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
 
October 27, 2016
 
Commission File Number 001-37651

Atlassian Corporation Plc
(Translation of registrant’s name into English)
 
Exchange House
Primrose Street
London EC2A 2EG
c/o Herbert Smith Freehills LLP
(Address of principal executive office)

	

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 October 27, 2016, Atlassian Corporation Plc (the “Company”) issued a press release announcing its results for the fiscal quarter ended September 30, 2016. 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 September 30, 2016 (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.

The information in this report on Form 6-K 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:	October 27, 2016	 	Atlassian Corporation Plc	
 	 	 	(Registrant)	
 	 	 	 	
 	 	 	/S/    MURRAY J. DEMO        	
 	 	 	Murray J. Demo
Chief Financial Officer
(Principal Financial and Accounting Officer)	

Exhibit Index

	
		
Exhibit Number	Exhibit Title	
 	 	
99.1	Press Release dated October 27, 2016.	
99.2	Shareholder Letter, dated October 27, 2016.	

Atlassian Announces First Quarter Fiscal Year 2017 Results

Quarterly revenue of $136.8 million, up 34% year-over-year
Quarterly IFRS operating loss of $5.1 million and non-IFRS operating income of $27.8 million
Quarterly free cash flow of $26.1 million

SAN FRANCISCO (October 27 , 2016 ) — Atlassian Corporation Plc (NASDAQ: TEAM), a leading provider of team collaboration and productivity software, today announced financial results for the first quarter of fiscal 2017 ended September 30, 2016, and released a shareholder letter on the Investor Relations section of its website at https://investors.atlassian.com.

“We had a great start to fiscal 2017, highlighted by Atlassian Summit, our annual user conference," said Scott Farquhar, Atlassian’s co-CEO and co-founder. "This was our largest Summit to date, with over 3,200 attendees from 35 countries. Summit showcased innovation across our product stack, with highlights including new JIRA Service Desk capabilities for external customer service and support use cases, real-time collaborative editing for Confluence and several firsts for our data center platform, including the introduction of AWS support for JIRA Software Data Center and Bitbucket Data Center, and the beta launch of HipChat Data Center.”  

First Quarter Fiscal Year 2017 Financial Highlights:
On an IFRS basis, Atlassian reported: 

•	Revenue: Total revenue was $136.8 million for the first quarter of fiscal 2017, up 34% from $101.8 million for the first quarter of fiscal 2016.	

•	Operating Loss: Operating loss was $5.1 million for the first quarter of fiscal 2017, compared with operating income of $7.1 million for the first quarter of fiscal 2016.	

•	Net Loss and Net Loss Per Diluted Share: Net loss was $2.6 million for the first quarter of fiscal 2017, compared with net income of $5.1 million for the first quarter of fiscal 2016. Net loss per diluted share was $0.01 for the first quarter of fiscal 2017, compared with net income per diluted share of $0.03 for the first quarter of fiscal 2016. 	

•	Balance Sheet: Cash and cash equivalents and short-term investments at the end of the first quarter of fiscal 2017 totaled $754.3 million.	
On a non-IFRS basis, Atlassian reported: 

•	Operating Income: Operating income was $27.8 million for the first quarter of fiscal 2017, compared with $22.9 million for the first quarter of fiscal 2016.	

•	Net Income and Net Income Per Diluted Share: Net income was $22.7 million for the first quarter of fiscal 2017, compared with $18.4 million for the first quarter of fiscal 2016. Net income per diluted share was $0.10 for the first quarter of fiscal 2017, compared with $0.11 per diluted share for the first quarter of fiscal 2016. 	

•	Free Cash Flow: Cash flow from operations for the first quarter of fiscal 2017 was $28.5 million, while capital expenditures totaled $2.4 million, leading to free cash flow of $26.1 million, an increase of 216% 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.”

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Recent Business Highlights:
		
•	Customer growth:  Atlassian ended the first quarter of fiscal 2017 with a total customer count on an active subscription or maintenance agreement basis of 65,673, a 27% increase over September 30, 2015. Atlassian added 4,723 net new customers during the quarter. Net new customers during the quarter were higher than typical as we benefited from a one-time increase in customers following our acquisition of StatusPage this quarter. Excluding StatusPage, Atlassian ended the first quarter of fiscal 2017 with a total customer count of 64,246, a 24% increase over September 30, 2015. Net new customers during the quarter excluding StatusPage were approximately 3,296. 	

•	Atlassian Marketplace:  With over 2,000 add-ons designed to enhance Atlassian products, the Atlassian Marketplace is one of the largest enterprise software marketplaces and passed a new milestone, surpassing more than $200 million in lifetime sales since its inception in 2012.  	

•	JIRA Service Desk for external customer support:  Atlassian expanded the reach of JIRA Service Desk beyond internal service organizations by introducing features designed to support external customers. These include features such as increased support for customer organizations, enabling end users within the same company to share and collaborate on each other's support tickets, and enhanced branding and customization of emails to support customers' communications with their customers.	

Financial Targets:
Atlassian is providing its financial targets for the second quarter and full fiscal year 2017. The company’s financial targets are as follows:

•	Second Quarter Fiscal Year 2017: 	

•	Total revenue is expected to be in the range of $142.5 million to $144.5 million.	

•	Gross margin is expected to be approximately 82% on an IFRS basis and approximately 84% on a non-IFRS basis. 	

•	Operating margin is expected to be approximately (8%) on an IFRS basis and approximately 16% on a non-IFRS basis. 	

•	Weighted-average share count is expected to be in the range of 234 million to 236 million shares on a fully diluted basis. 	

