Atlassian Corp 8-K, filed Apr 25, 2024
Atlassian Corp (TEAM)
8-K
2024-04-25
For: 2024-04-25
View Original
Added on
April 08, 2026
About this 8-K
Atlassian Corp filed this 8-K on April 25, 2024.
Items reported
- Item 2.02: Financial results
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
_________________
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 25, 2024
(Exact Name of Registrant as Specified in its Charter)
_________________
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||||||||
(Address of principal executive offices and Zip Code)
(415 ) 701-1110
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
_________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||||||
Securities registered pursuant to Section 12(b) of the Act: | |||||||||||||||||||||||
Title of each class | Trading Symbol | Name of each exchange on which registered | |||||||||||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On April 25, 2024, Atlassian Corporation (the “Company”) issued a press release announcing its results for the quarter ended March 31, 2024 (the “Press Release”). A copy of the Press Release is attached as Exhibit 99.1 to this current report on Form 8-K and is incorporated by reference herein. The Company also published a letter to its shareholders announcing its financial results for the quarter ended March 31, 2024 (the “Shareholder Letter”). The full text of the Shareholder Letter is attached as Exhibit 99.2 to this current report on Form 8-K and is incorporated by reference herein.
The information in this Item 2.02, including Exhibit 99.1 and Exhibit 99.2, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April 25, 2024, Scott Farquhar, the Company’s Co-Founder, Co-Chief Executive Officer and director, announced that he will step down from his role as Co-Chief Executive Officer, effective as of August 31, 2024. At that time, Mike Cannon-Brookes, the Company’s Co-Founder, Co-Chief Executive Officer and director will continue as the Company’s Chief Executive Officer.
Mr. Farquhar is expected to remain as a special advisor to the Company and serving as a member of its board of directors.
An update to Atlassian’s employees from Scott Farquhar regarding this announcement is attached to this Current Report on Form 8-K as Exhibit 99.3 and is incorporated by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 99.3 | ||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL). | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ATLASSIAN CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||
Date: | April 25, 2024 | By: | /s/ Joseph Binz | ||||||||||||||||||||||||||||||||||||||||||||
Joseph Binz | |||||||||||||||||||||||||||||||||||||||||||||||
Chief Financial Officer | |||||||||||||||||||||||||||||||||||||||||||||||
Atlassian Announces Third Quarter Fiscal Year 2024 Results and CEO Transition
Quarterly revenue of $1,189 million, up 30% year-over-year
Quarterly subscription revenue of $1,071 million, up 41% year-over-year
Quarterly GAAP operating margin of 1% and non-GAAP operating margin of 27%
Quarterly cash flow from operations of $565 million and free cash flow of $555 million
Team Anywhere/San Francisco (April 25, 2024) — Atlassian Corporation (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for its third quarter ended March 31, 2024. Atlassian also announced co-founder Scott Farquhar will step down as co-CEO effective August 31, 2024, with co-founder Mike Cannon Brookes continuing to lead Atlassian as CEO. A shareholder letter was posted on Atlassian’s Work Life blog at http://atlassian.com/blog/announcements/shareholder-letter-q3fy24 and in the Investor Relations section of Atlassian’s website at https://investors.atlassian.com.
Third Quarter Fiscal Year 2024 Earnings Results
“It’s been a milestone quarter for Atlassian,” said Mike Cannon-Brookes, co-founder and co-CEO.
“We’ve delivered $1.2 billion in revenue in Q3, up 30% year-over-year, driven by subscription revenue growth of 41% year-over-year. We drove record free cash flow of $555 million, up 59% year-over-year.
“Today, Atlassian is a cloud-majority company. We have over 300,000 customers using our Cloud products and have seen a 3x increase in paid seats in Cloud since we announced end-of-support for Server three and a half years ago. We have a significant opportunity to drive durable, long-term growth as we continue to execute against our cloud roadmap and deliver innovation across our cloud platform. We’re excited to share more at our flagship customer event next week, Team ’24,” concluded Cannon-Brookes.
CEO Transition
After an incredible 23 years, Scott Farquhar has made the decision to step down as co-CEO to spend more time with his young family, improve the world via philanthropy, and help further the technology industry globally.
“While it's a difficult decision to step away, I do so knowing Atlassian is exceptionally positioned to take hold of the massive opportunities at its feet. We have a strong leadership team, and great momentum around cloud, enterprise, and now, AI,” said Farquhar.
Cannon-Brookes added, “The contribution Scott has made at Atlassian is impossible to quantify. Starting with just the two of us in 2001, to a global company of over 11,000 employees and over USD $4 billion in annual revenue, Atlassian would not be the company it is today without Scott. I am truly grateful to have had him by my side every day for the last 23 years.”
Scott’s last day as co-CEO will be August 31, 2024. He will continue as an active Board member and assume a special advisor role.
Mike will continue to lead as CEO as Atlassian pursues its mission to unleash the potential of every team and capitalize on its strengths in the AI era. To read Scott’s blog post, visit: https://www.atlassian.com/blog/announcements/scott-farquhar-ceo-transition.
Third Quarter Fiscal Year 2024 Financial Highlights:
On a GAAP basis, Atlassian reported:
•Revenue: Total revenue was $1,189.1 million for the third quarter of fiscal year 2024, up 30% from $915.5 million for the third quarter of fiscal year 2023.
•Operating Income (Loss) and Operating Margin: Operating income was $17.8 million for the third quarter of fiscal year 2024, compared with operating loss of $161.6 million for the third quarter of fiscal year 2023. Operating margin was 1% for the third quarter of fiscal year 2024, compared with (18%) for the third quarter of fiscal year 2023.
•Net Income (Loss) and Net Income (Loss) Per Diluted Share: Net income was $12.8 million for the third quarter of fiscal year 2024, compared with net loss of $209.0 million for the third quarter of fiscal year 2023. Net
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income per diluted share was $0.05 for the third quarter of fiscal year 2024, compared with net loss per diluted share of $0.81 for the third quarter of fiscal year 2023.
•Balance Sheet: Cash and cash equivalents plus marketable securities at the end of the third quarter of fiscal year 2024 totaled $2.1 billion.
On a non-GAAP basis, Atlassian reported:
•Operating Income and Operating Margin: Operating income was $316.5 million for the third quarter of fiscal year 2024, compared with operating income of $197.1 million for the third quarter of fiscal year 2023. Operating margin was 27% for the third quarter of fiscal year 2024, compared with 22% for the third quarter of fiscal year 2023.
•Net Income and Net Income Per Diluted Share: Net income was $232.5 million for the third quarter of fiscal year 2024, compared with net income of $138.0 million for the third quarter of fiscal year 2023. Net income per diluted share was $0.89 for the third quarter of fiscal year 2024, compared with net income per diluted share of $0.54 for the third quarter of fiscal year 2023.
•Free Cash Flow: Cash flow from operations was $565.4 million and free cash flow was $554.9 million for the third quarter of fiscal year 2024. Free cash flow margin for the third quarter of fiscal year 2024 was 47%.
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 Marketplace Surpasses $4 Billion in Lifetime Sales: The Atlassian Marketplace surpassed $4 billion in lifetime sales since its inception in 2012. More than 1,800 Marketplace partners have created more than 5,700 apps and integrations, delivering additional value and innovation to customers.
•Loom Named to Fast Company’s List of World’s Most Innovative Companies 2024: Loom was named to Fast Company’s List of World’s Most Innovative Companies of 2024. In addition to delivering a seamless asynchronous video communication experience, the launch of advanced AI capabilities makes video creation easy with the ability to edit the transcript to say what you want, automatically share your message, and identify calls to action. This recognition is a testament to the dedication of our new Loom teammates, who continue to push the boundaries of the future of work.
•Optic Acquisition: Atlassian announced the acquisition of Optic, an Application Programming Interface (API) documentation and management company. Optic provides engineering organizations with native API documentation making it easier for developers to publish accurate API docs, avoid breaking changes, and improve the design of their APIs. Together with Compass, Optic will accelerate our ability to empower engineering teams and improve productivity by helping developers find the documentation they need and ship faster.
•Confluence Whiteboards: Atlassian released Confluence whiteboards into general availability. Confluence whiteboards are a freeform way for teams to collaborate, brainstorm, draw, and visualize in a simple, integrated way. Whiteboards allows teams to seamlessly connect individual thoughts and ideas to workflows, by moving from a whiteboard into Jira without even having to change screens.
•New Data Residency Regions Unlocked in the Cloud: Atlassian announced multiple new data residency regions available to customers: India, Japan, South Korea, Switzerland, and the United Kingdom. The expansion of data residency availability, now offered in 12 geographies, provides customers with control and flexibility on where they store their cloud data.
•Customers with >$10,000 in Cloud ARR: Atlassian ended its third quarter of fiscal year 2024 with 44,336 customers with greater than $10,000 in Cloud annualized recurring revenue (Cloud ARR), an increase of 19% year-over-year.
•Achieved Recognition on Fortune’s List of 100 Best Companies to Work For™ 2024: Atlassian was recognized, for the sixth consecutive year, on Fortune’s list of 100 Best Companies to Work For™. This remarkable accomplishment is a testament to the dedication, innovative spirit, and collective effort of all Atlassians who build upon our exceptional culture.
•Atlassian Team ’24: Atlassian will hold its flagship Team ’24 conference in Las Vegas from April 30, 2024 through May 2, 2024. Thousands of customers, partners, and Atlassians will come together to talk about teamwork innovation, and hear exciting announcements that advance the way teammates work together through deep human insights and breakthrough technologies. More information on Team ’24 can be found at https://events.atlassian.com/team.
