Business Wire | Jul 30, 2020 04:14PM EDT

Atlassian Announces Fourth Quarter and Fiscal Year 2020 Results

Jul. 30, 2020

SAN FRANCISCO--(BUSINESS WIRE)--Jul. 30, 2020--Atlassian Corporation Plc (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for its fourth quarter and fiscal year ended June 30, 2020 and released a shareholder letter on the Investor Relations section of its website at https://investors.atlassian.com.

"We drove strong results in fiscal year 2020, generating $1.6 billion in revenue, up 33% from the prior year," said Scott Farquhar, Atlassian's co-founder and co-CEO. "We now serve over 174,000 customers, including more than 150,000 using our cloud products, and made significant progress in transforming Atlassian into a cloud-first global software leader."

"Today, we are thrilled to announce the acquisition of Mindville, strengthening our IT market position," said Mike Cannon-Brookes, Atlassian's co-founder and co-CEO. "Mindville and our recent acquisition of Halp bolster our growing ITSM portfolio and work management offerings for non-technical teams."

Fourth Quarter Fiscal Year 2020 Financial Highlights:

On an IFRS basis, Atlassian reported:

* Revenue: Total revenue was $430.5 million for the fourth quarter of fiscal 2020, up 29% from $334.6 million for the fourth quarter of fiscal 2019. * Operating Loss and Operating Margin: Operating loss was $3.3 million for the fourth quarter of fiscal 2020, compared with an operating loss of $32.4 million for the fourth quarter of fiscal 2019. Operating margin was (1)% for the fourth quarter of fiscal 2020, compared with (10)% for the fourth quarter of fiscal 2019. * Net Loss and Net Loss Per Diluted Share: Net loss was $385.2 million for the fourth quarter of fiscal 2020, compared with a net loss of $237.5 million for the fourth quarter of fiscal 2019. Net loss per diluted share was $1.56 for the fourth quarter of fiscal 2020, compared with a net loss per diluted share of $0.99 for the fourth quarter of fiscal 2019.

Net loss for the fourth quarter of fiscal 2020 included a non-cash charge recorded in "other non-operating expense, net" of $382.7 million, compared with a non-cash charge of $156.3 million in the fourth quarter of fiscal 2019, as a result of marking to fair value the exchange feature of Atlassian's exchangeable senior notes and related capped calls.

* Balance Sheet: Cash and cash equivalents, and short-term investments at the end of the fourth quarter of fiscal 2020 totaled $2.2 billion.

On a non-IFRS basis, Atlassian reported:

* Operating Income and Operating Margin: Operating income was $82.5 million for the fourth quarter of fiscal 2020, compared with operating income of $55.9 million for the fourth quarter of fiscal 2019. Operating margin was 19% for the fourth quarter of fiscal 2020, compared with 17% for the fourth quarter of fiscal 2019. * Net Income and Net Income Per Diluted Share: Net income was $63.0 million for the fourth quarter of fiscal 2020, compared with net income of $51.2 million for the fourth quarter of fiscal 2019. Net income per diluted share was $0.25 for the fourth quarter of fiscal 2020, compared with net income per diluted share of $0.20 for the fourth quarter of fiscal 2019. * Free Cash Flow: Cash flow from operations was $123.3 million and free cash flow was $95.7 million for the fourth quarter of fiscal 2020. Free cash flow margin for the fourth quarter of fiscal 2020 was 22%.

Fiscal Year 2020 Financial Highlights

On an IFRS basis, Atlassian reported:

* Revenue: Total revenue was $1.6 billion for fiscal year 2020, up 33% from $1.2 billion for fiscal year 2019. * Operating Income (Loss) and Operating Margin: Operating income was $14.1 million for fiscal year 2020, compared with an operating loss of $63.4 million for fiscal year 2019. Operating margin was 1% for fiscal year 2020, compared with (5)% for fiscal year 2019. * Net Loss and Net Loss Per Diluted Share: Net loss was $350.7 million for fiscal year 2020, compared with a net loss of $637.6 million for fiscal year 2019. Net loss per diluted share was $1.43 for fiscal year 2020, compared with a net loss per diluted share of $2.67 for fiscal year 2019.

Net loss for fiscal year 2020 included a non-cash charge recorded in "other non-operating expense, net" of $336.0 million, compared with a non-cash charge of $533.9 million in fiscal year 2019, as a result of marking to fair value the exchange feature of Atlassian's exchangeable senior notes and related capped calls.

