Business Wire | Apr 29, 2021 04:05PM EDT

Atlassian Announces Third Quarter Fiscal Year 2021 Results

Apr. 29, 2021

SAN FRANCISCO--(BUSINESS WIRE)--Apr. 29, 2021--Atlassian Corporation Plc (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for its third quarter of fiscal year 2021 ended March 31, 2021 and released a shareholder letter available on Atlassian's Work Life blog at http://atlassian.com/blog/announcements/shareholder-letter-q3fy21. The shareholder letter was also posted to the Investor Relations section of Atlassian's website at https://investors.atlassian.com.

"The Atlassian cloud platform allows us to innovate faster than ever for teams and organizations of all sizes, highlighted by our announcement of Point A," said Mike Cannon-Brookes, Atlassian's co-founder and co-CEO. "The Point A program fast-tracks our most promising ideas and vets early versions with our users, so customers can get value out of early products from day 1. Our new products are able to rapidly evolve thanks to our incredible R&D teams building on top of our multi-year cloud platform investment."

"We continue to deliver innovation in the cloud in order to unleash the potential of every team," said Scott Farquhar, Atlassian's co-founder and co-CEO. "In Q3, we drove strong revenue growth and financial results, but we are most proud of how we continue to create lasting value for teams and customers in the cloud through initiatives like Open DevOps and the recent acquisitions of ThinkTilt and Chartio."

Third Quarter Fiscal Year 2021 Financial Highlights:

On an IFRS basis, Atlassian reported:

* Revenue: Total revenue was $568.7 million for the third quarter of fiscal year 2021, up 38% from $411.6 million for the third quarter of fiscal year 2020. * Operating Income (Loss) and Operating Margin: Operating income was $69.5 million for the third quarter of fiscal year 2021, compared with an operating loss of $19.9 million for the third quarter of fiscal year 2020. Operating margin was 12% for the third quarter of fiscal year 2021, compared with (5)% for the third quarter of fiscal year 2020. * Net Income (Loss) and Net Income (Loss) Per Diluted Share: Net income was $159.8 million for the third quarter of fiscal year 2021, compared with a net loss of $158.8 million for the third quarter of fiscal year 2020. Net income per diluted share was $0.63 for the third quarter of fiscal year 2021, compared with a net loss per diluted share of $0.65 for the third quarter of fiscal year 2020. Net income for the third quarter of fiscal year 2021 included a gain of $150.7 million recorded in "other non-operating income (expense), net," compared with a charge of $141.8 million in the third quarter of fiscal year 2020 relating to Atlassian's exchangeable senior notes and related capped calls. Of this amount, a gain of $161.3 million is related to marking to fair value the exchange feature of the notes and related capped calls that remain outstanding as of quarter end. In addition, a net loss of $10.6 million is related to the net impact of repurchasing a portion of the notes and unwinding of the related capped calls during this quarter.

* Balance Sheet: Cash and cash equivalents, and short-term investments at the end of the third quarter of fiscal year 2021 totaled $1.6 billion. During the third quarter of fiscal year 2021, Atlassian used $591.6 million in cash to repurchase a portion of the notes in privately negotiated transactions and received $63.3 million in cash from the unwinding of the related capped calls. The net impact resulted in cash outflows of $528.2 million, which is reflected in cash used in financing activities on our statements of cash flows.

On a non-IFRS basis, Atlassian reported:

* Operating Income and Operating Margin: Operating income was $175.7 million for the third quarter of fiscal year 2021, compared with operating income of $77.2 million for the third quarter of fiscal year 2020. Operating margin was 31% for the third quarter of fiscal year 2021, compared with 19% for the third quarter of fiscal year 2020. * Net Income and Net Income Per Diluted Share: Net income was $123.3 million for the third quarter of fiscal year 2021, compared with net income of $61.9 million for the third quarter of fiscal year 2020. Net income per diluted share was $0.48 for the third quarter of fiscal year 2021, compared with $0.25 for the third quarter of fiscal year 2020. * Free Cash Flow: Cash flow from operations was $377.0 million and free cash flow was $360.4 million for the third quarter of fiscal year 2021. Free cash flow margin for the third quarter of fiscal year 2021 was 63%.

