**Atlassian Announces Second Quarter Fiscal Year 2024 Results**

_Quarterly revenue of $1,060 million, up 21% year-over-year_

_Quarterly subscription revenue of $932 million, up 31% year-over-year_

_Quarterly GAAP operating margin of (5%) and non-GAAP operating margin of 24%_

_Quarterly cash flow from operations of $290 million and free cash flow of $284 million_

**Team Anywhere/San Francisco (February 1, 2024) — Atlassian Corporation (NASDAQ: TEAM), a leading provider**
of team collaboration and productivity software, today announced financial results for its second quarter ended
December 31, 2023 and released a shareholder letter available on Atlassian’s Work Life blog at http://atlassian.com/
blog/announcements/shareholder-letter-q2fy24. The shareholder letter was also posted to the Investor Relations
section of Atlassian’s website at https://investors.atlassian.com.

“Q2 was full of incredible milestones as we recorded our first-ever $1 billion revenue quarter, Jira Software crossed $1
billion in Cloud ARR, and we surpassed 300,000 customers,” said Scott Farquhar, Atlassian’s co-founder and co-CEO.
“We continued to execute well with quarterly revenue up 21% year-over-year, driven by subscription revenue growth of
31% year-over-year. While we are extremely proud of our accomplishments, we remain laser-focused on executing
against our top strategic priorities: cloud migrations, serving enterprise customers, ITSM, and AI.”

“The steady drumbeat of delivering innovation across our cloud platform continues as we rolled out our first wave of
Atlassian Intelligence capabilities into general availability accelerating our customers' productivity,” said Mike CannonBrookes, Atlassian’s co-founder and co-CEO. “With over 20 years of experience and knowledge about how technical
and non-technical teams plan, track, deliver, and collaborate, we are uniquely positioned to supercharge teams through
the power of AI. We officially welcomed Loom to the Atlassian family in Q2, and have been thrilled to see the team
deliver on their ambitious AI vision with a slew of new features including an enhanced editing experience that makes
updating a video as easy as editing a text document. The addition of async video to our toolbelt combined with its AI
capabilities will help our customers collaborate in deeper and more meaningful ways.”

**Second Quarter Fiscal Year 2024 Financial Highlights:**

_The following financial results for the second quarter of fiscal year 2024 include the impact from the acquisition of_
_Loom which closed on November 30, 2023._

On a GAAP basis, Atlassian reported:

**_•_** **Revenue: Total revenue was $1,060.1 million for the second quarter of fiscal year 2024, up 21% from $872.7**
million for the second quarter of fiscal year 2023.

-  **Operating Loss and Operating Margin: Operating loss was $49.1 million for the second quarter of fiscal year**
2024, compared with operating loss of $99.2 million for the second quarter of fiscal year 2023. Operating
margin was (5%) for the second quarter of fiscal year 2024, compared with (11%) for the second quarter of
fiscal year 2023.

**_•_** **Net Loss and Net Loss Per Diluted Share: Net loss was $84.5 million for the second quarter of fiscal year**
2024, compared with net loss of $205.0 million for the second quarter of fiscal year 2023. Net loss per diluted
share was $0.33 for the second quarter of fiscal year 2024, compared with net loss per diluted share of $0.80
for the second quarter of fiscal year 2023.

**•** **Balance Sheet: Cash and cash equivalents plus marketable securities at the end of the second quarter of**
fiscal year 2024 totaled $1.6 billion.

On a non-GAAP basis, Atlassian reported:

**_•_** **Operating Income and Operating Margin: Operating income was $250.6 million for the second quarter of**
fiscal year 2024, compared with operating income of $174.8 million for the second quarter of fiscal year 2023.
Operating margin was 24% for the second quarter of fiscal year 2024, compared with 20% for the second
quarter of fiscal year 2023.

**_•_** **Net Income and Net Income Per Diluted Share: Net income was $189.5 million for the second quarter of**


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diluted share of $0.45 for the second quarter of fiscal year 2023.

