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Classified in: Science and technology, Business
Subjects: EARNINGS, Conference Call, Webcast

Atlassian Announces Fourth Quarter and Fiscal Year 2021 Results


Atlassian Corporation Plc (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for its fourth quarter and fiscal year ended June 30, 2021 and released a shareholder letter available on Atlassian's Work Life blog at http://atlassian.com/blog/announcements/shareholder-letter-q4fy21. The shareholder letter was also posted to the Investor Relations section of Atlassian's website at https://investors.atlassian.com.

"Our Q4 was a ripper of a quarter - as we Aussies say - as we added over 23,000 new customers, grew subscription revenue 50 percent year-over-year, and continued to see cloud momentum build," said Mike Cannon-Brookes, Atlassian's co-founder and co-CEO. "We are incredibly proud of our resilience and execution during fiscal 2021. We continued to innovate with five new products built on top of our cloud platform, surpassed 200,000 customers and $2 billion in revenue, and added over 1,500 new Atlassians to the team."

"Looking ahead to fiscal 2022 and beyond, the opportunities in front of Atlassian have never been greater," said Scott Farquhar, Atlassian's co-founder and co-CEO. "We are reimagining the future of work and are keen to seize the massive opportunities that we see across our three core markets: agile development; IT service management; and work management for all teams. We will continue to put in the hard yards to execute and advance on our mission to unleash the potential of every team."

Fourth Quarter Fiscal Year 2021 Financial Highlights:

On an IFRS basis, Atlassian reported:

On a non-IFRS basis, Atlassian reported:

Fiscal Year 2021 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 first quarter of fiscal year 2022 as follows:

First Quarter Fiscal Year 2022:

For additional commentary regarding financial targets, please see Atlassian's fourth quarter fiscal year 2021 shareholder letter dated July 29, 2021.

With respect to Atlassian's expectations under "Financial Targets" above, a reconciliation of IFRS to non-IFRS gross margin, operating margin, and net income per diluted share, 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 http://atlassian.com/blog/announcements/shareholder-letter-q4fy21, and the Investor Relations section of Atlassian's website at: https://investors.atlassian.com. Atlassian will host a webcast 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 236,000 customers, across large and small organizations - including Bank of America, Redfin, NASA, Verizon, and Dropbox - 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, Jira Service Management, Trello, Bitbucket, 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, outlook, 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, and net income (loss) per diluted share.

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 results of operations. 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 a discrete tax impact resulting from a non-recurring transaction 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 a discrete tax impact resulting from a non-recurring transaction allow for more meaningful comparisons between our results of operations 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 June 30,

 

Fiscal Year Ended June 30,

 

2021

 

2020

 

2021

 

2020

Revenues:

 

 

 

 

 

 

 

Subscription

$

385,510

 

 

$

257,521

 

 

$

1,324,064

 

 

$

931,455

 

Maintenance

131,080

 

 

122,774

 

 

522,971

 

 

469,350

 

Perpetual license

9,237

 

 

20,365

 

 

84,806

 

 

95,162

 

Other

33,712

 

 

29,816

 

 

157,291

 

 

118,206

 

Total revenues

559,539

 

 

430,476

 

 

2,089,132

 

 

1,614,173

 

Cost of revenues (1) (2)

97,967

 

 

70,112

 

 

336,021

 

 

268,807

 

Gross profit

461,572

 

 

360,364

 

 

1,753,111

 

 

1,345,366

 

Operating expenses:

 

 

 

 

 

 

 

Research and development (1) (2)

245,929

 

 

210,738

 

 

963,326

 

 

763,188

 

Marketing and sales (1) (2)

133,429

 

 

77,892

 

 

372,909

 

 

299,683

 

General and administrative (1)

89,740

 

 

75,014

 

 

315,242

 

 

268,409

 

Total operating expenses

469,098

 

 

363,644

 

 

1,651,477

 

 

1,331,280

 

Operating income (loss)

(7,526

)

 

(3,280

)

 

101,634

 

 

14,086

 

Other non-operating expense, net

(199,401

)

 

(383,234

)

 

(620,759

)

 

(338,486

)

Finance income

1,008

 

 

3,390

 

 

7,174

 

 

27,801

 

Finance costs

(8,099

)

 

(12,484

)

 

(122,713

)

 

(49,610

)

Loss before income tax benefit (expense)

(214,018

)

 

(395,608

)

 

(634,664

)

 

(346,209

)

Income tax benefit (expense)

945

 

 

10,385

 

 

(61,651

)

 

(4,445

)

Net loss

$

(213,073

)

 

$

(385,223

)

 

$

(696,315

)

 

$

(350,654

)

Net loss per share attributable to ordinary shareholders:

 

 

 

 

 

