Atlassian Announces Second Quarter Fiscal Year 2023 Results

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Quarterly revenue of $873 million, up 27% year-over-year

Quarterly subscription revenue of $711 million, up 40% year-over-year

Quarterly GAAP operating margin of (11)% and non-GAAP operating margin of 20%

Quarterly cash flow from operations of $151 million and free cash flow of $146 million

Atlassian Corporation TEAM, a leading provider of team collaboration and productivity software, today announced financial results for its second quarter of fiscal year 2023 ended December 31, 2022 and released a shareholder letter available on Atlassian's Work Life blog at http://atlassian.com/blog/announcements/shareholder-letter-q2fy23. The shareholder letter was also posted to the Investor Relations section of Atlassian's website at https://investors.atlassian.com.

"We closed out 2022 with quarterly revenue of $873 million, up 27% year-over-year, driven by subscription revenue growth of 40% year-over-year," said Scott Farquhar, Atlassian's co-founder and co-CEO. "We are proud of everything we have accomplished in yet another unpredictable year. 2023 will be all about helping our customers navigate these challenging times, absorbing the macro-driven impacts on our business, and setting Atlassian up for long-term success."

"Our track record of making smart investment decisions in the service of long-term payoffs continues to yield results as we recently surpassed 45,000 Jira Service Management customers, making it one of our fastest-growing products. On top of that, Atlassian has also been recognized as a Leader by Gartner in the ITSM space," added co-founder and co-CEO Mike Cannon-Brookes. "We'll keep playing offense across our three large markets while being pragmatic."

Second Quarter Fiscal Year 2023 Financial Highlights:

On a GAAP basis, Atlassian reported:

  • Revenue: Total revenue was $872.7 million for the second quarter of fiscal year 2023, up 27% from $688.5 million for the second quarter of fiscal year 2022.
  • Operating Income (Loss) and Operating Margin: Operating loss was $99.2 million for the second quarter of fiscal year 2023, compared with operating income of $23.0 million for the second quarter of fiscal year 2022. Operating margin was (11)% for the second quarter of fiscal year 2023, compared with 3% for the second quarter of fiscal year 2022.
  • Net Loss and Net Loss Per Diluted Share: Net loss was $205.0 million for the second quarter of fiscal year 2023, compared with a net loss of $22.3 million for the second quarter of fiscal year 2022. Net loss per diluted share was $0.80 for the second quarter of fiscal year 2023, compared with a net loss per diluted share of $0.09 for the second quarter of fiscal year 2022. Net loss for the second quarter of fiscal year 2023 includes a non-recurring income tax charge of $83.1 million which increased net loss per diluted share by $0.32.
  • Balance Sheet: Cash and cash equivalents plus short-term investments at the end of the second quarter of fiscal year 2023 totaled $1.7 billion.

On a non-GAAP basis, Atlassian reported:

  • Operating Income and Operating Margin: Operating income was $174.8 million for the second quarter of fiscal year 2023, compared with operating income of $176.8 million for the second quarter of fiscal year 2022. Operating margin was 20% for the second quarter of fiscal year 2023, compared with 26% for the second quarter of fiscal year 2022.
  • Net Income and Net Income Per Diluted Share: Net income was $114.7 million for the second quarter of fiscal year 2023, compared with net income of $110.4 million for the second quarter of fiscal year 2022. Net income per diluted share was $0.45 for the second quarter of fiscal year 2023, compared with net income per diluted share of $0.43 for the second quarter of fiscal year 2022.
  • Free Cash Flow: Cash flow from operations was $150.5 million and free cash flow was $146.5 million for the second quarter of fiscal year 2023. Free cash flow margin for the second quarter of fiscal year 2023 was 17%. Cash flow from operations and free cash flow for the second quarter of fiscal year 2023 include a discrete tax payment of $57.0 million. Excluding this payment, cash flow from operations would have been $207.4 million, free cash flow would have been $203.4 million, and free cash flow margin would have been 23%.

