Atlassian (TEAM)2024-11-01 20:10Customer Base and Revenue - The company has over 300,000 customers as of September 30, 2024, with active use extending beyond this base due to free and starter products[121] - Customers with greater than $10,000 in Cloud ARR represent the majority of the company's Cloud revenue[121] - The number of customers with greater than $10,000 in Cloud ARR increased from 40,103 in September 2023 to 46,844 in September 2024[122] Subscription and Cloud Revenue - Subscription revenues are driven by the number and size of active licenses, product type, and license prices, with contractual terms ranging from one to twelve months[126] - The company expects subscription revenue to increase and remain the primary driver of revenue growth[128] - Cloud revenues increased by $187.7 million, or 31%, to $792.3 million in Q3 2024, while Data Center revenues grew by $92.7 million, or 38%, to $335.6 million[146] Financial Performance - Total revenues increased by $210.0 million, or 21%, to $1,187.8 million in Q3 2024 compared to Q3 2023, driven by increased demand from existing customers[143] - Subscription revenues grew by $280.0 million, or 33%, to $1,131.9 million in Q3 2024, primarily due to paid seat expansion, migrations, and price increases[144] - Other revenues decreased by $70.0 million, or 56%, to $55.8 million in Q3 2024, mainly due to a $75.5 million decline in maintenance revenue from discontinued Server offerings[145] - Net loss widened to $123.8 million in Q3 2024 from $31.9 million in Q3 2023, with the provision for income taxes increasing by $72.7 million to $93.6 million[142] Expenses and Investments - Cost of revenues is expected to rise as the company invests in cloud-based infrastructure to support migrations and Cloud customers[130] - Gross margin is expected to modestly decrease due to a sales mix shift from Data Center offerings to Cloud offerings, driven by increased hosting and personnel costs[131] - Research and development expenses increased by $121.4 million, or 25%, to $603.1 million in Q3 2024, primarily due to higher employee compensation costs[149] - Marketing and sales expenses grew by $58.8 million, or 30%, to $252.4 million in Q3 2024, driven by increased employee compensation and advertising costs[150] Cash Flow and Financing - Free cash flow decreased by $88.9 million in Q3 2024 compared to Q3 2023, primarily due to decreased net cash from operating activities and increased capital expenditures[124] - Net cash provided by operating activities decreased by $86.5 million, primarily due to higher employee bonus payments, supplier payments, and income taxes[164] - Net cash used in investing activities decreased by $38.2 million, driven by a $71.8 million reduction in marketable securities outflows[165] - Net cash used in financing activities increased by $120.9 million, mainly due to $117.7 million in Class A Common Stock repurchases[166] Debt and Share Repurchase - The company has $500 million in 5.250% senior notes due 2029 and $500 million in 5.500% senior notes due 2034[167] - A $750 million senior unsecured revolving credit facility was established in August 2024, replacing the previous $1 billion term loan and $500 million revolving credit facility[168] - The 2024 Share Repurchase Program authorizes up to $1.5 billion in Class A Common Stock repurchases, following the completion of the 2023 Repurchase Program[169] - Approximately 1.1 million shares of Class A Common Stock were repurchased for $183.9 million at an average price of $162.57 per share during Q3 2024[170] Tax and Regulatory Impact - The global minimum corporate income tax of 15% may impact the company's effective tax rate and cash tax payments starting fiscal year 2025[161] - Provision for income taxes increased by $72.7 million, a 347% rise compared to the same period in 2023, primarily due to changes in the mix of earnings and losses in foreign jurisdictions[156] - The projected non-GAAP tax rate for fiscal year 2025 is determined to be 26%[180] GAAP and Non-GAAP Metrics - GAAP gross profit for Q3 2024 was $970.157 million, compared to $799.746 million in Q3 2023[178] - Non-GAAP gross profit for Q3 2024 was $998.487 million, compared to $822.339 million in Q3 2023[178] - GAAP operating loss for Q3 2024 was $(31.978) million, compared to $(18.869) million in Q3 2023[178] - Non-GAAP operating income for Q3 2024 was $268.050 million, compared to $224.943 million in Q3 2023[178] - GAAP net loss for Q3 2024 was $(123.769) million, compared to $(31.883) million in Q3 2023[178] - Non-GAAP net income for Q3 2024 was $199.700 million, compared to $168.980 million in Q3 2023[178] - Free cash flow for Q3 2024 was $74.341 million, compared to $163.287 million in Q3 2023[178] - Weighted-average diluted shares outstanding for Q3 2024 was 260,775, compared to 258,915 in Q3 2023[178] - GAAP net loss per share - diluted for Q3 2024 was $(0.48), compared to $(0.12) in Q3 2023[178] Regional Revenue - Americas revenues rose by $95.0 million, or 19%, to $584.5 million in Q3 2024, with EMEA and Asia Pacific revenues increasing by $91.3 million (24%) and $23.8 million (22%) respectively[147] Other Financial Metrics - Other expense, net increased by $11.1 million, or 133%, to $19.4 million in Q3 2024, mainly due to higher equity method investment losses and foundation contributions[152] - Interest income rose by $3.3 million, or 13%, to $28.6 million in Q3 2024, reflecting higher investment balances[153] - Cash and cash equivalents totaled $2.1 billion, marketable securities $161.4 million, and accounts receivables $484.1 million as of September 30, 2024[162]