of current portion 175,774 201,483 Long-term debt 988,609 987,684 Deferred tax liabilities 23,993 23,881 Other non-current liabilities 63,447 48,157 Total liabilities 4,569,532 4,696,316 Commitments and contingencies (Note 11) Stockholders’ equity Class A Common Stock, $ 0.00001 par value; 750,000,000 shares authorized, 170,436,795 and 165,949,196 issued and outstanding at December 31, 2025 and June 30, 2025, respectively 2 2 Class B Common Stock, 0.00001 par value; 230,000,000 shares authorized, 95,068,747 and 97,030,987 issued and outstanding at December 31, 2025 and June 30, 2025, respectively 1 1 Additional paid-in capital 6,378,041 5,574,290 Accumulated other comprehensive income (loss) ( 465 ) 13,226 Accumulated deficit ( 4,786,730 ) ( 4,241,865 ) Total stockholders’ equity 1,590,849 1,345,654 Total liabilities and stockholders’ equity $ 6,160,381 $ 6,041,970 The above condensed consolidated financial statements should be read in conjunction with the accompanying notes. 3 ATLASSIAN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited) Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Revenues: Subscription $ 1,507,656 $ 1,213,248 $ 2,882,158 $ 2,345,196 Other 78,659 73,215 136,710 129,048 Total revenues 1,586,315 1,286,463 3,018,868 2,474,244 Cost of revenues (1) (2) 237,691 223,127 495,615 440,751 Gross profit 1,348,624 1,063,336 2,523,253 2,033,493 Operating expenses: Research and development (1) (2) 826,489 680,213 1,582,483 1,283,314 Marketing and sales (1) (2) 376,434 271,894 712,861 524,287 General and administrative (1) 193,448 168,708 371,993 315,349 Total operating expenses 1,396,371 1,120,815 2,667,337 2,122,950 Operating loss ( 47,747 ) ( 57,479 ) ( 144,084 ) ( 89,457 ) Other income (expense), net ( 13,550 ) ( 7,999 ) 5,254 ( 27,431 ) Interest income 18,065 25,586 47,910 54,150 Interest expense ( 12,525 ) ( 7,291 ) ( 21,161 ) ( 14,609 ) Loss before income taxes ( 55,757 ) ( 47,183 ) ( 112,081 ) ( 77,347 ) Provision for (benefit from) income taxes ( 13,112 ) ( 8,975 ) ( 17,566 ) 84,630 Net loss $ ( 42,645 ) $ ( 38,208 ) $ ( 94,515 ) $ ( 161,977 ) Net loss per share attributable to Class A and Class B common stockholders: Basic $ ( 0.16 ) $ ( 0.15 ) $ ( 0.36 ) $ ( 0.62 ) Diluted $ ( 0.16 ) $ ( 0.15 ) $ ( 0.36 ) $ ( 0.62 ) Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders: Basic 263,828 261,147 263,409 260,812 Diluted 263,828 261,147 263,409 260,812 (1) Amounts include stock-based compensation, as follows: Cost of revenues $ 20,121 $ 23,031 $ 40,052 $ 41,245 Research and development 324,865 260,278 571,359 453,723 Marketing and sales 55,505 43,260 99,489 79,252 General and administrative 52,133 52,161 92,851 90,656 (2) Amounts include amortization of acquired intangible assets, as follows: Cost of revenues $ 19,753 $ 10,130 $ 29,710 $ 20,246 Research and development 93 93 187 187 Marketing and sales 5,507 3,673 9,106 7,345 The above condensed consolidated financial statements should be read in conjunction with the accompanying notes. 4 ATLASSIAN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) (Unaudited) Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Net loss $ ( 42,645 ) $ ( 38,208 ) $ ( 94,515 ) $ ( 161,977 ) Other comprehensive income (loss), net of reclassification adjustments: Foreign currency translation adjustment 1,791 ( 13,499 ) ( 3,955 ) ( 7,839 ) Net change in unrealized gain (loss) on marketable and privately held debt securities ( 36 ) ( 741 ) 358 613 Net gain (loss) on cash flow hedging derivative instruments 594 ( 67,197 ) ( 10,094 ) ( 56,691 ) Other comprehensive income (loss), before tax 2,349 ( 81,437 ) ( 13,691 ) ( 63,917 ) Income tax effect — — — — Other comprehensive income (loss), net of tax 2,349 ( 81,437 ) ( 13,691 ) ( 63,917 ) Total comprehensive income (loss), net of tax $ ( 40,296 ) $ ( 119,645 ) $ ( 108,206 ) $ ( 225,894 ) The above condensed consolidated financial statements should be read in conjunction with the accompanying notes. 5 ATLASSIAN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (Unaudited) Three Months Ended December 31, 2025 Common Stock Additional paid in capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity Class A Class B Shares Amount Shares Amount Balance at September 30, 2025 167,175 $ 2 96,050 $ 1 $ 5,925,417 $ ( 2,814 ) $ ( 4,543,670 ) $ 1,378,936 Common stock issued 2,155 — — — — — — — Conversion from Class B Common Stock to Class A Common Stock 981 — ( 981 ) — — — — — Stock-based compensation — — — — 452,624 — — 452,624 Repurchases of Class A Common Stock ( 1,279 ) — — — — — ( 200,415 ) ( 200,415 ) Other comprehensive income (loss), net of tax — — — — — 2,349 — 2,349 Net loss — — — — — — ( 42,645 ) ( 42,645 ) Balance at December 31, 2025 169,032 $ 2 95,069 $ 1 $ 6,378,041 $ ( 465 ) $ ( 4,786,730 ) $ 1,590,849 Three Months Ended December 31, 2024 Common Stock Additional paid in capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity Class A Class B Shares Amount Shares Amount Balance at September 30, 2024 160,558 $ 2 99,995 $ 1 $ 4,498,214 $ 42,820 $ ( 3,512,203 ) $ 1,028,834 Common stock issued 1,770 — — — — — — — Conversion from Class B Common Stock to Class A Common Stock 1,018 — ( 1,018 ) — — — — — Stock-based compensation — — — — 378,730 — — 378,730 Repurchases of Class A Common Stock ( 368 ) — — — — — ( 68,364 ) ( 68,364 ) Other comprehensive income (loss), net of tax — — — — — ( 81,437 ) — ( 81,437 ) Net loss — — — — — — ( 38,208 ) ( 38,208 ) Balance at December 31, 2024 162,978 $ 2 98,977 $ 1 $ 4,876,944 $ ( 38,617 ) $ ( 3,618,775 ) $ 1,219,555 ATLASSIAN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED) (in thousands) (Unaudited) Six Months Ended December 31, 2025 Common Stock Additional paid in capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity Class A Class B Shares Amount Shares Amount Balance at June 30, 2025 165,860 $ 2 97,031 $ 1 $ 5,574,290 $ 13,226 $ ( 4,241,865 ) $ 1,345,654 Common stock issued 3,872 — — — — — — — Conversion from Class B Common Stock to Class A Common Stock 1,962 — ( 1,962 ) — — — — — Stock-based compensation — — — — 803,751 — — 803,751 Repurchases of Class A Common Stock ( 2,662 ) — — — — — ( 450,350 ) ( 450,350 ) Other comprehensive income (loss), net of tax — — — — — ( 13,691 ) — ( 13,691 ) Net loss — — — — — — ( 94,515 ) ( 94,515 ) Balance at December 31, 2025 169,032 $ 2 95,069 $ 1 $ 6,378,041 $ ( 465 ) $ ( 4,786,730 ) $ 1,590,849 Six Months Ended December 31, 2024 Common Stock Additional paid in capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity Class A Class B Shares Amount Shares Amount Balance at June 30, 2024 159,388 $ 2 101,012 $ 1 $ 4,212,064 $ 25,300 $ ( 3,204,516 ) $ 1,032,851 Common stock issued 3,054 — — — 4 — — 4 Conversion from Class B Common Stock to Class A Common Stock 2,035 — ( 2,035 ) — — — — — Stock-based compensation — — — — 664,876 — — 664,876 Repurchases of Class A Common Stock ( 1,499 ) — — — — — ( 252,282 ) ( 252,282 ) Other comprehensive income (loss), net of tax — — — — — ( 63,917 ) — ( 63,917 ) Net loss — — — — — — ( 161,977 ) ( 161,977 ) Balance at December 31, 2024 162,978 $ 2 98,977 $ 1 $ 4,876,944 $ ( 38,617 ) $ ( 3,618,775 ) $ 1,219,555 T he above condensed consolidated financial statements should be read in conjunction with the accompanying notes. 