Atlassian Corporation Plc (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for its first quarter of fiscal 2020 ended September 30, 2019 and released a shareholder letter on the Investor Relations section of its website at https://investors.atlassian.com.
"We're out of the blocks in good form in fiscal 2020," said Mike Cannon-Brookes, Atlassian's co-founder and co-CEO. "We updated Atlassian's Cloud platform in a big way with new Free and Premium editions. Our disruptive model continues to win new customers, both large and small, and these new editions offer them more choice and capabilities. Premium also showcases the increased sophistication of our enterprise cloud offerings, giving large companies the flexibility and the tools they need."
"We are also excited to announce that Atlassian has acquired Code Barrel, the creator of Automation for Jira," said Scott Farquhar, Atlassian's co-founder and co-CEO. "Automation for Jira is already used by thousands of organizations to help them reduce repetitive work and unleash the potential of their teams. This acquisition is an important step as we continue to enhance our cloud products."
First Quarter Fiscal Year 2020 Financial Highlights:
On an IFRS basis, Atlassian reported:
On a non-IFRS basis, Atlassian reported:
A reconciliation of IFRS to non-IFRS 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-IFRS Financial Measures."
Recent Business Highlights
Financial Targets:
Atlassian is providing its financial targets for the second quarter and full fiscal year 2020. The company's financial targets are as follows:
With respect to Atlassian's expectations under "Financial Targets" above, a reconciliation of IFRS to non-IFRS gross margin, operating margin, net income (loss) per diluted share, and free cash flow has been provided in the financial statement tables included in this press release.
Shareholder Letter and Webcast/Conference Call Details
A detailed shareholder letter is available on the Investor Relations section of Atlassian's website at: https://investors.atlassian.com. Atlassian will host a webcast and conference call to answer questions today:
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 team collaboration and productivity software helps teams organize, discuss, and complete shared work. Teams at more than 159,000 customers, across large and small organizations - including General Motors, Walmart Labs, Bank of America Merrill Lynch, Lyft, Verizon, Spotify and NASA - use Atlassian's project tracking, content creation and sharing, and service management products to work better together and deliver quality results on time. Learn more about our products, including Jira Software, Confluence, Trello, Bitbucket, Opsgenie, Jira Service Desk, and Jira Align at https://atlassian.com/.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. All statements other than statements of historical fact could be deemed forward looking, including risks and uncertainties related to statements about our products, customers, anticipated growth, anticipated benefits of the Code Barrel acquisition, technology and other key strategic areas, and our financial targets such as revenue, share count, and IFRS and non-IFRS financial measures including gross margin, operating margin, net income (loss) per diluted share, and free cash flow.
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 from time to time, including the section titled "Risk Factors" in our most recent Forms 20-F and 6-K (reporting our quarterly results). These documents are available on the SEC Filings section of the Investor Relations section of our website at: https://investors.atlassian.com/.
About Non-IFRS Financial Measures
Our reported results and financial targets include certain non-IFRS financial measures, including non-IFRS gross profit, non-IFRS operating income, non-IFRS net income, non-IFRS net income per diluted share, and free cash flow. Management believes that the use of these non-IFRS financial measures provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our results of operations, and also facilitates comparisons with peer companies, many of which use similar non-IFRS or non-GAAP financial measures to supplement their IFRS or GAAP results. Non-IFRS results are presented for supplemental informational purposes only to aid in understanding our operating results. The non-IFRS results should not be considered a substitute for financial information presented in accordance with IFRS, and may be different from non-IFRS or non-GAAP measures used by other companies.
Our non-IFRS financial measures include:
Our non-IFRS financial measures reflect adjustments based on the items below:
We exclude expenses related to share-based compensation, amortization of acquired intangible assets, non-coupon impact related to exchangeable senior notes and capped calls, the related income tax effects on these items, and changes in our assessment regarding the realizability of our deferred tax assets from certain of our non-IFRS financial measures as we believe this helps investors understand our operational performance. In addition, share-based compensation expense can be difficult to predict and varies from period to period and company to company due to differing valuation methodologies, subjective assumptions, and the variety of equity instruments, as well as changes in stock price. Management believes that providing non-IFRS financial measures that exclude share-based compensation expense, amortization of acquired intangible assets, non-coupon impact related to exchangeable senior notes and capped calls, the related income tax effects on these items, and changes in our assessment regarding the realizability of our deferred tax assets allow for more meaningful comparisons between our operating results from period to period.
