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
 
For the quarter ended September 30, 2021
 
Commission File Number 001-37651

Atlassian Corporation Plc
(Exact name of registrant as specified in its charter)
 
Not Applicable
(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 ☑ 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): ☐
 





QUARTERLY REPORT

1


ATLASSIAN CORPORATION PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. $ and shares in thousands, except per share data)
(unaudited)
    Three Months Ended September 30,
  Notes 2021 2020
Revenues:  
Subscription   $ 435,296  $ 277,964 
Maintenance   130,590  127,694 
Other   48,138  53,848 
Total revenues 12 614,024  459,506 
Cost of revenues (1) (2)   98,018  73,684 
Gross profit   516,006  385,822 
Operating expenses:  
Research and development (1) (2)   279,846  232,235 
Marketing and sales (1) (2)   102,928  70,286 
General and administrative (1)   93,586  71,369 
Total operating expenses   476,360  373,890 
Operating income   39,646  11,932 
Other non-operating expense, net (424,933) (26,271)
Finance income   280  2,590 
Finance costs   (7,111) (12,575)
Loss before income tax benefit (expense)   (392,118) (24,324)
Income tax benefit (expense) 5 (7,984) 2,770 
Net loss   $ (400,102) $ (21,554)
Net loss per share attributable to ordinary shareholders:  
Basic 14 $ (1.59) $ (0.09)
Diluted 14 $ (1.59) $ (0.09)
Weighted-average shares outstanding used to compute net loss per share attributable to ordinary shareholders:  
Basic 14 252,106  248,015 
Diluted 14 252,106  248,015 
(1)Amounts include share-based payment expense, as follows:
Cost of revenues $ 7,845  $ 5,256 
Research and development 72,602  61,451 
Marketing and sales 18,376  6,784 
General and administrative 20,152  12,240 
(2)Amounts include amortization of acquired intangible assets, as follows:
Cost of revenues $ 5,689  $ 5,419 
Research and development 94  41 
Marketing and sales 2,271  2,299 
The above consolidated statements of operations should be read in conjunction with the accompanying notes.
2

ATLASSIAN CORPORATION PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(U.S. $ in thousands)
(unaudited)
    Three Months Ended September 30,
  Notes 2021 2020
Net loss   $ (400,102) $ (21,554)
Items that will not be reclassified to profit or loss in subsequent periods:
Net gain (loss) on equity investments classified at fair value through other comprehensive income 3 (31,422) 57,991 
Income tax effect 7,222  (13,176)
Other comprehensive income (loss) for items that will not be reclassified to profit or loss, net of tax (24,200) 44,815 
Items that will be reclassified to profit or loss in subsequent periods:
Foreign currency translation adjustment (3,329) 1,059 
Net change in unrealized loss on debt investments classified at fair value through other comprehensive income (697) (1,313)
Net gain (loss) on cash flow hedging derivative instruments 3 (12,761) 6,602 
Income tax effect   (74) (3,234)
Other comprehensive income (loss) after tax that will be reclassified to profit or loss in subsequent periods (16,861) 3,114 
Other comprehensive income (loss), net of tax   (41,061) 47,929 
Total comprehensive income (loss), net of tax   $ (441,163) $ 26,375 

The above consolidated statements of comprehensive income (loss) should be read in conjunction with the accompanying notes.
3

ATLASSIAN CORPORATION PLC
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(U.S. $ in thousands)
Notes September 30, 2021 June 30, 2021
(unaudited)
Assets
Current assets:
Cash and cash equivalents 11 $ 1,507,418  $ 919,227 
Short-term investments 3 94,415  313,001 
Trade receivables 6 186,637  173,473 
Derivative assets 3, 13 105,211  127,486 
Prepaid expenses and other current assets 69,197  50,654 
1,962,878  1,583,841 
Assets held for sale 47,098  43,665 
Total current assets 2,009,976  1,627,506 
Non-current assets:
Property and equipment, net 7 66,604  66,221 
Deferred tax assets 30,394  36,174 
Goodwill 8 725,039  725,758 
Intangible assets, net 8 116,537  124,590 
Right-of-use assets, net 9 287,186  205,300 
Other non-current assets 11 181,388  159,795 
Total non-current assets 1,407,148  1,317,838 
Total assets $ 3,417,124  $ 2,945,344 
Liabilities
Current liabilities:
Trade and other payables 11 $ 202,330  $ 266,497 
Tax liabilities 32,107  42,051 
Provisions 25,190  25,148 
Deferred revenue 839,952  812,943 
Lease obligations 9 41,834  42,446 
Derivative liabilities 3 985,634  772,127 
Exchangeable senior notes, net 13 270,515  348,799 
Total current liabilities 2,397,562  2,310,011 
Non-current liabilities:
Deferred tax liabilities 19,471  26,625 
Provisions 12,172  12,435 
Deferred revenue 71,098  84,652 
Term loan facility, net 13 649,288  — 
Lease obligations 9 293,183  214,103 
Other non-current liabilities 1,586  2,604 
Total non-current liabilities 1,046,798  340,419 
Total liabilities 3,444,360  2,650,430 
Equity (deficit)
Share capital 25,256  25,164 
Share premium 461,017  461,016 
Other capital reserves 1,635,529  1,516,609 
Other components of equity 63,771  104,832 
Accumulated deficit (2,212,809) (1,812,707)
Total equity (deficit) (27,236) 294,914 
Total liabilities and equity (deficit) $ 3,417,124  $ 2,945,344 
The above consolidated statements of financial position should be read in conjunction with the accompanying notes.
4

ATLASSIAN CORPORATION PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(U.S. $ in thousands)
(unaudited)
Other components of equity
Share capital Share premium Other capital reserves Cash flow hedge reserve Foreign currency translation reserve Investments at fair value through other comprehensive income reserve Accumulated deficit Total equity (deficit)
Balance as of June 30, 2021 $ 25,164  $ 461,016  $ 1,516,609  $ (2,935) $ 8,675  $ 99,092  $ (1,812,707) $ 294,914 
Net loss (400,102) (400,102)
Other comprehensive loss, net of tax —  —  —  (12,967) (3,329) (24,765) (41,061)
Total comprehensive loss, net of tax (12,967) (3,329) (24,765) (400,102) (441,163)
Issuance of ordinary shares upon exercise of share options 1 1
Vesting of early exercised shares 8 (8)
Issuance of ordinary shares for settlement of restricted share units (RSUs) 84 (84)
Share-based payment 119,012 119,012
92 1 118,920 119,013
Balance as of September 30, 2021 $ 25,256  $ 461,017  $ 1,635,529  $ (15,902) $ 5,346  $ 74,327  $ (2,212,809) $ (27,236)

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
5

ATLASSIAN CORPORATION PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
(U.S. $ in thousands)
(unaudited)
Other components of equity
Share capital Share premium Other capital reserves Cash flow hedge reserve Foreign currency translation reserve Investments at fair value through other comprehensive income reserve Accumulated deficit Total Equity
Balance as of June 30, 2020 $ 24,744  $ 459,892  $ 1,130,918  $ 6,167  $ 3,759  $ 66,218  $ (1,116,392) $ 575,306 
Net loss (21,554) (21,554)
Other comprehensive income (loss), net of tax —  —  —  3,119  1,059  43,751  —  47,929 
Total comprehensive income (loss), net of tax 3,119 1,059 43,751 (21,554) 26,375
Issuance of ordinary shares upon exercise of share options 30 893 923
Vesting of early exercised shares 4 (4)
Issuance of ordinary shares for settlement of restricted share units 86 (86)
Share-based payment 85,802 85,802
Tax benefit from share plans 38 38
120 893 85,750 86,763
Balance as of September 30, 2020 $ 24,864  $ 460,785  $ 1,216,668  $ 9,286  $ 4,818  $ 109,969  $ (1,137,946) $ 688,444 

