What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-01 compared with 2026-02-06 · 125 added, 119 removed, 384 unchanged (39% of the section changed)

22 unchanged sentences

In September 2025, we announced plans to end-of-life our Data Center deployment offering.

Beginning in March 2026, we will no longer sell term licenses to new customers, and we will stop selling term licenses and expansions to existing customers in March 2028.

As of March 2026, we no longer sell term licenses to new customers, and we will stop selling term licenses and expansions to existing customers in March 2028.

Subject to limited exceptions, we also plan to end maintenance and support for on-premises versions of our products in March 2029.

13 unchanged sentences

Restructuring

During the first quarter of fiscal 2026, we initiated a rebalancing of resources, resulting in the elimination of certain roles.

These actions were part of our initiatives to reduce additional capacity no longer necessary due to the increased ability, accessibility, performance, stability, and supportability of our products.

As a result, we recorded severance and other termination benefits of $27.9 million and stock-based compensation of $1.4 million for the affected employees for the six months ended December 31, 2025.

In addition, during the first quarter of fiscal 2026, we exited certain floors of a leased property, which we plan to sublease, in order to optimize our real estate footprint.

As a result, we recorded impairment charges for the related operating lease right-of-use assets and leasehold improvements of $26.3 million for the six months ended December 31, 2025.

A summary of restructuring charges for the six months ended December 31, 2025 by major activity type is as follows (in thousands):

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

The July 2025 Plan is substantially completed as of March 31, 2026.

During the third quarter of fiscal year 2026, we initiated a restructuring plan (“March 2026 Plan”) to accelerate building the future of teamwork in the AI era.

This includes self-funding further investment in key strategic priorities, such as AI and enterprise sales, reorganizing our teams to move with more focus and speed across the Atlassian System of Work, and optimizing for long-term operational efficiency and sustainability.

The execution of the March 2026 Plan, including cash payment of severance and other termination benefits related liabilities, is expected to be substantially completed by the end of fiscal year 2026.

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

In addition, we exited certain leased properties, which we plan to sublease, in order to optimize our real estate footprint.

As a result, we recorded total impairment charges for the related operating lease right-of-use assets and leasehold improvements of $80.0 million for the nine months ended March 31, 2026.

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

Severance and Other Termination Benefits Stock-based Compensation Lease Consolidation Total

4 unchanged sentences

Total $ 198,056 $ 1,432 $ 80,021 $ 279,509

The execution of these actions, including cash payment of the severance and other termination benefits related liabilities, was substantially completed as of December 31, 2025.

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

7 unchanged sentences

We define the number of total customers at the end of any particular period as the number of organizations with unique domains with an active subscription for two or more seats.

We define the number of customers with Cloud ARR greater than $10,000 using the same definition as total customers, with the distinction of having an

active Cloud subscription and greater than $10,000 in Cloud ARR .

We define the number of customers with Cloud ARR greater than $10,000 using the same definition as total customers, with the distinction of having an active Cloud subscription and greater than $10,000 in Cloud ARR .

We define Cloud ARR as the annualized recurring revenue run-rate of Cloud subscription agreements at a point in time.

3 unchanged sentences

While a single customer may have distinct departments, operating segments, or subsidiaries with multiple active licenses or subscriptions of our apps, if the app deployments share a unique domain name, we only include the customer once for purposes of calculating a customer.

As of December 31, 2025, we had more than 350,000 customers.

As of March 31, 2026, we had more than 350,000 customers.

If we include single-user accounts and organizations that have only adopted our free or starter offerings, the active use of our offerings extends well beyond our total customer base.

2 unchanged sentences

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

December 31, 2024 March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025

March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 March 31, 2026

Number of customers with greater than $10,000 in Cloud ARR 50,715 51,978 53,017 55,369 55,913

5 unchanged sentences

The following table presents a reconciliation of net cash provided by operating activities to free cash flow for the periods presented (in thousands):

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2026 2025 2026 2025

2 unchanged sentences

Free cash flow $ 561,264 $ 638,315 $ 844,382 $ 1,055,225

Free cash flow decreased by $174.1 million during the three months ended December 31, 2025, as compared to the three months ended December 31, 2024.

