Business Wire | Jan 27, 2022 04:05PM EST

Atlassian Announces Second Quarter Fiscal Year 2022 Results

Jan. 27, 2022

TEAM, Anywhere/SAN FRANCISCO--(BUSINESS WIRE)--Jan. 27, 2022--Atlassian Corporation Plc (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for its second quarter of fiscal year 2022 ended December 31, 2021 and released a shareholder letter available on Atlassian's Work Life blog at http://atlassian.com/blog/announcements/shareholder-letter-q2fy22. The shareholder letter was also posted to the Investor Relations section of Atlassian's website at https://investors.atlassian.com.

"Q2 was another strong quarter for Atlassian with over 10,000 net new customers this quarter, 98% of which were in the Cloud," said Scott Farquhar, Atlassian's co-founder and co-CEO. "We also saw subscription revenue grow 64% year-over-year, which reflects our continued investment in our Cloud platform and the strong focus and effort we have put in to helping our customers seamlessly move to Cloud."

"The Atlassian Marketplace continues to go from strength to strength surpassing $2 billion in sales and shows no signs of slowing down," said Mike Cannon-Brookes, Atlassian's co-founder and co-CEO. "We recognise that the opportunities for Atlassian, our customers and our partners have never been greater as companies accelerate their future of work transformations, and we're incredibly proud of this partner ecosystem which is fuelling innovation and helping to deliver on our mission to unleash the potential of every team."

Second Quarter Fiscal Year 2022 Financial Highlights:

On an IFRS basis, Atlassian reported:

* Revenue: Total revenue was $688.5 million for the second quarter of fiscal year 2022, up 37% from $501.4 million for the second quarter of fiscal year 2021.

* Operating Income (Loss) and Operating Margin: Operating loss was $66.7 million for the second quarter of fiscal year 2022, compared with an operating income of $27.7 million for the second quarter of fiscal year 2021. Operating margin was (10)% for the second quarter of fiscal year 2022, compared with 6% for the second quarter of fiscal year 2021.

* Net Loss and Net Loss Per Diluted Share: Net loss was $77.5 million for the second quarter of fiscal year 2022, compared with a net loss of $621.5 million for the second quarter of fiscal year 2021. Net loss per diluted share was $0.31 for the second quarter of fiscal year 2022, compared with a net loss per diluted share of $2.49 for the second quarter of fiscal year 2021.

* Balance Sheet: Cash and cash equivalents plus short-term investments at the end of the second quarter of fiscal year 2022 totaled $986.0 million.

During the second quarter of fiscal year 2022, Atlassian drew $350.0 million from its term loan facility, used $1.2 billion in cash to settle the remaining portion of its outstanding exchangeable senior notes and received $104.5 million in cash from the unwinding of the related capped calls. The net impact resulted in cash outflows of $779.9 million, which is reflected in net cash used in financing activities on our Consolidated Statements of Cash Flows.

On a non-IFRS basis, Atlassian reported:

* Operating Income and Operating Margin: Operating income was $178.3 million for the second quarter of fiscal year 2022, compared with operating income of $143.2 million for the second quarter of fiscal year 2021. Operating margin was 26% for the second quarter of fiscal year 2022, compared with 29% for the second quarter of fiscal year 2021.

* Net Income and Net Income Per Diluted Share: Net income was $127.3 million for the second quarter of fiscal year 2022, compared with $95.3 million for the second quarter of fiscal year 2021. Net income per diluted share was $0.50 for the second quarter of fiscal year 2022, compared with $0.37 for the second quarter of fiscal year 2021.

* Free Cash Flow: Cash flow from operations was $221.7 million and free cash flow was $197.5 million for the second quarter of fiscal year 2022. Free cash flow margin for the second quarter of fiscal year 2022 was 29%.

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 Marketplace Surpasses $2 Billion in Lifetime Sales: During the second quarter of fiscal 2022, the Atlassian Marketplace surpassed $2 billion in lifetime sales since its inception in 2012. Atlassian's 1,250+ Marketplace Partners help deliver additional value to the tens of thousands of customers that utilize a Marketplace app.

