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Atlassian Announces Third Quarter Fiscal Year 2023 Results


Atlassian Corporation (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for its third quarter of fiscal year 2023 ended March 31, 2023 and released a shareholder letter available on Atlassian’s Work Life blog at http://atlassian.com/blog/announcements/shareholder-letter-q3fy23. The shareholder letter was also posted to the Investor Relations section of Atlassian’s website at https://investors.atlassian.com.

“Connecting with the Atlassian community in-person at Team ’23 was incredible, and the enthusiasm for our product announcements, particularly Atlassian Intelligence, was unmatched,” said Mike Cannon-Brookes, Atlassian’s co-founder and co-CEO. “With more than 20 years of knowledge reflecting how hundreds of thousands of software, IT, and business teams plan, track, and deliver work, Atlassian Intelligence has a unique understanding of teamwork. We are beyond thrilled about AI’s ability to unleash our customers’ potential and strengthen our competitive advantage.”

“We delivered a solid quarter of financial results exceeding our expectations with quarterly revenue of $915 million, up 24% year-over-year, driven by subscription revenue growth of 37% year-over-year,” said Scott Farquhar, Atlassian’s co-founder and co-CEO. “Our customers are turning to Atlassian for help to transform the way work gets done and we’re incredibly excited about the significant opportunities in front of us. We’ve made tough calls and now, looking ahead, we’re laser-focused on executing to drive faster at our largest growth opportunities and strategic initiatives.”

Third Quarter Fiscal Year 2023 Financial Highlights:

On a GAAP basis, Atlassian reported:

  • Revenue: Total revenue was $915.5 million for the third quarter of fiscal year 2023, up 24% from $740.5 million for the third quarter of fiscal year 2022.
  • Operating Income (Loss) and Operating Margin: Operating loss was $161.6 million for the third quarter of fiscal year 2023, compared with operating income of $32.9 million for the third quarter of fiscal year 2022. Operating margin was (18)% for the third quarter of fiscal year 2023, compared with 4% for the third quarter of fiscal year 2022. Operating loss for the third quarter of fiscal year 2023 includes restructuring charges associated with rebalancing resources and consolidating leases of $97.8 million which negatively impacted operating margin by 11%.
  • Net Income (Loss) and Net Income (Loss) Per Diluted Share: Net loss was $209.0 million for the third quarter of fiscal year 2023, compared with net income of $4.7 million for the third quarter of fiscal year 2022. Net loss per diluted share was $0.81 for the third quarter of fiscal year 2023, compared with net income per diluted share of $0.02 for the third quarter of fiscal year 2022. Net loss for the third quarter of fiscal year 2023 includes restructuring and income tax charges totaling $139.5 million which increased net loss per diluted share by $0.54, net of tax effects.
  • Balance Sheet: Cash and cash equivalents plus marketable securities at the end of the third quarter of fiscal year 2023 totaled $2.0 billion.

On a non-GAAP basis, Atlassian reported:

  • Operating Income and Operating Margin: Operating income was $197.1 million for the third quarter of fiscal year 2023, compared with operating income of $177.4 million for the third quarter of fiscal year 2022. Operating margin was 22% for the third quarter of fiscal year 2023, compared with 24% for the third quarter of fiscal year 2022.
  • Net Income and Net Income Per Diluted Share: Net income was $138.0 million for the third quarter of fiscal year 2023, compared with net income of $110.2 million for the third quarter of fiscal year 2022. Net income per diluted share was $0.54 for the third quarter of fiscal year 2023, compared with net income per diluted share of $0.43 for the third quarter of fiscal year 2022.
  • Free Cash Flow: Cash flow from operations was $352.4 million and free cash flow was $349.7 million for the third quarter of fiscal year 2023. Free cash flow margin for the third quarter of fiscal year 2023 was 38%.

A reconciliation of GAAP to non-GAAP 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-GAAP Financial Measures.”

