Atlassian Corp 10-Q for FY2023 Q1

Atlassian Corp (TEAM)

10-Q 2022-11-04 For: 2022-09-30

Added on April 08, 2026

About this 10-Q

Atlassian Corp filed this 10-Q on November 4, 2022, covering the quarter ended September 30, 2022 (FY2023 Q1).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $807.39M; up 31.5% from $614.02M a year earlier
Net loss: $13.74M; compared with a net loss of $411.2M a year earlier
Diluted EPS: -$0.05; compared with -$1.63 a year earlier

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


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, par value $0.00001 per share	TEAM	Nasdaq Global Select Market


	PART I.
Item 1.	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Operations (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited )	9
Item 2.	Management ’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	54
	PART II.
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	83
Item 3.	Defaults Upon Senior Securities	83
Item 4.	Mine Safety Disclosures	83
Item 5.	Other Information	83
Item 6.	Exhibits	84
	SIGNATURES	86


	September 30, 2022		June 30, 2022
Assets
Current assets:
Cash and cash equivalents	$	1,468,571	$	1,385,265
Marketable securities	54,537		73,294
Accounts receivable, net	246,781		308,127

Assets held for sale	—		60,265
Prepaid expenses and other current assets	96,999		70,002
Total current assets	1,866,888		1,896,953
Non-current assets:
Property and equipment, net	103,336		100,662
Operating lease right-of-use assets	266,885		277,276
Strategic investments	239,323		159,064
Intangible assets, net	92,544		100,840
Goodwill	721,912		722,838
Deferred tax assets	9,475		10,335
Other assets	71,069		58,862
Total assets	$	3,371,432	$	3,326,830
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	111,461	$	81,220
Accrued expenses and other current liabilities	274,770		406,139
Deferred revenue, current portion	1,066,090		1,066,059
Operating lease liabilities, current portion	45,360		40,638


Total current liabilities	1,497,681		1,594,056
Non-current liabilities:
Deferred revenue, net of current portion	106,744		116,621
Operating lease liabilities, net of current portion	267,373		274,434
Term loan facility	999,463		999,419
Deferred tax liabilities	1,038		312
Other non-current liabilities	18,520		14,616
Total liabilities	2,890,819		2,999,458
Commitments and contingencies (Note 13)
Stockholders’ equity
Class A Common Stock, $0.00001 par value; 750,000,000 shares authorized, 148,272,295 and 144,891,749 issued and outstanding at September 30, 2022 and June 30, 2022, respectively	1		1
Class B Common Stock, 0.00001 par value; 230,000,000 shares authorized, 107,247,693 and 110,035,649 issued and outstanding at September 30, 2022 and June 30, 2022, respectively	1		1
Additional paid-in capital	2,355,991		2,182,536
Accumulated other comprehensive income	7,391		13,864
Accumulated deficit	(1,882,771)		(1,869,030)
Total stockholders’ equity	480,613		327,372
Total liabilities and stockholders’ equity	$	3,371,432	$	3,326,830


	Three Months Ended September 30,
	2022		2021
Revenues:
Subscription	$	650,984	$	435,296
Maintenance	113,565		130,590
Other	42,843		48,138
Total revenues	807,392		614,024
Cost of revenues (1) (2)	139,392		96,256
Gross profit	668,000		517,768
Operating expenses:
Research and development (1) (2)	399,006		272,140
Marketing and sales (1) (2)	160,128		99,329
General and administrative (1)	142,893		89,822
Total operating expenses	702,027		461,291
Operating income (loss)	(34,027)		56,477
Other income (expense), net	29,289		(455,804)
Interest income	5,143		277
Interest expense	(6,121)		(11,518)
Loss before income taxes	(5,716)		(410,568)
Provision for income taxes	(8,025)		(636)
Net loss	$	(13,741)	$	(411,204)


Net loss per share:
Basic	$	(0.05)	$	(1.63)
Diluted	$	(0.05)	$	(1.63)
Weighted-average shares used in computing net loss per share:
Basic	255,167		252,106
Diluted	255,167		252,106


Cost of revenues	$	10,613	$	5,917
Research and development	110,129		64,282
Marketing and sales	23,195		14,494
General and administrative	29,694		16,214


Cost of revenues	$	5,697	$	5,689
Research and development	94		94
Marketing and sales	2,505		2,271


