UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

	
 	
FORM 6-K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
 
April 19, 2018
 
Commission File Number 001-37651

Atlassian Corporation Plc
(Exact name of Registrant as specified in its charter)
 
Not Applicable
(Translation of Registrant’s name into English)
 
Exchange House
Primrose Street
London EC2A 2EG
c/o Herbert Smith Freehills LLP
415.701.1110
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant’s Principal Executive Offices)

	

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:
Form 20-F  x Form 40-F  ¨
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

Results of Operations and Financial Condition.

On April 19, 2018, Atlassian Corporation Plc (the “Company”) issued a press release announcing its results for the fiscal quarter ended March 31, 2018. A copy of the press release is attached as Exhibit 99.1 to this report on Form 6-K and is incorporated by reference herein. The Company also issued a letter to its shareholders announcing its financial results for the quarter ended March 31, 2018 (the “Shareholder Letter”). The full text of the Shareholder Letter is attached as Exhibit 99.2 to this report on Form 6-K and is incorporated by reference herein.

Change in the Board of Directors and Board Committees.

On April 17, 2018, the Company’s Board of Directors (the “Board”) appointed Sasan Goodarzi to serve as a member of the Board. In addition, the Board also appointed Mr. Goodarzi to serve as a member of the Company’s Compensation and Leadership Development Committee. Mr. Goodarzi is Executive Vice President and General Manager at Intuit in its Small Business and Self Employed Group.

Mr. Goodarzi will participate in the non-employee directors’ compensation arrangements as described in the Company’s Annual Report on Form 20-F for the fiscal year ended June 30, 2017, filed with the Securities and Exchange Commission (the “SEC”) on September 1, 2017 (the “2017 Annual Report”). Under the terms of those arrangements, Mr. Goodarzi will receive a $50,000 retainer for annual service on the Board and will be granted an initial award of restricted share units (“RSUs”) having a fair market value of $250,000 divided by the closing trading price of a share of the Company’s Class A ordinary shares on the grant date. These RSUs will vest according to the following schedule: 25% will vest on the one-year anniversary of the grant date and the remaining 75% will vest in equal quarterly installments over the next three years, subject to continued service as a director through the applicable vesting dates. In addition, Mr. Goodarzi will be granted an annual award of RSUs having a fair market value of $225,000 divided by the closing trading price of a share of the Company’s Class A ordinary shares on the grant date, pro-rated for the year based on the time between his appointment and the Company’s next annual meeting of shareholders. These RSUs will vest in full on the earlier of (i) the one-year anniversary of the grant date or (ii) the next annual meeting of shareholders, subject to continued service as a director through the applicable vesting date.

There are no arrangements or understandings between Mr. Goodarzi and any other persons pursuant to which Mr. Goodarzi was named a director of the Company. The Company will also enter into its standard form of indemnification agreement with Mr. Goodarzi (in substantially the form filed with the SEC as Exhibit 10.1 to the Company’s Registration Statement on Form F-1 on November 9, 2015), which will require the Company to indemnify Mr. Goodarzi, to the fullest extent permitted under applicable law, for certain liabilities to which he may become subject to in the execution or discharge of his duties. To date, in fiscal 2018, Intuit has purchased approximately $415,000 of the Company’s products. These purchases were at arms-length and in the ordinary course and were not negotiated by Mr. Goodarzi. Mr. Goodarzi doesn’t have a direct or indirect material interest in these transactions.

In addition, on April 17, 2018, the Board appointed Shona Brown to serve as Chair of the Board, succeeding Scott Farquhar, who remains on the Board. Dr. Brown has served as a member of the Board since November 2015. In addition to Dr. Brown’s existing compensation arrangements, she will receive a $35,000 retainer for annual service as Chair of the Board as described in the 2017 Annual Report.

Following the above appointments, the directors and Board committee composition of the Company are:

Michael Cannon-Brookes
Scott Farquhar
Shona Brown (1) (2)
Heather Mirjahangir Fernandez (3) (4)
Sasan Goodarzi (2)
Jay Parikh (2)
Enrique Salem (3) (4)
Steve Sordello (3)
Richard Wong (4)

(1) Chair of the Board of Directors.
(2) Member of the Compensation and Leadership Development Committee.
(3) Member of the Audit Committee.
(4) Member of the Nominating and Corporate Governance Committee.

The information in this report on Form 6-K under the section titled “Results of Operations and Financial Condition” and the exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	
				
Date:	April 19, 2018	 	Atlassian Corporation Plc	
 	 	 	(Registrant)	
 	 	 	 	
 	 	 	/s/    James Beer	
 	 	 	James Beer
Chief Financial Officer
(Principal Financial Officer)	

Exhibit Index

	
		
Exhibit Number	Exhibit Title	
 	 	
99.1	Press Release dated April 19, 2018.	
99.2	Shareholder Letter dated April 19, 2018.	

Atlassian Announces Third Quarter Fiscal Year 2018 Results

Quarterly revenue of $223.7 million, up 40% year-over-year
Quarterly IFRS operating margin of (5%) and non-IFRS operating margin of 17%
Quarterly free cash flow of $86.4 million and free cash flow margin of 39%

SAN FRANCISCO (April 19, 2018) — Atlassian Corporation Plc (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for its third quarter of fiscal 2018 ended March 31, 2018 and released a shareholder letter on the Investor Relations section of its website at https://investors.atlassian.com.

“Atlassian had a strong quarter, adding more than 6,000 net new customers for the first time, and engaging with almost 3,000 users and partners around the world as part of our Team Tour,” said Mike Cannon-Brookes, Atlassian’s co-CEO and co-founder. “We were also excited to open our newest office in Bengaluru, India. This office will play an important role in expanding our global presence as we scale Atlassian to serve the Fortune 500,000.”

Third Quarter Fiscal Year 2018 Financial Highlights:
On an IFRS basis, Atlassian reported: 

•	Revenue: Total revenue was $223.7 million for the third quarter of fiscal 2018, up 40% from $159.9 million for the third quarter of fiscal 2017.	

•	Operating Loss and Operating Margin: Operating loss was $10.9 million for the third quarter of fiscal 2018, compared with $23.1 million for the third quarter of fiscal 2017. Operating margin was (5%) for the third quarter of fiscal 2018, compared with (14%) for the third quarter of fiscal 2017.	

•	Net Loss and Net Loss Per Diluted Share: Net loss was $14.3 million for the third quarter of fiscal 2018, compared with $17.5 million for the third quarter of fiscal 2017. Net loss per diluted share was $0.06 for the third quarter of fiscal 2018, compared with $0.08 for the third quarter of fiscal 2017. 	

•	Balance Sheet: Cash and cash equivalents and short-term investments at the end of the third quarter of fiscal 2018 totaled $763.9 million.	
On a non-IFRS basis, Atlassian reported: 

•	Operating Income and Operating Margin: Operating income was $38.4 million for the third quarter of fiscal 2018, compared with $24.5 million for the third quarter of fiscal 2017. Operating margin was 17% for the third quarter of fiscal 2018, compared with 15% for the third quarter of fiscal 2017.	

•	Net Income and Net Income Per Diluted Share: Net income was $24.6 million for the third quarter of fiscal 2018, compared with $18.9 million for the third quarter of fiscal 2017. Net income per diluted share was $0.10 for the third quarter of fiscal 2018, compared with $0.08 per diluted share for the third quarter of fiscal 2017. 	

•	Free Cash Flow: Cash flow from operations for the third quarter of fiscal 2018 was $91.7 million, while capital expenditures totaled $5.3 million, resulting in free cash flow of $86.4 million, an increase of 26% year-over-year.  	
A reconciliation of IFRS to non-IFRS financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below, under the heading “About Non-IFRS Financial Measures.”

Recent Business Highlights:

•	Customer growth:  Atlassian ended the third quarter of fiscal 2018 with a total customer count on an active subscription or maintenance agreement basis of 119,158, having added 6,587 net new customers during the quarter.  	

•	Atlassian Team Tour:  Atlassian kicked off its “Team Tour” in February 2018, a global customer event unveiling product updates, sharing the latest in team practices, and discussing the future of teamwork with	

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almost 3,000 users and partners. Atlassian has nearly completed its tour of 11 cities, with the event concluding in Tokyo on May 23.  
		
•	Bengaluru launch : Atlassian announced the opening of its newest office in Bengaluru, India. The new location will add to Atlassian’s world-class R&D and customer support centers around the globe.	

Board of Directors Announcements:
“We're excited about two big changes to our Board of Directors,” said Scott Farquhar, Atlassian's co-CEO and co-founder. “We're announcing the appointment of Shona Brown, a current Board member, as the new Chair the Board, where she will continue to improve our governance and processes, and help guide Atlassian as we scale. We are also adding a new Board member, Sasan Goodarzi, who brings almost 15 years of experience driving product leadership and growth at Intuit, and has first-hand knowledge of what it takes to scale a successful software business in the cloud.”