* Leader in Forrester Wave for Enterprise Service Management: Atlassian was named a Leader in The Forrester Wave(tm): Enterprise Service Management, Q4 2021. In addition, Atlassian's strategy for enterprise service management (ESM) received the highest score of all vendors in this report. Over 35,000 customers trust Jira Service Management to deliver exceptional service experiences for internal and external customers.

* Strategic Investments in Miro and Clockwise: Atlassian deepened its partnership with Miro, a visual collaboration company, by participating in their Series C funding round earlier this month. Miro's virtual whiteboarding product integrates with Jira and Confluence to drive customer innovation. Atlassian also invested in Clockwise, a scheduling optimization app provider. Clockwise's focus on team productivity aligns with Atlassian's mission to unleash the potential of every team. These investments showcase Atlassian Ventures' focus on driving customer value and expanding the economy around Atlassian.

* Percept.ai Acquisition: Atlassian announced today the acquisition of Percept.ai, an AI-powered virtual agent technology provider which will expand frontline support capabilities in Jira Service Management. The acquisition builds on Atlassian's previous investments in AI and machine learning, and will help customers efficiently deliver great employee and customer support experiences at high velocity.

* Atlassian Team '22: Atlassian will hold its flagship customer event in Las Vegas, at the Venetian Convention and Expo Center, from April 5 through April 7, 2022. Virtual attendance and global viewing parties will also be available from April 6 through April 7, 2022. Thousands of customers will discover Atlassian solutions, skills, and ideas to transform how their teams collaborate, power digital transformation, and drive cultural change. General information on Team '22 can be found at https://events.atlassian.com/team22/home.

* Customer Growth: Atlassian ended its second quarter of fiscal year 2022 with a total customer count, on an active subscription or maintenance agreement basis, of 226,521 customers, adding 10,021 net new customers during the quarter.

CTO transition:

Atlassian announced today that Sri Viswanath will transition his CTO responsibilities at the end of June 2022. Sri joined as CTO in January 2016, shortly after Atlassian's initial public offering. When Sri joined Atlassian, the company had approximately 800 employees in R&D and 54,000 customers. Sri has been instrumental in transforming the architecture of Atlassian's platform and products to establish the foundation of its cloud-first business. As of the end of the second quarter of fiscal year 2022, the company had nearly 4,000 Atlassians under Sri's leadership, supported more than 226,000 customers, and quarterly Cloud revenue had grown approximately 13x over his time at the company.

"To say Sri has been instrumental in this tremendous growth and scale would be an understatement. Particularly in our shift to cloud and building a world-class cloud platform," said Mike Cannon-Brookes, Atlassian's co-founder and co-CEO. "He is a respected and inspiring leader as well as a natural mentor, nurturing the careers of countless Atlassians during his tenure. While Scott and I are sad to see him go, we are thankful for the huge impact he has had on our customers, our growth, and our culture. We look forward to cheering him on in his next chapter - whatever that may be."

Financial Targets:

Atlassian is providing its financial targets for the third quarter of fiscal year 2022 as follows:

Third Quarter Fiscal Year 2022:

* Total revenue is expected to be in the range of $690 million to $705 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 in the range of (10%) to (9%) on an IFRS basis and in the range of 17% to 18% on a non-IFRS basis.

* Net loss per diluted share is expected to be in the range of ($0.33) to ($0.31) on an IFRS basis, and net income per diluted share is expected to be in the range of $0.29 to $0.31 on a non-IFRS basis.

* Weighted average share count is expected to be in the range of 253 million to 254 million shares when calculating diluted IFRS net loss per share and in the range of 257 million to 258 million shares when calculating diluted non-IFRS net income per share.

For additional commentary regarding financial targets, please see Atlassian's second quarter fiscal year 2022 shareholder letter dated January 27, 2022.

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-q2fy22, 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, January 27, 2022 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time).

* Webcast: A live webcast of the call can be accessed from the Investor Relations section of Atlassian's website at: https://investors.atlassian.com. Following the call, a replay will be available on the same website.