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:

  • A Leader in the 2022 Gartner® Magic Quadrant™ for IT Service Management Platforms: Atlassian was named a Leader in the 2022 Gartner Magic Quadrant for IT Service Management Platforms1. Atlassian aims to unlock high-velocity teams across the enterprise with Jira Service Management. Today, Jira Service Management powers service delivery at more than 45,000 customers.
  • Recognized in The Forrester Wave for Collaborative Work Management Tools: Atlassian was recognized as a Strong Performer in The Forrester Wave™: Collaborative Work Management Tools, Q4, 2022. Atlassian's work management solutions for business teams - Trello, Confluence, Jira Work Management, Atlas and Jira Align - enable every team to choose the best tool for their needs. Today, over 150,000 organizations around the world use Atlassian work management products.
  • Recognized in The Forrester Wave for Value Stream Management Solutions: Atlassian was recognized as a Strong Performer in The Forrester Wave™: Value Stream Management Solutions, Q4 2022. Atlassian's product vision spans the entire software delivery organizational chart by leveraging the Jira suite as the centerpiece of its Value Stream Management strategy.
  • Automation for Confluence: Atlassian launched Automation for Confluence, a feature that manages system maintenance so teams can focus on continuous collaboration. Automation gives admins the ability to manage content, organize spaces, streamline teamwork, and notify teams of important updates without the manual overhead.
  • Atlassian Presents: Unleash: Atlassian will hold an agile & DevOps tailored event on February 9, 2023. Discover how Atlassian tools, such as the Jira suite, and the right practices can unleash your team's ability to find success and take opportunities from idea to impact. Unleash will give attendees a unique opportunity to innovate with industry experts, master complexity through collaboration, and bring discovery into the software lifecycle. Unleash will be held in person at the bcc Berlin in Berlin, Germany, as well as virtually. Learn more at https://events.atlassian.com/unleash.
  • Customer Growth: Atlassian ended its second quarter of fiscal year 2023 with a total customer count, on an active subscription or maintenance agreement basis, of 253,177 customers, adding 4,004 net new customers during the quarter.

Share Repurchase Program Authorization

In January 2023, the Board of Directors authorized a program to repurchase up to $1 billion of Atlassian's Class A Common Stock. Atlassian may repurchase shares of Class A Common Stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The share repurchase program does not have a fixed expiration date, may be suspended or discontinued at any time, and does not obligate Atlassian to acquire any amount of Class A Common Stock. The timing, manner, price, and amount of any repurchases will be determined by Atlassian at its discretion and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations.

Financial Targets:

Atlassian is providing its financial targets as follows:

Third Quarter Fiscal Year 2023:

  • Total revenue is expected to be in the range of $890 million to $910 million.
  • Gross margin is expected to be approximately 81% on a GAAP basis and approximately 84% on a non-GAAP basis.
  • Operating margin is expected to be approximately (14%) on a GAAP basis and approximately 15% on a non-GAAP basis.

Fiscal Year 2023:

  • Total revenue growth year-over-year is expected to be approximately 25%.
  • Cloud revenue growth year-over-year is expected to be in the range of 35% to 40%.
  • Operating margin is expected to be approximately (11%) on a GAAP basis and approximately 17% on a non-GAAP basis.

For additional commentary regarding financial targets, please see Atlassian's second quarter fiscal year 2023 shareholder letter dated February 2, 2023.

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-q2fy23, 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 2, 2023 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 250,000 companies of all sizes worldwide - including NASA, Kiva, Deutsche Bank, and Salesforce - 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, Jira Service Management, Trello, Bitbucket, and Jira Align at https://atlassian.com/.

Forward-Looking Statements

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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, customers, macroeconomic environment, anticipated growth, outlook, technology, share repurchase program and other key strategic areas, and our financial targets such as 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, 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 (the "SEC") from time to time, including the section titled "Risk Factors" in our most recently filed Forms 20-F 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 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, non-GAAP operating income, 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. Excludes expenses related to stock-based compensation and amortization of acquired intangible assets.
  • Non-GAAP operating income. 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, non-coupon impact related to exchangeable senior notes and capped calls, gain on a non-cash sale of a controlling interest of a subsidiary and the related income tax effects on these items, and a non-recurring income tax adjustment.
  • 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 Non-GAAP Results" and "Reconciliation of GAAP to Non-GAAP Financial Targets" that present such reconciliations.