•	Appointment to Chair of the Board: Shona Brown	
Atlassian is pleased to announce the appointment of Shona Brown to Chair of the Board, succeeding Scott Farquhar, who remains on the Board. She has served as a member of Atlassian's Board of Directors since November 2015, and also as Chair of the Compensation and Leadership Development Committee. 
Dr. Brown is a former member of the Google executive team, which she joined in 2003. She served as vice president of business operations from 2003 to 2006 and as senior vice president of business operations from 2006 to 2011, after which she transitioned to a role leading Google’s technology for social impact efforts until 2012. Dr. Brown moved into a senior advisory role with Google from 2013 to 2015. Previously, Dr. Brown was a partner at McKinsey & Company, a management consulting firm. She is currently an advisor and board member to a portfolio of technology startups and also serves on the board of PepsiCo. Dr. Brown holds a bachelor of computer systems engineering from Carleton University, a master of arts in philosophy and economics from Oxford University (which she attended as a Rhodes scholar) and a Ph.D. in industrial engineering and industrial management from Stanford University.

•	Appointment to the Board: Sasan Goodarzi	
Atlassian is excited to welcome Sasan Goodarzi to our Board. Mr. Goodarzi is executive vice president and general manager of Intuit’s Small Business and Self-Employed Group. Appointed to this role in May 2016, he leads an organization that offers a global platform with a suite of products and services under the QuickBooks brand in pursuit of Intuit's mission of powering prosperity around the world.
Mr. Goodarzi has held multiple general management positions during two separate stints at Intuit, including as senior vice president and general manager for the company’s ProTax division and Intuit Financial Services from 2004 to 2010, as chief information officer leading Intuit’s transition to the cloud from 2011 to 2013, and as general manager and executive vice president of TurboTax from 2013 to 2016. Prior to joining Intuit, Mr. Goodarzi worked for Invensys, a global provider of industrial automation, transportation and controls technology, serving as global president of the products group. He also held a number of senior leadership roles in the automation control division at Honeywell.
Mr. Goodarzi earned his bachelor’s degree in electrical engineering at the University of Central Florida and a master’s degree in business administration from the Kellogg School of Management at Northwestern University.

Financial Targets:
Atlassian is providing its financial targets for the fourth quarter and full fiscal year 2018. The company’s financial targets are as follows:
		
•	Fourth Quarter Fiscal Year 2018: 	

•	Total revenue is expected to be in the range of $232 million to $234 million.	

•	Gross margin is expected to be approximately 81% on an IFRS basis and approximately 85% on a non-IFRS basis. 	

•	Operating margin is expected to be approximately (5%) on an IFRS basis and approximately 19% on a non-IFRS basis. 	

•	Net loss per diluted share is expected to be approximately ($0.05) on an IFRS basis, and net income per diluted share is expected to be approximately $0.12 on a non-IFRS basis.	

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•	Weighted-average share count is expected to be in the range of 234 million to 235 million shares when calculating diluted IFRS net loss per share and in the range of 246 million to 247 million shares when calculating diluted non-IFRS net income per share. 	

•	Fiscal Year 2018: 	
		
•	Total revenue is expected to be in the range of $862 million to $864 million.	

•	Gross margin is expected to be approximately 80% on an IFRS basis and approximately 84% on a non-IFRS basis. 	

•	Operating margin is expected to be approximately (7%) on an IFRS basis and approximately 19% on a non-IFRS basis. 	

•	Net loss per diluted share is expected to be in the range of ($0.44) to ($0.43) on an IFRS basis, and net income per diluted share is expected to be in the range of $0.47 to $0.48 on a non-IFRS basis. 	

•	Weighted-average share count is expected to be in the range of 231 million to 232 million shares when calculating diluted IFRS net loss per share and in the range of 243 million to 244 million shares when calculating diluted non-IFRS net income per share. 	

•	Free cash flow is expected to be in the range of $265 million to $272 million, which includes capital expenditures that are expected to be approximately $30 million.	

With respect to Atlassian’s expectations under “Financial Targets” above, a reconciliation of IFRS to non-IFRS gross margin, operating margin, net income per diluted share, and free cash flow have been provided in the financial statement tables included in this press release.

Shareholder Letter and Webcast/Conference Call Details
A detailed shareholder letter is available on the Investor Relations section of Atlassian’s website at: https://investors.atlassian.com. Atlassian will host a webcast and conference call to answer questions today:
		
•	When: Thursday, April 19, 2018 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time).	

•	Webcast:  A live webcast of the call can be accessed from the Investor Relations section of Atlassian’s website at: https://investors.atlassian.com. Following the call, a replay will be available on the same website.	

•	Dial in:  To access the call via telephone in North America, please dial 1-888-346-0688. For international callers, please dial 1-412-902-4250. Participants should request the “Atlassian call” after dialing in.	

•	Audio replay: An audio replay of the call will be available via telephone for seven days, beginning two hours after the call. To listen to the replay in North America, please dial 1-877-344-7529 (access code 10118114). International callers, please dial 1-412-317-0088 (access code 10118114).	
Atlassian has used, and will continue to use, its Investor Relations website at https://investors.atlassian.com as a means of making material information public and for complying with its disclosure obligations.

About Atlassian
Atlassian unleashes the potential of every team. Our collaboration software helps teams organize, discuss and complete shared work. Teams at more than 119,000 customers, across large and small organizations - including Citigroup, eBay, Coca-Cola, Visa, BMW and NASA - use Atlassian's project tracking, content creation and sharing, real-time communication and service management products to work better together and deliver quality results on time. Learn more about products including Jira Software, Confluence, Stride, Trello, Bitbucket and Jira Service Desk at https://atlassian.com.

Investor Relations Contact
Ian Lee
IR@atlassian.com
Media Contact
Scott Rubin
press@atlassian.com

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Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. All statements other than statements of historical fact could be deemed forward looking, including risks and uncertainties related to statements about our products, customers, expansion, technology and other key strategic areas, and our financial targets such as revenue, share count and IFRS and non-IFRS financial measures including gross margin, operating margin, net income (loss) per diluted share and free cash flow.
We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.
The achievement or success of the matters covered by such forward-looking statements involves known and unknown risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management’s beliefs and assumptions only as of the date such statements are made.
Further information on these and other factors that could affect our financial results is included in filings we make with the Securities and Exchange Commission from time to time, including the section titled “Risk Factors” in our most recent Forms 20-F and 6-K (reporting our quarterly results). These documents are available on the SEC Filings section of the Investor Relations section of our website at: https://investors.atlassian.com/.

About Non-IFRS Financial Measures
Our reported results and financial targets include certain non-IFRS financial measures, including non-IFRS gross profit, non-IFRS operating income, non-IFRS net income, non-IFRS net income per diluted share, and free cash flow. Management believes that the use of these non-IFRS financial measures provides consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our results of operations, and also facilitates comparisons with peer companies, many of which use similar non-IFRS or non-GAAP financial measures to supplement their IFRS or GAAP results. Non-IFRS results are presented for supplemental informational purposes only to aid in understanding our operating results. The non-IFRS results should not be considered a substitute for financial information presented in accordance with IFRS, and may be different from non-IFRS or non-GAAP measures used by other companies.
Our non-IFRS financial measures reflect adjustments based on the items below:
Non-IFRS gross profit.  Excludes expenses related to share-based compensation and amortization of acquired intangible assets.
Non-IFRS operating income.  Excludes expenses related to share-based compensation and amortization of acquired intangible assets.
Non-IFRS net income and non-IFRS net income per diluted share. Excludes expenses related to share- based compensation, amortization of acquired intangible assets, the related income tax effects on these items and changes in our assessment regarding the realizability of our deferred tax assets.
Free cash flow.  Free cash flow is defined as net cash provided by operating activities less capital expenditures, which consists of purchases of property and equipment and acquired intangible assets.
We exclude expenses related to share-based compensation, amortization of acquired intangible assets, the related income tax effects on these items and changes in our assessment regarding the realizability of our deferred tax assets from certain of our non-IFRS financial measures as we believe this helps investors understand our operational performance. In addition, share-based compensation expense can be difficult to predict and varies from period to period and company to company due to differing valuation methodologies, subjective assumptions and the variety of equity instruments, as well as changes in stock price. Management believes that providing non-IFRS financial measures that exclude share-based compensation expense, amortization of acquired intangible assets, the related income tax effects on these items and changes in our assessment regarding the realizability of our deferred tax assets allow for more meaningful comparisons between our operating results from period to period.
Management considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business, making strategic acquisitions and strengthening our statement of financial position.