 

 

Basic

$

(0.85

)

 

$

(1.56

)

 

$

(2.79

)

 

$

(1.43

)

Diluted

$

(0.85

)

 

$

(1.56

)

 

$

(2.79

)

 

$

(1.43

)

Weighted-average shares outstanding used to compute net loss per share attributable to ordinary shareholders:

 

 

 

 

 

 

 

Basic

251,264

 

 

246,909

 

 

249,679

 

 

244,844

 

Diluted

251,264

 

 

246,909

 

 

249,679

 

 

244,844

 

 

(1) Amounts include share-based payment expense, as follows:

 

Three Months Ended June 30,

 

Fiscal Year Ended June 30,

 

2021

 

2020

 

2021

 

2020

Cost of revenues

$

6,187

 

 

$

5,133

 

 

$

24,739

 

 

$

19,787

 

Research and development

55,093

 

 

52,162

 

 

253,328

 

 

204,150

 

Marketing and sales

16,754

 

 

9,058

 

 

46,978

 

 

41,960

 

General and administrative

16,011

 

 

11,786

 

 

60,687

 

 

47,498

 

 

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

 

Three Months Ended June 30,

 

Fiscal Year Ended June 30,

 

2021

 

2020

 

2021

 

2020

Cost of revenues

$

6,008

 

 

$

5,203

 

 

$

22,394

 

 

$

29,509

 

Research and development

44

 

 

42

 

 

168

 

 

166

 

Marketing and sales

2,298

 

 

2,349

 

 

9,192

 

 

12,860

 

Atlassian Corporation Plc

Consolidated Statements of Financial Position

(U.S. $ in thousands)

 

 

June 30, 2021

 

June 30, 2020

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

919,227

 

 

$

1,479,969

 

Short-term investments

313,001

 

 

676,072

 

Trade receivables

173,473

 

 

112,019

 

Tax receivables

2,332

 

 

1,509

 

Derivative assets

127,486

 

 

327,487

 

Prepaid expenses and other current assets

48,322

 

 

46,730

 

 

1,583,841

 

 

2,643,786

 

Assets held for sale

43,665

 

 

?

 

Total current assets

1,627,506

 

 

2,643,786

 

Non-current assets:

 

 

 

Property and equipment, net

66,221

 

 

97,648

 

Deferred tax assets

36,174

 

 

35,351

 

Goodwill

725,758

 

 

645,140

 

Intangible assets, net

124,590

 

 

129,690

 

Right-of-use assets, net

205,300

 

 

217,683

 

Other non-current assets

159,795

 

 

124,774

 

Total non-current assets

1,317,838

 

 

1,250,286

 

Total assets

$

2,945,344

 

 

$

3,894,072

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Trade and other payables

$

266,497

 

 

$

202,570

 

Tax liabilities

42,051

 

 

19,583

 

Provisions

25,148

 

 

14,291

 

Deferred revenue

812,943

 

 

573,813

 

Lease obligations

42,446

 

 

34,743

 

Derivative liabilities

772,127

 

 

1,284,596

 

Exchangeable senior notes, net

348,799

 

 

889,183

 

Total current liabilities

2,310,011

 

 

3,018,779

 

Non-current liabilities:

 

 

 

Deferred tax liabilities

26,625

 

 

31,304

 

Provisions

12,435

 

 

9,493

 

Deferred revenue

84,652

 

 

27,192

 

Lease obligations

214,103

 

 

229,825

 

Other non-current liabilities

2,604

 

 

2,173

 

Total non-current liabilities

340,419

 

 

299,987

 

Total liabilities

2,650,430

 

 

3,318,766

 

Equity

 

 

 

Share capital

25,164

 

 

24,744

 

Share premium

461,016

 

 

459,892

 

Other capital reserves

1,516,609

 

 

1,130,918

 

Other components of equity

104,832

 

 

76,144

 

Accumulated deficit

(1,812,707

)

 

(1,116,392

)

Total equity

294,914

 

 

575,306

 

Total liabilities and equity

$

2,945,344

 

 

$

3,894,072

 

Atlassian Corporation Plc

Consolidated Statements of Cash Flows

(U.S. $ in thousands)

(unaudited)

 

 

Three Months Ended June 30,

 

Fiscal Year Ended June 30,

 

2021

 

2020

 

2021

 

2020

Operating activities

 

 

 

 

 

 

 

Loss before income tax benefit (expense)

$

(214,018

)

 

$

(395,608

)

 

$

(634,664

)

 

$

(346,209

)

Adjustments to reconcile loss before income tax benefit (expense) to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

14,172

 

 

13,123

 

 

55,296

 

 

62,271

 

Depreciation of right-of-use assets

9,542

 

 

8,955

 

 