Atlassian has used, and will continue to use, its Investor Relations website at https://investors.atlassian.com as a means of making material information public and for complying with its disclosure obligations.

About Atlassian

Atlassian unleashes the potential of every team. Our team collaboration and productivity software helps teams organize, discuss, and complete shared work. Teams at more than 225,000 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, sustainability, Atlassian Marketplace, partnerships, acquisitions, strategic investments, 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 Six Months Ended December December 31, 31,

2021 2020 2021 2020

Revenues:

Subscription $ 508,987 $ 310,675 $ 944,283 $ 588,639

Maintenance 127,059 131,276 257,649 258,970

Other 52,480 59,408 100,618 113,256

Total revenues 688,526 501,359 1,302,550 960,865

Cost of revenues (1) 115,161 79,482 213,179 153,166 (2)

Gross profit 573,365 421,877 1,089,371 807,699

Operating expenses:

Research and 374,976 241,064 654,822 473,299 development (1) (2)

Marketing and sales 134,659 77,151 237,587 147,437 (1) (2)

General and 130,448 75,949 224,034 147,318 administrative (1)

Total operating 640,083 394,164 1,116,443 768,054 expenses

Operating income (66,718 ) 27,713 (27,072 ) 39,645 (loss)

Other non-operating (319 ) (545,749 ) (425,252 ) (572,020 )expense, net

Finance income 77 2,112 357 4,702

Finance costs (6,078 ) (91,448 ) (13,189 ) (104,023 )

Loss before income (73,038 ) (607,372 ) (465,156 ) (631,696 )tax expense

Income tax expense (4,434 ) (14,156 ) (12,418 ) (11,386 )

Net loss $ (77,472 ) $ (621,528 ) $ (477,574 ) $ (643,082 )

Net loss per shareattributable to ordinaryshareholders:

Basic $ (0.31 ) $ (2.49 ) $ (1.89 ) $ (2.59 )

Diluted $ (0.31 ) $ (2.49 ) $ (1.89 ) $ (2.59 )

Weighted-averageshares outstandingused to compute netloss per share attributable toordinaryshareholders:

Basic 252,960 249,188 252,533 248,601

Diluted 252,960 249,188 252,533 248,601

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

Three Months Ended December 31,

Six Months Ended December 31,

2021

2020

2021

2020

Cost of revenues

$

13,631

$

6,801

$

21,476

$

12,057

Research and development

147,233

73,085

219,835

134,536

Marketing and sales

35,812

11,666

54,188

18,450

General and administrative

40,334

16,140

60,486

28,380

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

Three Months Ended December 31,

Six Months Ended December 31,

2021

2020

2021

2020

Cost of revenues

$

5,599

$

5,413

$

11,288

$

10,832

Research and development

93

42

187

83

Marketing and sales

2,266

2,317

4,537

4,616

(1) Amounts includeshare-based paymentexpense, as follows:

Three Months Ended Six Months Ended December December 31, 31,

2021 2020 2021 2020

Cost of revenues $ 13,631 $ 6,801 $ 21,476 $ 12,057

Research and development 147,233 73,085 219,835 134,536

Marketing and sales 35,812 11,666 54,188 18,450

General and administrative 40,334 16,140 60,486 28,380

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

Three Months Ended Six Months Ended December December 31, 31,

2021 2020 2021 2020

Cost of revenues $ 5,599 $ 5,413 $ 11,288 $ 10,832

Research and development 93 42 187 83

Marketing and sales 2,266 2,317 4,537 4,616

Atlassian Corporation Plc Consolidated Statements of Financial Position (U.S. $ in thousands)

December 31, 2021

June 30, 2021

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

899,394

$

919,227

Short-term investments

86,629

313,001

Trade receivables

241,682

173,473

Tax receivables

11,337

2,332

Derivative assets

1,785

127,486

Prepaid expenses and other current assets

61,982

48,322

1,302,809

1,583,841

Assets held for sale

51,826

43,665

Total current assets

1,354,635

1,627,506

Non-current assets:

Property and equipment, net

71,155

66,221

Deferred tax assets

28,622

36,174

Goodwill

724,899

725,758

Intangible assets, net

108,578

124,590

Right-of-use assets, net

276,021

205,300

Strategic investments

163,102

122,159

Other non-current assets

33,601

37,636

Total non-current assets

1,405,978

1,317,838

Total assets

$

2,760,613

$

2,945,344

Liabilities

Current liabilities:

Trade and other payables

$

255,741

$

266,497

Tax liabilities

1,817

42,051

Provisions

32,253

25,148

Deferred revenue

913,889

812,943

Lease obligations

41,893

42,446

Derivative liabilities

14,208

772,127

Exchangeable senior notes, net

-

348,799

Total current liabilities

1,259,801

2,310,011

Non-current liabilities:

Deferred tax liabilities

16,538

26,625

Provisions

13,580

12,435

Deferred revenue

61,589

84,652

Term loan facility, net

999,332

-

Lease obligations

284,824

214,103

Other non-current liabilities

1,324

2,604

Total non-current liabilities

1,377,187

340,419

Total liabilities

2,636,988

2,650,430

Equity

Share capital

25,335

25,164

Share premium

461,020

461,016

Other capital reserves

1,872,524

1,516,609

Other components of equity

55,027

104,832

Accumulated deficit

(2,290,281

)

(1,812,707

)

Total equity

123,625

294,914

Total liabilities and equity

$

2,760,613

$

2,945,344

Atlassian Corporation PlcConsolidated Statements of Financial Position(U.S. $ in thousands)

December 31, 2021 June 30, 2021

(unaudited)

Assets

Current assets:

Cash and cash equivalents $ 899,394 $ 919,227

Short-term investments 86,629 313,001

Trade receivables 241,682 173,473

Tax receivables 11,337 2,332

Derivative assets 1,785 127,486

Prepaid expenses and other current assets 61,982 48,322

1,302,809 1,583,841

Assets held for sale 51,826 43,665

Total current assets 1,354,635 1,627,506

Non-current assets:

Property and equipment, net 71,155 66,221

Deferred tax assets 28,622 36,174

Goodwill 724,899 725,758

Intangible assets, net 108,578 124,590

Right-of-use assets, net 276,021 205,300

Strategic investments 163,102 122,159

Other non-current assets 33,601 37,636

Total non-current assets 1,405,978 1,317,838

Total assets $ 2,760,613 $ 2,945,344

Liabilities

Current liabilities:

Trade and other payables $ 255,741 $ 266,497

Tax liabilities 1,817 42,051

Provisions 32,253 25,148

Deferred revenue 913,889 812,943

Lease obligations 41,893 42,446

Derivative liabilities 14,208 772,127

Exchangeable senior notes, net - 348,799

Total current liabilities 1,259,801 2,310,011

Non-current liabilities:

Deferred tax liabilities 16,538 26,625

Provisions 13,580 12,435

Deferred revenue 61,589 84,652

Term loan facility, net 999,332 -

Lease obligations 284,824 214,103

Other non-current liabilities 1,324 2,604

Total non-current liabilities 1,377,187 340,419

Total liabilities 2,636,988 2,650,430

Equity

Share capital 25,335 25,164

Share premium 461,020 461,016

Other capital reserves 1,872,524 1,516,609

Other components of equity 55,027 104,832

Accumulated deficit (2,290,281 ) (1,812,707 )

Total equity 123,625 294,914

Total liabilities and equity $ 2,760,613 $ 2,945,344

Atlassian Corporation Plc Consolidated Statements of Cash Flows (U.S. $ in thousands) (unaudited)

Three Months Ended December 31,

Six Months Ended December 31,

2021

2020

2021

2020

Operating activities

Loss before income tax expense

$

(73,038

)

$

(607,372

)

$

(465,156

)

$

(631,696

)

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

Depreciation and amortization

12,153

13,807

25,317

27,218

Depreciation of right-of-use assets

11,053

9,378

21,132

18,592

Share-based payment expense

237,010

107,692

355,985

193,423

Net loss on exchange derivative and capped call transactions

-

539,102

424,482

566,598

Amortization of debt discount and issuance cost

118

87,854

3,840

97,027

Interest income

(77

)