The decrease in free cash flow was primarily attributable to a decrease in net cash provided by operating activities.

The decrease in net cash provided by operating activities was primarily attributable to an increase in cash paid to employees, vendors, and cash paid for income taxes, partially offset by an increase in cash received from customers.

Free cash flow decreased by $133.8 million during the six months ended December 31, 2025 as compared to the six months ended December 31, 2025.

The decrease in free cash flow was primarily attributable to a decrease in net cash provided by operating activities.

Free cash flow decreased by $77.1 million and $210.8 million during the three and nine months ended March 31, 2026, respectively, as compared to the three and nine months ended March 31, 2025.

The decrease in free

cash flow was primarily attributable to a decrease in net cash provided by operating activities.

The decrease in net cash provided by operating activities was primarily attributable to an increase in cash paid to employees, including payments made under restructuring plans, vendors, and cash paid for income taxes, partially offset by an increase in cash received from customers.

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

11 unchanged sentences

In September 2025, we announced plans to end-of-life our Data Center deployment offering.

Beginning in March 2026, we will no longer sell term licenses to new customers, and we will stop selling term licenses and expansions to existing customers in March 2028.

As of March 2026, we no longer sell term licenses to new customers, and we will stop selling term licenses and expansions to existing customers in March 2028.

Subject to limited exceptions, we plan to end maintenance and support for these on-premises versions of our products in March 2029.

9 unchanged sentences

Cost of revenues primarily consists of expenses related to hosting our cloud infrastructure, which includes third-party hosting fees and depreciation associated with computer equipment, compensation expenses for our employees, including stock-based compensation, payment processing fees, consulting and contractors costs associated with our customer support and infrastructure service teams, amortization of acquired intangible assets, such as the amortization of the cost associated with an acquired company’s developed technology, certain IT program expenses, and facilities and related overhead costs.

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

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

We allocate stock-based compensation based on the expense category in which the employee works.

5 unchanged sentences

Gross margin can fluctuate from period to period as a result of changes in product mix.

We expect gross margin to increase modestly, driven by optimization of our Cloud infrastructure and support costs, partially offset by the revenue mix shift from Data Center offerings to Cloud offerings.

We expect gross margin to be approximately flat, driven by the revenue mix shift from Data Center offerings to Cloud offerings and increases in cost of revenues to support our increasing number of Cloud customers and their related AI usage, offset by the continued optimization of our Cloud infrastructure and support costs.

Operating Expenses

10 unchanged sentences

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

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

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

Critical Accounting Estimates

8 unchanged sentences

The excess of the purchase price in a business combination over the fair value of these tangible and intangible assets acquired and liabilities assumed is recorded as goodwill.

Critical assumptions used to estimate the fair value of intangible assets include projected revenue growth, discount rate, and technology migration curves.

Critical assumptions used to estimate the fair value of intangible assets include projected revenue, revenue growth, and discount rate.

These assumptions are inhere ntly uncertain and unpredictable and, as a result, actual results may differ from estimates.

We evaluate these estimates and assumptions as new information is obtained and may record adjustments to the fair value of the tangible and intangible assets acquired and liabilities assumed, but not later than one year from the acquisition date.

There have been no other significant changes to our critical accounting policies and estimates during the three and six months ended December 31, 2025, as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Results of Operations included in our Annual Report on Form 10-K for fiscal year 2025.

There have been no other significant changes to our critical accounting policies and estimates during the three and nine months ended March 31, 2026, as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Results of Operations included in our Annual Report on Form 10-K for fiscal year 2025.