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Financial Targets:
Atlassian is providing its financial targets as follows:
Fourth Quarter Fiscal Year 2024:
•Total revenue is expected to be in the range of $1,120 million to $1,135 million.
•Cloud revenue growth year-over-year is expected to be approximately 32%.
•Data Center revenue growth year-over-year is expected to be in the range of 40% to 42%.
•Gross margin is expected to be approximately 81.0% on a GAAP basis and approximately 83.5% on a non-GAAP basis.
•Operating margin is expected to be approximately (7.0%) on a GAAP basis and approximately 18.5% on a non-GAAP basis.
For additional commentary regarding financial targets, please see Atlassian’s third quarter fiscal year 2024 shareholder letter dated April 25, 2024.
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-q3fy24, 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, April 25, 2024 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 300,000 companies of all sizes worldwide - including NASA, Audi, Kiva, Deutsche Bank and Dropbox - 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 and Jira Service Management at https://atlassian.com.
Investor Relations Contact
Martin Lam
IR@atlassian.com
Media Contact
Marie-Claire Maple
press@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, product features, including AI capabilities, customers, cloud migrations, macroeconomic environment, anticipated growth, outlook, potential benefits and synergies from Loom and other acquisitions, technology, and other key strategic areas, and our financial targets such as total revenue, Cloud and Data Center 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.
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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 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 U.S. generally accepted accounting principles (“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 and non-GAAP gross margin, non-GAAP operating income and non-GAAP operating margin, 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 and non-GAAP gross margin. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, and restructuring charges.
•Non-GAAP operating income and non-GAAP operating margin. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, and restructuring charges.
•Non-GAAP net income and non-GAAP net income per diluted share. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, restructuring charges, gain on a non-cash sale of a controlling interest of a subsidiary, and the related income tax adjustments.
•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.
Customers with >$10,000 in Cloud ARR
We define the number of customers with Cloud ARR greater than $10,000 at the end of any particular period as the number of organizations with unique domains with an active Cloud subscription for two or more seats and greater than $10,000 in Cloud ARR.
We define Cloud ARR as the annualized recurring revenue run-rate of Cloud subscription agreements at a point in time. We calculate Cloud ARR by taking the Cloud monthly recurring revenue (“Cloud MRR”) run-rate and multiplying it by 12. Cloud MRR for each month is calculated by aggregating monthly recurring revenue from committed contractual amounts at a point in time. Cloud ARR and Cloud MRR should be viewed independently of revenue and do not represent our revenue under GAAP, as they are operational metrics that can be affected by contract start and end dates and renewal rates.
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Atlassian Corporation
Condensed 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, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Subscription | $ | 1,071,355 | $ | 760,680 | $ | 2,855,518 | $ | 2,122,863 | |||||||||||||||
| Maintenance | 29,530 | 94,225 | 177,230 | 313,813 | |||||||||||||||||||
| Other | 88,243 | 60,548 | 194,265 | 158,873 | |||||||||||||||||||
| Total revenues | 1,189,128 | 915,453 | 3,227,013 | 2,595,549 | |||||||||||||||||||
| Cost of revenues (1) (2) | 213,425 | 168,652 | 585,990 | 463,989 | |||||||||||||||||||
| Gross profit | 975,703 | 746,801 | 2,641,023 | 2,131,560 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development (1) (2) | 576,490 | 522,344 | 1,595,007 | 1,395,026 | |||||||||||||||||||
| Marketing and sales (1) (2) | 223,814 | 220,921 | 637,894 | 567,240 | |||||||||||||||||||
| General and administrative (1) | 157,595 | 165,103 | 458,249 | 464,127 | |||||||||||||||||||
| Total operating expenses | 957,899 | 908,368 | 2,691,150 | 2,426,393 | |||||||||||||||||||
| Operating income (loss) | 17,804 | (161,567) | (50,127) | (294,833) | |||||||||||||||||||
| Other income (expense), net | (10,990) | (943) | (23,964) | 21,597 | |||||||||||||||||||
| Interest income | 21,414 | 15,047 | 69,233 | 29,153 | |||||||||||||||||||
| Interest expense | (8,453) | (7,978) | (26,430) | (21,607) | |||||||||||||||||||
| Income (loss) before provision for income taxes | 19,775 | (155,441) | (31,288) | (265,690) | |||||||||||||||||||
| Provision for income taxes | (7,023) | (53,596) | (72,312) | (162,119) | |||||||||||||||||||
| Net income (loss) | $ | 12,752 | $ | (209,037) | $ | (103,600) | $ | (427,809) | |||||||||||||||
| Net income (loss) per share attributable to Class A and Class B common stockholders: | |||||||||||||||||||||||
| Basic | $ | 0.05 | $ | (0.81) | $ | (0.40) | $ | (1.67) | |||||||||||||||
| Diluted | $ | 0.05 | $ | (0.81) | $ | (0.40) | $ | (1.67) | |||||||||||||||
| Weighted-average shares used in computing net income (loss) per share attributable to Class A and Class B common stockholders: | |||||||||||||||||||||||
| Basic | 259,717 | 256,825 | 258,738 | 255,949 | |||||||||||||||||||
| Diluted | 261,778 | 256,825 | 258,738 | 255,949 | |||||||||||||||||||
(1)Amounts include stock-based compensation as follows:
| Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Cost of revenues | $ | 17,840 | $ | 17,581 | $ | 53,874 | $ | 46,747 | |||||||||||||||
| Research and development | 190,322 | 167,994 | 528,587 | 447,465 | |||||||||||||||||||
| Marketing and sales | 33,383 | 36,571 | 103,832 | 97,922 | |||||||||||||||||||
| General and administrative | 40,974 | 41,281 | 121,652 | 110,709 | |||||||||||||||||||
(2)Amounts include amortization of acquired intangible assets, as follows:
| Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Cost of revenues | $ | 12,454 | $ | 5,696 | $ | 25,282 | $ | 17,090 | |||||||||||||||
| Research and development | 94 | 94 | 281 | 281 | |||||||||||||||||||
| Marketing and sales | 3,646 | 2,365 | 8,723 | 7,376 | |||||||||||||||||||
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Atlassian Corporation
Condensed Consolidated Balance Sheets
(U.S. $ in thousands)
(unaudited)
| March 31, 2024 | June 30, 2023 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,948,978 | $ | 2,102,550 | |||||||
| Marketable securities | 163,318 | 10,000 | |||||||||
| Accounts receivable, net | 646,082 | 477,678 | |||||||||
| Prepaid expenses and other current assets | 155,551 | 146,136 | |||||||||
| Total current assets | 2,913,929 | 2,736,364 | |||||||||
| Non-current assets: | |||||||||||
| Property and equipment, net | 80,961 | 81,402 | |||||||||
| Operating lease right-of-use assets | 180,967 | 184,195 | |||||||||
| Strategic investments | 220,125 | 225,538 | |||||||||
| Intangible assets, net | 312,816 | 69,072 | |||||||||
| Goodwill | 1,285,745 | 727,211 | |||||||||
| Deferred tax assets | 2,780 | 9,945 | |||||||||
| Other non-current assets | 65,942 | 73,052 | |||||||||
| Total assets | $ | 5,063,265 | $ | 4,106,779 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 188,241 | $ | 159,293 | |||||||
| Accrued expenses and other current liabilities | 484,896 | 423,131 | |||||||||
| Deferred revenue, current portion | 1,698,639 | 1,362,736 | |||||||||
| Operating lease liabilities, current portion | 46,437 | 44,930 | |||||||||
| Term loan facility, current portion | 50,000 | 37,500 | |||||||||
| Total current liabilities | 2,468,213 | 2,027,590 | |||||||||
| Non-current liabilities: | |||||||||||
| Deferred revenue, net of current portion | 256,926 | 182,743 | |||||||||
| Operating lease liabilities, net of current portion | 225,208 | 237,835 | |||||||||
| Term loan facility, net of current portion | 924,724 | 962,093 | |||||||||
| Deferred tax liabilities | 19,036 | 10,669 | |||||||||
| Other non-current liabilities | 34,987 | 31,177 | |||||||||
| Total liabilities | 3,929,094 | 3,452,107 | |||||||||
| Stockholders’ equity | |||||||||||
| Common stock | 3 | 3 | |||||||||
| Additional paid-in capital | 3,938,577 | 3,130,631 | |||||||||
| Accumulated other comprehensive income | 13,767 | 34,002 | |||||||||
| Accumulated deficit | (2,818,176) | (2,509,964) | |||||||||
| Total stockholders’ equity | 1,134,171 | 654,672 | |||||||||
| Total liabilities and stockholders’ equity | $ | 5,063,265 | $ | 4,106,779 | |||||||
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Atlassian Corporation
Condensed Consolidated Statements of Cash Flows
(U.S. $ in thousands)
(unaudited)
| Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||
| Net income (loss) | $ | 12,752 | $ | (209,037) | $ | (103,600) | $ | (427,809) | |||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||||||||
| Depreciation and amortization | 23,464 | 15,523 | 55,560 | 45,619 | |||||||||||||||||||
| Stock-based compensation | 282,519 | 263,427 | 807,945 | 702,843 | |||||||||||||||||||