**_•_** **Free Cash Flow: Cash flow from operations was $289.6 million and free cash flow was $284.3 million for**
the second quarter of fiscal year 2024. Free cash flow margin for the second quarter of fiscal year 2024 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:**

-  **AI on the Atlassian Platform: Atlassian announced the general availability of Atlassian Intelligence, bringing**
AI capabilities to the Premium and Enterprise editions of Jira Software, Confluence, and Jira Service
Management. Developed with 20 years of insights from how millions of teams work and interact, these
Atlassian Intelligence features - from gathering actionable insights from data through natural language querying
in Jira Software, to text generation and summarization in Confluence - will help teams do their best work with
speed, efficiency, and excellence.

-  **Enterprise Platform Enhancements: Atlassian expanded the enterprise-grade capabilities of the Atlassian**
cloud platform with the launch of Data Residency in Canada, Bring-Your-Own-Key encryption in Jira Software,
HIPAA compliance availability in all paid plans of Jira Software, Confluence, and Jira Service Management,
and enhanced API token controls for admins. These capabilities enable even more enterprise customers to
move to the Atlassian cloud platform.

**•** **A Leader in The Forrester Wave™: Enterprise Service Management: Atlassian was recognized as a**
Leader in The Forrester Wave™: Enterprise Service Management, Q4 2023, with Jira Service Management
receiving the highest possible score in the strategy category. Jira Service Management is a comprehensive and
integrated suite of tools that seamlessly connects development, IT, and business teams to foster enhanced
collaboration and workflow efficiency across the entire service delivery lifecycle.

**_•_** **Customers with >$10,000 in Cloud ARR: Atlassian ended its second quarter of fiscal year 2024 with 42,864**
customers with greater than $10,000 in Cloud ARR, an increase of 18% year-over-year. The acquisition of
Loom increased the number of customers with greater than $10,000 in Cloud ARR by 326.

-  **Achieved Global Recognition as a Great Place to Work: Atlassian was ranked 16th on Great Place to**
Work's World's Best Workplaces™ list and ranked 7th on Fortune's list of 100 Best Companies to Work For in
North America. These achievements are a testament to the unwavering commitment, tireless dedication, and
everyday efforts of the invaluable TEAM members who make Atlassian a top destination to do one’s best work.

**Financial Targets:**

_The following financial targets for the third quarter of fiscal year 2024 and fiscal year 2024 include the impact from the_
_acquisition of Loom._

Atlassian is providing its financial targets as follows:

**Third Quarter Fiscal Year 2024:**

-  Total revenue is expected to be in the range of $1,085 million to $1,105 million.

-  Cloud revenue growth year-over-year is expected to be in the range of 30.0% to 32.0%.

-  Data Center revenue growth year-over-year is expected to be approximately 35.0%.

-  Gross margin is expected to be approximately 81.0% on a GAAP basis and approximately 83.5% on a nonGAAP basis.

-  Operating margin is expected to be approximately (7.5%) on a GAAP basis and approximately 19.5% on a nonGAAP basis.


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-  Cloud revenue growth year-over-year is expected to be in the range of 28.5% to 30.5%.

-  Data Center revenue growth year-over-year is expected to be approximately 36.0%.

-  Gross margin is expected to be approximately 81.0% on a GAAP basis and approximately 83.5% on a nonGAAP basis.

-  Operating margin is expected to be in the range of (6.5%) to (6.0%) on a GAAP basis and in the range of
20.5% to 21.0% on a non-GAAP basis

For additional commentary regarding financial targets, please see Atlassian’s second quarter fiscal year 2024
shareholder letter dated February 1, 2024.

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-q2fy24, 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, February 1, 2024 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 agile & DevOps, IT 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, Audi, 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
Software, Confluence and Jira Service Management at https://atlassian.com.

