Atlassian (TEAM) Q4 2021 earnings summary

Executive summary

• FY21 revenue exceeded $2B; customer count rose to 236,118, with cloud migrations doubling YoY and five products built on the cloud platform.

• Growth and cash generation were strong, while IFRS net loss widened sharply due largely to exchangeable-note and capped-call charges; management planned continued investment and expected FY22 operating income and operating cash flow to decline.

Financial highlights

• Revenue rose 29% to $2.089B; subscription revenue grew 42% to $1.324B, maintenance rose 11% to $523.0M, perpetual licenses fell 11% to $84.8M, and other revenue increased 33% to $157.3M.

• Gross profit was $1.753B and gross margin 84%, versus 83% in FY20; operating income was $101.6M, up from $14.1M.

• IFRS net loss was $696.3M, or diluted EPS of $(2.79), versus net loss of $350.7M, or $(1.43), in FY20; non-operating expense included $322.3M of charges on settled Notes and capped calls.

• Adjusted non-IFRS operating income was $519.1M vs. $370.0M; non-IFRS net income was $357.6M vs. $288.8M, and diluted EPS was $1.40 vs. $1.15.

• Free cash flow was $764.9M vs. $500.4M; operating cash flow was $841.3M, including a $294.4M increase in deferred revenue.

Outlook and guidance

• Subscription revenue was expected to remain the primary growth driver; perpetual-license revenue was expected to decline as server sales contract, with maintenance revenue also expected to fall as customers migrate to cloud and data center.

• FY22 operating income and operating cash flow were expected to decrease as investment continued in personnel, cloud services, migration tools, the platform, and new products; share-based compensation expense was expected to increase.

• Migration of larger customers to cloud was identified as a key priority over the next several years; migration momentum included a 2x YoY increase in cloud migrations in FY21.