6 ATLASSIAN CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Cash flows from operating activities: Net loss $ ( 42,645 ) $ ( 38,208 ) $ ( 94,515 ) $ ( 161,977 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 35,621 23,149 59,954 45,976 Stock-based compensation 452,624 378,730 803,751 664,876 Impairment charges for leases and leasehold improvements — — 26,673 — Deferred income taxes ( 48,628 ) ( 2,161 ) ( 48,708 ) ( 2,929 ) Amortization of interest rate swap contracts ( 1,611 ) ( 6,865 ) ( 7,163 ) ( 14,020 ) Net loss (gain) on strategic investments 2,555 2,611 ( 23,971 ) 17,903 Net foreign currency loss (gain) ( 504 ) ( 5,621 ) 1,327 ( 2,581 ) Other ( 88 ) ( 968 ) 80 23 Changes in operating assets and liabilities, net of business combinations: Accounts receivable, net ( 367,390 ) ( 211,755 ) ( 126,029 ) ( 67,725 ) Prepaid expenses and other assets ( 43,578 ) ( 25,759 ) ( 136,259 ) ( 65,673 ) Accounts payable 35,315 24,863 10,358 14,719 Accrued expenses and other liabilities 32,956 30,464 ( 82,060 ) ( 77,704 ) Deferred revenue 123,178 183,425 ( 76,919 ) 81,509 Net cash provided by operating activities 177,805 351,905 306,519 432,397 Cash flows from investing activities: Business combinations, net of cash acquired ( 1,213,177 ) — ( 1,228,875 ) ( 4,975 ) Purchases of property and equipment ( 9,289 ) ( 9,336 ) ( 23,401 ) ( 15,487 ) Purchases of strategic investments ( 5,000 ) ( 11,500 ) ( 5,000 ) ( 25,550 ) Purchases of marketable securities ( 4,496 ) ( 116,619 ) ( 67,259 ) ( 160,323 ) Proceeds from maturities of marketable securities 53,222 25,480 85,109 71,628 Proceeds from sales of strategic investments 34,840 271 34,840 4,313 Net cash used in investing activities ( 1,143,900 ) ( 111,704 ) ( 1,204,586 ) ( 130,394 ) Cash flows from financing activities: Repurchases of Class A Common Stock ( 197,440 ) ( 69,241 ) ( 450,246 ) ( 252,851 ) Other — — — ( 3,143 ) Net cash used in financing activities ( 197,440 ) ( 69,241 ) ( 450,246 ) ( 255,994 ) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash ( 823 ) ( 9,056 ) ( 6,752 ) ( 5,492 ) Net increase (decrease) in cash, cash equivalents, and restricted cash ( 1,164,358 ) 161,904 ( 1,355,065 ) 40,517 Cash, cash equivalents, and restricted cash at beginning of period 2,323,055 2,056,735 2,513,762 2,178,122 Cash, cash equivalents, and restricted cash at end of period $ 1,158,697 $ 2,218,639 $ 1,158,697 $ 2,218,639 Reconciliation of cash, cash equivalents, and restricted cash within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows above: Cash and cash equivalents $ 1,158,122 $ 2,217,604 $ 1,158,122 $ 2,217,604 Restricted cash included in other non-current assets 575 1,035 575 1,035 Total cash, cash equivalents, and restricted cash $ 1,158,697 $ 2,218,639 $ 1,158,697 $ 2,218,639 Non-cash investing and financing activities: Purchase of property and equipment included in accrued expenses and other current liabilities 3,702 3,849 3,702 3,849 Repurchases of Class A Common Stock included in accrued expenses and other current liabilities 4,270 2,375 4,270 2,375 The above condensed consolidated financial statements should be read in conjunction with the accompanying notes. 7 ATLASSIAN CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ( Unaudited ) 1. Description of Business Atlassian Corporation (the “Company”) is a global technology company with a mission to unleash the potential of every team. The Company’s team collaboration software enables organizations to connect all teams through a system of work that unlocks productivity at scale. The Company’s portfolio of interconnected apps, AI agents, and products, each with discrete value propositions, delivers solutions for software teams, IT operations and support teams, leadership, and business teams. Atlassian puts AI at the center of the Company’s portfolio to enhance teamwork for users across 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. The Company’s fiscal year ends on June 30 of each year. References to fiscal year 2026, for example, refer to the fiscal year ending June 30, 2026. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which are established primarily by the Financial Accounting Standards Board (“FASB”). The accompanying condensed consolidated financial statements contain all normal recurring adjustments which are necessary to fairly present the condensed consolidated balance sheets as of December 31, 2025 and June 30, 2025, the statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for the three and six months ended December 31, 2025 and 2024. These condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are sufficient to make the information not misleading . Results of operations for interim periods are not necessarily indicative of results for the entire year or of the results to be expected in future periods. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions in the Company’s condensed consolidated financial statements. These estimates are based on information available as of the date of the condensed consolidated financial statements. Such management estimates and assumptions include, but are not limited to, the determination of: • the standalone selling price of performance obligations for revenue contracts with multiple performance obligations; • the fair value of assets acquired and liabilities assumed for business combinations; • the recognition, measurement and valuation of current and deferred income taxes and uncertain tax positions. Actual results could differ materially from these estimates. 8 Segment The Company operates as a single operating segment and derives revenue primarily from fees earned from subscription-based arrangements for providing customers with software in a cloud-based-infrastructure that the Company provides, and from the sale of on-premises term license agreements. An operating segment is defined as a component of an entity for which discrete financial information is available and whose results of operations are regularly reviewed by the chief operating decision maker (“CODM”). The Company has identified the CEO, Mike Cannon-Brookes, as the CODM. The CODM manages the Company using consolidated financial information. Further, the Company offers a connected portfolio of apps that are built on a single Atlassian platform and data model. Accordingly, the Company has determined it operates as a single operating and reportable segment. The CODM uses consolidated net loss to allocate resources, including headcount, and make business investment decisions during the Company’s budgeting process. The CODM also uses consolidated net loss to assess performance by comparing the consolidated results to forecasts. Significant segment expenses are organized by function and are presented on the condensed consolidated statements of operations. Other segment items included in consolidated net loss are: other income and expense, net, interest income, interest expense, and the provision for income taxes, which are reflected in the condensed consolidated statements of operations. Significant Accounting Policies There were no significant changes to the Company’s significant accounting policies disclosed in Note 2, “ Summary of Significant Accounting Policies, ” of its Annual Report on Form 10-K for fiscal year 2025, which was filed with the SEC on August 15, 2025. Concentration of Credit Risk and Significant Customers Financial instruments potentially exposing the Company to credit risk consist primarily of cash, cash equivalents, accounts receivable, derivative contracts, and investments. The Company holds cash at financial institutions that management believes are high credit, quality financial institutions and invests in investment grade securities rated A- and above. The Company’s derivative contracts expose it to credit risk to the extent that the counterparties may be unable to meet the terms of the arrangement. The Company enters into master netting agreements with select financial institutions to reduce its credit risk and trades with several counterparties to reduce its concentration risk with any single counterparty. The Company does not have significant exposure to counterparty credit risk at this time. In addition, the Company does not require nor is required to post collateral of any kind related to any foreign currency derivatives. Credit risk arising from accounts receivable is mitigated to a certain extent due to the Company’s large number of customers and their dispersion across various industries and geographies. The Company’s customer base is highly diversified, thereby limiting credit risk. The Company manages credit risk with customers by closely monitoring its receivables and contract assets. The Company continuously monitors outstanding receivables locally to assess whether there is objective evidence that outstanding accounts receivable and contract assets are credit-impaired. As of December 31, 2025, and June 30, 2025, no customer represented more than 10% of the total accounts receivable balance. For the three and six months ended December 31, 2025, and 2024, no customer represented more than 10% of total revenues. New Accounting Standards Not Yet Adopted in Fiscal Year 2026 In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. This ASU is effective for annual reporting periods beginning after December 15, 2024. The Company is currently evaluating the impact of the new guidance and expects to adopt ASU 2023-09 in its consolidated financial statements for the year ended June 30, 2026. The adoption will require certain additional disclosure in the notes to the Company's consolidated financial statements. 