| Impairment charges for leases and leasehold improvements | — | 61,098 | — | 61,098 | |||||||||||||||||||
| Deferred income taxes | 3,207 | 1,495 | (98) | 6,308 | |||||||||||||||||||
| Gain on a non-cash sale of a controlling interest of a subsidiary | — | — | (1,378) | (45,158) | |||||||||||||||||||
| Net loss (income) on strategic investments | 4,060 | (1,812) | 11,750 | 17,264 | |||||||||||||||||||
| Net foreign currency loss (gain) | (2,276) | (177) | 142 | (6,005) | |||||||||||||||||||
| Other | 412 | 1,381 | 698 | 1,611 | |||||||||||||||||||
| Changes in operating assets and liabilities, net of business combinations: | |||||||||||||||||||||||
| Accounts receivable, net | (119,819) | 8,460 | (166,494) | (38,031) | |||||||||||||||||||
| Prepaid expenses and other assets | (35,986) | (15,163) | (59,528) | (40,530) | |||||||||||||||||||
| Accounts payable | 28,227 | (27,700) | 28,850 | 22,034 | |||||||||||||||||||
| Accrued expenses and other liabilities | 67,149 | 131,238 | 54,958 | 81,055 | |||||||||||||||||||
| Deferred revenue | 301,681 | 123,636 | 393,135 | 215,037 | |||||||||||||||||||
| Net cash provided by operating activities | 565,390 | 352,369 | 1,021,940 | 595,336 | |||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||
| Business combinations, net of cash acquired | — | — | (844,727) | (600) | |||||||||||||||||||
| Purchases of property and equipment | (10,520) | (2,691) | (19,522) | (23,227) | |||||||||||||||||||
| Purchases of strategic investments | (4,250) | (9,000) | (8,250) | (18,450) | |||||||||||||||||||
| Purchases of marketable securities | (74,544) | — | (213,690) | (10,000) | |||||||||||||||||||
| Proceeds from maturities of marketable securities | 63,000 | 26,250 | 79,150 | 73,950 | |||||||||||||||||||
| Proceeds from sales of marketable securities and strategic investments | — | 8 | 61,392 | 629 | |||||||||||||||||||
| Net cash provided by (used in) investing activities | (26,314) | 14,567 | (945,647) | 22,302 | |||||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||||
| Principal payments of term loan facility | (12,500) | — | (25,000) | — | |||||||||||||||||||
| Repurchases of Class A Common Stock | (35,377) | (31,748) | (203,029) | (31,748) | |||||||||||||||||||
| Proceeds from other financing arrangements | — | 2 | — | 1,398 | |||||||||||||||||||
| Net cash used in financing activities | (47,877) | (31,746) | (228,029) | (30,350) | |||||||||||||||||||
| Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | (2,769) | 421 | (1,986) | (996) | |||||||||||||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 488,430 | 335,611 | (153,722) | 586,292 | |||||||||||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 1,461,763 | 1,637,969 | 2,103,915 | 1,386,686 | |||||||||||||||||||
| Net decrease in cash and cash equivalents included in assets held for sale | — | — | — | 602 | |||||||||||||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 1,950,193 | $ | 1,973,580 | $ | 1,950,193 | $ | 1,973,580 | |||||||||||||||
7
Atlassian Corporation
Revenues by Deployment Options
(U.S. $ in thousands)
(unaudited)
| Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Cloud | $ | 703,036 | $ | 534,891 | $ | 1,960,893 | $ | 1,522,269 | |||||||||||||||
| Data Center | 364,134 | 221,551 | 881,835 | 587,043 | |||||||||||||||||||
| Server | 29,720 | 94,389 | 177,645 | 314,370 | |||||||||||||||||||
| Marketplace and other (1) | 92,238 | 64,622 | 206,640 | 171,867 | |||||||||||||||||||
| Total revenues | $ | 1,189,128 | $ | 915,453 | $ | 3,227,013 | $ | 2,595,549 | |||||||||||||||
(1) Included in Marketplace and other 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.
8
Atlassian Corporation
Reconciliation of GAAP to Non-GAAP Results
(U.S. $ and shares in thousands, except percentage and per share data)
(unaudited)
| Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| GAAP gross profit | $ | 975,703 | $ | 746,801 | $ | 2,641,023 | $ | 2,131,560 | |||||||||||||||
| Plus: Stock-based compensation | 17,840 | 17,293 | 53,874 | 46,459 | |||||||||||||||||||
| Plus: Amortization of acquired intangible assets | 12,454 | 5,696 | 25,282 | 17,090 | |||||||||||||||||||
| Plus: Restructuring charges (1) | — | 9,247 | — | 9,247 | |||||||||||||||||||
| Non-GAAP gross profit | $ | 1,005,997 | $ | 779,037 | $ | 2,720,179 | $ | 2,204,356 | |||||||||||||||
| Gross margin | |||||||||||||||||||||||
| GAAP gross margin | 82% | 82% | 82% | 82% | |||||||||||||||||||
| Plus: Stock-based compensation | 2 | 2 | 1 | 2 | |||||||||||||||||||
| Plus: Amortization of acquired intangible assets | 1 | — | 1 | 1 | |||||||||||||||||||
| Plus: Restructuring charges (1) | —% | 1% | —% | —% | |||||||||||||||||||
| Non-GAAP gross margin | 85% | 85% | 84% | 85% | |||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| GAAP operating income (loss) | $ | 17,804 | $ | (161,567) | $ | (50,127) | $ | (294,833) | |||||||||||||||
| Plus: Stock-based compensation | 282,519 | 252,678 | 807,945 | 692,094 | |||||||||||||||||||
| Plus: Amortization of acquired intangible assets | 16,194 | 8,155 | 34,286 | 24,747 | |||||||||||||||||||
| Plus: Restructuring charges (1) | — | 97,848 | — | 97,848 | |||||||||||||||||||
| Non-GAAP operating income | $ | 316,517 | $ | 197,114 | $ | 792,104 | $ | 519,856 | |||||||||||||||
| Operating margin | |||||||||||||||||||||||
| GAAP operating margin | 1% | (18%) | (2%) | (11%) | |||||||||||||||||||
| Plus: Stock-based compensation | 25 | 28 | 26 | 26 | |||||||||||||||||||
| Plus: Amortization of acquired intangible assets | 1 | 1 | 1 | 1 | |||||||||||||||||||
| Plus: Restructuring charges (1) | — | 11 | — | 4 | |||||||||||||||||||
| Non-GAAP operating margin | 27% | 22% | 25% | 20% | |||||||||||||||||||
| Net income | |||||||||||||||||||||||
| GAAP net income (loss) | $ | 12,752 | $ | (209,037) | $ | (103,600) | $ | (427,809) | |||||||||||||||
| Plus: Stock-based compensation | 282,519 | 252,678 | 807,945 | 692,094 | |||||||||||||||||||
| Plus: Amortization of acquired intangible assets | 16,194 | 8,155 | 34,286 | 24,747 | |||||||||||||||||||
| Plus: Restructuring charges (1) | — | 97,848 | — | 97,848 | |||||||||||||||||||
| Less: Gain on a non-cash sale of a controlling interest of a subsidiary | — | — | (1,378) | (45,158) | |||||||||||||||||||
| Less: Income tax adjustments (2) | (78,969) | (11,689) | (146,271) | 3,513 | |||||||||||||||||||
| Non-GAAP net income | $ | 232,496 | $ | 137,955 | $ | 590,982 | $ | 345,235 | |||||||||||||||
| Net income per share | |||||||||||||||||||||||
| GAAP net income (loss) per share - diluted | $ | 0.05 | $ | (0.81) | $ | (0.40) | $ | (1.67) | |||||||||||||||
| Plus: Stock-based compensation | 1.08 | 0.98 | 3.11 | 2.70 | |||||||||||||||||||
| Plus: Amortization of acquired intangible assets | 0.06 | 0.03 | 0.13 | 0.10 | |||||||||||||||||||
| Plus: Restructuring charges (1) | — | 0.39 | — | 0.39 | |||||||||||||||||||
| Less: Gain on a non-cash sale of a controlling interest of a subsidiary | — | — | (0.01) | (0.18) | |||||||||||||||||||
| Less: Income tax adjustments (2) | (0.30) | (0.05) | (0.56) | 0.01 | |||||||||||||||||||
| Non-GAAP net income per share - diluted | $ | 0.89 | $ | 0.54 | $ | 2.27 | $ | 1.35 | |||||||||||||||
| Weighted-average diluted shares outstanding | |||||||||||||||||||||||
| Weighted-average shares used in computing diluted GAAP net income (loss) per share | 261,778 | 256,825 | 258,738 | 255,949 | |||||||||||||||||||
| Plus: Dilution from dilutive securities (3) | — | 425 | 1,273 | 590 | |||||||||||||||||||
| Weighted-average shares used in computing diluted non-GAAP net income per share | 261,778 | 257,250 | 260,011 | 256,539 | |||||||||||||||||||
| Free cash flow | |||||||||||||||||||||||
| GAAP net cash provided by operating activities | $ | 565,390 | $ | 352,369 | $ | 1,021,940 | $ | 595,336 | |||||||||||||||
| Less: Capital expenditures | (10,520) | (2,691) | (19,522) | (23,227) | |||||||||||||||||||
| Free cash flow | $ | 554,870 | $ | 349,678 | $ | 1,002,418 | $ | 572,109 | |||||||||||||||
9
(1) Restructuring charges include stock-based compensation expense related to the rebalancing of resources for the three and nine months ended March 31, 2023.
(2) In fiscal year 2024, we began to utilize a fixed long-term projected non-GAAP tax rate in our computation of the non-GAAP income tax adjustments in order to provide better consistency across interim reporting periods. In projecting this long-term non-GAAP tax rate, we utilized a three-year financial projection that excludes the direct and indirect income tax effects of the other non-GAAP adjustments reflected above. Additionally, we considered our current operating structure and other factors such as our existing tax positions in various jurisdictions and key legislation in major jurisdictions where we operate. For fiscal year 2024, we determined the projected non-GAAP tax rate to be 27%. This fixed long-term projected non-GAAP tax rate eliminates the effects of non-recurring and period specific items which can vary in size and frequency. Examples of the non-recurring and period specific items include but are not limited to changes in the valuation allowance related to deferred tax assets, effects resulting from acquisitions, and unusual or infrequently occurring items. We will periodically re-evaluate this long-term rate, as necessary, for significant events. The rate could be subject to change for a variety of reasons, for example, significant changes in the geographic earnings mix or fundamental tax law changes in major jurisdictions where the company operates.