•	Net loss per diluted share is expected to be approximately ($0.03) on an IFRS basis, and net income per diluted share is expected to be approximately of $0.08 on a non-IFRS basis.	

		
•	Fiscal Year 2017: 	
		
•	Total revenue is expected to be in the range of $597 million to $603 million. 	

•	Gross margin is expected to be in the range of 82% to 83% on an IFRS basis and in the range of 84% to 85% on a non-IFRS basis. 	

•	Operating margin is expected to be approximately (10%) on an IFRS basis and approximately 16% on a non-IFRS basis. 	

•	Weighted-average share count is expected to be in the range of 234 million to 236 million shares on a fully diluted basis. 	

•	Net loss per diluted share is expected to be in the range of ($0.18) to ($0.17) on an IFRS basis, and net income per diluted share is expected to be in the range of $0.33 to $0.34 on a non-IFRS basis. 	

•	Free cash flow is expected to be in the range of $155 million to $165 million, which factors in capital expenditures that are expected to be approximately $15 million in fiscal 2017.	

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.

2

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, October 27, 2016 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 10093166). International callers, please dial 1-412-317-0088 (access code 10093166).	
Atlassian has used, and intends to continue to use, its Investor Relations website at https://investors.atlassian.com as a means of disclosing material non-public information and for complying with its disclosure obligations.

About Atlassian
Atlassian unleashes the potential in every team. Our collaboration software helps teams organize, discuss and complete shared work. Teams at more than 65,000 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 about products including JIRA Software, Confluence, HipChat, Bitbucket and JIRA Service Desk at https://atlassian.com.

Investor Relations Contact
Ian Lee
IR@atlassian.com
Media Contact
Heather Staples
press@atlassian.com
Forward-Looking Statements
This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as “may,” “will,” “should,” “might,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that articulate our expectations, strategy, plans or intentions. Forward-looking statements contained in this press release include, but are not limited to, statements about our products, including our investments in products, 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 per diluted share and free cash flow.
Atlassian undertakes 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, Atlassian’s 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 Atlassian’s financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section titled “Risk Factors” in

3

the company’s Form 20-F previously filed with the SEC. These documents are available on the SEC Filings section of the Investor Relations section of Atlassian’s 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 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 and related income tax effects on these items.	

•	Free cash flow.  Free cash flow is defined as net cash provided by operating activities less capital expenditures, which consists primarily of purchases of property and equipment. 	

We exclude expenses related to share-based compensation, amortization of acquired intangible assets and income tax effect on these items 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 and the tax effects of those items allow for more meaningful comparisons between our operating results from period to period.
We include the effect of our outstanding share options and restricted share units (“RSUs”) in weighted-average shares used in computing non-IFRS net income per diluted share. IFRS excludes the impact of the full weighting of these outstanding equity awards until the effectiveness of our initial public offering (“IPO”). We have presented the full weighting impact of these additional shares from previously granted share options and RSUs, as if they were outstanding from the date of grant, in order to provide investors with insight into the full impact of all potentially dilutive awards outstanding and to provide comparability.
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.
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.	

4

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.

5

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

	
								
 	Three Months Ended September 30,	
 	2016	 	2015	
Revenues:	 		 	 		
Subscription	$	49,931		 	$	30,467		
Maintenance	61,741		 	50,354		
Perpetual license	17,501		 	15,501		
Other	7,614		 	5,500		
Total revenues	136,787		 	101,822		
Cost of revenues (1) (2)	22,562		 	16,420		
Gross profit	114,225		 	85,402		
Operating expenses:	 		 	 		
Research and development (1)	67,458		 	45,460		
Marketing and sales (1) (2)	24,980		 	16,262		
General and administrative (1)	26,915		 	16,602		
Total operating expenses	119,353		 	78,324		
Operating income (loss)	(5,128	)	 	7,078		
Other non-operating income (expense), net	(63	)	 	(603	)	
Finance income	1,322		 	46		
Finance costs	(7	)	 	(8	)	
Income (loss) before income tax benefit (expense)	(3,876	)	 	6,513		
Income tax benefit (expense)	1,239		 	(1,431	)	
Net income (loss)	$	(2,637	)	 	$	5,082		
Net income (loss) per share attributable to ordinary shareholders:	 		 	 		
Basic	$	(0.01	)	 	$	0.03		
Diluted	$	(0.01	)	 	$	0.03		
Weighted-average shares outstanding used to compute net income (loss) per share attributable to ordinary shareholders:	 		 	 		
Basic	218,504		 	144,008		
Diluted	218,504		 	145,513		

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

								
 	Three Months Ended September 30,	
 	2016	 	2015	
Cost of revenues	$	1,339		 	$	1,206		
Research and development	16,999		 	5,921		
Marketing and sales	3,515		 	2,742		
General and administrative	8,670		 	4,227		

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

								
 	Three Months Ended September 30,	
 	2016	 	2015	
Cost of revenues	$	2,202		 	$	1,745		
Marketing and sales	196		 	21		

6

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

	
								
