Atlassian Corp 6-K, filed Apr 29, 2022

Atlassian Corp (TEAM)

6-K 2022-04-29 For: 2022-03-31

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Added on April 08, 2026

About this 6-K

Atlassian Corp filed this 6-K on April 29, 2022.

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Consolidated Financial Statements						2
Management's Discussion and Analysis of Financial Condition and Results of Operations						31
Risk Factors						49


		Three Months Ended March 31,				Nine Months Ended March 31,
	Notes	2022		2021		2022		2021
Revenues:
Subscription		$	555,126	$	349,915	$	1,499,409	$	938,554
Maintenance		120,333		132,921		377,982		391,891
Other		65,032		85,892		165,650		199,148
Total revenues	12	740,491		568,728		2,043,041		1,529,593
Cost of revenues (1) (2)		119,374		84,888		332,553		238,054
Gross profit		621,117		483,840		1,710,488		1,291,539
Operating expenses:
Research and development (1) (2)		363,746		244,098		1,018,568		717,397
Marketing and sales (1) (2)		150,796		92,043		388,383		239,480
General and administrative (1)		122,707		78,184		346,741		225,502
Total operating expenses		637,249		414,325		1,753,692		1,182,379
Operating income (loss)		(16,132)		69,515		(43,204)		109,160
Other non-operating income (expense), net		(9,009)		150,662		(434,261)		(421,358)
Finance income		608		1,464		965		6,166
Finance costs		(6,024)		(10,591)		(19,213)		(114,614)
Income (loss) before income tax expense		(30,557)		211,050		(495,713)		(420,646)
Income tax expense	5	(530)		(51,210)		(12,948)		(62,596)
Net income (loss)		$	(31,087)	$	159,840	$	(508,661)	$	(483,242)


Net income (loss) per share attributable to ordinary shareholders:
Basic	14	$	(0.12)	$	0.64	$	(2.01)	$	(1.94)
Diluted	14	$	(0.12)	$	0.63	$	(2.01)	$	(1.94)
Weighted-average shares outstanding used to compute net loss per share attributable to ordinary shareholders:
Basic	14	253,723		250,279		252,924		249,152
Diluted	14	253,723		255,128		252,924		249,152


Cost of revenues	$	11,731	$	6,495	$	33,207	$	18,552
Research and development	115,397		63,699		335,232		198,235
Marketing and sales	28,794		11,774		82,982		30,224
General and administrative	31,289		16,296		91,775		44,676


Cost of revenues	$	5,709	$	5,554	$	16,997	$	16,386
Research and development	94		41		281		124
Marketing and sales	2,302		2,278		6,839		6,894


		Three Months Ended March 31,				Nine Months Ended March 31,
	Notes	2022		2021		2022		2021
Net income (loss)		$	(31,087)	$	159,840	$	(508,661)	$	(483,242)
Items that will not be reclassified to profit or loss in subsequent periods:
Net gain (loss) on equity investments classified at fair value through other comprehensive income	3	(18,665)		(4,574)		(72,222)		29,326
Income tax effect		4,368		1,040		16,681		(6,712)
Other comprehensive income (loss) for items that will not be reclassified to profit or loss, net of tax		(14,297)		(3,534)		(55,541)		22,614
Items that will be reclassified to profit or loss in subsequent periods:
Foreign currency translation adjustment		3,320		(3,210)		(2,819)		5,275
Net change in unrealized loss on debt investments classified at fair value through other comprehensive income		(415)		(1,151)		(1,287)		(4,016)
Net gain (loss) on cash flow hedging derivative instruments	3	46,300		(15,898)		46,666		4,658
Income tax effect		(10,060)		8,615		(11,976)		(1,693)
Other comprehensive income (loss) after tax that will be reclassified to profit or loss in subsequent periods		39,145		(11,644)		30,584		4,224
Other comprehensive income (loss), net of tax		24,848		(15,178)		(24,957)		26,838
Total comprehensive income (loss), net of tax		$	(6,239)	$	144,662	$	(533,618)	$	(456,404)


	Notes	March 31, 2022		June 30, 2021

		(unaudited)
Assets
Current assets:
Cash and cash equivalents	11	$	1,194,803	$	919,227
Short-term investments	3	86,215		313,001
Trade receivables	6	256,570		173,473
Tax receivables		7,666		2,332
Derivative assets	3, 13	15,406		127,486
Prepaid expenses and other current assets		64,987		48,322
		1,625,647		1,583,841
Assets held for sale		58,964		43,665
Total current assets		1,684,611		1,627,506
Non-current assets:
Property and equipment, net	7	83,687		66,221
Deferred tax assets		37,153		36,174
Goodwill	8	733,799		725,758
Intangible assets, net	8	105,103		124,590
Right-of-use assets, net	9	265,092		205,300