(2,112

)

(357

)

(4,702

)

Interest expense

5,960

3,594

9,349

6,996

Net unrealized foreign currency loss (gain)

(5,258

)

4,874

(11,656

)

10,441

Net unrealized loss on investments

-

750

500

750

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

298

51

(317

)

299

Changes in assets and liabilities:

Trade receivables

(54,992

)

(37,145

)

(68,203

)

(45,523

)

Prepaid expenses and other assets

4,585

4,057

(15,713

)

(7,361

)

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

61,863

32,823

(4,162

)

(14,561

)

Deferred revenue

64,429

61,297

77,884

83,933

Interest received

191

3,298

1,086

7,454

Income tax paid, net

(42,611

)

(21,486

)

(53,941

)

(28,961

)

Net cash provided by operating activities

221,684

200,462

300,070

279,927

Investing activities

Business combinations, net of cash acquired

-

(9,700

)

-

(42,164

)

Purchases of property and equipment

(12,581

)

(9,548

)

(19,462

)

(17,365

)

Purchases of investments

(42,000

)

(36,013

)

(116,003

)

(69,265

)

Proceeds from maturities of investments

7,600

120,627

61,487

195,304

Proceeds from sales of investments

-

40,607

186,262

47,694

Change in restricted cash

11,119

(2,162

)

11,119

(2,162

)

Payment of deferred consideration

(2,701

)

-

(3,839

)

(185

)

Net cash provided by (used in) investing activities

(38,563

)

103,811

119,564

111,857

Financing activities

Proceeds from exercise of share options

4

225

5

1,147

Payments of lease obligations

(11,626

)

(11,139

)

(23,812

)

(22,235

)

Payment of issuance costs for debt

-

(4,445

)

-

(4,445

)

Interest paid

(3,603

)

(3,294

)

(4,802

)

(3,294

)

Repayment of exchangeable senior notes

(1,234,376

)

(671,489

)

(1,548,686

)

(671,497

)

Proceeds from settlement of capped call transactions

104,519

72,776

135,497

72,776

Proceeds from term loan facility

350,000

-

1,000,000

-

Net cash used in financing activities

(795,082

)

(617,366

)

(441,798

)

(627,548

)

Effect of exchange rate changes on cash and cash equivalents

(245

)

4,546

(2,353

)

7,510

Net decrease in cash and cash equivalents

(612,206

)

(308,547

)

(24,517

)

(228,254

)

Cash and cash equivalents at beginning of period

1,507,418

1,560,262

919,227

1,479,969

Net decrease in cash and cash equivalents included in assets held for sale

4,182

-

4,684

-

Cash and cash equivalents at end of period

$

899,394

$

1,251,715

$

899,394

$

1,251,715

Atlassian Corporation PlcConsolidated Statements of Cash Flows(U.S. $ in thousands)(unaudited)

Three Months Ended December Six Months Ended December 31, 31,

2021 2020 2021 2020

Operating activities

Loss beforeincome tax $ (73,038 ) $ (607,372 ) $ (465,156 ) $ (631,696 )expense

Adjustments toreconcile lossbefore incometax expense to net cashprovided byoperatingactivities:

Depreciationand 12,153 13,807 25,317 27,218 amortization

Depreciation ofright-of-use 11,053 9,378 21,132 18,592 assets

Share-based 237,010 107,692 355,985 193,423 payment expense

Net loss onexchangederivative and - 539,102 424,482 566,598 capped calltransactions

Amortization ofdebt discount 118 87,854 3,840 97,027 and issuancecost

Interest income (77 ) (2,112 ) (357 ) (4,702 )

Interest 5,960 3,594 9,349 6,996 expense

Net unrealizedforeign (5,258 ) 4,874 (11,656 ) 10,441 currency loss(gain)

Net unrealizedloss on - 750 500 750 investments

Loss (gain) onsale ofinvestments, 298 51 (317 ) 299 disposal ofassets andother

Changes inassets and liabilities:

Trade (54,992 ) (37,145 ) (68,203 ) (45,523 )receivables

Prepaidexpenses and 4,585 4,057 (15,713 ) (7,361 )other assets

Trade and otherpayables,provisions and 61,863 32,823 (4,162 ) (14,561 )othernon-currentliabilities

Deferred 64,429 61,297 77,884 83,933 revenue

Interest 191 3,298 1,086 7,454 received

Income tax (42,611 ) (21,486 ) (53,941 ) (28,961 )paid, net

Net cashprovided by 221,684 200,462 300,070 279,927 operatingactivities

Investing activities

Businesscombinations, - (9,700 ) - (42,164 )net of cashacquired

Purchases ofproperty and (12,581 ) (9,548 ) (19,462 ) (17,365 )equipment

Purchases of (42,000 ) (36,013 ) (116,003 ) (69,265 )investments

Proceeds frommaturities of 7,600 120,627 61,487 195,304 investments

Proceeds fromsales of - 40,607 186,262 47,694 investments

Change in 11,119 (2,162 ) 11,119 (2,162 )restricted cash

Payment ofdeferred (2,701 ) - (3,839 ) (185 )consideration

Net cashprovided by(used in) (38,563 ) 103,811 119,564 111,857 investingactivities

Financing activities

Proceeds fromexercise of 4 225 5 1,147 share options

Payments oflease (11,626 ) (11,139 ) (23,812 ) (22,235 )obligations

Payment ofissuance costs - (4,445 ) - (4,445 )for debt

Interest paid (3,603 ) (3,294 ) (4,802 ) (3,294 )

Repayment ofexchangeable (1,234,376 ) (671,489 ) (1,548,686 ) (671,497 )senior notes

Proceeds fromsettlement of 104,519 72,776 135,497 72,776 capped calltransactions

Proceeds fromterm loan 350,000 - 1,000,000 - facility

Net cash usedin financing (795,082 ) (617,366 ) (441,798 ) (627,548 )activities

Effect ofexchange ratechanges on cash (245 ) 4,546 (2,353 ) 7,510 and cashequivalents

Net decrease incash and cash (612,206 ) (308,547 ) (24,517 ) (228,254 )equivalents

Cash and cashequivalents at 1,507,418 1,560,262 919,227 1,479,969 beginning ofperiod

Net decrease incash and cashequivalents 4,182 - 4,684 - included inassets held forsale

Cash and cashequivalents at $ 899,394 $ 1,251,715 $ 899,394 $ 1,251,715 end of period

Atlassian Corporation Plc Revenues by Deployment Options (U.S. $ in thousands) (unaudited)

Three Months Ended December 31,

Six Months Ended December 31,

2021

2020

2021

2020

Cloud

$

364,099

$

230,412

$

682,002

$

437,733

Data Center

139,108

76,060

250,303

142,410

Server (1)

135,519

153,399

275,066

303,230

Marketplace and services (2)

49,800

41,488

95,179

77,492

Total revenues

$

688,526

$

501,359

$

1,302,550

$

960,865

Atlassian Corporation PlcRevenues by Deployment Options(U.S. $ in thousands)(unaudited)

Three Months Ended December Six Months Ended December 31, 31,

2021 2020 2021 2020

Cloud $ 364,099 $ 230,412 $ 682,002 $ 437,733

Data Center 139,108 76,060 250,303 142,410

Server (1) 135,519 153,399 275,066 303,230

Marketplace and 49,800 41,488 95,179 77,492services (2)

Total revenues $ 688,526 $ 501,359 $ 1,302,550 $ 960,865

(1) Included in Server is perpetual license revenue. Perpetual license revenue is captured as other revenue on the Consolidated Statements of Operations.

(2) Included in Marketplace and services is premier support revenue. Premier support is a subscription-based arrangement for a higher level of support across different deployment options. Premier support is recognized as subscription revenue on the Consolidated Statements of Operations as the services are delivered over the term of the arrangement.

(1) Included in Server is perpetual license revenue. Perpetual license revenueis captured as other revenue on the Consolidated Statements of Operations.