 	September 30, 2016	 	June 30, 2016	
 	(unaudited)	 	 	
Assets	 	 	 	
Current assets:	 	 	 	
Cash and cash equivalents	$	266,745		 	$	259,709		
Short-term investments	487,599		 	483,405		
Trade receivables	14,898		 	15,233		
Current tax receivables	7,506		 	6,013		
Prepaid expenses and other current assets	21,256		 	14,178		
Total current assets	798,004		 	778,538		
Non-current assets:	 	 	 	
Property and equipment, net	54,557		 	58,762		
Deferred tax assets	147,433		 	127,411		
Goodwill	22,697		 	7,138		
Intangible assets, net	19,907		 	13,577		
Other non-current assets	5,649		 	5,547		
Total non-current assets	250,243		 	212,435		
Total assets	$	1,048,247		 	$	990,973		
Liabilities	 	 	 	
Current liabilities:	 	 	 	
Trade and other payables	$	48,572		 	$	57,886		
Current tax liabilities	2,855		 	286		
Provisions	5,169		 	4,716		
Deferred revenue	180,603		 	173,612		
Total current liabilities	237,199		 	236,500		
Non-current liabilities:	 	 	 	
Deferred tax liabilities	10,248		 	6,639		
Provisions	2,197		 	2,170		
Deferred revenue	8,313		 	7,456		
Other non-current liabilities	9,520		 	6,545		
Total non-current liabilities	30,278		 	22,810		
Total liabilities	$	267,477		 	$	259,310		
Equity	 	 	 	
Share capital	$	22,000		 	$	21,620		
Share premium	446,134		 	441,734		
Other capital reserves	290,550		 	244,335		
Other components of equity	5,448		 	4,699		
Retained earnings	16,638		 	19,275		
Total equity	$	780,770		 	$	731,663		
Total liabilities and equity	$	1,048,247		 	$	990,973		

7

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

	
								
 	Three Months Ended September 30,	
 	2016	 	2015	
Operating activities	 	 	 	
Income (loss) before income tax	$	(3,876	)	 	$	6,513		
Adjustments to reconcile income (loss) before income tax to net cash provided by operating activities:	 	 	 	
Depreciation and amortization	8,042		 	4,534		
Gain on sale of other assets	(342	)	 	—		
Net unrealized foreign currency loss (gain)	(93	)	 	564		
Share-based payment expense	30,523		 	14,096		
Interest income	(1,322	)	 	(46	)	
Changes in assets and liabilities:	 	 	 	
Trade receivables	627		 	1,278		
Prepaid expenses and other assets	(5,186	)	 	(4,124	)	
Trade and other payables, provisions and other non-current liabilities	(8,534	)	 	(10,708	)	
Deferred revenue	7,688		 	6,701		
Interest received	2,296		 	83		
Income tax paid, net of refunds	(1,361	)	 	(4,487	)	
Net cash provided by operating activities	28,462		 	14,404		
Investing activities	 	 	 	
Business combinations, net of cash acquired	(18,295	)	 	—		
Purchases of property and equipment	(2,391	)	 	(6,155	)	
Proceeds from sale of other assets	342		 	—		
Purchases of investments	(151,736	)	 	(4,400	)	
Proceeds from maturities of investments	34,850		 	19,582		
Proceeds from sales of investments	111,882		 	—		
Payment of deferred consideration	(185	)	 	(1,025	)	
Net cash provided by (used in) investing activities	(25,533	)	 	8,002		
Financing activities	 	 	 	
Proceeds from exercise of share options, including early exercised options	3,717		 	1,211		
Deferred offering costs	—		 	(1,745	)	
Net cash provided by (used in) financing activities	3,717		 	(534	)	
Effect of exchange rate changes on cash and cash equivalents	390		 	(634	)	
Net increase in cash and cash equivalents	7,036		 	21,238		
Cash and cash equivalents at beginning of period	259,709		 	187,094		
Cash and cash equivalents at end of period	$	266,745		 	$	208,332		

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 September 30,	
 	2016	 	2015	
Gross profit	 		 	 		
IFRS gross profit	$	114,225		 	$	85,402		
Plus: Share-based payment expense	1,339		 	1,206		
Plus: Amortization of acquired intangible assets	2,202		 	1,745		
Non-IFRS gross profit	$	117,766		 	$	88,353		
Operating income	 		 	 		
IFRS operating income (loss)	$	(5,128	)	 	$	7,078		
Plus: Share-based payment expense	30,523		 	14,096		
Plus: Amortization of acquired intangible assets	2,398		 	1,766		
Non-IFRS operating income	$	27,793		 	$	22,940		
Net income	 		 	 		
IFRS net income (loss)	$	(2,637	)	 	$	5,082		
Plus: Share-based payment expense	30,523		 	14,096		
Plus: Amortization of acquired intangible assets	2,398		 	1,766		
Less: Income tax effects and adjustments	(7,564	)	 	(2,565	)	
Non-IFRS net income	$	22,720		 	$	18,379		
Net income per share	 		 	 		
IFRS net income (loss) per share - basic	$	(0.01	)	 	$	0.03		
Plus: Share-based payment expense	0.13		 	0.11		
Plus: Amortization of acquired intangible assets	0.01		 	0.01		
Less: Income tax effects and adjustments	(0.03	)	 	(0.02	)	
Non-IFRS net income per share - basic	$	0.10		 	$	0.13		
 	 	 	 	
IFRS net income (loss) per share - diluted	$	(0.01	)	 	$	0.03		
Plus: Share-based payment expense	0.13		 	0.09		
Plus: Amortization of acquired intangible assets	0.01		 	0.01		
Less: Income tax effects and adjustments	(0.03	)	 	(0.02	)	
Non-IFRS net income per share - diluted	$	0.10		 	$	0.11		
Weighted-average diluted shares outstanding	 	 	 	
Weighted-average shares used in computing diluted IFRS net income (loss) per share	218,504		 	145,513		
Dilution from share options and RSUs (1)	15,609		 	—		
Dilution from share options and RSUs granted in periods prior to IPO (2)	—		 	18,018		
Weighted-average shares used in computing diluted non-IFRS net income per share	234,113		 	163,531		
Free cash flow	 		 	 		
IFRS net cash provided by operating activities	$	28,462		 	$	14,404		
Less: Capital expenditures	(2,391	)	 	(6,155	)	
Free cash flow	$	26,071		 	$	8,249		

(1) The effects of these dilutive securities were not included in the IFRS calculation of diluted net loss per share for the three months ended September 30, 2016 because the effect would have been anti-dilutive.
(2) Gives effect to share options and RSUs in periods prior to our IPO for comparability.