New Accounting Pronouncements Pending Adoption

2 unchanged sentences

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

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2026 % of Total Revenues 2025 % of Total Revenues 2026 % of Total Revenues 2025 % of Total Revenues

14 unchanged sentences

Loss before income taxes (62,794) (4) (7,354) (1) (174,875) (4) (84,701) (2)

Provision for (benefit from) income taxes (13,112) (1) (8,975) (1) (17,566) (1) 84,630 3

Provision for income taxes

(35,595) (2) (63,453) (4) (18,029) — (148,083) (4)

Net loss $ (98,389) (6) % $ (70,807) (5) % $ (192,904) (4) % $ (232,784) (6) %

Three Months Ended December 31, 2025 and 2024

Three Months Ended December 31,

Three Months Ended March 31, 2026 and 2025

Three Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

2 unchanged sentences

Total revenues $ 1,786,971 $ 1,356,716 $ 430,255 32 %

Total revenues increased $299.9 million, or 23%, in the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Total revenues increased $430.3 million, or 32%, in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Growth in total revenues was primarily attributable to increased demand for our offerings from existing customers.

Of total revenues recognized in the three months ended December 31, 2025, over 90% was attributable to sales to customer accounts existing on or before September 30, 2025.

Subscription revenues increased $294.4 million, or 24%, in the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Of total revenues recognized in the three months ended March 31, 2026, over 90% was attributable to sales to customer accounts existing on or before December 31, 2025.

Subscription revenues increased $426.0 million, or 33%, in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The increase in subscription revenues was primarily attributable to paid seat expansion from our existing customers and price increases.

Other revenues increased $5.4 million, or 7%, in the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Other revenues increased $4.2 million, or 5%, in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The increase in other revenues was primarily attributable to an increase of $3.1 million in marketplace revenue.

Total revenues by deployment options were as follows:

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

4 unchanged sentences

Total revenues by geography were as follows:

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

4 unchanged sentences

Cost of Revenues

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

1 unchanged sentence

Gross margin 85 % 84 %

Cost of revenues increased $14.6 million, or 7%, in the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

The overall increase was primarily attributable to an increase of $23.0 million in hosting fees and an increase of $9.6 million in amortization expense, partially offset by a decrease of $13.6 million in compensation expense for employees (which includes a decrease of $2.9 million in stock-based compensation) and a decrease of $4.0 million in consulting and other professional fees.

Cost of revenues increased $43.1 million, or 20%, in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The overall increase was primarily attributable to an increase of $28.1 million in hosting fees and an increase of $14.6 million in amortization expense, partially offset by a decrease of $15.9 million in compensation expense for employees, and a decrease of $4.3 million in fees paid for consulting and other professional services.

In addition, we recorded restructuring charges of $21.0 million in the three months ended March 31, 2026, which were comprised of $16.7 million of severance and other termination benefits, and $4.3 million of impairment charges for lease and leasehold improvements.

Operating Expenses

Research and Development

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

Research and development $ 926,954 $ 685,320 $ 241,634 35 %

Research and development expenses increased $146.3 million, or 22%, in the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Research and development expenses increased $241.6 million, or 35%, in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The overall increase was primarily attributable to an increase of $101.9 million in compensation expenses for employees (which includes an increase of $50.2 million in stock-based compensation).

In addition, we recorded restructuring charges of $128.5 million in the three months ended March 31, 2026, which were comprised of $105.0 million of severance and other termination benefits, and $23.5 million of impairment charges for lease and leasehold improvements.

Marketing and Sales

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

Marketing and sales $ 439,029 295,832 $ 143,197 48 %

Marketing and sales expenses increased $104.5 million , or 38%, for the three months ended December 31, 2025 compared to the three months ended December 31, 2024 .

Marketing and sales expenses increased $143.2 million, or 48%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The overall increase was primarily attributable to an increase of $68.5 million in compensation expenses for employees (which includes an increase of $10.1 million in stock-based compensation), and an increase of $12.7 million in advertising and marketing program expenses.

In addition, we recorded restructuring charges of $42.6 million in the three months ended March 31, 2026, which were comprised of $24.4 million of severance and other termination benefits, and $18.2 million of impairment charges for lease and leasehold improvements.