Strategic investments	3	150,756		122,159
Other non-current assets	11	64,377		37,636
Total non-current assets		1,439,967		1,317,838
Total assets		$	3,124,578	$	2,945,344
Liabilities
Current liabilities:
Trade and other payables	11	$	333,490	$	266,497
Tax liabilities		3,617		42,051
Provisions		34,817		25,148
Deferred revenue		1,002,791		812,943
Lease obligations	9	39,558		42,446
Derivative liabilities	3	3,017		772,127
Exchangeable senior notes, net	13	—		348,799
Total current liabilities		1,417,290		2,310,011
Non-current liabilities:
Deferred tax liabilities		23,844		26,625
Provisions		14,441		12,435
Deferred revenue		89,294		84,652
Term loan facility, net	13	999,375		—
Lease obligations	9	276,287		214,103

Other non-current liabilities		1,087		2,604
Total non-current liabilities		1,404,328		340,419
Total liabilities		2,821,618		2,650,430
Equity
Share capital		25,412		25,164
Share premium		461,029		461,016
Other capital reserves		2,059,852		1,516,609
Other components of equity		79,875		104,832
Accumulated deficit		(2,323,208)		(1,812,707)
Total equity		302,960		294,914
Total liabilities and equity		$	3,124,578	$	2,945,344


	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
	(U.S. $ in thousands)
U.S. treasury securities	$	83,797	$	—	$	(582)	$	83,215

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




Total marketable debt investments	$	86,797	$	—	$	(582)	$	86,215


	As of
	March 31, 2022		June 30, 2021
	(U.S. $ in thousands)
Recorded as follows:
Due in one year or less	$	86,215	$	265,179
Due after one year	—		49,922
Total marketable debt investments	$	86,215	$	315,101


	Level 1		Level 2		Level 3		Total
	(U.S. $ in thousands)
Description
Assets measured at fair value
Cash and cash equivalents:
Money market funds	$	781	$	—	$	—	$	781






Short-term investments:
U.S. treasury securities	—		83,215		—		83,215

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




Current derivative assets:
Derivative assets - foreign exchange hedging	—		10,485		—		10,485

Derivative assets - interest rate swaps	—		4,921		—		4,921
Non-current derivative assets:
Derivative assets - foreign exchange hedging	—		2,421		—		2,421
Derivative assets - interest rate swaps	—		31,460		—		31,460


Strategic investments:
Marketable equity securities	33,443		—		—		33,443
Non-marketable equity securities	—		—		116,795		116,795
Non-marketable debt securities	—		—		518		518
Total assets measured at fair value	$	34,224	$	135,502	$	117,313	$	287,039

Liabilities measured at fair value
Current derivative liabilities:
Derivative liabilities - foreign exchange hedging	$	—	$	3,017	$	—	$	3,017


Non-current derivative liabilities:
Derivative liabilities - foreign exchange hedging	—		39		—		39

Total liabilities measured at fair value	$	—	$	3,056	$	—	$	3,056


Type	Level	Valuation Technique	Inputs
Money market fund	Level 1	Quoted price in active market	N/A
Marketable equity securities	Level 1	Quoted price in active market	N/A
Marketable debt investments	Level 2	Quoted market price to the extent possible or alternative pricing sources and models utilizing market observable inputs	N/A
Non-marketable equity securities	Level 3	Last financing round valuation	N/A
Non-marketable debt securities	Level 3	Discounted cash flow	Timing, probability, and amount of forecast cash flows associated with liquidation of the securities
Foreign currency forward contracts	Level 2	Discounted cash flow	Foreign currency spot and forward rate Interest rate Credit quality of counterparties
Interest rate swaps	Level 2	Discounted cash flow	Forward and contract interest rates Credit quality of counterparties
Exchange feature of exchangeable senior notes	Level 3	June 30, 2021: Black-Scholes option pricing models	Stock price Time to expiration of the options Stock price volatility Interest rate
	Level 2	September 30, 2021: Redemption settlement price*	Stock price Exchange ratio
Capped Call Derivatives	Level 3	Non-binding quoted price obtained from counterparty banks	N/A


	Capped Call		Embedded Exchange Feature of Notes		Non-marketable investments
	(U.S. $ in thousands)
Balance as of June 30, 2021	$	124,153	$	(760,689)	$	11,750
Settlements or purchases	(135,497)		1,196,515		102,918
Gains (losses)

Recognized in other non-operating income (expense), net	11,344		(435,826)		(2,100)
Recognized in other comprehensive income	—		—		4,745

