Quarterly revenue of $807 million, up 31%
year-over-year
Quarterly subscription revenue of $651 million,
up 50% year-over-year
Quarterly GAAP operating margin of (4)% and
non-GAAP operating margin of 18%
Quarterly cash flow from operations of $92
million and free cash flow of $76 million
Atlassian Corporation (NASDAQ: TEAM), a leading provider of team
collaboration and productivity software, today announced financial
results for its first quarter of fiscal year 2023 ended September
30, 2022 and released a shareholder letter available on Atlassian’s
Work Life blog at
http://atlassian.com/blog/announcements/shareholder-letter-q1fy23.
The shareholder letter was also posted to the Investor Relations
section of Atlassian’s website at
https://investors.atlassian.com.
“We are proud of our Q1 results, growing subscription revenue 50
percent year-over-year, and we continue to have line of sight to
$10 billion in annual revenue,” said Scott Farquhar, Atlassian’s
co-founder and co-CEO. “Despite the turbulent macroeconomic
environment we find ourselves in, we have conviction about the
incredible long-term opportunities in front of us and our ability
to capitalize on them. We have the right products, the right
leaders, and the right strategies in place to come out of this
downturn in a much stronger market position.”
“Q1 was another momentous quarter of execution against our
long-term initiatives. We announced a new subscription offering in
Atlassian Together, launched Atlas into general availability, and
held Work Life, our first large-scale customer event focused on a
single market,” said Mike Cannon-Brookes, Atlassian’s co-founder
and co-CEO. “We also continue to execute well towards our strategy
of hiring and retaining the best talent around the world.”
First Quarter Fiscal Year 2023 Financial Highlights:
As a result of Atlassian's redomiciliation to the United States
on September 30, 2022, the company no longer reports financial
information in accordance with IFRS. The below financial
information has been prepared in accordance with GAAP and should
not be expected to correspond to figures previously presented under
IFRS.
On a GAAP basis, Atlassian reported:
- Revenue: Total revenue was $807.4 million for the first
quarter of fiscal year 2023, up 31% from $614.0 million for the
first quarter of fiscal year 2022.
- Operating Income (Loss) and Operating Margin: Operating
loss was $34.0 million for the first quarter of fiscal year 2023,
compared with operating income of $56.5 million for the first
quarter of fiscal year 2022. Operating margin was (4)% for the
first quarter of fiscal year 2023, compared with 9% for the first
quarter of fiscal year 2022.
- Net Loss and Net Loss Per Diluted Share: Net loss was
$13.7 million for the first quarter of fiscal year 2023, compared
with a net loss of $411.2 million for the first quarter of fiscal
year 2022. Net loss per diluted share was $0.05 for the first
quarter of fiscal year 2023, compared with a net loss per diluted
share of $1.63, for the first quarter of fiscal year 2022.
Mark-to-market accounting of the company’s strategic investments
increased net loss per diluted share by $0.05 for the first quarter
of fiscal year 2023 and $0.12 for the first quarter of fiscal year
2022.
- Balance Sheet: Cash and cash equivalents plus short-term
investments at the end of the first quarter of fiscal year 2023
totaled $1.5 billion.
On a non-GAAP basis, Atlassian reported:
- Operating Income and Operating Margin: Operating income
was $147.9 million for the first quarter of fiscal year 2023,
compared with operating income of $165.4 million for the first
quarter of fiscal year 2022. Operating margin was 18% for the first
quarter of fiscal year 2023, compared with 27% for the first
quarter of fiscal year 2022.
- Net Income and Net Income Per Diluted Share: Net income
was $92.5 million for the first quarter of fiscal year 2023,
compared with net income of $94.4 million for the first quarter of
fiscal year 2022. Net income per diluted share was $0.36 for the
first quarter of fiscal year 2023, compared with $0.37 for the
first quarter of fiscal year 2022. Mark-to-market accounting of the
company’s strategic investments reduced net income per diluted
share by $0.04 for the first quarter of fiscal year 2023 and $0.12
for the first quarter of fiscal year 2022.