9

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

	
						
 	Three Months Ending December 31, 2016	 	Fiscal Year Ending June 30, 2017	
Revenue	$142.5 million to $144.5 million		 	$597 million to $603 million		
 	 	 	 	
IFRS gross margin	82%		 	82% to 83%		
Share-based payment expense	1		 	1		
Amortization of acquired intangible assets	1		 	1		
Non-IFRS gross margin	84%		 	84% to 85%		
 	 	 	 	
IFRS operating margin	(8%)		 	(10%)		
Share-based payment expense	22		 	25		
Amortization of acquired intangible assets	2		 	1		
Non-IFRS operating margin	16%		 	16%		
 	 	 	 	
IFRS net loss per share - diluted	($0.03)		 	($0.18) to ($0.17)		
Share-based payment expense	0.13		 	0.62		
Amortization of acquired intangible assets	0.01		 	0.04		
   Income tax effects and adjustments	(0.03	)	 	(0.15	)	
Non-IFRS net income per share - diluted	$0.08		 	$0.33 to $0.34		
Weighted-average shares used in computing diluted non-IFRS net income per share	234 million to 236 million		 	234 million to 236 million		
 	 	 	 	
IFRS net cash provided by operations	 	 	$170 million to $180 million		
Less: Capital expenditures	 	 	(15 million)		
Free cash flow	 	 	$155 million to $165 million		

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Q4 FY2016 Q1 FY2017 October 27, 2016 

 

Q1 FY2017 Photocopies. Email. Status meetings. When Atlassian was founded, these were the tools of workplace collaboration. Today, the problems teams are solving have become increasingly complex, and the teams themselves increasingly distributed. It's no surprise then that more and more teams are turning to Atlassian to improve how they work. What started 15 years ago with a $10,000 credit card has   grown into a business helping teams at over 65,000 companies worldwide unleash their potential. Today we're excited to share highlights from a strong   first quarter of our fiscal 2017. Atlassian Summit 2016 unites our customer community Earlier this month, over 3,200 attendees from 35 countries came together for our 8th annual user conference, Atlassian Summit. Attendance was up 25% over last year and thousands more participated in the livestream. The event offered customers four days of training, best practices, and the opportunity to learn about new developments across the Atlassian product portfolio. In addition to a number of product announcements highlighted below, we also unveiled the Atlassian Team Playbook, our guide to making teamwork work. We believe great teamwork is the sum of incredible people, tools and practices. 2 Business highlights The Team Playbook provides step-by-step guides for tracking team health and executing plays that address common pain points like conflicting priorities or a lack of shared direction. We received incredible feedback from Summit attendees who are excited to combine the power of our software with proven processes for high- performing teams. Finally, this year's Summit included a celebration of those who give back. Over   60 Atlassian partners joined the Pledge 1% movement we founded in 2014 with Salesforce – up from 11 last year. Participating companies commit to donating   1% of equity, product, employee time, and/or profit to causes of their choosing. It's rewarding to see our ecosystem join us in our effort to change the face of corporate philanthropy. Mike Cannon-Brookes   Co-founder and CEO Scott Farquhar  Co-founder and CEO 

 

Q1 FY20173 • For project planning and tracking, we have seen rapid adoption of JIRA Core by non-technical teams. Among our attendees at Summit this year, over half use JIRA Core, representing significant growth since its launch just one year ago. • We furthered our momentum in the code management and collaboration space with the launch of Bitbucket Pipelines, a cloud-based continuous delivery offering. This new feature supports the continuous delivery approach increasingly preferred by software teams to build, test, and release software on a frequent basis. Supporting the collaboration needs of software teams remains a strong growth area for us with Bitbucket Cloud now hosting code from over five million developers, representing over 900,000 professional teams.  Serving all teams with full collaboration stack There are over 800 million knowledge workers globally, and the most important aspect of productivity is how well they work together. That's why it's our mission to unleash the potential in every team through our full portfolio of team collaboration products. We continue to see momentum across our business as we deliver better ways for a wide variety of teams to organize, discuss, and complete work.  • In the fast-growing team messaging space we continued to pioneer new capabilities with the launch of group video for HipChat to support the distributed nature of today's teams. We also introduced the public beta of HipChat Data Center to serve customers requiring an on-premise messaging service as their companies scale upwards of 5,000 users. The easy-to-use attributes of HipChat are attracting more teams than ever, generating approximately one billion messages every seven weeks. By comparison, when we first launched HipChat in 2010, it took us three years to reach our first billion messages.   • Confluence, our content collaboration product, is used by more than 30,000 of our customers across every type of team. At Summit, we heard how HR teams create on-boarding materials for new hires, marketing teams draft blog posts, plans, and campaign documents, and IT and customer service teams set up   and collaborate on self-service knowledge bases all within Confluence.  