Atlassian Corporation

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,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

Subscription

$

711,199

 

 

$

508,987

 

 

$

1,362,183

 

 

$

944,283

 

Maintenance

 

106,023

 

 

 

127,059

 

 

 

219,588

 

 

 

257,649

 

Other

 

55,482

 

 

 

52,480

 

 

 

98,325

 

 

 

100,618

 

Total revenues

 

872,704

 

 

 

688,526

 

 

 

1,680,096

 

 

 

1,302,550

 

Cost of revenues (1) (2)

 

155,945

 

 

 

110,191

 

 

 

295,337

 

 

 

206,447

 

Gross profit

 

716,759

 

 

 

578,335

 

 

 

1,384,759

 

 

 

1,096,103

 

Operating expenses:

 

 

 

 

 

 

 

Research and development (1) (2)

 

473,676

 

 

 

318,569

 

 

 

872,682

 

 

 

590,709

 

Marketing and sales (1) (2)

 

186,191

 

 

 

121,046

 

 

 

346,319

 

 

 

220,375

 

General and administrative (1)

 

156,131

 

 

 

115,678

 

 

 

299,024

 

 

 

205,500

 

Total operating expenses

 

815,998

 

 

 

555,293

 

 

 

1,518,025

 

 

 

1,016,584

 

Operating income (loss)

 

(99,239

)

 

 

23,042

 

 

 

(133,266

)

 

 

79,519

 

Other income (expense), net

 

(6,749

)

 

 

(22,343

)

 

 

22,540

 

 

 

(478,147

)

Interest income

 

8,963

 

 

 

74

 

 

 

14,106

 

 

 

351

 

Interest expense

 

(7,508

)

 

 

(21,022

)

 

 

(13,629

)

 

 

(32,540

)

Loss before income taxes

 

(104,533

)

 

 

(20,249

)

 

 

(110,249

)

 

 

(430,817

)

Provision for income taxes

 

(100,498

)

 

 

(2,079

)

 

 

(108,523

)

 

 

(2,715

)

Net loss

$

(205,031

)

 

$

(22,328

)

 

$

(218,772

)

 

$

(433,532

)

Net loss per share:

 

 

 

 

 

 

 

Basic

$

(0.80

)

 

$

(0.09

)

 

$

(0.86

)

 

$

(1.72

)

Diluted

$

(0.80

)

 

$

(0.09

)

 

$

(0.86

)

 

$

(1.72

)

Weighted-average shares used in computing net loss per share:

 

 

 

 

 

 

 

Basic

 

255,874

 

 

 

252,960

 

 

 

255,520

 

 

 

252,533

 

Diluted

 

255,874

 

 

 

252,960

 

 

 

255,520

 

 

 

252,533

 

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

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

2022

 

2021

 

2022

 

2021

Cost of revenues

$

18,553

 

$

8,453

 

$

29,166

 

$

14,370

Research and development

 

169,342

 

 

90,120

 

 

279,471

 

 

154,402

Marketing and sales

 

38,156

 

 

21,873

 

 

61,351

 

 

36,367

General and administrative

 

39,734

 

 

25,374

 

 

69,428

 

 

41,588

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

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

2022

 

2021

 

2022

 

2021

Cost of revenues

$

5,697

 

$

5,599

 

$

11,394

 

$

11,288

Research and development

 

93

 

 

93

 

 

187

 

 

187

Marketing and sales

 

2,506

 

 

2,266

 

 

5,011

 

 

4,537

Atlassian Corporation

Condensed Consolidated Balance Sheets

(U.S. $ in thousands)

(unaudited)

 

 

December 31, 2022

 

June 30, 2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,636,615

 

 

$

1,385,265

 

Marketable securities

 

36,069

 

 

 

73,294

 

Accounts receivable, net

 

354,844

 

 

 

308,127

 

Assets held for sale

 

 

 

 

60,265

 

Prepaid expenses and other current assets

 

107,232

 

 

 

70,002

 

Total current assets

 

2,134,760

 

 