Management considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening our statement of financial position.
Management uses non-IFRS gross profit, non-IFRS operating income, non-IFRS net income, non-IFRS net income per diluted share, and free cash flow:
The tables in this press release titled "Reconciliation of IFRS to Non-IFRS Results" and "Reconciliation of IFRS to Non-IFRS Financial Targets" provide reconciliations of non-IFRS financial measures to the most recent directly comparable financial measures calculated and presented in accordance with IFRS.
We understand that although non-IFRS gross profit, non-IFRS operating income, non-IFRS net income, non-IFRS net income per diluted share, and free cash flow are frequently used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS.
Atlassian Corporation Plc Consolidated Statements of Operations (U.S. $ and shares in thousands, except per share data) (unaudited) |
|||||||||||
|
Three Months Ended
|
||||||||||
|
2019 |
|
2018 |
||||||||
Revenues: |
|
|
|
||||||||
Subscription |
$ |
201,095 |
|
|
$ |
134,065 |
|
||||
Maintenance |
110,071 |
|
|
92,736 |
|
||||||
Perpetual license |
24,744 |
|
|
21,839 |
|
||||||
Other |
27,480 |
|
|
18,652 |
|
||||||
Total revenues |
363,390 |
|
|
267,292 |
|
||||||
Cost of revenues (1) (2) |
62,279 |
|
|
45,185 |
|
||||||
Gross profit |
301,111 |
|
|
222,107 |
|
||||||
Operating expenses: |
|
|
|
||||||||
Research and development (1) (2) |
175,882 |
|
|
124,380 |
|
||||||
Marketing and sales (1) (2) |
68,043 |
|
|
52,262 |
|
||||||
General and administrative (1) |
61,741 |
|
|
45,657 |
|
||||||
Total operating expenses |
305,666 |
|
|
222,299 |
|
||||||
Operating loss |
(4,555 |
) |
|
(192 |
) |
||||||
Other non-operating income (expense), net |
82,235 |
|
|
(237,248 |
) |
||||||
Finance income |
9,112 |
|
|
7,266 |
|
||||||
Finance costs |
(12,327 |
) |
|
(9,902 |
) |
||||||
Income (loss) before income tax expense |
74,465 |
|
|
(240,076 |
) |
||||||
Income tax expense |
(5,145 |
) |
|
(2,369 |
) |
||||||
Net income (loss) |
$ |
69,320 |
|
|
$ |
(242,445 |
) |
||||
Net income (loss) per share attributable to ordinary shareholders: |
|
|
|
||||||||
Basic |
$ |
0.29 |
|
|
$ |
(1.03 |
) |
||||
Diluted |
$ |
0.28 |
|
|
$ |
(1.03 |
) |
||||
Weighted-average shares outstanding used to compute net income (loss) per share attributable to ordinary shareholders: |
|
|
|
||||||||
Basic |
242,791 |
|
|
236,219 |
|
||||||
Diluted |
250,883 |
|
|
236,219 |
|
||||||
(1) Amounts include share-based payment expense, as follows: |
|||||||||||
|
Three Months Ended
|
||||||||||
|
2019 |
|
2018 |
||||||||
Cost of revenues |
$ |
4,712 |
|
|
$ |
3,519 |
|
||||
Research and development |
48,939 |
|
|
26,846 |
|
||||||
Marketing and sales |
10,631 |
|
|
7,761 |
|
||||||
General and administrative |
13,014 |
|
|
10,254 |
|
||||||
(2) Amounts include amortization of acquired intangible assets, as follows: |
|||||||||||
|
Three Months Ended
|
||||||||||
|
2019 |
|
2018 |
||||||||
Cost of revenues |
$ |
8,488 |
|
|
$ |
5,351 |
|
||||
Research and development |
41 |
|
|
? |
|
||||||
Marketing and sales |
3,686 |
|
|
8,988 |
|
Atlassian Corporation Plc Consolidated Statements of Financial Position (U.S. $ in thousands) |
|||||||
|
September 30, 2019 |
|
June 30, 2019 |
||||
|
(unaudited) |
|
