New revenue recognition standard - IFRS 15 July 26, 2018 Legal - PowerPoint PPT Presentation

New revenue recognition standard - IFRS 15 July 26, 2018

Legal disclosure This presentation 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 Atlassian’s statements on the impact of IFRS 15, Revenue from Contracts with Customers, on its income statement, balance sheet, and cash flow statement. Atlassian undertakes no obligation to update any forward-looking statements made in this presentation to reflect events or circumstances after the date of this presentation 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. This presentation includes certain non-IFRS financial measures and unaudited, estimated impacts related to IFRS 15. These non-IFRS financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. There are a number of limitations related to the use of these non-IFRS financial measures versus their nearest IFRS equivalents. For example, other companies may calculate non-IFRS financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-IFRS financial measures as tools for comparison. We have provided a reconciliation of those measures to the most directly comparable IFRS measures, which is available in the appendix. 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 website at: https:// investors.atlassian.com. 2

adoption of IFRS 15 Income statement Balance sheet IMPACT IMPACT Deferred revenue: Subscription revenue: Adoption date • Decreases (as more revenue • A portion of our revenue from term- July 1, 2018 recognized up-front) based licenses for our Data Center products will be recognized earlier Maintenance / Perpetual license / Full retrospective adoption Other revenue: FY’17 and FY’18 adjusted • Unused maintenance upon Server Cash flow statement product upgrades will be allocated between Maintenance, Perpetual license IMPACT and Other revenue (previously allocated Operating cash flow: in-full to Perpetual license revenue) • No change Expense: Free cash flow: • Commission expense decrease • No change (immaterial) 3

Total Revenue (IFRS 15 Adjusted) Total Revenue (Previously Reported) 41% 41% TOTAL REVENUE Previously Reported vs. IFRS 15 Adjusted USD IN MILLIONS $881.0 $874.0 $246.6 $243.8 $626.7 $619.9 $224.3 $214.6 $223.7 $212.6 $195.5 $193.8 Q1'18 Q2'18 Q3'18 Q4'18 FY17 FY18 Y/Y GROWTH RATE 4

64% 67% Subscription Revenue (Previously Reported) Subscription Revenue (IFRS 15 Adjusted) SUBSCRIPTION REVENUE Previously Reported vs. IFRS 15 Adjusted USD IN MILLIONS $410.7 $403.2 $120.3 $117.4 $106.3 $249.8 $242.1 $105.6 $97.7 $95.8 $86.4 $84.4 Q1'18 Q2'18 Q3'18 Q4'18 FY18 FY17 Y/Y GROWTH RATE 5

Gross Profit (IFRS 15 Adjusted) Gross Profit (Previously Reported) IFRS GROSS PROFIT Previously Reported vs. IFRS 15 Adjusted $708.3 $701.3 $507.5 $500.8 USD IN MILLIONS FY17 FY18 6

Gross Margin (IFRS 15 Adjusted) % OF REVENUE Gross Margin (Previously Reported) Gross Profit (IFRS 15 Adjusted) Gross Profit (Previously Reported) NON-IFRS GROSS PROFIT Previously Reported vs. IFRS 15 Adjusted $741.4 $734.4 $529.0 $522.2 USD IN MILLIONS FY17 FY18 84.2% 84.4% 84.2% 84.0% FY17 FY18 7

Gross Profit (IFRS 15 Adjusted) Gross Profit (Previously Reported) IFRS GROSS PROFIT Previously Reported vs. IFRS 15 Adjusted $202.4 $199.6 $179.1 USD IN MILLIONS $171.4 $178.5 $169.5 $155.4 $153.7 Q1'18 Q2'18 Q3'18 Q4'18 8

Gross Profit (IFRS 15 Adjusted) Gross Profit (Previously Reported) Gross Margin (IFRS 15 Adjusted) Gross Margin (Previously Reported) NON-IFRS GROSS PROFIT Previously Reported vs. IFRS 15 Adjusted $210.5 $207.6 $187.4 $179.9 USD IN MILLIONS $186.8 $163.7 $177.9 $162.0 Q1'18 Q2'18 Q3'18 Q4'18 85.3% 85.2% % OF REVENUE 83.8% 83.7% 83.5% 83.7% 83.6% 83.5% Q1'18 Q2'18 Q3'18 Q4'18 9

Operating Expenses (Previously Reported) Operating Expenses (IFRS 15 Adjusted) IFRS OPERATING EXPENSES Previously Reported vs. IFRS 15 Adjusted USD IN MILLIONS $755.0 $754.3 $204.9 $204.9 $189.4 $563.9 $563.4 $184.4 $189.4 $175.7 $184.7 $176.1 Q1'18 Q2'18 Q3'18 Q4'18 FY17 FY18 10

Operating Expenses (Previously Reported) Operating Expenses (IFRS 15 Adjusted) NON-IFRS OPERATING EXPENSES Previously Reported vs. IFRS 15 Adjusted USD IN MILLIONS $568.0 $567.3 $160.1 $160.1 $148.4 $418.0 $417.5 $148.4 $133.2 $133.5 $125.5 $125.9 Q1'18 Q2'18 Q3'18 Q4'18 FY17 FY18 11