General and Administrative

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

General and administrative $ 214,510 168,345 $ 46,165 27 %

General and administrative expenses increased $24.7 million, or 15%, in the three months ended December 31, 2025 compared to the three months ended December 31, 2024 .

The overall increase was primarily attributable to an increase of $16.7 million in compensation expense for employees, an increase of $2.5 million in software subscription related expense and an increase of $1.7 million in professional service fees.

General and administrative expenses increased $46.2 million, or 27%, in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The overall increase was primarily attributable to an increase of $18.3 million in compensation expense for employees (which includes an increase of $4.6 million in stock-based compensation), partially offset by decrease in office expense.

In addition, we recorded restructuring charges of $31.5 million in the three months ended March 31, 2026, which were comprised of $24.0 million of severance and other termination benefits, and $7.5 million of impairment charges for lease and leasehold improvements.

Other Expense, net

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

Other expense, net $ (4,923) $ (14,861) $ 9,938 (67) %

Other expense, net increased $5.6 million, or 69%, in the three months ended December 31, 2025, compared to the three months ended December 31, 2024.

The overall increase in other expense was primarily attributable to an increase of $6.5 million in realized loss on strategic investments.

Other expense, net decreased $9.9 million, or 67%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

The overall decrease in other expense was primarily attributable to a decrease of $5.2 million in expense related to our share of loss from an equity method investment, and an increase in net foreign currency transaction gains.

Interest Income

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

Interest income $ 12,554 $ 27,767 $ (15,213) (55) %

Interest income decreased $7.5 million, or (29)% in the three months ended December 31, 2025, compared to the three months ended December 31, 2024 .

The decrease was primarily attributable to a decrease in investment income as a result of decreased invested cash balances.

Interest income decreased $15.2 million, or 55% in the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

The decrease was primarily attributable to a decrease in investment income as a result of decreased invested cash balances and declining interest rates.

Interest Expense

Three Months Ended December 31,

Three Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

Interest expense $ (14,141) $ (7,804) $ (6,337) 81 %

Interest expense increased $5.2 million, or 72% in the three months ended December 31, 2025 compared to the three months ended December 31, 2024 .

Interest expense increased $6.3 million, or 81% in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The increase was primarily attributable to the amortization of interest rate swap contracts.

Benefit from Income Taxes

Three Months Ended December 31,

Provision for Income Taxes

Three Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

Benefit from income taxes $ (13,112) $ (8,975) $ (4,137) *

Provision for income taxes $ (35,595) $ (63,453) $ 27,858 *

Effective tax rate * *

* Not meaningful

Benefit from income taxes increased $4.1 million for the three months ended December 31, 2025, as compared to the three months ended December 31, 2024.

The increase was primarily attributable to the partial release of valuation allowance on certain U.S.

deferred tax assets resulting from the recognition of additional deferred tax liabilities in connection with the business combinations and the change in the mix of earnings and losses in foreign jurisdictions.

See Note 7, “Business Combinations,” and Note 17, “ Income Taxes ,” of the notes to our condensed consolidated financial statements for additional information.

Provision for income taxes decreased $27.9 million for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

The decrease was primarily attributable to the change in valuation allowance on Australian deferred tax assets related to deferred revenue recognition and the change in the mix of earnings and losses in foreign jurisdictions.

See Note 17, “ Income Taxes ,” of the notes to our condensed consolidated financial statements for additional information.

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

10 unchanged sentences

Certain provisions are effective for us beginning in fiscal year 2026.

The changes had an immaterial impact on our income tax benefit for the three and six months ended December 31, 2025 and we currently do not anticipate these changes to have a material impact on our results for fiscal year 2026.

The changes had an immaterial impact on our provision for income taxes for the three and nine months ended March 31, 2026 and we currently do not anticipate these changes to have a material impact on our results for fiscal year 2026.

We will continue to monitor any developments and guidance related to OBBBA.

1 unchanged sentence

This legislation has been enacted in certain jurisdictions where we operate and is effective for our fiscal year 2026.

As of December 31, 2025, the global minimum tax does not have a significant impact on our financial statements.