On a non-IFRS basis, Atlassian reported:

* Operating Income and Operating Margin: Operating income was $370.0 million for fiscal year 2020, compared with operating income of $251.2 million for fiscal year 2019. Operating margin was 23% for fiscal year 2020, compared with 21% for fiscal year 2019. * Net Income and Net Income Per Diluted Share: Net income was $288.8 million for fiscal year 2020, compared with net income of $214.5 million for fiscal year 2019. Net income per diluted share was $1.15 for fiscal year 2020, compared with net income per diluted share of $0.86 for fiscal year 2019. * Free Cash Flow: Cash flow from operations was $574.2 million and free cash flow was $500.4 million for fiscal year 2020, an increase of 19% year-over-year. Free cash flow margin for fiscal year 2020 was 31%.

A reconciliation of IFRS to non-IFRS 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-IFRS Financial Measures."

Recent Business Highlights:

* Customer Growth: Atlassian ended the fourth quarter of fiscal 2020 with a total customer count, on an active subscription or maintenance agreement basis, of 174,097. Atlassian added 3,046 net new customers during the quarter. * Halp Acquisition: In May, Atlassian closed its acquisition of Halp, which uses messaging to turn Slack into an internal help desk solution for any team, including marketing, security, legal, finance, support, and IT. Halp seamlessly extends Jira Service Desk into Slack, and offers two-way integration with Confluence, as well as Zendesk. Internal teams at Adobe, Home Depot, GitHub, Slack, ClassPass, and thousands more already use Halp every day. For more information, visit halp.com. * Mindville Acquisition: Today, Atlassian announced its acquisition of Mindville, an asset and configuration management company based in Sweden with over 1,700 customers worldwide including NASA, Spotify, and Samsung. With its acquisition of Mindville, Atlassian brings critical configuration management database (CMDB) capability to Jira Service Desk to better meet the needs of its IT customers. The lines between software development and IT continue to break down, and Mindville furthers Atlassian's ability to create a single platform for developer and IT workflows. For more information, visit mindville.com.

Financial Targets:

Atlassian is providing its financial targets for the first quarter of fiscal year 2021. The company's financial targets are as follows:

* First Quarter Fiscal Year 2021: * Total revenue is expected to be in the range of $430 million to $445 million. * Gross margin is expected to be approximately 84% on an IFRS basis and approximately 86% on a non-IFRS basis. * Operating margin is expected to be approximately 0% on an IFRS basis and approximately 21% on a non-IFRS basis. * Net loss per diluted share is expected to be in the range of ($0.06) to ($0.05) on an IFRS basis, and net income per diluted share is expected to be in the range of $0.26 to $0.27 on a non-IFRS basis. * Weighted average share count is expected to be in the range of 247 million to 249 million shares when calculating diluted IFRS net loss per share and in the range of 253 million to 255 million shares when calculating diluted non-IFRS net income per share.

For additional commentary regarding financial targets, please see Atlassian's Q4 fiscal 2020 shareholder letter dated July 30, 2020.

With respect to Atlassian's expectations under "Financial Targets" above, a reconciliation of IFRS to non-IFRS gross margin, operating margin, and net income (loss) per diluted share, has been provided in the financial statement tables included in this press release.

Shareholder Letter and Webcast/Conference Call Details:

A detailed shareholder letter is available on the Investor Relations section of Atlassian's website at: https://investors.atlassian.com. Atlassian will host a webcast and conference call to answer questions today:

* When: Thursday, July 30, 2020 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. * Dial in: To access the call via telephone in North America, please dial 1-833-714-0871. For international callers, please dial 1-778-560-2676. Participants should request the "Atlassian call" after dialing in. * Audio replay: An audio replay of the call will be available via telephone for seven days, beginning two hours after the call. To listen to the replay in North America, please dial 1-800-585-8367 (access code 4859305). International callers, please dial 1-416-621-4642 (access code 4859305).

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 team collaboration and productivity software helps teams organize, discuss, and complete shared work. Teams at more than 174,000 customers, across large and small organizations - including General Motors, Walmart Labs, Bank of America Merrill Lynch, Lyft, Verizon, Spotify and NASA - use Atlassian's project tracking, content creation and sharing, and service management products to work better together and deliver quality results on time. Learn more about our products, including Jira Software, Confluence, Trello, Bitbucket, Opsgenie, Jira Service Desk, and Jira Align at https://atlassian.com/.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. All statements other than statements of historical fact could be deemed forward looking, including risks and uncertainties related to statements about our products, customers, anticipated growth, go-to-market model, acquisitions, outlook, technology and other key strategic areas, and our financial targets such as revenue, share count, and IFRS and non-IFRS financial measures including gross margin, operating margin, and net income (loss) per diluted share.