(3) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the nine months ended March 31, 2024 and three and nine months ended March 31, 2023, respectively, because the effect would have been anti-dilutive.
10
Atlassian Corporation
Reconciliation of GAAP to Non-GAAP Financial Targets
| Three Months Ending June 30, 2024 | |||||||||||
| GAAP gross margin | 81.0% | ||||||||||
| Plus: Stock-based compensation | 1.5 | ||||||||||
| Plus: Amortization of acquired intangible assets | 1.0 | ||||||||||
| Non-GAAP gross margin | 83.5% | ||||||||||
| GAAP operating margin | (7.0%) | ||||||||||
| Plus: Stock-based compensation | 24.0 | ||||||||||
| Plus: Amortization of acquired intangible assets | 1.5 | ||||||||||
| Non-GAAP operating margin | 18.5% | ||||||||||
11
Q3 FY24 From the CEOs Fellow shareholders, It’s been a milestone quarter for the Atlassian history books. Today, Atlassian is a cloud-majority company. We have over 300,000 customers using our Cloud products and have seen a 3x increase in paid seats in the cloud since we announced the end-of- support for our Server products three and a half years ago. As we watched our dashboard tracking paid Server users reach zero, we reflected on how daunting this mountain appeared when we first drew up plans to sunset our Server offerings. And while this milestone is just that – one significant moment amongst many across our multi- year journey – we are chuffed with our accomplishments. Overall, we migrated more paid seats to the cloud than we had initially projected, underscoring the innovation we’ve been shipping and our customers' desire to make the switch. We’ve also consistently seen lower-than-expected churn from our Server base, which speaks to the mission-critical role our products play and value they deliver. As we look ahead, we have an even larger opportunity in the cloud than we had originally believed. We’ll continue to execute against our roadmap to pave the path for our Data Center customers to realize the innovation that can only be found in the Atlassian cloud. However, this quarter will be marked by more than a momentous cloud milestone. After an incredible 23 years, Scott Farquhar has made the decision to step down as co-CEO. Scott’s last day as co-CEO will be August 31, 2024. He will remain active as a Board member and assume a special advisor role. The contribution Scott has made in founding and building Atlassian is impossible to quantify, but can best be illustrated by the tens of thousands of jobs created, the hundreds of thousands of customers supported, and the millions of daily users around the world whose lives are improved by Atlassian’s software. Atlassian paved the way for other Australian technology companies and continues to do so today. Scott steps away to spend more time with his young family, improve the world via philanthropy, and help further the technology industry globally. Rest assured, there will be many moments of thanks and celebration of the incredible impact Scott has made in the coming months. Mike will continue to lead as CEO as Atlassian pursues its mission to unleash the potential of every team and capitalize on its strengths in the AI era. Atlassian in the AI era Atlassian is uniquely positioned to harness its competitive edge in the AI space. By combining the transformative power of AI with our 20+ years of data and insights into how teams plan, track, and deliver work, we can increase the velocity at which teams move work forward. And because we lead with R&D (as opposed to marketing or pricing), we focus on shipping high-quality features that drive user adoption by delivering value from day one. 2
Q3 FY24 We’re already seeing many of our customers benefit from the power of AI and virtual agent capabilities. FanDuel Group, a driving force in a multi-billion dollar gaming industry, cut tickets that require human intervention by 85%. Similarly, OVO Energy, a renewable energy leader with 4 million customers, is resolving 23% of all support requests in less than 5 seconds. 3 Last quarter, following the general availability (GA) announcement of Atlassian Intelligence, we said we’d be shipping new AI features at a healthy clip. In March we shipped the capability to create automation rules in Jira using natural language, powered by Atlassian Intelligence. With a simple description of what to automate, users can quickly create automation rules and let Atlassian Intelligence take care of the intricate process of formulating these rules. We also continued to thread Atlassian Intelligence throughout Jira Service Management to help teams deliver exceptional employee support. By rolling out advancements to the ATLASSIAN + OVO ENERGY “Atlassian Intelligence has helped our DevOps practices by reducing context- switching. We leveraged the virtual agent to create an AI-powered Developer Assistant to streamline support for developers in Slack; this means they can get help without having to leave their favorite tools. Alongside AI answers and issue summaries, harnessing Atlassian Intelligence to reduce distractions has led to a boost in our developer experience.” Martin Brignall Developer Tooling Specialist at OVO Energy Virtual Agent as well as AI-powered summaries and agent recommendations, we’re making it dead simple for 1) employees to self-serve and get help fast; and 2) support agents to provide help faster. In addition, the new AI-powered service desk configuration capabilities make it even easier for teams beyond IT (e.g., HR, facilities, legal) to configure service desks tailored to their needs.
Q3 FY24 Our approach has translated to over 30,000 customers enabling Atlassian Intelligence, with monthly active users (MAU) increasing 3x since launching into GA in December 2023. And the early feedback we’re hearing demonstrates the value these customers are realizing. Weekly users of Atlassian Intelligence in Confluence tell us they’re saving over 45 minutes a week on average, and 77% of users report saving time using AI search functions. This is just the tip of the iceberg when it comes to the customer impact we can make in the AI space. We have the talent, resources, and platform capabilities to harness the unique data and deep knowledge of teamwork we’ve built over years of helping millions of teams drive mission-critical work forward. We’re eagerly awaiting Team ‘24, where we’ll take the stage and unveil more ways in which we’ll unleash the potential of Atlassian customers through Atlassian Intelligence. A consistent innovation drumbeat We had a busy Q3 shipping an array of innovations to support our customers. Earlier this quarter, we delivered AI enhancements across Loom for better async video collaboration. Loom was subsequently named one of Fast Company’s Most Innovative Companies in the workplace category. This reinforces our belief that the rise of distributed work will mean async video increasingly becomes a communication mode of choice alongside text, presentations, and worksheets for the next generation of working professionals. We’re already seeing this culture change play out, with more and more customers choosing to collaborate via Loom in order to reduce real-time meetings. 4 ATLASSIAN + WEBSTRATEGIES “I prefer Loom for the organization capabilities in the platform and the AI summaries layered on top for the added gained efficiencies. Fifteen meetings [were] eliminated after switching to Loom in the second half of 2023.” Caroline Hall Prettyman Senior Manager, HubSpot Strategy, WebStrategies inc. Turbocharged by new AI capabilities, 23 million videos have been enhanced via Loom AI, boosting viewer engagement by 18%. We’re excited to continue innovating in this space in order to help teams collaborate in richer, more human ways.
Q3 FY24 We also launched Confluence whiteboards into GA, a dynamic and interactive feature that facilitates ideation and collaboration, turning the in-person team whiteboarding experience into an effortless digital experience. We shipped recent enhancements like dark mode, as well as smart sections, which take the effort out of making updates to Jira issues after planning sessions. We also are excited to announce we’ve acquired Optic, an API documentation and management tool that makes it easy for developers to publish accurate API documents, avoid breaking changes, and improve the design of their APIs. Adding Optic to Compass will accelerate our ability to empower engineering teams and improve productivity by helping developers find the documentation they need and ship faster. Customers will be better able to keep accurate, useful, and relevant API documentation to improve how they build and operate software. While our product suite serves customers' core needs around aligning, planning, and sharing work, our Marketplace extends the product’s capabilities to cover specialized use cases. In Q3, the Atlassian Marketplace surpassed $4 billion in lifetime sales. More than 1,800 Marketplace partners have built more than 5,700 apps and integrations, delivering even more value and innovation to our customers. This is a testament to our philosophy of having an open, extensible, yet flexible foundation. 5 ATLASSIAN + TRUST BANK “Confluence whiteboards have helped Trust Bank collaborate more effectively across our teams, especially in the discovery and delivery phases of our product development. This has allowed us to visualize and align on development plans and key priorities, raise and identify risks and blockers early, and track progress on key items at a glance.” Stewart Gray Agile Coach, Trust Bank With Confluence whiteboards, customers can avoid adding another tool to their organization, instead consolidating their collaboration tools to where their work is getting done – right in Confluence. One large technology company is saving $60,000 a year by using Confluence whiteboards instead of competitor tools. To date, over 600,000 Confluence whiteboards have been created, capturing the beginning of millions of bright ideas.
