Atlassian Announces Second Quarter Fiscal Year 2025 Results

TEAM Anywhere/SAN FRANCISCO--(BUSINESS WIRE)--Atlassian Corporation (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for its second quarter ended December 31, 2024. A shareholder letter was posted on Atlassian’s Work Life blog at http://atlassian.com/blog/announcements/shareholder-letter-q2fy25 and in the Investor Relations section of Atlassian’s website at https://investors.atlassian.com. Second Quarter Fiscal Year 2025 Earnings Results “The Atlassian System of Work is resonating with enterprises all over the globe, as business leaders increasingly turn to the Atlassian platform to help teams across their organization collaborate on the opportunities and challenges they face,” said Mike Cannon-Brookes, Atlassian’s CEO and co-Founder. “By infusing AI throughout our world-class cloud platform, we’re empowering all teams to accelerate collaboration and unlock organizational knowledge, further enabling them to unleash their full potential.” “Strong enterprise sales execution drove better-than-expected revenue across both our Cloud and Data Center offerings, as we delivered 30% year-over-year growth in subscription revenue in the second quarter,” said Joe Binz, Atlassian’s CFO. “The momentum we’re seeing across the business reinforces our conviction around investments we are making in our key strategic priorities of serving enterprise customers, AI, and the System of Work to deliver durable, long-term growth.” Second Quarter Fiscal Year 2025 Financial Highlights: On a GAAP basis, Atlassian reported: Revenue: Total revenue was $1,286.5 million for the second quarter of fiscal year 2025, up 21% from $1,060.1 million for the second quarter of fiscal year 2024. Operating Loss and Operating Margin: Operating loss was $57.5 million for the second quarter of fiscal year 2025, compared with operating loss of $49.1 million for the second quarter of fiscal year 2024. Operating margin was (4%) for the second quarter of fiscal year 2025, compared with (5%) for the second quarter of fiscal year 2024. Net Loss and Net Loss Per Diluted Share: Net loss was $38.2 million for the second quarter of fiscal year 2025, compared with net loss of $84.5 million for the second quarter of fiscal year 2024. Net loss per diluted share was $0.15 for the second quarter of fiscal year 2025, compared with net loss per diluted share of $0.33 for the second quarter of fiscal year 2024. Balance Sheet: Cash and cash equivalents plus marketable securities at the end of the second quarter of fiscal year 2025 totaled $2.5 billion. On a non-GAAP basis, Atlassian reported: Operating Income and Operating Margin: Operating income was $335.1 million for the second quarter of fiscal year 2025, compared with operating income of $250.6 million for the second quarter of fiscal year 2024. Operating margin was 26% for the second quarter of fiscal year 2025, compared with 24% for the second quarter of fiscal year 2024. Net Income and Net Income Per Diluted Share: Net income was $255.6 million for the second quarter of fiscal year 2025, compared with net income of $189.5 million for the second quarter of fiscal year 2024. Net income per diluted share was $0.96 for the second quarter of fiscal year 2025, compared with net income per diluted share of $0.73 for the second quarter of fiscal year 2024. Free Cash Flow: Cash flow from operations was $351.9 million and free cash flow was $342.6 million for the second quarter of fiscal year 2025. Free cash flow margin for the second quarter of fiscal year 2025 was 27%. A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below, under the heading “About Non-GAAP Financial Measures.” Recent Business Highlights: A Leader in The Forrester Wave™: Knowledge Management Solutions, Q4 2024: Atlassian was named a Leader in The Forrester Wave for Knowledge Management Solutions, Q4 20241, the first-ever Wave for this market. Atlassian offers products like Confluence, Loom, and Rovo which allow all teams to unlock knowledge across their organization and transform traditional silos into enterprise-wide collaboration with an AI-first strategy. A Leader in the 2024 Gartner® Magic Quadrant™ for Marketing Work Management Platforms: Atlassian was named a Leader in the 2024 Gartner Magic Quadrant for Marketing Work Management Platforms2. Atlassian tools like Jira and Rovo, along with deep integrations across a broad network of third-party applications enable marketing teams to plan and track work, align on goals, and reduce costs and context switching. A Leader in the IDC MarketScape: Worldwide IT Service Management Software 2024 Vendor Assessment: Atlassian was named a Leader in the IDC