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Management uses non-IFRS gross profit, non-IFRS operating income, non-IFRS net income, non-IFRS net income per diluted share and free cash flow:

•	As measures of operating performance, because these financial measures do not include the impact of items not directly resulting from our core operations; 	

•	For planning purposes, including the preparation of our annual operating budget; 	

•	To allocate resources to enhance the financial performance of our business; 	

•	To evaluate the effectiveness of our business strategies; and 	

•	In communications with our Board of Directors concerning our financial performance.	
The tables in this press release titled “Reconciliation of IFRS to Non-IFRS Results” and “Reconciliation of IFRS to Non-IFRS Financial Targets” provide reconciliations of non-IFRS financial measures to the most recent directly comparable financial measures calculated and presented in accordance with IFRS.
We understand that although non-IFRS gross profit, non-IFRS operating income, non-IFRS net income, non-IFRS net income per diluted share and free cash flow are frequently used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS.

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Atlassian Corporation Plc
Consolidated Statements of Operations
(U.S. $ and shares in thousands, except per share data)
(unaudited)

																
 	Three Months Ended March 31,	 	Nine Months Ended March 31,	
 	2018	 	2017	 	2018	 	2017	
Revenues:	 		 	 		 	 		 	 		
Subscription	$	105,604		 	$	63,369		 	$	285,775		 	$	169,626		
Maintenance	81,953		 	67,072		 	238,630		 	193,873		
Perpetual license	21,273		 	19,495		 	62,967		 	55,206		
Other	14,893		 	9,973		 	42,795		 	26,900		
Total revenues	223,723		 	159,909		 	630,167		 	445,605		
Cost of revenues (1) (2)	45,240		 	32,895		 	128,494		 	82,356		
Gross profit	178,483		 	127,014		 	501,673		 	363,249		
Operating expenses:	 		 	 		 	 	 	 	
Research and development (1)	108,544		 	82,262		 	304,730		 	219,477		
Marketing and sales (1) (2)	48,652		 	36,625		 	138,928		 	89,021		
General and administrative (1)	32,167		 	31,190		 	106,476		 	85,581		
Total operating expenses	189,363		 	150,077		 	550,134		 	394,079		
Operating loss	(10,880	)	 	(23,063	)	 	(48,461	)	 	(30,830	)	
Other non-operating income (expense), net	740		 	(492	)	 	(418	)	 	(806	)	
Finance income	2,001		 	1,040		 	4,824		 	3,803		
Finance costs	(8	)	 	(6	)	 	(24	)	 	(51	)	
Loss before income tax benefit (expense)	(8,147	)	 	(22,521	)	 	(44,079	)	 	(27,884	)	
Income tax benefit (expense)	(6,119	)	 	5,060		 	(49,411	)	 	6,088		
Net loss	$	(14,266	)	 	$	(17,461	)	 	$	(93,490	)	 	$	(21,796	)	
Net loss per share attributable to ordinary shareholders:	 		 	 		 	 	 	 	
Basic	$	(0.06	)	 	$	(0.08	)	 	$	(0.41	)	 	$	(0.10	)	
Diluted	$	(0.06	)	 	$	(0.08	)	 	$	(0.41	)	 	$	(0.10	)	
Weighted-average shares outstanding used to compute net loss per share attributable to ordinary shareholders:	 		 	 		 	 	 	 	
Basic	232,221		 	223,333		 	230,180		 	221,034		
Diluted	232,221		 	223,333		 	230,180		 	221,034		

	
 	
(1) Amounts include share-based payment expense, as follows:

																
 	Three Months Ended March 31,	 	Nine Months Ended March 31,	
 	2018	 	2017	 	2018	 	2017	
Cost of revenues	$	3,021		 	$	1,853		 	$	9,193		 	$	4,697		
Research and development	25,347		 	21,628		 	78,338		 	54,786		
Marketing and sales	5,816		 	5,336		 	18,161		 	11,940		
General and administrative	737		 	8,965		 	18,705		 	24,688		

(2) Amounts include amortization of acquired intangible assets, as follows:

																
 	Three Months Ended March 31,	 	Nine Months Ended March 31,	
 	2018	 	2017	 	2018	 	2017	
Cost of revenues	$	5,302		 	$	4,907		 	$	15,889		 	$	9,307		
Marketing and sales	9,022		 	4,866		 	27,067		 	5,281		

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Atlassian Corporation Plc
Consolidated Statements of Financial Position
(U.S. $ in thousands)
(unaudited)

	
								
 	March 31, 2018	 	June 30, 2017	
Assets	 	 	 	
Current assets:	 	 	 	
Cash and cash equivalents	$	393,513			$	244,420		
Short-term investments	370,353			305,499		
Trade receivables	38,469			26,807		
Current tax receivables	13,129			12,445		
Prepaid expenses and other current assets	22,697			23,317		
Total current assets	838,161			612,488		
Non-current assets:	 	 	 	
Property and equipment, net	35,098			41,173		
Deferred tax assets	97,234			188,239		
Goodwill	312,048			311,900		
Intangible assets, net	77,978			120,789		
Other non-current assets	12,226			9,269		
Total non-current assets	534,584			671,370		
Total assets	$	1,372,745			$	1,283,858		
Liabilities	 	 	 	
Current liabilities:	 	 	 	
Trade and other payables	$	100,106			$	73,192		
Current tax liabilities	22			2,207		
Provisions	6,882			6,162		
Deferred revenue	308,181			245,306		
Total current liabilities	415,191			326,867		
Non-current liabilities:	 	 	 	
Deferred tax liabilities	42,951			43,950		
Provisions	4,209			3,333		
Deferred revenue	17,861			10,691		
Other non-current liabilities	9,820			4,969		
Total non-current liabilities	74,841			62,943		
Total liabilities	490,032			389,810		
Equity	 	 	 	
Share capital	23,318			22,726		
Share premium	453,894			450,959		
Other capital reserves	518,793			437,346		
Other components of equity	3,427			6,246		
Accumulated deficit	(116,719	)		(23,229	)	
Total equity	882,713			894,048		
Total liabilities and equity	$	1,372,745			$	1,283,858		

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Atlassian Corporation Plc
Consolidated Statements of Cash Flows
(U.S. $ in thousands)
(unaudited)

	
																
 	Three Months Ended March 31,	 	Nine Months Ended March 31,	
 	2018	 	2017	 	2018	 	2017	
Operating activities	 	 	 	 	 		 	 		
Loss before income tax benefit (expense)	$	(8,147	)		$	(22,521	)		$	(44,079	)		$	(27,884	)	
Adjustments to reconcile loss before income tax benefit (expense) to net cash provided by operating activities:												
Depreciation and amortization	20,111			18,485			61,681			37,780		
Gain on sale of investments and other assets	(1,193	)		(15	)		(1,225	)		(422	)	
Net unrealized foreign currency (gain) loss	67			209			(95	)		1		
Share-based payment expense	34,921			37,782			124,397			96,111		
Interest income	(2,001	)		(1,040	)		(4,824	)		(3,803	)	
Changes in assets and liabilities:	 	 	 	 	 	 	 	
Trade receivables	(3,500	)		2,155			(11,887	)		(9,913	)	
Prepaid expenses and other assets	(236	)		(89	)		907			(2,859	)	
Trade and other payables, provisions and other non-current liabilities	27,311			12,707			33,569			9,308		
Deferred revenue	24,343			25,035			70,045			49,352		
Interest received	1,677			1,470			4,468			5,147		
Income tax paid, net of refunds	(1,677	)		(1,255	)		(3,704	)		(4,034	)	
Net cash provided by operating activities	91,676			72,923			229,253			148,784		
Investing activities							 			 		
Business combinations, net of cash acquired	—			(362,795	)		—			(381,090	)	
Purchases of property and equipment	(5,293	)		(4,623	)		(12,407	)		(9,921	)	
Proceeds from sale of other assets	1,000			—			1,000			342		
Purchases of investments	(64,896	)		(105,021	)		(292,024	)		(338,385	)	
Proceeds from maturities of investments	43,217			23,088			125,104			80,188		
Proceeds from sales of investments	18,907			235,173			100,965			433,761		
Increase in restricted cash	(96	)		—			(3,237	)		(3,369	)	
Payment of deferred consideration	(3,290	)		—			(3,290	)		(935	)	
Net cash used in investing activities	(10,451	)		(214,178	)		(83,889	)		(219,409	)	
Financing activities	 	 	 	 	 		 	 		
Proceeds from exercise of share options	932			1,535			3,087			7,403		
Net cash provided by financing activities	932			1,535			3,087			7,403		
Effect of exchange rate changes on cash and cash equivalents	451			440			642			395		
Net increase (decrease) in cash and cash equivalents	82,608		 	(139,280	)	 	149,093		 	(62,827	)	
Cash and cash equivalents at beginning of period	310,905		 	336,162		 	244,420		 	259,709		
Cash and cash equivalents at end of period	$	393,513		 	$	196,882		 	$	393,513		 	$	196,882		

8

Atlassian Corporation Plc
Reconciliation of IFRS to Non-IFRS Results
(U.S. $ and shares in thousands, except per share data)
(unaudited)