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.

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 from time to time, including the section titled "Risk Factors" in our most recent Forms 20-F and 6-K (reporting our quarterly results). These documents are available on the SEC Filings section of the Investor Relations section of our website at: https://investors.atlassian.com/.

About Non-IFRS Financial Measures

Our reported results and financial targets include certain non-IFRS financial measures, including non-IFRS gross profit, non-IFRS operating income, non-IFRS net income, non-IFRS net income per diluted share, and free cash flow. Management believes that the use of these non-IFRS financial measures provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our results of operations, and also facilitates comparisons with peer companies, many of which use similar non-IFRS or non-GAAP financial measures to supplement their IFRS or GAAP results. Non-IFRS results are presented for supplemental informational purposes only to aid in understanding our results of operations. The non-IFRS results should not be considered a substitute for financial information presented in accordance with IFRS, and may be different from non-IFRS or non-GAAP measures used by other companies.

Our non-IFRS financial measures include:

* Non-IFRS gross profit. Excludes expenses related to share-based compensation and amortization of acquired intangible assets. * Non-IFRS operating income. Excludes expenses related to share-based compensation and amortization of acquired intangible assets. * Non-IFRS net income and non-IFRS net income per diluted share. Excludes expenses related to share- based compensation, amortization of acquired intangible assets, non-coupon impact related to exchangeable senior notes and capped calls, the related income tax effects on these items, and changes in our assessment regarding the realizability of our deferred tax assets. * 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, and from fiscal year 2020, with the adoption of IFRS 16, Leases ("IFRS 16"), payments of lease obligations are also deducted.

Our non-IFRS financial measures reflect adjustments based on the items below:

* Share-based compensation. * Amortization of acquired intangible assets. * Non-coupon impact related to exchangeable senior notes and capped calls: Amortization of notes discount and issuance costs. Mark to fair value of the exchangeable senior notes exchange feature. Mark to fair value of the related capped call transactions. * The related income tax effects on these items, and changes in our assessment regarding the realizability of our deferred tax assets. * Capital expenditures and payments of lease obligations.

We exclude expenses related to share-based compensation, amortization of acquired intangible assets, non-coupon impact related to exchangeable senior notes and capped calls, the related income tax effects on these items, and changes in our assessment regarding the realizability of our deferred tax assets from certain of our non-IFRS financial measures as we believe this helps investors understand our operational performance. In addition, share-based compensation expense can be difficult to predict and varies from period to period and company to company due to differing valuation methodologies, subjective assumptions, and the variety of equity instruments, as well as changes in stock price. Management believes that providing non-IFRS financial measures that exclude share-based compensation expense, amortization of acquired intangible assets, non-coupon impact related to exchangeable senior notes and capped calls, the related income tax effects on these items, and changes in our assessment regarding the realizability of our deferred tax assets allow for more meaningful comparisons between our results of operations from period to period.

Management considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening our statement of financial position.

Management uses non-IFRS gross profit, non-IFRS operating income, non-IFRS net income, non-IFRS net income per diluted share, and free cash flow:

* As measures of operating performance, because these financial measures do not include the impact of items not directly resulting from our core operations. * For planning purposes, including the preparation of our annual operating budget. * To allocate resources to enhance the financial performance of our business. * To evaluate the effectiveness of our business strategies. * In communications with our Board of Directors concerning our financial performance.

The tables in this press release titled "Reconciliation of IFRS to Non-IFRS Results" and "Reconciliation of IFRS to Non-IFRS Financial Targets" provide reconciliations of non-IFRS financial measures to the most recent directly comparable financial measures calculated and presented in accordance with IFRS.

We understand that although non-IFRS gross profit, non-IFRS operating income, non-IFRS net income, non-IFRS net income per diluted share, and free cash flow are frequently used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS.