 

Q1 FY20174 high demand for AWS support among our enterprise customers who are eager to spend less energy maintaining their own networks, but are not yet ready to move to a cloud-based hosted service.   • Zero-downtime capabilities for JIRA Software Data Center. Now administrators can upgrade to a new version of the software without interrupting their company's access to JIRA.  • Support for SAML 2.0, which enables single sign-on across all our Data Center products. This is essential for organizations adopting SAML as their corporate identity standard. Momentum in the Atlassian Marketplace The developer ecosystem around Atlassian continues to grow and flourish, with more than 2,000 add-ons in the Atlassian Marketplace and more than 10,000 developers in our ecosystem. Approximately 40% of our customers have purchased an add-on from the Atlassian Marketplace. We are excited to announce that the Marketplace reached a new milestone:   $200 million in sales since its inception in 2012. It took us three years to hit the first $100 million but only a little over a year to hit the second $100 million. The success of the Marketplace demonstrates the tremendous value our customers find in integrating our products with other services and applications. JIRA Service Desk expands to external customer support and incident management Since launching three years ago as a way to help IT and business teams manage internal service requests, more than 20,000 organizations have adopted JIRA Service Desk. And as we’ve expanded across internal IT and business team use cases, we’ve heard increasing demand to use JIRA Service Desk for external customer service and support. We responded to this demand by adding several new external service and support capabilities, expanding both the reach of the product into the fast-growing external support desk market and the value the product can deliver to our customers. We also made it easier for internal and external customers to see information about incidents and downtime through an improved integration between JIRA Service Desk and StatusPage, the status and incident management product we acquired   in July of this year. Customers can access this information directly from the company's customer service portal, deflecting customer contacts so the response team stays focused on fixing the problem.  New offerings and capabilities for large enterprises Atlassian seeks to serve teams of all sizes. As we grow our product portfolio and expand to more teams within our customer base, our products become increasingly mission critical. We introduced the Data Center product line in 2014 to better serve the scaling and high-availability needs of large customers. We continue to invest in this growth area and introduced several improvements this past quarter: • Official support for running the Data Center versions of JIRA Software and Bitbucket on the Amazon Web Services (AWS) platform. This lets us meet the 

 

Q1 FY20175 Customer highlights Customers: We define 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 more than $10 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 define active licenses as those licenses that are under an active maintenance or subscription contract as of period end. We finished the first quarter of fiscal 2017 with 65,673 customers, a 27% year- over-year increase. We added 4,723 net new customers during the quarter. Net new customers during the quarter were higher than is typical because of a one- time increase in customers following our acquisition of StatusPage. Excluding StatusPage, we ended the quarter with a total customer count of 64,246, a 24% year-over-year increase, and 3,296 net new customers. Our customers represent diverse industries and geographies as our highly automated sales model allows us to target the Fortune 500,000 – not just the Fortune 500. A few of our more than 4,700 new customers during the quarter include utility software solutions provider SEDC, luggage manufacturer Samsonite, mobile device manufacturer ZTE, pet insurance administrator Petsure, luxury automotive manufacturer Bentley, asset management firm Russell Investments, organic food delivery firm Green Chef, and the Munich Airport.  Customers are using our products in all sorts of ways, across many types of teams. Here are just a handful of the myriad examples.  Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 65,673 60,950 57,431 54,262 51,636 48,622 45,640 42,780 40,070 37,250 Customers  Period ended Lufthansa Systems Lufthansa Systems, a leading provider of IT solutions in the aviation industry   that serves more than 300 airlines worldwide, uses JIRA Software, JIRA   Service Desk, JIRA Core, Confluence, FishEye, and Crucible to standardize   its processes on Atlassian products and now has over 8,000 users across the company. To highlight just one product, JIRA Core helps Lufthansa Systems' teams, from HR to marketing to information security to customer service, work smarter through project management and improved processes, ultimately delivering better service to customers. For instance, Lufthansa Systems' service delivery improvement team is made up of 30 people who need to be able to work cross-functionally with their production team and service delivery managers. Prior to using JIRA Core, the members of the team were working in a very individual way: sending direct email or having telephone calls. JIRA Core transformed the way the team works, letting them run projects collaboratively while streamlining and simplifying their processes.   

 

Q1 FY20176 Rockwell Collins Another example where we've seen our products spread like wildfire is at Rockwell Collins, a provider of avionics and IT systems to aircraft manufacturers and governmental agencies. Its usage of Atlassian tools began with a single engineering team in 2011. Today, over 20,000 employees are taking advantage of JIRA Software, Confluence, Bamboo, Bitbucket, FishEye, and Crucible. The engineering team uses JIRA Software for configuration control and process tracking as they develop avionic systems for new jets. Designers use Confluence for collaborative design work and reporting, as well as documenting team best practices. And the power and ease-of-use of our products has inspired teams in management, support, program office, marketing, and operations to use Confluence pages and JIRA Software kanban boards to manage their work more effectively.   Kabbage Kabbage, an online financial technology company, uses Atlassian products to develop its platform for personal and business loans, as well as push updates to its website six times a day on average. Kabbage's engineering and IT departments first adopted Atlassian products in 2011 and now use HipChat, Confluence, JIRA Software, JIRA Service Desk, Bamboo, and Bitbucket. In 2015, Kabbage moved the whole company to HipChat, migrating then-disjointed teams off the grab-bag assortment of communication tools being used at the time. Today the entire company uses HipChat, Confluence, and JIRA Software to better collaborate, document, and manage processes. Teams throughout Kabbage – including engineering, change management,   user experience, finance, infrastructure facilities and marketing — use JIRA Software to manage over 30 projects. Meanwhile, Kabbage's partner support, internal support, product operations, risk operations, fraud operations, and facilities teams use JIRA Service Desk to manage tickets and tasks efficiently. And Kabbage Cares, the company's employee volunteering program, uses Confluence to rally participants and share their stories, as well as JIRA Software to track employee volunteer hours.  Kabbage even uses Atlassian products to facilitate work with external   teams. They recently created a Confluence instance for a financial partner   who uses its platform to underwrite loans. Confluence lets Kabbage and   the partner document all transactions and related notes, ending what they   describe as the "torture of wading through 60+ emails in one thread" during   the underwriting process.  

