Quarterly revenue of $411.6 million, up 33% year-over-year
Quarterly IFRS operating margin of (5)% and non-IFRS operating margin of 19%
Quarterly cash flow from operations of $156.3 million and free cash flow of $140.3 million
SAN FRANCISCO–(BUSINESS WIRE)–Atlassian Corporation Plc (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for its third quarter of fiscal 2020 ended March 31, 2020 and released a shareholder letter on the Investor Relations section of its website at https://investors.atlassian.com.
“These are unprecedented times,” said Scott Farquhar, Atlassian’s co-founder and co-CEO. “The COVID-19 pandemic has caused a public health crisis and rapid economic change. As workers respond in a remote-work world, we’ve never been more committed to delivering on our mission to unleash the potential of every team and support our customers and community.”
“We’ve built Atlassian to be an enduring company focused on driving long-term results,” said Mike Cannon-Brookes, Atlassian’s co-founder and co-CEO. “Through efforts like launching free cloud editions of our core products, we will support our customers through challenging times, and position ourselves to drive durable growth.”
Third Quarter Fiscal Year 2020 Financial Highlights:
On an IFRS basis, Atlassian reported:
Net loss for the third quarter of fiscal 2020 included a non-cash charge recorded in “other non-operating (expense) income, net” of $141.8 million, compared with a non-cash charge of $172.6 million in the third quarter of fiscal 2019, as a result of marking to fair value the exchange feature of Atlassian’s exchangeable senior notes and related capped calls.
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 fourth 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 171,000 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, go-to-market model, future responses to and effects of the COVID-19 pandemic, 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 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 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 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 March 31, |
| Nine Months Ended March 31, | ||||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||
Revenues: |
|
|
|
|
|
|
| ||||||||
Subscription | $ | 244,155 |
|
| $ | 166,468 |
|
| $ | 673,934 |
|
| $ | 453,033 |
|
Maintenance |
| 119,628 |
|
|
| 98,862 |
|
|
| 346,576 |
|
|
| 288,759 |
|
Perpetual license |
| 21,002 |
|
|
| 23,152 |
|
|
| 74,797 |
|
|
| 70,769 |
|
Other |
| 26,797 |
|
|
| 20,788 |
|
|
| 88,390 |
|
|
| 62,980 |
|
Total revenues |
| 411,582 |
|
|
| 309,270 |
|
|
| 1,183,697 |
|
|
| 875,541 |
|
Cost of revenues (1) (2) |
| 70,655 |
|
|
| 54,189 |
|
|
| 198,695 |
|
|
| 149,156 |
|
Gross profit |
| 340,927 |
|
|
| 255,081 |
|
|
| 985,002 |
|
|
| 726,385 |
|
Operating expenses: |
|
|
|
|
|
|
| ||||||||
Research and development (1) (2) |
| 204,148 |
|
|
| 153,069 |
|
|
| 552,450 |
|
|
| 408,813 |
|
Marketing and sales (1) (2) |
| 84,485 |
|
|
| 70,544 |
|
|
| 221,791 |
|
|
| 191,756 |
|
General and administrative (1) |
| 72,214 |
|
|
| 59,025 |
|
|
| 193,395 |
|
|
| 156,734 |
|
Total operating expenses |
| 360,847 |
|
|
| 282,638 |
|
|
| 967,636 |
|
|
| 757,303 |
|
Operating (loss) income |
| (19,920 | ) |
|
| (27,557 | ) |
|
| 17,366 |
|
|
| (30,918 | ) |
Other non-operating (expense) income, net |
| (141,701 | ) |
|
| (173,324 | ) |
|
| 44,748 |
|
|
| (377,980 | ) |
Finance income |
| 7,199 |
|
|
| 9,303 |
|
|
| 24,411 |
|
|
| 24,228 |
|
Finance costs |
| (12,435 | ) |
|
| (10,103 | ) |
|
| (37,126 | ) |
|
| (30,024 | ) |
(Loss) income before income tax benefit (expense) |
| (166,857 | ) |
|
| (201,681 | ) |
|
| 49,399 |
|
|
| (414,694 | ) |
Income tax benefit (expense) |
| 8,032 |
|
|
| (1,163 | ) |
|
| (14,830 | ) |
|
| 14,590 |
|
Net (loss) income | $ | (158,825 | ) |
| $ | (202,844 | ) |
| $ | 34,569 |
|
| $ | (400,104 | ) |
Net (loss) income per share attributable to ordinary shareholders: |
