01—Abstract
Summary
Summary of the 20-F filed August 19, 2022. Cited figures are marked; the original filing is the authoritative source.
Atlassian Corporation Plc filed this Form 20-F annual report for the fiscal year ended June 30, 2022, on August 19, 2022.
Total revenues rose to $2.80 billiona from $2.09 billion, with subscription revenue increasing to $2.10 billion from $1.32 billion, a 58% increase, while maintenance revenue declined 5% and other revenue declined 13%. The company reported an IFRS operating loss of $106.5 million and an IFRS net loss of $614.1 million, compared with an operating income of $101.6 million and net loss of $696.3 million in fiscal 2021. The net loss was driven largely by $424.5 million of net losses on exchange derivative and capped call transactions tied to its exchangeable senior notes, which were fully settled during the year for $1.5 billion in cash.
Share-based payment expense rose to $707.1 millionb from $385.7 million, and research and development expense reached $1.40 billion, or 50% of revenue. The company ended the year with $1.39 billion in cash and cash equivalents and $1.0 billion drawn under a term loan facility. Free cash flow was $763.8 million, roughly flat versus $764.9 million the prior year, and net cash from operating activities was $883.5 million.
Management is transitioning customers from on-premises perpetual licenses to Cloud and Data Center offerings, ceasing sales of new perpetual licenses in February 2021 and upgrades in February 2022, with plans to end maintenance for on-premises versions in February 2024. The filing also discloses a planned U.S. redomiciliation of the parent company, and the Co-Chief Executive Officers and their affiliates hold approximately 88%c of total voting power through Class B shares.
02—Key points
Key Highlights
- Total revenues increased 34% to $2.80 billion, driven by subscription revenue growth of 58% to $2.10 billion.
- Cloud revenue reached $1.52 billion, up 57%, while Server revenue fell 14% to $525.0 million as customers migrate.
- Operating loss of $106.5 million compared with operating income of $101.6 million in fiscal 2021, reflecting higher share-based payment expense of $707.1 million.
- Net loss narrowed to $614.1 million from $696.3 million, with non-operating losses on exchange derivatives and capped calls of $424.5 million.
- Free cash flow was $763.8 million, essentially flat year over year, while net cash from operating activities rose to $883.5 million.
- Settled $1.5 billion of exchangeable senior notes in cash and drew $1.0 billion under a term loan facility, leaving $1.39 billion in cash and cash equivalents.
- Co-Chief Executive Officers Michael Cannon-Brookes and Scott Farquhar collectively hold approximately 88% of voting power, and a U.S. domestication is planned that would end foreign private issuer status.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2022, Atlassian lost $0.19.
- Revenue$2.80B100.0%
- Cost of revenue−$452.9M16.2%
- Gross profit$2.35B83.8%
- Operating costs−$2.28B81.3%
- Operating income$70.1M2.5%
- Interest, other & tax−$589.6M21.0%
- Net income−$519.5M18.5%
Where FY2022 revenue went
$2.80B- R&D: $1.29B, 46% of revenue
- Other operating costs: $988.0M, 35% of revenue
- Cost of revenue: $452.9M, 16% of revenue
- Operating income: $70.1M, 2.5% of revenue
Kept 2.5% as operating incomeOperating income $70.1M · 2.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed August 19, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $2.80B$2.09B | +34.2% |
| Cost of Revenue | $452.91M$331.85M | +36.5% |
| Gross Profit | $2.35B$1.76B | +33.7% |
| R&D Expenses | $1.29B$932.99M | +38.5% |
| Operating Expenses | $2.28B$1.62B | +41.1% |
| Operating Income | $70.08M$141.41M | −50.4% |
| Interest Expense | $41.47M$92.59M | −55.2% |
| Net Income | -$519.51M-$578.98M | +10.3% |
| EPS (Basic) | $-2.05$-2.32 | +11.6% |
| EPS (Diluted) | $-2.05$-2.32 | +11.6% |
| Shares Outstanding (Basic) | 253.31M249.68M | +1.5% |
| Shares Outstanding (Diluted) | 253.31M249.68M | +1.5% |
05—Questions
Frequently Asked Questions
How fast did Atlassian's revenue grow in fiscal 2022, and what drove it?
Total revenues increased $713.8 million, or 34%, to $2.80 billion. Growth was primarily attributed to increased demand from both new and existing customers, with subscription revenue up $772.6 million, or 58%, driven by additional subscriptions from existing customers, migrations to cloud-based services, and term-based Data Center licenses.
Why did Atlassian report a net loss despite growing revenue?
The net loss of $614.1 million was primarily due to the mark-to-fair-value of exchange and capped call derivatives and settlements of exchangeable senior notes, which produced $424.5 million of net losses in cash flow terms. The company also cited significant investments in research and development and cloud infrastructure, and share-based payment expense of $707.1 million, which rose from $385.7 million.
What is happening to Atlassian's on-premises and perpetual license business?
Atlassian stopped selling new perpetual licenses beginning in February 2021 and stopped selling upgrades to on-premises versions beginning in February 2022. It plans to end maintenance and support for these on-premises versions in February 2024. Server revenue declined 14% to $525.0 million, and maintenance revenue declined 5% to $495.1 million, and the company expects maintenance revenue to keep declining as customers migrate.
What control do existing shareholders have over Atlassian?
Class B ordinary shares carry ten votes each and collectively represent approximately 88% of total voting power as of June 30, 2022. Co-Chief Executive Officers Michael Cannon-Brookes and Scott Farquhar hold about 88% of voting power through their holdings. Holders of Class A shares, which carry one vote each, have limited ability to influence the outcome of significant transactions, including a change in control.
What is the planned U.S. Domestication and what does it mean for investors?
Atlassian announced in February 2022 its intention to redomicile its parent holding company from the United Kingdom to the United States, to broaden its investor base, support inclusion in additional stock indices, and streamline its structure. Completion requires shareholder approval, Nasdaq approval, and sanction of a UK scheme of arrangement. If completed, Atlassian would lose foreign private issuer status and move from IFRS to U.S. GAAP reporting, with the company expecting additional recurring and non-recurring costs.
06—Continue