Q3 FY24 A landmark quarter for our cloud future We’re proud as punch to showcase our cloud progress to date. When we announced we’d be sunsetting Server products three and a half years ago, we knew this change would require a big transition for us and for our on-premises customers. But we also knew that it would accelerate our progress in driving the future of teamwork. At the same time, we’ve always maintained cloud migrations would be a multi-year journey and Server’s end-of- support would be one milestone on that journey. Today, the Atlassian cloud is powering more than 300,000 customers like NASA, Reddit, Rivian, Domino’s Pizza Enterprises Ltd, and Paypal. Our customers now have more paid seats in Cloud products than in on-premises deployments. In fact, 94% of customers who use Jira Software, Confluence, and/or Jira Service Management have a presence in the cloud. What’s more, after migrating to Cloud, our customers are telling us they’re experiencing greater productivity and collaboration: The program to sunset our Server products has been an overall success. We beat our original expectations in both the number of paid seats migrated to Cloud and in customer churn. These numbers reflect the immense effort of teams right across Atlassian. What’s even more exciting is that we have an even bigger opportunity than we originally believed, as Data Center customers migrate to Cloud in the coming years. 6 Paid seats by deployment Beginning Ending Future KEY Cloud Data center Server (10/31/20) (3/31/24) Data Center to Cloud Migrations FY21 FY22 FY23 FY24E Notes: Ending balance includes an estimate of active Server seats post-end of support date. Future is illustrative of the paid seat composition at an unspecified future date. 47% 44% Average improvement in cross-functional collaboration Improvement in their ability to make insight-driven decisions more quickly 27% Average productivity increase Customers benefit after migrating to Cloud Source: TechValidate survey of 487 migrated Atlassian customers
Q3 FY24 Data Center has proven to be a stepping stone for our customers to ultimately get to the cloud. We’ve already seen strong Data Center to Cloud migration success, and that progress has been building each year. This reflects the deep relationships we’ve built with our largest customers, the significant advancements we’ve made in building enterprise platform capabilities, and the strong desire from customers to move to Cloud. In order to pave the way for our Data Center customers, we’ve been laser-focused on advancing our enterprise-grade cloud platform. We’ve been consistently increasing the scale of our Cloud products, meeting critical regulatory compliance standards, and enhancing data governance. Each quarter that we’ve shipped a new capability, we’ve seen customers from highly regulated industries make the move to Cloud thereafter. A few examples: • Healthcare: Castlight and CHC Healthcare • Financial Services: EMC Insurance, EQ Bank and Finoa • Government: UK Driver & Vehicle Licensing Agency • Highly regulated regions: The European Union, where customers like Software AG and Voith reside. And on the heels of announcing our Canada data residency option last quarter, we added multiple new regions in Q3 that will unlock Cloud for even more customers including the United Kingdom, Japan, Switzerland, India, and South Korea. 7 Steady delivery on our Cloud roadmap
Q3 FY24 Once customers experience Cloud, the value is clear. With the additions of platform features like automation, Atlassian Analytics, and Atlassian Intelligence, customers are getting more bang for their buck, and teams are able to work faster and smarter, together. As our largest customers migrate from Data Center to Cloud, we’ve had the opportunity to engage more deeply, build strategic relationships, and open the door to conversations with customers who want to do more with us. That might be consolidating tools onto the Atlassian platform, adding more products to address their challenges, or upgrading to higher-level editions to take advantage of more advanced capabilities. One such success story is the State of Utah, a customer whose vision is to be a technology leader that delivers value and simplifies the lives of Utah residents. This example is not an uncommon one. As we work with Data Center customers on their journey to Cloud, these conversations are happening more frequently. Atlassian is heads-down and focused on execution so we can help customers realize their full potential, which will ultimately be unleashed in the cloud. 8 State of Utah Several teams across the state government were already using Atlassian tools, including Trello, Jira Software, Bitbucket, Confluence, and Atlassian Access. Trello had become particularly popular as an intuitive project management tool that anyone could learn fast. As it spread quickly and organically, the IT team utilized Atlassian Access and reinforced to leadership the need for a more centralized, secure, cloud-based ecosystem. IT was able to convince leadership to migrate and consolidate on Atlassian’s cloud platform. Not only would they save money, but it would also reduce the IT team’s pain points, allowing them to be more strategic by giving them just one platform to manage. Today, the State of Utah relies on an integrated ecosystem of Enterprise edition tools to serve its constituents: • Jira Software for continuous integration and continuous delivery (CI/CD) • Bitbucket for securely storing code • Trello for non-technical project management • Confluence for knowledge management • Atlassian Access for single sign-on and enterprise-grade identity management The State of Utah has been able to unlock efficiency and effectiveness in the cloud to transform the way they work. Prior to Jira, they were using 14 different project management systems. But a move to Jira Cloud meant a speed up provisioning, improved collaboration and project management, and more transparency into projects across the State of Utah.
Q3 FY24 More to come at Team '24 We’ll also be holding our Investor Day at Team ’24 on May 1st, with a live stream option for those who can’t make it to Vegas. We hope to see you there! 9 We're excited to be hosting our flagship user event, Team ’24, in Las Vegas next week. This will be a three-day live event, April 30 - May 2, where we unveil plenty of new product features, along with breakout sessions, interactive labs, hands-on training, and networking opportunities for our customers. Mike Cannon-Brookes Co-founder and co-CEO Scott Farquhar Co-founder and co-CEO MIKE & SCOT T
Q3 FY24 10 Third quarter fiscal year 2024 financial summary (U.S. $ in thousands, except percentages and per share data) Third quarter fiscal year 2024 highlights Strong migrations and enterprise sales execution drove revenue, gross profit, and operating income ahead of our expectations. We delivered record billings and surpassed $1 billion in subscription revenue driven by growth in our Cloud and Data Center businesses. Strong customer retention drove record migrations as we ended support for our Server offerings, resulting in better-than-expected Data Center and Marketplace revenue. Gross profit and operating income benefited from revenue outperformance and disciplined cost management. We continue to execute well against our long-term objectives of consistently delivering differentiated value and innovation to customers, making meaningful progress on our cloud roadmap, and building new capabilities to better serve enterprise customers. The strong migrations to Data Center this quarter demonstrate not only customer commitment to the Atlassian platform but also the significant opportunity we have to deliver sustained, long-term Cloud revenue growth in the future. FE I I F AJ C % %' AE E A C J DD IP L GMRP LCP D DN NDO PG OD C LC NDO DL FDP I 0FE J E D I % % % %% - 3 I J C J DSDLRD , .-( - 6OMPP NOME ., - - , - 6OMPP OF L ( % NDO LF MPP ,( () NDO LF OF L ( :D MPP . , ( ) :D MPP NDO PG OD $ C R DC %)) %. 2 PG E MT EOM MNDO MLP (. ( 1FE - 3 I J C J 6OMPP NOME . . ) - 6OMPP OF L NDO LF L M D ( , - . ( NDO LF OF L % ( % :D L M D . , -)) :D L M D NDO PG OD $ C R DC %-) % 5ODD PG E MT (. (, , . - A reconciliation of GAAP to non-GAAP measures is provided within the tables at the end of this letter, in our earnings press release, and on our Investor Relations website. Joe Binz Chief Financial Officer Financial highlights
Q3 FY24 ALMUH T EUWIU RJ JM GEO )') UIYIQ I UI OW U T a M P % QdOQ Q OQ MSQ$ > ) > ) DIEU%RYIU% IEU UR WL IYIQ I F W SI GaN O U U %)0 %,.. 0/)%/1) - AMU Q M OQ 2%.,) 2-% . /2$ C TQ 11% -, /)%.-1 -/ M QbQ aQ % 12% 1 2 .%-., ,) > ) > ) DIEU%RYIU% IEU UR WL IYIQ I F HISOR PIQW 8 aP 0),%),/ .,-%12 , 9M M 8Q Q ,/-% ,- %.. /- GQ bQ 2%0 ) 2-%,12 /2$ AM WQ MOQ M P TQ 2 % ,1 /-%/ -, M QbQ aQ % 12% 1 2 .%-., ,) > ) > ) DIEU%RYIU% IEU UR WL IYIQ I F IR UESLMG UI MRQ 6YQ UOM ./-%,10 -..%)-- - :A:6 .))%)). ,./% -, -) 6 UM DMOURUO -%0,/ )-% // ) M QbQ aQ % 12% 1 2 .%-., ,) Highlights for Q3’24 include: All growth comparisons below relate to the corresponding period of last year, unless otherwise noted. • Revenue of $1,189 million increased 30%, driven by growth in our Cloud and Data Center offerings. • GAAP gross margin of 82% and non-GAAP gross margin of 85% were flat. • GAAP operating income was $18 million and GAAP operating margin of 1% increased approximately 19 percentage points. Non-GAAP operating income was $317 million and non-GAAP operating margin of 27% increased approximately 5 percentage points driven by greater operating leverage. • Operating cash flow of $565 million increased 60% driven primarily by strong collections on record billings. Free cash flow of $555 million increased 59%. Revenue (U.S. $ in thousands, except percentage data) 11
Q3 FY24 12 Revenues by deployment $1,189 $1,060 $978 $939$915 $873 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 Q3’24 $30 $69 $79 $86 $94 $106 $92 $63 $51 $58 $65 $60 $364 $275 $243 $232 $222 $194 $703$653$605$563$535$512 Cloud Data Center Marketplace and other Server (2) (1) Note: revenue totals may not foot due to rounding (U.S. $ in millions, except percentage data) Year-over-year growth % Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 Q3’24 Cloud 41% 34% 30% 27% 27% 31% Data Center 40% 47% 46% 42% 41% 64% Marketplace and other 20% 12% 17% 9% 5% 43% Server (22%) (29%) (27%) (31%) (35%) (69%) Total revenues 27% 24% 24% 21% 21% 30% Included in Server is perpetual license revenue. Perpetual license revenue is captured as other revenue on the Condensed Consolidated Statements of Operations. (1) Included in Marketplace and other 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. (2)
Q3 FY24 13 Revenue growth in Q3 was driven by subscription revenue, which grew 41%. Cloud revenue growth was in line with our expectations and grew 31% driven by paid seat expansion in existing customers, migrations from both Server and Data Center, and cross-sell of additional products. Prior quarter trends on the primary revenue growth drivers persisted in Q3, consistent with our expectations. Paid seat expansion remains challenged, with continued softness in SMB offset by relative strength in our enterprise customer segment. Trends around migrations, cross-sell of additional products, adoption of higher-value editions, and customer retention remained stable. Data Center revenue growth of 64% significantly exceeded our expectations driven by record migrations from Server, as well as strong expansion from existing customers. The impact of Server to Data Center migrations, net the impact from Data Center to Cloud migrations, benefited Data Center growth by approximately 36 points. The outperformance in migrations was driven by better-than-expected customer retention following the end-of-support for our Server offerings in February, underscoring the high-value nature of our products. As expected, most of those customers migrated to Data Center. Revenue growth also benefited from customers purchasing additional seats ahead of price changes implemented during the quarter. The contribution to Data Center revenue growth from the outperformance on migrations and customer purchasing in front of the price change was approximately 19 points and 8 points, respectively. Marketplace and other revenue growth of 43% also significantly exceeded our expectations, driven by customer purchasing of third-party apps in our Marketplace in conjunction with their Data Center subscriptions. This event-driven purchasing drove approximately 32 points of Marketplace and other revenue growth. As a reminder, revenue from sales of Marketplace apps is recognized in full at the time of sale. From a regional perspective, the outperformance in Data Center and related Marketplace app sales were primarily driven by partners in EMEA. Lastly, deferred revenue increased 40% year-over-year to $2.0 billion driven by continued growth in annual and multi-year agreements, which reflects increasing customer commitment to the Atlassian platform and roadmap.