MarketScape: Worldwide IT Service Management Software 2024 Vendor Assessment. Jira Service Management bridges the gap between software development and IT teams allowing customers to align service delivery with product delivery and overall goals through powerful AI-enabled features like automation and virtual agents. Increased Scale in Confluence Cloud: Atlassian announced the general availability of support for up to 150,000 users on a single site for Confluence Cloud, representing a 3x increase in scale. This achievement unlocks many opportunities for customers, such as further enabling migrations from Data Center to Cloud, expanding greater usage across a customer’s organization, and bringing technical and business teams together to accelerate centralized knowledge sharing and seamless collaboration. Expanded Strategic Partnership with Amazon Web Services: Atlassian and Amazon Web Services (AWS) announced a multi-year strategic collaboration agreement to further provide Atlassian customers access to the latest cloud-enabled services, including generative AI, underpinned by world-class security, privacy, compliance, and reliability. As part of the expanded partnership, Atlassian and AWS will establish a Cloud Center of Excellence to help streamline complex migrations for large enterprises and equip solutions partners with Cloud and AI skills, further enabling cloud migrations for millions of users. Customers with >$10,000 in Cloud ARR: Atlassian ended its second quarter of fiscal year 2025 with 49,449 customers with greater than $10,000 in Cloud annualized recurring revenue (Cloud ARR), an increase of 15% year-over-year. Ranked #1 on Fortune’s The Future 50 List: Atlassian was ranked first on Fortune’s The Future 50 List for 2024, which recognizes the companies most likely to adapt, thrive, and grow amid technological and economic change. This achievement underscores Atlassian’s commitment to fostering an innovative, collaborative, and flexible culture that enables technological advancement and incredible value delivery for customers, partners, employees, and shareholders. Board of Directors Update: Atlassian appointed Christian Smith to its Board of Directors. Christian is the Chief Revenue Officer at Splunk, a leader in cybersecurity and observability. Prior to this, Christian served as the Chief Revenue Officer at Nintex. Christian has more than 30 years of enterprise experience driving global sales and digital transformation which will be valuable in supporting Atlassian in its key strategic priorities of enterprise, AI, and the System of Work. Financial Targets: Atlassian is providing its financial targets as follows: Third Quarter Fiscal Year 2025: Total revenue is expected to be in the range of $1,345 million to $1,353 million. Cloud revenue growth year-over-year is expected to be approximately 23.5%. Data Center revenue growth year-over-year is expected to be approximately 7.0%. Marketplace and other revenue growth year-over-year is expected to be approximately flat. Gross margin is expected to be approximately 82.0% on a GAAP basis and approximately 84.5% on a non-GAAP basis. Operating margin is expected to be approximately (3.0%) on a GAAP basis and approximately 23.5% on a non-GAAP basis. Fiscal Year 2025: Total revenue growth year-over-year is expected to be in the range of 18.5% to 19.0%. Cloud revenue growth year-over-year is expected to be approximately 26.5%. Data Center revenue growth year-over-year is expected to be approximately 21.5%. Marketplace and other revenue growth year-over-year is expected to be approximately 8.5%. Gross margin is expected to be in the range of 81.5% to 82.0% on a GAAP basis and in the range of 84.0% to 84.5% on a non-GAAP basis. Operating margin is expected to be approximately (4.0%) on a GAAP basis and approximately 23.5% on a non-GAAP basis. For additional commentary regarding financial targets, please see Atlassian’s second quarter fiscal year 2025 shareholder letter dated January 30, 2025. With respect to Atlassian’s expectations under “Financial Targets” above, a reconciliation of GAAP to non-GAAP gross margin and operating margin has been provided in the financial statement tables included in this press release. Shareholder Letter and Webcast Details: A detailed shareholder letter is available on Atlassian’s Work Life blog at https://atlassian.com/blog/announcements/shareholder-letter-q2fy25, and the Investor Relations section of Atlassian’s website at https://investors.atlassian.com. Atlassian will host a webcast to answer questions today: When: Thursday, January 30, 2025 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). Webcast: A live webcast of the call can