Annual Report and Financial Statements
Atlassian Corporation Plc
Year Ended June 30, 2022
Registered No. 8776021
TABLE OF CONTENTS
Strategic Report
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Business Overview
3
Financial Review
11
Principal Risks and Uncertainties
22
Other Matters
36
Section 172 Statement
46
Directors’ Remuneration Report
49
Directors’ Report
59
Statement of Director’s Responsibilities
66
Independent Auditor’s Report to the Members of Atlassian Corporation Plc
68
Consolidated Statements of Operations
77
Consolidated Statements of Comprehensive Loss
78
Consolidated Statements of Financial Position
79
Consolidated Statements of Changes in Equity
81
Consolidated Statements of Cash Flows
82
Notes to Consolidated Financial Statements
83
Parent Company Statements of Financial Position
139
Parent Company Statements of Comprehensive Loss
140
Parent Company Statements of Changes in Equity
142
Notes to Parent Company Financial Statements
143
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Strategic Report
The board of directors (the “Board,” “directors” or “Directors”) presents the Strategic Report of Atlassian Corporation Plc (the “Company”) and its subsidiaries (together, the “Group”) for the fiscal year ended June 30, 2022. All references in this annual report to “Atlassian” or the “Company,” “we,” “our,” “us” or similar terms refer to the Group. All amounts in this annual report are in U.S. dollars unless noted otherwise.
Business Overview
Our mission is to unleash the potential of every team.
Our company was founded in 2002 to help software teams work better together. But from the beginning, our products were also designed to help developers collaborate with non-developer teams involved in software innovation. By landing with developers, our products organically spread to other technical and non-technical teams through cross-functional collaboration. And increasingly, organizations are turning to their software teams to drive digital transformation. As more technical and non-technical teams gain exposure to our products, and as we add to our portfolio through research and development and acquisitions, these teams are adopting and extending our products to novel use cases, bringing our products to more users and teams in their organizations. This powerful trend has created an expansive market opportunity for us.
Our products serve teams of all shapes and sizes, in virtually every industry. Our primary products include Jira Software and Jira Work Management for planning and project management, Confluence for content creation and sharing, Trello for capturing and adding structure to fluid, fast-forming work for teams, Jira Service Management for team service, management and support applications, Jira Align for enterprise agile planning, and Bitbucket for code sharing and management. Together, our products form an integrated system for organizing, discussing and completing shared work, becoming deeply entrenched in how people collaborate and how organizations run.
We begin with a deep investment in product development to create and refine high-quality and versatile products that users love. By making our products affordable for organizations of all sizes and transparently sharing our pricing online for most of our products, we do not follow the practice of opaque pricing and ad hoc discounting that is typical in the enterprise software industry. We pursue customer volume, targeting every organization, regardless of size, industry, or geography. This allows us to operate at unusual scale for an enterprise software company, with more than 240,000 customers across virtually every industry sector in approximately 200 countries as of June 30, 2022. Our customers range from small organizations that have adopted one of our products for a small group of users, to over two-thirds of the Fortune 500, many of which use a combination of our products across thousands of users.
We take a long-term view of our customer relationships and our opportunity. We recognize that users drive the adoption and proliferation of our products and, as a result, we focus on enabling a self-service,low-friction distribution model that makes it easy for users to try, adopt, and use our products. We are relentlessly focused on measuring and improving user satisfaction as we know that one happy user will beget another, thereby expanding the large and organic word-of-mouth community that helps drive our growth.
COVID-19
While COVID-19 did not have a material adverse impact on our financial condition or results of operations during the fiscal year ended June 30, 2022, the extent to which the COVID-19 pandemic ultimately impacts our business, results of operations, and financial position will depend on future developments, which are uncertain and cannot be predicted at this time, including, but not limited to, the continued duration and spread of the outbreak and related variants, its severity, the actions taken by governments and authorities to contain the virus or treat its impact, the effectiveness of current vaccines and therapeutic treatments, and the extent to which normal economic and operating conditions continue to resume. For example, while our diverse customer base is a competitive advantage for us and helps fuel our low-friction flywheel sales model, we have revenue exposure to customers who are small- and medium-sized businesses and to industries that may be disproportionately impacted by the COVID-19 pandemic. Also, a majority of our Cloud customers choose to be billed on a monthly basis and many of these customers are small and medium-sized businesses that may be adversely impacted by the COVID-19 pandemic. In addition, we may experience elongated sales cycles and extended payment terms and concessions as the economic and social impacts of COVID-19 become more fully realized.