As of March 31, 2026, the global minimum tax does not have a significant impact on our financial statements.

As additional jurisdictions enact legislation, transitional rules lapse, and other provisions of the global minimum tax legislation become effective, our effective tax rate and cash tax payments may increase in future years.

Six Months Ended December 31, 2025 and 2024

Six Months Ended December 31,

Nine Months Ended March 31, 2026 and 2025

Nine Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

2 unchanged sentences

Total revenues $ 4,805,839 $ 3,830,960 $ 974,879 25 %

Total revenues increased $544.6 million, or 22%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024.

Total revenues increased $974.9 million, or 25%, in the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025.

Growth in total revenues was primarily attributable to increased demand for our products from existing customers.

Of total revenues recognized in the six months ended December 31, 2025, over 90% was attributable to sales to customer accounts existing on or before June 30, 2025.

Subscription revenues increased $537.0 million, or 23%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024.

Of total revenues recognized in the nine months ended March 31, 2026, over 90% was attributable to sales to customer accounts existing on or before June 30, 2025.

Subscription revenues increased $963.0 million, or 27%, in the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025.

The increase in subscription revenues was primarily attributable to paid seat expansion from our existing customers and price increases.

Other revenues increased $7.7 million, or 6%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024.

Other revenues increased $11.9 million, or 6%, in the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025.

The increase in other revenues was primarily attributable to an increase of $11.0 million in marketplace revenue.

Total revenues by deployment options were as follows:

Six Months Ended December 31,

Nine Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

4 unchanged sentences

Total revenues by geography were as follows:

Six Months Ended December 31,

Nine Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

4 unchanged sentences

Cost of Revenues

Six Months Ended December 31,

Nine Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

1 unchanged sentence

Gross margin 84 % 83 %

Cost of revenues increased $54.9 million, or 12%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024.

The overall increase was primarily attributable to an increase of $37.4 million in hosting fees paid to third-party providers.

In addition, we recorded restructuring charges of $31.6 million in the six months ended December 31, 2025, which were composed of $29.2 million of severance and other termination benefits, and $2.4 million of impairment charges for a lease and leasehold improvements.

The increase was partially offset by a decrease of $6.8 million in fees paid for consulting and other professional services.

Cost of revenues increased $98.0 million, or 15%, in the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025.

The overall increase was primarily attributable to an increase of $65.5 million in hosting fees paid to third-party providers, and an increase of $24.0 million in amortization expense, partially offset by a decrease of $33.1 million in compensation expense for employees (which includes a decrease of $5.9 million in stock-based compensation), and a decrease of $11.1 million in fees paid for consulting and other professional services.

In addition, we recorded restructuring charges of $52.6 million in the nine months ended March 31, 2026, which were comprised of $46.0 million of severance and other termination benefits, and $6.6 million of impairment charges for lease and leasehold improvements.

Operating Expenses

Research and Development

Six Months Ended December 31,

Nine Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

Research and development $ 2,509,437 $ 1,968,634 $ 540,803 27 %

Research and development expenses increased $299.2 million, or 23%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024.

Research and development expenses increased $540.8 million, or 27%, in the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025.

The overall increase was primarily attributable to an increase of $380.2 million in compensation expenses for employees (which includes an increase of $167.8 million in stock-based compensation).

In addition, we recorded restructuring charges of $12.1 million in the six months ended December 31, 2025 , related to impairment charges for a lease and leasehold improvements.

In addition, we recorded restructuring charges of $140.6 million in the nine months ended March 31, 2026, which were comprised of $105.0 million of severance and other termination benefits, and $35.6 million of impairment charges for lease and leasehold improvements.

Marketing and Sales

Six Months Ended December 31,

Nine Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

Marketing and sales $ 1,151,890 $ 820,119 $ 331,771 40 %

Marketing and sales expenses increased $188.6 million, or 36%, for the six months ended December 31, 2025 , compared to the six months ended December 31, 2024 .

Marketing and sales expenses increased $331.8 million, or 40%, for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025.