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:

* Atlassian Team '21: Atlassian is currently holding its premier virtual customer event from April 28th through April 30th. With approximately 30,000 registered attendees, Team '21 is the ultimate digital experience for developers, creators, and innovators of every industry. Live and recorded sessions for Team '21 can be found at https://events.atlassian.com/team21. * Point A: Atlassian introduced its Point A program focused on fast tracking its next generation of new products to drive the future of teamwork. Atlassian announced five Point A products, all built on its cloud platform, that it is developing in collaboration with customers: Jira Work Management enables business teams to move forward by being the one place where they track, coordinate, and manage their work with structure and consistency. Compass gives software development teams a bird's eye view of the digital services across their organization, connecting engineering output with the teams that support it in a single, trusted place. Halp is a modern ticketing help desk that seamlessly integrates with Slack and Microsoft Teams, making request management conversational and delightful for everyone throughout your organization. Jira Product Discovery helps product managers build what matters by rallying teams around priorities, from discovery all the way through delivery. Team Central serves as an organization's connective tissue, helping any team connect and communicate progress as frequently and frictionlessly as modern work demands, and allowing any team the ability to track progress and provide real-time updates to anyone across an organization. * Continuous Investment in Leading-Edge Innovation: During the quarter, Trello launched several new tools to visualize work - dashboard, timeline, table, and map views, as well as enhanced smart cards. Also, at Team '21, Atlassian announced updates for both Jira Software and Jira Service Management. For Jira Software, Atlassian introduced Open DevOps, a pre-configured development toolchain of Atlassian and partner products. * ThinkTilt and Chartio Acquisitions: Atlassian recently announced the acquisition of ThinkTilt, maker of ProForma, a no-code/low-code form builder for Jira. Based in Brisbane, Australia and used by over 700 companies, ThinkTilt helps IT empower any team in an organization to quickly deliver great service and support to employees. During the quarter, Atlassian also announced the acquisition of Chartio, a cloud-based visualization and analytics solution. Chartio will become the analytics and data visualization engine for Atlassian's cloud platform, starting with the Jira family. * Customer Growth: Atlassian ended its third quarter of fiscal year 2021 with a total customer count, on an active subscription or maintenance agreement basis, of 212,807 customers, adding 18,473 net new customers during the quarter. It is important to note that 5,658 of these net new customers were single-user Trello accounts. Atlassian saw strong Trello customer growth during the quarter driven by both the rollout of new product features and recent funnel optimization initiatives.

Financial Targets:

Atlassian is providing its financial targets for the fourth quarter of fiscal year 2021 as follows:

Fourth Quarter Fiscal Year 2021:

* Total revenue is expected to be in the range of $513 million to $528 million. * Gross margin is expected to be in the range of 82% to 83% on an IFRS basis and in the range of 84% to 85% on a non-IFRS basis. * Operating margin is expected to be approximately (6%) on an IFRS basis and approximately 13% on a non-IFRS basis. * Net loss per diluted share is expected to be approximately ($0.08) on an IFRS basis, and net income per diluted share is expected to be approximately $0.17 on a non-IFRS basis. * Weighted average share count is expected to be in the range of 250 million to 252 million shares when calculating diluted IFRS net loss per share and in the range of 255 million to 257 million shares when calculating diluted non-IFRS net income per share.

For additional commentary regarding financial targets, please see Atlassian's third quarter fiscal year 2021 shareholder letter dated April 29, 2021.

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 Details:

A detailed shareholder letter is available on Atlassian's Work Life blog at http://atlassian.com/blog/announcements/shareholder-letter-q3fy21, 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 29, 2021 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. * 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 6576384). International callers, please dial 1-416-621-4642 (access code 6576384).

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 212,000 customers, across large and small organizations - including Bank of America, Redfin, NASA, Verizon, and Dropbox - 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, Jira Service Management, Trello, Bitbucket, 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 discrete tax impact resulting from a non-recurring transaction. * 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 payments of lease obligations.