We adapted quickly to operate as a fully-remote company in the face of the COVID-19 pandemic, and empowered many customers to do the same through our mission-critical work management products. Our
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automated, online sales model allows us to land thousands of new customers every quarter without relying on a traditional, traveling enterprise sales force. We delivered value to teams at over 240,000 customers, including over two-thirds of the Fortune 500, with no single customer contributing more than 1% of our total revenues.
Cash Exchangeable Senior Notes
In fiscal year 2018, we issued exchangeable senior notes in the aggregate principal amount of $1.0 billion (collectively, the “Notes”). In connection with the issuance of the Notes, we entered into privately negotiated capped call transactions with certain financial institutions. During fiscal year 2021, we repurchased $643.2 million principal amount of the Notes in privately-negotiated transactions for aggregate consideration of $1,790.4 million in cash. During the fiscal year 2022, we had fully settled the remaining principal amount of the Notes for aggregate consideration of $1.5 billion in cash and unwound the related capped calls for net proceeds of $135.5 million.
We entered into a $1 billion senior unsecured delayed-draw term loan facility (the “Term Loan Facility”) and a $500 million senior unsecured revolving credit facility (the “Revolving Credit Facility,” and together with the Term Loan Facility, the “Credit Facility”) in October 2020. The Credit Facility matures in October 2025. The Revolving Credit Facility may be borrowed, repaid, and re-borrowed until its maturity, and the Group has the option to request an increase of $250 million in certain circumstances. Commencing on October 31, 2023, we are obligated to repay the outstanding principal amount of the Credit Facility in installments on a quarterly basis in an amount equal to 1.25% of the Credit Facility borrowing amount until the maturity of the Credit Facility. As of June 30, 2022, $1.0 billion has been drawn under the Term Loan Facility, and we are in compliance with all related covenants.
As of June 30, 2022, we had cash and cash equivalents totaling $1.4 billion, short-term investments totaling $73.3 million and trade receivables totaling $308.1 million. We believe that our existing cash and cash equivalents, together with cash generated from operations, and borrowing capacity from the Revolving Credit Facility will be sufficient to meet our anticipated cash needs for at least the next 12 months.
Market Trends
Software is Changing Everything
Software is transforming both our society and the way we do business, impacting almost every aspect of our lives and redefining the limits of what people and organizations can achieve. Software is everywhere and increasingly in everything, from our doorbells to the tiny computers we carry in our pockets. Software is eliminating the mundane and simplifying the complex. It modernizes transportation, delivers medical breakthroughs, reduces energy consumption and advances education. Software is also substantially impacting business, helping organizations redefine their most traditional processes while creating entirely new and more efficient ways to get work done.
Companies need to digitally transform their business processes and business models to be able to succeed in today’s technology driven marketplace. We believe organizations of all kinds, across all industries are either software driven or are threatened by competitors that are. Technology companies such as Amazon in retail, Netflix in entertainment, and Uber in transportation are disrupting global industries with innovations that seemed unimaginable only a few years ago. Software-enabled companies such as Spotify in music, StitchFix in clothing, Zillow in real estate, and Tesla Motors in automobiles leverage software to transform traditional products and services into richer customer experiences.
In addition, non-commercial institutions such as governments, schools and non-profits are also using software to re-engineer their processes and enhance services. Today, organizations of all types and sizes face an existential imperative to drive software innovation.
Software Teams are Essential and Multi-Dimensional
The digital transformation that organizations must undergo in order to survive and prosper can be imagined by many, but constructed by few. Teams that can deliver software innovation require a myriad of talents and functional expertise and are critical to each organization’s efforts to thrive and compete.