|
|
|
|
|
|
| ||||||||
Basic | $ | (0.65 | ) |
| $ | (0.85 | ) |
| $ | 0.14 |
|
| $ | (1.68 | ) |
Diluted | $ | (0.65 | ) |
| $ | (0.85 | ) |
| $ | 0.14 |
|
| $ | (1.68 | ) |
Weighted-average shares outstanding used to compute net (loss) income per share attributable to ordinary shareholders: |
|
|
|
|
|
|
| ||||||||
Basic |
| 245,504 |
|
|
| 239,410 |
|
|
| 244,161 |
|
|
| 237,778 |
|
Diluted |
| 245,504 |
|
|
| 239,410 |
|
|
| 251,255 |
|
|
| 237,778 |
|
(1) Amounts include share-based payment expense, as follows: | |||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Cost of revenues | $ | 5,535 |
| $ | 4,871 |
| $ | 14,654 |
| $ | 12,156 |
| |||
Research and development |
| 57,071 |
|
| 42,222 |
|
| 151,988 |
|
| 102,044 |
| |||
Marketing and sales |
| 11,397 |
|
| 10,979 |
|
| 32,902 |
|
| 28,590 |
| |||
General and administrative |
| 13,519 |
|
| 14,674 |
|
| 35,712 |
|
| 38,840 |
| |||
(2) Amounts include amortization of acquired intangible assets, as follows: | |||||||||||||||
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Cost of revenues | $ | 6,645 |
| $ | 7,068 |
| $ | 24,306 |
| $ | 19,479 |
| |||
Research and development |
| 41 |
|
| 19 |
|
| 124 |
|
| 40 |
| |||
Marketing and sales |
| 2,900 |
|
| 5,716 |
|
| 10,511 |
|
| 25,072 |
|
Atlassian Corporation Plc Consolidated Statements of Financial Position (U.S. $ in thousands) | |||||||
| March 31, 2020 |
| June 30, 2019 | ||||
| (unaudited) |
|
| ||||
Assets |
|
|
| ||||
Current assets: |
|
|
| ||||
Cash and cash equivalents | $ | 1,338,193 |
|
| $ | 1,268,441 |
|
Short-term investments | 733,612 |
|
| 445,046 |
| ||
Trade receivables | 93,710 |
|
| 82,525 |
| ||
Tax receivables | 1,784 |
|
| 707 |
| ||
Derivative assets | 245,601 |
|
| 215,156 |
| ||
Prepaid expenses and other current assets | 45,470 |
|
| 30,236 |
| ||
Total current assets | 2,458,370 |
|
| 2,042,111 |
| ||
Non-current assets: |
|
|
| ||||
Property and equipment, net | 85,038 |
|
| 81,459 |
| ||
Deferred tax assets | 19,639 |
|
| 17,084 |
| ||
Goodwill | 632,779 |
|
| 608,907 |
| ||
Intangible assets, net | 131,934 |
|
| 150,975 |
| ||
Right-of-use assets, net | 225,985 |
|
| — | |||
Other non-current assets | 87,212 |
|
| 76,722 |
| ||
Total non-current assets | 1,182,587 |
|
| 935,147 |
| ||
Total assets | $ | 3,640,957 |
|
| $ | 2,977,258 |
|
Liabilities |
|
|
| ||||
Current liabilities: |
|
|
| ||||
Trade and other payables | $ | 179,739 |
|
| $ | 159,487 |
|
Tax liabilities | 14,300 |
|
| 11,703 |
| ||
Provisions | 9,721 |
|
| 8,983 |
| ||
Deferred revenue | 547,518 |
|
| 440,954 |
| ||
Lease obligations | 34,659 |
|
| — | |||
Derivative liabilities | 858,447 |
|
| 855,005 |
| ||
Current portion of exchangeable senior notes, net | 880,120 |
|
| 853,576 |
| ||
Total current liabilities | 2,524,504 |
|
| 2,329,708 |
| ||
Non-current liabilities: |
|
|
| ||||
Deferred tax liabilities | 16,020 |
|
| 13,872 |
| ||
Provisions | 7,221 |
|
| 6,082 |
| ||
Deferred revenue | 35,638 |
|
| 27,866 |
| ||
Lease obligations | 235,974 |
|
| — | |||
Other non-current liabilities | 1,441 |
|
| 34,263 |
| ||
Total non-current liabilities | 296,294 |
|
| 82,083 |
| ||
Total liabilities | 2,820,798 |
|
| 2,411,791 |
| ||
Equity |
|
|
| ||||
Share capital | 24,629 |
|
| 24,199 |
| ||
Share premium | 459,590 |
|
| 458,166 |
| ||
Other capital reserves | 1,051,796 |
|
| 816,660 |
| ||
Other components of equity | 15,313 |
|
| 32,079 |
| ||
Accumulated deficit | (731,169 | ) |
| (765,637 | ) | ||
Total equity | 820,159 |
|
| 565,467 |
| ||
Total liabilities and equity | $ | 3,640,957 |
|
| $ | 2,977,258 |
|
Atlassian Corporation Plc Consolidated Statements of Cash Flows (U.S. $ in thousands) (unaudited) | |||||||||||||||
| Three Months Ended March 31, |
| Nine Months Ended March 31, | ||||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||
Operating activities |
|
|
|
|
|
|
| ||||||||
(Loss) income before income tax benefit (expense) | $ | (166,857 | ) |