The overall increase was primarily attributable to an increase of $178.3 million in compensation expenses for employees (which includes an increase of $30.3 million in stock-based compensation), and an increase of $63.6 million in advertising and marketing program expenses.

In addition, we recorded restructuring charges of $8.2 million in the six months ended December 31, 2025 , related to impairment charges for a lease and leasehold improvements.

In addition, we recorded restructuring charges of $50.8 million in the nine months ended March 31, 2026, which were comprised of $26.4 million of impairment charges for lease and leasehold improvements, and $24.4 million of severance and other termination benefits.

General and Administrative

Six Months Ended December 31,

Nine Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

General and administrative $ 586,503 $ 483,694 $ 102,809 21 %

General and administrative expenses increased $56.6 million, or 18%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024 .

The overall increase was primarily attributable to an increase of $36.4 million in compensation expenses for employees (which includes an increase of $2.2 million in stock-based compensation) and an increase of $6.2 million in professional service fees .

In addition, we recorded restructuring charges of $3.7 million in the six months ended December 31, 2025 , related to impairment charges for a lease and leasehold improvements.

General and administrative expenses increased $102.8 million, or 21%, in the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025.

The overall increase was primarily attributable to an increase of $54.6 million in compensation expenses for employees (which includes an increase of $6.8 million in stock-based compensation).

In addition, we recorded restructuring charges of $35.4 million in the nine months ended March 31, 2026, which were comprised of $24.1 million of severance and other termination benefits, and $11.3 million of impairment charges for lease and leasehold improvements.

Other Income (Expense), net

Six Months Ended December 31,

Nine Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

Other income (expense), net $ 331 $ (42,292) $ 42,623 (101) %

Other income (expense), net increased $32.7 million, or 119% in the six months ended December 31, 2025 compared to the six months ended December 31, 2024.

Other income (expense), net increased $42.6 million, or 101% in the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025.

The overall increase in other income was primarily attributable to an increase of $24.7 million in unrealized gains on public equity investments and a decrease of $20.4 million in expenses related to our share of loss from an equity method investment.

Interest Income

Six Months Ended December 31,

Nine Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

Interest income $ 60,464 $ 81,917 $ (21,453) (26) %

Interest income decreased $6.2 million , or 12% in the six months ended December 31, 2025 compared to the six months ended December 31, 2024 .

The decrease was primarily attributable to a decrease in our portfolio yield due to declining interest rates.

Interest income decreased $21.5 million, or 26% in the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025.

The decrease was primarily attributable to a decrease in investment income as a result of decreased invested cash balances and declining interest rates.

Interest Expense

Six Months Ended December 31,

Nine Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

Interest expense $ (35,302) $ (22,413) $ (12,889) 58 %

Interest expense increased $6.6 million, or 45%, in the six months ended December 31, 2025 compared to the six months ended December 31, 2024 .

Interest expense increased $12.9 million, or 58%, in the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025.

The increase was primarily attributable to the amortization of interest rate swap contracts.

Provision for (Benefit from) Income Taxes

Six Months Ended December 31,

Provision for Income Taxes

Nine Months Ended March 31,

(in thousands, except percentage data) 2026 2025 $ Change % Change

Provision for (benefit from) income taxes $ (17,566) $ 84,630 $ (102,196) *

Provision for income taxes

$ (18,029) $ (148,083) $ 130,054 *

Effective tax rate * *

* Not meaningful

Provision for (benefit from) income taxes decreased $102.2 million for the six months ended December 31, 2025, as compared to the six months ended December 31, 2024.

The decrease was primarily attributable to the change in the mix of earnings and losses in foreign jurisdictions and the partial release of valuation allowance on certain U.S.

Provision for income taxes decreased $130.1 million for the nine months ended March 31, 2026, as compared to the nine months ended March 31, 2025.

The decrease was primarily attributable to the the change in valuation allowance on Australian deferred tax assets related to deferred revenue recognition, the change in the mix of earnings and losses in foreign jurisdictions, and the partial release of valuation allowance on certain U.S.

deferred tax assets resulting from the recognition of additional deferred tax liabilities in connection with the business combinations.

