01—Abstract
Summary
Summary of the 8-K filed April 25, 2024. Cited figures are marked; the original filing is the authoritative source.
Atlassian Corporation filed this Form 8-K on April 25, 2024 to furnish its results for the third quarter ended March 31, 2024, and to announce a leadership transition.
Total revenue was $1,189.1 milliona, up 30% from $915.5 million a year earlier, with subscription revenue of $1,071.4 million, up 41% year-over-year. GAAP operating income was $17.8 million (a 1% operating margin), compared with an operating loss of $161.6 million in the prior-year quarter. Net income was $12.8 million, or $0.05 per diluted share.
Non-GAAP operating income was $316.5 millionb (27% margin) and free cash flow was $554.9 million, up 59% year-over-year per the shareholder letter. Cloud revenue was $703.0 million, up 31% year-over-year per the shareholder letter, and Data Center revenue was $364.1 million, up 64%. Management attributed the Data Center and Marketplace outperformance largely to Server-to-Data Center migrations and customer purchases ahead of price changes.
The company also reported 44,336 customers with Cloud ARR above $10,000,c up 19% year-over-year. Co-founder Scott Farquhar will step down as co-Chief Executive Officer effective August 31, 2024, and will remain on the board as a special advisor.
Mike Cannon-Brookes, the other co-founder and co-CEO, will continue as sole Chief Executive Officer. For the fourth quarter of fiscal 2024, the company guided to total revenue of $1,120 million to $1,135 milliond and a GAAP operating margin of approximately (7.0%).
02—Key points
Key Highlights
- Q3 FY24 total revenue of $1,189.1 million, up 30% year-over-year from $915.5 million
- Subscription revenue of $1,071.4 million, up 41% year-over-year
- GAAP operating income of $17.8 million (1% margin) versus an operating loss of $161.6 million a year earlier; non-GAAP operating income of $316.5 million (27% margin)
- Net income of $12.8 million, or $0.05 per diluted share, versus a net loss of $209.0 million in the prior-year quarter
- Cash flow from operations of $565.4 million and free cash flow of $554.9 million, up 59% year-over-year per the shareholder letter
- Co-founder Scott Farquhar to step down as co-CEO effective August 31, 2024; Mike Cannon-Brookes continues as CEO and Farquhar remains on the board as a special advisor
- Q4 FY24 guidance: total revenue of $1,120 million to $1,135 million; GAAP operating margin of approximately (7.0%) and non-GAAP operating margin of approximately 18.5%
03—Questions
Frequently Asked Questions
Why did Atlassian's GAAP results improve so much year-over-year?
GAAP operating income was $17.8 million in Q3 FY24 compared with an operating loss of $161.6 million in Q3 FY23, which included $97.8 million of restructuring charges in the prior-year period. The company also cited revenue growth of 30% and increased operating leverage as drivers of the improved margin.
What drove the strong Data Center and Marketplace revenue?
Per the shareholder letter, Data Center revenue grew 64% year-over-year, driven by record migrations from Server after end-of-support in February, along with customers buying additional seats ahead of price changes. Marketplace and other revenue grew 43%, driven by third-party app purchases tied to Data Center subscriptions.
What is the leadership change and who will run Atlassian?
Scott Farquhar will step down as co-CEO effective August 31, 2024, and will remain a board member and special advisor. Mike Cannon-Brookes will continue to lead Atlassian as Chief Executive Officer.
What did Atlassian guide to for the fourth quarter of fiscal 2024?
The company expects total revenue of $1,120 million to $1,135 million, Cloud revenue growth of approximately 32% year-over-year, and Data Center revenue growth of 40% to 42%. It expects GAAP gross margin of approximately 81.0% and non-GAAP gross margin of approximately 83.5%.
04—Continue