Atlassian (TEAM) Q4 2019 earnings summary

Executive summary

• FY19 revenue reached $1.210B, up 37% YoY; customer count rose to 152,727 and free cash flow was $422.2M.

• More than 90% of FY19 revenue came from customer accounts already active by June 30, 2018, with growth driven by both new and existing customers.

• Cloud was the primary strategic focus for FY20, supporting a long-term goal of 100M monthly active users; investment would target larger Cloud customers and Server-to-Cloud migration.

Financial highlights

• Revenue: $1.210B, up 37% YoY; gross profit was $999.8M versus $708.3M in FY18.

• Revenue mix: subscriptions $634.0M, +54%; maintenance $394.5M, +21%; perpetual licenses $93.6M, +13%; other $88.1M, +45%.

• IFRS gross margin was 83%, versus 80% in FY18; operating loss was $63.4M versus $46.0M, and net loss was $637.6M versus $113.4M.

• IFRS diluted loss per share was $2.67 versus $0.49; adjusted non-IFRS net income was $214.5M and diluted EPS was $0.86.

• Free cash flow was $422.2M versus $281.2M; operating cash flow was $466.3M, up from $311.5M.

Outlook and guidance

• Subscription revenue was expected to continue growing faster than perpetual license revenue as customers adopted Cloud subscriptions and Data Center term licenses.

• Costs were expected to rise in absolute dollars, including Cloud infrastructure, R&D, marketing and sales, G&A, and personnel; R&D could also increase as a share of revenue.

• Significant Cloud, global expansion and product investment meant IFRS profitability was not expected in the near term; future profitability was not assured.

• Existing cash and cash equivalents plus operating cash generation were expected to cover anticipated needs for at least 12 months.