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. Net loss on settlements of exchangeable senior notes and capped call transactions. * The related income tax effects on these items, and discrete tax impact resulting from a non-recurring transaction. * Purchases of property and equipment 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 discrete tax impact resulting from a non-recurring transaction 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 discrete tax impact resulting from a non-recurring transaction 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 and investors 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 March Nine Months Ended March 31, 31,

2021 2020 2021 2020

Revenues:

Subscription $ 349,915 $ 244,155 $ 938,554 $ 673,934

Maintenance 132,921 119,628 391,891 346,576

Perpetual license 31,308 21,002 75,569 74,797

Other 54,584 26,797 123,579 88,390

Total revenues 568,728 411,582 1,529,593 1,183,697

Cost of revenues (1) 84,888 70,655 238,054 198,695 (2)

Gross profit 483,840 340,927 1,291,539 985,002

Operating expenses:

Research and 244,098 204,148 717,397 552,450 development (1) (2)

Marketing and sales 92,043 84,485 239,480 221,791 (1) (2)

General and 78,184 72,214 225,502 193,395 administrative (1)

Total operating 414,325 360,847 1,182,379 967,636 expenses

Operating income 69,515 (19,920 ) 109,160 17,366 (loss)

Other non-operatingincome (expense), 150,662 (141,701 ) (421,358 ) 44,748 net

Finance income 1,464 7,199 6,166 24,411

Finance costs (10,591 ) (12,435 ) (114,614 ) (37,126 )

Income (loss) beforeincome tax benefit 211,050 (166,857 ) (420,646 ) 49,399 (expense)

Income tax benefit (51,210 ) 8,032 (62,596 ) (14,830 )(expense)

Net income (loss) $ 159,840 $ (158,825 ) $ (483,242 ) $ 34,569

Net income (loss)per shareattributable to ordinaryshareholders:

Basic $ 0.64 $ (0.65 ) $ (1.94 ) $ 0.14

Diluted $ 0.63 $ (0.65 ) $ (1.94 ) $ 0.14

Weighted-averageshares outstandingused to compute netincome (loss) per share attributableto ordinaryshareholders:

Basic 250,279 245,504 249,152 244,161

Diluted 255,128 245,504 249,152 251,255

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

Three Months Ended March Nine Months Ended March 31, 31,

2021 2020 2021 2020

Cost of revenues $ 6,495 $ 5,535 $ 18,552 $ 14,654

Research and 63,699 57,071 198,235 151,988 development

Marketing and sales 11,774 11,397 30,224 32,902

General and 16,296 13,519 44,676 35,712 administrative

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

Three Months Ended March Nine Months Ended March 31, 31,

2021 2020 2021 2020

Cost of revenues $ 5,554 $ 6,645 $ 16,386 $ 24,306

Research and 41 41 124 124 development

Marketing and sales 2,278 2,900 6,894 10,511



Atlassian Corporation Plc

Consolidated Statements of Financial Position

(U.S. $ in thousands)

March 31, 2021

June 30, 2020

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

1,151,450

$

1,479,969

Short-term investments

412,872

676,072

Trade receivables

193,155

112,019

Tax receivables

3,161

1,509

Derivative assets

189,776

327,487

Prepaid expenses and other current assets

54,341

46,730

Total current assets

2,004,755

2,643,786

Non-current assets:

Property and equipment, net

100,707

97,648

Deferred tax assets

44,652

35,351

Goodwill

719,160

645,140

Intangible assets, net

128,285

129,690

Right-of-use assets, net

194,476

217,683

Other non-current assets

130,983

124,774

Total non-current assets

1,318,263

1,250,286

Total assets

$

3,323,018

$

3,894,072

Liabilities

Current liabilities:

Trade and other payables

$

233,458

$

202,570

Tax liabilities

54,087

19,583

Provisions

25,041

14,291

Deferred revenue

779,987

573,813

Lease obligations

39,218

34,743

Derivative liabilities

884,883

1,284,596

Exchangeable senior notes, net

542,055

889,183

Total current liabilities

2,558,729

3,018,779

Non-current liabilities:

Deferred tax liabilities

37,049

31,304

Provisions

10,906

9,493

Deferred revenue

93,831

27,192

Lease obligations

205,565

229,825

Other non-current liabilities

4,270

2,173

Total non-current liabilities

351,621

299,987

Total liabilities

2,910,350

3,318,766

Equity

Share capital

25,088

24,744

Share premium

461,012

459,892

Other capital reserves

1,423,220

1,130,918

Other components of equity

102,982

76,144

Accumulated deficit

(1,599,634)