- Free Cash Flow: Cash flow from operations was $92.4
million and free cash flow was $75.9 million for the first quarter
of fiscal year 2023. Free cash flow margin for the first quarter of
fiscal year 2023 was 9%.
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:
- Atlassian Together: Atlassian announced a new, single
subscription to its work management products – Trello, Confluence,
Atlas, and Jira Work Management. The subscription also includes
Access, an enterprise-grade identity and access management solution
that connects Atlassian products to third-party identity providers.
Atlassian Together provides organizations with a complete Atlassian
tool set that helps teams choose the best tool for the job while
ensuring alignment across the organization.
- Atlas Launch: Atlassian announced Atlas, a new teamwork
directory customized to help organizations provide alignment across
teams, apps, and work regardless of what tools their teams use, is
generally available. Atlas helps teams communicate the context and
progress of their work with other teams, and empowers teams to work
in the tools that let them thrive.
- Partnership with Accenture: Atlassian and Accenture are
expanding their partnership to help enterprises embrace agile ways
of working. With this partnership, Accenture’s global team of
experts will help provide enterprise-wide agile consulting and
implementation services to help customers realize faster time to
value from their investments in Atlassian products, including Jira
Align, Jira Software, and Jira Service Management.
- United States Redomiciliation: Atlassian changed its
corporate domicile from the United Kingdom to the United States. As
a result, it has transitioned its accounting standards from IFRS to
GAAP. Atlassian believes moving its parent entity to the United
States will increase its access to a broader set of investors,
support inclusion in additional stock indices, improve financial
reporting comparability with industry peers, streamline its
corporate structure, and provide more flexibility in accessing
capital.
- Sustainability Report: Atlassian released its Fiscal
Year 2022 Sustainability Report. This year marked Atlassian’s third
consecutive year of operating on 100% renewable energy. The company
also accounted for work-from-home emissions for the first time.
Atlassian continues its emissions reductions efforts in pursuit of
becoming “net zero” by 2040, as well as executing on its diversity,
equity, and inclusion strategy, releasing its first human rights
statement, and giving back to its communities through philanthropic
programs driven by the Atlassian Foundation. Our Fiscal Year 2022
Sustainability Report can be found at
https://investors.atlassian.com/Sustainability/default.aspx.
- Customer Growth: Atlassian ended its first quarter of
fiscal year 2023 with a total customer count, on an active
subscription or maintenance agreement basis, of 249,173 customers,
adding 6,550 net new customers during the quarter.
Financial Targets:
Atlassian is providing its financial targets for the second
quarter of fiscal year 2023 as follows:
Second Quarter Fiscal Year 2023:
- Total revenue is expected to be in the range of $835 million to
$855 million.
- Gross margin is expected to be in the range of 80% to 81% on a
GAAP basis and in the range of 83% to 84% on a non-GAAP basis.
- Operating margin is expected to be approximately (20%) on a
GAAP basis and approximately 13% on a non-GAAP basis.
For additional commentary regarding financial targets, please
see Atlassian’s first quarter fiscal year 2023 shareholder letter
dated November 3, 2022.
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-q1fy23,
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, November 3, 2022 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 240,000 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
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, partnerships, sustainability initiatives,
macroeconomic environment, anticipated growth, outlook, technology
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 6-K (reporting our quarterly results), as well
as Forms 10-K 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.