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

6

ATLASSIAN CORPORATION PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. $ in thousands)
(unaudited)
  Three Months Ended September 30,
2021 2020
Operating activities  
Loss before income tax benefit (expense)   $ (392,118) $ (24,324)
Adjustments to reconcile loss before income tax benefit (expense) to net cash provided by operating activities:  
Depreciation and amortization 13,164  13,411 
Depreciation of right-of-use assets 10,079  9,214 
Share-based payment expense   118,975  85,731 
Net loss on exchange derivative and capped call transactions 424,482  27,496 
Amortization of debt discount and issuance cost 3,722  9,173 
Interest income   (280) (2,590)
Interest expense 3,389  3,402 
Net unrealized foreign currency loss (gain) (6,398) 5,567 
Net unrealized loss on investments 500  — 
Loss (gain) on sale of investments, disposal of assets and other (615) 248 
Changes in assets and liabilities:  
Trade receivables   (13,211) (8,378)
Prepaid expenses and other assets   (20,298) (11,418)
Trade and other payables, provisions and other non-current liabilities   (66,025) (47,384)
Deferred revenue   13,455  22,636 
Interest received   895  4,156 
Income tax paid, net   (11,330) (7,475)
Net cash provided by operating activities   78,386  79,465 
Investing activities  
Business combinations, net of cash acquired —  (32,464)
Purchases of property and equipment (6,881) (7,817)
Purchases of investments   (74,003) (33,252)
Proceeds from maturities of investments 53,887  74,677 
Proceeds from sales of investments 186,262  7,087 
Payment of deferred consideration   (1,138) (185)
Net cash provided by investing activities   158,127  8,046 
Financing activities
Proceeds from exercise of share options 922 
Payments of lease obligations (12,186) (11,096)
Interest paid   (1,199) — 
Repayment of exchangeable senior notes   (314,310) (8)
Proceeds from settlement of capped call transactions   30,978  — 
Proceeds from term loan facility 650,000  — 
Net cash provided by (used in) financing activities 353,284  (10,182)
Effect of exchange rate changes on cash and cash equivalents (2,108) 2,964 
Net increase in cash and cash equivalents 587,689  80,293 
Cash and cash equivalents at beginning of period 919,227  1,479,969 
Net decrease in cash and cash equivalents included in assets held for sale   502   
Cash and cash equivalents at end of period $ 1,507,418  $ 1,560,262 
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
7



ATLASSIAN CORPORATION PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




(unaudited)
1. Corporate Information
Atlassian Corporation Plc (the “Company”) is a public company limited by shares, incorporated and registered in the United Kingdom. The registered office of the Company and its subsidiaries (collectively, “Atlassian,” the “Group,” “our,” or “we”) is located at Exchange House, Primrose Street, London EC2A 2EG, c/o Herbert Smith Freehills LLP.
We design, develop, license and maintain software and provision software hosting services to help teams organize, discuss and complete their work. Our primary products include Jira Software, targeting software teams, and Jira Work Management, targeting other business teams (collectively, “Jira”), Confluence for team content creation and sharing, Trello for capturing and adding structure to fluid, fast-forming work for teams, Jira Service Management for team service, management and support applications, Jira Align for enterprise agile planning, Bitbucket for code sharing and management, and Atlassian Access for enterprise-grade security and centralized administration.
2. Summary of Significant Accounting Policies
Basis of preparation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the Group’s accounting policies, which are in accordance with International Financial Reporting Standards (“IFRS”), and in compliance with International Accounting Standard (“IAS”) 34. Our accounting policies apply standards issued by the International Accounting Standards Board (“IASB”) and related interpretations issued by the IFRS Interpretations Committee (“IFRS IC”). The consolidated financial statements have been prepared on a historical cost basis, except for debt and equity financial assets and derivative financial instruments that have been measured at fair value.
Certain information and disclosures normally included in the notes to annual financial statements have been condensed or omitted. We believe that the condensed information and disclosures made are adequate and that the information gives a true and fair view. The information included in this quarterly report on Form 6-K should be read in conjunction with the Group’s audited consolidated financial statements and accompanying notes included in the Group’s annual report on Form 20-F for the year ended June 30, 2021, which was filed with the Securities and Exchange Commission (“SEC”) on August 13, 2021.
All amounts included in the unaudited interim consolidated financial statements are reported in thousands of U.S. dollars (U.S. $ in thousands) except where otherwise stated. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
The accompanying consolidated statements of financial position as of September 30, 2021, the consolidated statements of operations, comprehensive income (loss) and cash flows for the three months ended September 30, 2021 and 2020, the consolidated statements of changes in equity for three months ended September 30, 2021 and 2020, and related footnote information are unaudited. The consolidated statement of financial position as of June 30, 2021 was derived from the audited consolidated financial statements included in the Group’s annual report on Form 20-F. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, necessary to present fairly the Group’s financial position as of September 30, 2021, and the results of operations and cash flows for the three months ended September 30, 2021 and 2020. The results of the three months ended September 30, 2021 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year.
8

Use of estimates
The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgments and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgments and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which forms the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions and may materially affect the financial results or the financial position reported in future periods.
In January 2020, the World Health Organization declared a novel coronavirus (“COVID-19”) a Public Health Emergency of International Concern, and a pandemic in March 2020. The impact of COVID-19 continues to unfold and the extent of the impact will depend on a number of factors, including the duration and spread of the outbreak, its severity, the actions taken by governments and authorities to contain the virus or treat its impact, the effectiveness of current vaccine treatments, and how quickly and to what extent normal economic and operating conditions can resume. The Group considered the impact of COVID-19 on the assumptions and estimates used, including the allowance for credit losses for accounts receivable, the creditworthiness of customers entering into revenue arrangements, our impairment assessment of assets, the fair values of our financial instruments, and income taxes, which require increased judgement and carry a higher degree of estimate uncertainty. The Group determined that there were no material adverse impacts on the consolidated financial statements for the three months ended September 30, 2021. As events continue to evolve and additional information becomes available, the Group’s assumptions and estimates may change in future periods.
Reclassification
Certain reclassifications have been made to prior period balances in order to conform to the current period presentation. “Perpetual License” revenues have been reclassified to “Other” revenues on our consolidated statements of operation. The reclassifications have no impact on our previously reported total revenues.
Updated significant accounting policies
There have been no changes to our critical accounting policies and estimates described in the Group’s Annual Report on Form 20-F for the year ended June 30, 2021, filed with the SEC on August 13, 2021.
3. Financial Instruments
As of September 30, 2021, the Group’s investments consisted of the following:
  Amortized Cost Unrealized Gains Unrealized Losses Fair Value
  (U.S. $ in thousands)
Debt Investments      
Marketable debt securities:
U.S. treasury securities $ 83,796  $ 14  $ (20) $ 83,790 
Certificates of deposit and time deposits 5,600  —  —  5,600 
Corporate debt securities 7,611  14  —  7,625 
Non-marketable debt securities 3,000  —  (2,500) 500 
Total debt investments $ 100,007  $ 28  $ (2,520) $ 97,515 
Equity Investments
Marketable equity securities $ 10,270  $ 64,329  $ —  $ 74,599 
Non-marketable equity securities 64,000  4,388  (250) 68,138 
Total equity investments $ 74,270  $ 68,717  $ (250) $ 142,737 
Total investments $ 174,277  $ 68,745  $ (2,770) $ 240,252 
As of September 30, 2021, the Group had $94.4 million of investments which were classified as short-term investments on the Group’s consolidated statement of financial position. Additionally, the Group had marketable equity securities totaling $74.6 million, non-marketable equity securities totaling $68.1 million, and certificates of deposit and time deposits totaling $2.6 million all of which were classified as long-term and were included in other non-current assets on the Group’s consolidated statement of financial position.
9