Balance as of March 31, 2022	$	—	$	—	$	117,313

Change in unrealized gains (losses) relating to assets and liabilities held at the end of the reporting period

Recognized in other non-operating income (expense), net	—		—		(2,100)
Recognized in other comprehensive income	—		—		4,745


		As of
	Statement of Financial Position Location	March 31, 2022		June 30, 2021
		(U.S. $ in thousands)
Derivative assets - hedging
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Current derivative assets	$	7,492	$	3,325
Foreign exchange forward contracts	Other non-current assets	2,421		—
Interest rate swaps	Current derivative assets	4,921		—
Interest rate swaps	Other non-current assets	31,460		3,147
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Current derivative assets	2,993		8
Total derivative assets		$	49,287	$	6,480
Derivative liabilities - hedging
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Current derivative liabilities	$	2,684	$	5,336
Interest rate swaps	Current derivative liabilities	—		3,380
Foreign exchange forward contracts	Other non-current liabilities	39		669
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Current derivative liabilities	333		2,722
Total derivative liabilities		$	3,056	$	12,107


	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
AUD/USD forward contracts:
Notional amount	$	552,230	$	49,829	$	602,059	$	409,810	$	192,249	$	602,059
Average forward rate	0.7410		0.7172		0.7390		0.7389		0.7393		0.7390
EUR/USD forward contracts:
Notional amount	15,963		—		15,963		—		15,963		15,963
Average forward rate	1.1171		—		1.1171		—		1.1171		1.1171
Total	$	568,193	$	49,829	$	618,022	$	409,810	$	208,212	$	618,022

Interest rate swaps:
Notional amount	$	—	$	650,000	$	650,000	$	650,000	$	—	$	650,000
Average interest rate			0.81%		0.81%		0.81%				0.81%


	Equipment		Computer Hardware and Software		Furniture and Fittings		Leasehold Improvements and Other		Total
	(U.S. $ in thousands)
Cost as of June 30, 2021	$	10,430	$	9,537	$	21,188	$	106,996	$	148,151

Additions	67		9,446		2,612		19,083		31,208

Disposals	(1,207)		(7,616)		(2,230)		(14,631)		(25,684)
Effect of change in exchange rates	(119)		(75)		(99)		(813)		(1,106)
Cost as of March 31, 2022	9,171		11,292		21,471		110,635		152,569

Accumulated depreciation as of June 30, 2021	(7,545)		(9,062)		(11,259)		(54,064)		(81,930)
Depreciation expense	(1,261)		(592)		(2,425)		(9,015)		(13,293)

Disposals	1,197		7,615		2,149		14,518		25,479
Effect of change in exchange rates	73		53		60		676		862
Accumulated depreciation as of March 31, 2022	(7,536)		(1,986)		(11,475)		(47,885)		(68,882)
Net book amount as of March 31, 2022	$	1,635	$	9,306	$	9,996	$	62,750	$	83,687


	Note	Goodwill
		(U.S. $ in thousands)
Balance as of June 30, 2021		$	725,758
Additions	10	9,361
Effect of change in exchange rates		(1,320)
Balance as of March 31, 2022		$	733,799


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Operating activities
Income (loss) before income tax expense	$	(30,557)	$	211,050	$	(495,713)	$	(420,646)
Adjustments to reconcile loss before income tax expense to net cash provided by operating activities:
Depreciation and amortization	12,093		13,906		37,410		41,124
Depreciation of right-of-use assets	10,806		9,418		31,938		28,010
Share-based payment expense	187,211		98,264		543,196		291,687
Net loss (gain) on exchange derivative and capped call transactions	—		(150,665)		424,482		415,933
Amortization of debt discount and issuance cost	117		7,275		3,957		104,302
Interest income	(608)		(1,464)		(965)		(6,166)
Interest expense	5,907		3,316		15,256		10,312
Net foreign currency loss (gain)	3,623		(266)		(8,033)		10,175
Net unrealized loss on investments	1,600		1,250		2,100		2,000
Net loss on sale of investments, disposal of assets and other	2,485		836		2,168		1,135

Changes in assets and liabilities:
Trade receivables	(14,980)		(35,420)		(83,183)		(80,943)
Prepaid expenses and other assets	(9,109)		(3,691)		(24,822)		(11,052)
Trade and other payables, provisions and other non-current liabilities	72,658		47,784		68,496		33,223
Deferred revenue	116,459		186,880		194,343		270,813
Interest received	633		3,018		1,719		10,472
Income tax paid, net	(5,309)		(14,455)		(59,250)		(43,416)
Net cash provided by operating activities	353,029		377,036		653,099		656,963
Investing activities
Business combinations, net of cash acquired	(12,377)		(41,460)		(12,377)		(83,624)
Purchases of intangible assets	(4,018)		—		(4,018)		—
Purchases of property and equipment	(26,473)		(5,365)		(45,935)		(22,730)