(1,116,392)

Total equity

412,668

575,306

Total liabilities and equity

$

3,323,018

$

3,894,072

Atlassian Corporation Plc

Consolidated Statements of Financial Position

(U.S. $ in thousands)

March 31, 2021 June 30, 2020

(unaudited)

Assets

Current assets:

Cash and cash equivalents $ 1,151,450 $ 1,479,969

Short-term investments 412,872 676,072

Trade receivables 193,155 112,019

Tax receivables 3,161 1,509

Derivative assets 189,776 327,487

Prepaid expenses and other current assets 54,341 46,730

Total current assets 2,004,755 2,643,786

Non-current assets:

Property and equipment, net 100,707 97,648

Deferred tax assets 44,652 35,351

Goodwill 719,160 645,140

Intangible assets, net 128,285 129,690

Right-of-use assets, net 194,476 217,683

Other non-current assets 130,983 124,774

Total non-current assets 1,318,263 1,250,286

Total assets $ 3,323,018 $ 3,894,072

Liabilities

Current liabilities:

Trade and other payables $ 233,458 $ 202,570

Tax liabilities 54,087 19,583

Provisions 25,041 14,291

Deferred revenue 779,987 573,813

Lease obligations 39,218 34,743

Derivative liabilities 884,883 1,284,596

Exchangeable senior notes, net 542,055 889,183

Total current liabilities 2,558,729 3,018,779

Non-current liabilities:

Deferred tax liabilities 37,049 31,304

Provisions 10,906 9,493

Deferred revenue 93,831 27,192

Lease obligations 205,565 229,825

Other non-current liabilities 4,270 2,173

Total non-current liabilities 351,621 299,987

Total liabilities 2,910,350 3,318,766

Equity

Share capital 25,088 24,744

Share premium 461,012 459,892

Other capital reserves 1,423,220 1,130,918

Other components of equity 102,982 76,144

Accumulated deficit (1,599,634) (1,116,392)

Total equity 412,668 575,306

Total liabilities and equity $ 3,323,018 $ 3,894,072

Atlassian Corporation Plc

Consolidated Statements of Cash Flows

(U.S. $ in thousands)

(unaudited)

Three Months Ended March 31,

Nine Months Ended March 31,

2021

2020

2021

2020

Operating activities

Income (loss) before income tax benefit (expense)

$

211,050

$

(166,857

)

$

(420,646

)

$

49,399

Adjustments to reconcile income (loss) before income tax expense to net cash provided by operating activities:

Depreciation and amortization

13,906

14,738

41,124

49,148

Depreciation of right-of-use assets

9,418

8,945

28,010

26,172

Loss (gain) on sale of investments, disposal of assets and other

836

(591

)

1,135

(855

)

Net unrealized loss on investments

1,250

-

2,000

-

Interest expense

3,316

3,482

10,312

10,581

Net unrealized foreign currency loss (gain)

(266

)

(4,119

)

10,175

(3,173

)

Share-based payment expense

98,264

87,522

291,687

235,256

Net loss (gain) on exchange derivative and capped call transactions

(150,665

)

141,783

415,933

(46,743

)

Amortization of debt discount and issuance cost

7,275

8,955

104,302

26,545

Interest income

(1,464

)

(7,200

)

(6,166

)

(24,411

)

Changes in assets and liabilities:

Trade receivables

(35,420

)

29,902

(80,943

)

(11,211

)

Prepaid expenses and other assets

(3,691

)

(1,224

)

(11,052

)

(7,594

)

Trade and other payables, provisions and other non-current liabilities

47,784

30,961

33,223

25,452

Deferred revenue

186,880

4,958

270,813

113,737

Interest received

3,018

8,146

10,472

24,416

Income tax paid, net

(14,455

)

(3,088

)

(43,416

)

(15,850

)

Net cash provided by operating activities

377,036

156,313

656,963

450,869

Investing activities

Business combinations, net of cash acquired

(41,460

)

-

(83,624

)