																
 	Three Months Ended March 31,	 	Nine Months Ended March 31,	
 	2018	 	2017	 	2018	 	2017	
Gross profit	 		 	 		 	 		 	 		
IFRS gross profit	$	178,483		 	$	127,014		 	$	501,673		 	$	363,249		
Plus: Share-based payment expense	3,021		 	1,853		 	9,193		 	4,697		
Plus: Amortization of acquired intangible assets	5,302		 	4,907		 	15,889		 	9,307		
Non-IFRS gross profit	$	186,806		 	$	133,774		 	$	526,755		 	$	377,253		
Operating income	 		 	 		 	 		 	 		
IFRS operating loss	$	(10,880	)	 	$	(23,063	)	 	$	(48,461	)	 	$	(30,830	)	
Plus: Share-based payment expense	34,921		 	37,782		 	124,397		 	96,111		
Plus: Amortization of acquired intangible assets	14,324		 	9,773		 	42,956		 	14,588		
Non-IFRS operating income	$	38,365		 	$	24,492		 	$	118,892		 	$	79,869		
Net income	 		 	 		 	 		 	 		
IFRS net loss	$	(14,266	)	 	$	(17,461	)	 	$	(93,490	)	 	$	(21,796	)	
Plus: Share-based payment expense	34,921		 	37,782		 	124,397		 	96,111		
Plus: Amortization of acquired intangible assets	14,324		 	9,773		 	42,956		 	14,588		
Less: Income tax effects and adjustments	(10,389	)	 	(11,162	)	 	11,673		 	(25,587	)	
Non-IFRS net income	$	24,590		 	$	18,932		 	$	85,536		 	$	63,316		
Net income per share	 		 	 		 	 		 	 		
IFRS net loss per share - basic	$	(0.06	)	 	$	(0.08	)	 	$	(0.41	)	 	$	(0.10	)	
Plus: Share-based payment expense	0.15		 	0.17		 	0.54		 	0.44		
Plus: Amortization of acquired intangible assets	0.06		 	0.04		 	0.19		 	0.07		
Less: Income tax effects and adjustments	(0.04	)	 	(0.05	)	 	0.05		 	(0.12	)	
Non-IFRS net income per share - basic	$	0.11		 	$	0.08		 	$	0.37		 	$	0.29		
 	 	 	 	 	 	 	 	
IFRS net loss per share - diluted	$	(0.06	)	 	$	(0.08	)	 	$	(0.41	)	 	$	(0.10	)	
Plus: Share-based payment expense	0.14		 	0.17		 	0.53		 	0.42		
Plus: Amortization of acquired intangible assets	0.06		 	0.04		 	0.18		 	0.06		
Less: Income tax effects and adjustments	(0.04	)	 	(0.05	)	 	0.05		 	(0.11	)	
Non-IFRS net income per share - diluted	$	0.10		 	$	0.08		 	$	0.35		 	$	0.27		
Weighted-average diluted shares outstanding	 	 	 	 	 	 	 	
Weighted-average shares used in computing diluted IFRS net loss per share	232,221		 	223,333		 	230,180		 	221,034		
Plus: Dilution from share options and RSUs (1)	12,356		 	12,900		 	13,185		 	13,900		
Weighted-average shares used in computing diluted non-IFRS net income per share	244,577		 	236,233		 	243,365		 	234,934		
Free cash flow	 		 	 		 	 		 	 		
IFRS net cash provided by operating activities	$	91,676		 	$	72,923		 	$	229,253		 	$	148,784		
Less: Capital expenditures	(5,293	)	 	(4,623	)	 	(12,407	)	 	(9,921	)	
Free cash flow	$	86,383		 	$	68,300		 	$	216,846		 	$	138,863		
(1) The effects of these dilutive securities were not included in the IFRS calculation of diluted net loss per share for the three and nine months ended March 31, 2018 and 2017 because the effect would have been anti-dilutive.

9

Atlassian Corporation Plc
Reconciliation of IFRS to Non-IFRS Results
(as a percentage of total revenues)
(unaudited)

	
												
 	Three Months Ended March 31,	 	Nine Months Ended March 31,	
 	2018	 	2017	 	2018	 	2017	
Operating margin	 		 	 		 	 	 	 	
IFRS operating margin	(5	%)	 	(14	%)	 	(8	%)	 	(7	%)	
Plus: Share-based payment expense	16		 	23		 	20		 	22		
Plus: Amortization of acquired intangible assets	6		 	6		 	7		 	3		
Non-IFRS operating margin	17	 %	 	15	 %	 	19	 %	 	18	 %	

10

Atlassian Corporation Plc
Reconciliation of IFRS to Non-IFRS Financial Targets
(U.S. $)

						
 	Three Months Ending
June 30, 2018	 	Fiscal Year Ending
June 30, 2018	
Revenue	$232 million to $234 million		 	$862 million to $864 million		
 	 	 	 	
IFRS gross margin	81%		 	80%		
Plus: Share-based payment expense	2		 	2		
Plus: Amortization of acquired intangible assets	2		 	2		
Non-IFRS gross margin	85%		 	84%		
 	 	 	 	
IFRS operating margin	(5%)		 	(7%)		
Plus: Share-based payment expense	18		 	19		
Plus: Amortization of acquired intangible assets	6		 	7		
Non-IFRS operating margin	19%		 	19%		
 	 	 	 	
IFRS net loss per share - diluted	($0.05)		 	($0.44) to ($0.43)		
Plus: Share-based payment expense	0.17		 	0.68		
Plus: Amortization of acquired intangible assets	0.06		 	0.24		
Less: Income tax effects and adjustments	(0.06	)	 	(0.01	)	
Non-IFRS net income per share - diluted	$0.12		 	$0.47 to $0.48		
 	 	 	 	
Weighted-average shares used in computing diluted IFRS net loss per share	234 million to 235 million		 	231 million to 232 million		
Dilution from share options and RSUs (1)	12 million		 	12 million		
Weighted-average shares used in computing diluted non-IFRS net income per share	246 million to 247 million		 	243 million to 244 million		
 	 	 	 	
IFRS net cash provided by operating activities	 	 	$295 million to $302 million		
Less: Capital expenditures	 	 	(30 million)		
Free cash flow	 	 	$265 million to $272 million		

(1) The effects of these dilutive securities are not included in our IFRS calculation of diluted net loss per share for the three months ending June 30, 2018 and fiscal year ending June 30, 2018 because the effect would be anti-dilutive.

11

Shareholder Letter Q3 FY18 

 

Q3 FY18 Fellow shareholders, We're fresh o another quarter of strong nancial, customer and product growth. Revenue for the quarter was $223.7 million, up 40% year-over-year, with free cash ow of $86.4 million. We added 6,587 new customers this quarter, bringing our total customer count to 119,158. For the second quarter in a row, we achieved record quarterly customer growth, surpassing 6,000 net new customers for the rst time in our history. This is another step towards our goal of serving the Fortune 500,000. Word-of-mouth referrals continue to drive more new business for us than any ad campaign or brand initiative, and cultivating a community of user champions remains a top focus for us. We have nearly completed our global Team Tour event series where we are engaging with thousands of users and partners in 11 cities around the globe.And throughout the quarter, consistent with quarters past, thousands more of our users came together at Atlassian User Group meetings worldwide to share best practices around improving teamwork at their companies. We also continued to demonstrate the vibrancy of our R&D engine, announcing a number of updates across our family of products. And we shared plans to open a new Atlassian oce in the dynamic technology hub of Bengaluru, India. Conuence serves 40,000+ customers in new and beautiful ways When we rst created Conuence in 2004, Atlassian was two years old and had just a handful of employees. Although our customers were primarily software teams at that time, we built Conuence as a versatile platform any team could use to connect with each other and with the teams around them. And it worked. Today, we're proud to announce that Conuence Cloud, Server, and Data Center editions are used   by more than40,000 customers worldwide, supportingmillions of users each month creating and sharing content, and spanningevery type of team and industry imaginable. Conuence has become indispensable for customers such as Rent the Runway, the New York Times, Morningstar, and ANZ Bankas they collaborate on project plans, documentation, and much more. Part of what makes Conuence so popular is its ease of use, which we continuously improve through feature and UI updates. This quarter, customers who use our two on-premises deployment options— Server and Data Center—were introduced to a simplied and beautiful new user interface, employing the new design language we rolled out in Cloud earlier this scal year. It includes   updated color palettes, easy-to-read typography, and intuitive icons to help users nd and create content quickly. From the CEOs 2 

 

Q3 FY18 We also added a number of improved features for Conuence Server. We enhanced @mentions, making them smart enough to auto-suggest usersyou've been collaborating with recently and whose work is most relevant to yours,connecting users to valuable content more quickly. We updated our email notication system, shifting from a larger volume of individual notications about edits, likes, shares, and comments to a convenient digest that summarizes all changes into a single email thread. And we released a new mobile app for Conuence Server, allowing users to create, edit, share, and comment on pages directly from their phone or tablet. 3 

