TechDogs-"Atlassian Announces Second Quarter Fiscal Year 2023 Results"

Software Development

Atlassian Announces Second Quarter Fiscal Year 2023 Results

By Business Wire

Business Wire
Overall Rating

Quarterly revenue of $873 million, up 27% year-over-year

Quarterly subscription revenue of $711 million, up 40% year-over-year

Quarterly GAAP operating margin of (11)% and non-GAAP operating margin of 20%

Quarterly cash flow from operations of $151 million and free cash flow of $146 million

TEAM, Anywhere/AUSTIN, Texas--(BUSINESS WIRE)--Atlassian Corporation (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for its second quarter of fiscal year 2023 ended December 31, 2022 and released a shareholder letter available on Atlassian’s Work Life blog at http://atlassian.com/blog/announcements/shareholder-letter-q2fy23. The shareholder letter was also posted to the Investor Relations section of Atlassian’s website at https://investors.atlassian.com.

We closed out 2022 with quarterly revenue of $873 million, up 27% year-over-year, driven by subscription revenue growth of 40% year-over-year,” said Scott Farquhar, Atlassian’s co-founder and co-CEO. “We are proud of everything we have accomplished in yet another unpredictable year. 2023 will be all about helping our customers navigate these challenging times, absorbing the macro-driven impacts on our business, and setting Atlassian up for long-term success.”

Our track record of making smart investment decisions in the service of long-term payoffs continues to yield results as we recently surpassed 45,000 Jira Service Management customers, making it one of our fastest-growing products. On top of that, Atlassian has also been recognized as a Leader by Gartner in the ITSM space,” added co-founder and co-CEO Mike Cannon-Brookes. “We’ll keep playing offense across our three large markets while being pragmatic.”

Second Quarter Fiscal Year 2023 Financial Highlights:

On a GAAP basis, Atlassian reported:

  • Revenue: Total revenue was $872.7 million for the second quarter of fiscal year 2023, up 27% from $688.5 million for the second quarter of fiscal year 2022.
  • Operating Income (Loss) and Operating Margin: Operating loss was $99.2 million for the second quarter of fiscal year 2023, compared with operating income of $23.0 million for the second quarter of fiscal year 2022. Operating margin was (11)% for the second quarter of fiscal year 2023, compared with 3% for the second quarter of fiscal year 2022.
  • Net Loss and Net Loss Per Diluted Share: Net loss was $205.0 million for the second quarter of fiscal year 2023, compared with a net loss of $22.3 million for the second quarter of fiscal year 2022. Net loss per diluted share was $0.80 for the second quarter of fiscal year 2023, compared with a net loss per diluted share of $0.09 for the second quarter of fiscal year 2022. Net loss for the second quarter of fiscal year 2023 includes a non-recurring income tax charge of $83.1 million which increased net loss per diluted share by $0.32.
  • Balance Sheet: Cash and cash equivalents plus short-term investments at the end of the second quarter of fiscal year 2023 totaled $1.7 billion.

On a non-GAAP basis, Atlassian reported:

  • Operating Income and Operating Margin: Operating income was $174.8 million for the second quarter of fiscal year 2023, compared with operating income of $176.8 million for the second quarter of fiscal year 2022. Operating margin was 20% for the second quarter of fiscal year 2023, compared with 26% for the second quarter of fiscal year 2022.
  • Net Income and Net Income Per Diluted Share: Net income was $114.7 million for the second quarter of fiscal year 2023, compared with net income of $110.4 million for the second quarter of fiscal year 2022. Net income per diluted share was $0.45 for the second quarter of fiscal year 2023, compared with net income per diluted share of $0.43 for the second quarter of fiscal year 2022.
  • Free Cash Flow: Cash flow from operations was $150.5 million and free cash flow was $146.5 million for the second quarter of fiscal year 2023. Free cash flow margin for the second quarter of fiscal year 2023 was 17%. Cash flow from operations and free cash flow for the second quarter of fiscal year 2023 include a discrete tax payment of $57.0 million. Excluding this payment, cash flow from operations would have been $207.4 million, free cash flow would have been $203.4 million, and free cash flow margin would have been 23%.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below, under the heading “About Non-GAAP Financial Measures.”

