Atlassian

Prospectus Summary

PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Class A ordinary shares. You should read this entire prospectus carefully, including "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations", and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision.

Overview

Our mission is to unleash the potential in every team.

Our products help teams organize, discuss and complete their work—delivering superior outcomes for their organizations.

We believe human advancement has always been driven by teamwork—from the great explorations of earth and space to innovations in industry, medicine, music and technology. And while it's common to celebrate the individual genius behind a breakthrough idea, in nearly every case there is a team of unsung heroes that actually get the work done.

We also believe that the greatest lever teams have to advance humanity lies in the power of software innovation. Through software, contact lenses now monitor and report on the blood glucose levels of diabetes patients, allowing patient and doctor to better manage the disease. Through software, cars can monitor and report on vehicle status, improving driver safety. Through software, people can read, write and converse with people in languages they do not speak. Each of these advances was delivered by teams.

Software's transformational impact is forcing organizations to use software to innovate, or face disruption from competitors that do. Today, organizations in every industry are becoming software-driven. As a result, the teams that imagine, create and deliver that software are more essential than ever.

Our company was founded in 2002 to help software teams work better together. From the beginning, our products were designed to help developers collaborate with other non-developer teams involved in software innovation. This breakthrough approach separated us from traditional software providers focused solely on developers.

As more non-developer teams are exposed to our products, they adopt and extend them to new use cases, bringing our products to other users and other types of teams in their organizations. This has created an expansive market opportunity for us.

Today, our products serve teams of all shapes and sizes, in virtually every industry—from software and technical teams to IT and service teams, from sales and marketing teams to HR, finance and legal teams. Our products include JIRA for team planning and project management, Confluence for team content creation and sharing, HipChat for team messaging and communications, Bitbucket for team code sharing and management and JIRA Service Desk for team services and support applications.

Our products form an integrated system for organizing, discussing and completing shared work, becoming deeply entrenched in how people work together and how organizations run. Our products have been used by NASA to design the Mars Rover, by Cochlear to develop aural implants, and by Runkeeper to create GPS fitness tracking applications.

We founded our company on the premise that great products could sell themselves and we have developed a unique approach to the market that is centered on this belief. We begin with a deep investment in product development to create and refine high-quality and versatile products that users love. We make our products affordable for organizations of all sizes and we transparently share our simple pricing online. We pursue customer and user volume, targeting teams in every organization, regardless of size, industry or geography.

To reach this expansive market, we distribute and sell our products online without traditional sales infrastructure where users 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 users to try, adopt and use our products.

Our culture of innovation, transparency and dedication to customer service drives our success in implementing and refining this unique approach. We believe this approach fosters innovation, quality, customer happiness, scale and profitability.

We recognize that users drive the adoption and proliferation of our products and, as a result, we are relentlessly focused on measuring and improving user satisfaction. We know that one happy user will beget another, thereby expanding the large and organic word-of-mouth community that helps drive our growth. We operate at unusual scale for an enterprise software company, with more than 5 million monthly active users of our products and more than 51,000 customers (organizations that have at least one active and paid license or subscription for which they paid more than $10 per month) across virtually every industry sector in more than 160 countries. Our customers range from small organizations that have adopted one of our products for a small group of users, to 79 of the Fortune 100 and 273 of the Fortune 500, many of which use a multitude of our products across thousands of users.

Our model has allowed us to grow while maintaining profitability for each of the last 10 fiscal years. Our total revenues were $148.5 million, $215.1 million and $319.5 million for the fiscal years ended June 30, 2013, 2014 and 2015, respectively, representing a compound annual growth rate of 46.7% from fiscal 2013 to fiscal 2015. Our total revenues were $67.9 million and $101.8 million for the three months ended September 30, 2014 and 2015, respectively, representing an annual growth rate of 49.9%. We generated net income of $10.8 million, $19.0 million and $6.8 million for the fiscal years ended June 30, 2013, 2014 and 2015, respectively, and $3.6 million and $5.1 million for the three months ended September 30, 2014 and 2015, respectively. We also generated free cash flow of $47.1 million, $65.0 million and $65.5 million for the fiscal years ended June 30, 2013, 2014 and 2015, respectively, and $3.6 million and $8.2 million for the three months ended September 30, 2014 and 2015, respectively.

Market Trends

•

Software is Changing Everything—Software is impacting almost every aspect of our lives and redefining the limits of what people and organizations can achieve. Software is everywhere and increasingly in everything, and organizations of all types and sizes face an existential imperative to drive software innovation.


•

Software Teams are Essential and Multi-Dimensional—Teams that can deliver software innovation require a myriad of talents and functional expertise and are critical to each organization's efforts to thrive and compete. Software developers have become more essential and influential and the demand for software development talent has grown.


•

Software Team Collaboration is Complex and Challenging—Modern software development is highly creative, iterative and asynchronous, and very complex. Software teams today must iterate and move faster than ever before, and are becoming the model for modern workforce collaboration across all teams.

•

Increasing Complexity Makes Collaboration Critical for All Teams—Across the global economy, work is becoming more complex, faster-paced and more collaborative. In addition, more and more teams are now spread across geographies.


•

All Teams are Seeking Better Ways to Connect and Get Work Done—As software projects become more cross-functional, knowledge workers throughout organizations have been exposed to the collaboration and workflow practices of software teams. This exposure across organizations has coincided with growing dissatisfaction with traditional productivity tools.


•

Teams Are Now Making Their Own Technology Choices—Following the "bring your own device" trend, employees are increasingly empowered to "bring your own software", leading to the user-driven viral adoption of new types of consumer-style software products within an organization.