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Certain provisions are effective for us beginning in fiscal year 2026.

We will continue to monitor any developments and guidance related to OBBBA.

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This legislation has been enacted in certain jurisdictions where we operate and is effective for our fiscal year 2026.

As of December 31, 2025, the global minimum tax does not have a significant impact on our financial statements.

As of March 31, 2026, the global minimum tax does not have a significant impact on our financial statements.

As additional jurisdictions enact

legislation, transitional rules lapse, and other provisions of the global minimum tax legislation become effective, our effective tax rate and cash tax payments may increase in future years.

Liquidity and Capital Resources

As of December 31, 2025, we had cash and cash equivalents totaling $1.2 billion, marketable securities totaling $407.9 million, and accounts receivable totaling $911.9 million.

As of March 31, 2026, we had cash and cash equivalents totaling $1.1 billion and accounts receivable totaling $907.4 million .

Since our inception, we have primarily financed our operations through cash flows generated by operations and corporate debt.

Our cash flows from operating activities, investing activities, and financing activities for the periods presented were as follows (in thousands):

Six Months Ended December 31,

Nine Months Ended March 31,

Net cash provided by operating activities $ 873,994 $ 1,085,078

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

Net cash provided by operating activities decreased by $125.9 million for the six months ended December 31, 2025, compared to the six months ended December 31, 2024.

Net cash provided by operating activities decreased by $211.1 million for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025.

The net decrease was primarily attributable to an increase in cash paid to employees, vendors, and cash paid for income taxes, partially offset by an increase in cash received from customers.

Net cash used in investing activities increased by $1,074.2 million during the six months ended December 31, 2025, compared to the six months ended December 31, 2024.

The net increase was primarily attributable to an increase in cash consideration paid for acquisitions, net of cash acquired of approximately $1,223.9 million.

Net cash used in financing activities increased by $194.3 million for the six months ended December 31, 2025, compared to the six months ended December 31, 2024.

The net increase was primarily attributable to an increase in repurchases of Class A Common Stock of $197.4 million.

Net cash used in investing activities increased by $593.1 million during the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025.

The net increase was primarily attributable to an increase in cash consideration paid for acquisitions, net of cash acquired of approximately $1.2 billion, partially offset by an increase in net inflows of $578.8 million related to marketable securities activity, and an increase in net inflows of $50.8 million related to strategic investment activity.

Net cash used in financing activities increased by $1.1 billion for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025.

The net increase was primarily attributable to an increase in repurchases of Class A Common Stock of $1.1 billion.

Material Cash Requirements

As of December 31, 2025 , we had $500.0 million aggregate principal amount of 5.250% senior notes due 2029 (the “2029 Notes”) and $500.0 million aggregate principal amount of 5.500% senior notes due 2034 (the “2034 Notes,” and together with the 2029 Notes, the “Notes”).

As of March 31, 2026 , we had $500.0 million aggregate principal amount of 5.250% senior notes due 2029 (the “2029 Notes”) and $500.0 million aggregate principal amount of 5.500% senior notes due 2034 (the “2034 Notes,” and together with the 2029 Notes, the “Notes”).

The 2029 Notes and the 2034 Notes will mature on May 15, 2029, and May 15, 2034, respectively.

Interest on the Notes will be paid semi-annually in arrears on May 15 and November 15 of each year, starting from November 15, 2024.

Interest on the Notes is paid semi-annually in arrears on May 15 and November 15 of each year, starting from November 15, 2024.

On August 12, 2024, Atlassian US, Inc.’s prior credit facility was amended and restated to provide for a $750 million senior unsecured revolving credit facility (the “2024 Credit Facility”).

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The 2024 Credit Facility matures in August 2029.

As of December 31, 2025, there were no borrowings under the 2024 Credit Facility.

As of March 31, 2026, there were no borrowings under the 2024 Credit Facility.

