01—Abstract
Summary
Summary of the 10-Q filed April 26, 2024. Cited figures are marked; the original filing is the authoritative source.
Atlassian Corporation's Form 10-Q for the quarter ended March 31, 2024 shows a return to quarterly net income, with net income of $12.8 milliona for the three months ended March 31, 2024, compared with a net loss of $209.0 million a year earlier.
Total revenues rose 30% to $1.19 billionb, driven by subscription revenue growth of 41% to $1.07 billion. Cloud revenue increased 31% to $703.0 million and Data Center revenue increased 64% to $364.1 million, while Server revenue declined 69% as maintenance and support for Server offerings generally ended in February 2024. Gross margin was 82% in both periods.
For the nine months ended March 31, 2024, the company still reported a net loss of $103.6 millionc, though this improved from a $427.8 million loss a year earlier. Total revenues grew 24% to $3.23 billion and operating cash flow was $1.02 billion, up from $595.3 million. Free cash flow for the nine months was $1.00 billion.
The company made acquisitions during the period, most notably Loom, Inc., for approximately $885.6 milliond in cash, and repurchased $204.6 million of Class A stock. Cash and cash equivalents stood at $1.95 billion at quarter-end, against a term loan balance of $975.0 million outstanding under the Credit Facility.
The filing also discloses ongoing securities class action and stockholder derivative litigation tied to statements made during an August to November 2022 class period, for which the company has recorded no liabilities. The company also noted that a co-Chief Executive Officer intends to step down into an advisory role effective August 31, 2024, and that Class B shareholders hold approximately 86% of voting power.
02—Key points
Key Highlights
- Q3 FY2024 net income of $12.8 million versus a net loss of $209.0 million in Q3 FY2023; diluted EPS of $0.05 versus $(0.81).
- Total revenues of $1,189.1 million for the three months ended March 31, 2024, up 30% from $915.5 million; subscription revenues up 41% to $1,071.4 million.
- Maintenance revenue fell 69% to $29.5 million as Server support generally ended in February 2024; Cloud revenue grew 31% to $703.0 million and Data Center revenue grew 64% to $364.1 million.
- Nine-month net loss narrowed to $103.6 million from $427.8 million, while nine-month operating cash flow reached $1,021.9 million and free cash flow was $1,002.4 million.
- Acquired Loom, Inc. on November 30, 2023 for approximately $885.6 million in cash, adding $544.8 million of goodwill and $272.3 million of intangible assets on a preliminary basis.
- Cash and cash equivalents of $1,949.0 million at March 31, 2024; term loan outstanding of $975.0 million under the Credit Facility, with a $500 million revolver fully available.
- Remaining performance obligations of approximately $2.3 billion, with about 80% expected to be recognized over the next 12 months; repurchased $204.6 million of Class A stock in the nine months, leaving $641.2 million authorized.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Atlassian kept $0.01.
- Revenue$1.19B100.0%
- Cost of revenue−$213.4M17.9%
- Gross profit$975.7M82.1%
- Operating costs−$957.9M80.6%
- Operating income$17.8M1.5%
- Interest, other & tax−$5.1M0.4%
- Net income$12.8M1.1%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed April 26, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $1.19B$915.45M | +29.9% |
| Cost of Revenue | $213.43M$168.65M | +26.5% |
| Gross Profit | $975.70M$746.80M | +30.7% |
| R&D Expenses | $576.49M$522.34M | +10.4% |
| Operating Expenses | $957.90M$908.37M | +5.5% |
| Operating Income | $17.80M-$161.57M | +111.0% |
| Interest Expense | $8.45M$7.98M | +6.0% |
| Net Income | $12.75M-$209.04M | +106.1% |
| EPS (Basic) | $0.05$-0.81 | +106.2% |
| EPS (Diluted) | $0.05$-0.81 | +106.2% |
| Shares Outstanding (Basic) | 259.72M256.82M | +1.1% |
| Shares Outstanding (Diluted) | 261.78M256.82M | +1.9% |
05—Questions
Frequently Asked Questions
Did Atlassian return to profitability in the quarter?
Yes, on a GAAP basis for the three months ended March 31, 2024, Atlassian reported net income of $12.8 million, compared with a net loss of $209.0 million in the prior-year quarter. The nine-month period still shows a net loss of $103.6 million.
What drove revenue growth this quarter?
The filing attributes growth primarily to increased demand from new and existing customers. Subscription revenue rose $310.7 million, or 41%, mainly from additional subscriptions from the existing customer base and customers migrating to Cloud and Data Center term licenses.
How is the decline in Server revenue affecting the business?
Server revenue fell 69% to $29.7 million in the quarter as the company no longer sells perpetual licenses or upgrades and generally ended Server maintenance and support in February 2024. The company states maintenance revenue is expected to be immaterial after the Server end-of-support date.
What legal proceedings are disclosed?
A putative securities class action filed in February 2023 covers purchasers between August 5, 2022 and November 3, 2022, and three stockholder derivative lawsuits are also pending. A hearing on the defendants' motion to dismiss the class action is scheduled for August 8, 2024. The company has not recorded any liabilities for these matters.
What leadership change was disclosed?
The filing notes that the company announced on April 25, 2024 that one of its co-Chief Executive Officers intends to step down into an advisory role, effective August 31, 2024.
06—Continue