Atlassian : Q2 2021 Transcript

Corrected Transcript

28-Jan-2021

Atlassian Corp. Plc (TEAM)

Q2 2021 Earnings Call

	Total Pages: 23
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Atlassian Corp. Plc (TEAM)	Corrected Transcript
Q2 2021 Earnings Call	28-Jan-2021

CORPORATE PARTICIPANTS

Matthew Sonefeldt	James A. Beer
Vice President-Investor Relations, Atlassian Corp. Plc	Chief Financial Officer, Atlassian Corp. Plc
Scott Farquhar	Michael Cannon-Brookes
Co-Founder,Co-Chief Executive Officer & Director, Atlassian Corp. Plc	Co-Founder,Co-Chief Executive Officer & Director, Atlassian Corp. Plc

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OTHER PARTICIPANTS

Alex Kurtz	J. Derrick Wood
Analyst, KeyBanc Capital Markets, Inc.	Analyst, Cowen and Company
Keith Eric Weiss	Rob Oliver
Analyst, Morgan Stanley & Co. LLC	Analyst, Robert W. Baird & Co., Inc.
Ittai Kidron	Rishi N. Jaluria
Analyst, Oppenheimer & Co., Inc.	Analyst, D.A. Davidson & Co.
Michael Turrin	Luv Sodha
Analyst, Wells Fargo Securities LLC	Analyst, Jefferies LLC
Arjun Bhatia	Jack Andrews
Analyst, William Blair & Co. LLC	Analyst, Needham & Co. LLC
Robert Majek	Pat Walravens
Analyst, Raymond James & Associates, Inc.	Analyst, JMP Securities LLC
Walter H. Pritchard	Frederick Havemeyer
Analyst, Citigroup Global Markets, Inc.	Analyst, Macquarie Capital (USA), Inc.
Gregg Moskowitz	Ari Terjanian
Analyst, Mizuho Securities USA LLC	Analyst, Cleveland Research Co. LLC
David Hynes
Analyst, Canaccord Genuity LLC

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Atlassian Corp. Plc (TEAM)	Corrected Transcript
Q2 2021 Earnings Call	28-Jan-2021

MANAGEMENT DISCUSSION SECTION

Operator: Good afternoon. Thank you for joining Atlassian's Earnings Conference Call for the Second Quarter of Fiscal Year 2021. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Atlassian's website following this call.

I will now hand the call over to Matt Sonefeldt, Atlassian's head of Investor Relations.

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Matthew Sonefeldt

Vice President-Investor Relations, Atlassian Corp. Plc

Good afternoon and welcome to Atlassian's second quarter of fiscal 2021 earnings call. Thank you for joining us today. On the call today, we have Atlassian's Co-Founders and Co-CEOs, Scott Farquhar and Mike Cannon- Brookes; as well as our Chief Financial Officer, James Beer.

Earlier today, we issued a press release and a shareholder letter with our financial results and commentary for our second quarter of fiscal 2021. The shareholder letter was posted on our company blog and all items have also been posted to the Investor Relations section of Atlassian's website. On our IR site, we have also posted a supplemental data sheet. During the call, we'll make brief opening remarks and then spend the remainder of time on Q&A.

This call will include forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. 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, and we assume no obligation to update or revise such statements should they change or cease to be current. Further information on these and other factors that could affect the company's financial results is included in filings we make with the Securities and Exchange Commission from time to time, including the section entitled Risk Factors in our most recent Form 20-F and quarterly Form 6-K.

In addition, during today's call, we will discuss non-IFRS financial measures. These non-IFRS financial measures are in addition to and are 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 our nearest IFRS equivalents and it may be different from non- IFRS measures and non-GAAP measures used by other companies. A reconciliation between IFRS and non-IFRS financial measures is available in our earnings release, our shareholder letter, and in our updated investor data sheet on the IR website.

During Q&A, please ask your full question upfront so that we can easily move through to the next speaker. Lastly, we have announced dates for Team 2021, our virtual annual customer conference, taking place April 28 and 29. We hope to see you there.

With that, I'll turn this call to Scott for opening remarks.

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Atlassian Corp. Plc (TEAM)	Corrected Transcript
Q2 2021 Earnings Call	28-Jan-2021

Scott Farquhar

Co-Founder,Co-Chief Executive Officer & Director, Atlassian Corp. Plc

Thank you, everyone, for joining today. We hope you and your loved ones remain safe during these challenging times.

We hope you're taking the time to read the shareholder letter. This quarter, we focused on three themes tied to Atlassian's long-term focus. First, that we're off to a strong start in our multi-year initiative to migrate our server customers to the cloud. Second, we continue to deliver mission critical solutions for our customers across large TAMs through products like Jira Service Management which launched in Q2. And third, that we will continue to use the cloud to deliver innovation to customers small and large in our ultimate goal to serve the Fortune 500,000.

Our business results reflect steady execution against our goals. In Q2, we generated $501 million in revenue, up 23% year-over-year. We also achieved subscription revenue growth of 36%. During the quarter, we added a record 11,617 net new customers of all sizes, bringing our total count to over 194,000. While we're proud of these results, there's plenty of hard work that lies ahead.

Before we move to Q&A, Mike and I want to thank our employees who continue to inspire us with their passion for customers and their adaptability. You make unleashing the potential of all things possible. With that, I'll pass the call to the speaker.

So I called him speaker. They're waiting for me to say the word operator.

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QUESTION AND ANSWER SECTION

Operator: [Operator Instructions] Your first question comes from the line of Alex Kurtz with KeyBanc Capital Markets. Your line is open.

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Alex Kurtz

Analyst, KeyBanc Capital Markets, Inc.

Q

Yeah, thanks. Thanks for taking the question. Just on the new customer adds, the strength there, what drove that? Is there something changing with the SMB customer base? Is there certain verticals that stood out to you? Just a little bit of context around that.

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Scott Farquhar

Co-Founder,Co-Chief Executive Officer & Director, Atlassian Corp. Plc

A

Yeah. Great question. Look, if you've been around for a while, Alex, you'll know that the new customer number bounces around a lot. We had about 3,000 in Q4, 8,000 and a bit in Q1 and, of course, 11,500 now. And it's not a number we guide towards or we really manage into Atlassian. And it's also always been a pretty small driver of immediate revenue being the smallest of our customers.

What changed this quarter is with a lot of the funnel changes. We've gone around three in some of our products. Also, in Trello, we changed the monetization funnels. A lot of those areas which we are really proud of like they're

• it kind of put us in the right place for very long-term growth. They did change sort of the mix of customer ratios and we do have a larger mix of smaller customers.

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