Recent Business Highlights:

  • A Leader in the 2022 Gartner® Magic Quadrant™ for IT Service Management Platforms: Atlassian was named a Leader in the 2022 Gartner Magic Quadrant for IT Service Management Platforms1. Atlassian aims to unlock high-velocity teams across the enterprise with Jira Service Management. Today, Jira Service Management powers service delivery at more than 45,000 customers.
  • Recognized in The Forrester Wave for Collaborative Work Management Tools: Atlassian was recognized as a Strong Performer in The Forrester Wave™: Collaborative Work Management Tools, Q4, 2022. Atlassian’s work management solutions for business teams - Trello, Confluence, Jira Work Management, Atlas and Jira Align - enable every team to choose the best tool for their needs. Today, over 150,000 organizations around the world use Atlassian work management products.
  • Recognized in The Forrester Wave for Value Stream Management Solutions: Atlassian was recognized as a Strong Performer in The Forrester Wave™: Value Stream Management Solutions, Q4 2022. Atlassian’s product vision spans the entire software delivery organizational chart by leveraging the Jira suite as the centerpiece of its Value Stream Management strategy.
  • Automation for Confluence: Atlassian launched Automation for Confluence, a feature that manages system maintenance so teams can focus on continuous collaboration. Automation gives admins the ability to manage content, organize spaces, streamline teamwork, and notify teams of important updates without the manual overhead.
  • Atlassian Presents: Unleash: Atlassian will hold an agile & DevOps tailored event on February 9, 2023. Discover how Atlassian tools, such as the Jira suite, and the right practices can unleash your team’s ability to find success and take opportunities from idea to impact. Unleash will give attendees a unique opportunity to innovate with industry experts, master complexity through collaboration, and bring discovery into the software lifecycle. Unleash will be held in person at the bcc Berlin in Berlin, Germany, as well as virtually. Learn more at https://events.atlassian.com/unleash.
  • Customer Growth: Atlassian ended its second quarter of fiscal year 2023 with a total customer count, on an active subscription or maintenance agreement basis, of 253,177 customers, adding 4,004 net new customers during the quarter.

Share Repurchase Program Authorization

In January 2023, the Board of Directors authorized a program to repurchase up to $1 billion of Atlassian's Class A Common Stock. Atlassian may repurchase shares of Class A Common Stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The share repurchase program does not have a fixed expiration date, may be suspended or discontinued at any time, and does not obligate Atlassian to acquire any amount of Class A Common Stock. The timing, manner, price, and amount of any repurchases will be determined by Atlassian at its discretion and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations.

Financial Targets:

Atlassian is providing its financial targets as follows:

Third Quarter Fiscal Year 2023:

  • Total revenue is expected to be in the range of $890 million to $910 million.
  • Gross margin is expected to be approximately 81% on a GAAP basis and approximately 84% on a non-GAAP basis.
  • Operating margin is expected to be approximately (14%) on a GAAP basis and approximately 15% on a non-GAAP basis.

Fiscal Year 2023:

  • Total revenue growth year-over-year is expected to be approximately 25%.
  • Cloud revenue growth year-over-year is expected to be in the range of 35% to 40%.
  • Operating margin is expected to be approximately (11%) on a GAAP basis and approximately 17% on a non-GAAP basis.

For additional commentary regarding financial targets, please see Atlassian’s second quarter fiscal year 2023 shareholder letter dated February 2, 2023.

With respect to Atlassian’s expectations under “Financial Targets” above, a reconciliation of GAAP to non-GAAP gross margin and operating margin has been provided in the financial statement tables included in this press release.

Shareholder Letter and Webcast Details:

A detailed shareholder letter is available on Atlassian’s Work Life blog at https://atlassian.com/blog/announcements/shareholder-letter-q2fy23, and the Investor Relations section of Atlassian’s website at: https://investors.atlassian.com. Atlassian will host a webcast to answer questions today:

  • When: Thursday, February 2, 2023 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time).
  • Webcast: A live webcast of the call can be accessed from the Investor Relations section of Atlassian’s website at https://investors.atlassian.com. Following the call, a replay will be available on the same website.