37,552

 

 

35,127

 

Share-based payment expense

94,045

 

 

78,139

 

 

385,732

 

 

313,395

 

Net loss on exchange derivative and capped call transactions

200,513

 

 

382,696

 

 

616,446

 

 

335,953

 

Amortization of debt discount and issuance cost

5,246

 

 

9,063

 

 

109,548

 

 

35,608

 

Interest income

(1,008

)

 

(3,390

)

 

(7,174

)

 

(27,801

)

Interest expense

2,852

 

 

3,421

 

 

13,164

 

 

14,002

 

Net unrealized foreign currency loss (gain)

(2,525

)

 

1,670

 

 

7,650

 

 

(1,503

)

Impairment of lease-related assets

7,435

 

 

?

 

 

7,435

 

 

?

 

Net unrealized loss on investments

?

 

 

?

 

 

2,000

 

 

?

 

Loss (gain) on sale of investments, disposal of assets and other

9

 

 

(138

)

 

1,144

 

 

(993

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

Trade receivables

19,687

 

 

(18,229

)

 

(61,256

)

 

(29,440

)

Prepaid expenses and other assets

(2,002

)

 

(3,014

)

 

(13,054

)

 

(10,608

)

Trade and other payables, provisions and other non-current liabilities

31,676

 

 

26,080

 

 

64,899

 

 

51,532

 

Deferred revenue

23,558

 

 

17,798

 

 

294,371

 

 

131,535

 

Interest received

2,041

 

 

4,801

 

 

12,513

 

 

29,217

 

Income tax paid, net

(6,856

)

 

(2,026

)

 

(50,272

)

 

(17,876

)

Net cash provided by operating activities

184,367

 

 

123,341

 

 

841,330

 

 

574,210

 

Investing activities

 

 

 

 

 

 

 

Business combinations, net of cash acquired

(7,960

)

 

(15,229

)

 

(91,584

)

 

(53,212

)

Purchases of intangible assets

(1,800

)

 

?

 

 

(1,800

)

 

?

 

Purchases of property and equipment

(8,790

)

 

(15,844

)

 

(31,520

)

 

(35,709

)

Purchases of investments

(25,912

)

 

(34,450

)

 

(119,431

)

 

(985,931

)

Proceeds from maturities of investments

124,447

 

 

88,011

 

 

454,996

 

 

513,268

 

Proceeds from sales of investments

?

 

 

7,857

 

 

48,786

 

 

245,498

 

Increase in restricted cash

(456

)

 

(2,085

)

 

(2,618

)

 

(2,085

)

Payment of deferred consideration

?

 

 

(760

)

 

(185

)

 

(760

)

Net cash provided by (used in) investing activities

79,529

 

 

27,500

 

 

256,644

 

 

(318,931

)

Financing activities

 

 

 

 

 

 

 

Proceeds from exercise of share options

5

 

 

317

 

 

1,163

 

 

1,802

 

Payments of lease obligations

(11,336

)

 

(11,790

)

 

(44,874

)

 

(38,125

)

Payment of issuance costs for credit facility

?

 

 

?

 

 

(4,445

)

 

?

 

Interest paid

(2,282

)

 

(3,125

)

 

(6,498

)

 

(6,250

)

Repayment of exchangeable senior notes

(540,197

)

 

?

 

 

(1,803,244

)

 

(2

)

Proceeds from settlement of capped call transactions

67,012

 

 

?

 

 

203,093

 

 

?

 

Net cash used in financing activities

(486,798

)

 

(14,598

)

 

(1,654,805

)

 

(42,575

)

Effect of exchange rate changes on cash and cash equivalents

(4

)

 

5,533

 

 

5,406

 

 

(1,176

)

Net increase (decrease) in cash and cash equivalents

(222,906

)

 

141,776

 

 

(551,425

)

 

211,528

 

Cash and cash equivalents at beginning of period

1,151,450

 

 

1,338,193

 

 

1,479,969

 

 

1,268,441

 

Cash and cash equivalents included in assets held for sale

(9,317

)

 

?

 

 

(9,317

)

 

?

