How fast did Atlassian's revenue grow in fiscal 2020?

Total revenues increased $404.0 million, or 33%, to $1,614.2 million in the fiscal year ended June 30, 2020. Subscription revenue grew 47%, while maintenance grew 19%, perpetual license 2%, and other revenue 34%.

Why is the net loss so large if operating income was positive?

The company reported a net loss of $350.7 million mainly because of a $336.0 million net non-cash loss from marking to fair value the embedded exchange feature of the exchangeable senior notes and the related capped call transactions. Operating income was $14.1 million.

What is the risk associated with the exchangeable senior notes?

The notes became exchangeable at holders' option between July 1, 2020 and September 30, 2020 after the closing price condition was met. The company would settle exchanges entirely in cash, which could affect liquidity, and the $889.2 million carrying amount is classified as current.

What does management expect for fiscal 2021?

Management expects perpetual license revenue to decline as the server business slows, maintenance revenue to be flat, and operating income and operating cash flow to decrease as the company invests in personnel, its platform, and cloud services. It also plans loyalty discounts to encourage server customers to migrate to the cloud.

Who controls the company's voting power?

Holders of Class B ordinary shares, which carry ten votes per share, held about 90.33% of voting power as of June 30, 2020. Co-CEOs Michael Cannon-Brookes and Scott Farquhar together held about 89.45%, which allows them to control substantially all shareholder votes.

TEAM 10-K FY2020 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 20-F filed August 14, 2020. Cited figures are marked; the original filing is the authoritative source.

Atlassian Corporation Plc's annual report for the fiscal year ended June 30, 2020 shows total revenues of $1,614.2 million^a, up $404.0 million, or 33%, from $1,210.1 million in fiscal 2019.

Subscription revenue grew $297.5 million^b, or 47%, to $931.5 million, and now makes up the largest share of revenue. Maintenance revenue rose 19% to $469.4 million, and perpetual license revenue rose 2% to $95.2 million. The company reported an IFRS operating income of $14.1 million, compared with an operating loss of $63.4 million a year earlier, while its net loss narrowed to $350.7 million from $637.6 million.

The loss is driven mainly by non-cash mark-to-fair-value charges on the exchangeable senior notes and related capped calls, which were $336.0 million^c in fiscal 2020 per the cash flow reconciliation. Free cash flow, a non-IFRS measure, was $500.4 million, up from $422.2 million. Cash and cash equivalents were $1.48 billion and short-term investments were $676.1 million at June 30, 2020.

The $1.0 billion^d exchangeable senior notes became exchangeable for cash after the closing price condition was met as of June 30, 2020, and they are classified as current liabilities. Working capital was a deficit of $375.0 million at year end.

Management expects perpetual license revenue to decline in fiscal 2021 as the server business slows, and expects operating income and operating cash flow to decrease in fiscal 2021 as investment continues. Governance is concentrated: Class B shares with ten votes each give co-founders Michael Cannon-Brookes and Scott Farquhar about 89.45% of voting power combined, and the company is a foreign private issuer reporting under IFRS.

02—Key points

Key Highlights

Total revenues rose 33% to $1,614.2 million, with subscription revenue up 47% to $931.5 million.
IFRS operating income was $14.1 million, versus an operating loss of $63.4 million in fiscal 2019.
Net loss narrowed to $350.7 million from $637.6 million, largely due to non-cash fair value changes on the exchangeable notes and capped calls.
Non-IFRS net income was $288.8 million, or $1.15 per diluted share, and free cash flow was $500.4 million.
Cash and cash equivalents of $1.48 billion and short-term investments of $676.1 million at June 30, 2020.
The $1.0 billion exchangeable senior notes became exchangeable for cash and are classified as current, creating a working capital deficit of $375.0 million.
Co-founders hold about 89.45% of voting power through Class B shares, and management expects perpetual license revenue to decline in fiscal 2021.

03—Questions

Frequently Asked Questions

How fast did Atlassian's revenue grow in fiscal 2020?
Total revenues increased $404.0 million, or 33%, to $1,614.2 million in the fiscal year ended June 30, 2020. Subscription revenue grew 47%, while maintenance grew 19%, perpetual license 2%, and other revenue 34%.
Why is the net loss so large if operating income was positive?
The company reported a net loss of $350.7 million mainly because of a $336.0 million net non-cash loss from marking to fair value the embedded exchange feature of the exchangeable senior notes and the related capped call transactions. Operating income was $14.1 million.
What is the risk associated with the exchangeable senior notes?
The notes became exchangeable at holders' option between July 1, 2020 and September 30, 2020 after the closing price condition was met. The company would settle exchanges entirely in cash, which could affect liquidity, and the $889.2 million carrying amount is classified as current.
What does management expect for fiscal 2021?
Management expects perpetual license revenue to decline as the server business slows, maintenance revenue to be flat, and operating income and operating cash flow to decrease as the company invests in personnel, its platform, and cloud services. It also plans loyalty discounts to encourage server customers to migrate to the cloud.
Who controls the company's voting power?
Holders of Class B ordinary shares, which carry ten votes per share, held about 90.33% of voting power as of June 30, 2020. Co-CEOs Michael Cannon-Brookes and Scott Farquhar together held about 89.45%, which allows them to control substantially all shareholder votes.

04—Continue

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