(37,983

)

Purchases of property and equipment

(5,365

)

(6,742

)

(22,730

)

(19,865

)

Purchases of investments

(24,254

)

(364,603

)

(93,519

)

(951,481

)

Proceeds from maturities of investments

135,245

232,239

330,549

425,257

Proceeds from sales of investments

1,092

95,680

48,786

237,641

Increase in restricted cash

-

-

(2,162

)

-

Payment of deferred consideration

-

-

(185

)

-

Net cash provided by (used in) investing activities

65,258

(43,426

)

177,115

(346,431

)

Financing activities

Proceeds from exercise of share options

11

499

1,158

1,485

Payments of lease obligations

(11,303

)

(9,308

)

(33,538

)

(26,335

)

Payment of issuance costs for credit facility

-

-

(4,445

)

-

Interest paid

(922

)

-

(4,216

)

(3,125

)

Repayment of exchangeable senior notes

(591,550

)

(2

)

(1,263,047

)

(2

)

Proceeds from settlement of capped call transactions

63,305

-

136,081

-

Net cash used in financing activities

(540,459

)

(8,811

)

(1,168,007

)

(27,977

)

Effect of exchange rate changes on cash and cash equivalents

(2,100

)

(5,608

)

5,410

(6,709

)

Net increase (decrease) in cash and cash equivalents

(100,265

)

98,468

(328,519

)

69,752

Cash and cash equivalents at beginning of period

1,251,715

1,239,725

1,479,969

1,268,441

Cash and cash equivalents at end of period

$

1,151,450

$

1,338,193

$

1,151,450

$

1,338,193

Atlassian Corporation Plc

Consolidated Statements of Cash Flows

(U.S. $ in thousands)

(unaudited)

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

Operating activities

Income (loss)before income $ 211,050 $ (166,857 ) $ (420,646 ) $ 49,399 tax benefit(expense)

Adjustmentsto reconcileincome (loss)before incometax expense to net cashprovided byoperatingactivities:

Depreciationand 13,906 14,738 41,124 49,148 amortization

Depreciationof 9,418 8,945 28,010 26,172 right-of-useassets

Loss (gain)on sale ofinvestments, 836 (591 ) 1,135 (855 ) disposal ofassets andother

Netunrealized 1,250 - 2,000 - loss oninvestments

Interest 3,316 3,482 10,312 10,581 expense

Netunrealizedforeign (266 ) (4,119 ) 10,175 (3,173 ) currency loss(gain)

Share-basedpayment 98,264 87,522 291,687 235,256 expense

Net loss(gain) onexchangederivative (150,665 ) 141,783 415,933 (46,743 ) and cappedcalltransactions

Amortizationof debt 7,275 8,955 104,302 26,545 discount andissuance cost

Interest (1,464 ) (7,200 ) (6,166 ) (24,411 ) income

Changes inassets and liabilities:

Trade (35,420 ) 29,902 (80,943 ) (11,211 ) receivables

Prepaidexpenses and (3,691 ) (1,224 ) (11,052 ) (7,594 ) other assets

Trade andotherpayables,provisions 47,784 30,961 33,223 25,452 and othernon-currentliabilities

Deferred 186,880 4,958 270,813 113,737 revenue

Interest 3,018 8,146 10,472 24,416 received

Income tax (14,455 ) (3,088 ) (43,416 ) (15,850 ) paid, net

Net cashprovided by 377,036 156,313 656,963 450,869 operatingactivities

Investing activities

Businesscombinations, (41,460 ) - (83,624 ) (37,983 ) net of cashacquired

Purchases ofproperty and (5,365 ) (6,742 ) (22,730 ) (19,865 ) equipment

Purchases of (24,254 ) (364,603 ) (93,519 ) (951,481 ) investments

Proceeds frommaturities of 135,245 232,239 330,549 425,257 investments

Proceeds fromsales of 1,092 95,680 48,786 237,641 investments

Increase inrestricted - - (2,162 ) - cash

Payment ofdeferred - - (185 ) - consideration

Net cashprovided by(used in) 65,258 (43,426 ) 177,115 (346,431 ) investingactivities