 

Q3 FY18 4 Celebrating our rst anniversary with Trello It's hard to believe but we just passed one year since we welcomed Trello to the Atlassian family.   We were rst attracted to Trello by its tremendous growth potential and its t with our products, business model, and people. Over the past year, our conviction in Trello's business and team has   only strengthened, and we are delighted by how seamlessly Trello's integration with Atlassian   has progressed. Our initial focus when we acquired Trello was to ensure its tremendous momentum continued. Trello   has more than delivered on that objective.At our Summit user conference in September 2017, we announced that Trello boasts over25 million registered users—up from roughly 19 million at the end   of calendar year 2016. This growth spans the globe. Trello is used in more than 200 countries, and available in over 20 languages.In fact, Trello recently surpassed one million registered users in each   of these four key markets: theUnited States, Brazil, United Kingdom, and France. We look forward to introducing Trello to millions more users around the world, no matter where they are or in what language they're collaborating. This rapid expansion has attracted a growing ecosystem of companies who want to integrate their applications with Trello. Similar to other products in the Atlassian family, add-on apps are a big part of what makes Trello so powerful—and what keeps users coming back for more. These integrations, called “Power-Ups,”can be enabled on Trello boards to add additional capabilities and extend Trello to a broader set of use cases. For example, Power-Ups can be used to add a calendar to a board, create custom elds on cards, or even pull in real-time information from external services like Evernote   or Dropbox. In response to the growing popularity of Trello Power-Ups, and the broader set of Power-Ups being developed, we created a new curated online directory to help Trello users discover the many ways they can extend and enhance Trello. The directory oers access to more than80Power-Ups today. 

 

Q3 FY18 5 Bengaluru, here we come Atlassian has always focused on smart growth, nding and tapping the best sources of talent no matter where they might be around the globe. As we look forward to growing our team to 5,000 Atlassians and beyond, we've established Bengaluru, India as our newest location to grow our talent and culture. We plan to develop the Bengaluru oce into a world-class R&D and customer support center, alongside our sizable engineering and product teams in the United States and Australia, which will also continue to grow. Initial hiring is already under way. We've hired our rst functional leaders in Bengaluru, and plan to expand further in the coming months by adding a number of people in engineering, recruiting, design, product management, and customer support roles. 

 

Q3 FY18 6 Customer bonanza: Team Tour, Atlassian User Groups, and the Atlassian Community online We've nearly completed our Team Tour of 11 cities around the globe, which started in Amsterdam in February and nishes in Tokyo on May 23. Over the course of these events, we will have met with almost 3,000 Atlassian users and partners, sharing product updates, swapping tips, and exchanging stories and ideas about modern teamwork. The Team Tour attracted users from both technical and non-technical backgrounds, which was reected in the diverse range of keynote presentations. For instance, in Washington D.C., our keynote speaker from Blackstone Federal explained how a large U.S. federal agency has used the Atlassian product suite to cut costs and better enforce standards and policies. In Amsterdam, our presenter from Air France KLM discussed how their business and development teamsare using our products to work together more closely.We also welcomed speakers from customers like eBay, Deutsche Telekom, LinkedIn, Lyft, Adobe, and Fox Networks, who spoke about the role our tools play in unleashing the potential of a broad range of teams across their organizations. In addition to the Team Tour, more than 4,000 Atlassian users gathered at 177 Atlassian User Group (AUG) meetings in 98 cities across 33 countries during Q3. The AUG gatherings bring users together every month to network, solve problems, and nd new ways to use our products, highlighting the vibrant community that has grown around Atlassian. During the quarter, we also celebrated the one-year anniversary of the Atlassian Community   (http://community.atlassian.com),an online destination for existing customers, future customers,   and our ecosystem of partners and app developers.The online community has grown to more than 

 

Q3 FY18 7 Board of Directors announcements We are pleased to share two changes to our Board of Directors. one million members who exchange ideas, oer tips, help onboard new users, and providevaluable product feedback. It is a shining example of the size and energyof the global community involved with our products and practices, all championing better ways of working inside their organizations. Sasan Goodarzi  Board Member Shona Brown  Chair of the Board First,we are pleased to announce the appointment ofShona Brown to Chairof the Board, succeeding Scott Farquhar, who remains on the Board. Shona has served as a member of   Atlassian's Board since November 2015,and also asChairof the Compensation and Leadership Development Committee. Shona is a former member of the Google executive team, which she joined in 2003. She served as vice president of business operations from 2003 to 2006 and as senior vice president of business operations from 2006 to 2011, after which she transitioned to a role leading Google's technology for social impact eorts until 2012. Shona moved into a senior advisory role with Google from 2013 to 2015. Previously, Shona was a partner at McKinsey & Company, a management consulting rm. She is currently an advisor and board member to a portfolio of technology startups and also serves on the board of PepsiCo. Shona holds a bachelor of computer systems engineering from Carleton University, a master of arts in philosophy and economics from Oxford University (which she attended as a Rhodes scholar) and a Ph.D. in industrial engineering and industrial management from Stanford University. Shona's experience advising on organizational structure, operational excellence and culture as Google grew from 1,000 to 30,000 employees during her tenure will continue to be invaluable as Atlassian scales through one billion dollars in annual revenue and beyond. Second, we are excited to welcome Sasan Goodarzi to our Board. Sasanisexecutive vice president and general manager of Intuit's Small Business and Self-Employed Group. Appointed to this role in May 2016, he leads an organization that oers a global platform with a suite of products and services under the QuickBooks brand in pursuit of Intuit's mission of powering prosperity around the world. Sasan has held multiple general management positions during two separate stints at Intuit, including as senior vice president and general manager for the company’s ProTax division and Intuit Financial Services from 2004 to 2010, as chief information ocer leading Intuit's transition to the cloud from 2011 to 2013, and as the general manager and executive vice president of TurboTax from 2013 to 2016. 

 

Q3 FY18 8 Mike Cannon-Brookes  Co-founder and CEO Scott Farquhar  Co-founder and CEO Prior to joining Intuit, Sasan worked for Invensys, a global provider of industrial automation, transportation and controls technology, serving as global president of the products group. He also held a number of senior leadership roles in the automation control division at Honeywell. Sasan earned his bachelor's degree in electrical engineering at the University of Central Florida   and a master's degree in business administration from the Kellogg School of Management at Northwestern University. We look forward to working closely with Shona, Sasan, and the rest of our world-class Board members. In the meantime, it's full steam ahead into the nal quarter of our FY18 as we pursue our mission of unleashing the potential ofevery team. Best Wishes, Mike Cannon-Brookes and Scott Farquhar 

 

Q3 FY18 Our customers represent diverse industries and geographies, from start-ups to blue chips, thanks to a highly automated sales model that allows us to target the Fortune 500,000. We nished the third quarter of scal 2018 with 119,158 customers, as a result of the addition of 6,587   net-new customers this quarter.Over80%of our net-new customers in Q3'18 chose one or more   of our Cloud products. The customer growth during the quarter was driven by each of our core Cloud products. Customer highlights 9 Jay Simons  President Customers Period ended Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 119,158 112,571 107,746 89,237 85,031 68,837 65,673 60,950 57,431 54,262 * ** *Includes an increase of 12,789 customers as a result of our acquisition of Trello during the third quarter of scal 2017. **Includes an increase of 14,263 customers primarily as a result of Bitbucket Cloud pricing changes. Customers: We dene the number of customers at the end of any particular period as the number of organizations with unique domains that have at least one active and paid license or subscription of our products for which they paid approximately $10 or more per month. While a single customer may have distinct departments, operating segments or subsidiaries with multiple active licenses or subscriptions of our products, if the product deployments share a unique domain name, we only include the customer once for purposes of calculating this metric. We dene active licenses as those licenses that are under an active maintenance or subscription contract as of period end. 

