Atlassian Corp 10-Q for FY2024 Q1

Atlassian Corp (TEAM)

10-Q 2023-11-03 For: 2023-09-30

Added on April 08, 2026

About this 10-Q

Atlassian Corp filed this 10-Q on November 3, 2023, covering the quarter ended September 30, 2023 (FY2024 Q1).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $977.78M; up 21.1% from $807.39M a year earlier
Net loss: $31.88M; compared with a net loss of $13.74M a year earlier
Diluted EPS: -$0.12; compared with -$0.05 a year earlier

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Delaware						88-3940934
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, par value $0.00001 per share	TEAM	Nasdaq Global Select Market


	PART I
Item 1.	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements of Operations (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	5
	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	37
	PART II
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	69
Item 5.	Other Information	69
Item 6.	Exhibits	70
	SIGNATURES	71


	September 30, 2023		June 30, 2023
Assets
Current assets:
Cash and cash equivalents	$	2,143,530	$	2,102,550
Marketable securities	94,298		10,000
Accounts receivable, net	368,260		477,678


Prepaid expenses and other current assets	129,617		146,136
Total current assets	2,735,705		2,736,364
Non-current assets:
Property and equipment, net	79,631		81,402
Operating lease right-of-use assets	181,435		184,195
Strategic investments	220,133		225,538
Intangible assets, net	60,842		69,072
Goodwill	726,519		727,211
Deferred tax assets	6,141		9,945
Other non-current assets	69,233		73,052
Total assets	$	4,079,639	$	4,106,779
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	126,201	$	159,293
Accrued expenses and other current liabilities	362,337		423,131
Deferred revenue, current portion	1,326,108		1,362,736
Operating lease liabilities, current portion	42,737		44,930
Term loan facility, current portion	50,000		37,500


Total current liabilities	1,907,383		2,027,590
Non-current liabilities:
Deferred revenue, net of current portion	174,973		182,743
Operating lease liabilities, net of current portion	231,797		237,835
Term loan facility, net of current portion	949,637		962,093
Deferred tax liabilities	12,110		10,669
Other non-current liabilities	29,114		31,177
Total liabilities	3,305,014		3,452,107
Commitments and contingencies (Note 13)
Stockholders’ equity
Class A Common Stock, $0.00001 par value; 750,000,000 shares authorized, 154,177,836 and 152,442,673 issued and outstanding at September 30, 2023 and June 30, 2023, respectively	2		2
Class B Common Stock, 0.00001 par value; 230,000,000 shares authorized, 104,085,737 and 105,124,103 issued and outstanding at September 30, 2023 and June 30, 2023, respectively	1		1
Additional paid-in capital	3,366,212		3,130,631
Accumulated other comprehensive income	15,598		34,002
Accumulated deficit	(2,607,188)		(2,509,964)
Total stockholders’ equity	774,625		654,672
Total liabilities and stockholders’ equity	$	4,079,639	$	4,106,779


	Three Months Ended September 30,
	2023		2022
Revenues:
Subscription	$	851,982	$	650,984
Maintenance	78,598		113,565
Other	47,195		42,843
Total revenues	977,775		807,392
Cost of revenues (1) (2)	178,029		139,392
Gross profit	799,746		668,000
Operating expenses:
Research and development (1) (2)	481,738		399,006
Marketing and sales (1) (2)	193,567		160,128
General and administrative (1)	143,310		142,893
Total operating expenses	818,615		702,027
Operating loss	(18,869)		(34,027)
Other income (expense), net	(8,335)		29,289
Interest income	25,226		5,143
Interest expense	(8,976)		(6,121)
Loss before provision for income taxes	(10,954)		(5,716)
Provision for income taxes	(20,929)		(8,025)
Net loss	$	(31,883)	$	(13,741)


Net loss per share attributable to Class A and Class B common stockholders:
Basic	$	(0.12)	$	(0.05)
Diluted	$	(0.12)	$	(0.05)
Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders:
Basic	257,907		255,167
Diluted	257,907		255,167


Cost of revenues	$	16,821	$	10,613
Research and development	150,446		110,129
Marketing and sales	32,281		23,195
General and administrative	36,033		29,694


Cost of revenues	$	5,772	$	5,697
Research and development	94		94
Marketing and sales	2,365		2,505