be accessed from the Investor Relations section of Atlassian’s website at https://investors.atlassian.com. Following the call, a replay will be available on the same website. Atlassian has used, and will continue to use, its Investor Relations website at https://investors.atlassian.com as a means of making material information public and for complying with its disclosure obligations. About Atlassian Atlassian unleashes the potential of every team. Our software development, service management and work management software helps teams organize, discuss, and complete shared work. The majority of the Fortune 500 and over 300,000 companies of all sizes worldwide - including NASA, BMW, Kiva, Deutsche Bank and Dropbox - rely on our solutions to help their teams work better together and deliver quality results on time. Learn more about our products, including Jira, Confluence and Jira Service Management at https://atlassian.com. Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. In some cases, you can identify these statements by forward-looking words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate,” “further,” or “continue,” and similar expressions or variations, but these words are not the exclusive means for identifying such statements. All statements other than statements of historical fact could be deemed forward looking, including but not limited to risks and uncertainties related to statements about our platform, products, product features, System of Work, AI capabilities, enterprise sales, customers, strategic partnerships, leadership transitions, strategic priorities, anticipated growth, outlook and results, and our financial targets such as total revenue, Cloud, Data Center, and Marketplace and other revenue, and GAAP and non-GAAP financial measures including gross margin and operating margin. We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. The achievement or success of the matters covered by such forward-looking statements involves known and unknown risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management’s beliefs and assumptions only as of the date such statements are made. Further information on these and other factors that could affect our financial results is included in filings we make with the Securities and Exchange Commission (the “SEC”) from time to time, including the section titled “Risk Factors” in our most recently filed Forms 10-K and 10-Q. These documents are available on the SEC Filings section of the Investor Relations section of our website at https://investors.atlassian.com. About Non-GAAP Financial Measures In addition to the measures presented in our condensed consolidated financial statements, we regularly review other measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”), defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions. The key measures we consider are non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share and free cash flow (collectively, the “Non-GAAP Financial Measures”). These Non-GAAP Financial Measures, which may be different from similarly titled non-GAAP measures used by other companies, provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations. Management believes that tracking and presenting these Non-GAAP Financial Measures provides management, our board of directors, investors and the analyst community with the ability to better evaluate matters such as: our ongoing core operations, including comparisons between periods and against other companies in our industry; our ability to generate cash to service our debt and fund our operations; and the underlying business trends that are affecting our performance. Our Non-GAAP Financial Measures include: Non-GAAP gross profit and non-GAAP gross margin. Excludes expenses related to stock-based compensation and amortization of acquired intangible assets. Non-GAAP operating income and non-GAAP operating margin. Excludes expenses related to stock-based compensation and amortization of acquired intangible assets. Non-GAAP net income and non-GAAP net income per diluted share. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, gain on a non-cash sale of a controlling interest of a subsidiary and the related income tax adjustments. Free cash flow. Free cash flow is defined as net cash provided by operating activities less capital expenditures, which consists of purchases of property and equipment. We understand that although these Non-GAAP Financial Measures are frequently used by investors and the analyst community in their evaluation of our financial performance, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. We compensate for such limitations by reconciling these Non-GAAP Financial Measures to the most comparable GAAP financial measures. We encourage you to review the tables in this press release titled “Reconciliation of GAAP to Non-GAAP Results” and “Reconciliation of GAAP to Non-GAAP Financial Targets” that present such reconciliations. Customers with >$10,000 in Cloud ARR We define the number of customers with Cloud ARR greater than $10,000 at the end of any particular period as the number of organizations with unique domains with an active Cloud subscription for two or more seats and greater than $10,000 in Cloud ARR. We define Cloud ARR as the annualized recurring revenue run-rate of Cloud subscription agreements at a point in time. We calculate Cloud ARR by taking the Cloud monthly recurring revenue (“Cloud MRR”) run-rate and multiplying it by 12. Cloud MRR for each month is calculated by aggregating monthly recurring revenue from committed contractual amounts at a point in time. Cloud ARR and Cloud MRR should be viewed independently of revenue and do not represent our revenue under GAAP, as they are operational metrics that can be affected by contract start and end dates and renewal rates. __________________________ 1 Forrester does not endorse any company, product, brand, or service included in its research publications and does not advise any person to select the products or services of any company or brand based on the ratings included in such publications. Information is based on the best available resources. Opinions reflect judgment at the time and are subject to change. For more information, read about Forrester’s objectivity at https://www.forrester.com/about-us/objectivity/. 2 Gartner, Magic Quadrant for Marketing Work Management Platforms, Michael McCune, Lacretia Marsh, et al., 17 December 2024. Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. The Gartner content described herein (the “Gartner Content”) represents research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and is not a representation of fact. Gartner Content speaks as of its original publication date (and not as of the date of this Press Release), and the opinions expressed in the Gartner Content are subject to change without notice. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and MAGIC QUADRANT is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved. Atlassian Corporation Condensed Consolidated Statements of Operations (U.S. $ and shares in thousands, except per share data) (unaudited) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Revenues: Subscription $ 1,213,248 $ 932,181 $ 2,345,196 $ 1,784,163 Other 73,215 127,929 129,048 253,722 Total revenues 1,286,463 1,060,110 2,474,244 2,037,885 Cost of revenues (1) (2) 223,127 194,536 440,751 372,565 Gross profit 1,063,336 865,574 2,033,493 1,665,320 Operating expenses: Research and development (1) (2) 680,213 536,779 1,283,314 1,018,517 Marketing and sales (1) (2) 271,894 220,513 524,287 414,080 General and administrative (1) 168,708 157,344 315,349 300,654 Total operating expenses 1,120,815 914,636 2,122,950 1,733,251 Operating loss (57,479 ) (49,062 ) (89,457 ) (67,931 ) Other expense, net (7,999 ) (4,639 ) (27,431 ) (12,974 ) Interest income 25,586 22,593 54,150 47,819 Interest expense (7,291 ) (9,001 ) (14,609 ) (17,977 ) Loss before income taxes (47,183 ) (40,109 ) (77,347 ) (51,063 ) Provision for (benefit from) income taxes (8,975 ) 44,360 84,630 65,289 Net loss $ (38,208 ) $ (84,469 ) $ (161,977 ) $ (116,352 ) Net loss per share attributable to Class A and Class B common stockholders: Basic $ (0.15 ) $ (0.33 ) $ (0.62 ) $ (0.45 ) Diluted $ (0.15 ) $ (0.33 ) $ (0.62 ) $ (0.45 ) Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders: Basic 261,147 258,601 260,812 258,254 Diluted 261,147 258,601 260,812 258,254 (1) Amounts include stock-based compensation as follows: Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Cost of revenues $ 23,031 $ 19,213 $ 41,245 $ 36,034 Research and development 260,278 187,819 453,723 338,265 Marketing and sales 43,260 38,168 79,252 70,449 General and administrative 52,161 44,645 90,656 80,678 (2) Amounts include amortization of acquired intangible assets, as follows: Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Cost of revenues $ 10,130 $ 7,056 $ 20,246 $ 12,828 Research and development 93 93 187 187 Marketing and sales 3,673 2,712 7,345 5,077 Atlassian Corporation Condensed Consolidated Balance Sheets (U.S. $ in thousands) (unaudited) December 31, 2024 June 30, 2024 Assets Current assets: Cash and cash equivalents $ 2,217,604 $ 2,176,930 Marketable securities 251,629 161,973 Accounts receivable, net 695,661 628,049 Prepaid expenses and other current assets 156,806 109,312 Total current