 

Q3 FY18 Some of the new customers we added during the quarter include premium eyewear company Luxottica,electric car developer Faraday Future, the French consumer goodsand home   improvement company Adeo, the genetics testing laboratory Baylor Genetics, the Brazilian   port terminal Portonave,luxury jewelry retailer Tiany & Co., and the State of Nebraska. Customers use our products in a variety of ways, across all types of teams. While it would be   dicult to list the thousands of use cases for our products, we'd like to share a handful of the   stories our customers share with us each quarter. These examples illustrate the breadth of  application and versatility of our products, as well as how we expand across teams, departments   and customer organizations. Be The Match Empowering life-saving bone marrow transplants Be The Match is the largest DNA registry in the world, operated by the nonprot National Marrow Donor Program. It focuses on nding life-saving bone marrow transplants for blood cancer patients through its registry of 30 million potential donors. Be The Matchdevelops software for transplant centers that connect donorswith cancer patients who match their genetic makeup. Before Atlassian, the organization's development team had disparate homegrown and one-o vendor solutions, resulting in duplicate eorts and lack of visibility across engineering, business owners, and leadership.The engineering group started usingJira, and for the rst time could track, coordinate, and deploy multiple complex initiatives concurrently. Teams instantly took to Jira and it began to spread across numerous projects. Following this success, Be the Match rolled out the full Atlassian product suite. Itswitched to Bitbucket to manage code and adopted Conuence for managing documentation, use cases, and requirements. Itsintegrated Atlassian suite aligns itsteams across the U.S. and Europe on all projects. Atlassian empowers Be The Match to develop critical, life-saving applications that improve the donor matching process. “The improved eciency, speed, and quality has helped us put more cures for cancer into the hands of our transplant center physicians,” saidMike McCullough, Chief Information Ocer, Be The Match. Domino’s Pizza Delivering technology—and pizza—faster Domino's Pizza, a world leader in on-demand pizza delivery, uses Atlassian tools to make it easier for itscustomers to order pizza through their mobileapps, Facebook, Twitter, Alexa, the Domino’s website and elsewhere. On the surface, Domino’s may be thought of as a standard pizza company. However, under the hood it isa technology-driven e-commerce giant, with $5.6 billion in digital sales in 2016. Domino’s relies on Atlassian tools to get their innovations into the hands of itsconsumers and employees faster. 10 

 

Q3 FY18 Ensuring technology security used to be a speed bump in the Domino's DevOpsworkow. The security team was typically brought into projects late in the process, and determining the security requirements alone often took hours of meetings. Looking for a better way to work, the security team looked to the development team's tools and best practices. The development team was using Conuenceto create and share specications, and Jira Software to track and manage tickets and tasks. The security team realized that they could use these Atlassian tools to connect with the development team and streamline their process. Domino's security team worked with Forty8Fifty Labs, an authorized Atlassian partner, to loop the security team into the DevOps process much earlier using Conuence and Jira. They created a customized Atlassian app that includes a Conuence form for developers to submit security-related information, which generates Jira tickets based on the information provided. What previously required some 20 hours of meetings and review can now be resolved within minutes. Domino's was able to break down barriers between teams by automating a unique workow—the kind of automation that is a key driver of eciency in today's software-reliant world. In addition to Jira and Conuence, Domino's uses Jira Service Desk, Bitbucket, and Hipchat, all of which allow Domino'sto keep itsfocus on customers. Atlassian tools help Domino's teamsmake ordering pizza easier, faster, and more secure. Multinational semiconductor company Rapid adoption of Jira and Conuence company-wide A multi-national semiconductor companybegan usingAtlassian products in 2007, in a way familiar to many customers: with the purchase of a single Jira license, costing $1,200 annually. Over time, our products spread throughout the company as teams replaced their legacy collaboration tools with Jira, Conuence,and Bitbucket. To date, the company's 9,000 Jira users have logged over 700,000 issues. The company even set   up a separate Jira instance to manage work with external partners and vendors. Now it's taking   the next step, switching to Jira Software Data Center to take advantage of easy scaling and   upgrade capabilities. Not to be outdone, Conuence and Bitbucket have also gone viral within the company. Over the past year, the company has been adding over 100 new Conuence users each month. Today, they have over 10,000 Conuence users across the company. This customer now spends over $300,000 with Atlassian annually—and it all started with that modest $1,200 spend. 11 

 

Q3 FY18 Financial highlights Third quarter scal 2018 results Revenue Total revenue for the third quarter of scal 2018 was $223.7 million, up 40% year-over-year. Our revenue by line item for the quarter is as follows: • Subscription revenueprimarily relates to fees earned from sales of our Cloud products. A portion of this revenue also relates to sales of our Data Center products, which are server products sold to our largest enterprise customers on a subscription basis. We recognize subscription revenue ratably over the term of the contract. For Q3'18, subscription revenue was $105.6 million, up 67% year-over-year. This was the rst time in our history that quarterly subscription revenue surpassed $100 million. • Maintenance revenuerepresents fees earned from providing customers updates, upgrades and technical product support for our perpetual license products.Maintenance revenue is recognized ratably over the support period, which is typically 12 months. For Q3'18, maintenance revenue was $82.0 million, up 22% year-over-year. 12 James Beer  Chief Financial Ocer Third quarter scal 2018 nancial summary (in thousands, except per share data) A reconciliation of IFRS to non-IFRS measures is provided within tables at the end of this letter, in our earnings press release and posted on our Investor Relations website at https://investors.atlassian.com. Third quarter of fiscal 2018 financial summary (in thousands, except per share data) Three Months Ended March 31, IFRS Results 2018 2017 Revenue $223,723 $159,909 Gross profit $178,483 $127,014 Gross margin 79.8% 79.4% Operating loss ($10,880) ($23,063) Operating margin (4.9%) (14.4%) Net loss ($14,266) ($17,461) Net loss per share - diluted ($0.06) ($0.08) Non-IFRS Results Gross profit $186,806 $133,774 Gross margin 83.5% 83.7% Operating income $38,365 $24,492 Operating margin 17.1% 15.3% Net income $24,590 $18,932 Net income per share - diluted $0.10 $0.08 Free cash flow $86,383 $68,300 

 

Q3 FY18 • License revenueconsists of fees earned from the sale of perpetual licenses for our server products, and is recognized at the time of sale. For Q3'18, license revenue was $21.3 million, up 9% year-  over-year. • Other revenueincludes our portion of the fees received for sales of third-party apps in the Atlassian Marketplace, and for training services. For Q3'18, other revenue was$14.9 million, up 49% year-over-year. 13 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 $224 $213 $194 $174 $160 $149 36% 40%36% 37% 42% 43% Revenue U.S. $ in millions (Y/Y growth rate in %) Revenue by type U.S. $ in millions (Y/Y growth rate in %) Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Subscription Maintenance Perpetual License Other 8% 22% 66% 19% 19% 64% 22% 16% 66% 70% 22% 9% 67% 24% 20% $224 $149 $160 $174 14% 24% 69% $194 $213 

 

Q3 FY18 Margins and operating expenses IFRS gross margin for Q3'18was 79.8%, compared with 79.4% for Q3'17.Non-IFRS gross margin for Q3'18was 83.5%, compared with 83.7% for Q3'17. As we have discussed in prior quarters, gross margin for the quarter included accelerated depreciation expense incurred as part of our transition from our self-managed data centers to our third-party cloud provider. Due to the successful migration of all our Jira and Conuence Cloud customers to our new Cloud platform on AWS, we shortened the useful life of our self-managed data center equipment to the end of Q3'18. The remaining accelerated depreciation was reected in our Q3'18 cost of revenues, and we do not expect to incur material further depreciation related to our previous self-managed Cloud infrastructuregoing forward. On an IFRS basis, operating expenses were $189.4 million in Q3'18, up 26% from $150.1 million in Q3'17.On a non-IFRS basis, operating expenses were $148.4 million in Q3'18, up 36% from $109.3 million in Q3'17. • Research & development expense on an IFRS basis was $108.5 millionin Q3'18, compared with $82.3 million in Q3'17.Research & development expense on a non-IFRS basis was $83.2 million or 37.2% of revenue in Q3'18, compared with $60.6 million or 37.9% of revenue in Q3'17. • Marketing & salesexpense on an IFRS basis was $48.7 million in Q3'18, compared with $36.6 million in Q3'17.Marketing & salesexpense on a non-IFRS basis was $33.8 million or 15.1% of revenue in Q3'18, compared with $26.4 million or 16.5% of revenue in Q3'17. • General & administrative expense on an IFRS basis was $32.2 million in Q3'18, compared with $31.2 million in Q3'17.General & administrative expense on a non-IFRS basis was $31.4 million or 14.0% of revenue in Q3'18, compared with $22.2 million or 13.9% of revenue in Q3'17. Total employee headcount was 2,503 at the end of Q3'18, an increase of 95 employees since the end of Q2'18. IFRS operating loss was $10.9 million for Q3'18, compared with $23.1 million for Q3'17.Non-IFRS operating income was $38.4 million, or 17.1%of revenue for Q3'18, compared with $24.5 million or 15.3% of revenue for Q3'17. Net income IFRS net loss was $14.3 million, or ($0.06) per diluted share, for Q3'18, compared with an IFRS net loss of $17.5 million, or ($0.08) per diluted share, for Q3'17.Non-IFRS net income was $24.6 million, or $0.10 per diluted share, for Q3'18, compared with $18.9 million, or $0.08 per diluted share, for Q3'17. Our non-IFRS net income per share in Q3'18 was higher than our target of $0.08 per diluted share due to lower than expected tax expense during the quarter. The tax expense was attributable to the nal mix of income and deductions we recorded across our geographical jurisdictions and entities, and how we account for them under IFRS. This geographical mix can vary from quarter to quarter, 14 

 