	Three Months Ended September 30, 2023
	Common Stock						Additional paid in capital		Accumulated other comprehensive income		Accumulated Deficit		Total stockholders’ equity
	Class A			Class B
	Shares	Amount		Shares	Amount
Balance at June 30, 2023	152,437	$	2	105,124	$	1	$	3,130,631	$	34,002	$	(2,509,964)	$	654,672
Common stock issued	1,048	—		—	—		—		—		—		—
Conversion from Class B Common Stock to Class A Common Stock	1,038	—		(1,038)	—		—		—		—		—
Stock-based compensation	—	—		—	—		235,581		—		—		235,581
Repurchases of Class A Common Stock	(349)	—		—	—		—		—		(65,341)		(65,341)
Other comprehensive loss, net of tax	—	—		—	—		—		(18,404)		—		(18,404)
Net loss	—	—		—	—		—		—		(31,883)		(31,883)
Balance at September 30, 2023	154,174	$	2	104,086	$	1	$	3,366,212	$	15,598	$	(2,607,188)	$	774,625


	Three Months Ended September 30, 2022
	Common Stock						Additional paid in capital		Accumulated other comprehensive income		Accumulated Deficit		Total stockholders’ equity
	Class A			Class B
	Shares	Amount		Shares	Amount
Balance at June 30, 2022	144,820	$	1	110,036	$	1	$	2,182,536	$	13,864	$	(1,869,030)	$	327,372
Common stock issued	624	—		—	—		(176)		—		—		(176)
Conversion from Class B Common Stock to Class A Common Stock	2,788	—		(2,788)	—		—		—		—		—
Stock-based compensation	—	—		—	—		173,631		—		—		173,631
Other comprehensive loss, net of tax	—	—		—	—		—		(6,473)		—		(6,473)
Net loss	—	—		—	—		—		—		(13,741)		(13,741)
Balance at September 30, 2022	148,232	$	1	107,248	$	1	$	2,355,991	$	7,391	$	(1,882,771)	$	480,613


	Level 1		Level 2		Total

Assets measured at fair value
Cash and cash equivalents:
Money market funds	$	1,405,663	$	—	$	1,405,663
U.S. treasury securities	—		3,986		3,986


Commercial paper	—		9,971		9,971
Corporate debt securities	—		1,999		1,999
Marketable securities:
U.S. treasury securities	—		13,520		13,520
Agency securities	—		2,935		2,935
Certificates of deposit and time deposits	—		10,000		10,000
Commercial paper	—		23,551		23,551
Corporate debt securities	—		44,292		44,292


Derivative financial instruments	—		56,353		56,353











Total assets measured at fair value	$	1,405,663	$	166,607	$	1,572,270

Liabilities measured at fair value
Derivative financial instruments	$	—	$	19,418	$	19,418



Total liabilities measured at fair value	$	—	$	19,418	$	19,418


	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value

U.S. treasury securities	$	13,521	$	—	$	(1)	$	13,520
Agency securities	2,932		3		—		2,935
Certificates of deposit and time deposits	10,000		—		—		10,000
Commercial paper	23,551		—		—		23,551
Corporate debt securities	44,350		—		(58)		44,292


Total marketable securities	$	94,354	$	3	$	(59)	$	94,298


	September 30, 2023		June 30, 2023
Due in one year or less	$	94,298	$	10,000


	Privately held equity securities
Initial total cost	$	138,550
Cumulative net losses	(398)
Carrying value	$	138,152


	Publicly traded equity securities		Privately held equity securities		Total
Initial total cost	$	10,270	$	135,050	$	145,320
Cumulative net gains (losses)	9,095		(398)		8,697
Carrying value	$	19,365	$	134,652	$	154,017


	Equity Method Investment
Balance as of June 30, 2023	$	85,436
Share of losses	(6,762)
Effect of change in exchange rates	(2,392)
Balance as of September 30, 2023	$	76,282


	Three Months Ended September 30,
	2023		2022








Cash flows from operating activities:
Net loss	$	(31,883)	$	(13,741)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	15,084		14,620
Stock-based compensation	235,581		173,631

Deferred income taxes	5,313		1,522
Gain on a non-cash sale of a controlling interest of a subsidiary	(1,378)		(43,092)


