01—Abstract
Summary
Summary of the 10-Q filed February 6, 2026. Cited figures are marked; the original filing is the authoritative source.
Atlassian Corporation's fiscal second-quarter 2026 10-Q (three months ended December 31, 2025) reports total revenues of $1,586.3 milliona, up 23% from $1,286.5 million a year earlier.
Subscription revenues rose 24% to $1,507.7 millionb, driven primarily by paid seat expansion from existing customers and price increases. Cloud revenues were $1,067.0 million, up 26%, while Data Center revenues were $435.6 million, up 20%. GAAP operating loss narrowed to $47.7 million from $57.5 million, and net loss was $42.6 million, or $0.16 per share.
The filing reports non-GAAP operating income of $430.2 millionc, a 27% non-GAAP operating margin, and non-GAAP net income of $320.9 million, or $1.22 per diluted share. The quarter included two large acquisitions: The Browser Company of New York (purchase price $488.3 million) and A Software Company (purchase price $720.4 million, all cash). Goodwill rose to $2,305.1 million from $1,304.4 million at June 30, 2025.
Free cash flow fell to $168.5 milliond from $342.6 million, and operating cash flow for the quarter was $177.8 million versus $351.9 million a year earlier. Cash and cash equivalents declined to $1,158.1 million at December 31, 2025 from $2,512.9 million at June 30, 2025, reflecting acquisition payments and $450.3 million of share repurchases for the six months.
The company also announced an end-of-life plan for its Data Center offering: no new term licenses to new customers starting March 2026, no term licenses or expansions for existing customers starting March 2028, and end of maintenance and support in March 2029. Management recorded $55.7 million of restructuring charges in the six months, and the filing states that the Chief Financial Officer will step down effective June 2026.
02—Key points
Key Highlights
- Q2 FY2026 total revenues of $1,586.3 million, up 23%; subscription revenues of $1,507.7 million, up 24%, with Cloud revenues up 26% to $1,067.0 million.
- GAAP operating loss of $47.7 million for the quarter, versus $57.5 million a year earlier; net loss of $42.6 million, or $0.16 per share.
- Non-GAAP operating income of $430.2 million (27% non-GAAP operating margin) and non-GAAP net income of $320.9 million, or $1.22 per diluted share.
- Acquisitions of The Browser Company of New York ($488.3 million) and A Software Company ($720.4 million cash) lifted goodwill to $2,305.1 million and intangible assets, net, to $495.0 million.
- Free cash flow of $168.5 million for the quarter, down from $342.6 million; six-month operating cash flow of $306.5 million versus $432.4 million.
- Data Center end-of-life plan: no new term licenses to new customers from March 2026, no expansions from March 2028, and maintenance ends March 2029.
- Share repurchases of $200.4 million in the quarter and $450.3 million for six months; $720.9 million remains under the 2024 program and $2.5 billion under the 2025 program.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2026, Atlassian lost $0.03.
- Revenue$1.59B100.0%
- Cost of revenue−$237.7M15.0%
- Gross profit$1.35B85.0%
- Operating costs−$1.40B88.0%
- Operating income−$47.7M3.0%
- Interest, other & tax$5.1M0.3%
- Net income−$42.6M2.7%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed February 6, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $1.59B$1.29B | +23.3% |
| Cost of Revenue | $237.69M$223.13M | +6.5% |
| Gross Profit | $1.35B$1.06B | +26.8% |
| R&D Expenses | $826.49M$680.21M | +21.5% |
| Operating Expenses | $1.40B$1.12B | +24.6% |
| Operating Income | -$47.75M-$57.48M | +16.9% |
| Net Income | -$42.65M-$38.21M | −11.6% |
| EPS (Basic) | $-0.16$-0.15 | −6.7% |
| EPS (Diluted) | $-0.16$-0.15 | −6.7% |
| Shares Outstanding (Basic) | 263.83M261.15M | +1.0% |
| Shares Outstanding (Diluted) | 263.83M261.15M | +1.0% |
05—Questions
Frequently Asked Questions
How fast did Atlassian's revenue grow in the quarter, and what drove it?
Total revenues grew 23% to $1,586.3 million for the three months ended December 31, 2025. The filing attributes the growth primarily to increased demand from existing customers, with subscription revenue up 24% due mainly to paid seat expansion and price increases.
Why did free cash flow decline so sharply?
Free cash flow fell by $174.1 million to $168.5 million in the quarter. The filing attributes the decline primarily to lower net cash provided by operating activities, reflecting higher cash paid to employees, vendors and income taxes, partially offset by higher cash received from customers.
What did Atlassian pay for its recent acquisitions?
The Browser Company of New York was acquired for a total purchase price of $488.3 million, including $481.5 million in cash. A Software Company was acquired for $720.4 million in cash. Both acquisitions produced goodwill, which the company primarily attributes to the assembled workforce and expanded market opportunities.
What is the outlook for the Data Center business?
Atlassian plans to end-of-life its Data Center offering. Beginning March 2026 it will stop selling term licenses to new customers, stop selling term licenses and expansions to existing customers in March 2028, and, subject to limited exceptions, end maintenance and support in March 2029. The filing states that the company expects Cloud offerings to remain the primary driver of revenue growth.
How much liquidity and debt does Atlassian have?
At December 31, 2025, the company held $1.2 billion of cash and cash equivalents and $407.9 million of marketable securities. It had $1.0 billion of senior notes outstanding (carrying value of $988.6 million), and no borrowings under its $750 million revolving credit facility. The company states that existing cash, operating cash flow and facility capacity should meet its needs for at least the next 12 months.
06—Continue