 

1,896,953

 

Non-current assets:

 

 

 

Property and equipment, net

 

100,334

 

 

 

100,662

 

Operating lease right-of-use assets

 

254,811

 

 

 

277,276

 

Strategic investments

 

237,181

 

 

 

159,064

 

Intangible assets, net

 

84,248

 

 

 

100,840

 

Goodwill

 

723,229

 

 

 

722,838

 

Deferred tax assets

 

7,657

 

 

 

10,335

 

Other non-current assets

 

71,795

 

 

 

58,862

 

Total assets

$

3,614,015

 

 

$

3,326,830

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

130,318

 

 

$

81,220

 

Accrued expenses and other current liabilities

 

308,930

 

 

 

406,139

 

Deferred revenue, current portion

 

1,158,743

 

 

 

1,066,059

 

Operating lease liabilities, current portion

 

46,659

 

 

 

40,638

 

Total current liabilities

 

1,644,650

 

 

 

1,594,056

 

Non-current liabilities:

 

 

 

Deferred revenue, net of current portion

 

115,338

 

 

 

116,621

 

Operating lease liabilities, net of current portion

 

257,653

 

 

 

274,434

 

Term loan facility

 

999,506

 

 

 

999,419

 

Deferred tax liabilities

 

2,489

 

 

 

312

 

Other non-current liabilities

 

16,887

 

 

 

14,616

 

Total liabilities

 

3,036,523

 

 

 

2,999,458

 

Stockholders' equity

 

 

 

Common stock

 

2

 

 

 

2

 

Additional paid-in capital

 

2,621,776

 

 

 

2,182,536

 

Accumulated other comprehensive income

 

43,516

 

 

 

13,864

 

Accumulated deficit

 

(2,087,802

)

 

 

(1,869,030

)

Total stockholders' equity

 

577,492

 

 

 

327,372

 

Total liabilities and stockholders' equity

$

3,614,015

 

 

$

3,326,830

 

Atlassian Corporation

Condensed Consolidated Statements of Cash Flows

(U.S. $ in thousands)

(unaudited)

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

$

(205,031

)

 

$

(22,328

)

 

$

(218,772

)

 

$

(433,532

)

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

 

 

 

 

 

 

 

Depreciation and amortization

 

15,476

 

 

 

12,298

 

 

 

30,096

 

 

 

25,602

 

Stock-based compensation

 

265,785

 

 

 

145,820

 

 

 

439,416

 

 

 

246,727

 

Deferred income taxes

 

3,291

 

 

 

(427

)

 

 

4,813

 

 

 

(2,041

)

Net loss on exchange derivative and capped call transactions

 

 

 

 

 

 

 

 

 

 

424,482

 

Amortization of debt discount and issuance cost

 

117

 

 

 

16,975

 

 

 

235

 

 

 

26,816

 

Net loss on strategic investments

 

7,563

 

 

 

22,135

 

 

 

19,076

 

 

 

53,557

 

Net foreign currency gain

 

(2,203

)

 

 

(5,258

)

 

 

(5,828

)

 

 

(11,656

)

Gain on a non-cash sale of a controlling interest of a subsidiary

 

(2,066

)

 

 

 

 

 

(45,158

)

 

 

 

Other

 

(5

)

 

 

297

 

 

 

(5

)

 

 

(318

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

(107,805

)

 

 

(68,203

)

 

 

(46,491

)

 

 

(68,203

)

Prepaid expenses and other assets

 

(2,690

)

 

 

(25,082

)

 

 

(25,367

)

 

 

(25,082

)

Accounts payable

 

18,587

 

 

 

20,507

 

 

 

49,734

 

 

 

20,507

 

Accrued expenses and other liabilities

 

58,260

 

 

 

(63,287

)

 

 

(50,183

)

 

 

(63,287

)

Deferred revenue

 

101,246

 

 

 

77,884

 

 

 

91,401

 

 

 

77,884

 

Net cash provided by operating activities

 

150,525

 

 

 

206,455

 

 

 

242,967

 

 

 

271,456

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Business combinations, net of cash acquired

 

 

 

 

(2,701

)

 