Atlassian Corporation Plc

Consolidated Statements of Operations

(U.S. $ and shares in thousands, except per share data)

(unaudited)

Three Months Ended June 30, Fiscal Year Ended June 30,

2020 2019 2020 2019

Revenues:

Subscription $ 257,521 $ 180,917 $ 931,455 $ 633,950

Maintenance 122,774 105,767 469,350 394,526

Perpetual 20,365 22,824 95,162 93,593 license

Other 29,816 25,078 118,206 88,058

Total revenues 430,476 334,586 1,614,173 1,210,127

Cost of revenues 70,112 61,129 268,807 210,285 (1) (2)

Gross profit 360,364 273,457 1,345,366 999,842

Operating expenses:

Research anddevelopment (1) 210,738 170,321 763,188 579,134 (2)

Marketing and 77,892 76,600 299,683 268,356 sales (1) (2)

General andadministrative 75,014 58,980 268,409 215,714 (1)

Total operating 363,644 305,901 1,331,280 1,063,204 expenses

Operating income (3,280 ) (32,444 ) 14,086 (63,362 ) (loss)

Othernon-operating (383,234 ) (157,473 ) (338,486 ) (535,453 ) expense, net

Finance income 3,390 9,272 27,801 33,500

Finance costs (12,484 ) (10,217 ) (49,610 ) (40,241 )

Loss beforeincome tax (395,608 ) (190,862 ) (346,209 ) (605,556 ) benefit (expense)

Income taxbenefit 10,385 (46,655 ) (4,445 ) (32,065 ) (expense)

Net loss $ (385,223 ) $ (237,517 ) $ (350,654 ) $ (637,621 )

Net loss pershareattributable to ordinaryshareholders:

Basic $ (1.56 ) $ (0.99 ) $ (1.43 ) $ (2.67 )

Diluted $ (1.56 ) $ (0.99 ) $ (1.43 ) $ (2.67 )

Weighted-averagesharesoutstanding usedto compute net loss per share attributable toordinaryshareholders:

Basic 246,909 241,121 244,844 238,611

Diluted 246,909 241,121 244,844 238,611

(1) Amounts include share-based payment expense, as follows:

Three Months Ended June 30, Fiscal Year Ended June 30,

2020 2019 2020 2019

Cost of revenues $ 5,133 $ 5,294 $ 19,787 $ 17,450

Research and 52,162 47,005 204,150 149,049 development

Marketing and 9,058 10,713 41,960 39,303 sales

General and 11,786 13,120 47,498 51,960 administrative

(2) Amounts include amortization of acquired intangible assets, as follows:

Three Months Ended June 30, Fiscal Year Ended June 30,

2020 2019 2020 2019

Cost of revenues $ 5,203 $ 8,518 $ 29,509 $ 27,997

Research and 42 20 166 60 development

Marketing and 2,349 3,672 12,860 28,744 sales

Atlassian Corporation Plc

Consolidated Statements of Financial Position

(U.S. $ in thousands)

June 30, 2020 June 30, 2019

(unaudited)

Assets

Current assets:

Cash and cash equivalents $ 1,479,969 $ 1,268,441

Short-term investments 676,072 445,046

Trade receivables 112,019 82,525

Tax receivables 1,509 707

Derivative assets 327,487 215,156

Prepaid expenses and other current assets 46,730 30,236

Total current assets 2,643,786 2,042,111

Non-current assets:

Property and equipment, net 97,648 81,459

Deferred tax assets 35,351 17,084

Goodwill 645,140 608,907

Intangible assets, net 129,690 150,975

Right-of-use assets, net 217,683 -

Other non-current assets 124,774 76,722

Total non-current assets 1,250,286 935,147

Total assets $ 3,894,072 $ 2,977,258

Liabilities

Current liabilities:

Trade and other payables $ 202,570 $ 159,487

Tax liabilities 19,583 11,703

Provisions 14,291 8,983

Deferred revenue 573,813 440,954

Lease obligations 34,743 -

Derivative liabilities 1,284,596 855,005

Current portion of exchangeable senior 889,183 853,576 notes, net

Total current liabilities 3,018,779 2,329,708

Non-current liabilities:

Deferred tax liabilities 31,304 13,872

Provisions 9,493 6,082

Deferred revenue 27,192 27,866

Lease obligations 229,825 -

Other non-current liabilities 2,173 34,263

Total non-current liabilities 299,987 82,083

Total liabilities 3,318,766 2,411,791

Equity

Share capital 24,744 24,199

Share premium 459,892 458,166

Other capital reserves 1,130,918 816,660

Other components of equity 76,144 32,079

Accumulated deficit (1,116,392 ) (765,637 )

