Atlassian Corporation Plc — FY2022 Form 20-F
Reporting period: Fiscal year ended June 30, 2022, compared primarily with fiscal 2021. Although the request specifies “2021 Q4,” the supplied filing is an annual report for FY2022, not a 2021 quarterly filing. Financial statements are prepared under IFRS and reported in U.S. dollars.
Business context
Atlassian sells collaboration, project-management, software-development and IT-service products, including Jira, Confluence, Trello and Jira Service Management. Its largely online, self-service model is supplemented by solution partners, which contributed approximately 40% of FY2022 revenue. The company reported 242,623 customers at June 30, 2022, up from 204,754 a year earlier.
Key financial metrics
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Revenue | $2.803 billion | $2.089 billion | +34% |
| Gross profit / margin | $2.337 billion / 83% | $1.753 billion / 84% | Margin down 1 percentage point |
| Operating income (loss) | $(106.5) million | $101.6 million | Turned to operating loss |
| IFRS net loss | $(614.1) million | $(696.3) million | Loss narrowed |
| Non-IFRS operating income | $633.0 million | $519.1 million | +22% |
| Non-IFRS net income | $434.3 million | $357.6 million | +21% |
| Operating cash flow | $883.5 million | $841.3 million | +5% |
| Free cash flow | $763.8 million | $764.9 million | Down $1.2 million |
Non-IFRS figures exclude specified items, notably share-based compensation and, for net income, certain exchangeable-note and capped-call effects; they are not substitutes for IFRS results. Share-based compensation expense rose to $707.1 million from $385.7 million. Research and development was 50% of revenue, versus 46% in FY2021.
Subscription revenue grew 58% to $2.097 billion and represented 75% of revenue, versus 63% a year earlier. Maintenance revenue fell 5% to $495.1 million; other revenue declined 13% to $211.1 million. By deployment, Cloud revenue grew 57% to $1.515 billion, Data Center grew 67% to $560.3 million, and Server fell 14% to $525.0 million.
Liquidity, debt and cash flow
- At June 30, 2022, cash and cash equivalents were $1.385 billion, short-term investments $73.3 million, and trade receivables $308.1 million.
- The company drew $1.0 billion under its senior unsecured term loan facility; a separate $500 million revolving facility was available. The facility matures in October 2025. Atlassian reported compliance with its covenants.
- The remaining exchangeable senior notes were settled for $1.5 billion in cash during FY2022; related capped calls generated $135.5 million in proceeds. The filing attributes substantial non-cash earnings volatility to fair-value changes and settlements of these instruments.
- Management said cash, operating cash generation and revolving borrowing capacity should cover anticipated needs for at least 12 months. Total liabilities were $3.026 billion and equity was $335.6 million.
- Contractual obligations included $956.1 million for leases not yet commenced, chiefly related to the planned Sydney headquarters; the initial lease term is 15 years and is expected to begin in FY2027.
Material changes, outlook and risks
- Growth was driven by new and existing customers and migration toward Cloud and Data Center. More than 90% of FY2022 revenue came from customer accounts that existed by June 30, 2021.
- Atlassian discontinued sales of new perpetual licenses beginning in February 2021, stopped upgrades to those on-premises products beginning February 2022, and plans to end their maintenance and support in February 2024. Management expects Server and maintenance revenue to contract while subscriptions—especially Cloud—remain the main growth driver. Cloud migration discounts and lower initial-year revenue may weigh on near-term growth and margins.
- Management plans continued investment in Cloud infrastructure, migration tools, product development and personnel, with most added hiring expected in R&D. Share-based payment expense is expected to rise in FY2023; $675.8 million of unamortized expense remained at year-end.
- Management said inflation, higher interest rates, COVID-19 and Russia’s invasion of Ukraine had not individually materially harmed FY2022 results, but future effects remained uncertain. Risks include slower customer spending or renewals, competition, execution of the Cloud transition, cybersecurity and service availability, privacy and cross-border data rules, foreign exchange, and variable-rate debt.
- A small subset of Cloud customers experienced an April 2022 outage caused by a faulty maintenance script. Atlassian restored access with minimal to no data loss and said the impact, including service credits, was not material to FY2022 results.
- The planned U.S. domestication was subject to approvals at the filing date; management cited potential access to investors and index inclusion, alongside added costs and reporting obligations. Dual-class shares concentrated approximately 88% of voting power with Class B holders, principally the co-CEOs and affiliates.
The company reported no material legal proceedings as of the report date, effective disclosure controls and internal control over financial reporting, and no present plan to pay dividends.
Most important facts for investors to verify
- Whether Cloud customer migration, subscription growth and retention can offset declining Server and maintenance revenue, including the February 2024 support end date.
- How much of reported earnings and future expense reflects share-based compensation and other adjustments; assess IFRS and non-IFRS measures separately.
- Current cash, revolver availability, debt terms and interest-rate exposure, including the effect of the LIBOR-to-SOFR transition.
- Execution, final costs and completion status of the U.S. domestication and Sydney headquarters arrangements.
- Developments in security, privacy, service reliability and customer-credit risks, particularly given the Cloud transition and the higher FY2022 receivables allowance.