As of June 30, 2021, the Group’s investments consisted of the following:
  Amortized Cost Unrealized Gains Unrealized Losses Fair Value
  (U.S. $ in thousands)
Debt Investments
Marketable debt securities:
U.S. treasury securities $ 209,567  $ 407  $ (26) $ 209,948 
Agency securities 5,750  —  5,752 
Certificates of deposit and time deposits 9,253  —  —  9,253 
Corporate debt securities 87,626  322  —  87,948 
Municipal securities 2,700  —  —  2,700 
Non-marketable debt securities 2,000  —  (2,000) — 
Total debt investments $ 316,896  $ 731  $ (2,026) $ 315,601 
Equity Investments
Marketable equity securities $ 10,270  $ 100,139  $ —  $ 110,409 
Non-marketable equity securities 12,000  —  (250) 11,750 
Total equity investments $ 22,270  $ 100,139  $ (250) $ 122,159 
Total investments $ 339,166  $ 100,870  $ (2,276) $ 437,760 
As of June 30, 2021, the Group had $313.0 million of investments which were classified as short-term investments on the Group’s consolidated statement of financial position. Additionally, the Group had marketable equity securities totaling $110.4 million, non-marketable equity securities totaling $11.8 million, and certificates of deposit and time deposits totaling $2.6 million, all of which were classified as long-term and were included in other non-current assets on the Group’s consolidated statement of financial position.
The table below summarizes the Group’s debt investments by remaining contractual maturity:
As of
  September 30, 2021 June 30, 2021
  (U.S. $ in thousands)
Recorded as follows:    
Due in one year or less $ 52,035  $ 265,679 
Due after one year 45,480  49,922 
Total debt investments $ 97,515  $ 315,601 

10

Fair value measurements
The following table presents the Group’s financial instruments measured and recognized at fair value as of September 30, 2021, by level within the fair value hierarchy:

Level 1 Level 2 Level 3 Total
(U.S. $ in thousands)
Description
Assets measured at fair value
Cash and cash equivalents:
Money market funds $ 7,031  $ —  $ —  $ 7,031 
Commercial paper —  98,067  —  98,067 
Short-term investments:
U.S. treasury securities —  83,790  —  83,790 
Certificates of deposit and time deposits —  3,000  —  3,000 
Corporate debt securities —  7,625  —  7,625 
Current derivative assets:
Derivative assets - hedging —  599  —  599 
Derivative assets - capped call transactions —  —  104,519  104,519 
Derivative assets - interest rate swap —  93  —  93 
Non-current derivative assets:
Derivative assets - interest rate swap —  3,691  —  3,691 
Other non-current assets:
Certificates of deposit and time deposits —  2,600  —  2,600 
Marketable equity securities 74,599  —  —  74,599 
Non-marketable equity securities —  —  68,138  68,138 
Non-marketable debt securities —  —  500  500 
Total assets measured at fair value $ 81,630  $ 199,465  $ 173,157  $ 454,252 
Liabilities measured at fair value        
Current derivative liabilities:
Derivative liabilities - hedging $ —  $ 18,489  $ —  $ 18,489 
Derivative liabilities - exchangeable feature of exchangeable senior notes —  963,860  —  963,860 
Derivative liabilities - interest rate swaps —  3,285  —  3,285 
Non-current derivative liabilities:
Derivative liabilities - hedging —  501  —  501 
Total liabilities measured at fair value $ —  $ 986,135  $ —  $ 986,135 

11

The following table presents the Group’s financial instruments measured and recognized at fair value as of June 30, 2021, by level within the fair value hierarchy:
Level 1 Level 2 Level 3 Total
(U.S. $ in thousands)
Description
Assets measured at fair value
Cash and cash equivalents:
Money market funds $ 20,966  $ —  $ —  $ 20,966 
Agency securities —  4,600  —  4,600 
Commercial paper —  149,347  —  149,347 
Short-term investments:
U.S. treasury securities —  209,948  —  209,948 
Agency securities —  5,752  —  5,752 
Certificates of deposit and time deposits —  6,653  —  6,653 
Corporate debt securities —  87,948  —  87,948 
Municipal securities —  2,700  —  2,700 
Current derivative assets:
Derivative assets - foreign exchange hedging —  3,333  —  3,333 
Derivative assets - capped call transactions —  —  124,153  124,153 
Non-current derivative assets:
Derivative assets - interest rate swaps —  3,147  —  3,147 
Other non-current assets:
Certificates of deposit and time deposits —  2,600  —  2,600 
Marketable equity securities 110,409  —  —  110,409 
Non-marketable equity securities —  —  11,750  11,750 
Total assets measured at fair value $ 131,375  $ 476,028  $ 135,903  $ 743,306 
Liabilities measured at fair value
Current derivative liabilities:
Derivative liabilities - foreign exchange hedging $ —  $ 8,058  $ —  $ 8,058 
Derivative liabilities - interest rate swaps —  3,380  —  3,380 
Derivative liabilities - exchangeable feature of exchangeable senior notes —  —  760,689  760,689 
Non-current derivative liabilities:
Derivative liabilities - foreign exchange hedging —  669  —  669 
Total liabilities measured at fair value $ —  $ 12,107  $ 760,689  $ 772,796 
Due to the short-term nature of trade receivables, contract assets and trade and other payables, their carrying amount is assumed to approximate their fair value.










12

Determination of fair value
The following table sets forth a description of the valuation techniques and the inputs used in fair value measurement:
Type Level Valuation Technique Inputs
Money market fund Level 1 Quoted price in active market N/A
Marketable equity securities Level 1 Quoted price in active market N/A
Marketable debt securities Level 2 Quoted market price to the extent possible or alternative pricing sources and models utilizing market observable inputs N/A
Non-marketable equity securities Level 3 Publicly available financing round valuation N/A
Non-marketable debt securities Level 3 Discounted cash flow Timing, probability, and amount of forecast cash flows associated with liquidation of the securities
Foreign currency forward contracts Level 2 Discounted cash flow Foreign currency spot and forward rate
Interest rate
Credit quality of counterparties
Interest rate swaps Level 2 Discounted cash flow Forward and contract interest rates
Credit quality of counterparties
Exchange feature of exchangeable senior notes
Level 3 June 30, 2021: Black-Scholes option pricing models Stock price
Time to expiration of the options
Stock price volatility
Interest rate
Level 2 September 30, 2021: Redemption settlement price* Stock price
Exchange ratio
Capped Call Derivatives Level 3 Non-binding quoted price obtained from counterparty banks N/A
*As of September 30, 2021, all outstanding Notes are called for redemption by the Company. As such, the Company used redemption settlement price as fair value.
13