Recent Business Highlights:

  • Atlassian Team ’23: Atlassian held its flagship Team ’23 conference from April 18th through April 20th. Thousands of customers, partners, and Atlassians gathered in person in Las Vegas, and thousands more joined virtually from around the world. On-demand streaming content and recorded sessions for Team ’23 can be found at https://events.atlassian.com/team23/sessions.
  • Atlassian Intelligence: At Team ’23, Atlassian introduced Atlassian Intelligence, a virtual teammate built on its machine learning models and technology from OpenAI that creates, summarizes and extracts information from a customer’s content in its products. Atlassian Intelligence is designed to understand and define natural language, act as an on-demand dictionary, and write queries in JQL or SQL. Teamwork is already the magic ingredient for achieving that which seems impossible, and Atlassian Intelligence’s objective is to accelerate it.
  • New Features and Capabilities in Confluence: New features and capabilities are coming to Confluence in the form of whiteboards, databases, and additional scalability. At Team ’23, Atlassian introduced whiteboards, a digital tool that helps teams convert unstructured brainstorms into deliverables like Jira issues or Confluence pages. Atlassian also introduced databases for Confluence, which allows teams to connect and track work through structured dynamic tables that can be referenced anywhere and automatically synced. Atlassian also announced the general availability of 50,000-user instances for Confluence Cloud, enabling larger organizations to unlock the benefits of cloud and scale their usage of our products.
  • Atlassian Marketplace Surpasses $3 Billion in Lifetime Sales: The Atlassian Marketplace surpassed $3 billion in lifetime sales since its inception in 2012. Atlassian’s 1,700+ Marketplace Partners help deliver additional value to the tens of thousands of customers that utilize a Marketplace app.
  • Achieved Recognition on Fortune’s List of 100 Best Companies to Work For™ 2023: Atlassian was ranked 7th on Fortune’s list of 100 Best Companies to Work For. This achievement was made possible by all the decision-makers, culture carriers, and everyday TEAMmates who make Atlassian a special place to work.
  • Customer Growth: Atlassian ended its third quarter of fiscal year 2023 with a total customer count, on an active subscription or maintenance agreement basis, of 259,775 customers, adding 6,598 net new customers during the quarter.

Financial Targets:

Atlassian is providing its financial targets as follows:

Fourth Quarter Fiscal Year 2023:

  • Total revenue is expected to be in the range of $900 million to $920 million.
  • Cloud revenue growth year-over-year is expected to be in the range of 26% to 28%.
  • Gross margin is expected to be approximately 81.0% on a GAAP basis and approximately 83.5% on a non-GAAP basis.
  • Operating margin is expected to be approximately (11.0%) on a GAAP basis and approximately 17.0% on a non-GAAP basis.

For additional commentary regarding financial targets, please see Atlassian’s third quarter fiscal year 2023 shareholder letter dated May 4, 2023.

With respect to Atlassian’s expectations under “Financial Targets” above, a reconciliation of GAAP to non-GAAP gross margin and operating margin 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 https://atlassian.com/blog/announcements/shareholder-letter-q3fy23, 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, May 4, 2023 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 agile DevOps, IT service management and work management software helps teams organize, discuss, and complete shared work. The majority of the Fortune 500 and over 250,000 companies of all sizes worldwide - including NASA, Kiva, Deutsche Bank, and Salesforce - rely on our solutions to help their teams 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 Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. In some cases, you can identify these statements by forward-looking words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate,” or “continue,” and similar expressions or variations, but these words are not the exclusive means for identifying such statements. All statements other than statements of historical fact could be deemed forward looking, including risks and uncertainties related to statements about our products, product features, including the introduction of AI and large language models, customers, Atlassian Marketplace, macroeconomic environment, anticipated growth, the effects of our recent restructuring, outlook, technology and other key strategic areas, and our financial targets such as revenue and GAAP and non-GAAP financial measures including gross margin and operating margin.

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 (the “SEC”) from time to time, including the section titled “Risk Factors” in our most recently filed Forms 20-F and 10-Q. These documents are available on the SEC Filings section of the Investor Relations section of our website at: https://investors.atlassian.com.