Purchases of investments	(7,918)		(24,254)		(123,921)		(93,519)
Proceeds from maturities of investments	2,600		135,245		64,087		330,549
Proceeds from sales of investments	—		1,092		186,262		48,786
Change in restricted cash	—		—		11,119		(2,162)
Payment of deferred consideration	(645)		—		(4,484)		(185)
Net cash provided by (used in) investing activities	(48,831)		65,258		70,733		177,115
Financing activities

Proceeds from exercise of share options	10		11		15		1,158


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
	(U.S. $ in thousands)
Depreciation:
Equipment	$	368	$	531	$	1,261	$	1,646
Computer hardware and software	234		491		592		1,410
Furniture and fittings	795		865		2,425		2,582
Leasehold improvements	2,591		4,146		9,015		12,082
Total depreciation	3,988		6,033		13,293		17,720
Amortization:
Patents and trademarks	279		261		840		862
Customer relationships	2,138		2,231		6,533		6,681
Acquired developed technology	5,688		5,381		16,744		15,861
Total amortization	8,105		7,873		24,117		23,404
Total depreciation and amortization	$	12,093	$	13,906	$	37,410	$	41,124
Employee benefits expense:
Salaries and wages	$	230,171	$	164,680	$	627,017	$	463,351
Variable compensation	45,405		26,221		122,105		75,260
Payroll taxes	30,246		27,687		67,096		52,142
Share-based payment expense	187,211		98,264		543,196		291,687
Defined contribution plan expense	14,839		10,694		38,883		28,200
Contractor expense	6,750		3,946		18,498		19,241
Other	31,252		22,206		89,769		60,122
Total employee benefits expense	$	545,874	$	353,698	$	1,506,564	$	990,003


	Patents, Trademarks and Other Rights		Acquired Developed Technology		Customer Relationships		Total
	(U.S. $ in thousands)
Cost as of June 30, 2021	$	29,375	$	230,849	$	130,041	$	390,265
Additions	—		3,768		861		4,629


Cost as of March 31, 2022	29,375		234,617		130,902		394,894

Accumulated amortization as of June 30, 2021	(24,109)		(161,937)		(79,629)		(265,675)
Amortization charge	(840)		(16,744)		(6,533)		(24,117)


Accumulated amortization as of March 31, 2022	(24,949)		(178,680)		(86,162)		(289,791)
Net book amount as of March 31, 2022	$	4,426	$	55,937	$	44,740	$	105,103


	Fair Value		Useful Life
	(U.S. $ in thousands)		(years)
Developed technology	$	8,200	5
Customer relationships	1,400		5
Total intangible assets subject to amortization	$	9,600


	As of March 31, 2022
	(U.S. $ in thousands)
Principal amount	$	1,000,000
Unamortized issuance cost	(625)
Net liability	$	999,375


	Capped Call Assets		Notes, Net		Embedded Exchange Feature of Notes		Term loan Facility
	(U.S. $ in thousands)
Balance as of June 30, 2021	$	(124,153)	$	348,799	$	760,689	$	—
Cash flows	135,497		(352,171)		(1,196,515)		1,000,000
Amortization of debt discount and issuance cost	—		3,372		—		116
Fair value changes	(11,344)		—		435,826		—
Other	—		—		—		(741)
Balance as of March 31, 2022	$	—	$	—	$	—	$	999,375


		Share Options
	Shares Available for Grant	Outstanding	Weighted Average Exercise Price		RSUs Outstanding
Balance as of June 30, 2021	34,283,109	67,372	$	0.75	5,541,748
Increase in shares authorized:

RSUs granted	(3,109,019)	—	—		3,109,019
RSUs canceled	502,662	—	—		(502,662)
RSUs settled	—	—	—		(2,276,122)

Share options exercised	—	(16,559)	0.88		—

Balance as of March 31, 2022	31,676,752	50,813	$	0.70	5,871,983
Share options vested and exercisable as of March 31, 2022		50,813	$	0.70
Share options vested and exercisable as of June 30, 2021		67,372	$	0.75


	Three Months Ended December 31,
	2021		2020		$ Change		% Change
	(U.S. $ in thousands)
Cloud	$	399,453	$	249,879	$	149,574	60	%
Data Center	151,095		94,739		56,356		59
Server	132,333		164,229		(31,896)		(19)
Marketplace and services	57,610		59,881		(2,271)		(4)
Total revenues	$	740,491	$	568,728	$	171,763	30	%


Date:	April 29, 2022	Atlassian Corporation Plc


		/s/ James Beer
		James Beer Chief Financial Officer