- 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 September
30,
2022
2021
Revenues:
Subscription
$
650,984
$
435,296
Maintenance
113,565
130,590
Other
42,843
48,138
Total revenues
807,392
614,024
Cost of revenues (1) (2)
139,392
96,256
Gross profit
668,000
517,768
Operating expenses:
Research and development (1) (2)
399,006
272,140
Marketing and sales (1) (2)
160,128
99,329
General and administrative (1)
142,893
89,822
Total operating expenses
702,027
461,291
Operating income (loss)
(34,027
)
56,477
Other income (expense), net
29,289
(455,804
)
Interest income
5,143
277
Interest expense
(6,121
)
(11,518
)
Loss before income taxes
(5,716
)
(410,568
)
Provision for income taxes
(8,025
)
(636
)
Net loss
$
(13,741
)
$
(411,204
)
Net loss per share:
Basic
$
(0.05
)
$
(1.63
)
Diluted
$
(0.05
)
$
(1.63
)
Weighted-average shares used in computing
net loss per share:
Basic
255,167
252,106
Diluted
255,167
252,106
(1) Amounts include stock-based compensation as follows:
Three Months Ended September
30,
2022
2021
Cost of revenues
$
10,613
$
5,917
Research and development
110,129
64,282
Marketing and sales
23,195
14,494
General and administrative
29,694
16,214
(2) Amounts include amortization of acquired intangible assets,
as follows:
Three Months Ended September
30,
2022
2021
Cost of revenues
$
5,697
$
5,689
Research and development
94
94
Marketing and sales
2,505
2,271
Atlassian Corporation
Condensed Consolidated Balance
Sheets
(U.S. $ in thousands)
(unaudited)
September 30, 2022
June 30, 2022
Assets
Current assets:
Cash and cash equivalents
$
1,468,571
$
1,385,265
Marketable securities
54,537
73,294
Accounts receivable, net
246,781
308,127
Assets held for sale
—
60,265
Prepaid expenses and other current
assets
96,999
70,002
Total current assets
1,866,888
1,896,953
Non-current assets:
Property and equipment, net
103,336
100,662
Operating lease right-of-use assets
266,885
277,276
Strategic investments
239,323
159,064
Intangible assets, net
92,544
100,840
Goodwill
721,912
722,838
Deferred tax assets
9,475
10,335
Other assets
71,069
58,862
Total assets
$
3,371,432
$
3,326,830
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
111,461
$
81,220
Accrued expenses and other current
liabilities
274,770
406,139
Deferred revenue, current portion
1,066,090
1,066,059
Operating lease liabilities, current
portion
45,360
40,638
Total current liabilities
1,497,681
1,594,056
Non-current liabilities:
Deferred revenue, net of current
portion
106,744
116,621
Operating lease liabilities, net of
current portion
267,373
274,434
Term loan facility
999,463
999,419
Deferred tax liabilities
1,038
312
Other non-current liabilities
18,520
14,616
Total liabilities
2,890,819
2,999,458
Stockholders’ equity
Common stock
2
2
Additional paid-in capital
2,355,991
2,182,536
Accumulated other comprehensive income
7,391
13,864
Accumulated deficit
(1,882,771
)
(1,869,030
)
Total stockholders’ equity
480,613
327,372
Total liabilities and stockholders’
equity
$
3,371,432
$
3,326,830
Atlassian Corporation
Condensed Consolidated
Statements of Cash Flows
(U.S. $ in thousands)
(unaudited)
Three Months Ended September
30,
2022
2021
Cash flows from operating
activities:
Net loss
$
(13,741
)
$
(411,204
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
14,620
13,304
Stock-based compensation
173,631
100,907
Deferred income taxes
1,522
(1,614
)
Net loss on exchange derivative and capped
call transactions
—
424,482
Amortization of debt discount and issuance
cost
118
9,841
Net loss on strategic investments
11,513
31,422
Net foreign currency gain
(3,625
)
(6,398
)
Gain on a non-cash sale of a controlling
interest of a subsidiary
(43,092
)
—
Other
—
(615
)
Changes in operating assets and
liabilities:
Accounts receivable, net
61,314
(13,211
)
Prepaid expenses and other assets
(22,677
)
(21,185
)
Accounts payable
31,147
10,223
Accrued expenses and other liabilities
(108,443
)
(84,406
)
Deferred revenue
(9,845
)
13,455
Net cash provided by operating
activities
92,442
65,001
Cash flows from Investing
activities:
Business combinations, net of cash
acquired
(600
)
(1,138
)
Purchases of property and equipment