Q3 FY18 creating the potential for volatility in our tax rate from one quarter to the next. Our estimated annual tax rate does not tend to demonstrate this same level of volatility from quarter to quarter. Balance sheet Atlassian nished Q3'18with $763.9 million in cash and cash equivalents and short-term investments. Free cash ow Free cash ow for Q3'18was $86.4 million, comprised of cash ow from operations of $91.7 million, less capital expenditures of $5.3 million. Free cash ow margin for Q3'18, dened as free cash ow as a percentage of revenue, was 38.6%. 15 

 

Q3 FY18 Financial targets for Q4’18 and full year scal 2018 16 Financial Targets IFRS Three Months Ending June 30, 2018 Fiscal Year Ending June 30, 2018 Revenue $232 million to $234 million $862 million to $864 million Gross margin 81% 80% Operating margin (5%) (7%) Net loss per share - diluted ($0.05) ($0.44) to ($0.43) Weighted-avg. shares used in computing diluted IFRS net loss per share 234 million to 235 million 231 million to 232 million Non-IFRS Three Months Ending June 30, 2018 Fiscal Year Ending June 30, 2018 Gross margin 85% 84% Operating margin 19% 19% Net income per share - diluted $0.12 $0.47 to $0.48 Weighted-avg. shares used in computing diluted non-IFRS net income per share 246 million to 247 million 243 million to 244 million Free cash flow not provided $265 million to $272 million Our revenue target for scal 2018 includes approximately $20 million of revenue contribution from Trello, and also assumes that the Cloud per-user pricing changes we announced in July 2017 will contribute low single-digit points of annual revenue growth in scal 2018. While we do not provide IFRS and non-IFRS eective tax rate targets for full-year scal 2018 or scal 2019, we expect the recent change in U.S. corporate income tax rates will have a very modest impact on our scal 2018 net income. We anticipate greater eective tax rate benets in scal 2019, which begins in July 2018. 

 

Q3 FY18 Atlassian Corporation Plc  Consolidated statements of operations (U.S. $ and shares in thousands, except per share data)  (unaudited) 17 Three Months Ended March 31, Nine Months Ended March 31, 2018 2017 2018 2017 Revenues: Subscription $ 105,604 $ 63,369 $ 285,775 $ 169,626 Maintenance 81,953 67,072 238,630 193,873 Perpetual license 21,273 19,495 62,967 55,206 Other 14,893 9,973 42,795 26,900 Total revenues 223,723 159,909 630,167 445,605 Cost of revenues (1) (2) 45,240 32,895 128,494 82,356 Gross profit 178,483 127,014 501,673 363,249 Operating expenses: Research and development (1) 108,544 82,262 304,730 219,477 Marketing and sales (1) (2) 48,652 36,625 138,928 89,021 General and administrative (1) 32,167 31,190 106,476 85,581 Total operating expenses 189,363 150,077 550,134 394,079 Operating loss (10,880) (23,063) (48,461) (30,830) Other non-operating income (expense), net 740 (492) (418) (806) Finance income 2,001 1,040 4,824 3,803 Finance costs (8) (6) (24) (51) Loss before income tax benefit (expense) (8,147) (22,521) (44,079) (27,884) Income tax benefit (expense) (6,119) 5,060 (49,411) 6,088 Net loss $ (14,266) $ (17,461) $ (93,490) $ (21,796) Net loss per share attributable to ordinary shareholders: Basic $ (0.06) $ (0.08) $ (0.41) $ (0.10) Diluted $ (0.06) $ (0.08) $ (0.41) $ (0.10) Weighted-average shares outstanding used to compute net loss per share attributable to ordinary shareholders: Basic 232,221 223,333 230,180 221,034 Diluted 232,221 223,333 230,180 221,034 (1) Amounts include share-based payment expense, as follows: Three Months Ended March 31, Nine Months Ended March 31, 2018 2017 2018 2017 Cost of revenues $ 3,021 $ 1,853 $ 9,193 $ 4,697 Research and development 25,347 21,628 78,338 54,786 Marketing and sales 5,816 5,336 18,161 11,940 General and administrative 737 8,965 18,705 24,688 (2) Amounts include amortization of acquired intangible assets, as follows: Three Months Ended March 31, Nine Months Ended March 31, 2018 2017 2018 2017 Cost of revenues $ 5,302 $ 4,907 $ 15,889 $ 9,307 Marketing and sales 9,022 4,866 27,067 5,281 

 

Q3 FY18 Atlassian Corporation Plc Consolidated statements of nancial position (U.S. $ in thousands) (unaudited) 18 March 31, 2018 June 30, 2017 Assets Current assets: Cash and cash equivalents $ 393,513 $ 244,420 Short-term investments 370,353 305,499 Trade receivables 38,469 26,807 Current tax receivables 13,129 12,445 Prepaid expenses and other current assets 22,697 23,317 Total current assets 838,161 612,488 Non-current assets: Property and equipment, net 35,098 41,173 Deferred tax assets 97,234 188,239 Goodwill 312,048 311,900 Intangible assets, net 77,978 120,789 Other non-current assets 12,226 9,269 Total non-current assets 534,584 671,370 Total assets $ 1,372,745 $ 1,283,858 Liabilities Current liabilities: Trade and other payables $ 100,106 $ 73,192 Current tax liabilities 22 2,207 Provisions 6,882 6,162 Deferred revenue 308,181 245,306 Total current liabilities 415,191 326,867 Non-current liabilities: Deferred tax liabilities 42,951 43,950 Provisions 4,209 3,333 Deferred revenue 17,861 10,691 Other non-current liabilities 9,820 4,969 Total non-current liabilities 74,841 62,943 Total liabilities 490,032 389,810 Equity Share capital 23,318 22,726 Share premium 453,894 450,959 Other capital reserves 518,793 437,346 Other components of equity 3,427 6,246 Accumulated deficit (116,719) (23,229) Total equity 882,713 894,048 Total liabilities and equity $ 1,372,745 $ 1,283,858 

 

Q3 FY18 Three Months Ended March 31, Nine Months Ended March 31, 2018 2017 2018 2017 Operating activities Loss before income tax benefit (expense) $ (8,147) $ (22,521) $ (44,079) $ (27,884) Adjustments to reconcile loss before income tax benefit (expense) to net cash provided by operating activities: Depreciation and amortization 20,111 18,485 61,681 37,780 Gain on sale of investments and other assets (1,193) (15) (1,225) (422) Net unrealized foreign currency (gain) loss 67 209 (95) 1 Share-based payment expense 34,921 37,782 124,397 96,111 Interest income (2,001) (1,040) (4,824) (3,803) Changes in assets and liabilities: Trade receivables (3,500) 2,155 (11,887) (9,913) Prepaid expenses and other assets (236) (89) 907 (2,859) Trade and other payables, provisions and other non-current liabilities 27,311 12,707 33,569 9,308 Deferred revenue 24,343 25,035 70,045 49,352 Interest received 1,677 1,470 4,468 5,147 Income tax paid, net of refunds (1,677) (1,255) (3,704) (4,034) Net cash provided by operating activities 91,676 72,923 229,253 148,784 Investing activities Business combinations, net of cash acquired — (362,795) — (381,090) Purchases of property and equipment (5,293) (4,623) (12,407) (9,921) Proceeds from sale of other assets 1,000 — 1,000 342 Purchases of investments (64,896) (105,021) (292,024) (338,385) Proceeds from maturities of investments 43,217 23,088 125,104 80,188 Proceeds from sales of investments 18,907 235,173 100,965 433,761 Increase in restricted cash (96) — (3,237) (3,369) Payment of deferred consideration (3,290) — (3,290) (935) Net cash used in investing activities (10,451) (214,178) (83,889) (219,409) Financing activities Proceeds from exercise of share options 932 1,535 3,087 7,403 Net cash provided by financing activities 932 1,535 3,087 7,403 Effect of exchange rate changes on cash and cash equivalents 451 440 642 395 Net increase (decrease) in cash and cash equivalents 82,608 (139,280) 149,093 (62,827) Cash and cash equivalents at beginning of period 310,905 336,162 244,420 259,709 Cash and cash equivalents at end of period $ 393,513 $ 196,882 $ 393,513 $ 196,882 Atlassian Corporation Plc Consolidated statements of cash ows (U.S. $ in thousands)  (unaudited) 19 

 