 

Cash and cash equivalents at end of period

$

919,227

 

 

$

1,479,969

 

 

$

919,227

 

 

$

1,479,969

 

Atlassian Corporation Plc

Reconciliation of IFRS to Non-IFRS Results

(U.S. $ and shares in thousands, except per share data)

(unaudited)

 

 

Three Months Ended June 30,

 

Fiscal Year Ended June 30,

 

2021

 

2020

 

2021

 

2020

Gross profit

 

 

 

 

 

 

 

IFRS gross profit

$

461,572

 

 

$

360,364

 

 

$

1,753,111

 

 

$

1,345,366

 

Plus: Share-based payment expense

6,187

 

 

5,133

 

 

24,739

 

 

19,787

 

Plus: Amortization of acquired intangible assets

6,008

 

 

5,203

 

 

22,394

 

 

29,509

 

Non-IFRS gross profit

$

473,767

 

 

$

370,700

 

 

$

1,800,244

 

 

$

1,394,662

 

Operating income

 

 

 

 

 

 

 

IFRS operating income (loss)

$

(7,526

)

 

$

(3,280

)

 

$

101,634

 

 

$

14,086

 

Plus: Share-based payment expense

94,045

 

 

78,139

 

 

385,732

 

 

313,395

 

Plus: Amortization of acquired intangible assets

8,350

 

 

7,594

 

 

31,754

 

 

42,535

 

Non-IFRS operating income

$

94,869

 

 

$

82,453

 

 

$

519,120

 

 

$

370,016

 

Net income

 

 

 

 

 

 

 

IFRS net loss

$

(213,073

)

 

$

(385,223

)

 

$

(696,315

)

 

$

(350,654

)

Plus: Share-based payment expense

94,045

 

 

78,139

 

 

385,732

 

 

313,395

 

Plus: Amortization of acquired intangible assets

8,350

 

 

7,594

 

 

31,754

 

 

42,535

 

Plus: Non-coupon impact related to exchangeable senior notes and capped calls

203,588

 

 

391,759

 

 

723,823

 

 

371,561

 

Less: Income tax effects and adjustments

(30,672

)

 

(29,256

)

 

(87,417

)

 

(88,030

)

Non-IFRS net income

$

62,238

 

 

$

63,013

 

 

$

357,577

 

 

$

288,807

 

Net income per share

 

 

 

 

 

 

 

IFRS net loss per share - diluted

$

(0.85

)

 

$

(1.56

)

 

$

(2.79

)

 

$

(1.43

)

Plus: Share-based payment expense

0.37

 

 

0.33

 

 

1.51

 

 

1.27

 

Plus: Amortization of acquired intangible assets

0.03

 

 

0.03

 

 

0.12

 

 

0.17

 

Plus: Non-coupon impact related to exchangeable senior notes and capped calls

0.81

 

 

1.57

 

 

2.90

 

 

1.49

 

Less: Income tax effects and adjustments

(0.12

)

 

(0.12

)

 

(0.34

)

 

(0.35

)

Non-IFRS net income per share - diluted

$

0.24

 

 

$

0.25

 

 

$

1.40

 

 

$

1.15

 

Weighted-average diluted shares outstanding

 

 

 

 

 

 

 

Weighted-average shares used in computing diluted IFRS net loss per share

251,264

 

 

246,909

 

 

249,679

 

 

244,844

 

Plus: Dilution from share options and RSUs (1)

4,216

 

 

6,000

 

 

5,041

 

 

6,811

 

Weighted-average shares used in computing diluted non-IFRS net income per share

255,480

 

 

252,909

 

 

254,720

 

 

251,655

 

Free cash flow

 

 

 

 

 

 

 

IFRS net cash provided by operating activities

$

184,367

 

 

$

123,341

 

 

$

841,330

 

 

$

574,210

 

Less: Capital expenditures

(8,790

)

 

(15,844

)

 

(31,520

)

 

(35,709

)

Less: Payments of lease obligations

(11,336

)

 

(11,790

)

 

(44,874

)

 

(38,125

)

Free cash flow

$

164,241

 

 

$

95,707

 

 

$

764,936

 

 

$

500,376

 

(1) The effects of these dilutive securities were not included in the IFRS calculation of diluted net loss per share for the three months and fiscal year ended June 30, 2021 and 2020 because the effect would have been anti-dilutive.

Atlassian Corporation Plc

Reconciliation of IFRS to Non-IFRS Financial Targets

(U.S. $)

 

 

Three Months Ending
September 30, 2021

Revenue

$575 million to $590 million

 

 

IFRS gross margin

83%

Plus: Share-based payment expense

1

Plus: Amortization of acquired intangible assets

1

Non-IFRS gross margin

85%

 

 

IFRS operating margin

5%

Plus: Share-based payment expense

19

Plus: Amortization of acquired intangible assets

1

Non-IFRS operating margin

25%

 

 

IFRS net income per share - diluted

$0.09 to $0.10

Plus: Share-based payment expense

0.42

Plus: Amortization of acquired intangible assets

0.03

Plus: Non-coupon impact related to exchangeable senior notes and capped calls

0.01

Less: Income tax effects and adjustments

(0.17)

Non-IFRS net income per share - diluted

$0.38 to $0.39

 

 

Weighted-average shares used in computing diluted IFRS and non-IFRS net income per share

254 million to 256 million

 


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