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


	Three Months Ended September 30, 2021
	Common Stock						Additional paid in capital		Accumulated other comprehensive income		Accumulated Deficit		Total stockholders’ equity
	Class A			Class B
	Shares	Amount		Shares	Amount
Balance at June 30, 2021	137,038	$	1	114,610	$	1	$	1,657,426	$	5,354	$	(1,349,520)	$	313,262
Common stock issued under employee stock plans	912	—		—	—		1		—		—		1
Conversion from Class B Common Stock to Class A Common Stock	1,139	—		(1,139)	—		—		—		—		—
Stock-based compensation	—	—		—	—		100,944		—		—		100,944
Other comprehensive loss, net of tax	—	—		—	—		—		(17,156)		—		(17,156)
Net loss	—	—		—	—		—		—		(411,204)		(411,204)
Balance at September 30, 2021	139,089	$	1	113,471	$	1	$	1,758,371	$	(11,802)	$	(1,760,724)	(14,153)


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


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


	Three Months Ended September 30, 2021
		IFRS		GAAP
Net loss per share attributable to ordinary shareholders:
Basic and diluted		$	(1.59)	$	(1.63)


		Fiscal Year Ended June 30, 2022
	Note	IFRS		Adjustments		GAAP
Assets:
Prepaid expenses and other current assets	(b)	$	72,303	$	(2,301)	$	70,002
Property and equipment, net	(b)	98,554		2,108		100,662
Operating lease right-of-use assets	(b)	267,328		9,948		277,276
Goodwill	(a)	732,666		(9,828)		722,838
Deferred tax assets	(e)	42,760		(32,425)		10,335
Other assets	(b)	60,740		(1,878)		58,862
Total conversion adjustments				$	(34,376)

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


	Level 1		Level 2		Total

Assets measured at fair value
Cash and cash equivalents:
Money market funds	$	450,480	$	—	$	450,480





Marketable securities:
U.S. treasury securities	—		44,537		44,537

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




Derivative financial instruments	—		62,501		62,501





Other non-current assets:

Marketable equity securities	20,993		—		20,993



Total assets measured at fair value	$	471,473	$	117,038	$	588,511

Liabilities measured at fair value
Derivative financial instruments	$	—	$	37,521	$	37,521



Total liabilities measured at fair value	$	—	$	37,521	$	37,521


	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value

U.S. treasury securities	$	44,999	$	—	$	(462)	$	44,537

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




Total marketable securities	$	54,999	$	—	$	(462)	$	54,537


	Three Months Ended September 30,
	2022		2021








Cash flows from operating activities:
Net loss	$	(13,741)	$	(411,204)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	14,620		13,304
Stock-based compensation	173,631		100,907
Deferred income taxes	1,522		(1,614)
Net loss on exchange derivative and capped call transactions	—		424,482
Amortization of debt discount and issuance cost	118		9,841
Net loss on strategic investments	11,513		31,422
Net foreign currency gain	(3,625)		(6,398)

Gain on a non-cash sale of a controlling interest of a subsidiary	(43,092)		—
Other	—		(615)
Changes in operating assets and liabilities:
Accounts receivable, net	61,314		(13,211)
Prepaid expenses and other assets	(22,677)		(21,185)
Accounts payable	31,147		10,223
Accrued expenses and other liabilities	(108,443)		(84,406)
Deferred revenue	(9,845)		13,455
Net cash provided by operating activities	92,442		65,001
Cash flows from Investing activities:
Business combinations, net of cash acquired	(600)		(1,138)

Purchases of property and equipment	(16,496)		(6,881)
Purchases of strategic investments	(8,350)		(53,000)
Purchases of marketable securities	(10,000)		(21,003)
Proceeds from maturities of investments	28,950		53,887
Proceeds from sale of strategic investments	258		—
Proceeds from sales of marketable securities	—		186,262


	Three Months Ended September 30,
	2022		2021
Unrealized losses recognized on publicly traded equity securities, net	$	(9,808)	$	(35,810)
Unrealized gains recognized on privately held equity securities, net	—		4,388
Impairments on privately held equity and debt securities	(2,015)		(500)


Losses on strategic investments, net	$	(11,823)	$	(31,922)
Change in unrealized losses relating to assets held at the end of the reporting period:
Recognized in other income (expense), net	(11,513)		$	(31,422)
Recognized in other comprehensive loss	(310)		$	(500)


	Equity Method Investment
Balance as of July 20, 2022	$	88,853
Effect of change in exchange rates	(5,113)
Balance as of September 30, 2022	$	83,740