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
1,187,191 |
|
|
$ |
1,268,441 |
|
Short-term investments |
587,496 |
|
|
445,046 |
|
||
Trade receivables |
99,351 |
|
|
82,525 |
|
||
Tax receivables |
1,496 |
|
|
707 |
|
||
Derivative assets |
214,342 |
|
|
215,156 |
|
||
Prepaid expenses and other current assets |
47,915 |
|
|
30,236 |
|
||
Total current assets |
2,137,791 |
|
|
2,042,111 |
|
||
Non-current assets: |
|
|
|
||||
Property and equipment, net |
80,735 |
|
|
81,459 |
|
||
Deferred tax assets |
14,226 |
|
|
17,084 |
|
||
Goodwill |
609,648 |
|
|
608,907 |
|
||
Intangible assets, net |
138,760 |
|
|
150,975 |
|
||
Right-of-use assets, net |
236,688 |
|
|
? |
|
||
Other non-current assets |
62,752 |
|
|
76,722 |
|
||
Total non-current assets |
1,142,809 |
|
|
935,147 |
|
||
Total assets |
$ |
3,280,600 |
|
|
$ |
2,977,258 |
|
Liabilities |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Trade and other payables |
$ |
125,435 |
|
|
$ |
159,487 |
|
Current tax liabilities |
11,993 |
|
|
11,703 |
|
||
Provisions |
9,205 |
|
|
8,983 |
|
||
Deferred revenue |
469,439 |
|
|
440,954 |
|
||
Lease obligations |
30,914 |
|
|
? |
|
||
Derivative liabilities |
777,838 |
|
|
855,005 |
|
||
Current portion of exchangeable senior notes, net |
862,318 |
|
|
853,576 |
|
||
Total current liabilities |
2,287,142 |
|
|
2,329,708 |
|
||
Non-current liabilities: |
|
|
|
||||
Deferred tax liabilities |
10,325 |
|
|
13,872 |
|
||
Provisions |
6,248 |
|
|
6,082 |
|
||
Deferred revenue |
30,937 |
|
|
27,866 |
|
||
Lease obligations |
251,381 |
|
|
? |
|
||
Other non-current liabilities |
319 |
|
|
34,263 |
|
||
Total non-current liabilities |
299,210 |
|
|
82,083 |
|
||
Total liabilities |
2,586,352 |
|
|
2,411,791 |
|
||
Equity |
|
|
|
||||
Share capital |
24,356 |
|
|
24,199 |
|
||
Share premium |
458,796 |
|
|
458,166 |
|
||
Other capital reserves |
893,913 |
|
|
816,660 |
|
||
Other components of equity |
13,601 |
|
|
32,079 |
|
||
Accumulated deficit |
(696,418 |
) |
|
(765,637 |
) |
||
Total equity |
694,248 |
|
|
565,467 |
|
||
Total liabilities and equity |
$ |
3,280,600 |
|
|
$ |
2,977,258 |
Atlassian Corporation Plc Consolidated Statements of Cash Flows (U.S. $ in thousands) (unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
2019 |
|
2018 |
||||
Operating activities |
|
|
|
||||
Income (loss) before income tax expense |
$ |
74,465 |
|
|
$ |
(240,076 |
) |
Adjustments to reconcile income (loss) before income tax expense to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
16,657 |
|
|
17,415 |
|
||
Depreciation of right-of-use assets |
8,358 |
|
|
? |
|
||
(Gain) loss on sale of investments and other assets |
(47 |
) |
|
10 |
|
||
Net unrealized foreign currency gain |
(2,237 |
) |
|
(422 |
) |
||
Share-based payment expense |
77,296 |
|
|
48,380 |
|
||
Net unrealized (gain) loss on exchange derivative and capped call transactions |
(82,103 |
) |
|
236,353 |
|
||
Amortization of debt discount and issuance cost |
8,742 |
|
|
8,333 |
|
||
Interest income |
(9,112 |
) |
|
(7,266 |
) |
||
Interest expense |
3,583 |
|
|
1,570 |
|
||
Changes in assets and liabilities: |
|
|
|
||||
Trade receivables |
(16,837 |
) |
|
(5,371 |
) |
||
Prepaid expenses and other assets |
(8,597 |
) |
|
1,678 |
|
||
Trade and other payables, provisions and other non-current liabilities |