9 In November 2024, the FASB issued ASU No. 2024-03 “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures.” This ASU requires disaggregated disclosure of income statement expenses for public entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and disclosures. In July 2025, the FASB issued ASU 2025-05 “ Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets for Private Companies and Certain Not-for-Profit Entities,” which amends ASC 326-20 to provide a practical expedient and an accounting policy election (for all entities, other than public business entities that elect the practical expedient) related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. This ASU is effective for fiscal years beginning after December 15, 2025, and early adoption is permitted. The Company is currently evaluating the impact of the new guidance and does not expect it to have a material impact on its consolidated financial statements. In September 2025, the FASB issued ASU 2025-06 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” This ASU makes targeted improvements to the accounting for internally developed software subject to ASC 350-40. This ASU is effective for fiscal years beginning after December 15, 2027, and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements. In November 2025, the FASB issued ASU 2025-11 “Interim Reporting, (Topic 270), ” which clarifies interim reporting guidance and centralizes condensed interim disclosure requirements. This ASU is effective for interim periods within fiscal years beginning after December 15, 2027, and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and disclosures. In December 2025, the FASB issued ASU 2025-12, “Codification Improvements,” which clarifies guidance and makes minor improvements across various topics, including earnings per share, receivables, revenue, income taxes, and equity. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and disclosures. 3. Fair Value Measurements The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2025, by level within the fair value hierarchy (in thousands): Level 1 Level 2 Total Assets measured at fair value Cash and cash equivalents: Money market funds $ 515,441 $ — $ 515,441 Marketable securities: U.S. treasury securities — 197,753 197,753 Agency securities — 3,210 3,210 Certificates of deposit and time deposits — 10,000 10,000 Commercial paper — 12,433 12,433 Corporate debt securities — 184,536 184,536 Derivative financial instruments — 21,658 21,658 Total assets measured at fair value $ 515,441 $ 429,590 $ 945,031 Liabilities measured at fair value Derivative financial instruments $ — $ 4,846 $ 4,846 Total liabilities measured at fair value $ — $ 4,846 $ 4,846 10 The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2025, by level within the fair value hierarchy (in thousands): Level 1 Level 2 Total Assets measured at fair value Cash and cash equivalents: Money market funds $ 1,774,138 $ — $ 1,774,138 Corporate debt securities — 382 382 Marketable securities: U.S. treasury securities — 176,661 176,661 Agency securities — 3,216 3,216 Certificates of deposit and time deposits — 10,000 10,000 Commercial paper — 19,697 19,697 Corporate debt securities — 214,694 214,694 Derivative financial instruments — 23,234 23,234 Total assets measured at fair value $ 1,774,138 $ 447,884 $ 2,222,022 Liabilities measured at fair value Derivative financial instruments $ — $ 2,445 $ 2,445 Total liabilities measured at fair value $ — $ 2,445 $ 2,445 Due to the short-term nature of accounts receivable, net, contract assets, accounts payable, accrued expenses, and other current liabilities, their carrying amount is assumed to approximate their fair value. Determination of Fair Value The Company uses quoted prices in active markets for identical assets to determine the fair value of the Company’s Level 1 investments. The fair value of the Company’s Level 2 investments is determined based on quoted market prices or alternative market observable inputs. Strategic Investments Measured and Recorded at Fair Value on a Non-Recurring Basis The Company’s investments in privately held companies are not included in the tables above and are discussed in Note 4, “Investments.” The carrying value of the Company’s privately held equity securities are adjusted on a non-recurring basis upon observable price changes in orderly transactions for identical or similar investments of the same issuer, or impairment (referred to as the measurement alternative). Privately held equity securities that have been remeasured during the period based on observable price changes in orderly transactions are classified within Level 2 or Level 3 in the fair value hierarchy because the Company estimates the value based on valuation methods which may include a combination of the observable transaction price at the transaction date and other unobservable inputs including volatility, rights and preferences of the investments, and obligations of the securities the Company holds. The fair value of privately held equity securities that have been remeasured due to impairment is classified within Level 3. The Company’s privately held debt and equity securities amounted to $ 156.1 million and $ 168.8 million as of December 31, 2025, and June 30, 2025, respectively. 11 4. Investments Marketable Securities The Company’s investments of marketable securities as of December 31, 2025, consisted of the following (in thousands): Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. treasury securities $ 197,135 $ 618 $ — $ 197,753 Agency securities 3,199 11 — 3,210 Certificates of deposit and time deposits 10,000 — — 10,000 Commercial paper 12,433 — — 12,433 Corporate debt securities 183,962 574 — 184,536 Total marketable securities $ 406,729 $ 1,203 $ — $ 407,932 The Company’s investments of marketable securities as of June 30, 2025, consisted of the following (in thousands): Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. treasury securities $ 176,338 $ 388 $ ( 65 ) $ 176,661 Agency securities 3,197 19 — 3,216 Certificates of deposit and time deposits 10,000 — — 10,000 Commercial paper 19,697 — — 19,697 Corporate debt securities 214,190 527 ( 23 ) 214,694 Total marketable securities $ 423,422 $ 934 $ ( 88 ) $ 424,268 The table below summarizes the Company’s marketable securities by remaining contractual maturity (in thousands): December 31, 2025 June 30, 2025 Due in one year or less $ 310,866 $ 271,923 Due in one year through five years 97,066 152,345 Total marketable securities $ 407,932 $ 424,268 The Company regularly reviews the changes to the rating of its marketable securities by rating agencies and monitors the surrounding economic conditions to assess the risk of expected credit losses. As of December 31, 2025, and June 30, 2025, unrealized losses and the related risk of expected credit losses were not material. Strategic Investments Carrying value of privately held debt securities The Company’s investments of privately held debt securities as of December 31, 2025, consisted of the following (in thousands): Amortized Cost Unrealized Gains Unrealized Losses Fair Value Privately held debt securities $ 7,430 $ — $ ( 3,250 ) $ 4,180 The Company’s investments of privately held debt securities as of June 30, 2025, consisted of the following (in thousands): Amortized Cost Unrealized Gains Unrealized Losses Fair Value Privately