Level 3 financial instruments
In April 2018, Atlassian Inc., a wholly-owned subsidiary of the Company, issued $1 billion in Notes and entered into related capped call transactions. Please refer to Note 13, “Debt” for details. The exchange feature of the Notes is valued using a Black-Scholes option pricing model as of June 30, 2021. In August 2021, all the outstanding Notes were called for redemption. We utilized the redemption settlement price as fair value as of September 30, 2021. The exchange feature of the Notes was transferred to Level 2. There were no other transfers between levels during the three months ended September 30, 2021.
The following table presents the reconciliations of Level 3 financial instrument fair values:
  Capped Call Embedded Exchange Feature of Notes Non-marketable Investments
  (U.S. $ in thousands)
Balance as of June 30, 2021 $ 124,153  $ (760,689) $ 11,750 
Settlements or purchases
(30,978) 232,654  53,000 
Gains (losses)
Recognized in other non-operating expense, net
11,344  (435,825) (500)
Recognized in other comprehensive income (loss) —  —  4,388 
Transfer Out —  963,860  — 
Balance as of September 30, 2021 $ 104,519  $ —  $ 68,638 
Change in unrealized gains (losses) relating to assets and liabilities held at the end of the reporting period
Recognized in other non-operating expense, net
9,153  (379,549) (500)
Recognized in other comprehensive income (loss) —  —  4,388 
During the three months ended September 30, 2021, the Group made three equity investments totaling $52 million in privately-held technology companies’ preferred stock financings.
14

Derivative financial instruments
The Group has derivative instruments that are used for hedging activities as discussed below and derivative instruments relating to the Notes and the capped call transactions as discussed in Note 13, “Debt.
The fair value of the hedging derivative instruments were as follows:
As of
Statement of Financial Position Location September 30, 2021 June 30, 2021
(U.S. $ in thousands)
Derivative assets - hedging
Derivatives designated as hedging instruments:
Foreign exchange forward contracts Current derivative assets $ 315  $ 3,325 
Interest rate swaps Current derivative assets 93  — 
Interest rate swaps Other non-current assets 3,691  3,147 
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts Current derivative assets 284 
Total derivative assets $ 4,383  $ 6,480 
Derivative liabilities - hedging
Derivatives designated as hedging instruments:
Foreign exchange forward contracts Current derivative liabilities $ 16,363  $ 5,336 
Interest rate swaps Current derivative liabilities 3,285  3,380 
Foreign exchange forward contracts Other non-current liabilities 501  669 
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts Current derivative liabilities 2,125  2,722 
Total derivative liabilities $ 22,274  $ 12,107 
The following table sets forth the notional amounts of our derivative instruments as of September 30, 2021 (U.S. $ in thousands):
Notional Amounts of Derivative Instruments
Notional Amount by Term to Maturity Classification by Notional Amount
Under 12 months Over 12 months Total Cash Flow Hedge Non Hedge Total
AUD/USD forward contracts:
Notional amount $ 575,616  $ 27,014  $ 602,630  $ 373,777  $ 228,853  $ 602,630 
Average forward rate 0.7445  0.7348  0.7441  0.7548  0.7265  0.7441 
EUR/USD forward contracts:
Notional amount 14,342  —  14,342  —  14,342  14,342 
Average forward rate 1.1701  —  1.1701  —  1.1701  1.1701 
Total $ 589,958  $ 27,014  $ 616,972  $ 373,777  $ 243,195  $ 616,972 
Interest rate swaps:
Notional amount $ —  $ 650,000  $ 650,000  $ 650,000  $ —  $ 650,000 
Average fixed rate 0.81  % 0.81  % 0.81  % 0.81  %
15

The following table sets forth the notional amounts of our derivative instruments at June 30, 2021 (U.S. $ in thousands):
Notional Amounts of Derivative Instruments
Notional Amount by Term to Maturity Classification by Notional Amount
Under 12 months Over 12 months Total Cash Flow Hedge Non Hedge Total
AUD/USD forward contracts:
Notional amount $ 623,321  $ 24,627  $ 647,948  $ 397,184  $ 250,764  $ 647,948 
Average forward rate 0.7563  0.7718  0.7569  0.7563  0.7579  0.7569 
EUR/USD forward contracts:
Notional amount 11,040  —  11,040  —  11,040  11,040 
Average forward rate 1.2025  —  1.2025  —  1.2025  1.2025 
Total $ 634,361  $ 24,627  $ 658,988  $ 397,184  $ 261,804  $ 658,988 
The effects of derivatives designated as hedging instruments on our consolidated financial statements were as follows (amounts presented are prior to any income tax effects):
Three Months Ended September 30,
2021 2020
(U.S. $ in thousands)
Forward Contracts:
Gross unrealized gain (loss) recognized in other comprehensive income (loss) $ (14,203) $ 9,558 
Net gain (loss) reclassified from cash flow hedge reserve into profit or loss - effective portion: $ (315) $ 2,956 
Recognized in cost of revenues 180 
Recognized in research and development (869) 2,665 
Recognized in marketing and sales 45  39 
Recognized in general and administrative 329  251 
Change in fair value used for measuring ineffectiveness:
Cash flow hedging instruments $ (14,193) $ 9,589 
Hedged item - highly probable forecast expenditures (14,203) 9,558 
Gains recognized into general and administrative - ineffective portion 10  31 
Interest rate swaps:
Gross unrealized gain recognized in other comprehensive income (loss) $ 344  $ — 
Net loss reclassified from interest rate swap reserve into finance cost (783) — 

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4. Expenses
Loss before income tax benefit (expense) included the following expenses:
  Three Months Ended September 30,
  2021 2020
  (U.S. $ in thousands)
Depreciation:    
Equipment $ 486  $ 570 
Computer hardware and software 317  410 
Furniture and fittings 812  851 
Leasehold improvements 3,496  3,820 
Total depreciation 5,111  5,651 
Amortization:
Patents and trademarks 283  300 
Customer relationships 2,222  2,216 
Acquired developed technology 5,548  5,244 
Total amortization 8,053  7,760 
Total depreciation and amortization $ 13,164  $ 13,411 
Employee benefits expense:
Salaries and wages $ 183,654  $ 144,909 
Variable compensation 37,137  24,537 
Payroll taxes 18,173  13,014 
Share-based payment expense 118,975  85,731 
Defined contribution plan expense 11,425  8,498 
Contractor expense 5,559  9,734 
Other 26,450  19,525 
Total employee benefits expense $ 401,373  $ 305,948 

