Atlassian Corp 10-Q for FY2023 Q2

Atlassian Corp (TEAM)

10-Q 2023-02-03 For: 2022-12-31

Added on April 08, 2026

About this 10-Q

Atlassian Corp filed this 10-Q on February 3, 2023, covering the quarter ended December 31, 2022 (FY2023 Q2).

Headline figures

Quarter ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $872.7M; up 26.7% from $688.53M a year earlier
Net loss: $205.03M; compared with a net loss of $22.33M a year earlier
Diluted EPS: -$0.80; compared with -$0.09 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


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


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)	4
	Condensed Consolidated Statements of Operations (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	56
	PART II.
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	86
Item 3.	Defaults Upon Senior Securities	86
Item 4.	Mine Safety Disclosures	86
Item 5.	Other Information	86
Item 6.	Exhibits	87
	SIGNATURES	88


	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
Commitments and contingencies (Note 13)
Stockholders’ equity
Class A Common Stock, $0.00001 par value; 750,000,000 shares authorized, 149,039,165 and 144,891,749 issued and outstanding at December 31, 2022 and June 30, 2022, respectively	1		1
Class B Common Stock, 0.00001 par value; 230,000,000 shares authorized, 107,247,693 and 110,035,649 issued and outstanding at December 31, 2022 and June 30, 2022, respectively	1		1
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


	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


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


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


	Three Months Ended December 31, 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 September 30, 2022	148,232	$	1	107,248	$	1	$	2,355,991	$	7,391	$	(1,882,771)	$	480,613
Common stock issued under employee stock plans	788	—		—	—		—		—		—		—
Stock-based compensation	—	—		—	—		265,785		—		—		265,785
Other comprehensive income, net of tax	—	—		—	—		—		36,125		—		36,125
Net loss	—	—		—	—		—		—		(205,031)		(205,031)
Balance at December 31, 2022	149,020	$	1	107,248	$	1	$	2,621,776	$	43,516	$	(2,087,802)	$	577,492


	Three Months Ended December 31, 2021
	Common Stock						Additional paid in capital		Accumulated other comprehensive loss		Accumulated Deficit		Total stockholders’ equity
	Class A			Class B
	Shares	Amount		Shares	Amount
Balance at September 30, 2021	139,089	$	1	113,471	$	1	$	1,758,371	$	(11,802)	$	(1,760,724)	$	(14,153)
Common stock issued under employee stock plans	794	—		—	—		4		—		—		4
Conversion from Class B Common Stock to Class A Common Stock	1,138	—		(1,138)	—		—		—		—		—
Stock-based compensation	—	—		—	—		145,882		—		—		145,882
Other comprehensive income, net of tax	—	—		—	—		—		10,122		—		10,122
Net loss	—	—		—	—		—		—		(22,328)		(22,328)
Balance at December 31, 2021	141,021	$	1	112,333	$	1	$	1,904,257	$	(1,680)	$	(1,783,052)	$	119,527


	Six Months Ended December 31, 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 under employee stock plans	1,412	—		—	—		(176)		—		—		(176)
Conversion from Class B Common Stock to Class A Common Stock	2,788	—		(2,788)	—		—		—		—		—
Stock-based compensation	—	—		—	—		439,416		—		—		439,416
Other comprehensive income, net of tax	—	—		—	—		—		29,652		—		29,652
Net loss	—	—		—	—		—		—		(218,772)		(218,772)
Balance at December 31, 2022	149,020	$	1	107,248	$	1	$	2,621,776	$	43,516	$	(2,087,802)	$	577,492