**Investor Relations Contact**
Martin Lam
IR@atlassian.com

**Media Contact**
Marie-Claire Maple
press@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,” 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 risks and uncertainties related to statements about our products, product features, including AI capabilities,
customers, cloud migrations, macroeconomic environment, anticipated growth, outlook, potential benefits and
synergies from Loom and other acquisitions, technology, and other key strategic areas, and our financial targets such
as total revenue, Cloud and Data Center 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 ncertainties and ass mptions If an s ch risks or ncertainties materiali e or if an of the ass mptions pro e


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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
and non-GAAP gross margin, non-GAAP operating income and 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 NonGAAP Results” and “Reconciliation of GAAP to Non-GAAP Financial Targets” that present such reconciliations.

**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 on a single product basis is defined as Cloud ARR from subscriptions for that
specific product. 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.

**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 and greater than $10,000 in Cloud
ARR.


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**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,**

**2023** **2022** **2023** **2022**

Revenues:

Subscription $ 932,181 $ 711,199 $ 1,784,163 $ 1,362,183

Maintenance 69,102 106,023 147,700 219,588

Other 58,827 55,482 106,022 98,325

Total revenues 1,060,110 872,704 2,037,885 1,680,096

Cost of revenues (1) (2) 194,536 155,945 372,565 295,337

Gross profit 865,574 716,759 1,665,320 1,384,759

Operating expenses:

Research and development (1) (2) 536,779 473,676 1,018,517 872,682

Marketing and sales (1) (2) 220,513 186,191 414,080 346,319

General and administrative (1) 157,344 156,131 300,654 299,024

Total operating expenses 914,636 815,998 1,733,251 1,518,025

Operating loss (49,062) (99,239) (67,931) (133,266)

Other income (expense), net (4,639) (6,749) (12,974) 22,540

Interest income 22,593 8,963 47,819 14,106

Interest expense (9,001) (7,508) (17,977) (13,629)

Loss before provision for income taxes (40,109) (104,533) (51,063) (110,249)

Provision for income taxes (44,360) (100,498) (65,289) (108,523)

Net loss $ (84,469) $ (205,031) $ (116,352) $ (218,772)

Net loss per share attributable to Class A and
Class B common stockholders:

Basic $ (0.33) $ (0.80) $ (0.45) $ (0.86)

Diluted $ (0.33) $ (0.80) $ (0.45) $ (0.86)

Weighted-average shares used in computing net
loss per share attributable to Class A and Class
B common stockholders:

Basic 258,601 255,874 258,254 255,520

Diluted 258,601 255,874 258,254 255,520


(1) Amounts include stock-based compensation as follows:

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

**2023** **2022** **2023** **2022**

Cost of revenues $ 19,213 $ 18,553 $ 36,034 $ 29,166

Research and development 187,819 169,342 338,265 279,471

Marketing and sales 38,168 38,156 70,449 61,351

General and administrative 44,645 39,734 80,678 69,428


(2) Amounts include amortization of acquired intangible assets, as follows:

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

**2023** **2022** **2023** **2022**

Cost of revenues $ 7,056 $ 5,697 $ 12,828 $ 11,394

Research and development 93 93 187 187

Marketing and sales 2,712 2,506 5,077 5,011


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**Condensed Consolidated Balance Sheets**

**(U.S. $ in thousands)**

**(unaudited)**

**December 31, 2023** **June 30, 2023**


**Assets**

Current assets:

Cash and cash equivalents $ 1,460,497 $ 2,102,550

Marketable securities 150,831 10,000

Accounts receivable, net 526,379 477,678

Prepaid expenses and other current assets 133,834 146,136

Total current assets 2,271,541 2,736,364

Non-current assets:

Property and equipment, net 78,095 81,402

Operating lease right-of-use assets 189,195 184,195

Strategic investments 223,405 225,538

Intangible assets, net 329,010 69,072

Goodwill 1,285,896 727,211

Deferred tax assets 3,859 9,945

Other non-current assets 68,497 73,052

**Total assets** $ 4,449,498 $ 4,106,779

**Liabilities and Stockholders’ Equity**

Current liabilities:

Accounts payable $ 160,469 $ 159,293

Accrued expenses and other current liabilities 410,377 423,131

Deferred revenue, current portion 1,451,023 1,362,736

Operating lease liabilities, current portion 46,230 44,930

Term loan facility, current portion 50,000 37,500

Total current liabilities 2,118,099 2,027,590

Non-current liabilities:

Deferred revenue, net of current portion 202,860 182,743

Operating lease liabilities, net of current portion 237,481 237,835

Term loan facility, net of current portion 937,180 962,093

Deferred tax liabilities 16,819 10,669

Other non-current liabilities 32,136 31,177

**Total liabilities** 3,544,575 3,452,107

**Stockholders’ equity**

Common stock 3 3

Additional paid-in capital 3,656,057 3,130,631

Accumulated other comprehensive income 38,664 34,002

Accumulated deficit (2,789,801) (2,509,964)

**Total stockholders’ equity** 904,923 654,672

**Total liabilities and stockholders’ equity** $ 4,449,498 $ 4,106,779


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

**2023** **2022** **2023** **2022**


**Cash flows from operating activities:**

Net loss $ (84,469) $ (205,031) $ (116,352) $ (218,772)

Adjustments to reconcile net loss to net cash
provided by operating activities:

Depreciation and amortization 17,012 15,476 32,096 30,096

Stock-based compensation 289,845 265,785 525,426 439,416

Deferred income taxes (8,618) 3,291 (3,305) 4,813

Gain on a non-cash sale of a controlling interest of
a subsidiary — (2,066) (1,378) (45,158)

Net loss on strategic investments 1,442 7,563 7,690 19,076

Net foreign currency loss (gain) 2,237 (2,203) 2,418 (5,828)

Other 154 112 286 230

Changes in operating assets and liabilities, net of
business combinations:

Accounts receivable, net (156,163) (107,805) (46,675) (46,491)

Prepaid expenses and other assets (486) (2,690) (23,542) (25,367)

Accounts payable 33,648 18,587 623 49,734

Accrued expenses and other liabilities 59,140 58,260 (12,191) (50,183)

Deferred revenue 135,852 101,246 91,454 91,401

**Net cash provided by operating activities** 289,594 150,525 456,550 242,967

**Cash flows from investing activities:**

Business combinations, net of cash acquired (844,727) — (844,727) (600)

Purchases of property and equipment (5,333) (4,040) (9,002) (20,536)

Purchases of strategic investments (250) (1,100) (4,000) (9,450)

Purchases of marketable securities and other
investments (69,783) — (139,146) (10,000)

Proceeds from maturities of marketable securities 16,150 18,750 16,150 47,700

Proceeds from sales of marketable securities and
strategic investments 41,513 363 61,392 621

**Net cash provided by (used in) investing**
**activities** (862,430) 13,973 (919,333) 7,735

**Cash flows from financing activities:**

Principal payments of term loan facility (12,500) — (12,500) —

Repurchases of Class A Common Stock (101,773) — (167,652) —

Proceeds from other financing arrangements — — — 1,396

**Net cash provided by (used in) financing**
**activities** (114,273) — (180,152) 1,396

Effect of foreign exchange rate changes on cash,
cash equivalents and restricted cash 4,063 3,522 783 (1,417)

Net increase (decrease) in cash, cash equivalents,
and restricted cash (683,046) 168,020 (642,152) 250,681

**Cash, cash equivalents, and restricted cash at**
**beginning of period** 2,144,809 1,469,949 2,103,915 1,386,686

Net decrease in cash and cash equivalents included
in assets held for sale — — — 602

**Cash, cash equivalents, and restricted cash at**
**end of period** $ 1,461,763 $ 1,637,969 $ 1,461,763 $ 1,637,969


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**Revenues by Deployment Options**

**(U.S. $ in thousands)**

**(unaudited)**

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

**2023** **2022** **2023** **2022**

Cloud $ 653,210 $ 512,335 $ 1,257,857 $ 987,378

Data Center 274,758 194,264 517,701 365,492

Server 69,173 106,168 147,925 219,981

Marketplace and other (1) 62,969 59,937 114,402 107,245

Total revenues $ 1,060,110 $ 872,704 $ 2,037,885 $ 1,680,096


(1) Included in Marketplace and other is premier support revenue. Premier support is a subscription-based arrangement 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.


