Atlassian : Q4 2021 Transcript

Corrected Transcript

29-Jul-2021

Atlassian Corp. Plc (TEAM)

Q4 2021 Earnings Call

	Total Pages: 17
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Atlassian Corp. Plc (TEAM)	Corrected Transcript
Q4 2021 Earnings Call	29-Jul-2021

CORPORATE PARTICIPANTS

Martin Lam	James A. Beer
Senior Manager-Investor Relations, Atlassian Corp. Plc	Chief Financial Officer, Atlassian Corp. Plc
Michael Cannon-Brookes
Co-Founder,Co-Chief Executive Officer & Director, Atlassian Corp. Plc

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OTHER PARTICIPANTS

Luke Morison	Keith Bachman
Analyst, Canaccord Genuity LLC	Analyst, BMO Capital Markets Corp.
Keith Weiss	Ari Terjanian
Analyst, Morgan Stanley & Co. LLC	Analyst, Cleveland Research Co. LLC
Rob Oliver	George Iwanyc
Analyst, Robert W. Baird & Co., Inc.	Analyst, Oppenheimer & Co., Inc.
Tyler Radke	Fred Havemeyer
Analyst, Citigroup Global Markets, Inc.	Analyst, Macquarie Group
Gregg Moskowitz	Luv Sodha
Analyst, Mizuho Securities USA LLC	Analyst, Jefferies LLC
James E. Fish	Michael Turrin
Analyst, Piper Sandler & Co.	Analyst, Wells Fargo Securities LLC

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Atlassian Corp. Plc (TEAM)	Corrected Transcript
Q4 2021 Earnings Call	29-Jul-2021

MANAGEMENT DISCUSSION SECTION

Operator: Good afternoon. Thank you for joining Atlassian's Earnings Conference Call for the Fourth 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 Martin Lam, Atlassian's Head of Investor Relations. Sir, please go ahead.

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Martin Lam

Senior Manager-Investor Relations, Atlassian Corp. Plc

Good afternoon and welcome to Atlassian's fourth quarter of fiscal year 2021 earnings call. Thank you for joining us today. On the call today, we have Atlassian's Co-Founder and Co-CEO, Mike Cannon-Brookes and our Chief Financial Officer, James Beer.

Earlier today, we issued a shareholder letter and press release with our financial results and commentary for our fourth quarter and full fiscal year 2021. The shareholder letter is available on Atlassian's Work Life blog and the Investor Relations section of our website where you'll also find other earnings-related materials including the earnings press release and supplemental investor datasheet.

During the call today, we will 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.

During today's call, we will also 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. The reconciliation between IFRS and non-IFRS financial measures is available in our shareholder letter, earnings release and investor datasheet on the IR website.

During Q&A, please ask your full question upfront so that we can be fair and easily move on to the next speaker. With that, I'll turn the call over to Mike for opening remarks.

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Michael Cannon-Brookes

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

Thanks for joining the call today, everyone, wherever you are in the world. Scott's out on holiday. So, it'll be just James and I taking your questions today. We're in lockdown here in Australia. So, I hope you and your loved ones are safe wherever you are. As you've already read in our shareholder letter, our Q4 was a ripper of a quarter as

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Atlassian Corp. Plc (TEAM)	Corrected Transcript
Q4 2021 Earnings Call	29-Jul-2021

we say down here. We added over 23,000 net new customers. We generated revenue of $560 million, up 30% year-over-year.

Importantly, we grew subscription revenue 50% year-over-year with cloud revenue up 47% year-over-year. And our cloud migration momentum continues to build. Our strong Q4 caps off another year that we're incredibly proud of. We entered FY 2021 staring down headwinds and we exited stronger than ever before. I'm proud of our resilience and our ability to execute during a difficult year. We've continued to deliver innovation to technical and non-technical teams, building new products and new capabilities on top of our world class cloud platform. We surged past 200,000 customers and $2 billion in revenue. We followed through on what we said that we would do. We played offense. We've added more than 1,500 Atlassians to our team. And we'll continue to play offense into FY 2022 and beyond. We still have a lot of work to do, but the opportunities in front of Atlassian have never been greater, and we're keen to seize those opportunities.

Before we move to Q&A, I want to take a moment to thank the thousands of Atlassians around the world whose resilience, passion and commitment drive the innovation that we continue to deliver to our customers every day, every month and every quarter.