	Six Months Ended December 31, 2021
	Common Stock						Additional paid in capital		Accumulated other comprehensive income (loss)		Accumulated Deficit		Total stockholders’ equity
	Class A			Class B
	Shares	Amount		Shares	Amount
Balance at June 30, 2021	137,038	$	1	114,610	$	1	$	1,657,426	$	5,354	$	(1,349,520)	$	313,262
Common stock issued under employee stock plans	1,706	—		—	—		5		—		—		5
Conversion from Class B Common Stock to Class A Common Stock	2,277	—		(2,277)	—		—		—		—		—
Stock-based compensation	—	—		—	—		246,826		—		—		246,826
Other comprehensive loss, net of tax	—	—		—	—		—		(7,034)		—		(7,034)
Net loss	—	—		—	—		—		—		(433,532)		(433,532)
Balance at December 31, 2021	141,021	$	1	112,333	$	1	$	1,904,257	$	(1,680)	$	(1,783,052)	$	119,527


Equipment			3 years
Computer hardware and computer-related software			3 years
Furniture and fittings			5 years
Leasehold improvements			Shorter of the remaining lease term or 7 years


Patents, trademarks and other rights			5 - 12 years
Customer relationships			3 - 10 years
Acquired developed technology			4 - 6 years


		Three months ended		Six months ended
	Note	December 31, 2021
Net loss - IFRS		$	(77,472)	$	(477,574)
Cost of revenues	(a), (b)	4,970		6,732
Operating expenses	(a), (b)	84,790		99,859
Other expense, net	(b), (c)	(22,024)		(52,895)
Interest income	(b)	(3)		(6)
Interest expense	(b), (d)	(14,944)		(19,351)
Provision for income taxes	(e)	2,355		9,703
Net loss - GAAP		$	(22,328)	$	(433,532)


	Three Months Ended December 31, 2021				Six Months Ended December 31, 2021
	IFRS		GAAP		IFRS		GAAP
Net loss per share attributable to ordinary shareholders:
Basic and diluted	$	(0.31)	$	(0.09)	$	(1.89)	$	(1.72)


	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)		(54,992)		(46,491)		(68,203)
Prepaid expenses and other assets	(2,690)		(3,897)		(25,367)		(25,082)
Accounts payable	18,587		10,284		49,734		20,507
Accrued expenses and other liabilities	58,260		21,119		(50,183)		(63,287)
Deferred revenue	101,246		64,429		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


	Level 1		Level 2		Total

Assets measured at fair value
Cash and cash equivalents:
Money market funds	$	426,413	$	—	$	426,413





Marketable securities:
U.S. treasury securities	—		26,069		26,069

Certificates of deposit and time deposits	—		10,000		10,000




Derivative financial instruments	—		70,514		70,514





Strategic investments:

Publicly traded equity securities	19,325		—		19,325



Total assets measured at fair value	$	445,738	$	106,583	$	552,321

Liabilities measured at fair value
Derivative financial instruments	$	—	$	9,537	$	9,537



Total liabilities measured at fair value	$	—	$	9,537	$	9,537


	Level 1		Level 2		Total
Assets measured at fair value
Cash and cash equivalents:
Money market funds	$	555,247	$	—	$	555,247






Marketable securities:
U.S. treasury securities	—		70,294		70,294

Certificates of deposit and time deposits	—		3,000		3,000




Derivative financial instruments	—		44,052		44,052





Strategic investments:

Publicly traded equity securities	30,801		—		30,801


Total assets measured at fair value	$	586,048	$	117,346	$	703,394

Liabilities measured at fair value
Derivative financial instruments	$	—	$	24,100	$	24,100


	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value

U.S. treasury securities	$	26,250	$	—	$	(181)	$	26,069

Certificates of deposit and time deposits	10,000		—		—		10,000




Total marketable securities	$	36,250	$	—	$	(181)	$	36,069


	Note	IFRS		Adjustments		GAAP
Assets:
Prepaid expenses and other current assets	(b)	$	72,303	$	(2,301)	$	70,002
Property and equipment, net	(b)	98,554		2,108		100,662
Operating lease right-of-use assets	(b)	267,328		9,948		277,276
Goodwill	(a)	732,666		(9,828)		722,838
Deferred tax assets	(e)	42,760		(32,425)		10,335
Other non-current assets	(b)	60,740		(1,878)		58,862
Total conversion adjustments				$	(34,376)