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**(** **$** **,** **p p** **g** **p** **)**

**(unaudited)**

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

**2023** **2022** **2023** **2022**

**Gross profit**
GAAP gross profit $ 865,574 $ 716,759 $ 1,665,320 $ 1,384,759

Plus: Stock-based compensation 19,213 18,553 36,034 29,166

Plus: Amortization of acquired intangible assets 7,056 5,697 12,828 11,394

Non-GAAP gross profit $ 891,843 $ 741,009 $ 1,714,182 $ 1,425,319

**Gross margin**
GAAP gross margin 82 % 82 % 82 % 82 %

Plus: Stock-based compensation 2 2 2 2

Plus: Amortization of acquired intangible assets — 1 — 1

Non-GAAP gross margin 84 % 85 % 84 % 85 %

**Operating income**
GAAP operating loss $ (49,062) $ (99,239) $ (67,931) $ (133,266)

Plus: Stock-based compensation 289,845 265,785 525,426 439,416

Plus: Amortization of acquired intangible assets 9,861 8,296 18,092 16,592

Non-GAAP operating income $ 250,644 $ 174,842 $ 475,587 $ 322,742

**Operating margin**
GAAP operating margin (5%) (11%) (3%) (8%)

Plus: Stock-based compensation 28 30 25 26

Plus: Amortization of acquired intangible assets 1 1 1 1

Non-GAAP operating margin 24 % 20 % 23 % 19 %

**Net income**
GAAP net loss $ (84,469) $ (205,031) $ (116,352) $ (218,772)

Plus: Stock-based compensation 289,845 265,785 525,426 439,416

Plus: Amortization of acquired intangible assets 9,861 8,296 18,092 16,592

Less: Gain on a non-cash sale of a controlling
interest of a subsidiary — (2,067) (1,378) (45,158)

Less: Income tax adjustments (1) (25,731) 47,750 (67,302) 15,202

Non-GAAP net income $ 189,506 $ 114,733 $ 358,486 $ 207,280

**Net income per share**
GAAP net loss per share - diluted $ (0.33) $ (0.80) $ (0.45) $ (0.86)

Plus: Stock-based compensation 1.12 1.04 2.03 1.72

Plus: Amortization of acquired intangible assets 0.04 0.03 0.07 0.06

Less: Gain on a non-cash sale of a controlling
interest of a subsidiary — (0.01) (0.01) (0.17)

Less: Income tax adjustments (1) (0.10) 0.19 (0.26) 0.06

Non-GAAP net income per share - diluted $ 0.73 $ 0.45 $ 1.38 $ 0.81

**Weighted-average diluted shares outstanding**
Weighted-average shares used in computing diluted
GAAP net loss per share 258,601 255,874 258,254 255,520

Plus: Dilution from dilutive securities (2) 1,051 304 1,030 673

Weighted-average shares used in computing diluted
non-GAAP net income per share 259,652 256,178 259,284 256,193

**Free cash flow**
GAAP net cash provided by operating activities $ 289,594 $ 150,525 $ 456,550 $ 242,967

Less: Capital expenditures (5,333) (4,040) (9,002) (20,536)

Free cash flow $ 284,261 $ 146,485 $ 447,548 $ 222,431


(1) In fiscal year 2024, we began to 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 year 2024, we determined the projected non-GAAP tax rate to be 27%. 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 the company operates.


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**Reconciliation of GAAP to Non-GAAP Financial Targets**

**Three Months Ending**

**March 31, 2024**


**Fiscal Year Ending**

**June 30, 2024**


**GAAP gross margin** **81.0%** **81.0%**

Plus: Stock-based compensation 2.0 2.0

Plus: Amortization of acquired intangible assets 0.5 0.5

**Non-GAAP gross margin** **83.5%** **83.5%**

**GAAP operating margin** **(7.5%)** **(6.5%) to (6.0%)**

Plus: Stock-based compensation 26.0 26.0

Plus: Amortization of acquired intangible assets 1.0 1.0

**Non-GAAP operating margin** **19.5%** **20.5% to 21.0%**


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