	Notional Amounts of Derivative Instruments
	Notional Amount by Term to Maturity								Classification by Notional Amount
	Under 12 months		Over 12 months			Total			Cash Flow Hedge			Non Hedge		Total
Forward contracts	$	588,272	$	42,679		$	630,951		$	461,595		$	169,356	$	630,951
Interest rate swaps:
Notional amount	$	—	$	650,000		$	650,000		$	650,000		$	—	$	650,000
Average interest rate			0.81		%	0.81		%	0.81		%			0.81		%


	September 30, 2022		June 30, 2022
Due in one year or less	$	54,537	$	73,294


	Fair Value		Measurement Alternative		Other		Total
Equity securities	$	20,993	$	133,030	$	—	$	154,023
Debt securities and other investments	—		—		1,560		1,560
Total strategic investments	$	20,993	$	133,030	$	1,560	$	155,583


	Balance Sheet Location	September 30, 2022		June 30, 2022
Derivative assets
Derivatives designated as hedging instruments:


Interest rate swaps	Prepaid expenses and other current assets	21,282		13,296
Interest rate swaps	Other assets	40,991		30,367
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Prepaid expenses and other current assets	228		389
Total derivative assets		$	62,501	$	44,052

Derivative liabilities
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Accrued expenses and other current liabilities	$	31,003	$	18,208

Foreign exchange forward contracts	Other non-current liabilities	1,802		812
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Accrued expenses and other current liabilities	4,716		5,080
Total derivative liabilities		$	37,521	$	24,100


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

Effect of change in exchange rates	(926)
Balance as of September 30, 2022	$	721,912


	September 30, 2022		June 30, 2022		Weighted-Average Remaining Useful Lives (Years)
Acquired Developed Technology	$	234,618	$	234,618	3
Patents, Trademarks, and Other Rights	33,393		33,393		5
Customer Relationships	129,502		129,502		5
Intangible assets, gross	397,513		397,513
Less: accumulated amortization	(304,969)		(296,673)
Intangible assets, net	$	92,544	$	100,840


Fiscal Years:
Remainder of 2023	$	24,607
2024	26,266
2025	14,908
2026	12,370
2027	7,267
Thereafter	7,126
Total future amortization expense	$	92,544


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


Fiscal years:	Operating Lease Payments
Remainder of 2023	$	39,810
2024	50,573
2025	48,036
2026	41,435
2027	36,755
Thereafter	127,981
Total future operating lease payments	344,590
Less: imputed interest	(31,857)

Total lease liability balance	$	312,733


	September 30, 2022		June 30, 2022
Accrued expenses	109,629		123,381
Employee benefits	104,973		197,701
Tax liabilities	5,448		26,367

Customer deposits	10,208		9,718
Derivative liabilities	35,719		23,288
Liabilities held for sale	—		17,564
Other payables	8,793		8,120
Total accrued expenses and other liabilities	$	274,770	$	406,139


	Number of Shares	Weighted Average Grant Date Fair Value		Weighted Average Remaining Life (Years)	Aggregate Intrinsic Value (in thousands)












Balance as of June 30, 2022	6,023,997	$	257.62	3	$	1,128,897
Granted	5,289,877	257.40
Vested	(578,285)	222.15			$	163,869
Forfeited or cancelled	(307,506)	274.69
Balance as of September 30, 2022	10,428,083	$	258.97	3	$	2,196,050


	As of
	September 30, 2021	December 31, 2021	March 31, 2022	June 30, 2022	September 30, 2022
Number of customers	216,500	226,521	234,575	242,623	249,173


	Three Months Ended September 30,
(in thousands)	2022		2021		$ Change		% Change

Subscription	$	650,984	$	435,296	$	215,688	50	%
Maintenance	113,565		130,590		(17,025)		(13)
Other	42,843		48,138		(5,295)		(11)
Total revenues	$	807,392	$	614,024	$	193,368	31


	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 - 31, 2022	439	$	9.14	—	—
August 1 - 31, 2022	306	$	9.14	—	—
September 1- 30, 2022	—	—		—	—
Total	745


ACCEPTED AND AGREED:
{candidate_signature}
Signed by [FIRST NAME] [LAST NAME]						Date


Date: November 4, 2022			/s/ Michael Cannon-Brookes
			Michael Cannon-Brookes
			Co-Chief Executive Officer (Co-Principal Executive Officer)


Date: November 4, 2022			/s/ Scott Farquhar
			Scott Farquhar
			Co-Chief Executive Officer (Co-Principal Executive Officer)


Date: November 4, 2022			/s/ Joseph Binz
			Joseph Binz
			Chief Financial Officer