| $ | (201,681 | ) |
| $ | 49,399 |
|
| $ | (414,694 | ) |
Adjustments to reconcile (loss) income before income tax benefit (expense) to net cash provided by operating activities: |
|
|
|
|
|
|
| ||||||||
Depreciation and amortization | 14,738 |
|
| 16,303 |
|
| 49,148 |
|
| 54,403 |
| ||||
Depreciation of right-of-use assets | 8,945 |
|
| — |
| 26,172 |
|
| — | ||||||
Net unrealized loss (gain) on investments | — |
| 1 |
|
| — |
| (46 | ) | ||||||
(Gain) loss on sale of investments and disposal of other assets | (591 | ) |
| 2 |
|
| (855 | ) |
| (2,345 | ) | ||||
Net unrealized foreign currency gain | (4,119 | ) |
| (742 | ) |
| (3,173 | ) |
| (634 | ) | ||||
Share-based payment expense | 87,522 |
|
| 72,746 |
|
| 235,256 |
|
| 181,630 |
| ||||
Net unrealized loss (gain) on exchange derivative and capped call transactions | 141,783 |
|
| 172,582 |
|
| (46,743 | ) |
| 377,587 |
| ||||
Amortization of debt discount and issuance cost | 8,955 |
|
| 8,535 |
|
| 26,545 |
|
| 25,301 |
| ||||
Interest income | (7,200 | ) |
| (9,417 | ) |
| (24,411 | ) |
| (24,228 | ) | ||||
Interest expense | 3,482 |
|
| 1,568 |
|
| 10,581 |
|
| 4,723 |
| ||||
Changes in assets and liabilities: |
|
|
|
|
|
|
| ||||||||
Trade receivables | 29,902 |
|
| 7,513 |
|
| (11,211 | ) |
| (15,627 | ) | ||||
Prepaid expenses and other assets | (1,224 | ) |
| 4,046 |
|
| (7,594 | ) |
| (13,161 | ) | ||||
Trade and other payables, provisions and other non-current liabilities | 30,961 |
|
| 38,231 |
|
| 25,452 |
|
| 56,205 |
| ||||
Deferred revenue | 4,958 |
|
| 16,201 |
|
| 113,737 |
|
| 88,946 |
| ||||
Interest received | 8,146 |
|
| 8,235 |
|
| 24,416 |
|
| 21,956 |
| ||||
(Income tax paid) tax refunds received, net | (3,088 | ) |
| (872 | ) |
| (15,850 | ) |
| 8,600 |
| ||||
Net cash provided by operating activities | 156,313 |
|
| 133,251 |
|
| 450,869 |
|
| 348,616 |
| ||||
Investing activities |
|
|
|
|
|
|
| ||||||||
Business combinations, net of cash acquired | — |
| — |
| (37,983 | ) |
| (263,554 | ) | ||||||
Purchases of intangible assets | — |
| — |
| — |
| (850 | ) | |||||||
Purchases of property and equipment | (6,742 | ) |
| (6,106 | ) |
| (19,865 | ) |
| (24,629 | ) | ||||
Proceeds from sales of property, equipment and intangible assets | — |
| — |
| — |
| 3,721 |
| |||||||
Purchases of investments | (364,603 | ) |
| (158,258 | ) |
| (951,481 | ) |
| (352,647 | ) | ||||
Proceeds from maturities of investments | 232,239 |
|
| 131,669 |
|
| 425,257 |
|
| 317,583 |
| ||||
Proceeds from sales of investments | 95,680 |
|
| 3,070 |
|
| 237,641 |
|
| 8,742 |
| ||||
Increase in restricted cash | — |
| — |
| — |
| (552 | ) | |||||||
Net cash used in investing activities | (43,426 | ) |
| (29,625 | ) |
| (346,431 | ) |
| (312,186 | ) | ||||
Financing activities |
|
|
|
|
|
|
| ||||||||
Proceeds from exercise of share options | 499 |
|
| 1,125 |
|
| 1,485 |
|
| 2,829 |
| ||||
Payment of exchangeable senior notes issuance costs | — |
| — |
| — |
| (410 | ) | |||||||
Payments of lease obligations | (9,308 | ) |
| — |
| (26,335 | ) |
| — | ||||||
Interest paid | — |
| — |
| (3,125 | ) |
| (3,194 | ) | ||||||
Repayment of exchangeable senior notes | (2 | ) |
| — |
| (2 | ) |
| — | ||||||
Net cash (used in) provided by financing activities | (8,811 | ) |
| 1,125 |
|
| (27,977 | ) |
| (775 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (5,608 | ) |
| (56 | ) |
| (6,709 | ) |
| (710 | ) | ||||
Net increase in cash and cash equivalents | 98,468 |
|
| 104,695 |
|
| 69,752 |
|
| 34,945 |
| ||||
Cash and cash equivalents at beginning of period | 1,239,725 |
|
| 1,340,589 |
|
| 1,268,441 |
|
| 1,410,339 |
| ||||
Cash and cash equivalents at end of period | $ | 1,338,193 |
|
| $ | 1,445,284 |
|
| $ | 1,338,193 |
|
| $ | 1,445,284 |
|
Contacts
Investor Relations Contact
Martin Lam & Matt Sonefeldt
IR@atlassian.com
Media Contact
Jake Standish
press@atlassian.com
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