With that, I'll pass to the operator for your questions.

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QUESTION AND ANSWER SECTION

Operator: [Operator Instructions] Your first question comes from the line of David Hynes from Canaccord. Your line is now open.

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Luke Morison

Analyst, Canaccord Genuity LLC

Q

Hey, guys. This is Luke on for DJ. Thanks for taking the question. So, I just had a quick one, I guess, product- oriented thinking about your ITSM capabilities. That whole solution set has been considerably bolstered over the last couple years starting with Jira Service Desk and adding incremental functionality with OpsGenie for incident management, Mindville for asset management, Confluence solves knowledge management. It feels like a really full complete solution at this point, which begs the question do you feel like there are other areas there that would still be logical additions to become part of the platform? Thanks.

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Michael Cannon-Brookes

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

A

Thanks. Maybe, I can take that one. Look, we are extremely uniquely positioned in ITSM. We see that positioning resonating with customers every single day. As companies are increasingly blending the line between their software folks and their ops folk, between dev and IT, however you say it, we have a single unified pane of glass as we say in JSM and then extending to the whole Atlassian family. I think, we've been very thoughtful and consistent in how we've grown that from two, three years ago when we said we were doubling down on the IT space. And then almost every quarter or six months since then you've seen a steady drumbeat of improvements as we've continued to build the capabilities and go after the opportunities that exist there. We're still going to keep doing that.

We believe in the opportunities in the broader IT space very deeply. We think we're the only company that can address those unique requirements, as those companies head into the future from 50 person companies, all the

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Atlassian Corp. Plc (TEAM)	Corrected Transcript
Q4 2021 Earnings Call	29-Jul-2021

way up to 500,000 person companies. We're very unique in our breadth and span there, and you see it turning up in the results. So, I guess, I don't have a concrete answer other than we deeply believe in the opportunity in front of us in that area, and our uniqueness and position, and it's - I think, it's showing in the business we're getting with customers.

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Operator: Thank you. Your next question comes from the line of Keith Weiss from Morgan Stanley. Your line is now open.

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Keith Weiss

Analyst, Morgan Stanley & Co. LLC

Q

Great quarter, guys, and a really fantastic end to the fiscal year. It really seems like something has catalyzed or something has shifted over the past two quarters. You talked in the letter about the 70% acceleration in large customers coming over to cloud. Prior, you guys were a little bit more cautious on the pace of that transition. 23,000 customer adds is just a eye-popping number compared to like the 8,000 you did a year ago. Is there something in particular? Is it the macro environment? Is it just like the product strategy gelling, the distribution strategy gelling? Is there something you could point to for that sort of what seems like a catalyst or an inflection point and the momentum on the cloud strategy in just, like, overall customer additions?

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Michael Cannon-Brookes

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

A

Yeah. Hey, Keith. That's a - look, I think, we're in a great position across the board, and we continue to take our long-term thoughts in mind. If you think about the last year, in such a maelstrom, boneheaded moves that are really easy to make, and we've kept our heads. We've been very sensible about how we have made decisions throughout these last 12 to 18 months and continue to focus on the long term and focus on our customers.

And so, the strength that you are seeing across the board in so many different areas comes from thousands of really smart, really thoughtful long-term decisions that we've made that are continuing to drive the pace and progress of Atlassian and the value to the customers. I don't think anything particularly has changed in the last two years in that philosophy and strategy, which I always say is more important than individual decisions.

You can certainly point to things like free, which has significantly expanded our funnel and ability to grow the customer number at various sites. You can point to the continued integration of Trello. You yourself have probably asked the whole series of Trello question over the last four years, and our answers have been very consistent and very much the same. And that is four years' worth of work from the Trello team and the all the parts of Atlassian in bringing that in and continue to make it part of the family. That continues to pay off, as is our broader shift in migration to the cloud, which gives us a lot of fantastic capabilities for those customers right on top of our platform and all the other things that cloud brings us.

So, I don't have a singular shift. I don't think there's any individual thing that's changed. I think, it's our 20 years of Atlassian history and making long term decisions and continue to execute it at a very, very high level against those decisions. That is, that continues.

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Operator: Thank you. Your next question comes from the line of Rob Oliver from Baird. Your line is now open.

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Rob Oliver

Analyst, Robert W. Baird & Co., Inc.

Q

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