About Non-GAAP Financial Measures

In addition to the measures presented in our condensed consolidated financial statements, we regularly review other measures that are not presented in accordance with GAAP, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions. The key measures we consider are non-GAAP gross profit, non-GAAP operating income and non-GAAP operating margin, non-GAAP net income, non-GAAP net income per diluted share and free cash flow (collectively, the “Non-GAAP Financial Measures”). These Non-GAAP Financial Measures, which may be different from similarly titled non-GAAP measures used by other companies, provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations. Management believes that tracking and presenting these Non-GAAP Financial Measures provides management, our board of directors, investors and the analyst community with the ability to better evaluate matters such as: our ongoing core operations, including comparisons between periods and against other companies in our industry; our ability to generate cash to service our debt and fund our operations; and the underlying business trends that are affecting our performance.

Our Non-GAAP Financial Measures include:

  • Non-GAAP gross profit. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, and restructuring charges.
  • Non-GAAP operating income and non-GAAP operating margin. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, and restructuring charges.
  • Non-GAAP net income and non-GAAP net income per diluted share. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, restructuring charges, non-coupon impact related to exchangeable senior notes and capped calls, gain on a non-cash sale of a controlling interest of a subsidiary and the related income tax effects on these items, and a non-recurring income tax adjustment.
  • 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.

We understand that although these Non-GAAP Financial Measures are frequently used by investors and the analyst community in their evaluation of our financial performance, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. We compensate for such limitations by reconciling these Non-GAAP Financial Measures to the most comparable GAAP financial measures. We encourage you to review the tables in this press release titled “Reconciliation of GAAP to Non-GAAP Results” and “Reconciliation of GAAP to Non-GAAP Financial Targets” that present such reconciliations.

Atlassian Corporation

Condensed Consolidated Statements of Operations

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

(unaudited)

 

 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2023

 

2022

 

2023

 

2022

Revenues:

 

 

 

 

 

 

 

Subscription

$

760,680

 

 

$

555,126

 

 

$

2,122,863

 

 

$

1,499,409

 

Maintenance

 

94,225

 

 

 

120,333

 

 

 

313,813

 

 

 

377,982

 

Other

 

60,548

 

 

 

65,032

 

 

 

158,873

 

 

 

165,650

 

Total revenues

 

915,453

 

 

 

740,491

 

 

 

2,595,549

 

 

 

2,043,041

 

Cost of revenues (1) (2)

 

168,652

 

 

 

116,063

 

 

 

463,989

 

 

 

322,510

 

Gross profit

 

746,801

 

 

 

624,428

 

 

 

2,131,560

 

 

 

1,720,531

 

Operating expenses:

 

 

 

 

 

 

 

Research and development (1) (2)

 

522,344

 

 

 

334,161

 

 

 

1,395,026

 

 

 

924,870

 

Marketing and sales (1) (2)

 

220,921

 

 

 

142,386

 

 

 

567,240

 

 

 

362,761

 

General and administrative (1)

 

165,103

 

 

 

114,984

 

 

 

464,127

 

 

 

320,484

 

Total operating expenses

 

908,368

 

 

 

591,531

 

 

 

2,426,393

 

 

 

1,608,115

 

Operating income (loss)

 

(161,567

)

 

 

32,897

 

 

 

(294,833

)

 

 

112,416

 

Other income (expense), net

 

(943

)

 

 

(23,084

)

 

 

21,597

 

 

 

(501,231

)

Interest income

 

15,047

 

 

 

605

 

 

 

29,153

 

 

 

956

 

Interest expense

 

(7,978

)

 

 

(4,159

)

 

 

(21,607

)

 

 

(36,699

)

Income (loss) before Income taxes

 

(155,441

)

 

 

6,259

 

 

 

(265,690

)

 

 

(424,558

)

Provision for income taxes

 

(53,596

)

 

 

(1,598

)

 

 

(162,119

)

 

 

(4,313

)

Net income (loss)

$

(209,037

)

 

$

4,661

 

 

$

(427,809

)

 

$

(428,871

)

Net income (loss) per share attributable to Class A and Class B common stockholders:

 

 

 

 

 

 

 

Basic

$

(0.81

)

 

$

0.02

 

 

$

(1.67

)

 

$

(1.70

)

Diluted

$

(0.81

)

 

$

0.02

 

 

$

(1.67

)

 

$

(1.70

)

Weighted-average shares used in computing net income (loss) per share attributable to Class A and Class B common stockholders:

 

 

 

 

 

 

 

Basic

 

256,825

 

 

 

253,723

 

 

 

255,949

 

 

 

252,924

 

Diluted

 

256,825

 

 

 

255,741

 

 

 

255,949

 

 

 

252,924

(1) Amounts include stock-based compensation as follows:

 

 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2023

 

2022

 

2023

 

2022

Cost of revenues

$

17,581

 

$

8,269

 

$

46,747

 

$

22,639

Research and development

 

167,994

 

 

84,778

 

 

447,465

 

 

239,180

Marketing and sales

 

36,571

 

 

20,053

 

 

97,922

 

 

56,420

General and administrative

 

41,281

 

 

23,302

 

 

110,709

 

 

64,890

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

 

 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2023

 

2022

 

2023

 

2022

Cost of revenues

$

5,696

 

$

5,709

 

$

17,090

 

$

16,997

Research and development

 

94

 

 

94

 

 

281

 

 

281

Marketing and sales

 

2,365

 

 

2,302

 

 

7,376

 

 

6,839

Atlassian Corporation

Condensed Consolidated Balance Sheets

(U.S. $ in thousands)

(unaudited)

 

 

March 31, 2023

 

June 30, 2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,972,217

 

 

$

1,385,265

 

Marketable securities

 

10,000

 

 

 

73,294

 

Accounts receivable, net

 

346,348

 

 

 

308,127

 

Assets held for sale

 

 

 

 

60,265

 

Prepaid expenses and other current assets

 

115,722

 

 

 

70,002

 

Total current assets

 

2,444,287

 

 

 

1,896,953

 

Non-current assets:

 

 

 

Property and equipment, net

 

85,564

 

 

 

100,662

 

Operating lease right-of-use assets

 

190,708

 

 

 

277,276

 

Strategic investments

 

246,537

 

 

 

159,064

 

Intangible assets, net

 

76,093

 

 

 

100,840

 

Goodwill

 

723,442

 

 

 

722,838

 

Deferred tax assets

 

8,128

 

 

 

10,335

 

Other non-current assets

 

64,250

 

 

 

58,862

 

Total assets

$

3,839,009

 

 

$

3,326,830

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

106,488

 

 

$

81,220

 

Accrued expenses and other current liabilities

 

433,069

 

 

 

406,139

 

Deferred revenue, current portion

 

1,264,217

 

 

 

1,066,059

 

Operating lease liabilities, current portion

 

43,910

 

 

 

40,638

 

Term loan facility, current portion

 

25,000

 

 

 

 

Total current liabilities

 

1,872,684

 

 

 

1,594,056

 

Non-current liabilities:

 

 

 

Deferred revenue, net of current portion

 

133,500

 

 

 

116,621

 

Operating lease liabilities, net of current portion

 

246,750

 

 

 

274,434

 

Term loan facility, net of current portion

 

974,550

 

 

 

999,419

 

Deferred tax liabilities

 

4,445

 

 

 

312

 

Other non-current liabilities

 

24,813

 

 

 

14,616

 

Total liabilities

 

3,256,742

 

 

 

2,999,458

 

Stockholders’ equity

 

 

 

Common stock

 

2

 

 

 

2

 

Additional paid-in capital

 

2,885,206

 

 

 

2,182,536

 

Accumulated other comprehensive income

 

29,614

 

 

 

13,864

 

Accumulated deficit

 

(2,332,555

)

 

 

(1,869,030

)

Total stockholders’ equity

 

582,267

 

 

 

327,372

 

Total liabilities and stockholders’ equity

$

3,839,009

 

 

$

3,326,830

 

Atlassian Corporation

Condensed Consolidated Statements of Cash Flows

(U.S. $ in thousands)