Software developers have become more essential and influential and the demand for software development talent has grown among organizations across all industries. As software innovation sweeps through organizations, people across all functional areas are increasingly part of software teams. Developers, product managers, IT managers, designers, marketers and many other team members must now collaborate to drive software innovation for their organizations. Successful software development requires diverse, distributed teams to connect and perform seamlessly together. To tackle this challenge, software teams have been at the forefront of the effort to create and utilize collaboration tools to drive efficiency and productivity.
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Software Team Collaboration is Complex and Challenging
Modern software development is highly creative, iterative, asynchronous, and very complex. In many ways, the process is analogous to asking ten writers to independently pen one chapter of a novel at the same time, and re-assemble these pieces into a cohesive and elegant narrative, on a tight deadline. And because software is so essential for how modern organizations compete, the expectations and urgency to innovate have increased. Software teams today must iterate and move faster than ever before.
Software teams are distributed across geographies, time zones and business functions. And the amount of information they are creating and sharing – from business plans and requirements documents, to code and documentation – is growing and constantly changing. This increases the complexity and the need for greater cooperation and communication, as multiple participants, relevant information and iterative workflows must ultimately be integrated effectively. As a result, software development is regarded as a pinnacle of organizational teamwork and has increasingly become the model for modern workforce collaboration across all teams.
Increasing Complexity Makes Collaboration Critical for All Teams
Across the global economy, work is becoming more complex, faster-paced, and more collaborative. While software teams were among the first to truly embrace a globally distributed workforce – through outsourcing or simply racing to where they could find scarce talent – more and more teams are now spread across geographies. A marketing team might have a remote group of internal designers, or work closely with a third-party design firm they contracted to support a project. An HR team might have a shared services center in a lower cost location, or work frequently with third-party recruiters. Organizations are increasingly utilizing a global talent pool and leveraging technology to help make work more efficient and productive.
In addition to the complexity that comes with being globally distributed, teams are creating and managing more and more information, face higher expectations of work quality from their organizations and must produce under tighter and more frequent deadlines. In addition, development teams are increasingly collaborating across multiple types of devices – both while at work and while working remotely.
All Teams are Seeking Better Ways to Connect and Get Work Done
In today’s dynamic and intensely collaborative business environment, all employees are seeking new and more powerful ways to connect and access the information and systems they need to be successful. As software projects become more cross-functional, knowledge workers throughout organizations have been exposed to the collaboration and workflow practices of software teams. This exposure across organizations has coincided with growing dissatisfaction with traditional productivity tools such as email, phone calls, web conferencing, word processing and spreadsheets.
While traditional tools can help to connect people, they lack the functionality, integration and compatibility needed to complete work efficiently in today’s dynamic environment. Such tools make it difficult for teams to stay coordinated, transparently track the status of complex processes, manage dependencies, communicate intelligently and operate with sufficient context. For example, a global team using traditional tools to collaborate on a financial analysis would struggle to integrate and complete their work: to track and comprehend communications between disparate parties and from multiple phone calls, video conferences and email threads; to manage version control and audit of multiple spreadsheets; and to keep the broader team consistently apprised of progress, milestones and deadlines.
Teams are Now Making Their Own Technology Choices
Following the “bring your own device” trend, employees are increasingly empowered to “bring your own software,” leading to the user-driven viral adoption of new types of consumer-style software products within an organization.
In addition, people are increasingly adopting business collaboration technology that is as personal, user- friendly, versatile, and powerful as the consumer technology applications they use in their everyday lives. They seek products with modern design and social and search functionality, with the ability to seamlessly work across desktop and mobile devices.
Modern teams of all kinds are seeking a new system of engagement – software built for teams that integrates multiple streams of complex tasks and dynamic information, and improves efficiency through real-time sharing, openness, and transparency.
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Atlassian Corporation plc published this content on 28 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 September 2022 21:35:02 UTC.