Net loss on strategic investments	6,248		11,513
Net foreign currency loss (gain)	181		(3,625)
Other	132		118
Changes in operating assets and liabilities:
Accounts receivable, net	109,488		61,314
Prepaid expenses and other assets	(23,056)		(22,677)
Accounts payable	(33,025)		31,147
Accrued expenses and other liabilities	(71,331)		(108,443)
Deferred revenue	(44,398)		(9,845)
Net cash provided by operating activities	166,956		92,442
Cash flows from investing activities:
Business combinations, net of cash acquired	—		(600)

Purchases of property and equipment	(3,669)		(16,496)
Purchases of strategic investments	(3,750)		(8,350)
Purchases of marketable securities and other investments	(69,363)		(10,000)
Proceeds from maturities of marketable securities	—		28,950

Proceeds from sales of marketable securities and strategic investments	19,879		258


	Notional Amounts of Derivative Instruments
	Notional Amount by Term to Maturity								Classification by Notional Amount
	Under 12 months		Over 12 months			Total			Cash Flow Hedge			Non Hedge		Total
Forward contracts	$	727,591	$	49,015		$	776,606		$	510,650		$	265,956	$	776,606
Interest rate swaps:
Notional amount	$	—	$	650,000		$	650,000		$	650,000		$	—	$	650,000
Average fixed interest rate			0.77		%	0.77		%	0.77		%			0.77		%


	Notional Amounts of Derivative Instruments
	Notional Amount by Term to Maturity								Classification by Notional Amount
	Under 12 months		Over 12 months			Total			Cash Flow Hedge			Non Hedge		Total
Forward contracts	$	849,811	$	35,181		$	884,992		$	532,059		$	352,933	$	884,992
Interest rate swaps:
Notional amount	$	—	$	650,000		$	650,000		$	650,000		$	—	$	650,000
Average fixed interest rate			0.81		%	0.81		%	0.81		%			0.81		%



	Three Months Ended September 30,
	2023		2022
Beginning balance of accumulated gains in accumulated other comprehensive loss	$	48,170	$	24,502
Gross unrealized gains (losses) recognized in other comprehensive loss	(8,070)		286
Net losses (gains) reclassified from cash flow hedge in accumulated other comprehensive income into profit or loss:
Recognized in cost of revenues	443		514
Recognized in research and development	1,464		3,479
Recognized in marketing and sales	370		406
Recognized in general and administrative	700		1,581
Recognized in interest expense	(7,494)		(2,297)
Ending balance of accumulated gains in accumulated other comprehensive income	$	35,583	$	28,471


	Balance Sheet Location	September 30, 2023		June 30, 2023
Derivative assets
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Prepaid expenses and other current assets	$	607	$	3,177

Interest rate swaps	Prepaid expenses and other current assets	29,319		28,926
Interest rate swaps	Other non-current assets	25,298		28,215
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Prepaid expenses and other current assets	1,129		3,892
Total derivative assets		$	56,353	$	64,210

Derivative liabilities
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Accrued expenses and other current liabilities	$	16,487	$	9,657
Foreign exchange forward contracts	Other non-current liabilities	763		209

Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Accrued expenses and other current liabilities	2,168		248
Total derivative liabilities		$	19,418	$	10,114


	September 30, 2023		June 30, 2023
Equipment	$	10,526	$	9,298
Computer Hardware and Software	32,908		29,801
Furniture and Fittings	24,853		24,773
Leasehold Improvements and Other	123,475		123,125

Property and equipment, gross	191,762		186,997
Less: accumulated depreciation and impairment	(112,131)		(105,595)
Property and equipment, net	$	79,631	$	81,402


	September 30, 2023		June 30, 2023		Weighted-Average Remaining Useful Lives (Years)
Acquired Developed Technology	$	235,818	$	235,818	2
Patents, Trademarks, and Other Rights	33,393		33,393		5
Customer Relationships	129,502		129,502		4
Intangible assets, gross	398,713		398,713
Less: accumulated amortization	(337,871)		(329,641)
Intangible assets, net	$	60,842	$	69,072


Fiscal Years:
Remainder of 2024	$	17,999
2025	15,208
2026	12,670
2027	7,839
2028	5,274
Thereafter	1,852
Total future amortization expense	$	60,842