5. Income Tax
The Group reported a tax expense of $8.0 million on pretax loss of $392.1 million for the three months ended September 30, 2021, as compared to a tax benefit of $2.8 million on pretax loss of $24.3 million for the three months ended September 30, 2020.
During the three months ended September 30, 2021, the Group recorded income tax expense of $7.0 million to account for the reduction in the carrying value of US deferred tax assets. The reduction in carrying value of deferred tax assets was a result of a decrease in cumulative unrealized investment gains which support their recognition.
During the three months ended September 30, 2020, the Group recorded income tax benefit of $14.7 million and $2.0 million to account for the increase in the carrying value of deferred tax assets in the US and Australia, respectively. The increases in carrying value of deferred tax assets were a result of cumulative unrealized investment and foreign exchange hedging gains that support their recognition. In addition, the Group recorded $5.4 million of income tax expense in Sweden upon transfer of Mindville’s intellectual property to the U.S.
The difference between the Group’s effective tax rate and the United Kingdom’s statutory tax rate primarily relates to its operations in foreign jurisdictions which have different statutory rates and significant permanent differences. Significant permanent differences include non-deductible expenses related to the Notes and capped call transactions, share based payments, research and development incentives, losses and future tax benefits that do not meet the relevant deferred tax recognition criterion.
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Management regularly assesses the realizability of its deferred tax assets and recognizes them to the extent that full or partial realization is probable. The Company evaluates and weighs all available positive and negative evidence such as historic results, future reversals of existing deferred tax liabilities, projected future taxable income, as well as prudent and feasible tax-planning strategies. The assessment requires significant judgment and is performed in each of the applicable jurisdictions. The unrecognized deferred tax assets at the end of September 30, 2020 are primarily related to Australia and the U.S. The Company will continue to evaluate the realizability and recognition of its deferred tax assets.
6. Trade Receivables
The Group’s trade receivables consisted of the following:
As of
  September 30, 2021 June 30, 2021
  (U.S. $ in thousands)
Gross trade receivables $ 187,259  $ 173,849 
Expected credit loss allowance (622) (376)
Total trade receivables $ 186,637  $ 173,473 
As of September 30, 2021 and June 30, 2021, no customer represented more than 10% of the total trade receivables balance, respectively.
7. Property and Equipment, Net
Property and equipment, net consisted of the following:
  Equipment Computer
Hardware
and
Software
Furniture
and
Fittings
Leasehold
Improvements and Other
Total
  (U.S. $ in thousands)
Cost as of June 30, 2021
$ 10,430  $ 9,537  $ 21,188  $ 106,996  $ 148,151 
Additions 66  140  194  5,637  6,037 
Disposals (206) (7,281) (436) (80) (8,003)
Effect of change in exchange rates (41) (11) (51) (325) (428)
Cost as of September 30, 2021
10,249  2,385  20,895  112,228  145,757 
Accumulated depreciation as of June 30, 2021
(7,545) (9,062) (11,259) (54,064) (81,930)
Depreciation expense (485) (317) (812) (3,496) (5,110)
Disposals 203  7,281  22  79  7,585 
Effect of change in exchange rates 19  11  26  246  302 
Accumulated depreciation as of September 30, 2021
(7,808) (2,087) (12,023) (57,235) (79,153)
Net book amount as of
September 30, 2021
$ 2,441  $ 298  $ 8,872  $ 54,993  $ 66,604 
8. Goodwill and Intangible Assets
Goodwill
Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill amounts are not amortized, but rather tested for impairment at least annually during the fourth quarter, or when indicators of impairment exist.
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Goodwill consisted of the following:
  Notes Goodwill
  (U.S. $ in thousands)
Balance as of June 30, 2021 $ 725,758 
Effect of change in exchange rates (719)
Balance as of September 30, 2021 $ 725,039 
There was no impairment of goodwill during the three months ended September 30, 2021.
Intangible assets
Intangible assets consisted of the following:
  Patents,
Trademarks
and Other Rights
Acquired Developed Technology Customer
Relationships
Total
  (U.S. $ in thousands)
Cost as of June 30, 2021 and September 30, 2021
$ 29,375  $ 230,849  $ 130,041  $ 390,265 
Accumulated amortization as of
June 30, 2021
(24,109) (161,937) (79,629) (265,675)
Amortization charge (283) (5,548) (2,222) (8,053)
Accumulated amortization as of September 30, 2021
(24,392) (167,485) (81,851) (273,728)
Net book amount as of
September 30, 2021
$ 4,983  $ 63,364  $ 48,190  $ 116,537 
As of September 30, 2021, no development costs have qualified for capitalization, and all development costs have been expensed as incurred.
9. Leases
The Group leases various offices in locations including, Sydney, Australia; the San Francisco Bay Area, California, New York, New York, Austin, Texas, and Boston, Massachusetts, in the United States; Amsterdam, the Netherlands; Manila, the Philippines; Bengaluru, India; Yokohama, Japan; Stockholm, Sweden; and Gdansk, Poland under leases expiring within one to eight years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.
The following table sets forth the carrying amounts of our right-of-use assets and lease obligations:
As of
  September 30, 2021 June 30, 2021
  (U.S. $ in thousands)
Assets
Right-of-use assets $ 287,186  $ 205,300 
Liabilities
Lease obligations, current 41,834  42,446 
Lease obligations, non-current 293,183  214,103 
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The following table presents information about our leases on our consolidated statements of operations:
  Three Months Ended September 30,
  2021 2020
  (U.S. $ in thousands)
Depreciation of right-of-use assets $ 10,079  $ 9,214 
Interest expense on lease obligations 1,693  1,807 
Short-term leases expense 158  155 
Low value leases expense 489  288 
The following table presents supplemental information about our leases:
  Three Months Ended September 30,
  2021 2020
  (U.S. $ in thousands)
Cash outflows:
Principal portion of the lease obligations $ 10,493  $ 9,289 
Interest portion of the lease obligations
1,693  1,807 
Short-term leases and low value leases
584  814 
Total cash outflows $ 12,770  $ 11,910 
Additions to right-of-use assets
$ 92,141  $ 3,580 
10. Business Combinations
Fiscal year 2021
Mindville
On July 24, 2020, we acquired 100% of the outstanding equity of Mindville, an asset and configuration management company based in Sweden. Total purchase price consideration for Mindville was approximately $36.4 million in cash. In addition, the Company granted $12.0 million worth of restricted shares of the Company to key employees of Mindville, which are subject to future vesting provisions based on service conditions and accounted for as share based compensation.
With the acquisition of Mindville, Atlassian brings critical configuration management database capabilities to Jira Service Management to better meet the needs of its IT customers. We have included the financial results of Mindville in our consolidated financial statements from the date of acquisition, which have not been material. Pro forma results of operations have not been presented for the twelve months ended June 30, 2021 because the effect of the acquisition was not material to the financial statements.