(31,829 |
) |
|
(14,278 |
) |
||
Deferred revenue |
31,556 |
|
|
21,648 |
|
||
Interest received |
8,679 |
|
|
6,740 |
|
||
(Income tax paid) tax refunds received, net |
(2,383 |
) |
|
10,215 |
|
||
Net cash provided by operating activities |
76,191 |
|
|
84,929 |
|
||
Investing activities |
|
|
|
||||
Business combinations, net of cash acquired |
(815 |
) |
|
? |
|
||
Purchases of intangible assets |
? |
|
|
(850 |
) |
||
Purchases of property and equipment |
(6,113 |
) |
|
(10,716 |
) |
||
Proceeds from sales of property, equipment and intangible assets |
? |
|
|
721 |
|
||
Purchases of investments |
(323,756 |
) |
|
(64,441 |
) |
||
Proceeds from maturities of investments |
122,449 |
|
|
92,333 |
|
||
Proceeds from sales of investments |
59,019 |
|
|
5,521 |
|
||
Net cash (used in) provided by investing activities |
(149,216 |
) |
|
22,568 |
|
||
Financing activities |
|
|
|
||||
Proceeds from exercise of share options |
655 |
|
|
997 |
|
||
Payments of exchangeable senior notes issuance costs |
? |
|
|
(410 |
) |
||
Payments of lease obligations |
(7,670 |
) |
|
? |
|
||
Net cash (used in) provided by financing activities |
(7,015 |
) |
|
587 |
|
||
Effect of exchange rate changes on cash and cash equivalents |
(1,210 |
) |
|
(643 |
) |
||
Net (decrease) increase in cash and cash equivalents |
(81,250 |
) |
|
107,441 |
|
||
Cash and cash equivalents at beginning of period |
1,268,441 |
|
|
1,410,339 |
|
||
Cash and cash equivalents at end of period |
$ |
1,187,191 |
|
|
$ |
1,517,780 |
|
Atlassian Corporation Plc Reconciliation of IFRS to Non-IFRS Results (U.S. $ and shares in thousands, except per share data) (unaudited) |
|||||||
|
Three Months Ended
|
||||||
|
2019 |
|
2018 |
||||
Gross profit |
|
|
|
||||
IFRS gross profit |
$ |
301,111 |
|
|
$ |
222,107 |
|
Plus: Share-based payment expense |
4,712 |
|
|
3,519 |
|
||
Plus: Amortization of acquired intangible assets |
8,488 |
|
|
5,351 |
|
||
Non-IFRS gross profit |
$ |
314,311 |
|
|
$ |
230,977 |
|
Operating income |
|
|
|
||||
IFRS operating loss |
$ |
(4,555 |
) |
|
$ |
(192 |
) |
Plus: Share-based payment expense |
77,296 |
|
|
48,380 |
|
||
Plus: Amortization of acquired intangible assets |
12,215 |
|
|
14,339 |
|
||
Non-IFRS operating income |
$ |
84,956 |
|
|
$ |
62,527 |
|
Net income |
|
|
|
||||
IFRS net income (loss) |
$ |
69,320 |
|
|
$ |
(242,445 |
) |
Plus: Share-based payment expense |
77,296 |
|
|
48,380 |
|
||
Plus: Amortization of acquired intangible assets |
12,215 |
|
|
14,339 |
|
||
Plus: Non-coupon impact related to exchangeable senior notes and capped calls |
(73,361 |
) |
|
244,686 |
|
||
Less: Income tax effects and adjustments |
(15,463 |
) |
|
(15,734 |
) |
||
Non-IFRS net income |
$ |
70,007 |
|
|
$ |
49,226 |
|
Net income per share |
|
|
|
||||
IFRS net income (loss) per share - diluted |
$ |
0.28 |
|
|
$ |
(1.03 |
) |
Plus: Share-based payment expense |
0.31 |
|
|
0.20 |
|
||
Plus: Amortization of acquired intangible assets |
0.05 |
|
|
0.06 |
|
||
Plus: Non-coupon impact related to exchangeable senior notes and capped calls |
(0.29 |
) |
|
1.03 |
|
||
Less: Income tax effects and adjustments |
(0.07 |
) |
|
(0.06 |
) |
||
Non-IFRS net income per share - diluted |
$ |
0.28 |
|
|
$ |
0.20 |
|
Weighted-average diluted shares outstanding |
|
|
|
||||