Atlassian has used, and will continue to use, its Investor Relations website at https://investors.atlassian.com as a means of making material information public and for complying with its disclosure obligations.

Here's another interesting article on Introduction To Software Development

About Atlassian

Atlassian unleashes the potential of every team. Our agile & DevOps, IT service management and work management software helps teams organize, discuss, and complete shared work. The majority of the Fortune 500 and over 250,000 companies of all sizes worldwide - including NASA, Kiva, Deutsche Bank, and Salesforce - rely on our solutions to help their teams work better together and deliver quality results on time. Learn more about our products, including Jira Software, Confluence, Jira Service Management, Trello, Bitbucket, and Jira Align at https://atlassian.com/.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. In some cases, you can identify these statements by forward-looking words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate,” or “continue,” and similar expressions or variations, but these words are not the exclusive means for identifying such statements. All statements other than statements of historical fact could be deemed forward looking, including risks and uncertainties related to statements about our products, customers, macroeconomic environment, anticipated growth, outlook, technology, share repurchase program and other key strategic areas, and our financial targets such as revenue and GAAP and non-GAAP financial measures including gross margin and operating margin.

We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

The achievement or success of the matters covered by such forward-looking statements involves known and unknown risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management’s beliefs and assumptions only as of the date such statements are made.

Further information on these and other factors that could affect our financial results is included in filings we make with the Securities and Exchange Commission (the “SEC”) from time to time, including the section titled “Risk Factors” in our most recently filed Forms 20-F and 10-Q. These documents are available on the SEC Filings section of the Investor Relations section of our website at: https://investors.atlassian.com/.

About Non-GAAP Financial Measures

In addition to the measures presented in our condensed consolidated financial statements, we regularly review other measures that are not presented in accordance with GAAP, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions. The key measures we consider are non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, non-GAAP net income per diluted share and free cash flow (collectively, the “Non-GAAP Financial Measures”). These Non-GAAP Financial Measures, which may be different from similarly titled non-GAAP measures used by other companies, provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations. Management believes that tracking and presenting these Non-GAAP Financial Measures provides management, our board of directors, investors and the analyst community with the ability to better evaluate matters such as: our ongoing core operations, including comparisons between periods and against other companies in our industry; our ability to generate cash to service our debt and fund our operations; and the underlying business trends that are affecting our performance.

Our Non-GAAP Financial Measures include:

  • Non-GAAP gross profit. Excludes expenses related to stock-based compensation and amortization of acquired intangible assets.
  • Non-GAAP operating income. Excludes expenses related to stock-based compensation and amortization of acquired intangible assets.
  • Non-GAAP net income and non-GAAP net income per diluted share. Excludes expenses related to stock-based compensation, amortization of acquired intangible assets, non-coupon impact related to exchangeable senior notes and capped calls, gain on a non-cash sale of a controlling interest of a subsidiary and the related income tax effects on these items, and a non-recurring income tax adjustment.
  • Free cash flow. Free cash flow is defined as net cash provided by operating activities less capital expenditures, which consists of purchases of property and equipment.

We understand that although these Non-GAAP Financial Measures are frequently used by investors and the analyst community in their evaluation of our financial performance, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. We compensate for such limitations by reconciling these Non-GAAP Financial Measures to the most comparable GAAP financial measures. We encourage you to review the tables in this press release titled “Reconciliation of GAAP to Non-GAAP Results” and “Reconciliation of GAAP to Non-GAAP Financial Targets” that present such reconciliations.

Atlassian Corporation

Condensed Consolidated Statements of Operations

(U.S. $ and shares in thousands, except per share data)

(unaudited)

Three Months Ended December 31,

Six Months Ended December 31,

2022

2021

2022

2021

Revenues:

Subscription

$

711,199

$

508,987

$

1,362,183

$

944,283

Maintenance

106,023

127,059

219,588

257,649

Other

55,482

52,480

98,325

100,618

Total revenues

872,704

688,526

1,680,096

1,302,550

Cost of revenues (1) (2)

155,945

110,191

295,337

206,447

Gross profit

716,759

578,335

1,384,759

1,096,103

Operating expenses:

Research and development (1) (2)

473,676

318,569

872,682

590,709

Marketing and sales (1) (2)