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The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the date of acquisition:
Fair Value
(U.S. $ in thousands)
Cash and cash equivalents $ 1,235 
Tax receivables, current 166 
Prepaid expenses and other current assets 668 
Property and equipment, net 52 
Right-of-use assets, net 403 
Intangible assets 9,600 
Goodwill 30,039 
Trade and other payables (492)
Tax liabilities (23)
Provisions, current (135)
Deferred revenue (1,300)
Lease obligations, current (268)
Deferred tax liabilities (2,694)
Lease obligations, non-current (136)
Other non-current liabilities (669)
Net assets acquired $ 36,446 
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The goodwill balance is primarily attributed to the assembled workforce and expanded market opportunities. The goodwill balance is deductible in the U.S. and not deductible in Sweden for income tax purposes. The fair values assigned to tangible assets acquired, liabilities assumed and identifiable intangible assets were based on management’s estimates and assumptions. The fair value of acquired receivables approximates the gross contractual amounts receivable. The deferred tax liabilities were primarily a result of the difference in the book basis and tax basis related to the identifiable intangible assets. Transaction costs of $1.1 million were expensed as incurred, which was included in general and administrative expenses.
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:
Fair Value Useful Life
(U.S. $ in thousands) (years)
Developed technology $ 8,200  5
Customer relationships 1,400  5
Total intangible assets subject to amortization $ 9,600 
The amount recorded for developed technology represents the estimated fair value of Mindville’s asset and configuration management solution. The amount recorded for customer relationships represents the fair value of the underlying relationships with Mindville’s customers. The purchase price allocation was finalized without further adjustment.
Chartio
On February 26, 2021, we acquired 100% of the outstanding equity of Chart.io, Inc. (“Chartio”), a data analytics and visualization tool that allows users to create dashboards and charts using their various data sources. Total purchase price consideration for Chartio was approximately $45.6 million, consisting of $45.0 million in cash and $0.6 million in equity. In addition, the Company granted $4.5 million worth of restricted shares of the Company to key employees of Chartio, which are subject to future vesting provisions based on service conditions and accounted for as share based compensation.
The acquisition of Chartio brings an analytics and data visualization solution to Atlassian’s products, including Jira Software, Jira Align and Jira Service Management. We have included the financial results of Chartio in our consolidated financial statements from the date of acquisition. Pro forma results of operations have not been
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presented for the twelve months ended June 30, 2021 because the effect of the acquisition was not material to the financial statements.
The following table summarizes the preliminary estimated fair values of assets acquired and liabilities assumed as of the date of acquisition:
Fair Value
(U.S. $ in thousands)
Cash and cash equivalents $ 1,035 
Accounts receivable 266 
Prepaid and other assets 40 
Deferred tax assets 3,009 
Developed technology 12,400 
Goodwill 33,271 
Deferred revenue (682)
Trade and other payables (676)
Deferred tax liabilities (3,095)
Net assets acquired $ 45,568 
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The goodwill balance is primarily attributed to the assembled workforce and expanded market opportunities. The goodwill balance is not deductible in the U.S. for income tax purposes. The fair values assigned to tangible assets acquired, liabilities assumed and identifiable intangible assets were based on management’s estimates and assumptions. The fair value of acquired receivables approximates the gross contractual amounts receivable. The deferred tax liabilities were primarily a result of the difference in the book basis and tax basis related to the identifiable intangible assets. The amount recorded for developed technology of $12.4 million represents the estimated fair value of Chartio’s data visualization technology and is amortized over six years.
Other fiscal year 2021 business combination
On October 27, 2020, we acquired 100% of the outstanding equity of a privately held company in Poland that primarily provided outsourced software development and support services to Atlassian for a cash consideration of approximately $10.6 million. The purchase price was allocated to net liabilities of $0.7 million and goodwill of $11.3 million. The goodwill balance is primarily attributed to the assembled workforce and is deductible in U.S. and not deductible in Poland for income tax purposes.
Our purchase price allocations are preliminary and subject to revision as additional information existing as of the respective acquisition dates but unknown to us may become available within the respective measurement periods (up to one year from the respective acquisition dates). The primary areas of the purchase price allocation that are not yet finalized are fair value of contingencies.
11. Other Balance Sheet Accounts
Cash and cash equivalents
Cash and cash equivalents consisted of the following:
As of
  September 30, 2021 June 30, 2021
  (U.S. $ in thousands)
Cash and bank deposits $ 1,397,591  $ 739,042 
Amounts due from third-party credit card processors 4,729  5,272 
Commercial paper 98,067  149,347 
Money market funds 7,031  20,966 
Agency securities —  4,600 
Total cash and cash equivalents $ 1,507,418  $ 919,227 
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The majority of the Group’s cash and cash equivalents are held in bank deposits, money market funds and short-term investments which have a maturity of three months or less to enable us to meet our short-term liquidity requirements. Money market funds are quoted in active markets and are subject to insignificant risk of changes in value. The Group only purchases investment grade securities rated A- and above, which are highly liquid and subject to insignificant risk of changes in value.
Assets held for sale
During the fourth quarter of the fiscal year ended June 30, 2021, the Group committed to a plan to sell our subsidiary, Vertical First Trust, which was established for the construction project associated with our new headquarters building in Sydney, Australia. In July 2021, the Group entered into term sheet with a buyer to effect the sale. The term sheet provides a framework for the buyer to invest in and develop the Group’s headquarters building. The Group will retain a long-term equity interest in the building. The sale is expected to be completed within fiscal year 2022. The assets were presented as held for sale in the consolidated statement of financial position as of September 30, 2021 and June 30, 2021 and measured at the lower of carrying value or fair value less cost to sell.

The major assets classified as held for sale at September 30, 2021 and June 30, 2021 and were as follows:
As of
September 30, 2021 June 30, 2021
(U.S. $ in thousands)
Cash and cash equivalents $ 8,815  $ 9,317 
Property and equipment, net 37,914  34,092 

Other non-current assets
Other non-current assets consisted of the following:
As of
September 30, 2021 June 30, 2021
(U.S. $ in thousands)
Marketable equity securities $ 74,599  $ 110,409 
Non-marketable equity securities 68,138  11,750 
Non-marketable debt securities 500  — 
Security deposits 3,101  4,267 
Restricted cash 11,795  11,795 
Derivative assets 3,691  3,147 
Deferred commission 6,228  5,175 
Other 13,336  13,252 
Total other non-current assets $ 181,388  $ 159,795 

As of September 30, 2021 and June 30, 2021, the Group had certificates of deposit and time deposits totaling $2.6 million, which were classified as long-term and were included in security deposits. The Group’s restricted cash was primarily used for commitments of standby letters of credit related to facilities leases and was not available for the Group’s use in its operations.
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Trade and other payables
Trade and other payables consisted of the following:
As of
  September 30, 2021 June 30, 2021
  (U.S. $ in thousands)
Trade payables $ 50,300  $ 40,366 
Accrued expenses 89,169  101,940 
Accrued bonus 26,528  91,894 
Sales and indirect taxes 11,028  10,152 
Current portion of contingent consideration 6,178  6,896 
Customer deposits 8,435  8,832 
Liabilities held for sale 6,062  949 
Other payables 4,630  5,468 
Total trade and other payables $ 202,330  $ 266,497 