Liabilities and Stockholders' Equity:
Deferred tax liabilities	(e)	$	26,457	$	(26,145)	$	312
Common stock and Additional paid in capital	(a), (e)	2,710,349		(527,811)		2,182,538
Accumulated other comprehensive income	(b), (c), (e)	53,829		(39,965)		13,864
Accumulated deficit	(a), (b), (c), (e)	(2,428,575)		559,545		(1,869,030)
Total conversion adjustments				$	(34,376)


	December 31, 2022		June 30, 2022
Due in one year or less	$	36,069	$	73,294


	Publicly traded equity securities		Privately held equity securities		Total
Initial total cost	$	10,270	$	128,800	$	139,070
Cumulative net gain (loss)	9,055		(687)		8,368
Carrying Value	$	19,325	$	128,113	$	147,438


	Equity Method Investment
Balance as of July 20, 2022	$	88,853
Effect of change in exchange rates	(1,069)
Balance as of December 31, 2022	$	87,784


	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	$	658,857	$	35,067		$	693,924		$	447,419		$	246,505	$	693,924
Interest rate swaps:
Notional amount	$	—	$	650,000		$	650,000		$	650,000		$	—	$	650,000
Average interest rate			0.81		%	0.81		%	0.81		%			0.81		%


	Balance Sheet Location	December 31, 2022		June 30, 2022
Derivative assets
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Prepaid expenses and other current assets	$	6,524	$	—
Foreign exchange forward contracts	Other non-current assets	1,464		—
Interest rate swaps	Prepaid expenses and other current assets	25,662		13,296
Interest rate swaps	Other non-current assets	34,375		30,367
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Prepaid expenses and other current assets	2,489		389
Total derivative assets		$	70,514	$	44,052

Derivative liabilities
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Accrued expenses and other current liabilities	$	9,067	$	18,208

Foreign exchange forward contracts	Other non-current liabilities	—		812
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Accrued expenses and other current liabilities	470		5,080
Total derivative liabilities		$	9,537	$	24,100


	Goodwill
Balance as of June 30, 2022	$	722,838

Effect of change in exchange rates	391
Balance as of December 31, 2022	$	723,229


	December 31, 2022		June 30, 2022		Weighted-Average Remaining Useful Lives (Years)
Acquired Developed Technology	$	234,618	$	234,618	2
Patents, Trademarks, and Other Rights	33,393		33,393		5
Customer Relationships	129,502		129,502		5
Intangible assets, gross	397,513		397,513
Less: accumulated amortization	(313,265)		(296,673)
Intangible assets, net	$	84,248	$	100,840


Fiscal Years:
Remainder of 2023	$	16,310
2024	26,267
2025	14,908
2026	12,370
2027	7,267
Thereafter	7,126
Total future amortization expense	$	84,248


	December 31, 2022		June 30, 2022
Weighted average remaining lease term (in years)	8		8
Weighted average discount rate	2.4	%	2.4	%


Fiscal years:	Operating Lease Payments
Remainder of 2023	$	27,892
2024	51,351
2025	48,701
2026	41,710
2027	36,755
Thereafter	127,981
Total future operating lease payments	334,390
Less: imputed interest	(30,078)

Total lease liability balance	$	304,312


	December 31, 2022		June 30, 2022
Accrued expenses	$	115,827	$	123,381
Employee benefits	126,012		197,701
Tax liabilities	38,011		26,367
Customer deposits	10,131		9,718
Derivative liabilities	9,537		23,288
Liabilities held for sale	—		17,564
Other payables	9,412		8,120
Total accrued expenses and other liabilities	$	308,930	$	406,139


	Number of Shares	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value












Balance as of June 30, 2022	6,023,997	$	257.62	$	1,128,897
Granted	6,599,428	$	237.66
Vested	(1,344,975)	$	230.99	$	260,126
Forfeited or cancelled	(420,983)	$	270.12
Balance as of December 31, 2022	10,857,467	$	248.31	$	1,397,139