Financing activities

Proceeds fromexercise of 11 499 1,158 1,485 share options

Payments oflease (11,303 ) (9,308 ) (33,538 ) (26,335 ) obligations

Payment ofissuancecosts for - - (4,445 ) - creditfacility

Interest paid (922 ) - (4,216 ) (3,125 )

Repayment ofexchangeable (591,550 ) (2 ) (1,263,047 ) (2 ) senior notes

Proceeds fromsettlement of 63,305 - 136,081 - capped calltransactions

Net cash usedin financing (540,459 ) (8,811 ) (1,168,007 ) (27,977 ) activities

Effect ofexchange ratechanges on (2,100 ) (5,608 ) 5,410 (6,709 ) cash and cashequivalents

Net increase(decrease) in (100,265 ) 98,468 (328,519 ) 69,752 cash and cashequivalents

Cash and cashequivalents 1,251,715 1,239,725 1,479,969 1,268,441 at beginningof period

Cash and cashequivalents $ 1,151,450 $ 1,338,193 $ 1,151,450 $ 1,338,193 at end ofperiod

Atlassian Corporation Plc

Reconciliation of IFRS to Non-IFRS Results

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

(unaudited)

Three Months Ended March 31,

Nine Months Ended March 31,

2021

2020

2021

2020

Gross profit

IFRS gross profit

$

483,840

$

340,927

$

1,291,539

$

985,002

Plus: Share-based payment expense

6,495

5,535

18,552

14,654

Plus: Amortization of acquired intangible assets

5,554

6,645

16,386

24,306

Non-IFRS gross profit

$

495,889

$

353,107

$

1,326,477

$

1,023,962

Operating income

IFRS operating income (loss)

$

69,515

$

(19,920

)

$

109,160

$

17,366

Plus: Share-based payment expense

98,264

87,522

291,687

235,256

Plus: Amortization of acquired intangible assets

7,873

9,586

23,404

34,941

Non-IFRS operating income

$

175,652

$

77,188

$

424,251

$

287,563

Net income

IFRS net income (loss)

$

159,840

$

(158,825

)

$

(483,242

)

$

34,569

Plus: Share-based payment expense

98,264

87,522

291,687

235,256

Plus: Amortization of acquired intangible assets

7,873

9,586

23,404

34,941

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

(143,390

)

150,738

520,235

(20,198

)

Less: Income tax effects and adjustments

670

(27,129

)

(56,745

)

(58,774

)

Non-IFRS net income

$

123,257

$

61,892

$

295,339

$

225,794

Net income per share

IFRS net income (loss) per share - diluted

$

0.63

$

(0.65

)

$

(1.94

)

$

0.14

Plus: Share-based payment expense

0.39

0.35

1.16

0.93

Plus: Amortization of acquired intangible assets

0.03

0.04

0.09

0.14

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

(0.57

)

0.61

2.06

(0.08

)

Less: Income tax effects and adjustments

-

(0.10

)

(0.21

)

(0.23

)

Non-IFRS net income per share - diluted

$

0.48

$

0.25

$

1.16

$

0.90

Weighted-average diluted shares outstanding

Weighted-average shares used in computing diluted IFRS net income (loss) per share

255,128

245,504

249,152

251,255

Plus: Dilution from share options and RSUs (1)

-

6,389

5,301

-

Weighted-average shares used in computing diluted non-IFRS net income per share

255,128

251,893

254,453

251,255

Free cash flow

IFRS net cash provided by operating activities

$

377,036

$

156,313

$

656,963

$

450,869

Less: Capital expenditures

(5,365

)

(6,742

)

(22,730

)

(19,865

)

Less: Payments of lease obligations

(11,303

)

(9,308

)

(33,538

)

(26,335

)

Free cash flow

$

360,368

$

140,263

$

600,695

$

404,669

(1) The effects of these dilutive securities were not included in the IFRS calculation of diluted net loss per share for the nine months ended March 31, 2021 and three months ended March 31, 2020 because the effect would have been anti-dilutive.