 

Q1 FY2017 Revenue Total revenue for the first quarter of fiscal 2017 was $136.8 million, up 34%   year-over-year. Our revenue by line item for the quarter is as follows: • Subscription revenue primarily relates to fees earned from sales of our cloud products. A small 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 Q1’17, subscription revenue was $49.9 million, up 64% year- over-year. The growth in subscription revenue reflects more of our customers choosing our cloud products, as well as strong growth in our Data Center offerings during the quarter.  • Maintenance revenue represents 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 Q1’17, maintenance revenue was $61.7 million, up 23% year-over-year.  • License revenue is related to fees earned from the sale of perpetual licenses   for our server or behind-the-firewall products, and is recognized at the time   of sale. For Q1’17, license revenue was $17.5 million, up 13% year-over-year. 7 Financial highlights Murray Demo   Chief Financial Officer Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 $137 $128 $118 $110 $102 $92 45%50%49% 40% 39% 34% Revenue   USD in millions (Y/Y growth rate in %) $84 $84 $84 $84 $84 $84 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Subscription Maintenance Perpetual License Other $92 $102 $110 $118 $137 13% 23% 64% 28% 17% 68% 36% 11% 71%77% 39% 9% 70% 69% 45% 46% 21% Revenue by type  USD in millions (Y/Y growth rate in %) 20% $128 • Other revenue includes our portion of the fees received for sales of third-party add-ons and extensions in the Atlassian Marketplace, and for training services. For Q1’17, other revenue was $7.6 million, up 38% year-over-year.  

 

Q1 FY20178 Margins and operating expenses A reconciliation of IFRS to non-IFRS measures is provided within the tables at the end of this letter, in our earnings press release or posted on our Investor Relations website. IFRS gross margin for Q1'17 was 83.5%, compared with 83.9% for Q1'16. Non- IFRS gross margin for Q1'17 was 86.1%, compared with 86.8% for Q1'16. Gross margin in the quarter was higher than expected as we incurred lower support costs and lower depreciation expense. The accelerated depreciation expense we discussed last quarter began later in the quarter than anticipated. Lower depreciation expense in the first quarter will be offset by higher depreciation expense in the remaining three quarters of fiscal 2017. On an IFRS basis, operating expenses were $119.4 million in Q1'17, up 52% from $78.3 million in Q1'16. On a non-IFRS basis, operating expenses were $90.0 million in Q1'17, up 38% from $65.4 million Q1'16.  • Research & development expense on an IFRS basis was $67.5 million in Q1'17, compared with $39.5 million in Q1'16. Research & development expense on a non-IFRS basis was $50.4 million or 36.9% of revenue in Q1'17, compared with $39.5 million or 38.8% of revenue in Q1’16. • Marketing & sales expense on an IFRS basis was $25.0 million in Q1'17, compared with $16.3 million in Q1'16. Marketing & sales expense on a non- IFRS basis was $21.3 million or 15.5% of revenue in Q1'17, compared with $13.5 million or 13.3% of revenue in Q1'16.  • General & administrative expense on an IFRS basis was $26.9 million in Q1'17, compared with $16.6 million in Q1'16. General & administrative expense on a non-IFRS basis was $18.2 million or 13.3% of revenue in Q1'17, compared with $12.4 million or 12.2% of revenue in Q1'16.    Total employee headcount was 1,833 at the end of Q1'17. Headcount growth compared with Q4’16 was across all expense categories, with the majority in research & development. IFRS operating loss was $5.1 million for Q1'17, compared with IFRS operating income of $7.1 million for Q1'16. Non-IFRS operating income was $27.8 million,   or 20.3% of revenue for Q1'17, compared with $22.9 million or 22.5% of revenue for Q1'16. Operating margin for the quarter was higher than targeted due to higher revenue and gross margin, as well as lower consulting and headcount related expenses. Net income IFRS net loss was $2.6 million, or ($0.01) per diluted share, for Q1'17 compared with IFRS net income of $5.1 million, or $0.03 per diluted share, for Q1'16. Non- IFRS net income was $22.7 million, or $0.10 per diluted share, for Q1'17 compared with $18.4 million, or $0.11 per diluted share, for Q1'16.    Balance sheet Atlassian finished Q1'17 with $754.3 million in cash, cash equivalents and short- term investments.   Free cash flow Free cash flow for Q1'17 was $26.1 million, comprised of cash flow from operations of $28.5 million, less capital expenditures of $2.4 million. Free cash flow margin, defined as free cash flow as a percentage of revenue, was 19.1%. 

 

Q1 FY20179 Financial targets   For the full year fiscal 2017, our financial targets are as follows:  • Total revenue is expected to be in the range of $597 million to $603 million. • Gross margin is expected to be in the range of 82% to 83% on an IFRS basis   and in the range of 84% to 85% on a non-IFRS basis. • Operating margin is expected to be approximately (10%) on an IFRS basis and approximately 16% on a non-IFRS basis. • Weighted-average share count is expected to be in the range of 234 million to 236 million shares on a fully diluted basis. • Net loss per diluted share is expected to be in the range of ($0.18) to ($0.17) on an IFRS basis, and net income per diluted share is expected to be in the range of $0.33 to $0.34 on a non-IFRS basis. • Free cash flow is expected to be in the range of $155 million to $165 million, which factors in capital expenditures that are expected to be approximately   $15 million in fiscal 2017. Financial targets for Second Quarter Fiscal 2017 and Full Year Fiscal 2017 For the second quarter of fiscal 2017, our financial targets are as follows: • Total revenue is expected to be in the range of $142.5 million to $144.5 million. • Gross margin is expected to be approximately 82% on an IFRS basis and approximately 84% on a non-IFRS basis. • Operating margin is expected to be approximately (8%) on an IFRS basis and approximately 16% on a non-IFRS basis. • Weighted-average share count is expected to be in the range of approximately 234 million to 236 million shares on a fully diluted basis. • Net loss per diluted share is expected to be approximately ($0.03) on an   IFRS basis, and net income per diluted share is expected to be approximately $0.08 on a non-IFRS basis. 