186,191

121,046

346,319

220,375

General and administrative (1)

156,131

115,678

299,024

205,500

Total operating expenses

815,998

555,293

1,518,025

1,016,584

Operating income (loss)

(99,239

)

23,042

(133,266

)

79,519

Other income (expense), net

(6,749

)

(22,343

)

22,540

(478,147

)

Interest income

8,963

74

14,106

351

Interest expense

(7,508

)

(21,022

)

(13,629

)

(32,540

)

Loss before income taxes

(104,533

)

(20,249

)

(110,249

)

(430,817

)

Provision for income taxes

(100,498

)

(2,079

)

(108,523

)

(2,715

)

Net loss

$

(205,031

)

$

(22,328

)

$

(218,772

)

$

(433,532

)

Net loss per share:

Basic

$

(0.80

)

$

(0.09

)

$

(0.86

)

$

(1.72

)

Diluted

$

(0.80

)

$

(0.09

)

$

(0.86

)

$

(1.72

)

Weighted-average shares used in computing net loss per share:

Basic

255,874

252,960

255,520

252,533

Diluted

255,874

252,960

255,520

252,533

(1) Amounts include stock-based compensation as follows:

Three Months Ended December 31,

Six Months Ended December 31,

2022

2021

2022

2021

Cost of revenues

$

18,553

$

8,453

$

29,166

$

14,370

Research and development

169,342

90,120

279,471

154,402

Marketing and sales

38,156

21,873

61,351

36,367

General and administrative

39,734

25,374

69,428

41,588

(2) Amounts include amortization of acquired intangible assets, as follows:

Three Months Ended December 31,

Six Months Ended December 31,

2022

2021

2022

2021

Cost of revenues

$

5,697

$

5,599

$

11,394

$

11,288

Research and development

93

93

187

187

Marketing and sales

2,506

2,266

5,011

4,537

Atlassian Corporation

Condensed Consolidated Balance Sheets

(U.S. $ in thousands)

(unaudited)

December 31, 2022

June 30, 2022

Assets

Current assets:

Cash and cash equivalents

$

1,636,615

$

1,385,265

Marketable securities

36,069

73,294

Accounts receivable, net

354,844

308,127

Assets held for sale

60,265

Prepaid expenses and other current assets

107,232

70,002

Total current assets

2,134,760

1,896,953

Non-current assets:

Property and equipment, net

100,334

100,662

Operating lease right-of-use assets

254,811

277,276

Strategic investments

237,181

159,064

Intangible assets, net

84,248

100,840

Goodwill

723,229

722,838

Deferred tax assets

7,657

10,335

Other non-current assets

71,795

58,862

Total assets

$

3,614,015

$

3,326,830

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

130,318

$

81,220

Accrued expenses and other current liabilities

308,930

406,139

Deferred revenue, current portion

1,158,743

1,066,059

Operating lease liabilities, current portion

46,659

40,638

Total current liabilities

1,644,650

1,594,056

Non-current liabilities:

Deferred revenue, net of current portion

115,338

116,621

Operating lease liabilities, net of current portion

257,653

274,434

Term loan facility

999,506

999,419

Deferred tax liabilities

2,489

312

Other non-current liabilities

16,887

14,616

Total liabilities

3,036,523

2,999,458

Stockholders’ equity

Common stock

2

2

Additional paid-in capital

2,621,776

2,182,536

Accumulated other comprehensive income

43,516

13,864

Accumulated deficit

(2,087,802

)

(1,869,030

)

Total stockholders’ equity

577,492

327,372

Total liabilities and stockholders’ equity

$

3,614,015

$

3,326,830

Atlassian Corporation

Condensed Consolidated Statements of Cash Flows

(U.S. $ in thousands)

(unaudited)

Three Months Ended December 31,

Six Months Ended December 31,

2022

2021

2022

2021

Cash flows from operating activities:

Net loss

$

(205,031

)

$

(22,328

)

$

(218,772

)

$

(433,532

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

15,476

12,298

30,096

25,602

Stock-based compensation

265,785

145,820

439,416

246,727

Deferred income taxes

3,291

(427

)

4,813

(2,041

)