Atlassian Corporation Plc

Reconciliation of IFRS to Non-IFRS Results

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

(unaudited)

Three Months Ended March Nine Months Ended March 31, 31,

2021 2020 2021 2020

Gross profit

IFRS gross profit $ 483,840 $ 340,927 $ 1,291,539 $ 985,002

Plus: Share-based 6,495 5,535 18,552 14,654 payment expense

Plus: Amortizationof acquired 5,554 6,645 16,386 24,306 intangible assets

Non-IFRS gross $ 495,889 $ 353,107 $ 1,326,477 $ 1,023,962 profit

Operating income

IFRS operating $ 69,515 $ (19,920 ) $ 109,160 $ 17,366 income (loss)

Plus: Share-based 98,264 87,522 291,687 235,256 payment expense

Plus: Amortizationof acquired 7,873 9,586 23,404 34,941 intangible assets

Non-IFRS operating $ 175,652 $ 77,188 $ 424,251 $ 287,563 income

Net income

IFRS net income $ 159,840 $ (158,825 ) $ (483,242 ) $ 34,569 (loss)

Plus: Share-based 98,264 87,522 291,687 235,256 payment expense

Plus: Amortizationof acquired 7,873 9,586 23,404 34,941 intangible assets

Plus: Non-couponimpact related toexchangeable senior (143,390 ) 150,738 520,235 (20,198 )notes and cappedcalls

Less: Income taxeffects and 670 (27,129 ) (56,745 ) (58,774 )adjustments

Non-IFRS net income $ 123,257 $ 61,892 $ 295,339 $ 225,794

Net income per share

IFRS net income(loss) per share - $ 0.63 $ (0.65 ) $ (1.94 ) $ 0.14 diluted

Plus: Share-based 0.39 0.35 1.16 0.93 payment expense

Plus: Amortizationof acquired 0.03 0.04 0.09 0.14 intangible assets

Plus: Non-couponimpact related toexchangeable senior (0.57 ) 0.61 2.06 (0.08 )notes and cappedcalls

Less: Income taxeffects and - (0.10 ) (0.21 ) (0.23 )adjustments

Non-IFRS net income $ 0.48 $ 0.25 $ 1.16 $ 0.90 per share - diluted

Weighted-averagediluted shares outstanding

Weighted-averageshares used incomputing diluted 255,128 245,504 249,152 251,255 IFRS net income(loss) per share

Plus: Dilution fromshare options and - 6,389 5,301 - RSUs (1)

Weighted-averageshares used incomputing diluted 255,128 251,893 254,453 251,255 non-IFRS net incomeper share

Free cash flow

IFRS net cashprovided by $ 377,036 $ 156,313 $ 656,963 $ 450,869 operating activities

Less: Capital (5,365 ) (6,742 ) (22,730 ) (19,865 )expenditures

Less: Payments of (11,303 ) (9,308 ) (33,538 ) (26,335 )lease obligations

Free cash flow $ 360,368 $ 140,263 $ 600,695 $ 404,669

(1) The effects of these dilutive securities were not included in the IFRS calculation of diluted net loss per share for the nine months ended March 31, 2021 and three months ended March 31, 2020 because the effect would have been anti-dilutive.

Atlassian Corporation Plc

Reconciliation of IFRS to Non-IFRS Financial Targets

(U.S. $)

Three Months Ending June 30, 2021

Revenue $513 million to $528 million



IFRS gross margin 82% to 83%

Plus: Share-based payment expense 1

Plus: Amortization of acquired intangible assets 1

Non-IFRS gross margin 84% to 85%



IFRS operating margin (6%)

Plus: Share-based payment expense 17

Plus: Amortization of acquired intangible assets 2

Non-IFRS operating margin 13%



IFRS net loss per share - diluted ($0.08)

Plus: Share-based payment expense 0.35

Plus: Amortization of acquired intangible assets 0.03

Plus: Non-coupon impact related to exchangeable senior 0.02notes and capped calls

Less: Income tax effects and adjustments (0.15)

Non-IFRS net income per share - diluted $0.17



Weighted-average shares used in computing diluted IFRS net 250 million to 252loss per share million

Dilution from share options and RSUs (1) 5 million

Weighted-average shares used in computing diluted non-IFRS 255 million to 257net 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 June 30, 2021 because the effect would be anti-dilutive.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210429006085/en/

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

CONTACT: Media Contact Jake Standish press@atlassian.com