	September 30, 2023		June 30, 2023
Accrued expenses	$	114,745	$	107,479
Employee benefits	142,738		191,801
Tax liabilities	65,117		88,748

Customer deposits	11,109		11,784
Derivative liabilities	18,655		9,905

Other payables	9,973		13,414
Total accrued expenses and other liabilities	$	362,337	$	423,131


	Number of Shares	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Balance as of June 30, 2023	9,562,918	$	235.16	$	1,604,753
Granted	6,078,952	200.06		—
Vested	(1,046,736)	247.53		199,371
Forfeited or cancelled	(407,987)	234.41		—
Balance as of September 30, 2023	14,187,147	$	219.23	$	2,858,852


	As of
	September 30, 2022	December 31, 2022	March 31, 2023	June 30, 2023	September 30, 2023

Number of customers with greater than $10,000 in Cloud ARR	34,011	36,191	37,336	38,726	40,103


	Three Months Ended September 30,
	2023		% of Total Revenues		2022		% of Total Revenues

Revenues:
Subscription	$	851,982	87	%	$	650,984	82	%
Maintenance	78,598		8		113,565		14
Other	47,195		5		42,843		4
Total revenues	977,775		100		807,392		100
Cost of revenues	178,029		18		139,392		17
Gross profit	799,746		82		668,000		83
Operating expenses:
Research and development	481,738		49		399,006		49
Marketing and sales	193,567		20		160,128		20
General and administrative	143,310		15		142,893		18
Total operating expenses	818,615		84		702,027		87
Operating loss	(18,869)		(2)		(34,027)		(4)
Other income (expense), net	(8,335)		(1)		29,289		3
Interest income	25,226		3		5,143		1
Interest expense	(8,976)		(1)		(6,121)		(1)
Loss before provision for income taxes	(10,954)		(1)		(5,716)		(1)
Provision for income taxes	(20,929)		(2)		(8,025)		(1)
Net loss	$	(31,883)	(3)	%	$	(13,741)	(2)	%


	Three Months Ended September 30,
(in thousands, except percentage data)	2023		2022		$ Change		% Change
Subscription	$	851,982	$	650,984	$	200,998	31	%
Maintenance	78,598		113,565		(34,967)		(31)
Other	47,195		42,843		4,352		10
Total revenues	$	977,775	$	807,392	$	170,383	21	%


	Total Number of Shares Purchased (1)	Average Price Paid Per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
July 2023	174	$	174.20	174	$	815,569
August 2023	12	169.15		12	813,486
September 2023	163	202.17		163	780,507
Total	349			349



			Deed of Amendment (No.2) to Agreement for Lease Atlassian HQ — Dexus Property Services Pty Limited (Developer) Vertical First Pty Ltd as trustee for the Vertical First Trust (Landlord) Atlassian Pty Ltd (Tenant) Dexus Funds Management Limited as responsible entity for Dexus Property Trust (Financial Guarantor) Dexus Funds Management Limited as responsible entity for Dexus Operations Trust (Performance Guarantor) Atlassian Corporation (Atlassian Guarantor) —


Details			3
1. Defined terms & interpretation			5
1.1 Defined terms			5
1.2 Interpretation			5
1.3 Headings			6
2. Amendments to the Atlassian AFL			6
2.1 Amendments			6
2.2 Confirmation of Atlassian AFL			6
2.3 Continued force and effect of Atlassian AFL			6
2.4 Dispute Resolution			6
3. Confidentiality and publicity			6
3.1 Confidentiality of this deed			6
3.2 Publicity			7
4. Notices			7
5. Landlord Trustee Limitation of Liability			7
6. Performance Guarantor Limitation of Liability			8
6.1 Trustee			8
6.2 Limitation of Performance Guarantor's liability			8
6.3 Override			8
7. Financial Guarantor's Limitation of Liability			8
7.1 Trustee			8
7.2 Limitation of Financial Guarantor's liability			8
7.3 Override			9
8. Landlord Warranties			9
8.1 Warranties given in both capacities			9
8.2 Warranties			9
8.3 Landlord's Obligations			9
9. Assignment			10
9.1 No Party to assign			10
9.2 Change of Control			10
9.3 Assignment or Change of Control approved under the Atlassian AFL			10
10. Miscellaneous			10
10.1 Next Business Day			10
10.2 Interest			10
10.3 Waiver and variation			10
10.4 Antecedent breaches			10
10.5 Severability			10
10.6 Non-merger			11
10.7 Entire agreement			11
10.8 No reliance			11
10.9 Further assurances			11
10.10 Costs			11
10.11 Counterparts			11
10.12 Power and capacity warranties			11
10.13 Governing law and jurisdiction			11
10.14 Electronic signatures			11
10.15 Confirmation			11
Signing page			13
Schedule 1 – Amendments to Atlassian AFL			16
Schedule 2 – Milestones			19