Total equity 575,306 565,467

Total liabilities and equity $ 3,894,072 $ 2,977,258

Atlassian Corporation Plc

Consolidated Statements of Cash Flows

(U.S. $ in thousands)

(unaudited)

Three Months Ended June 30, Fiscal Year Ended June 30,

2020 2019 2020 2019

Operating activities

Loss beforeincome tax $ (395,608 ) $ (190,862 ) $ (346,209 ) $ (605,556 ) benefit (expense)

Adjustmentsto reconcileloss beforeincome taxbenefit (expense) to net cashprovided byoperatingactivities:

Depreciationand 13,123 15,845 62,271 70,248 amortization

Depreciationof 8,955 - 35,127 - right-of-use assets

Gain on saleofinvestments, (138 ) (12 ) (993 ) (2,357 ) disposal of assets andother

Netunrealizedforeign 1,670 (136 ) (1,503 ) (770 ) currency loss(gain)

Share-basedpayment 78,139 76,132 313,395 257,762 expense

Netunrealizedloss onexchange 382,696 156,321 335,953 533,908 derivative and cappedcalltransactions

Amortizationof debt 9,063 8,638 35,608 33,939 discount and issuance cost

Interest (3,390 ) (9,272 ) (27,801 ) (33,500 ) income

Interest 3,421 1,579 14,002 6,302 expense

Changes inassets and liabilities:

Trade (18,229 ) (14,584 ) (29,440 ) (30,211 ) receivables

Prepaidexpenses and (3,014 ) 14,292 (10,608 ) 1,085 other assets

Trade andotherpayables,provisions 26,080 19,419 51,532 75,624 and othernon-currentliabilities

Deferred 17,798 33,556 131,535 122,502 revenue

Interest 4,801 8,372 29,217 30,328 received

Tax refundsreceived (2,026 ) (1,562 ) (17,876 ) 7,038 (income tax paid), net

Net cashprovided by 123,341 117,726 574,210 466,342 operating activities

Investing activities

Businesscombinations, (15,229 ) (155,041 ) (53,212 ) (418,595 ) net of cash acquired

Purchases ofintangible - (1,260 ) - (2,110 ) assets

Purchases ofproperty and (15,844 ) (19,563 ) (35,709 ) (44,192 ) equipment

Proceeds fromsales ofproperty, - - - 3,721 equipment and intangibleassets

Purchases of (34,450 ) (295,389 ) (985,931 ) (648,036 ) investments

Proceeds frommaturities of 88,011 167,438 513,268 485,021 investments

Proceeds fromsales of 7,857 11,803 245,498 20,545 investments

Increase inrestricted (2,085 ) - (2,085 ) (552 ) cash

Payment ofdeferred (760 ) - (760 ) - consideration

Net cashprovided by(used in) 27,500 (292,012 ) (318,931 ) (604,198 ) investingactivities

Financing activities

Proceeds fromexercise of 317 713 1,802 3,542 share options

Payment ofexchangeablesenior notes - - - (410 ) issuancecosts

Payments oflease (11,790 ) - (38,125 ) - obligations

Interest paid (3,125 ) (3,125 ) (6,250 ) (6,319 )

Repayment ofexchangeable - - (2 ) - senior notes

Net cash usedin financing (14,598 ) (2,412 ) (42,575 ) (3,187 ) activities

Effect ofexchange ratechanges on 5,533 (145 ) (1,176 ) (855 ) cash and cashequivalents

Net increase(decrease) in 141,776 (176,843 ) 211,528 (141,898 ) cash and cash equivalents

Cash and cashequivalents 1,338,193 1,445,284 1,268,441 1,410,339 at beginning of period

Cash and cashequivalents $ 1,479,969 $ 1,268,441 $ 1,479,969 $ 1,268,441 at end of period

Atlassian Corporation Plc

Reconciliation of IFRS to Non-IFRS Results

(U.S. $ and shares in thousands, except per share data)

(unaudited)

Three Months Ended June 30, Fiscal Year Ended June 30,

2020 2019 2020 2019

Gross profit

IFRS gross $ 360,364 $ 273,457 $ 1,345,366 $ 999,842 profit

Plus:Share-based 5,133 5,294 19,787 17,450 payment expense

Plus:Amortization ofacquired 5,203 8,518 29,509 27,997 intangibleassets

Non-IFRS gross $ 370,700 $ 287,269 $ 1,394,662 $ 1,045,289 profit

Operating income

IFRS operating $ (3,280 ) $ (32,444 ) $ 14,086 $ (63,362 ) income (loss)