Q3 FY24 Margins, operating expenses, and operating income (loss) (U.S. $ in thousands, except percentage data) GAAP operating expenses increased 5% year-over-year driven by higher employment costs, including bonus and stock-based compensation expenses. As a reminder, we incurred $98 million of restructuring charges in Q3’23. Headcount at the end of Q3’24 was 11,902, an increase of 479 from Q2’24 driven primarily by hiring in R&D and sales to drive key strategic priorities such as cloud migrations, serving enterprise customers, delivering innovative customer value across our product portfolio, and AI. Non-GAAP operating expenses increased 18% year-over-year and were slightly lower than expected driven by savings in discretionary spending. GAAP operating margin of 1% and non-GAAP operating margin of 27% benefited year-over-year from increased operating leverage. The outperformance on Data Center and Marketplace revenue in the quarter benefited GAAP and non-GAAP operating margins by over 5 points. Net income (U.S. $ in thousands, except per share data) 14 ALMUH T EUWIU RJ JM GEO )') PEU MQ EQH RSIUEWMQ I SIQ I PPEU U T a M P % QdOQ Q TM Q PM M M P Q OQ MSQ$ > ) > ) 5UR PEU MQ g g 66D S YM SU .(% . %, B & 66D S YM SU . %, . % ARWEO RSIUEWMQ I SIQ I 66D Q M U S Qd Q Q 2.0%122 2)1%,/1 B & 66D Q M U S Qd Q Q /12%-1) .1 %2 , I IEUGL EQH HIYIORSPIQW I SIQ I 66D Q QM OT M P PQbQ YQ Qd Q Q .0/%-2) . %,-- B & 66D Q QM OT M P PQbQ YQ Qd Q Q ,1/%)0- , /%21 F F6 AG )(% ) %, :EUNIWMQ EQH EOI I SIQ I 66D YM WQ U S M P M Q Qd Q Q ,%1 - )%2 B & 66D YM WQ U S M P M Q Qd Q Q 1/%01. .2%0)1 F F6 AG %- -% 5IQIUEO EQH EHPMQM WUEWMYI I SIQ I 66D SQ Q M M P MPYU U M UbQ Qd Q Q .0%.2. /.% ), B & 66D SQ Q M M P MPYU U M UbQ Qd Q Q /%/ ).% ,- F F6 AG %. % SIUEWMQ MQGRPI 66D Q M U S U O YQ $ 0%1)- / %./0$ B & 66D Q M U S U O YQ , /%. 0 20% - F F6 AG (,%, ( % ) ALMUH T EUWIU RJ JM GEO )') IW QGRPI U T a M P % QdOQ Q TM Q PM M$ > ) > ) 5// UI OW BQ U O YQ $ %0. )2%),0$ BQ U O YQ $ Q TM Q & PU a QP )'). )'1 $ RQ%5// UI OW BQ U O YQ , %-2/ ,0%2.. BQ U O YQ Q TM Q & PU a QP )'12 )'.- ALMUH T EUWIU RJ JM GEO )') 4UII 1E L 4OR U T a M P % QdOQ Q OQ MSQ$ > ) > ) 4UII GE L JOR 66D Q OM T bUPQP Ne Q M U S MO UbU UQ ./.%,2) ,. %,/2 @Q 3 8M U M Qd Q PU a Q )%. )$ %/2 $ ; QQ OM T R c ..-%10) ,-2%/01 F F6 AG ,%- ).%(
Q3 FY24 Free cash flow (U.S. $ in thousands, except percentage data) Customers with >$10,000 in Cloud ARR For each period ended Financial targets (U.S. $) Q4’24 4MQEQGMEO AEU IW 5// ALUII :RQWL 3QHMQ QI '$ )') FQbQ aQ % ) YU U % ,. YU U 8 aP QbQ aQ S c T eQM & bQ &eQM $ M d' , 9M M 8Q Q QbQ aQ S c T eQM & bQ &eQM $ -) - YM SU 1 ') C Q M U S YM SU 0') $ RQ%5// ALUII :RQWL 3QHMQ QI '$ )') YM SU 1,'. C Q M U S YM SU 1'. , 15 ALMUH T EUWIU RJ JM GEO )') IW QGRPI U T a M P % QdOQ Q TM Q PM M$ > ) > ) 5// UI OW BQ U O YQ $ %0. )2%),0$ BQ U O YQ $ Q TM Q & PU a QP )'). )'1 $ RQ%5// UI OW BQ U O YQ , %-2/ ,0%2.. BQ U O YQ Q TM Q & PU a QP )'12 )'.- ALMUH T EUWIU RJ JM GEO )') 4UII 1E L 4OR U T a M P % QdOQ Q OQ MSQ$ > ) > ) 4UII GE L JOR 66D Q OM T bUPQP Ne Q M U S MO UbU UQ ./.%,2) ,. %,/2 @Q 3 8M U M Qd Q PU a Q )%. )$ %/2 $ ; QQ OM T R c ..-%10) ,-2%/01 F F6 AG ,%- ).%( Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 Q3’24 44,336 42,864 40,10338,72637,33636,191 34,011 32,355 30,565 We define the number of customers with Cloud ARR greater than $10,000 at the end of any particular period as the number of organizations with unique domains with an active Cloud subscription and greater than $10,000 in Cloud ARR. We define Cloud ARR as the annualized recurring revenue run-rate of Cloud subscription agreements at a point in time. We calculate Cloud ARR by taking the Cloud monthly recurring revenue (“Cloud MRR”) run-rate and multiplying it by 12. Cloud MRR for each month is calculated by aggregating monthly recurring revenue from committed contractual amounts at a point in time. Cloud ARR and Cloud MRR should be viewed independently of revenue and do not represent our revenue under GAAP, as they are operational metrics that can be affected by contract start and end dates and renewal rates.
Q3 FY24 16 Q4'24 Outlook Total Revenue For Q4’24, we expect total company revenue to be in the range of $1,120 million to $1,135 million. This guidance implies full year FY24 revenue growth of approximately 23% and assumes neither improvement nor deterioration in macroeconomic conditions. Further detail and expected trends are provided below: SUBSCRIPTION REVENUE Cloud revenue We expect Q4’24 Cloud revenue growth of approximately 32% year-over-year, of which migrations will drive approximately 10 points. Our guidance assumes current trends across all core growth drivers persist into Q4 and that the rate of paid seat expansion in our SMB customer segment will remain challenged. Data Center revenue We expect Q4’24 Data Center revenue growth to be in the range of 40% to 42% year-over-year. Our guidance assumes revenue recognition from the outperformance on Q3 billings (a benefit of approximately 15 points to Data Center revenue growth in Q4), limited migrations from Server post end-of-support, and continued migrations to Cloud enabled by delivery of enterprise-grade platform capabilities and value. MAINTENANCE REVENUE We will no longer recognize Server revenue and therefore expect Server revenue to be zero in Q4’24.
Q3 FY24 17 OTHER REVENUE We expect Other revenue, which is primarily comprised of Marketplace revenue, to be roughly flat year-over-year in Q4'24, driven by continued sales mix shift to Cloud apps. As a reminder, there is a lower Marketplace take rate on third-party Cloud apps relative to Data Center apps to incentivize further Cloud app development. Gross margin We expect GAAP gross margin to be approximately 81.0% and non-GAAP gross margin to be approximately 83.5% in Q4'24. Our guidance assumes gross margins continue to decrease year- over-year driven by revenue mix shift to Cloud. Operating and free cash flow margin We expect GAAP operating margin to be approximately (7.0%) and non-GAAP operating margin to be approximately 18.5% in Q4’24. Operating expense growth will be driven by our continued investments in key strategic priorities to deliver long-term growth. Additionally, our flagship user conference, Team ’24, takes place in Q4, which drives quarter-to-quarter seasonality in operating expenses. Share count We continue to expect diluted share count to increase by less than 2% in FY24.