assets 3,321,700 3,076,264 Non-current assets: Property and equipment, net 85,443 86,315 Operating lease right-of-use assets 172,905 172,468 Strategic investments 222,299 223,221 Intangible assets, net 272,578 299,057 Goodwill 1,292,187 1,288,756 Deferred tax assets 6,881 3,934 Other non-current assets 72,312 62,118 Total assets $ 5,446,305 $ 5,212,133 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 190,550 $ 177,545 Accrued expenses and other current liabilities 531,283 577,359 Deferred revenue, current portion 1,914,090 1,806,269 Operating lease liabilities, current portion 48,644 48,953 Total current liabilities 2,684,567 2,610,126 Non-current liabilities: Deferred revenue, net of current portion 282,155 308,467 Operating lease liabilities, net of current portion 209,097 214,474 Long-term debt 986,785 985,911 Deferred tax liabilities 20,054 20,387 Other non-current liabilities 44,092 39,917 Total liabilities 4,226,750 4,179,282 Stockholders’ equity Common stock 3 3 Additional paid-in capital 4,876,944 4,212,064 Accumulated other comprehensive income (loss) (38,617 ) 25,300 Accumulated deficit (3,618,775 ) (3,204,516 ) Total stockholders’ equity 1,219,555 1,032,851 Total liabilities and stockholders’ equity $ 5,446,305 $ 5,212,133 Atlassian Corporation Condensed Consolidated Statements of Cash Flows (U.S. $ in thousands) (unaudited) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Cash flows from operating activities: Net loss $ (38,208 ) $ (84,469 ) $ (161,977 ) $ (116,352 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 23,149 17,012 45,976 32,096 Stock-based compensation 378,730 289,845 664,876 525,426 Deferred income taxes (2,161 ) (8,618 ) (2,929 ) (3,305 ) Amortization of interest rate swap contracts (6,865 ) — (14,020 ) — Net loss on strategic investments 2,611 1,442 17,903 7,690 Net foreign currency loss (gain) (5,621 ) 2,237 (2,581 ) 2,418 Other (968 ) 154 23 (1,092 ) Changes in operating assets and liabilities, net of business combinations: Accounts receivable, net (211,755 ) (156,163 ) (67,725 ) (46,675 ) Prepaid expenses and other assets (25,759 ) (486 ) (65,673 ) (23,542 ) Accounts payable 24,863 33,648 14,719 623 Accrued expenses and other liabilities 30,464 59,140 (77,704 ) (12,191 ) Deferred revenue 183,425 135,852 81,509 91,454 Net cash provided by operating activities 351,905 289,594 432,397 456,550 Cash flows from investing activities: Business combinations, net of cash acquired — (844,727 ) (4,975 ) (844,727 ) Purchases of property and equipment (9,336 ) (5,333 ) (15,487 ) (9,002 ) Purchases of strategic investments (11,500 ) (250 ) (25,550 ) (4,000 ) Purchases of marketable securities and other investments (116,619 ) (69,783 ) (160,323 ) (139,146 ) Proceeds from maturities of marketable securities 25,480 16,150 71,628 16,150 Proceeds from sales of marketable securities and strategic investments 271 41,513 4,313 61,392 Net cash used in investing activities (111,704 ) (862,430 ) (130,394 ) (919,333 ) Cash flows from financing activities: Principal payments of term loan facility — (12,500 ) — (12,500 ) Repurchases of Class A Common Stock (69,241 ) (101,773 ) (252,851 ) (167,652 ) Other — — (3,143 ) — Net cash used in financing activities (69,241 ) (114,273 ) (255,994 ) (180,152 ) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash (9,056 ) 4,063 (5,492 ) 783 Net increase (decrease) in cash, cash equivalents, and restricted cash 161,904 (683,046 ) 40,517 (642,152 ) Cash, cash equivalents, and restricted cash at beginning of period 2,056,735 2,144,809 2,178,122 2,103,915 Cash, cash equivalents, and restricted cash at end of period $ 2,218,639 $ 1,461,763 $ 2,218,639 $ 1,461,763 Atlassian Corporation Revenues by Deployment Options (U.S. $ in thousands) (unaudited) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Cloud $ 846,962 $ 653,210 $ 1,639,268 $ 1,257,857 Data Center 362,281 274,758 697,875 517,701 Server — 69,173 — 147,925 Marketplace and other (1) 77,220 62,969 137,101 114,402 Total revenues $ 1,286,463 $ 1,060,110 $ 2,474,244 $ 2,037,885 (1) Included in Marketplace and other is premier support revenue. Premier support consists of subscription-based arrangements for a higher level of support across different deployment options. Premier support is recognized as subscription revenue on the Condensed Consolidated Statements of Operations as the services are delivered over the term of the arrangement. Atlassian Corporation Reconciliation of GAAP to Non-GAAP Results (U.S. $ and shares in thousands, except percentage and per share data) (unaudited) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Gross profit GAAP gross profit $ 1,063,336 $ 865,574 $ 2,033,493 $ 1,665,320 Plus: Stock-based compensation 23,031 19,213 41,245 36,034 Plus: Amortization of acquired intangible assets 10,130 7,056 20,246 12,828 Non-GAAP gross profit $ 1,096,497 $ 891,843 $ 2,094,984 $ 1,714,182 Gross margin GAAP gross margin 83 % 82 % 82 % 82 % Plus: Stock-based compensation 1 2 2 2 Plus: Amortization of acquired intangible assets 1 — 1 — Non-GAAP gross margin 85 % 84 % 85 % 84 % Operating income GAAP operating loss $ (57,479 ) $ (49,062 ) $ (89,457 ) $ (67,931 ) Plus: Stock-based compensation 378,730 289,845 664,876 525,426 Plus: Amortization of acquired intangible assets 13,896 9,861 27,778 18,092 Non-GAAP operating income $ 335,147 $ 250,644 $ 603,197 $ 475,587 Operating margin GAAP operating margin (4 %) (5 %) (4 %) (3 %) Plus: Stock-based compensation 29 28 27 25 Plus: Amortization of acquired intangible assets 1 1 1 1 Non-GAAP operating margin 26 % 24 % 24 % 23 % Net income GAAP net loss $ (38,208 ) $ (84,469 ) $ (161,977 ) $ (116,352 ) Plus: Stock-based compensation 378,730 289,845 664,876 525,426 Plus: Amortization of acquired intangible assets 13,896 9,861 27,778 18,092 Less: Gain on a non-cash sale of a controlling interest of a subsidiary — — — (1,378 ) Less: Income tax adjustments (1) (98,791 ) (25,731 ) (75,350 ) (67,302 ) Non-GAAP net income $ 255,627 $ 189,506 $ 455,327 $ 358,486 Net income per share GAAP net loss per share - diluted $ (0.15 ) $ (0.33 ) $ (0.62 ) $ (0.45 ) Plus: Stock-based compensation 1.43 1.12 2.53 2.03 Plus: Amortization of acquired intangible assets 0.05 0.04 0.11 0.07 Less: Gain on a non-cash sale of a controlling interest of a subsidiary — — — (0.01 ) Less: Income tax adjustments (1) (0.37 ) (0.10 ) (0.29 ) (0.26 ) Non-GAAP net income per share - diluted $ 0.96 $ 0.73 $ 1.73 $ 1.38 Weighted-average diluted shares outstanding Weighted-average shares used in computing diluted GAAP net loss per share 261,147 258,601 260,812 258,254 Plus: Dilution from dilutive securities (2) 4,546 1,051 2,422 1,030 Weighted-average shares used in computing diluted non-GAAP net income per share 265,693 259,652 263,234 259,284 Free cash flow GAAP net cash provided by operating activities $ 351,905 $ 289,594 $ 432,397 $ 456,550 Less: Capital expenditures (9,336 ) (5,333 ) (15,487 ) (9,002 ) Free cash flow $ 342,569 $ 284,261 $ 416,910 $ 447,548 (1) We utilize a fixed long-term projected non-GAAP tax rate in our computation of the non-GAAP income tax adjustments in order to provide better consistency across interim reporting periods. In projecting this long-term non-GAAP tax rate, we utilized a three-year financial projection that excludes the direct and indirect income tax effects of the other non-GAAP adjustments reflected above. Additionally, we considered our current operating structure and other factors such as our existing tax positions in various jurisdictions and key legislation in major jurisdictions where we operate. For fiscal years 2025 and 2024, we determined the projected non-GAAP tax rate to be 26% and 27%, respectively. This fixed long-term projected non-GAAP tax rate eliminates the effects of non-recurring and period specific items which can vary in size and frequency. Examples of the non-recurring and period specific items include but are not limited to changes in the valuation allowance related to deferred tax assets, effects resulting from acquisitions, and unusual or infrequently occurring items. We will periodically re-evaluate this long-term rate, as necessary, for significant events. The rate could be subject to change for a variety of reasons, for example, significant changes in the geographic earnings mix or fundamental tax law changes in major jurisdictions where we operate. (2) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three and six months ended December 31, 2024 and 2023, because the effect would have been anti-dilutive. Atlassian Corporation Reconciliation of GAAP to Non-GAAP Financial Targets Three Months Ending March 31, 2025 GAAP gross margin 82.0% Plus: Stock-based compensation 1.5 Plus: Amortization of acquired intangible assets 1.0 Non-GAAP gross margin 84.5% GAAP operating margin (3.0%) Plus: Stock-based compensation 25.5 Plus: Amortization of acquired intangible assets 1.0 Non-GAAP operating margin 23.5% Fiscal Year Ending June 30, 2025 GAAP gross margin 81.5% to 82.0% Plus: Stock-based compensation 1.5 Plus: Amortization of acquired intangible assets 1.0 Non-GAAP gross margin 84.0% to 84.5% GAAP operating margin (4.0%) Plus: Stock-based compensation 26.5 Plus: Amortization of acquired intangible assets 1.0 Non-GAAP operating margin 23.5%

Atlassian Announces Second Quarter Fiscal Year 2025 Results

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