Atlassian (TEAM) Q4 2022 earnings summary

Executive summary

• FY22 revenue rose 34% to $2.803B, led by cloud and Data Center subscriptions; IFRS net loss was $614.1M, while non-IFRS net income reached $434.3M.

• Growth strategy prioritizes cloud migration, product development and global scale; management expected subscription revenue to remain the primary growth driver.

Financial highlights

• Revenue was $2.803B, up 34% YoY; subscription revenue increased 58% to $2.097B, while maintenance fell 5% to $495.1M and other revenue fell 13% to $211.1M.

• Gross profit was $2.337B and gross margin 83%, versus 84% in FY21; operating loss was $106.5M versus operating income of $101.6M in FY21.

• IFRS net loss was $614.1M, or $2.42 diluted loss per share; non-IFRS net income was $434.3M, or $1.69 diluted EPS, excluding share-based compensation, acquired-intangible amortization and Notes/capped-call effects, among other adjustments.

• Operating cash flow was $883.5M; free cash flow was $763.8M, down $1.2M YoY as higher capex and lease payments largely offset stronger operating cash flow.

Outlook and guidance

• Subscription revenue expected to increase and remain the primary revenue growth driver; maintenance revenue expected to decline as Server customers migrate to Cloud and Data Center.

• Server upgrades ended in February 2022; maintenance and support for Server offerings planned to end in February 2024, with migration tools, support and pricing programs intended to assist transitions.

• Expenses expected to rise in absolute dollars, including R&D, marketing and sales, G&A, cloud infrastructure and personnel; share-based payment expense expected to increase in FY23.

• Existing cash, operating cash generation and Revolving Credit Facility capacity expected to cover anticipated cash needs for at least 12 months.