	As of
	December 31, 2021	March 31, 2022	June 30, 2022	September 30, 2022	December 31, 2022
Number of customers	226,521	234,575	242,623	249,173	253,177


	Three Months Ended December 31,
(in thousands, except percentage data)	2022		2021		$ Change		% Change
Subscription	$	711,199	$	508,987	$	202,212	40	%
Maintenance	106,023		127,059		(21,036)		(17)
Other	55,482		52,480		3,002		6
Total revenues	$	872,704	$	688,526	$	184,178	27	%


			Deed
Atlassian Central
Guarantor Replacement Deed

Dexus Property Services Pty Limited Vertical First Pty Ltd as trustee for the Vertical First Trust Atlassian Pty Ltd Atlassian Corporation Limited (formerly Atlassian Corporation Plc) Atlassian Corporation Dexus Funds Management Limited as responsible entity for Dexus Property Trust Dexus Funds Management Limited as responsible entity for Dexus Operations Trust


			480 Queen Street Qld 4000 Australia GPO Box 3124 Brisbane Qld 4001 Australia			T +61 7 3258 6666 F +61 7 3258 6444 herbertsmithfreehills.com DX 255 Brisbane


Table of contents
1 Definitions and interpretation			3
1.1 Definitions			3
1.2 Agreement for Lease Definitions			3
1.3 Rules for interpreting this Deed			3
1.4 Limitations of liability			3
2 Replacement and termination of guarantee			4
2.1 Provision of Replacement Guarantee			4
2.2 Termination of Original Guarantee			4
3 Variation to the Agreement for Lease			4
4 Notices			4
5 Miscellaneous			4
5.1 Governing law and jurisdiction			4
5.2 Entire agreement			5
5.3 Further acts and documents			5
5.4 Waiver and variation of rights			5
5.5 Severability			5
5.6 Counterparts			5
5.7 Power and capacity warranties			5
5.8 Electronic signatures			6
5.9 Confirmation			6
Schedule 1
Form of Replacement Guarantee			7
1 Tenant Guarantee			7
1.1 Not used			7
1.2 Guarantee			7
1.3 Indemnities			7


1.4 Atlassian Guarantor as principal debtor			8
1.5 Extent of guarantee and indemnity			8
1.6 Preservation of Developer’s rights			8
1.7 Suspension of Atlassian Guarantor’s rights			9
1.8 Other securities and obligations of Atlassian Guarantor			9
1.9 Reinstatement of Tenant’s rights			10
1.10 Application of money			10
1.11 Replacement of Tenant Parent Company Guarantee			10
1.12 Limitation of liability			10
Signing page			12


Developer			Dexus Property Services Pty Limited ABN 66 080 918 252 of Level 25, Australia Square, 264-278 George Street, Sydney NSW 2000 (Developer)
Landlord			Vertical First Pty Ltd as trustee for the Vertical First Trust ACN 636 939 985 of Level 6/341 George Street, Sydney NSW 2000 (Landlord)
Tenant			Atlassian Pty Ltd ACN 102 443 916 of Level 6/341 George Street, Sydney NSW 2000 (Tenant)
Outgoing Guarantor			Atlassian Corporation Limited (formerly Atlassian Corporation Plc) c/- Exchange House, Primrose Street, London, EC2A 2EG United Kingdom (Outgoing Guarantor)
Incoming Guarantor			Atlassian Corporation, a Delaware corporation 350 Bush Street, Floor 13, San Francisco, CA 94014 (Incoming Guarantor)
Financial Guarantor			Dexus Funds Management Limited as responsible entity for Dexus Property Trust ABN 24 060 920 783 of Level 25, Australia Square, 264-278 George Street, Sydney NSW 2000 (Financial Guarantor)
Performance Guarantor			Dexus Funds Management Limited as responsible entity for Dexus Operations Trust ABN 24 060 920 783 of Level 25, Australia Square, 264-278 George Street, Sydney NSW 2000 (Performance Guarantor)