(2) Included in Marketplace and services is premier support revenue. Premiersupport is a subscription-based arrangement for a higher level of supportacross different deployment options. Premier support is recognized assubscription revenue on the Consolidated Statements of Operations as theservices are delivered over the term of the arrangement.

Atlassian Corporation Plc Reconciliation of IFRS to Non-IFRS Results (U.S. $ and shares in thousands, except per share data) (unaudited)

Three Months Ended December 31,

Six Months Ended December 31,

2021

2020

2021

2020

Gross profit

IFRS gross profit

$

573,365

$

421,877

$

1,089,371

$

807,699

Plus: Share-based payment expense

13,631

6,801

21,476

12,057

Plus: Amortization of acquired intangible assets

5,599

5,413

11,288

10,832

Non-IFRS gross profit

$

592,595

$

434,091

$

1,122,135

$

830,588

Operating income

IFRS operating income (loss)

$

(66,718

)

$

27,713

$

(27,072

)

$

39,645

Plus: Share-based payment expense

237,010

107,692

355,985

193,423

Plus: Amortization of acquired intangible assets

7,958

7,772

16,012

15,531

Non-IFRS operating income

$

178,250

$

143,177

$

344,925

$

248,599

Net income

IFRS net loss

$

(77,472

)

$

(621,528

)

$

(477,574

)

$

(643,082

)

Plus: Share-based payment expense

237,010

107,692

355,985

193,423

Plus: Amortization of acquired intangible assets

7,958

7,772

16,012

15,531

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

-

626,956

427,853

663,625

Less: Income tax effects and adjustments

(40,172

)

(25,581

)

(76,639

)

(57,415

)

Non-IFRS net income

$

127,324

$

95,311

$

245,637

$

172,082

Net income per share

IFRS net loss per share - diluted

$

(0.31

)

$

(2.49

)

$

(1.89

)

$

(2.59

)

Plus: Share-based payment expense

0.93

0.44

1.40

0.78

Plus: Amortization of acquired intangible assets

0.03

0.04

0.06

0.07

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

-

2.48

1.69

2.63

Less: Income tax effects and adjustments

(0.15

)

(0.10

)

(0.30

)

(0.21

)

Non-IFRS net income per share - diluted

$

0.50

$

0.37

$

0.96

$

0.68

Weighted-average diluted shares outstanding

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

252,960

249,188

252,533

248,601

Plus: Dilution from share options and RSUs (1)

4,018

5,357

4,028

5,457

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

256,978

254,545

256,561

254,058

Free cash flow

IFRS net cash provided by operating activities

$

221,684

$

200,462

$

300,070

$

279,927

Less: Capital expenditures

(12,581

)

(9,548

)

(19,462

)

(17,365

)

Less: Payments of lease obligations

(11,626

)

(11,139

)

(23,812

)

(22,235

)

Free cash flow

$

197,477

$

179,775

$

256,796

$

240,327

Atlassian Corporation PlcReconciliation of IFRS to Non-IFRS Results(U.S. $ and shares in thousands, except per share data)(unaudited)

Three Months Ended Six Months Ended December December 31, 31,

2021 2020 2021 2020

Gross profit

IFRS gross profit $ 573,365 $ 421,877 $ 1,089,371 $ 807,699

Plus: Share-based 13,631 6,801 21,476 12,057 payment expense

Plus: Amortization ofacquired intangible 5,599 5,413 11,288 10,832 assets

Non-IFRS gross profit $ 592,595 $ 434,091 $ 1,122,135 $ 830,588

Operating income

IFRS operating income $ (66,718 ) $ 27,713 $ (27,072 ) $ 39,645 (loss)

Plus: Share-based 237,010 107,692 355,985 193,423 payment expense

Plus: Amortization ofacquired intangible 7,958 7,772 16,012 15,531 assets

Non-IFRS operating $ 178,250 $ 143,177 $ 344,925 $ 248,599 income

Net income

IFRS net loss $ (77,472 ) $ (621,528 ) $ (477,574 ) $ (643,082 )