12. Revenues
Deferred revenues
We record deferred revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. The changes in the balances of deferred revenue are as follows:
  Three Months Ended September 30,
  2021 2020
(U.S. $ in thousands)
Deferred revenue, beginning of period $ 897,595  $ 601,005 
Additions 627,479  483,442 
Subscription revenue (435,296) (277,964)
Maintenance revenue (130,590) (127,694)
Other revenue (48,138) (53,848)
Deferred revenue, end of period $ 911,050  $ 624,941 
The additions in the deferred revenue balance are primarily cash payments received or due in advance of satisfying our performance obligations.
For the three months ended September 30, 2021 and 2020, approximately 55% and 53% of revenue recognized was from the deferred revenue balances at the beginning of each fiscal year.
Transaction price allocated to remaining performance obligations
Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods. Transaction price allocated to the remaining performance obligations is influenced by several factors, including the timing of renewals, the timing of delivery of software licenses, average contract terms, and foreign currency exchange rates. Unbilled portions of the remaining performance obligations are subject to future economic risks including bankruptcies, regulatory changes and other market factors.
As of September 30, 2021, approximately $957.0 million of revenue is expected to be recognized from transaction price allocated to remaining performance obligations. We expect to recognize revenue on approximately 89% of these remaining performance obligations over the next 12 months with the balance recognized thereafter. 
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Disaggregated revenues
The Group’s revenues by geographic region based on customers who purchased our products or services are as follows:
  Three Months Ended September 30,
  2021 2020
(U.S. $ in thousands)
Americas:
United States $ 269,962  $ 202,504 
Other Americas 38,762  27,874 
Total Americas $ 308,724  $ 230,378 
EMEA:
United Kingdom $ 42,059  $ 30,713 
Other EMEA 192,955  147,356 
Total EMEA $ 235,014  $ 178,069 
Asia Pacific $ 70,286  $ 51,059 
Total revenues $ 614,024  $ 459,506 
The Group provides different deployment options for our product offerings. Cloud offerings provide customers the right to use our software in a cloud-based infrastructure that we provide. Data Center offerings are on-premises term license agreements for our Data Center products, which are software licensed for a specified period, and includes support and maintenance service that is bundled with the license for the term of the license period. Server offerings include the license of software on a perpetual basis to customers for use on the customer’s premises and support and maintenance service of unspecified future updates, upgrades and enhancements and technical product support. Marketplace and services offerings mainly include fees received for sales of third-party apps in the Atlassian Marketplace and services like premier support, technical account management, consulting and training. Premier support consists of subscription-based arrangements for a higher level of support across different deployment options, and revenues from this offering are included in Subscription revenues within our Consolidated Statement of Operations. For the three months ended September 30, 2021 and 2020, premier support revenues were $6.2 million and $4.3 million, respectively.
The Group’s revenues by deployment options are as follows:
  Three Months Ended September 30,
  2021 2020
(U.S. $ in thousands)
Cloud $ 317,903  $ 207,320 
Data Center 111,195  66,349 
Server 139,547  149,831 
Marketplace and services 45,379  36,006 
Total revenues $ 614,024  $ 459,506 
13. Debt
Exchangeable Senior Notes
2023 Exchangeable Senior Notes
In 2018, Atlassian, Inc., a wholly-owned subsidiary of the Company, issued $1 billion in aggregate principal amount of Notes due on May 1, 2023. The Notes are senior, unsecured obligations of the Group, and are scheduled
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to mature on May 1, 2023, unless earlier exchanged, redeemed or repurchased. The Notes bear interest at a rate of 0.625% per year payable semiannually in arrears on May 1 and November 1 of each year, beginning on November 1, 2018. The net proceeds from the offering of the Notes were approximately $990.0 million, after deducting issuance costs. In connection with the issuance of the Notes, the Group entered into privately negotiated capped call transactions with certain financial institutions. The capped call transactions expire in May 2023 and must be settled in cash. The capped call transactions are expected to generally offset cash payments due, limited by a capped price per share. The initial cap price of the capped call transactions is $114.42 per share and is subject to certain adjustments under the terms of the capped call transactions.
The exchange feature of the Notes requires bifurcation from the Notes and is accounted for as a derivative liability. The capped call transactions are accounted for as derivative assets. The Notes embedded exchange derivative and capped call assets are carried on the consolidated statements of financial position at their estimated fair values and are adjusted at the end of each reporting period, with unrealized gain or loss reflected in the consolidated statements of operations.
For the three months ended September 30, 2021, we settled early exchange requests of $81.7 million principal amount of the Notes for aggregate consideration of $314.3 million in cash and unwound the related capped calls for net proceeds of $31.0 million. On August 2, 2021, the Company issued a redemption notice for the remaining outstanding $270.5 million principal amount of the Notes.
The principal amount, unamortized debt discount, unamortized issuance costs of the liability component of the Notes and net carrying amount of the liability component of the Notes as of September 30, 2021 and June 30, 2021, were as follows:
As of
September 30, 2021 June 30, 2021
(U.S. $ in thousands)
Principal amount $ 270,515  $ 352,171 
Unamortized debt discount —  (3,224)
Unamortized issuance cost —  (148)
Net liability $ 270,515  $ 348,799 
The effective interest rate, contractual interest expense and amortization of debt discount for the Notes for the three months ended September 30, 2021 and 2020 were as follows:
Three Months Ended September 30,
2021 2020
(U.S. $ in thousands)
Effective interest rate 4.83  % 4.83  %
Contractual interest expense $ —  $ 1,562 
Amortization of debt discount 3,224  8,771 
Amortization of issuance cost 148  402 
Credit Facility
In October 2020, Atlassian, Inc. entered into a $1 billion senior unsecured delayed-draw term loan facility (the “Term Loan Facility”) and a $500 million senior unsecured revolving credit facility (the “Revolving Credit Facility,” and together with the Term Loan Facility, the “Credit Facility”). The Group will use the net proceeds of the Credit Facility for general corporate purposes, including repayment of existing indebtedness. The Credit Facility matures in October 2025 and bears interest, at the Group’s option, at a base rate plus a margin up to 0.50% or LIBOR rate plus a spread of 0.875% to 1.50%, in each case with such margin being determined by the Group’s consolidated leverage ratio. The Group may draw from the Term Loan Facility up to five times within a 12-month period from the closing of the Term Loan Facility. The Revolving Credit Facility may be borrowed, repaid, and re-borrowed until its maturity, and the Group has the option to request an increase of $250 million in certain circumstances. The Credit Facility may be prepaid at the Group’s option without penalty.
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The Company is also obligated to pay a ticking fee and a commitment fee on the undrawn amounts of the Term Loan Facility and Revolving Credit Facility, respectively, at an annual rate ranging from 0.075% to 0.20%, determined by the Group’s consolidated leverage ratio. The Credit Facility requires compliance with various financial and non-financial covenants, including affirmative and negative covenants. Financial covenant includes a maximum consolidated leverage ratio of 3.5x provided that such ratio increases to 4.5x during the period of four fiscal quarters immediately following a material acquisition. As of September 30, 2021, the Group was in compliance with all related covenants.
In August 2021, the Company drew $650 million from the Term Loan Facility. The principal amount and unamortized issuance costs of the Term Loan as of September 30, 2021 were as follows:
As of September 30, 2021
(U.S. $ in thousands)
Principal amount $ 650,000 
Unamortized issuance cost (712)
Net liability $ 649,288 
The total contractual interest expense, including the ticking fee and commitment fee, for the Credit Facility was $1.3 million for the three months ended September 30, 2021.
Reconciliation of assets and liabilities arising from financing activities:
  Capped Call Assets Notes, Net Embedded Exchange Feature of Notes Term Loan Facility
(U.S. $ in thousands)
Balance as of June 30, 2021 $ (124,153) $ 348,799  $ 760,689  $ — 
Cash flows 30,978  (81,656) (232,654) 650,000 
Amortization of debt discount and issuance cost —  3,372  —  29 
Fair value changes (11,344) —  435,825  — 
Other —  —  —  (741)
Balance as of September 30, 2021 $ (104,519) $ 270,515  $ 963,860  $ 649,288 