 

(600

)

 

 

(3,839

)

Purchases of property and equipment

 

(4,040

)

 

 

(12,581

)

 

 

(20,536

)

 

 

(19,462

)

Purchases of strategic investments

 

(1,100

)

 

 

(42,000

)

 

 

(9,450

)

 

 

(95,000

)

Purchases of marketable securities

 

 

 

 

 

 

 

(10,000

)

 

 

(21,003

)

Proceeds from maturities of marketable securities

 

18,750

 

 

 

7,600

 

 

 

47,700

 

 

 

61,487

 

Proceeds from sales of marketable securities and strategic investments

 

363

 

 

 

 

 

 

621

 

 

 

186,262

 

Net cash provided by (used in) investing activities

 

13,973

 

 

 

(49,682

)

 

 

7,735

 

 

 

108,445

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from term loan facility

 

 

 

 

350,000

 

 

 

 

 

 

1,000,000

 

Repayment of exchangeable senior notes

 

 

 

 

(1,234,376

)

 

 

 

 

 

(1,548,686

)

Proceeds from settlement of capped call transactions

 

 

 

 

104,519

 

 

 

 

 

 

135,497

 

Proceeds from other financing arrangements

 

 

 

 

4

 

 

 

1,396

 

 

 

5

 

Net cash provided by (used in) financing activities

 

 

 

 

(779,853

)

 

 

1,396

 

 

 

(413,184

)

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash

 

3,522

 

 

 

(246

)

 

 

(1,417

)

 

 

(2,355

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

168,020

 

 

 

(623,326

)

 

 

250,681

 

 

 

(35,638

)

Cash, cash equivalents, and restricted cash at beginning of period

 

1,469,949

 

 

 

1,519,213

 

 

 

1,386,686

 

 

 

931,023

 

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

 

 

 

 

4,182

 

 

 

602

 

 

 

4,684

 

Cash, cash equivalents, and restricted cash at end of period

$

1,637,969

 

 

$

900,069

 

 

$

1,637,969

 

 

$

900,069

 

Atlassian Corporation

Revenues by Deployment Options

(U.S. $ in thousands)

(unaudited)

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

2022

 

2021

 

2022

 

2021

Cloud

$

512,335

 

$

364,099

 

$

987,378

 

$

682,002

Data Center

 

194,264

 

 

139,108

 

 

365,492

 

 

250,303

Server (1)

 

106,168

 

 

135,519

 

 

219,981

 

 

275,066

Marketplace and services (2)

 

59,937

 

 

49,800

 

 

107,245

 

 

95,179

Total revenues

$

872,704

 

$

688,526

 

$

1,680,096

 

$

1,302,550

(1) Included in Server is perpetual license revenue. Perpetual license revenue is captured as other revenue on the Condensed Consolidated Statements of Operations.
(2) Included in Marketplace and services 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.

Atlassian Corporation

Reconciliation of GAAP to Non-GAAP Results

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

(unaudited)

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Gross profit

 

 

 

 

 

 

 

GAAP gross profit

$

716,759

 

 

$

578,335

 

 

$

1,384,759

 

 

$

1,096,103

 

Plus: Stock-based compensation

 

18,553

 

 

 

8,453

 

 

 

29,166

 

 

 

14,370

 

Plus: Amortization of acquired intangible assets

 

5,697

 

 

 

5,599

 

 

 

11,394

 

 

 

11,288

 

Non-GAAP gross profit

$

741,009

 

 

$

592,387

 

 

$

1,425,319

 

 

$

1,121,761

 

Operating income

 

 

 

 

 

 

 

GAAP operating income (loss)

$

(99,239

)

 

$

23,042

 

 

$

(133,266

)

 

$

79,519

 

Plus: Stock-based compensation

 

265,785

 

 

 

145,820

 

 

 

439,416

 

 

 

246,727

 

Plus: Amortization of acquired intangible assets

 

8,296

 

 

 

7,958

 

 

 

16,592

 

 

 

16,012

 

Non-GAAP operating income

$

174,842

 

 

$

176,820

 

 

$

322,742

 

 

$

342,258

 

Net income

 