Refer to Note 10, “ Debt, ” to our condensed consolidated financial statements for additional information.

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The 2024 Repurchase Program commenced in April 2025 following completion of the prior repurchase program.

The 2024 Repurchase Program was completed in March 2026.

In October 2025, the Board of Directors authorized a new program under which we may repurchase up to an additional $2.5 billion of the Company’s outstanding Class A Common Stock (the “2025 Repurchase Program” and, together with the 2024 Repurchase Program, the “Repurchase Programs”).

The 2025 Repurchase Program will commence following completion of the 2024 Repurchase Program.

The 2025 Repurchase Program commenced in March 2026 following completion of the 2024 Repurchase Program.

The Repurchase Programs do not have a fixed expiration date, may be suspended or discontinued at any time, and do not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.

During the three and six months ended December 31, 2025, we repurchased and subsequently retired approximately 1.3 million and 2.7 million shares of Class A Common Stock for approximately $200.4 million and $450.3 million at an average price per share of $156.74 and $169.21, respectively.

During the three and nine months ended March 31, 2026, we repurchased and subsequently retired approximately 11.8 million and 14.5 million shares of Class A Common Stock for approximately $1.0 billion and $1.5 billion at an average price per share of $85.04 and $100.51, respectively.

The 1% excise tax as a result of the Inflation Reduction Act is excluded in the total repurchase cost and average price paid.

All repurchases were made in open market transactions.

As of December 31, 2025, $720.9 million and $2.5 billion of Class A Common Stock remained available for repurchase under the 2024 Share Repurchase Program and 2025 Share Repurchase Program, respectively.

As of March 31, 2026, $2.2 billion of Class A Common Stock remained available for repurchase under the 2025 Share Repurchase Program.

Contractual Obligations

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We believe that our existing cash and cash equivalents, together with cash generated from operations, and borrowing capacity from the 2024 Credit Facility will be sufficient to meet our anticipated cash needs for at least the next 12 months.

Our other future cash requirements will depend on many factors including our growth rate, the timing and extent of spend on research and development efforts, employee headcount, marketing and sales activities, payments to tax authorities, acquisitions of additional businesses and technologies, the introduction of new software and services offerings, enhancements to our existing software and services offerings and the continued market acceptance of our offerings.

As of December 31, 2025, we are not party to any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.

Our other future cash requirements will depend on many factors including our growth rate, the timing and extent of spend on research and development efforts, investment in AI, employee headcount, marketing and sales activities, investment in enterprise sales, payments to tax authorities, acquisitions of additional businesses and technologies, the introduction of new software and services offerings, enhancements to our existing software and services offerings and the continued market acceptance of our offerings.

As of March 31, 2026, we are not party to any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.

Non-GAAP Financial Measures

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We compensate for such limitations by reconciling these Non-GAAP Financial Measures to the most comparable GAAP financial measures.

The following table presents a reconciliation of our Non-GAAP Financial Measures to the most comparable GAAP financial measure for the three and six months ended December 31, 2025 and 2024 (in thousands, except percentage and per share data):

Three Months Ended December 31, Six Months Ended December 31,

The following table presents a reconciliation of our Non-GAAP Financial Measures to the most comparable GAAP financial measure for the three and nine months ended March 31, 2026 and 2025 (in thousands, except percentage and per share data):

Three Months Ended March 31, Nine Months Ended March 31,

2026 2025 2026 2025

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The rate could be subject to change for a variety of reasons, for example, significant changes in the geographic earnings mix or fundamental tax law changes in major jurisdictions where we operate.

(2) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three and six months ended December 31, 2025 and December 31, 2024 because the effect would have been anti-dilutive.

(3) Restructuring charges include stock-based compensation expense related to the rebalancing of resources for the six months ended December 31, 2025.

(2) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three and nine months ended March 31, 2026 and March 31, 2025 because the effect would have been anti-dilutive.

(3) Restructuring charges include stock-based compensation expense related to the rebalancing of resources for the nine months ended March 31, 2026.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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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 2. Management’s Discussion and Analysis