 

Q1 FY2017 Atlassian Corporation Plc  Consolidated statements of operations (U.S. $ and shares in thousands, except per share data)  (unaudited) 10 Three Months Ended September 30, 2016 2015 Revenues: Subscription $ 49,931 $ 30,467 Maintenance 61,741 50,354 Perpetual license 17,501 15,501 Other 7,614 5,500 Total revenues 136,787 101,822 Cost of revenues (1) (2) 22,562 16,420 Gross profit 114,225 85,402 Operating expenses: Research and development (1) 67,458 45,460 Marketing and sales (1) (2) 24,980 16,262 General and administrative (1) 26,915 16,602 Total operating expenses 119,353 78,324 Operating income (loss) (5,128) 7,078 Other non-operating income (expense), net (63) (603) Finance income 1,322 46 Finance costs (7) (8) Income (loss) before income tax benefit (expense) (3,876) 6,513 Income tax benefit (expense) 1,239 (1,431) Net income (loss) $ (2,637) $ 5,082 Net income (loss) per share attributable to ordinary shareholders: Basic $ (0.01) $ 0.03 Diluted $ (0.01) $ 0.03 Weighted-average shares outstanding used to compute net income (loss) per share attributable to ordinary shareholders: Basic 218,504 144,008 Diluted 218,504 145,513 (1) Amounts include share-based payment expense, as follows: Three Months Ended September 30, 2016 2015 Cost of revenues $ 1,339 $ 1,206 Research and development 16,999 5,921 Marketing and sales 3,515 2,742 General and administrative 8,670 4,227 (2) Amounts include amortization of acquired intangible assets, as follows: Three Months Ended September 30, 2016 2015 Cost of revenues $ 2,202 $ 1,745 Marketing and sales 196 21 

 

Q1 FY2017 Atlassian Corporation Plc Consolidated statements of financial position (U.S. $ in thousands)   (unaudited) 11 September 30, 2016 June 30, 2016 Assets Current assets: Cash and cash equivalents $ 266,745 $ 259,709 Short-term investments 487,599 483,405 Trade receivables 14,898 15,233 Current tax receivables 7,506 6,013 Prepaid expenses and other current assets 21,256 14,178 Total current assets 798,004 778,538 Non-current assets: Property and equipment, net 54,557 58,762 Deferred tax assets 147,433 127,411 Goodwill 22,697 7,138 Intangible assets, net 19,907 13,577 Other non-current assets 5,649 5,547 Total non-current assets 250,243 212,435 Total assets $ 1,048,247 $ 990,973 Liabilities Current liabilities: Trade and other payables $ 48,572 $ 57,886 Current tax liabilities 2,855 286 Provisions 5,169 4,716 Deferred revenue 180,603 173,612 Total current liabilities 237,199 236,500 Non-current liabilities: Deferred tax liabilities 10,248 6,639 Provisions 2,197 2,170 Deferred revenue 8,313 7,456 Other non-current liabilities 9,520 6,545 Total non-current liabilities 30,278 22,810 Total liabilities $ 267,477 $ 259,310 Equity Share capital $ 22,000 $ 21,620 Share premium 446,134 441,734 Other capital reserves 290,550 244,335 Other components of equity 5,448 4,699 Retained earnings 16,638 19,275 Total equity $ 780,770 $ 731,663 Total liabilities and equity $ 1,048,247 $ 990,973 

 

Q1 FY2017 Atlassian Corporation Plc Consolidated statements of cash flows (U.S. $ in thousands)  (unaudited) 12 Three Months Ended September 30, 2016 2015 Operating activities Income (loss) before income tax $ (3,876) $ 6,513 Adjustments to reconcile income (loss) before income tax to net cash provided by operating activities: Depreciation and amortization 8,042 4,534 Gain on sale of other assets (342) — Net unrealized foreign currency loss (gain) (93) 564 Share-based payment expense 30,523 14,096 Interest income (1,322) (46) Changes in assets and liabilities: Trade receivables 627 1,278 Prepaid expenses and other assets (5,186) (4,124) Trade and other payables, provisions and other non-current liabilities (8,534) (10,708) Deferred revenue 7,688 6,701 Interest received 2,296 83 Income tax paid, net of refunds (1,361) (4,487) Net cash provided by operating activities 28,462 14,404 Investing activities Business combinations, net of cash acquired (18,295) — Purchases of property and equipment (2,391) (6,155) Proceeds from sale of other assets 342 — Purchases of investments (151,736) (4,400) Proceeds from maturities of investments 34,850 19,582 Proceeds from sales of investments 111,882 — Payment of deferred consideration (185) (1,025) Net cash provided by (used in) investing activities (25,533) 8,002 Financing activities Proceeds from exercise of share options, including early exercised options 3,717 1,211 Deferred offering costs — (1,745) Net cash provided by (used in) financing activities 3,717 (534) Effect of exchange rate changes on cash and cash equivalents 390 (634) Net increase in cash and cash equivalents 7,036 21,238 Cash and cash equivalents at beginning of period 259,709 187,094 Cash and cash equivalents at end of period $ 266,745 $ 208,332 