(unaudited)

 

 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2023

 

2022

 

2023

 

2022

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income (loss)

$

(209,037

)

 

$

4,661

 

 

$

(427,809

)

 

$

(428,871

)

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

 

 

 

 

 

 

 

Depreciation and amortization

 

15,523

 

 

 

12,239

 

 

 

45,619

 

 

 

37,841

 

Stock-based compensation

 

263,427

 

 

 

136,402

 

 

 

702,843

 

 

 

383,129

 

Impairment charges for leases and leasehold improvements

 

61,098

 

 

 

 

 

 

61,098

 

 

 

 

Deferred income taxes

 

1,495

 

 

 

(879

)

 

 

6,308

 

 

 

(2,920

)

Net loss on exchange derivative and capped call transactions

 

 

 

 

 

 

 

 

 

 

424,482

 

Amortization of debt discount and issuance cost

 

118

 

 

 

117

 

 

 

353

 

 

 

26,933

 

Net loss (gain) on strategic investments

 

(1,812

)

 

 

18,665

 

 

 

17,264

 

 

 

72,222

 

Net foreign currency loss (gain)

 

(177

)

 

 

3,623

 

 

 

(6,005

)

 

 

(8,033

)

Gain on a non-cash sale of a controlling interest of a subsidiary

 

 

 

 

 

 

 

(45,158

)

 

 

 

Other

 

1,263

 

 

 

94

 

 

 

1,258

 

 

 

(224

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

8,460

 

 

 

(14,980

)

 

 

(38,031

)

 

 

(83,183

)

Prepaid expenses and other assets

 

(15,163

)

 

 

(11,373

)

 

 

(40,530

)

 

 

(36,455

)

Accounts payable

 

(27,700

)

 

 

5,148

 

 

 

22,034

 

 

 

25,655

 

Accrued expenses and other liabilities

 

131,238

 

 

 

64,533

 

 

 

81,055

 

 

 

1,246

 

Deferred revenue

 

123,636

 

 

 

116,459

 

 

 

215,037

 

 

 

194,343

 

Net cash provided by operating activities

 

352,369

 

 

 

334,709

 

 

 

595,336

 

 

 

606,165

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Business combinations, net of cash acquired

 

 

 

 

(13,022

)

 

 

(600

)

 

 

(16,861

)

Purchases of intangible assets

 

 

 

 

(4,018

)

 

 

 

 

 

(4,018

)

Purchases of property and equipment

 

(2,691

)

 

 

(26,473

)

 

 

(23,227

)

 

 

(45,935

)

Purchases of strategic investments

 

(9,000

)

 

 

(7,918

)

 

 

(18,450

)

 

 

(102,918

)

Purchases of marketable securities

 

 

 

 

 

 

 

(10,000

)

 

 

(21,003

)

Proceeds from maturities of marketable securities

 

26,250

 

 

 

2,600

 

 

 

73,950

 

 

 

64,087

 

Proceeds from sales of marketable securities and strategic investments

 

8

 

 

 

 

 

 

629

 

 

 

186,262

 

Net cash provided by (used in) investing activities

 

14,567

 

 

 

(48,831

)

 

 

22,302

 

 

 

59,614

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from term loan facility

 

 

 

 

 

 

 

 

 

 

1,000,000

 

Repayment of exchangeable senior notes

 

 

 

 

 

 

 

 

 

 

(1,548,686

)

Proceeds from settlement of capped call transactions

 

 

 

 

 

 

 

 

 

 

135,497

 

Repurchases of Class A Common Stock

 

(31,748

)

 

 

 

 

 

(31,748

)

 

 

 

Proceeds from other financing arrangements

 

2

 

 

 

9,525

 

 

 

1,398

 

 

 

9,530

 

Net cash provided by (used in) financing activities

 

(31,746

)

 

 

9,525

 

 

 

(30,350

)

 

 

(403,659

)

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash

 

421

 

 

 

(283

)

 

 

(996

)

 

 

(2,638

)

Net increase in cash, cash equivalents, and restricted cash

 