Q3 FY18 Atlassian Corporation Plc Reconciliation of IFRS to non-IFRS results (U.S. $ and shares in thousands, except per share data)  (unaudited) 20 Three Months Ended March 31, Nine Months Ended March 31, 2018 2017 2018 2017 Gross profit IFRS gross profit $ 178,483 $ 127,014 $ 501,673 $ 363,249 Plus: Share-based payment expense 3,021 1,853 9,193 4,697 Plus: Amortization of acquired intangible assets 5,302 4,907 15,889 9,307 Non-IFRS gross profit $ 186,806 $ 133,774 $ 526,755 $ 377,253 Operating income IFRS operating loss $ (10,880) $ (23,063) $ (48,461) $ (30,830) Plus: Share-based payment expense 34,921 37,782 124,397 96,111 Plus: Amortization of acquired intangible assets 14,324 9,773 42,956 14,588 Non-IFRS operating income $ 38,365 $ 24,492 $ 118,892 $ 79,869 Net income IFRS net loss $ (14,266) $ (17,461) $ (93,490) $ (21,796) Plus: Share-based payment expense 34,921 37,782 124,397 96,111 Plus: Amortization of acquired intangible assets 14,324 9,773 42,956 14,588 Less: Income tax effects and adjustments (10,389) (11,162) 11,673 (25,587) Non-IFRS net income $ 24,590 $ 18,932 $ 85,536 $ 63,316 Net income per share IFRS net loss per share - basic $ (0.06) $ (0.08) $ (0.41) $ (0.10) Plus: Share-based payment expense 0.15 0.17 0.54 0.44 Plus: Amortization of acquired intangible assets 0.06 0.04 0.19 0.07 Less: Income tax effects and adjustments (0.04) (0.05) 0.05 (0.12) Non-IFRS net income per share - basic $ 0.11 $ 0.08 $ 0.37 $ 0.29 IFRS net loss per share - diluted $ (0.06) $ (0.08) $ (0.41) $ (0.10) Plus: Share-based payment expense 0.14 0.17 0.53 0.42 Plus: Amortization of acquired intangible assets 0.06 0.04 0.18 0.06 Less: Income tax effects and adjustments (0.04) (0.05) 0.05 (0.11) Non-IFRS net income per share - diluted $ 0.10 $ 0.08 $ 0.35 $ 0.27 Weighted-average diluted shares outstanding Weighted-average shares used in computing diluted IFRS net loss per share 232,221 223,333 230,180 221,034 Plus: Dilution from share options and RSUs (1) 12,356 12,900 13,185 13,900 Weighted-average shares used in computing diluted non-IFRS net income per share 244,577 236,233 243,365 234,934 Free cash flow IFRS net cash provided by operating activities $ 91,676 $ 72,923 $ 229,253 $ 148,784 Less: Capital expenditures (5,293) (4,623) (12,407) (9,921) Free cash flow $ 86,383 $ 68,300 $ 216,846 $ 138,863 (1) The effects of these dilutive securities were not included in the IFRS calculation of diluted net loss per share for the three and nine months ended March 31, 2018 and 2017 because the effect would have been anti-dilutive. 

 

Q3 FY18 Atlassian Corporation Plc Reconciliation of IFRS to non-IFRS nancial targets (U.S. $) 21 Three Months Ending June 30, 2018 Fiscal Year Ending June 30, 2018 Revenue $232 million to $234 million $862 million to $864 million IFRS gross margin 81% 80% Plus: Share-based payment expense 2 2 Plus: Amortization of acquired intangible assets 2 2 Non-IFRS gross margin 85% 84% IFRS operating margin (5%) (7%) Plus: Share-based payment expense 18 19 Plus: Amortization of acquired intangible assets 6 7 Non-IFRS operating margin 19% 19% IFRS net loss per share - diluted ($0.05) ($0.44) to ($0.43) Plus: Share-based payment expense 0.17 0.68 Plus: Amortization of acquired intangible assets 0.06 0.24 Less: Income tax effects and adjustments (0.06) (0.01) Non-IFRS net income per share - diluted $0.12 $0.47 to $0.48 Weighted-average shares used in computing diluted IFRS net loss per share 234 million to 235 million 231 million to 232 million Dilution from share options and RSUs (1) 12 million 12 million Weighted-average shares used in computing diluted non-IFRS net income per share 246 million to 247 million 243 million to 244 million IFRS net cash provided by operating activities $295 million to $302 million Less: Capital expenditures (30 million) Free cash flow $265 million to $272 million (1) The effect of these dilutive securities are not included in our IFRS calculation of diluted net loss per share for the three months ending March 31, 2018 and fiscal year ending June 30, 2018 because the effect would be anti-dilutive.(1) The eect of these dilutive securities are not included in our IFRS calculation of diluted net loss per share for the three months ending June 30, 2018 and scal year ending June 30, 2018 because the eect would be anti-dilutive. 

 

Q3 FY18 22 Forward-looking statements This shareholder letter contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. All statements other than statements of historical fact could be deemed forward looking, including risks and uncertainties related to statements about our protability, products, customers, expansion, technology and other key strategic areas, and our nancial targets such as revenue, share count and IFRS and non-IFRS nancial measures including gross margin, operating margin, net income per diluted share and free cash ow. We undertake no obligation to update any forward-looking statements made in this shareholder letter to reect events or circumstances after the date of this shareholder letter or to reect new information or the occurrence of unanticipated events, except as required by law. The achievement or success of the matters covered by such forward-looking statements involves known and unknown risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could dier materially from the results expressed or implied by the forward-looking statements we make. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management’s beliefs and assumptions only as of the date such statements are made. Further information on these and other factors that could aect our nancial results is included in lings we make with the Securities and Exchange Commission from time to time, including the section titled “Risk Factors” in our most recent Forms 20-F and 6-K (reporting our quarterly results). These documents are available on the SEC Filings section of the Investor Relations section of our website at: https:// investors.atlassian.com. About non-IFRS nancial measures Our reported results and nancial targets include certain non-IFRS nancial measures, including non-IFRS gross prot, non-IFRS operating income, non-IFRS net income, non-IFRS net income per diluted share, and free cash ow. Management believes that the use of these non- IFRS nancial measures provides consistency and comparability with our past nancial performance, facilitates period-to-period comparisons of our results of operations, and also facilitates comparisons with peer companies, many of which use similar non-IFRS or non-GAAP nancial measures to supplement their IFRS or GAAP results. Non-IFRS results are presented for supplemental informational purposes only to aid in understanding our operating results. The non-IFRS results should not be considered a substitute for nancial information presented in accordance with IFRS, and may be dierent from non-IFRS or non-GAAP measures used by other companies. Our non-IFRS nancial measures reect adjustments based on the items below: • Non-IFRS gross prot. Excludes expenses related to share-based compensation and amortization of acquired intangible assets. • Non-IFRS operating income. Excludes expenses related to share-based compensation and amortization of acquired intangible assets. • Non-IFRS net income and non-IFRS net income per diluted share. Excludes expenses related to share based compensation, amortization of acquired intangible assets, the related income tax eects on these items and changes in our assessment regarding the realizability of our deferred tax assets. • Free cash ow. Free cash ow is dened as net cash provided by operating activities less capital expenditures, which consists of purchases of property and equipment and acquired intangible assets. We exclude expenses related to share-based compensation, amortization of acquired intangible assets, the related income tax eects on these items and changes in our assessment regarding the realizability of our deferred tax assets from certain of our non-IFRS nancial measures as we believe this helps investors understand our operational performance. In addition, share-based compensation expense can be dicult to predict and varies from period to period and company to company due to diering valuation methodologies, subjective assumptions and the variety of equity instruments, as well as changes in stock price. Management believes that providing non-IFRS nancial measures that exclude share-based compensation expense, amortization of acquired intangible assets, the related income tax eects on these items and changes in our assessment regarding the realizability of our deferred tax assets allow for more meaningful comparisons between our operating results from period to period. 

 

Q3 FY18 23 Management considers free cash ow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business, making strategic acquisitions and strengthening our statement of nancial position. Management uses non-IFRS gross prot, non-IFRS operating income, non-IFRS net income, non-IFRS net income per diluted share and free cash ow: • As measures of operating performance, because these nancial measures do not include the impact of items not directly resulting from our core operations; • For planning purposes, including the preparation of our annual operating budget; • To allocate resources to enhance the nancial performance of our business; • To evaluate the eectiveness of our business strategies; and • In communications with our Board of Directors concerning our nancial performance.  The tables in this shareholder letter titled “Reconciliation of IFRS to non-IFRS results” and “Reconciliation of IFRS to non-IFRS nancial targets” provide reconciliations of non-IFRS nancial measures to the most recent directly comparable nancial measures calculated and presented in accordance with IFRS. We understand that although non-IFRS gross prot, non-IFRS operating income, non-IFRS net income, non-IFRS net income per diluted share and free cash ow are frequently used by investors and securities analysts in their evaluation of companies, these measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations as reported under IFRS. About Atlassian Atlassian unleashes the potential of every team. Our collaboration software helps teams organize, discuss and complete shared work. Teams at more than 119,000 customers, across large and small organizations — including Citigroup, eBay, Coca-Cola, Visa, BMW and NASA — use Atlassian's project tracking, content creation and sharing, real-time communication and service management products to work better together and deliver quality results on time. Learn more about products including Jira Software, Conuence, Stride, Trello, Bitbucket and Jira Service Desk at https://atlassian.com. Investor relations contact: Ian Lee, IR@atlassian.com  Media contact: Scott Rubin, press@atlassian.com