held debt securities $ 7,780 $ — $ ( 3,350 ) $ 4,430 12 Carrying value of privately held equity securities Privately held equity securities are measured using the measurement alternative. The carrying value is measured as the total initial cost plus the cumulative net gain (loss). The carrying values for privately held equity securities as of December 31, 2025 are summarized below (in thousands): Privately held equity securities Initial total cost $ 142,302 Cumulative net gains (losses) 9,604 Carrying value $ 151,906 Privately held equity securities’ cumulative net losses are composed of downward adjustments and impairment charges of $ 5.4 million and upward adjustments of $ 15.0 million as of December 31, 2025. During the three months ended December 31, 2025, the Company sold its holdings of its publicly traded equity securities. As such, the Company did not have any publicly traded equity securities as of December 31, 2025. The carrying values for privately held equity securities as of June 30, 2025 are summarized below (in thousands): Privately held equity securities Initial total cost $ 166,302 Cumulative net losses ( 1,909 ) Carrying value $ 164,393 Privately held equity securities’ cumulative net losses are composed of downward adjustments and impairment charges of $ 8.5 million and upward adjustments of $ 6.6 million as of June 30, 2025. 13 Gains and Losses on Strategic Investments The components of gains and losses on strategic investments were as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Unrealized gains recognized on publicly traded equity securities $ — $ — $ 24,729 $ — Unrealized gains recognized on privately held equity securities 7,549 — 9,846 — Unrealized losses recognized on privately held equity securities including impairment ( 749 ) — $ ( 1,249 ) $ — Unrealized losses on privately held debt securities ( 250 ) — ( 250 ) — Unrealized gains, net $ 6,550 $ — $ 33,076 $ — Realized losses recognized on sales of publicly traded equity securities ( 10,070 ) — ( 10,070 ) — Realized losses recognized on privately held equity securities — ( 2,611 ) — ( 2,645 ) Realized gains recognized on privately held equity securities 965 — 965 — Gains (losses) on strategic investments, net $ ( 2,555 ) $ ( 2,611 ) $ 23,971 $ ( 2,645 ) Unrealized gains recognized during the reporting period on privately held equity securities still held at the reporting date $ 6,800 $ — $ 8,597 $ — Unrealized gains recognized on privately held equity securities include upward adjustments from equity securities accounted for under the measurement alternative, while unrealized losses recognized on privately held equity securities include downward adjustments and impairment. Realized gains on sales of privately held securities, net, reflect the difference between the sale proceeds and the carrying value of the security at the beginning of the period or the purchase date, if later. Realized gains and losses recognized on sales of publicly traded equity securities reflect the difference between the sale proceeds and the carrying value of the security at the beginning of the period. Equity Method Investment Vertical First Trust (“VFT”) was established for the construction project associated with the Company’s new global headquarters in Sydney, Australia (the “Australian HQ Property”). In fiscal year 2023, the Company completed a non-cash sale of the controlling interest of VFT to a third-party buyer as part of the contemplated transactions for the buyer to invest in and develop the Australian HQ Property. The Company retained a minority equity interest of 13 % in the form of ordinary units in VFT and has significant influence in VFT. The Company’s interest in VFT is accounted for using the equity method in the condensed consolidated financial statements. Under the equity method, the Company records its proportionate share of VFT’s earnings or losses. The following table sets forth the carrying amounts of the equity method investment and the movements during fiscal year 2025 and the six months ended December 31, 2025 (in thousands): Equity Method Investment Balance as of June 30, 2024 $ 74,510 Share of losses ( 20,433 ) Effect of change in exchange rates ( 958 ) Balance as of June 30, 2025 53,119 Share of losses — Effect of change in exchange rates 774 Balance as of December 31, 2025 $ 53,893 14 The carrying amount of the Company’s investment in VFT was reported within strategic investments in the condensed consolidated balance sheets. 5. Derivative Contracts The Company has derivative instruments that are used for hedging activities as discussed below. The following table sets forth the notional amounts of the Company’s hedging derivative instruments as of December 31, 2025 (in thousands): Notional Amounts of Derivative Instruments Notional Amount by Term to Maturity Classification by Notional Amount Under 12 months Over 12 months Total Cash Flow Hedge Non Hedge Total Forward contracts $ 1,008,770 $ 65,189 $ 1,073,959 $ 760,817 $ 313,142 $ 1,073,959 The following table sets forth the notional amounts of the Company’s hedging derivative instruments as of June 30, 2025 (in thousands): Notional Amounts of Derivative Instruments Notional Amount by Term to Maturity Classification by Notional Amount Under 12 months Over 12 months Total Cash Flow Hedge Non Hedge Total Forward contracts $ 1,064,280 $ 79,858 $ 1,144,138 $ 765,613 $ 378,525 $ 1,144,138 The fair values of the Company’s derivative instruments were as follows (in thousands): Balance Sheet Location December 31, 2025 June 30, 2025 Derivative assets Derivatives designated as hedging instruments: Foreign exchange forward contracts Prepaid expenses and other current assets $ 18,423 $ 16,210 Foreign exchange forward contracts Other non-current assets 926 3,715 Derivatives not designated as hedging instruments: Foreign exchange forward contracts Prepaid expenses and other current assets 2,309 3,309 Total derivative assets $ 21,658 $ 23,234 Derivative liabilities Derivatives designated as hedging instruments: Foreign exchange forward contracts Accrued expenses and other current liabilities $ 4,493 $ 2,409 Foreign exchange forward contracts Other non-current liabilities 185 — Derivatives not designated as hedging instruments: Foreign exchange forward contracts Accrued expenses and other current liabilities 168 36 Total derivative liabilities $ 4,846 $ 2,445 15 The pre-tax effects of derivatives designated as cash flow hedging instruments on the condensed consolidated financial statements were as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Beginning balance of accumulated gains in accumulated other comprehensive income (loss) $ 13,991 $ 51,930 $ 24,679 $ 41,424 Gross unrealized gains (losses) recognized in other comprehensive income (loss) 3,216 ( 57,867 ) ( 3,493 ) ( 39,852 ) Net losses (gains) reclassified from cash flow hedge in accumulated other comprehensive income (loss) into profit or loss: Recognized in cost of revenues 181 32 361 ( 11 ) Recognized in research and development ( 1,731 ) ( 2,049 ) ( 648 ) ( 2,489 ) Recognized in marketing and sales ( 32 ) ( 48 ) 15 9 Recognized in general and administrative 571 ( 400 ) 834 ( 328 ) Recognized in interest expense ( 1,611 ) ( 6,865 ) ( 7,163 ) ( 14,020 ) Ending balance of accumulated gains in accumulated other comprehensive income (loss) $ 14,585 $ ( 15,267 ) $ 14,585 $ ( 15,267 ) 6. Property and Equipment Property and equipment, net consisted of the following (in thousands): December 31, 2025 June 30, 2025 Equipment $ 19,458 $ 15,008 Computer hardware and software 63,282 58,559 Furniture and fittings 27,521 25,217 Leasehold improvements and other 142,219 154,113 Property and equipment, gross 252,480 252,897 Less: accumulated depreciation ( 154,528 ) ( 147,779 ) Property and equipment, net $ 97,952 $ 105,118 Depreciation expense was $ 10.3 million and $ 9.3 million for the three months ended December 31, 2025, and 2024, respectively, and $ 21.0 million and $ 18.2 million for the six months ended December 31, 2025 and 2024, respectively. During the six months ended December 31, 2025, the Company recorded a $ 1.1 million impairment charge, which is recorded in leasehold improvements and other, as a result of its facilities consolidation restructuring efforts. Refer to Note 14, “ Restructuring ,” for additional information. 