Weighted-average shares used in computing diluted IFRS net income (loss) per share |
250,883 |
|
|
236,219 |
|
||
Plus: Dilution from share options and RSUs (1) |
? |
|
|
10,576 |
|
||
Weighted-average shares used in computing diluted non-IFRS net income per share |
250,883 |
|
|
246,795 |
|
||
Free cash flow |
|
|
|
||||
IFRS net cash provided by operating activities |
$ |
76,191 |
|
|
$ |
84,929 |
|
Less: Capital expenditures |
(6,113 |
) |
|
(10,716 |
) |
||
Less: Payments of lease obligations |
(7,670 |
) |
|
? |
|
||
Free cash flow (2) |
$ |
62,408 |
|
|
$ |
74,213 |
|
(1) The effects of these dilutive securities were not included in the IFRS calculation of diluted net loss per share for the three months ended September 30, 2018 because the effect would have been anti-dilutive.
(2) As a result of our adoption of IFRS 16 on July 1, 2019, we have updated our definition of free cash flow to subtract payments of lease obligations under IFRS 16. These payments were previously, but no longer, reported in cash provided by operating activities. As a result, free cash flow is not affected by this change.
Atlassian Corporation Plc Reconciliation of IFRS to Non-IFRS Financial Targets (U.S. $) |
|||
|
Three Months Ending
|
|
Fiscal Year Ending
|
Revenue |
$386 million to $390 million |
|
$1,560 million to $1,574 million |
|
|
|
|
IFRS gross margin |
83% |
|
82% to 83% |
Plus: Share-based payment expense |
1 |
|
1 |
Plus: Amortization of acquired intangible assets |
2 |
|
2 |
Non-IFRS gross margin |
86% |
|
85% to 86% |
|
|
|
|
IFRS operating margin |
(1%) |
|
(3%) |
Plus: Share-based payment expense |
20 |
|
20 |
Plus: Amortization of acquired intangible assets |
3 |
|
3 |
Non-IFRS operating margin |
22% |
|
20% |
|
|
|
|
IFRS net (loss) income per share - diluted |
($0.03) |
|
$0.01 |
Plus: Share-based payment expense |
0.29 |
|
1.25 |
Plus: Amortization of acquired intangible assets |
0.05 |
|
0.16 |
Plus: Non-coupon impact related to exchangeable senior notes and capped calls |
0.04 |
|
(0.18) |
Less: Income tax effects and adjustments |
(0.08) |
|
(0.24) |
Non-IFRS net income per share - diluted |
$0.27 |
|
$1.00 |
|
|
|
|
Weighted-average shares used in computing diluted IFRS net (loss) income per share |
243 million to 244 million |
|
253 million to 255 million |
Dilution from share options and RSUs (1) |
8 million |
|
? |
Weighted-average shares used in computing diluted non-IFRS net income per share |
251 million to 252 million |
|
253 million to 255 million |
|
|
|
|
IFRS net cash provided by operating activities |
|
|
$525 million to $535 million |
Less: Capital expenditures |
|
|
(30 million) |
Less: Payments of lease obligations |
|
|
(30 million) |
Free cash flow (2) |
|
|
$465 million to $475 million |
(1) The effects of these dilutive securities are not included in our IFRS calculation of diluted net loss per share for the three months ending December 31, 2019 because the effect would be anti-dilutive.
(2) As a result of our adoption of IFRS 16 on July 1, 2019, we have updated our definition of free cash flow to subtract payments of lease obligations under IFRS 16. These payments were previously, but no longer, reported in cash provided by operating activities. As a result, free cash flow is not affected by this change.
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