Q3 FY24 18 ATLASSIAN CORPORATION Condensed consolidated statements of operations (U.S. $ and shares in thousands, except per share data) (unaudited) S ARR AM 1N ON AS NM 1NMDEMRED 1NMRN DASED SASELEMSR NF :OE AS NMR % % AMD R A ER M S NTRAMDR EWCEOS OE R A E DASA TMATD SED EE 8NMS R 3MDED 8A C ) ME 8NMS R 3MDED 8A C ) ( ( ( () ( ( ( () FWFO FT0 CTDS PO - ) -, ,. ( . . ( (( .,) :B O FOBODF ( ) (( -- () ) ) . ) IFS .. ( ) , . (, . .-) P BM SFWFO FT . (. ) ) ((- ) ( 3PT PG SFWFO FT ( ( ) ( ,. , ( . ,) . 7SPTT SPG - - ) - , . ( , () ( ) , FSB O F FOTFT0 FTFBSDI BOE EFWFMP NFO ( -, (( ) - ) (, :BSLF O BOE TBMFT ( (() . (( ( ,)- . ,- ( 7FOFSBM BOE BEN O T SB WF - , ) . ( , (- P BM P FSB O F FOTFT - . . ),. ( , ( (, ) ) FSB O ODPNF MPTT - . , ,- (- ( .)) IFS ODPNF F FOTF OF ) () , ( - 8O FSFT ODPNF ( - , ()) ( ) 8O FSFT F FOTF . ) - -. (, ) ( , - 8ODPNF MPTT CFGPSF SPW T PO GPS ODPNF B FT -- ) (.. (, , SPW T PO GPS ODPNF B FT - () ) , -( ) ( ,( F ODPNF MPTT ( - ( ( )- ) , (- . F ODPNF MPTT FS TIBSF B S C BCMF P 3MBTT 1 BOE 3MBTT 2 DPNNPO T PDLIPMEFST0 2BT D % %. % %,- 4 M FE % %. % %,- AF I FE$BWFSB F TIBSFT TFE O DPN O OF ODPNF MPTT FS TIBSF B S C BCMF P 3MBTT 1 BOE 3MBTT 2 DPNNPO T PDLIPMEFST0 2BT D ( - - ( , .( ( . -). ( 4 M FE (, --. ( , .( ( . -). ( 1NP O T ODM EF T PDL$CBTFE DPN FOTB PO BT GPMMP T0 EE 8NMS R 3MDED 8A C ) ME 8NMS R 3MDED 8A C ) ( ( ( () ( ( ( () 3PT PG SFWFO FT - . - . ) .- , - - FTFBSDI BOE EFWFMP NFO )(( ,- (. .- - , :BSLF O BOE TBMFT )) ).) ), - ) .)( - (( 7FOFSBM BOE BEN O T SB WF - (. ( , ( - ( 1NP O T ODM EF BNPS B PO PG BDR SFE O BO CMF BTTF T BT GPMMP T0 EE 8NMS R 3MDED 8A C ) ME 8NMS R 3MDED 8A C ) ( ( ( () ( ( ( () 3PT PG SFWFO FT ( , , ( (.( - FTFBSDI BOE EFWFMP NFO (. (. :BSLF O BOE TBMFT ) , , ( ), . -() - )-,
Q3 FY24 19 S ARR AM 1N ON AS NM 1NMDEMRED 1NMRN DASED 0A AMCE EESR % % M S NTRAMDR TMATD SED 8A C ) ( ( TME ) ( () RRESR 3 SSFO BTTF T0 3BTI BOE DBTI FR WBMFO T . -. ( ( :BSLF BCMF TFD S FT ,) ) . 1DDP O T SFDF WBCMF OF , , .( -- ,-. SF B E F FOTFT BOE P IFS D SSFO BTTF T , ), P BM D SSFO BTTF T ( ) ( ( -), ), PO$D SSFO BTTF T0 SP FS BOE FR NFO OF . , . ( FSB O MFBTF S I $PG$ TF BTTF T . ,- . SB F D OWFT NFO T (( ( (( ). 8O BO CMF BTTF T OF ) ( . , , -( 7PPE MM (. - -(- ( 4FGFSSFE B BTTF T ( -. IFS OPO$D SSFO BTTF T , ( -) ( NSA ARRESR ,) (, , -- 7 AB S ER AMD SNCJ N DE R 3PT S 3 SSFO M BC M FT0 1DDP O T B BCMF .. ( ( ) 1DDS FE F FOTFT BOE P IFS D SSFO M BC M FT . . , () ) 4FGFSSFE SFWFO F D SSFO PS PO , . ,) ),( -), FSB O MFBTF M BC M FT D SSFO PS PO , )- ) FSN MPBO GBD M D SSFO PS PO )- P BM D SSFO M BC M FT ( ,. ( ) ( (- PO$D SSFO M BC M FT0 4FGFSSFE SFWFO F OF PG D SSFO PS PO ( , (, .( - ) FSB O MFBTF M BC M FT OF PG D SSFO PS PO (( ( . ()- .) FSN MPBO GBD M OF PG D SSFO PS PO ( -( ,( ) 4FGFSSFE B M BC M FT ), ,, IFS OPO$D SSFO M BC M FT ) .- ) -- NSA AB S ER ) ( ) ( - SNCJ N DE R EPT S 3PNNPO T PDL ) ) 1EE POBM B E$ O DB BM ) ). -- ) ) ,) 1DD N MB FE P IFS DPN SFIFOT WF ODPNF ) -,- ) ( 1DD N MB FE EFG D ( . . -, ( , NSA RSNCJ N DE R EPT S ) - , ,-( NSA AB S ER AMD RSNCJ N DE R EPT S ,) (, , -- , ATLASSIAN CORPORATION Condensed consolidated balance sheets (U.S. $ in thousands) (unaudited)
Q3 FY24 20 S ARR AM 1N ON AS NM 1NMDEMRED 1NMRN DASED SASELEMSR NF 1AR 4 N R % % M S NTRAMDR TMATD SED EE 8NMS R 3MDED 8A C ) ME 8NMS R 3MDED 8A C ) ( ( ( () ( ( ( () 1AR F N R F NL NOE AS MG ACS U S ER. F ODPNF MPTT ( - ( ( )- ) , (- . 1E T NFO T P SFDPOD MF OF ODPNF MPTT P OF DBTI SPW EFE C P FSB O BD W FT0 4F SFD B PO BOE BNPS B PO () , () , , PDL$CBTFE DPN FOTB PO (.( (,) (- . - - ( . ) 8N B SNFO DIBS FT GPS MFBTFT BOE MFBTFIPME N SPWFNFO T , . , . 4FGFSSFE ODPNF B FT ) ( - . , ) . 7B O PO B OPO$DBTI TBMF PG B DPO SPMM O O FSFT PG B T CT E BS )-. . F MPTT ODPNF PO T SB F D OWFT NFO T , . ( - - (, F GPSF O D SSFOD MPTT B O ( (-, -- ( , IFS ( ). , . , 3IBO FT O P FSB O BTTF T BOE M BC M FT OF PG C T OFTT DPNC OB POT0 1DDP O T SFDF WBCMF OF . . , ,, ). ) SF B E F FOTFT BOE P IFS BTTF T ) ., ,) (. ) 1DDP O T B BCMF (. ((- (- - (. . (( ) 1DDS FE F FOTFT BOE P IFS M BC M FT ,- ) (). . . 4FGFSSFE SFWFO F ) ,. () ,), ) ) ) ( )- ES CAR O NU DED B NOE AS MG ACS U S ER , ) ) ( ), ( )), 1AR F N R F NL MUERS MG ACS U S ER. 2 T OFTT DPNC OB POT OF PG DBTI BDR SFE . -(- , SDIBTFT PG SP FS BOE FR NFO ( ( , (( () ((- SDIBTFT PG T SB F D OWFT NFO T ( . ( . SDIBTFT PG NBSLF BCMF TFD S FT - ( ) , SPDFFET GSPN NB S FT PG NBSLF BCMF TFD S FT ,) (, ( - -) SPDFFET GSPN TBMFT PG NBSLF BCMF TFD S FT BOE T SB F D OWFT NFO T . , ) ( ,( ES CAR O NU DED B TRED M MUERS MG ACS U S ER (, ) ,- , - (( ) ( 1AR F N R F NL F MAMC MG ACS U S ER. S OD BM B NFO T PG FSN MPBO GBD M ( ( F SDIBTFT PG 3MBTT 1 3PNNPO PDL ) )-- ) - . ( ) ( ) - . SPDFFET GSPN P IFS G OBOD O BSSBO FNFO T ( ) . ES CAR TRED M F MAMC MG ACS U S ER - .-- ) - , ((. ( ) ) 5GGFD PG GPSF O F DIBO F SB F DIBO FT PO DBTI DBTI FR WBMFO T BOE SFT S D FE DBTI ( -, ( ., , F ODSFBTF EFDSFBTF O DBTI DBTI FR WBMFO T BOE SFT S D FE DBTI .. ) )) , ) -(( ., ( ( 1AR CAR EPT UA EMSR AMD ERS CSED CAR AS BEG MM MG NF OE ND , -,) ,)- , ( ) )., ,., F EFDSFBTF O DBTI BOE DBTI FR WBMFO T ODM EFE O BTTF T IFME GPS TBMF , ( 1AR CAR EPT UA EMSR AMD ERS CSED CAR AS EMD NF OE ND ) -) . ) -) . - ATLASSIAN CORPORATION Condensed consolidated statements of cash flows (U.S. $ in thousands) (unaudited)
Q3 FY24 21 G FF CE CE G C 3 C G C C . 2 GC 0C . 2 3 F GF $4$ F E F G C F F G E G E F E G G E C G F , E ( 0 C G F , E ( ) ( ) ( .ECFF EC G 611 F NRR NE S - - ) - , . ( , () ( ) , TR0 SN $A RDC NL DMR S NM - . - ( ) ) .- , TR0 1LN S S NM NE PT DC MS MF A D RRDSR ( , , ( (.( - TR0 DRS T ST MF G FDR ( - ( - :NM$611 F NRR NE S - -- )- ( -( - ( ( ) , .ECFF A E 611 F NRR L F M .( .( .( .( TR0 SN $A RDC NL DMR S NM ( ( ( TR0 1LN S S NM NE PT DC MS MF A D RRDSR TR0 DRS T ST MF G FDR :NM$611 F NRR L F M . . . . 1 E G CA 611 N D S MF M NLD NRR - . , ,- (- ( .)) TR0 SN $A RDC NL DMR S NM (.( ( ( ,-. . - , ( TR0 1LN S S NM NE PT DC MS MF A D RRDSR , . ) (., ( - - TR0 DRS T ST MF G FDR - . . - . . :NM$611 N D S MF M NLD ) , - - - ( . , 1 E G A E 611 N D S MF L F M . ( TR0 SN $A RDC NL DMR S NM ( (. (, (, TR0 1LN S S NM NE PT DC MS MF A D RRDSR TR0 DRS T ST MF G FDR :NM$611 N D S MF L F M (- (( ( ( 0 G CA 611 MDS M NLD NRR ( - ( ( )- ) , (- . TR0 SN $A RDC NL DMR S NM (.( ( ( ,-. . - , ( TR0 1LN S S NM NE PT DC MS MF A D RRDSR , . ) (., ( - - TR0 DRS T ST MF G FDR - . . - . . 8DRR0 6 M NM MNM$ RG R D NE NMS N MF MSD DRS NE RTAR C )-. . 8DRR0 7M NLD S W CITRSLDMSR ( -. , ,. , (- ) ) :NM$611 MDS M NLD ()( , )- .( ) () 0 G CA E F E 611 MDS M NLD NRR D RG D $ C TSDC % %. % %,- TR0 SN $A RDC NL DMR S NM % . % . )% (%- TR0 1LN S S NM NE PT DC MS MF A D RRDSR % , % ) % ) % TR0 DRS T ST MF G FDR %) %) 8DRR0 6 M NM MNM$ RG R D NE NMS N MF MSD DRS NE RTAR C % % . 8DRR0 7M NLD S W CITRSLDMSR ( %) % % , % :NM$611 MDS M NLD D RG D $ C TSDC %. % (%(- %) G E G F E F C GFG D FGSDC$ D FD RG DR TRDC M NL TS MF C TSDC 611 MDS M NLD NRR D RG D (, --. ( , .( ( . -). ( TR0 3 TS NM E NL C TS D RD T S DR ) ( (-) D FGSDC$ D FD RG DR TRDC M NL TS MF C TSDC MNM$611 MDS M NLD D RG D (, --. ( - ( (, ( , ) -E F C 611 MDS RG N CDC A N D S MF S S DR , ) ) ( ), ( )), 8DRR0 2 S DW DMC ST DR ( ( , (( () ((- 5 DD RG E N .