7. Business Combinations The Browser Company of New York Inc. On October 20, 2025, the Company acquired 100 % of the outstanding equity of The Browser Company of New York Inc. (“BCNY”), the company behind the Dia and Arc browsers. The total purchase price was $ 488.3 million, composed of $ 481.5 million in cash and $ 6.8 million in non-cash settlement of existing BCNY shares included in our strategic investments. The acquisition of BCNY further expands offerings to Atlassian customers by providing a browser for enterprises designed for knowledge workers using SaaS applications in the AI-era. The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands): 16 Fair Value Cash and cash equivalents $ 22,160 Prepaid expenses and other current assets 1,235 Intangible assets, net 91,000 Goodwill 376,885 Accrued expenses and other current liabilities ( 2,102 ) Deferred tax liabilities ( 832 ) Net assets acquired $ 488,346 The excess of purchase price over the fair value of assets acquired and liabilities assumed was recorded as goodwill. The resulting goodwill is primarily attributed to the assembled workforce and expanded market opportunities, including providing the BCNY browsers to customers as an additional product along with existing Company offerings. The goodwill is not deductible in the U.S. for income tax purposes. The fair values assigned to assets acquired and liabilities assumed are preliminary and based on management’s estimates and assumptions which may be subject to change as additional information is received. The primary areas that remain preliminary relate to the fair values of certain intangible assets acquired, certain tangible assets and liabilities acquired, contingencies as of the acquisition date, income tax, including deferred taxes, and residual goodwill. The Company expects to finalize the valuation no later than one year from the acquisition date. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except for useful life): Fair Value Useful Life Developed Technology $ 80,000 3 Trade Name 11,000 3 Developed technology represents the estimated fair value of BCNY’s AI-enabled browser technology. Trade name represents the estimated fair value of the BCNY trade name. In connection with the transaction, the Company granted $ 8.2 million worth of replacement awards in the form of restricted stock unit (“RSU”) awards to BCNY employees and $ 97.0 million worth of RSU awards to certain key BCNY employees. The fair value of the RSU awards was based on the stock price of the Company on the grant date. The RSU awards are subject to future vesting provisions based on service conditions, and the related expense is accounted for as stock-based compensation and classified in the condensed consolidated statement of operations according to the activities that the employees perform. A Software Company On November 10, 2025, the Company acquired 100 % of the outstanding equity of A Software Company (“DX”), which specializes in engineering intelligence. The acquisition of DX further expands the offerings to Atlassian customers and enhances our Collections. The total purchase price was composed of $ 720.4 million in cash. The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands): 17 Fair Value Cash and cash equivalents $ 27,910 Accounts Receivable 6,529 Other non-current assets 9,929 Intangible assets, net 182,800 Goodwill 557,439 Accrued expenses and other current liabilities ( 1,706 ) Deferred revenue, current ( 25,482 ) Deferred tax liabilities ( 26,865 ) Other non-current liabilities ( 10,192 ) Net assets acquired $ 720,362 The excess of purchase price over the fair value of assets acquired and liabilities assumed was recorded as goodwill. The resulting goodwill is primarily attributed to the assembled workforce and expanded market opportunities, including integrating the DX engineering intelligence platform with existing Company offerings. The goodwill is not deductible in the U.S. for income tax purposes. The fair values assigned to assets acquired and liabilities assumed are preliminary and based on management’s estimates and assumptions which may be subject to change as additional information is received. The primary areas that remain preliminary relate to the fair values of certain intangible assets acquired, certain tangible assets and liabilities acquired, contingencies as of the acquisition date, income tax, including deferred taxes, and residual goodwill. The Company expects to finalize the valuation no later than one year from the acquisition date. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except for useful life): Fair Value Useful Life Developed Technology $ 138,000 5 Trade Name 37,000 5 Customer Relationships 4,800 5 Backlog 3,000 3 Developed technology represents the estimated fair value of DX’s engineering intelligence technology. Trade name represents the estimated fair value of the DX trade name. In connection with the transaction, the Company granted $ 201.8 million in restricted stock and provided $ 38.9 million in deferred cash compensation to certain key DX employees. The fair value of the restricted stock was based on the Company’s stock price on the grant date. Both the restricted stock and cash compensation are subject to future vesting provisions based on service conditions. The related expense for the restricted stock and cash compensation is accounted for as employee compensation expense, specifically stock-based compensation related to the restricted stock, and is classified in the condensed consolidated statement of operations according to the activities that the employees perform. Other Fiscal Year 2026 Business Combinations During the six months ended December 31, 2025, the Company completed two additional acquisitions to expand its offerings. The transactions were accounted for as business combinations and were not material individually or in the aggregate to the condensed consolidated financial statements. Total transaction costs incurred related to the Company’s fiscal year 2026 business combinations were not material. The Company has included the financial results of each business combination in its condensed consolidated financial statements from the date of acquisition, which were not material for the three months ended December 31, 2025. Pro forma results of operations have not been presented for the three and six months ended December 31, 2025 and 2024 because the effect of the acquisitions individually and in the aggregate would not be material to our condensed consolidated financial statements. 18 8. Goodwill and Intangible Assets Goodwill Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill amounts are not amortized, but rather tested for impairment at least annually during the fourth quarter, or when indicators of impairment exist. Goodwill consisted of the following (in thousands): Goodwill Balance as of June 30, 2025 $ 1,304,445 Additions 999,243 Effect of change in exchange rates 1,444 Balance as of December 31, 2025 $ 2,305,132 Intangible Assets Intangible assets consisted of the following as of December 31, 2025 (in thousands): Gross Carrying Amount Accumulated Amortization Net Acquired developed technology $ 700,262 $ ( 308,005 ) $ 392,257 Patents, trade names, and other rights 118,928 ( 42,066 ) 76,862 Customer relationships 143,487 ( 117,647 ) 25,840 Total Intangible Assets $ 962,677 $ ( 467,718 ) $ 494,959 Intangible assets consisted of the following as of June 30, 2025 (in thousands): Gross Carrying Amount Accumulated Amortization Net Acquired developed technology $ 466,932 $ ( 278,525 ) $ 188,407 Patents, trade names, and other rights 70,928 ( 37,337 ) 33,591 Customer relationships 135,687 ( 112,845 ) 22,842 Total Intangible Assets $ 673,547 $ ( 428,707 ) $ 244,840 The weighted-average remaining useful lives of the Company’s acquired intangible assets as of December 31, 2025 were as follows: Weighted-Average Remaining Useful Lives (Years) Acquired developed technology 4 Patents, trade names, and other rights 5 Customer relationships 3 Amortization expense for intangible assets was approximately $ 25.4 million and $ 13.9 million for the three months ended December 31, 2025, and 2024, respectively and $ 39.0 million and $ 27.8 million for the six months ended December 31, 2025 and 2024, respectively. 