Company: TEAM
Filing Date: 2025-05-02
Form Type: 10-Q
Source: 0001650372-25-000022
Chunk: 61

Company: Atlassian Corp
Filing Date: 2025-05-02
Form: 10-Q
Item: Part I, Item 3
Chunk 61
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 adversely affect our ability to use or sell these technologies or subject us to legal liability.

We may encounter challenges to our business as we transition our business to focusing more on our Cloud offerings.

We currently offer and sell both Data Center and Cloud offerings of certain of our products. For these products, our Cloud offering enables quicker setup and subscription pricing, while our Data Center offering permits more customization, a term license fee structure, and complete application control. Although a substantial majority of our revenue was historically generated from customers using our Server and Data Center products, over time our customers have moved and we expect them to continue to move to our Cloud offerings, resulting in our Cloud offerings becoming more central to our distribution model. As a part of this transition, we ceased sales of new perpetual licenses for our Server products in February 2021 and, subject to limited exceptions, ended maintenance and support for Server products in February 2024. 

We may be subject to additional competitive and pricing pressures for our Cloud offerings compared to our Data Center offerings, which could harm our business. Further, revenues from our Cloud offerings are typically lower in the initial year compared to our Data Center offerings, which may impact our near-term revenue growth rates and margins, and we incur higher or additional costs to supply our Cloud offerings, such as fees associated with hosting our Cloud infrastructure. We have and expect to continue to see increased expenses and lower margins due to such hosting costs increasing in this transition. Our strategy to provide our AI tools at no or low cost to the majority of our Cloud customers may further increase these hosting costs without corresponding revenue increases. Additionally, we offered discounts to certain of our enterprise-level Server customers to incentivize migration to our Cloud offerings, which impacted our near-term revenue growth. Our revenue growth rates and profitability may also be negatively impacted by Server customers that did not transition to our Cloud or Data Center offerings or Data Center customers that do not migrate to our Cloud offerings in the future. If our Cloud offerings do not develop as quickly as we expect, if we are unable to continue to scale our systems to meet the requirements of successful, large Cloud offerings, or if we lose customers currently using our Data Center products due to our increased focus on our Cloud offerings or our inability to successfully migrate them to our Cloud offerings, our business could be harmed. We are directing a significant portion of our financial and operating resources to implement robust Cloud offerings and to migrate our existing customers to our Cloud offerings, but even if we continue to make these investments, we may be unsuccessful in growing or implementing our Cloud offering