- ) ,-. ( . -( ATLASSIAN CORPORATION Reconciliation of GAAP to non-GAAP results (U.S. $ and shares in thousands, except per share data) (unaudited) FT S D S O DIBS FT ODM EF T PDL$CBTFE DPN FOTB PO F FOTF SFMB FE P IF SFCBMBOD O PG SFTP SDFT GPS IF ISFF BOE O OF NPO IT FOEFE :BSDI ) ( ()% ( 8O G TDBM FBS ( ( F CF BO P M F B G FE MPO $ FSN SP FD FE OPO$711 B SB F O P S DPN B PO PG IF OPO$711 ODPNF B BE T NFO T O PSEFS P SPW EF CF FS DPOT T FOD BDSPTT O FS N SF PS O FS PET% 8O SP FD O I T MPO $ FSN OPO$711 B SB F F M FE B ISFF$ FBS G OBOD BM SP FD PO IB F DM EFT IF E SFD BOE OE SFD ODPNF B FGGFD T PG IF P IFS OPO$711 BE T NFO T SFGMFD FE BCPWF% 1EE POBMM F DPOT EFSFE P S D SSFO P FSB O T S D SF BOE P IFS GBD PST T DI BT P S F T O B PT POT O WBS P T S TE D POT BOE LF MF TMB PO O NB PS S TE D POT IFSF F P FSB F% 6PS G TDBM FBS ( ( F EF FSN OFE IF SP FD FE OPO$711 B SB F P CF (- % I T G FE MPO $ FSN SP FD FE OPO$711 B SB F FM N OB FT IF FGGFD T PG OPO$SFD SS O BOE FS PE T FD G D FNT I DI DBO WBS O T F BOE GSFR FOD % 5 BN MFT PG IF OPO$SFD SS O BOE FS PE T FD G D FNT ODM EF C BSF OP M N FE P DIBO FT O IF WBM B PO BMMP BODF SFMB FE P EFGFSSFE B BTTF T FGGFD T SFT M O GSPN BDR T POT BOE O T BM PS OGSFR FO M PDD SS O FNT% AF MM FS PE DBMM SF$FWBM B F I T MPO $ FSN SB F BT OFDFTTBS GPS T O G DBO FWFO T% IF SB F DP ME CF T C FD P DIBO F GPS B WBS F PG SFBTPOT GPS F BN MF T O G DBO DIBO FT O IF FP SB I D FBSO O T N PS G OEBNFO BM B MB DIBO FT O NB PS S TE D POT IFSF IF DPN BO P FSB FT% ) IF FGGFD T PG IFTF E M WF TFD S FT FSF OP ODM EFE O IF 711 DBMD MB PO PG E M FE OF MPTT FS TIBSF GPS IF O OF NPO IT FOEFE :BSDI ) ( ( BOE ISFF BOE O OF NPO IT FOEFE :BSDI ) ( () SFT FD WFM CFDB TF IF FGGFD P ME IBWF CFFO BO $E M WF%
Q3 FY24 22 ATLASSIAN CORPORATION Reconciliation of GAAP to non-GAAP financial targets (U.S. $) S ARR AM 1N ON AS NM ECNMC AS NM NF 5 SN NM$5 4 MAMC A A GESR EE 8NMS R 3MD MG TME ) ( ( 5 G NRR LA G M - % M T0 PDL$CBTFE DPN FOTB PO % M T0 1NPS B PO PG BDR SFE O BO CMF BTTF T % NM$5 G NRR LA G M -)% 5 NOE AS MG LA G M ,% M T0 PDL$CBTFE DPN FOTB PO ( % M T0 1NPS B PO PG BDR SFE O BO CMF BTTF T % NM$5 NOE AS MG LA G M -%
Q3 FY24 23 FORWARD-LOOKING STATEMENTS This shareholder letter 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, product features, including AI capabilities, customers, Atlassian Platform, Atlassian Marketplace, Cloud and Data Center migrations, macroeconomic environment, anticipated growth, outlook, technology, potential benefits and synergies from Loom and other acquisitions, our Team Anywhere program, hiring capabilities, and other key strategic areas, and our financial targets such as total revenue, Cloud and Data Denter 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 shareholder letter to reflect events or circumstances after the date of this shareholder letter 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 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 and non-GAAP gross margin, non-GAAP operating income and non-GAAP operating margin, 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 nonGAAP 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 and Non-GAAP gross margin. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, and restructuring charges. • Non-GAAP operating income and non-GAAP operating margin. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, and restructuring charges. • Non-GAAP net income and non-GAAP net income per diluted share. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, restructuring charges, gain on a non-cash sale of a controlling interest of a subsidiary, and the related income tax adjustments. • 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 shareholder letter titled “Reconciliation of GAAP to Non-GAAP Results” and “Reconciliation of GAAP to Non-GAAP Financial Targets” that present such reconciliations. 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 300,000 companies of all sizes worldwide - including NASA, Audi, Kiva, Deutsche Bank and Dropbox - 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 and Jira Service Management at https://atlassian.com. Investor relations contact: Martin Lam, IR@atlassian.com Media contact: M-C Maple, press@atlassian.com
EXHIBIT 99.3
Founder Update 142: The journey of a lifetime
It’s with a full but heavy heart, I share with you all today my decision to step down as Atlassian’s co-CEO. At this important juncture in my personal and professional life, I hope you will let me indulge in some nostalgia and pride.
It’s been 23 years since Mike and I started Atlassian, fresh out of university. We got to work on the heels of the dot com bust and unbeknownst to us, we were kickstarting the Australian tech industry. We started what is now known as ‘Product Led Growth’ by selling business software online with no salespeople, and 23 years later we continue to innovate by leading the world as the largest company committed to remote, with Team Anywhere.
Today, rockets don’t launch into orbit without Atlassian’s software. From helping to land the Mars Rover, to ensuring cars roll off the production line and Domino’s pizzas are delivered on time, to life-saving medical procedures being tracked and managed in hospitals, our solutions are woven into the fabric of teamwork worldwide. We’re unleashing the potential of teams in every corner of the world (and beyond!).
And while there is never a perfect time to make this change, I take comfort in my decision knowing Atlassian is so well placed for the future. We have a world-class cloud platform and the best team we’ve ever had. Our new Point A products are gaining real traction, AI is providing new and exciting opportunities, and we have over 300,000 cloud customers consolidating around Atlassian.
There are very few companies in the world that can play (and win) in the huge markets we do, with the incredible opportunities at our feet. The future has never looked brighter.
Beyond the outward impact, it’s Atlassian’s soul that brings me the most joy. People say there’s something special about this place - something hard to put your finger on. Atlassians really, truly, deeply care about each other and for doing the right thing for one another, for our customers and for the planet.
As for me, I’m looking forward to spending some time with my young family, improving the world via philanthropy with Skip Foundation and Pledge 1%, investing with Skip Capital, as well as mentoring other tech CEOs. My last day as co-CEO will be August 31, 2024, and after that, I will remain a board member and a special advisor.
Finally, while there will be plenty of time for long thank you's and goodbyes over the next four months, I can't let this opportunity go by without recognising and thanking my co-founder Mike. Mike - it’s hard to put into words the gratitude I feel, and my love for all we have created together. You really are George Bernard Shaw’s Unreasonable Man, and the world and I are better as a result.
Scott ♥