Plus: Share-based 237,010 107,692 355,985 193,423 payment expense

Plus: Amortization ofacquired intangible 7,958 7,772 16,012 15,531 assets

Plus: Non-couponimpact related toexchangeable senior - 626,956 427,853 663,625 notes and cappedcalls

Less: Income taxeffects and (40,172 ) (25,581 ) (76,639 ) (57,415 )adjustments

Non-IFRS net income $ 127,324 $ 95,311 $ 245,637 $ 172,082

Net income per share

IFRS net loss per $ (0.31 ) $ (2.49 ) $ (1.89 ) $ (2.59 )share - diluted

Plus: Share-based 0.93 0.44 1.40 0.78 payment expense

Plus: Amortization ofacquired intangible 0.03 0.04 0.06 0.07 assets

Plus: Non-couponimpact related toexchangeable senior - 2.48 1.69 2.63 notes and cappedcalls

Less: Income taxeffects and (0.15 ) (0.10 ) (0.30 ) (0.21 )adjustments

Non-IFRS net income $ 0.50 $ 0.37 $ 0.96 $ 0.68 per share - diluted

Weighted-averagediluted shares outstanding

Weighted-averageshares used incomputing diluted 252,960 249,188 252,533 248,601 IFRS net loss pershare

Plus: Dilution fromshare options and 4,018 5,357 4,028 5,457 RSUs (1)

Weighted-averageshares used incomputing diluted 256,978 254,545 256,561 254,058 non-IFRS net incomeper share

Free cash flow

IFRS net cashprovided by operating $ 221,684 $ 200,462 $ 300,070 $ 279,927 activities

Less: Capital (12,581 ) (9,548 ) (19,462 ) (17,365 )expenditures

Less: Payments of (11,626 ) (11,139 ) (23,812 ) (22,235 )lease obligations

Free cash flow $ 197,477 $ 179,775 $ 256,796 $ 240,327

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

(1) The effects of these dilutive securities were not included in the IFRScalculation of diluted net loss per share for the three and six months endedDecember 31, 2021 and 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

March 31, 2022

Revenue

$690 million to $705 million

IFRS gross margin

82% to 83%

Plus: Share-based payment expense

2

Plus: Amortization of acquired intangible assets

0

Non-IFRS gross margin

84% to 85%

IFRS operating margin

(10%) to (9%)

Plus: Share-based payment expense

26

Plus: Amortization of acquired intangible assets

1

Non-IFRS operating margin

17% to 18%

IFRS net loss per share - diluted

($0.33) to ($0.31)

Plus: Share-based payment expense

0.70

Plus: Amortization of acquired intangible assets

0.03

Less: Income tax effects and adjustments

(0.11)

Non-IFRS net income per share - diluted

$0.29 to $0.31

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

253 million to 254 million

Dilution from share options and RSUs (1)

4 million

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

257 million to 258 million

Atlassian Corporation PlcReconciliation of IFRS to Non-IFRS Financial Targets(U.S. $)

Three Months Ending March 31, 2022

Revenue $690 million to $705 million



IFRS gross margin 82% to 83%

Plus: Share-based payment expense 2

Plus: Amortization of acquired intangible assets 0

Non-IFRS gross margin 84% to 85%



IFRS operating margin (10%) to (9%)

Plus: Share-based payment expense 26

Plus: Amortization of acquired intangible assets 1

Non-IFRS operating margin 17% to 18%



IFRS net loss per share - diluted ($0.33) to ($0.31)

Plus: Share-based payment expense 0.70

Plus: Amortization of acquired intangible assets 0.03

Less: Income tax effects and adjustments (0.11)

Non-IFRS net income per share - diluted $0.29 to $0.31



Weighted-average shares used in computing diluted IFRS net 253 million to 254loss per share million

Dilution from share options and RSUs (1) 4 million

Weighted-average shares used in computing diluted non-IFRS 257 million to 258net 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 March 31, 2022 because the effect would be anti-dilutive.

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CONTACT: Investor Relations Contact Martin Lam IR@atlassian.com Media Contact M-C Maple press@atlassian.com