 

 

 

 

 

 

GAAP net loss

$

(205,031

)

 

$

(22,328

)

 

$

(218,772

)

 

$

(433,532

)

Plus: Stock-based compensation

 

265,785

 

 

 

145,820

 

 

 

439,416

 

 

 

246,727

 

Plus: Amortization of acquired intangible assets

 

8,296

 

 

 

7,958

 

 

 

16,592

 

 

 

16,012

 

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

 

 

 

 

16,856

 

 

 

 

 

 

450,829

 

Less: Gain on a non-cash sale of a controlling interest of a subsidiary

 

(2,067

)

 

 

 

 

 

(45,158

)

 

 

 

Plus (less): Income tax adjustments

 

47,750

 

 

 

(37,879

)

 

 

15,202

 

 

 

(75,200

)

Non-GAAP net income

$

114,733

 

 

$

110,427

 

 

$

207,280

 

 

$

204,836

 

Net income per share

 

 

 

 

 

 

 

GAAP net loss per share - diluted

$

(0.80

)

 

$

(0.09

)

 

$

(0.86

)

 

$

(1.72

)

Plus: Stock-based compensation

 

1.04

 

 

 

0.57

 

 

 

1.72

 

 

 

0.98

 

Plus: Amortization of acquired intangible assets

 

0.03

 

 

 

0.03

 

 

 

0.06

 

 

 

0.06

 

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

 

 

 

 

0.07

 

 

 

 

 

 

1.77

 

Less: Gain on a non-cash sale of a controlling interest of a subsidiary

 

(0.01

)

 

 

 

 

 

(0.17

)

 

 

 

Plus (less): Income tax adjustments

 

0.19

 

 

 

(0.15

)

 

 

0.06

 

 

 

(0.29

)

Non-GAAP net income per share - diluted

$

0.45

 

 

$

0.43

 

 

$

0.81

 

 

$

0.80

 

Weighted-average diluted shares outstanding

 

 

 

 

 

 

 

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

 

255,874

 

 

 

252,960

 

 

 

255,520

 

 

 

252,533

 

Plus: Dilution from dilutive securities (1)

 

304

 

 

 

3,072

 

 

 

673

 

 

 

3,178

 

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

 

256,178

 

 

 

256,032

 

 

 

256,193

 

 

 

255,711

 

Free cash flow

 

 

 

 

 

 

 

GAAP net cash provided by operating activities

$

150,525

 

 

$

206,455

 

 

$

242,967

 

 

$

271,456

 

Less: Capital expenditures

 

(4,040

)

 

 

(12,581

)

 

 

(20,536

)

 

 

(19,462

)

Free cash flow

$

146,485

 

 

$

193,874

 

 

$

222,431

 

 

$

251,994

 

(1) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three and six months ended December 31, 2022 and 2021 because the effect would have been anti-dilutive.

Atlassian Corporation

Reconciliation of GAAP to Non-GAAP Financial Targets

 

 

Three Months Ending
March 31, 2023

GAAP gross margin

81%

Plus: Stock-based compensation

2

Plus: Amortization of acquired intangible assets

1

Non-GAAP gross margin

84%

 

 

GAAP operating margin

(14%)

Plus: Stock-based compensation

28

Plus: Amortization of acquired intangible assets

1

Non-GAAP operating margin

15%

 

Fiscal Year Ending
June 30, 2023

GAAP operating margin

(11%)

Plus: Stock-based compensation

27

Plus: Amortization of acquired intangible assets

1

Non-GAAP operating margin

17%

1 Gartner, Magic Quadrant for IT Service Management Platforms, Rich Doheny, Chris Matchett, Siddharth Shetty, 31 October 2022.
Gartner Disclaimer- Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner research organization and should not be construed as statements of fact. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. Gartner Peer Insights Customers' Choice constitute the subjective opinions of individual end-user reviews, ratings, and data applied against a documented methodology; they neither represent the views of, nor constitute an endorsement by, Gartner or its affiliates. GARTNER and MAGIC QUADRANT are a registered trademark and service mark, and PEER INSIGHTS is a trademark and service mark, of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved.

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