335,611

 

 

 

295,120

 

 

 

586,292

 

 

 

259,482

 

Cash, cash equivalents, and restricted cash at beginning of period

 

1,637,969

 

 

 

900,069

 

 

 

1,386,686

 

 

 

931,023

 

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

 

 

 

 

276

 

 

 

602

 

 

 

4,960

 

Cash, cash equivalents, and restricted cash at end of period

$

1,973,580

 

 

$

1,195,465

 

 

$

1,973,580

 

 

$

1,195,465

 

Atlassian Corporation

Revenues by Deployment Options

(U.S. $ in thousands)

(unaudited)

 

 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2023

 

2022

 

2023

 

2022

Cloud

$

534,891

 

$

399,453

 

$ 1,522,269

 

$

1,081,455

Data Center

 

221,551

 

 

151,095

 

587,043

 

 

401,398

Server (1)

 

94,389

 

 

132,333

 

314,370

 

 

407,399

Marketplace and services (2)

 

64,622

 

 

57,610

 

171,867

 

 

152,789

Total revenues

$

915,453

 

$

740,491

 

$ 2,595,549

 

$

2,043,041

(1) Included in Server is perpetual license revenue. Perpetual license revenue is captured as other revenue on the Condensed 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 Condensed Consolidated Statements of Operations as the services are delivered over the term of the arrangement.

Restructuring Charges
(U.S. $ in thousands)
(unaudited)

During the third quarter of fiscal year 2023, Atlassian incurred charges associated with rebalancing resources to accelerate progress against its highest priorities and consolidating leases to optimize its real estate footprint. A summary of these restructuring charges for the three and nine months ended March 31, 2023 by major activity type is as follows:

 

Severance and
Other
Termination
Benefits

 

Stock-based
Compensation

 

Lease
Consolidation

 

Total

Cost of revenue

$

1,066

 

$

288

 

$

7,893

 

$

9,247

Research and development

 

8,271

 

 

6,046

 

 

29,004

 

 

43,321

Marketing and sales

 

7,293

 

 

1,909

 

 

14,984

 

 

24,186

General and administrative

 

9,163

 

 

2,506

 

 

9,425

 

 

21,094

Total restructuring charges

$

25,793

 

$

10,749

 

$

61,306

 

$

97,848

Atlassian Corporation

Reconciliation of GAAP to Non-GAAP Results

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

(unaudited)

 

 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2023

 

2022

 

2023

 

2022

Gross profit

 

 

 

 

 

 

 

GAAP gross profit

$

746,801

 

 

$

624,428

 

 

$

2,131,560

 

 

$

1,720,531

 

Plus: Stock-based compensation

 

17,293

 

 

 

8,269

 

 

 

46,459

 

 

 

22,639

 

Plus: Amortization of acquired intangible assets

 

5,696

 

 

 

5,709

 

 

 

17,090

 

 

 

16,997

 

Plus: Restructuring charges (1)

 

9,247

 

 

 

 

 

 

9,247

 

 

 

 

Non-GAAP gross profit

$

779,037

 

 

$

638,406

 

 

$

2,204,356

 

 

$

1,760,167

 

Operating income

 

 

 

 

 

 

 

GAAP operating income (loss)

$

(161,567

)

 

$

32,897

 

 

$

(294,833

)

 

$

112,416

 

Plus: Stock-based compensation

 

252,678

 

 

 

136,402

 

 

 

692,094

 

 

 

383,129

 

Plus: Amortization of acquired intangible assets

 

8,155

 

 

 

8,105

 

 

 

24,747

 

 

 

24,117

 

Plus: Restructuring charges (1)

 

97,848

 

 

 

 

 

 

97,848

 

 

 

 

Non-GAAP operating income

$

197,114

 

 

$

177,404

 

 

$

519,856

 

 

$

519,662

 

Operating margin

 

 

 

 

 

 

 

GAAP operating margin

 

(18

) %

 

 

4

%

 

 

(11

) %

 

 

6

%

Plus: Stock-based compensation

 

28

%

 