Plus:Share-based 78,139 76,132 313,395 257,762 payment expense

Plus:Amortization ofacquired 7,594 12,210 42,535 56,801 intangibleassets

Non-IFRS $ 82,453 $ 55,898 $ 370,016 $ 251,201 operating income

Net income

IFRS net loss $ (385,223 ) $ (237,517 ) $ (350,654 ) $ (637,621 )

Plus:Share-based 78,139 76,132 313,395 257,762 payment expense

Plus:Amortization ofacquired 7,594 12,210 42,535 56,801 intangibleassets

Plus: Non-couponimpact relatedto exchangeable 391,759 164,959 371,561 567,847 senior notes andcapped calls

Less: Income taxeffects and (29,256 ) 35,429 (88,030 ) (30,243 ) adjustments

Non-IFRS net $ 63,013 $ 51,213 $ 288,807 $ 214,546 income

Net income per share

IFRS net lossper share - $ (1.56 ) $ (0.99 ) $ (1.43 ) $ (2.67 ) diluted

Plus:Share-based 0.33 0.32 1.27 1.05 payment expense

Plus:Amortization ofacquired 0.03 0.05 0.17 0.23 intangibleassets

Plus: Non-couponimpact relatedto exchangeable 1.57 0.68 1.49 2.37 senior notes andcapped calls

Less: Income taxeffects and (0.12 ) 0.14 (0.35 ) (0.12 ) adjustments

Non-IFRS netincome per share $ 0.25 $ 0.20 $ 1.15 $ 0.86 - diluted

Weighted-averagediluted shares outstanding

Weighted-averageshares used incomputing 246,909 241,121 244,844 238,611 diluted IFRS netloss per share

Plus: Dilutionfrom share 6,000 8,860 6,811 9,609 options and RSUs (1)

Weighted-averageshares used incomputing 252,909 249,981 251,655 248,220 diluted non-IFRS net income pershare

Free cash flow

IFRS net cashprovided by $ 123,341 $ 117,726 $ 574,210 $ 466,342 operating activities

Less: Capital (15,844 ) (19,563 ) (35,709 ) (44,192 ) expenditures

Less: Paymentsof lease (11,790 ) - (38,125 ) - obligations

Free cash flow $ 95,707 $ 98,163 $ 500,376 $ 422,150 (2)

(1) The effects of these dilutive securities were not included in the IFRS calculation of diluted net loss per share for the three months and fiscal years ended June 30, 2020 and 2019 because the effect would have been anti-dilutive.

(2) As a result of our adoption of IFRS 16 on July 1, 2019, we have updated our definition of free cash flow to subtract payments of lease obligations under IFRS 16. These payments were previously, but no longer, reported in cash provided by operating activities. As a result, free cash flow is not affected by this change.

Atlassian Corporation Plc

Reconciliation of IFRS to Non-IFRS Financial Targets

(U.S. $)

Three Months Ending September 30, 2020

Revenue $430 million to $445 million



IFRS gross margin 84%

Plus: Share-based payment expense 1

Plus: Amortization of acquired intangible assets 1

Non-IFRS gross margin 86%



IFRS operating margin 0%

Plus: Share-based payment expense 19

Plus: Amortization of acquired intangible assets 2

Non-IFRS operating margin 21%



IFRS net loss per share - diluted ($0.06) to ($0.05)

Plus: Share-based payment expense 0.33

Plus: Amortization of acquired intangible assets 0.03

Plus: Non-coupon impact related to exchangeable senior 0.04notes and capped calls

Less: Income tax effects and adjustments (0.08)

Non-IFRS net income per share - diluted $0.26 to $0.27



Weighted-average shares used in computing diluted IFRS 247 million to 249net loss per share million

Dilution from share options and RSUs (1) 6 million

Weighted-average shares used in computing diluted 253 million to 255non-IFRS net income per share million

(1) The effects of these dilutive securities are not included in the IFRS calculation of diluted net loss per share for the three months ending September 30, 2020.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200730006029/en/

CONTACT: Investor Relations Contact Martin Lam & Matt Sonefeldt IR@atlassian.com

CONTACT: Media Contact Jake Standish press@atlassian.com