(16,496
)
(6,881
)
Purchases of strategic investments
(8,350
)
(53,000
)
Purchases of marketable securities
(10,000
)
(21,003
)
Proceeds from maturities of
investments
28,950
53,887
Proceeds from sale of strategic
investments
258
—
Proceeds from sales of marketable
securities
—
186,262
Net cash provided by (used in)
investing activities
(6,238
)
158,127
Cash flows from financing
activities:
Proceeds from term loan facility
—
650,000
Repayment of exchangeable senior notes
—
(314,310
)
Proceeds from settlement of capped call
transactions
—
30,978
Proceeds from other financing
arrangements
1,572
—
Other financing activities
(176
)
1
Net cash provided by financing
activities
1,396
366,669
Effect of foreign exchange rate changes on
cash, cash equivalents and restricted cash
(4,939
)
(2,109
)
Net increase in cash, cash equivalents,
and restricted cash
82,661
587,688
Cash, cash equivalents, and restricted
cash at beginning of period
1,386,686
931,023
Net decrease in cash and cash equivalents
included in assets held for sale
602
502
Cash, cash equivalents, and restricted
cash at end of period
$
1,469,949
$
1,519,213
Atlassian Corporation
Revenues by Deployment
Options
(U.S. $ in thousands)
(unaudited)
Three Months Ended September
30,
2022
2021
Cloud
$
475,043
$
317,903
Data Center
171,228
111,195
Server (1)
113,813
139,547
Marketplace and services (2)
47,308
45,379
Total revenues
$
807,392
$
614,024
(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 September
30,
2022
2021
Gross profit
GAAP gross profit
$
668,000
$
517,768
Plus: Stock-based compensation
10,613
5,917
Plus: Amortization of acquired intangible
assets
5,697
5,689
Non-GAAP gross profit
$
684,310
$
529,374
Operating income
GAAP operating income (loss)
$
(34,027
)
$
56,477
Plus: Stock-based compensation
173,631
100,907
Plus: Amortization of acquired intangible
assets
8,296
8,054
Non-GAAP operating income
$
147,900
$
165,438
Net income
GAAP net loss
$
(13,741
)
$
(411,204
)
Plus: Stock-based compensation
173,631
100,907
Plus: Amortization of acquired intangible
assets
8,296
8,054
Plus: Non-coupon impact related to
exchangeable senior notes and capped calls
—
433,973
Less: Gain on a non-cash sale of a
controlling interest of a subsidiary
(43,091
)
—
Less: Income tax effects
(32,548
)
(37,321
)
Non-GAAP net income
$
92,547
$
94,409
Net income per share
GAAP net loss per share - diluted
$
(0.05
)
$
(1.63
)
Plus: Stock-based compensation
0.68
0.41
Plus: Amortization of acquired intangible
assets
0.03
0.03
Plus: Non-coupon impact related to
exchangeable senior notes and capped calls
—
1.71
Less: Gain on a non-cash sale of a
controlling interest of a subsidiary
(0.17
)
—
Less: Income tax effects
(0.13
)
(0.15
)
Non-GAAP net income per share -
diluted
$
0.36
$
0.37
Weighted-average diluted shares
outstanding
Weighted-average shares used in computing
diluted GAAP net loss per share
255,167
252,106
Plus: Dilution from dilutive securities
(1)
1,041
3,284
Weighted-average shares used in computing
diluted non-GAAP net income per share
256,208
255,390
Free cash flow
GAAP net cash provided by operating
activities
$
92,442
$
65,001
Less: Capital expenditures
(16,496
)
(6,881
)
Free cash flow
$
75,946
$
58,120
(1) The effects of these dilutive securities were not included
in the GAAP calculation of diluted net loss per share for the three
months ended September 30, 2022 and 2021 because the effect would
have been anti-dilutive.
Atlassian Corporation
Reconciliation of GAAP to
Non-GAAP Financial Targets
(U.S. $)
Three Months Ending
December 31, 2022
Revenue
$835 million to $855
million
GAAP gross margin
80% to 81%
Plus: Stock-based compensation
2
Plus: Amortization of acquired intangible
assets
1
Non-GAAP gross margin
83% to 84%
GAAP operating margin
(20%)
Plus: Stock-based compensation
32
Plus: Amortization of acquired intangible
assets
1
Non-GAAP operating margin
13%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221103006245/en/
Investor Relations Contact Martin Lam
IR@atlassian.com
Media Contact Marie-Claire Maple press@atlassian.com
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