01—Abstract
Summary
Summary of the 20-F filed August 13, 2021. Cited figures are marked; the original filing is the authoritative source.
Atlassian Corporation Plc's annual report for the fiscal year ended June 30, 2021 shows total revenues of $2.09 billiona, up 29% from $1.61 billion, with subscription revenue rising 42% to $1.32 billion.
Growth was driven by new and existing customers and by accelerated demand for on-premises products ahead of the discontinuation of new perpetual license sales in February 2021 and related price changes. Operating income was $101.6 millionb, compared with $14.1 million a year earlier, but the company posted a net loss of $696.3 million (or $2.79 per share), driven mainly by $616.4 million of net losses on the exchange derivative and capped call transactions tied to its exchangeable senior notes. Free cash flow was $764.9 million, up from $500.4 million, and net cash from operating activities was $841.3 million.
The balance sheet carried $919.2 millionc of cash and cash equivalents and $313.0 million of short-term investments as of June 30, 2021, against $1.11 billion of exchangeable senior notes due at their if-exchanged value. Working capital was a deficit of $726.2 million, largely because the notes and their exchange derivative were classified as current. Management said cash and existing resources, plus the new $1.5 billion Credit Facility (no amounts drawn at year end), should cover needs for at least the next 12 months.
The company also disclosed that it expects operating income and operating cash flow to decrease in fiscal 2022 as share-based compensation and investment rise, and that perpetual license revenue will keep declining. Class B shares carry ten votes each, and co-CEOs Michael Cannon-Brookes and Scott Farquhar together hold approximately 89%d of total voting power. The company reports under IFRS as a foreign private issuer, and its Class A shares trade on Nasdaq under the symbol TEAM.
02—Key points
Key Highlights
- Total revenues of $2,089.1 million, up 29% from $1,614.2 million in fiscal 2020; subscription revenues rose 42% to $1,324.1 million.
- Operating income of $101.6 million versus $14.1 million in fiscal 2020, while the net loss widened to $696.3 million ($2.79 per share) from $350.7 million.
- Net loss driven primarily by $616.4 million of net losses on exchange derivative and capped call transactions tied to the exchangeable senior notes; $322.3 million of charges related to notes and capped calls settled during the year.
- Free cash flow of $764.9 million, up from $500.4 million, on net cash provided by operating activities of $841.3 million.
- Cash and cash equivalents of $919.2 million and short-term investments of $313.0 million at June 30, 2021; the company drew nothing on its $1.5 billion Credit Facility at year end.
- Management expects operating income and operating cash flow to decrease in fiscal 2022, with perpetual license revenue to decline as no new perpetual licenses are sold from February 2021.
- Class B shares (ten votes each) held by the co-CEOs and affiliates represent approximately 89% of total voting power, limiting other shareholders' influence.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2021, Atlassian lost $0.28.
- Revenue$2.09B100.0%
- Cost of revenue−$331.9M15.9%
- Gross profit$1.76B84.1%
- Operating costs−$1.62B77.3%
- Operating income$141.4M6.8%
- Interest, other & tax−$720.4M34.5%
- Net income−$579.0M27.7%
Where FY2021 revenue went
$2.09B- R&D: $933.0M, 45% of revenue
- Other operating costs: $682.9M, 33% of revenue
- Cost of revenue: $331.9M, 16% of revenue
- Operating income: $141.4M, 6.8% of revenue
Kept 6.8% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed August 13, 2021Financial Statements
| Revenue | $2.09B |
| Cost of Revenue | $331.85M |
| Gross Profit | $1.76B |
| R&D Expenses | $932.99M |
| Operating Expenses | $1.62B |
| Operating Income | $141.41M |
| Interest Expense | $92.59M |
| Net Income | -$578.98M |
| EPS (Basic) | $-2.32 |
| EPS (Diluted) | $-2.32 |
| Shares Outstanding (Basic) | 249.68M |
| Shares Outstanding (Diluted) | 249.68M |
05—Questions
Frequently Asked Questions
Why was there a large net loss despite positive operating income?
The net loss of $696.3 million was driven mainly by the accounting for the exchangeable senior notes and related capped call transactions. The filing states that net losses on the exchange derivative and capped calls were $616.4 million, and that the notes' exchange feature is marked to fair value each period, which creates volatility in reported results. Cash interest paid on the notes was small by comparison, and the filing notes that this accounting does not affect cash paid to holders.
What drove the revenue growth in fiscal 2021?
The filing attributes growth to increased demand from new and existing customers, plus accelerated short-term demand for on-premises products as customers bought ahead of the discontinuation of new perpetual license sales and of price changes for on-premises products in the third quarter of fiscal 2021. Subscription revenue growth was primarily from additional subscriptions by existing customers and accelerated data center demand.
Can the company meet its obligations on the exchangeable senior notes?
The filing states that cash and cash equivalents, cash from operations, and borrowing capacity under the Credit Facility are expected to be sufficient to meet anticipated cash needs for at least the next 12 months. At June 30, 2021 the notes were classified as current, with an if-exchanged value of $1,109.6 million in contractual obligations. The company also disclosed that subsequent to year end it had received exchange requests and submitted a redemption notice, and made a first $650 million drawdown on its Term Loan Facility.
What is the outlook for the business as management describes it?
Management says it will keep investing in its platform, cloud services, migration tools and new products, and expects share-based payment expense to increase in fiscal 2022. It expects operating income and operating cash flow to decrease in fiscal 2022. It also expects subscription revenue to remain the primary driver of growth while maintenance and perpetual license revenue decline as server customers migrate to cloud and data center offerings.
How much control do the founders have over the company?
Class B ordinary shares carry ten votes per share, and holders of Class B shares together hold approximately 89% of voting power. Co-CEOs Michael Cannon-Brookes and Scott Farquhar each hold 56,954,822 Class B shares, which together represent about 89% of the company's total voting power. The filing states this concentrated control may delay or deter a change in control and could limit other shareholders' ability to influence major transactions.
06—Continue