Net loss on exchange derivative and capped call transactions

424,482

Amortization of debt discount and issuance cost

117

16,975

235

26,816

Net loss on strategic investments

7,563

22,135

19,076

53,557

Net foreign currency gain

(2,203

)

(5,258

)

(5,828

)

(11,656

)

Gain on a non-cash sale of a controlling interest of a subsidiary

(2,066

)

(45,158

)

Other

(5

)

297

(5

)

(318

)

Changes in operating assets and liabilities:

Accounts receivable, net

(107,805

)

(68,203

)

(46,491

)

(68,203

)

Prepaid expenses and other assets

(2,690

)

(25,082

)

(25,367

)

(25,082

)

Accounts payable

18,587

20,507

49,734

20,507

Accrued expenses and other liabilities

58,260

(63,287

)

(50,183

)

(63,287

)

Deferred revenue

101,246

77,884

91,401

77,884

Net cash provided by operating activities

150,525

206,455

242,967

271,456

Cash flows from investing activities:

Business combinations, net of cash acquired

(2,701

)

(600

)

(3,839

)

Purchases of property and equipment

(4,040

)

(12,581

)

(20,536

)

(19,462

)

Purchases of strategic investments

(1,100

)

(42,000

)

(9,450

)

(95,000

)

Purchases of marketable securities

(10,000

)

(21,003

)

Proceeds from maturities of marketable securities

18,750

7,600

47,700

61,487

Proceeds from sales of marketable securities and strategic investments

363

621

186,262

Net cash provided by (used in) investing activities

13,973

(49,682

)

7,735

108,445

Cash flows from financing activities:

Proceeds from term loan facility

350,000

1,000,000

Repayment of exchangeable senior notes

(1,234,376

)

(1,548,686

)

Proceeds from settlement of capped call transactions

104,519

135,497

Proceeds from other financing arrangements

4

1,396

5

Net cash provided by (used in) financing activities

(779,853

)

1,396

(413,184

)

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash

3,522

(246

)

(1,417

)

(2,355

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

168,020

(623,326

)

250,681

(35,638

)

Cash, cash equivalents, and restricted cash at beginning of period

1,469,949

1,519,213

1,386,686

931,023

Net decrease in cash and cash equivalents included in assets held for sale

4,182

602

4,684

Cash, cash equivalents, and restricted cash at end of period

$

1,637,969

$

900,069

$

1,637,969

$

900,069

Atlassian Corporation

Revenues by Deployment Options

(U.S. $ in thousands)

(unaudited)

Three Months Ended December 31,

Six Months Ended December 31,

2022

2021

2022

2021

Cloud

$

512,335

$

364,099

$

987,378

$

682,002

Data Center

194,264

139,108

365,492

250,303

Server (1)

106,168

135,519

219,981

275,066

Marketplace and services (2)

59,937

49,800

107,245

95,179

Total revenues

$

872,704

$

688,526

$

1,680,096

$

1,302,550


Contacts

Investor Relations Contact
Martin Lam
IR@atlassian.com

Media Contact
Marie-Claire Maple
press@atlassian.com


Read full story here

First published on Fri, Feb 3, 2023

Enjoyed what you read? Great news – there’s a lot more to explore!

Dive into our content repository of the latest tech news, a diverse range of articles spanning introductory guides, product reviews, trends and more, along with engaging interviews, up-to-date AI blogs and hilarious tech memes!

Also explore our collection of branded insights via informative white papers, enlightening case studies, in-depth reports, educational videos and exciting events and webinars from leading global brands.

Head to the TechDogs homepage to Know Your World of technology today!

Disclaimer - Reference to any specific product, software or entity does not constitute an endorsement or recommendation by TechDogs nor should any data or content published be relied upon. The views expressed by TechDogs’ members and guests are their own and their appearance on our site does not imply an endorsement of them or any entity they represent. Views and opinions expressed by TechDogs’ Authors are those of the Authors and do not necessarily reflect the view of TechDogs or any of its officials. All information / content found on TechDogs’ site may not necessarily be reviewed by individuals with the expertise to validate its completeness, accuracy and reliability.

Tags:

Atlassian Corporation DevOps IT Service Management Work Management Software

Join The Discussion

- Promoted By TechDogs -

The Enterprise’s Guide For Generative AI