 

19

%

 

 

26

%

 

 

18

%

Plus: Amortization of acquired intangible assets

 

1

%

 

 

1

%

 

 

1

%

 

 

1

%

Plus: Restructuring charges (1)

 

11

%

 

 

%

 

 

4

%

 

 

%

Non-GAAP operating margin

 

22

%

 

 

24

%

 

 

20

%

 

 

25

%

Net income

 

 

 

 

 

 

 

GAAP net income (loss)

$

(209,037

)

 

$

4,661

 

 

$

(427,809

)

 

$

(428,871

)

Plus: Stock-based compensation

 

252,678

 

 

 

136,402

 

 

 

692,094

 

 

 

383,129

 

Plus: Amortization of acquired intangible assets

 

8,155

 

 

 

8,105

 

 

 

24,747

 

 

 

24,117

 

Plus: Restructuring charges (1)

 

97,848

 

 

 

 

 

 

97,848

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

450,829

 

Less: Gain on a non-cash sale of a controlling interest of a subsidiary

 

 

 

 

 

 

 

(45,158

)

 

 

 

Plus (less): Income tax adjustments

 

(11,689

)

 

 

(39,000

)

 

 

3,513

 

 

 

(114,200

)

Non-GAAP net income

$

137,955

 

 

$

110,168

 

 

$

345,235

 

 

$

315,004

 

Net income per share

 

 

 

 

 

 

 

GAAP net income (loss) per share - diluted

$

(0.81

)

 

$

0.02

 

 

$

(1.67

)

 

$

(1.70

)

Plus: Stock-based compensation

 

0.98

 

 

 

0.53

 

 

 

2.70

 

 

 

1.51

 

Plus: Amortization of acquired intangible assets

 

0.03

 

 

 

0.03

 

 

 

0.10

 

 

 

0.09

 

Plus: Restructuring charges (1)

 

0.39

 

 

 

 

 

 

0.39

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

1.78

 

Less: Gain on a non-cash sale of a controlling interest of a subsidiary

 

 

 

 

 

 

 

(0.18

)

 

 

 

Plus (less): Income tax adjustments

 

(0.05

)

 

 

(0.15

)

 

 

0.01

 

 

 

(0.45

)

Non-GAAP net income per share - diluted

$

0.54

 

 

$

0.43

 

 

$

1.35

 

 

$

1.23

 

Weighted-average diluted shares outstanding

 

 

 

 

 

 

 

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

 

256,825

 

 

 

255,741

 

 

 

255,949

 

 

 

252,924

 

Plus: Dilution from dilutive securities (2)

 

425

 

 

 

 

 

 

590

 

 

 

2,791

 

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

 

257,250

 

 

 

255,741

 

 

 

256,539

 

 

 

255,715

 

Free cash flow

 

 

 

 

 

 

 

GAAP net cash provided by operating activities

$

352,369

 

 

$

334,709

 

 

$

595,336

 

 

$

606,165

 

Less: Capital expenditures

 

(2,691

)

 

 

(26,473

)

 

 

(23,227

)

 

 

(45,935

)

Free cash flow

$

349,678

 

 

$

308,236

 

 

$

572,109

 

 

$

560,230

 

(1) Restructuring charges include stock-based compensation expense related to the rebalancing of resources for the three and nine months ended March 31, 2023.

(2) The effects of these dilutive securities were not included in the GAAP calculation of diluted net loss per share for the three and nine months ended March 31, 2023 and nine months ended March 31, 2022 because the effect would have been anti-dilutive.

Atlassian Corporation

Reconciliation of GAAP to Non-GAAP Financial Targets

 

 

Three Months Ending
June 30, 2023

GAAP gross margin

81.0%

Plus: Stock-based compensation

2.0

Plus: Amortization of acquired intangible assets

0.5

Non-GAAP gross margin

83.5%

 

 

GAAP operating margin

(11.0%)

Plus: Stock-based compensation

27.0

Plus: Amortization of acquired intangible assets

1.0

Non-GAAP operating margin

17.0%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005969/en/

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