19 The following table presents the estimated future amortization expense related to intangible assets held as of December 31, 2025 (in thousands): Fiscal Years: Remainder of 2026 $ 62,518 2027 120,083 2028 117,321 2029 87,843 2030 73,839 Thereafter 33,355 Total future amortization expense $ 494,959 9. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2025 June 30, 2025 Accrued expenses $ 216,138 $ 180,197 Employee benefits 320,210 422,986 Tax liabilities 9,182 36,726 Customer deposits 19,153 16,396 Other payables 39,167 25,296 Total accrued expenses and other current liabilities $ 603,850 $ 681,601 10. Debt Credit Facility In August 2024, the Company’s principal U.S. operating subsidiary, Atlassian US, Inc., entered into an amended and restated credit agreement (the "2024 Credit Agreement"), which eliminated a term loan facility and provides for a $ 750 million senior unsecured revolving credit facility (the “2024 Credit Facility”). The 2024 Credit Agreement replaced the Company's prior credit agreement entered into in October 2020 (“2020 Credit Agreement”), which provided for a $ 1 billion senior unsecured delayed-draw term loan facility (the “Term Loan”) and a $ 500 million senior unsecured revolving credit facility. The 2024 Credit Facility bears interest, at the Company’s option, at a base rate or the Secured Overnight Financing Rate, plus, in each case, a spread of 0.875 % to 1.50 % per annum. In each case, the applicable margin will be determined by the consolidated leverage ratio of the Company and its subsidiaries, or, following the Company’s one-time option, the Company’s credit rating. The Company may repay outstanding loans under the 2024 Credit Facility at any time, without premium or penalty, and the Company has the option to request an increase of $ 250 million in certain circumstances. The 2024 Credit Facility matures in August 2029. As of December 31, 2025 there were no borrowings under the 2024 Credit Facility. The Company is also obligated to pay a commitment fee on the undrawn amounts of the 2024 Credit Facility at an annual rate ranging from 0.075 % to 0.20 %, determined by the Company’s consolidated leverage ratio, or, following the Company’s one-time option, the Company’s credit rating. The 2024 Credit Facility requires compliance with various financial and non-financial covenants, including affirmative and negative covenants. The financial covenants include a maximum consolidated leverage ratio of 3.5 x, which increases to 4.5 x during the period of four fiscal quarters immediately following a material acquisition. As of December 31, 2025, the Company was in compliance with all covenants associated with the 2024 Credit Facility. Senior Notes 20 On May 15, 2024, the Company issued $ 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 2029 Notes and the 2034 Notes will mature on May 15, 2029, and May 15, 2034, respectively. The 2029 Notes bear interest at a rate of 5.250 % per year. The 2034 Notes bear interest at a rate of 5.500 % per year. Interest on the Notes is paid semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2024. The Notes are senior unsecured obligations of the Company. The Company may redeem either series of the Notes, in whole or in part, at any time or from time to time at the applicable redemption price. Upon the occurrence of a change of control event, the Company will be required to make an offer to repurchase all outstanding Notes from their holders at a price equal to 101 % of their principal amount thereof, plus accrued and unpaid interest to, but not including, the date of repurchase. The indenture governing the Notes also includes covenants (including certain limited covenants restricting the Company’s ability to incur certain liens and enter into certain sale and leaseback transactions), events of default, and other customary provisions. As of December 31, 2025, the Company was in compliance with all covenants associated with the Notes. The Company incurred debt discount and issuance costs of approximately $ 14.3 million in connection with the Notes offering, which were allocated on a pro rata basis to the 2029 Notes and 2034 Notes. The debt discount and issuance costs are amortized on an effective interest rate method to interest expense over the contractual term of the Notes. The proceeds from this offering, net of debt discounts and issuance costs, were $ 985.7 million. The net proceeds were used primarily to repay the Term Loan. The components of the Notes were as follows (in thousands, except percentage data): Instrument Expected Remaining Term (years) Contractual Interest Rate Effective Interest Rate December 31, 2025 June 30, 2025 2029 Notes 3.4 5.250 % 5.55 % $ 500,000 $ 500,000 2034 Notes 8.4 5.500 % 5.71 % 500,000 500,000 Unamortized debt discount and issuance costs ( 11,391 ) ( 12,316 ) Long-term debt $ 988,609 $ 987,684 The total estimated fair value of the Notes was approximately $ 1.04 billion and $ 1.03 billion as of December 31, 2025, and June 30, 2025, respectively. The estimated fair value of the Notes, which the Company deems Level 2 financial instruments, was determined based on quoted bid prices in an over-the-counter market on the last trading day of the reporting period. 11. Commitments and Contingencies Noncancellable Purchase Obligations The Company has contractual commitments for services with third parties related to its cloud services platform, marketing-related contracts, and other services. These commitments are non-cancellable and expire within two to seven years , as disclosed in Note 11, “Commitments and Contingencies ” of its Annual Report on Form 10-K for fiscal year 2025. Operating Leases During the six months ended December 31, 2025, the Company recorded a $ 25.2 million impairment charge for operating lease right-of-use assets as a result of its facilities consolidation restructuring efforts. Refer to Note 14, “ Restructuring ,” for additional information. There were no other material changes to the Company’s operating lease arrangements and future lease payments under non-cancelable operating leases, including obligations for leases that have not yet commenced, disclosed in Note 9, “ Leases, ” of the Company’s Annual Report on Form 10-K for fiscal year 2025. Supplemental information related to operating leases were as follows (in thousands): 21 Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Operating lease costs $ 9,803 $ 10,909 $ 20,428 $ 21,575 Right-of-use assets obtained in exchange for new operating lease liabilities $ — $ 13,363 $ 239 $ 20,789 Legal Proceedings From time to time, the Company is party to litigation and other legal proceedings in the ordinary course of business. While the Company does not believe the ultimate resolutions of these pending legal matters are likely to have a material adverse effect on the Company’s financial position, the results of any litigation or other legal proceedings are uncertain and as such the resolution of such legal proceedings, either individually or in the aggregate, could have a material adverse effect on its business, results of operations, financial condition or cash flows. The Company accrues for loss contingencies when it is both probable that it will incur the loss and when it can reasonably estimate the amount of the loss or range of loss. For the periods presented, the Company has not recorded any liabilities as a result of the litigation or other legal proceedings in its condensed consolidated financial statements. Indemnification Provisions The Company’s agreements include provisions indemnifying customers against intellectual property and other third-party claims. In addition, the Company has entered into indemnification agreements with its directors, executive officers and certain other officers that will require the Company to, among other things, indemnify these individuals for certain liabilities that may arise as a result of their affiliation with the Company. For the periods presented, the Company has not incurred any costs as a result of such indemnification obligations and has not recorded any liabilities related to such obligations in its condensed consolidated financial statements. 