 

Q1 FY2017 Atlassian Corporation Plc Reconciliation of IFRS to non-IFRS results (U.S. $ and shares in thousands, except per share data)  (unaudited) 13 Three Months Ended September 30, 2016 2015 Gross profit IFRS gross profit $ 114,225 $ 85,402 Plus: Share-based payment expense 1,339 1,206 Plus: Amortization of acquired intangible assets 2,202 1,745 Non-IFRS gross profit $ 117,766 $ 88,353 Operating income IFRS operating income (loss) $ (5,128) $ 7,078 Plus: Share-based payment expense 30,523 14,096 Plus: Amortization of acquired intangible assets 2,398 1,766 Non-IFRS operating income $ 27,793 $ 22,940 Net income IFRS net income (loss) $ (2,637) $ 5,082 Plus: Share-based payment expense 30,523 14,096 Plus: Amortization of acquired intangible assets 2,398 1,766 Less: Income tax effects and adjustments (7,564) (2,565) Non-IFRS net income $ 22,720 $ 18,379 Net income per share IFRS net income (loss) per share - basic $ (0.01) $ 0.03 Plus: Share-based payment expense 0.13 0.11 Plus: Amortization of acquired intangible assets 0.01 0.01 Less: Income tax effects and adjustments (0.03) (0.02) Non-IFRS net income per share - basic $ 0.10 $ 0.13 IFRS net income (loss) per share - diluted $ (0.01) $ 0.03 Plus: Share-based payment expense 0.13 0.09 Plus: Amortization of acquired intangible assets 0.01 0.01 Less: Income tax effects and adjustments (0.03) (0.02) Non-IFRS net income per share - diluted $ 0.10 $ 0.11 Weighted-average diluted shares outstanding Weighted-average shares used in computing diluted IFRS net income (loss) per share 218,504 145,513 Dilution from share options and RSUs (1) 15,609 — Dilution from share options and RSUs granted in periods prior to IPO (2) — 18,018 Weighted-average shares used in computing diluted non-IFRS net income per share 234,113 163,531 Free cash flow IFRS net cash provided by operating activities $ 28,462 $ 14,404 Less: Capital expenditures (2,391) (6,155) Free cash flow $ 26,071 $ 8,249 (1) The effects of these dilutive securities were not included in the IFRS calculation of diluted net loss per share for the three months ended September 30, 2016 because the effect would have been anti-dilutive. (2) Gives effect to share options and RSUs in periods prior to our IPO for comparability. 

 

Q1 FY2017 Atlassian Corporation Plc Reconciliation of IFRS to non-IFRS   financial targets (U.S. $) 14 Three Months Ending December 31, 2016 Fiscal Year Ending June 30, 2017 Revenue $142.5 million to $144.5 million $597 million to $603 million IFRS gross margin 82% 82% to 83% Share-based payment expense 1 1 Amortization of acquired intangible assets 1 1 Non-IFRS gross margin 84% 84% to 85% IFRS operating margin (8%) (10%) Share-based payment expense 22 25 Amortization of acquired intangible assets 2 1 Non-IFRS operating margin 16% 16% IFRS net loss per share - diluted ($0.03) ($0.18) to ($0.17) Share-based payment expense 0.13 0.62 Amortization of acquired intangible assets 0.01 0.04 Income tax effects and adjustments (0.03) (0.15) Non-IFRS net income per share - diluted $0.08 $0.33 to $0.34 Weighted-average shares used in computing diluted non-IFRS net income per share 234 million to 236 million 234 million to 236 million IFRS net cash provided by operations $170 million to $180 million Less: Capital expenditures (15 million) Free cash flow $155 million to $165 million 

 

Q1 FY2017 Forward-looking statements This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as “may,” “will,” “should,” “might,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that articulate our expectations, strategy, plans or intentions. Forward-looking statements contained in this press release include, but are not limited to, statements about our products, including our investments in products, 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 per diluted share and free cash flow. Atlassian undertakes 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, Atlassian’s 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 Atlassian’s financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section titled “Risk Factors” in the company’s Form 20-F previously filed with the SEC. These documents are available on the SEC Filings section of the Investor Relations section of Atlassian’s 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 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 and related income tax effects on these items. • Free cash flow. Free cash flow is defined as net cash provided by operating activities less capital expenditures, which consists primarily of purchases of property and equipment. We exclude expenses related to share-based compensation, amortization of acquired intangible assets and income tax effect on these items 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 and the tax effects of those items allow for more meaningful comparisons between our operating results from period to period. 15 

 

Q1 FY2017 We include the effect of our outstanding share options and restricted share units (“RSUs”) in weighted-average shares used in computing non-IFRS net income per diluted share. IFRS excludes the impact of the full weighting of these outstanding equity awards until the effectiveness of our IPO. We have presented the full weighting impact of these additional shares from previously granted share options and RSUs, as if they were outstanding from the date of grant, in order to provide investors with insight into the full impact of all potentially dilutive awards outstanding and to provide comparability. 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. 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 letter 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. 16 

 

Q1 FY201717 About Atlasssian Atlassian unleashes the potential in every team. Our collaboration software   helps teams organize, discuss and complete shared work. Teams at more than 65,000 large and small organizations — including Citigroup, eBay, CocaCola, 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 about products including JIRA Software, Confluence, HipChat, Bitbucket and JIRA Service   Desk at https://atlassian.com. Investor relations contact: Ian Lee, IR@atlassian.com  Media Contact: Heather Staples, press@atlassian.com Ian Lee   Investor relations contact Heather Staples   Media contact