Operating Income (Previously Reported) Operating Income (IFRS 15 Adjusted) IFRS OPERATING INCOME Previously Reported vs. IFRS 15 Adjusted USD IN MILLIONS ($46.0) ($53.7) ($55.8) ($63.1) FY17 FY18 12

Operating Margin (Previously Reported) Operating Margin (IFRS 15 Adjusted) Operating Income (IFRS 15 Adjusted) Operating Income (Previously Reported) NON-IFRS OPERATING INCOME Previously Reported vs. IFRS 15 Adjusted $174.1 $166.4 $111.5 $104.2 USD IN MILLIONS FY17 FY18 19.8% 19.0% 17.8% % OF REVENUE 16.8% FY17 FY18 13

Operating Income (IFRS 15 Adjusted) Operating Income (Previously Reported) IFRS OPERATING INCOME Previously Reported vs. IFRS 15 Adjusted ($2.5) ($5.3) ($10.3) ($13.0) USD IN MILLIONS ($10.9) ($15.3) ($20.3) ($22.3) Q1'18 Q2'18 Q3'18 Q4'18 14

Operating Income (IFRS 15 Adjusted) Operating Income (Previously Reported) Operating Margin (IFRS 15 Adjusted) Operating Margin (Previously Reported) NON-IFRS OPERATING INCOME Previously Reported vs. IFRS 15 Adjusted $50.3 $46.7 $47.5 USD IN MILLIONS $44.4 $39.0 $38.2 $38.4 $36.1 Q1'18 Q2'18 Q3'18 Q4'18 21.7% 20.4% % OF REVENUE 19.5% 20.9% 17.4% 19.5% 18.6% 17.1% Q1'18 Q2'18 Q3'18 Q4'18 15

REVENUE Previously Reported vs. IFRS 15 Adjusted Previously 
 IFRS 15 Delta Reported Adjusted Revenue FY17 FY18 FY17 FY18 △ FY17 △ FY18 $242.1 $403.2 $249.8 $410.7 $7.7 $7.5 Subscription 265.5 325.9 264.5 326.5 (1.0) 0.6 Maintenance 74.6 85.5 74.1 83.2 (0.5) (2.3) Perpetual license 37.7 59.4 38.3 60.6 0.6 1.2 Other $619.9 $874.0 $626.7 $881.0 $6.8 $7.0 Total revenues USD in millions 16

REVENUE Previously Reported vs. IFRS 15 Adjusted Previously Reported Q1’18 Q2’18 Q3’18 Q4’18 $84.4 $95.8 $105.6 $117.4 Subscription 76.3 80.4 81.9 87.3 Maintenance 19.9 21.7 21.3 22.5 Perpetual license 13.2 14.7 14.9 16.6 Other $193.8 $212.6 $223.7 $243.8 Total revenues IFRS 15 Adjusted Q1’18 Q2’18 Q3’18 Q4’18 $86.4 $97.7 $106.3 $120.3 Subscription 76.2 80.5 82.2 87.6 Maintenance 19.5 21.4 20.6 21.7 Perpetual license 13.4 15.0 15.2 17.0 Other $195.5 $214.6 $224.3 $246.6 Total revenues USD in millions 17

IFRS KEY FINANCIAL METRICS Previously Reported vs. IFRS 15 Adjusted Previously 
 IFRS 15 Delta Reported Adjusted FY17 FY18 FY17 FY18 △ FY17 △ FY18 $500.8 $701.3 $507.5 $708.3 $6.7 $7.0 Gross profit 80.8% 80.2% 81.0% 80.4% 0.2% 0.2% Gross margin ($63.1) ($53.7) ($55.8) ($46.0) $7.3 $7.7 Operating loss (10.2%) (6.2%) (8.9%) (5.2%) 1.3% 1.0% Operating margin ($42.5) ($119.3) ($37.4) ($113.4) $5.1 $5.9 Net loss ($0.19) ($0.52) ($0.17) ($0.49) $0.02 $0.03 Diluted net loss per share Cash flow - operations $199.4 $311.5 $199.4 $311.5 $0.0 $0.0 USD in millions, except per share data 18

IFRS KEY FINANCIAL METRICS Previously Reported vs. IFRS 15 Adjusted Previously Reported Q1’18 Q2’18 Q3’18 Q4’18 Gross profit $153.7 $169.5 $178.5 $199.6 Gross margin 79.3% 79.7% 79.8% 81.9% Operating loss ($22.3) ($15.3) ($10.9) ($5.3) Operating margin (11.5%) (7.2%) (4.9%) (2.2%) Net loss ($14.0) ($65.2) ($14.3) ($25.9) Diluted net loss per share ($0.06) ($0.28) ($0.06) ($0.11) Cash flow - operations $65.2 $72.3 $91.7 $82.2 IFRS 15 Adjusted Q1’18 Q2’18 Q3’18 Q4’18 Gross profit $155.4 $171.4 $179.1 $202.4 Gross margin 79.5% 79.9% 79.8% 82.1% Operating loss ($20.3) ($13.0) ($10.3) ($2.5) Operating margin (10.4%) (6.1%) (4.6%) (1.0%) Net loss ($11.5) ($64.2) ($15.8) ($21.9) Diluted net loss per share ($0.05) ($0.28) ($0.07) ($0.09) Cash flow - operations $65.2 $72.3 $91.7 $82.2 USD in millions, except per share data 19