12. Revenue Remaining Performance Obligations The transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and unbilled amounts that will be recognized as revenue in future periods. Transaction price allocated to the remaining performance obligations is influenced by several factors, including the timing of renewals, the timing of delivery of software licenses, average contract terms, and foreign currency exchange rates. Unbilled portions of the remaining performance obligations are subject to future economic risks, including bankruptcies, regulatory changes, and other market factors. As of December 31, 2025, approximately $ 3.8 billion of revenue is expected to be recognized from the transaction price allocated to remaining performance obligations. The Company expects to recognize revenue on approximately 71 % of these remaining performance obligations over the next 12 months, with the balance recognized thereafter. Disaggregated Revenue The Company’s revenues by geographic region based on end-users who purchased the Company’s offerings were as follows (in thousands): 22 Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Americas United States $ 648,343 $ 537,396 $ 1,261,360 $ 1,043,623 Other Americas 97,905 81,769 190,674 160,041 Total Americas 746,248 619,165 1,452,034 1,203,664 EMEA Germany 166,166 131,991 308,144 249,793 Other EMEA 497,174 393,491 921,275 744,958 Total EMEA 663,340 525,482 1,229,419 994,751 Asia Pacific 176,727 141,816 337,415 275,829 Total revenues $ 1,586,315 $ 1,286,463 $ 3,018,868 $ 2,474,244 The Company’s revenues by deployment options were as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Cloud $ 1,067,027 $ 846,962 $ 2,064,735 $ 1,639,268 Data Center 435,616 362,281 808,264 697,875 Marketplace and other 83,672 77,220 145,869 137,101 Total revenues $ 1,586,315 $ 1,286,463 $ 3,018,868 $ 2,474,244 The Company provides different deployment options for its product offerings. Cloud offerings provide customers the right to use the Company’s software in a cloud-based infrastructure that the Company provides. Data Center offerings are on-premises term license agreements for the Company’s Data Center products, which are 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. Marketplace and other offerings mainly include fees received for sales of third-party apps in the Atlassian Marketplace and services like premier support, advisory services and training services. Premier support consists of subscription-based arrangements for a higher level of support across different deployment options, and revenues from this offering are included in Subscription revenues within the Company’s condensed consolidated statements of operations. In September 2025, the Company announced plans to end-of-life its Data Center deployment offering. Beginning in March 2026, the Company will no longer sell term licenses to new customers, and the Company will stop selling term licenses and expansions to existing customers in March 2028. Subject to limited exceptions, the Company plans to end maintenance and support for its Data Center offerings in March 2029. Deferred Revenue The Company records deferred revenues when cash payments are received or due in advance of the Company satisfying its performance obligations, including amounts that are refundable. The changes in the balances of deferred revenue were as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Balance, beginning of period $ 2,281,156 $ 2,012,820 $ 2,481,254 $ 2,114,736 Additions 1,736,668 1,469,888 2,969,123 2,555,753 Revenue ( 1,586,315 ) ( 1,286,463 ) ( 3,018,868 ) ( 2,474,244 ) Balance, end of period $ 2,431,509 $ 2,196,245 $ 2,431,509 $ 2,196,245 For the three months ended December 31, 2025 and 2024, approximately 40 % and 41 % of revenue recognized was from the deferred revenue balances at the beginning of each fiscal year, respectively. For the six months ended December 31, 2025 and 2024, approximately 50 % and 51 % of revenue recognized was from the deferred revenue balances at the beginning of each fiscal year, respectively. 23 Deferred Contract Acquisition Costs The changes in the balances of deferred contract acquisition costs were as follows (in thousands): Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Balance, beginning of period $ 140,598 $ 83,444 $ 136,340 $ 79,711 Additions 43,657 23,833 62,754 36,063 Amortization expense ( 15,966 ) ( 10,026 ) ( 30,805 ) ( 18,523 ) Balance, end of period $ 168,289 $ 97,251 $ 168,289 $ 97,251 Deferred contract acquisition costs included in: Prepaid expenses and other current assets $ 62,443 $ 36,578 Other non-current assets 105,846 60,673 Total $ 168,289 $ 97,251 There were no impairment losses recorded during the periods presented. 13. Geographic Information The Company’s long-lived assets by geographic regions were as follows (in thousands): December 31, 2025 June 30, 2025 United States $ 129,828 $ 168,841 Australia 50,814 54,073 India 30,096 34,909 All other countries 13,689 16,422 Total long-lived assets $ 224,427 $ 274,245 Long-lived assets for this purpose consist of property and equipment and operating lease right-of-use assets. 14. Restructuring During the first quarter of fiscal year 2026, the Company initiated a rebalancing of resources resulting in the elimination of certain roles. These actions were part of the Company’s initiatives to reduce additional capacity no longer necessary due to the increased ability, accessibility, performance, stability, and supportability of its products. As a result, the Company recorded severance and other termination benefits of $ 27.9 million, and stock-based compensation of $ 1.4 million for the affected employees for the six months ended December 31, 2025. In addition, during the first quarter of fiscal year 2026, the Company exited certain floors of a leased property, which it plans to sublease, in order to optimize its real estate footprint. As a result, the Company recorded impairment charges for the related operating lease right-of-use assets and leasehold improvements of $ 26.3 million for the six months ended December 31, 2025. The fair values of the impaired assets were estimated using discounted cash flow models (income approach) based on market participant assumptions with Level 3 fair value inputs. The assumptions used in estimating fair value include the expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods, and discount rates that reflect the level of risk associated with receiving future cash flows. The execution of these actions, including cash payment of the severance and other termination benefits and related liabilities, was substantially completed as of December 31, 2025. A summary of the Company’s restructuring charges for the six months ended December 31, 2025, by major activity type was as follows (in thousands): 24 Severance and Other Termination Benefits Stock-based Compensation Lease Consolidation Total Cost of revenue $ 27,794 $ 1,432 $ 2,366 $ 31,592 Research and development — — 12,102 12,102 Marketing and sales — — 8,154 8,154 General and administrative 95 — 3,735 3,830 Total $ 27,889 $ 1,432 $ 26,357 $ 55,678 The following table is a summary of the changes in the liabilities, included within accrued expenses and other current liabilities on the condensed consolidated balance sheets as of December 31, 2025, related to the restructuring charges (in thousands): Severance and Other Termination Benefits Stock-based Compensation Lease Consolidation Total Charges $ 27,889 $ 1,432 $ 26,357 $ 55,678 Payments ( 22,215 ) — ( 50 ) ( 22,265 ) Non-cash items ( 446 ) ( 1,432 ) ( 26,307 ) ( 28,185 ) Liability as of December 31, 2025 $ 5,228 $ — $ — $ 5,228 15. Stockholders’ Equity Stock-based Compensation A summary of RSU activity for the six months ended December 31, 2025 was as follows (in thousands except share and per share data): Number of Shares Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Balance as of June 30, 2025 $ 16,578,020 $ 190.98 $ 3,366,830 Granted 13,120,190 166.45 — Vested ( 3,833,577 ) 195.82 604,727 Forfeited or cancelled ( 1,598,962 ) 179.38 — Balance as of December 31, 2025 $ 24,265,671 $ 177.56 $ 3,934,436 As of December 31, 2025, total compensation cost not yet recognized in the condensed consolidated financial statements related to employee and director RSU awards was $ 3.3 billion. During the six months ended December 31, 2025, the Company granted 1,353,312 shares of restricted stock awards (“RSA”) in connection with business combinations. During the six months ended December 31, 2024, the Company did not grant any shares of RSA. As of December 31, 2025 and June 30, 2025, there were 1,405,418 and 90,083 shares of RSA outstanding, respectively. These outstanding shares of RSA are subject to forfeiture or repurchase at the original exercise price during the repurchase period following employee termination, as applicable. The total aggregate intrinsic value of outstanding shares of RSA was $ 227.9 million and $ 18.3 million as of December 31, 2025 and June 30, 2025, respectively. Share Repurchase Program In September 2024, the Board of Directors authorized a program to repurchase up to $ 1.5 billion of the Company’s outstanding Class A Common Stock (the “2024 Repurchase Program”). The 2024 Repurchase Program commenced in April 2025 following completion of the previous repurchase program. In October 2025, the Board of Directors authorized a new program under which the Company may repurchase up to an additional $ 2.5 billion of the Company’s outstanding Class A Common Stock (the “2025 Repurchase Program” and, together with the 2024 Repurchase Program, the “Repurchase Programs”). The 2025 Repurchase Program will commence following completion of the 2024 Repurchase Program. 25 The Repurchase Programs do not have a fixed expiration date, may be suspended or discontinued at any time, and do not obligate the Company to repurchase any specific dollar amount or to acquire any specific number of shares. The Company may repurchase shares of Class A Common Stock 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”), in accordance with applicable securities laws and other restrictions. The timing, manner, price, and amount of any repurchases will be determined by the Company at its 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. During the three and six months ended December 31, 2025, the Company repurchased and subsequently retired approximately 1.3 million and 2.7 million shares of its Class A Common Stock for approximately $ 200.4 million and $ 450.3 million at an average price per share of $ 156.74 and $ 169.21 , respectively. All repurchases were made in open market transactions. As of December 31, 2025, the Company was authorized to purchase a remaining $ 720.9 million and $ 2.5 billion of its Class A Common Stock under the 2024 Share Repurchase Program and 2025 Share Repurchase Program, respectively. 16. Net Loss Per Share The Company computes net loss per share of Class A and Class B Common Stock using the two-class method. As the liquidation and dividend rights for both Class A and Class B Common Stock are identical, the net loss is allocated on a proportionate basis to the weighted-average number of shares of common stock outstanding for the period. Basic net loss per share attributable to Class A and Class B stockholders is computed by dividing the net loss by the weighted-average number of Class A and Class B Common Stock outstanding during the period. For the calculation of diluted net loss per share, net loss for basic earnings per share is adjusted by the effect of dilutive securities, including awards under the Company’s equity compensation plans. The dilutive potential shares of common stock are computed using the treasury stock method or the as-if converted method, as applicable. Since the Company is in a loss position for all periods reported, basic and diluted net loss per share are the same for all periods as the inclusion of potential dilutive shares would have been anti-dilutive. The following tables present the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share data): Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Class A Class B Class A Class B Class A Class B Class A Class B Numerator: Net loss $ ( 26,961 ) $ ( 15,684 ) $ ( 23,725 ) $ ( 14,483 ) $ ( 59,171 ) $ ( 35,344 ) $ ( 100,188 ) $ ( 61,789 ) Denominator: Weighted-average shares outstanding, basic and diluted 166,797 97,031 162,158 98,989 164,906 98,503 161,321 99,491 Net loss per share, basic and diluted $ ( 0.16 ) $ ( 0.16 ) $ ( 0.15 ) $ ( 0.15 ) $ ( 0.36 ) $ ( 0.36 ) $ ( 0.62 ) $ ( 0.62 ) The potential weighted average dilutive securities that were not included in the dilutive earnings per share calculation because the effect would be anti-dilutive were as follows (shares in thousands): Three Months Ended December 31, Six Months Ended December 31, 2025 2024 2025 2024 Class A Common Stock restricted stock units 16,762 6,805 12,666 8,598 Class A Common Stock restricted stock awards 69 48 36 33 Total 16,831 6,853 12,702 8,631 17. Income Taxes The Company computes its provision for (benefit from) income taxes by applying the estimated annual effective tax rate to year-to-date ordinary income and adjusting the provision for (benefit from) income taxes for 26 discrete tax items recorded in the period. In each quarter, the Company updates the estimated annual effective tax rate and makes a year-to-date adjustment to the provision. The estimated annual effective tax rate is subject to volatility due to several factors, including changes in the Company’s relative proportion of domestic and foreign earnings, current cash taxes in jurisdictions with valuation allowances, material discrete tax items, or a combination of these factors as a result of certain transactions or events. The Company reported an income tax benefit of $ 13.1 million and $ 17.6 million for the three and six months ended December 31, 2025, respectively, as compared to an income tax benefit of $ 9.0 million and an income tax provision of $ 84.6 million for the three and six months ended December 31, 2024, respectively. The income tax benefit for the three and six months ended December 31, 2025 was primarily attributable to the mix of earnings and losses at various jurisdictions, valuation allowances in the U.S. and Australia, and non-deductible stock-based compensation in certain foreign jurisdictions. The income tax benefit for the three months ended December 31, 2024 was primarily attributable to the mix of earnings and losses at various jurisdictions. The income tax provision for the six months ended December 31, 2024 was primarily attributable to the mix of earnings and losses at various jurisdictions, non-deductible stock-based compensation in certain foreign jurisdictions, and valuation allowances in the U.S. and Australia, partially offset by research and development tax credits and incentives. 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 expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective for the Company beginning in fiscal year 2026. The changes had an immaterial impact on the Company’s benefit from income taxes for the three and six months ended December 31, 2025. The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. Based on available evidence as of December 31, 2025, the Company will continue to maintain a valuation allowance against U.S. federal, U.S. state, and Australian deferred tax assets. The Company intends to maintain the valuation allowance until sufficient positive evidence exists to support the reversal of, or a decrease in, the valuation allowance. 27