01—Abstract
Summary
Summary of the 10-Q filed February 2, 2024. Cited figures are marked; the original filing is the authoritative source.
Atlassian Corporation's 10-Q for the quarter ended December 31, 2023 shows total revenues of $1,060.1 milliona for the three months, up from $872.7 million, with subscription revenue of $932.2 million compared with $711.2 million.
Maintenance revenue fell to $69.1 millionb from $106.0 million as Server offerings wind down, with the filing noting maintenance and support for Server offerings generally ends in February 2024. The company reported a three-month net loss of $84.5 million, narrower than the $205.0 million loss a year earlier, and a six-month net loss of $116.4 million versus $218.8 million. Operating loss narrowed to $49.1 million from $99.2 million for the quarter.
Non-GAAP operating income for the quarter was $250.6 millionc, and free cash flow was $284.3 million, compared with $146.5 million a year earlier. The balance sheet shows cash and cash equivalents of $1,460.5 million at December 31, 2023, down from $2,102.6 million at June 30, 2023, reflecting the $844.7 million of cash used for business combinations in the period, principally the acquisition of Loom, Inc. for approximately $885.6 million, which closed on November 30, 2023. Goodwill rose to $1,285.9 million from $727.2 million, and intangible assets, net, rose to $329.0 million.
The company repurchased $163.5 milliond of Class A Common Stock in the six months, with $682.4 million remaining under its $1.0 billion authorization. Term loan facility balances totaled $987.5 million outstanding after a $12.5 million required repayment. The filing also discloses ongoing securities class action and stockholder derivative litigation, which the company says it intends to vigorously defend.
On January 22, 2024, the court granted defendants' motion to dismiss the putative class action with leave to amend by February 12, 2024. The company recorded no liabilities for litigation in the periods presented. Class B shares carry ten votes per share, and the Class B holders collectively hold approximately 87% of voting power as of December 31, 2023.
02—Key points
Key Highlights
- Total revenues of $1,060.1 million for the three months ended December 31, 2023, up 21% from $872.7 million a year earlier, with subscription revenue up 31%.
- Maintenance revenue declined 35% to $69.1 million as Server offerings approach end of maintenance and support in February 2024.
- Net loss narrowed to $84.5 million for the quarter from $205.0 million, and operating loss narrowed to $49.1 million from $99.2 million.
- Free cash flow was $284.3 million for the quarter versus $146.5 million a year earlier; non-GAAP operating income was $250.6 million.
- Acquisition of Loom, Inc. for approximately $885.6 million in cash on November 30, 2023 increased goodwill to $1,285.9 million and intangible assets, net, to $329.0 million.
- Cash and cash equivalents fell to $1,460.5 million from $2,102.6 million at June 30, 2023; $163.5 million was spent on share repurchases in the six months, with $682.4 million remaining under the program.
- Securities class action was dismissed by the court on January 22, 2024 with leave to amend; the company does not believe pending legal matters are likely to have a material adverse effect on its financial position.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2024, Atlassian lost $0.08.
- Revenue$1.06B100.0%
- Cost of revenue−$194.5M18.4%
- Gross profit$865.6M81.6%
- Operating costs−$914.6M86.3%
- Operating income−$49.1M4.6%
- Interest, other & tax−$35.4M3.3%
- Net income−$84.5M8.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed February 2, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $1.06B$872.70M | +21.5% |
| Cost of Revenue | $194.54M$155.94M | +24.7% |
| Gross Profit | $865.57M$716.76M | +20.8% |
| R&D Expenses | $536.78M$473.68M | +13.3% |
| Operating Expenses | $914.64M$816.00M | +12.1% |
| Operating Income | -$49.06M-$99.24M | +50.6% |
| Interest Expense | $9.00M$7.51M | +19.9% |
| Net Income | -$84.47M-$205.03M | +58.8% |
| EPS (Basic) | $-0.33$-0.80 | +58.8% |
| EPS (Diluted) | $-0.33$-0.80 | +58.8% |
| Shares Outstanding (Basic) | 258.60M255.87M | +1.1% |
| Shares Outstanding (Diluted) | 258.60M255.87M | +1.1% |
05—Questions
Frequently Asked Questions
How did Atlassian's revenue and profitability change in the quarter ended December 31, 2023?
Total revenues rose 21% to $1,060.1 million, driven by subscription revenue growth of 31% to $932.2 million. The net loss narrowed to $84.5 million from $205.0 million, and the operating loss narrowed to $49.1 million from $99.2 million, while the income tax provision decreased to $44.4 million from $100.5 million.
What drove the decline in maintenance revenue?
Maintenance revenue fell 35% to $69.1 million. The company no longer offers upgrades to perpetual licenses beginning February 2022 and will generally end maintenance and support for Server offerings in February 2024, with maintenance revenue expected to be immaterial after that date.
What was the Loom acquisition and how did it affect the balance sheet?
On November 30, 2023, Atlassian acquired 100% of Loom, Inc., an asynchronous video messaging platform, for approximately $885.6 million in cash. Goodwill increased by $558.2 million in the period and identifiable intangible assets of $272.3 million were recorded. The company said Loom's results were not material to the quarter.
What is the status of the securities litigation against the company?
A putative securities class action filed February 3, 2023 was dismissed on January 22, 2024, with plaintiffs given until February 12, 2024 to file an amended complaint. Related stockholder derivative lawsuits are stayed pending resolution of motions to dismiss in the class action. The defendants deny the allegations and intend to vigorously defend the claims, and no litigation liabilities have been recorded.
How much capital has the company returned through share repurchases and what remains authorized?
During the six months ended December 31, 2023, the company repurchased about 0.9 million Class A shares for approximately $163.5 million. As of December 31, 2023, $682.4 million remained authorized under the $1.0 billion Share Repurchase Program authorized in January 2023.
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