14. Earnings Per Share
Basic earnings per share is computed by dividing the net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by giving effect to all potential weighted-average dilutive shares. The dilutive effect of outstanding awards is reflected in diluted earnings per share by application of the treasury stock method.
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A reconciliation of the calculation of basic and diluted net loss per share is as follows:
  Three Months Ended September 30,
  2021 2020
(U.S. $ in thousands except per share data)
Numerator:
Net loss attributable to ordinary shareholders: $ (400,102) $ (21,554)
Denominator:
Weighted-average ordinary shares outstanding—basic 252,106  248,015 
Weighted-average ordinary shares outstanding—diluted 252,106  248,015 
Net loss per share attributable to ordinary shareholders:
Basic net loss per share $ (1.59) $ (0.09)
Diluted net loss per share $ (1.59) $ (0.09)
For the three months ended September 30, 2021 and 2020, potentially anti-dilutive weighted-average shares excluded from the computation of net income per share were 4.2 million and 5.5 million, respectively.
15. Share-based Payments
The Group maintains three share-based employee compensation plans: the 2015 Share Incentive Plan (“2015 Plan”); the Atlassian Corporation Plc 2013 U.S. Share Option Plan (“2013 U.S. Option Plan”); and the Atlassian UK Employee Share Option Plan (together with the 2013 U.S. Option Plan, the “Option Plans”). In October 2015, the Company’s board of directors approved the 2015 Plan, and in November 2015, our shareholders adopted the 2015 Plan, effective on the date of our initial public offering (“IPO”), which serves as the successor to the Options Plans, and provides for the issuance of incentive and non-statutory share options, share appreciation rights, restricted share awards, RSUs, unrestricted share awards, cash-based awards, performance share awards, performance-based awards to covered employees, and dividend equivalent rights to qualified employees, directors and consultants. Under the 2015 Plan, a total of 20.7 million Class A ordinary shares were initially reserved for the issuance of awards, subject to automatic annual increases.
RSU grants generally vest over four years with 25% vesting on the one year anniversary of the date of grant and 1/12th of the remaining RSUs vest over the remaining three years, on a quarterly basis thereafter. Effective from April 2021, on-going RSU grants to existing employees vest evenly over four years on a quarterly basis. Performance-based RSUs have non-market performance vesting conditions. Individuals must continue to provide services to a Group entity in order to vest.
The Option Plans allowed for the issuance of options to purchase restricted shares. Effective upon our IPO, the shares underlying the options converted to Class A ordinary shares. Although no future awards will be granted under the Option Plans, they will continue to govern outstanding awards granted thereunder.
Under the Option Plans, share options have a contractual life of seven to ten years and typically follow a standard vesting schedule over a four year period: 25% vest on the one year anniversary and 1/48th monthly vesting for the 36 months thereafter. Individuals must continue to provide services to a Group entity in order to vest. Upon termination, all unvested options are forfeited and vested options must generally be exercised within three months.
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RSU and Class A ordinary share option activity was as follows:
Share Options
Shares
Available
for Grant
Outstanding Weighted
Average
Exercise
Price
RSUs
Outstanding
Balance as of June 30, 2021 34,283,109  67,372  $ 0.75  5,541,748 
Increase in shares authorized:
RSUs granted (2,335,792) —  —  2,335,792 
RSUs canceled 189,238  —  —  (189,238)
RSUs settled —  —  —  (832,910)
Share options exercised —  (1,500) 0.66  — 
Balance as of September 30, 2021 32,136,555  65,872  $ 0.75  6,855,392 
Share options vested and exercisable as of September 30, 2021 65,872  $ 0.75 
Share options vested and exercisable as of June 30, 2021 67,372  $ 0.75 
All outstanding share options are vested and exercisable, and the weighted-average remaining contractual life for options outstanding as of September 30, 2021 and June 30, 2021 was 3.6 years and 3.9 years, respectively.
All share-based payments are measured based on the grant date fair value of the awards and recognized in the consolidated statements of operations over the period during which the employee is required to perform services in exchange for the award (generally the four-year vesting period of the award).
The weighted-average grant date fair value of the RSUs issued during the three months ended September 30, 2021 and 2020 was $387.69 per share and $170.97 per share, respectively.
As of September 30, 2021, the Group had an aggregate of $891.9 million of future period share-based payment expense related to all equity awards outstanding, net of estimated forfeitures, to be amortized over a weighted-average period of 1.7 years.
Restricted stock
The Group did not grant any shares of restricted stock during the three months ended September 30, 2021 that were subject to forfeiture. As of September 30, 2021 and June 30, 2021, there were 193,062 and 270,251 shares of restricted stock outstanding, respectively. These outstanding shares of restricted stock are subject to forfeiture or repurchase at the original exercise price during the repurchase period following employee termination, as applicable.
16. Related Party Transactions
During the reporting period, we had no related party transactions that had a material effect on our business, financial position or results in the reporting period.
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17. Events after the reporting period
On October 1, 2021, the Company drew down the remaining $350 million from the Term Loan Facility.
On October 7, 2021, the Company settled the remaining $270.5 million principal amount of the Notes for aggregate consideration of $1.2 billion in cash and unwound the related capped calls for net proceeds of $104.5 million.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 
This quarterly report contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “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 quarterly report include, but are not limited to, statements about:
Our future financial performance, including our revenues, cost of revenues, gross profit or gross margin and operating expenses; 
The sufficiency of our cash and cash equivalents to meet our liquidity needs; 
Our ability to increase the number of customers using our software; 
Our ability to attract and retain customers to use our products and solutions; 
Our ability to develop new products and enhancements to our existing products;
Our ability to successfully expand in our existing markets and into new markets; 
Our ability to effectively manage our growth and future expenses; 
Our ability to prevent security breaches and unauthorized access to customer data;
Our ability to maintain, protect and enhance our intellectual property; 
Our ability to grow our Cloud offerings, including the impact of customers transitioning from perpetual licenses to subscription licenses;
Our future growth and profitability; 
Our ability to repay our outstanding long-term debt in a timely manner and on favorable terms;
Our ability to comply with modified or new laws and regulations applying to our business, including privacy and data security regulations; 
Our ability to attract and retain qualified employees and key personnel;
Future acquisitions of, or investments in, complementary companies, products, services or technologies; and
The impact of natural disasters, climate change, diseases and pandemics, such as COVID-19 pandemic, and any associated economic downturn, and political and social unrest on our results of operations and financial performance.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this quarterly report.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this quarterly report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in “Risk Factors” and elsewhere in this quarterly report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this quarterly report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
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The forward-looking statements made in this quarterly report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this quarterly report to reflect events or circumstances after the date of this quarterly report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, or investments.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this quarterly report and our annual report on Form 20-F filed with the SEC on August 13, 2021. As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” in this quarterly report.
Overview
Our mission is to unleash the potential of every team.
Our products help teams organize, discuss and complete their work — delivering superior outcomes for their organizations.
Our products serve teams of all shapes and sizes, in virtually every industry. Our primary products include Jira Software and Jira Work Management for planning and project management, Confluence for content creation and sharing, Trello for capturing and adding structure to fluid, fast-forming work for teams, Jira Service Management for team service, management and support applications, Jira Align for enterprise agile planning, and Bitbucket for code sharing and management. Together, our products form an integrated system for organizing, discussing and completing shared work, becoming deeply entrenched in how people collaborate and how organizations run.
We begin with a deep investment in product development to create and refine high-quality and versatile products that users love. By making our products affordable for organizations of all sizes and transparently sharing our pricing online for most of our products, we do not follow the practice of opaque pricing and ad hoc discounting that is typical in the enterprise software industry. We pursue customer volume, targeting every organization, regardless of size, industry, or geography. This allows us to operate at unusual scale for an enterprise software company, with more than 216,000 customers across virtually every industry sector in approximately 210 countries as of September 30, 2021. Our customers range from small organizations that have adopted one of our products for a small group of users, to over two-thirds of the Fortune 500, many of which use a combination of our products across thousands of users.
To reach this expansive market, we primarily distribute and sell our products online without traditional sales infrastructure where our customers can get started in minutes without the need for assistance. We focus on enabling a self-service, low-friction model that makes it easy for customers to try, adopt and use our products. By making our products simple, powerful, affordable and easy to adopt, we generate demand from word-of-mouth and viral expansion within organizations.
Our culture of innovation, transparency and dedication to customer service drives our success in implementing and refining this unique approach. We believe this approach creates a self-reinforcing effect that fosters innovation, quality, customer happiness, scale and profitability. As a result of this strategy, we invest significantly more in research and development activities than in traditional sales activities relative to other enterprise software companies.
A substantial majority of our sales are automated through our website, including sales of our products through our solution partners and resellers. Our solution partners and resellers primarily focus on customers in regions that require local language support and other customized needs. We plan to continue to invest in our partner programs to help us enter and grow in new markets, complementing our automated, low-touch approach.
We generate revenues primarily in the form of subscriptions, maintenance and other sources. Subscription revenues consist primarily of fees earned from subscription-based arrangements for providing customers the right to use our software in a cloud-based-infrastructure that we provide (“Cloud offerings”). We also sell on-premises term license agreements for our Data Center products (“Data Center offerings”), consisting of software licensed for a specified period and support and maintenance service that is bundled with the license for the term of the license period. Subscription revenues also include subscription-based agreements for our premier support services. From time to time, we make changes to our product offerings, prices and pricing plans for our products which may impact the growth rate of our revenue, our deferred revenue balances, and customer retention.
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Maintenance provides our customers with access to unspecified future updates, upgrades and enhancements and technical product support for perpetual license products on an if-and-when available basis (“Server offerings”). Maintenance revenue combined with our subscription revenue business, th