Name			Dexus Property Services Pty Limited (ABN 66 080 918 252)
Short form name			Developer
Notice details			Address: Level 25, Australia Square, 264-278 George Street, Sydney NSW 2000
			Attention: General Counsel
			E-mail address: ###


Name			Vertical First Pty Ltd (ABN 50 636 939 985) in its capacity as trustee of the Vertical First Trust (ABN 47 915 597 236)
Short form name			Landlord
Notice details			Address: Level 6/341 George Street, Sydney NSW 2000
			Attention: ###
			E-mail address: to both ### and ###


Name			Atlassian Pty Ltd (ACN 102 443 916)
Short form name			Tenant
Notice details			Address: Level 6/341 George Street, Sydney NSW 2000
			Attention: ###
			E-mail address: to both ### and ###


Name			Dexus Funds Management Limited (ABN 24 060 920 783) as responsible entity for Dexus Property Trust (ABN 24 595 854 202)
Short form name			Financial Guarantor
Notice details			Address: Level 25, Australia Square, 264-278 George Street, Sydney NSW 2000
			Attention: General Counsel
			E-mail address: ###


Name			Atlassian Corporation, a Delaware corporation
Short form name			Atlassian Guarantor
Notice details			Address: c/o Atlassian Inc, 350 Bush Street, 13th Floor, San Francisco, CA 94014
			Attention: General Counsel
			E-mail address: ###


	Developer
	Executed by Dexus Property Services Pty Limited (ABN 66 080 918 252) under Power of Attorney dated 17 December 2021
sign here ►	/s/ James Matthew Hough	/s/ Roger Ian Clarke
	Signature of attorney who declares that the attorney has not received any notice of the revocation of the Power of Attorney	Signature of attorney who declares that the attorney has not received any notice of the revocation of the Power of Attorney
name of attorney	James Matthew Hough	Roger Ian Clarke
sign here ►	/s/ Prerna Sundarjee	/s/ Prerna Sundarjee
	Signature of witness	Signature of witness
name of witness	Prerna Sundarjee	Prerna Sundarjee


	Landlord
	Executed by Vertical First Pty Ltd (ABN 50 636 939 985) in its capacity as trustee of the Vertical First Trust (ABN 47 915 597 236) in accordance with section 127(1) of the Corporations Act 2001 (Cth) by
sign here ►	/s/ James Matthew Hough	/s/ Roger Ian Clarke
	Signature of attorney who declares that the attorney has not received any notice of the revocation of the Power of Attorney	Signature of attorney who declares that the attorney has not received any notice of the revocation of the Power of Attorney
name of attorney	James Matthew Hough	Roger Ian Clarke
sign here ►	/s/ Prerna Sundarjee	/s/ Prerna Sundarjee
	Signature of witness	Signature of witness
name of witness	Prerna Sundarjee	Prerna Sundarjee


	Tenant
	Executed by Atlassian Pty Ltd (ACN 102 443 916) in accordance with section 127(1) of the Corporations Act 2001 (Cth) by
sign here ►	/s/ Gene Chi-Ching Liu	/s/ Stanley Smith Shepard
	Director	Director/Secretary
print name►	Gene Chi-Ching Liu	Stanley Smith Shepard

By signing above, each director or secretary (as applicable) consents to electronic execution of this document (in whole or in part), represents that they hold the position or are the person named with respect to their execution and authorises any other director or secretary (as applicable) to produce a copy of this document bearing his or her signature for the purpose of signing the copy to complete its execution under Section 127 of the Corporations Act 2001. The copy of the signature appearing on the copy so executed is to be treated as his or her original signature.