Limitations of Traditional Approaches

Traditional Tools

Most traditional software development technologies are costly, complex, poorly designed, hard to use and not easily integrated with other software systems. Moreover, these technologies were designed solely for the needs of software developers and do not extend well to other use cases. Other point solutions do not provide the breadth, integration and security that organizations require.

In an effort to serve the needs of teams and integrate software developers and other knowledge workers, organizations have often relied on traditional personal productivity tools. While these tools are widely used, they were designed many years ago, provide narrow functionality, are not integrated, and are not suited for the demands of managing complex projects among diverse and broadly distributed teams.

Traditional Distribution Models

Traditional enterprise software distribution models, with their focus on quota-driven sales representatives and reliance on large deals, are not well suited to reach, influence or meet the needs of teams, who are increasingly driving technology purchasing decisions.

Historically, enterprise software was purchased in a centralized, top down fashion. As a result, purchase decisions were often disconnected from actual user needs and resulted in low adoption rates.

The consumerization of enterprise technology has given a much broader population of workers a stake and a voice in the procurement of software solutions. Teams of all kinds have increasing freedom to choose the technology they want.

Market Opportunity

Our products address several large and well-established categories of IT spending. Investment in these traditional categories is expected to total more than $35.0 billion in 2015. According to Gartner, Inc., a market research firm, the Application Development market is expected to be $8.8 billion and the IT Operations market is expected to be $9.1 billion in 2015 for the IT Asset and Financial Management, IT Service Support Management Tools and Automation Tools markets. International Data Corporation ("IDC"), a market research firm, expects the market for Collaborative Applications to be $13.5 billion and the Project and Portfolio Management market to be $3.8 billion in 2015.

We believe that the limitations of traditional tools and distribution models, coupled with the growing demand for modern collaboration technology, present an opportunity to expand within these traditional categories. By providing affordable, versatile, adaptable and modern software built for the needs of teams, we believe that we can continue to disrupt and increase our share of these large, existing markets.

The Atlassian Way

Our product strategy, distribution model and company culture work in concert to create unique value for our customers and competitive advantage for our company.

We invest significantly in developing and refining products that allow teams to achieve their full potential. We make versatile products that can be used in a myriad of ways. Our products are easy to adopt and use and can be distributed and proliferated organically and efficiently.

We offer these products at affordable price points in a high-velocity online distribution model. Our distribution model does not rely on costly sales infrastructure to push product to our customers. By making our products simple, powerful and easy to adopt, we generate demand from word-of-mouth and viral expansion within organizations. Our model is designed to operate at scale and serve millions of customers.

We believe that our product strategy, distribution model and company culture are mutually reinforcing. By investing in innovation and making our products affordable and easy to use, we operate without reliance on traditional sales infrastructure, which enhances our distribution model and permits long-term investment in product leadership and our unique culture.

Our Product Strategy

We have developed and acquired a broad portfolio of products that help teams large and small to organize, discuss and complete their work in a coordinated, efficient and modern fashion.

Our products, which include JIRA, Confluence, HipChat, Bitbucket and JIRA Service Desk, serve the needs of teams of software developers, IT managers and knowledge workers. While these products provide a range of distinct functionality to users, they share certain core attributes:

•

Built for Teams—Our products are singularly designed to help teams work better together and achieve more.


•

Easy to Adopt and Use—We invest significantly in research and development to enable our products to be both powerful and extremely easy to use.


•

Versatile and Adaptable—We develop simple and well-designed products that are useful in a broad range of workflows and projects.


•

Integrated—Our products are integrated and designed to work well together.


•

Open—We are dedicated to making our products open and interoperable with a range of other platforms and applications.

Our Distribution Model

Our high-velocity distribution model is designed to drive exceptional customer scale by making affordable products available via our convenient, low-friction online channel. We focus on product quality, automated distribution and customer service in lieu of a costly traditional sales infrastructure. We rely on word-of-mouth and low-touch demand generation to drive trial, adoption and expansion of our products within customers.

The following are key attributes of our unique model:

•

Innovation-driven—Relative to other enterprise software companies, we invest significantly in research and development rather than sales and marketing.


•

Simple and Affordable—We offer our products at affordable prices in a simple and transparent format, with a free trial before purchase.


•

Organic and Expansive—Our model benefits from significant customer word-of-mouth about our products that drives traffic to our website.


•

Scale-oriented—Our model is designed to generate and benefit from significant customer scale and our goal is to maximize the number of individual users of our software.


•

Data-driven—Our scale and the design of our model allows us to gather insights into and improve the customer experience.

Our Culture

Our company culture is exemplified by our core values:

•

Open Company, No Bullsh*t


•

Build with Heart and Balance


•

Don't #@!% the Customer


•

Play, as a Team


•

Be the Change You Seek

These values contribute to a culture that is open, innovative, dedicated to our customers, team-driven and long-term focused, all of which enable us to drive customer value and achieve competitive differentiation.

Our Financial Model

By developing a product strategy, distribution model and culture that are designed around the needs of our customers and users, we believe that we have established a financial model that is favorable for our shareholders. Our model has allowed us to grow customers and revenue steadily while maintaining profitability for each of the last 10 fiscal years. Our model relies on rapidly and efficiently landing new customers and expanding our relationship with them over time. The following are the key elements of our model:

•

Significant Investment in Ongoing Product Development and Sales Automation—Our research and development investments enable us to rapidly build new products, continuously enhance our existing products, acquire and integrate technologies and also help us obtain data-driven insights and further automate and streamline our approach to customer acquisition.


•

Rapid and Efficient Acquisition of New Customers—By building products that are affordable and easy to adopt and use, we are able to attract customers rapidly without employing a traditional salesforce, and thereby lower the cost of customer acquisition significantly. At September 30, 2015, we had over 5 million monthly active users of our software across more than 450,000 organizations and more than 51,000 customers.


•

Continued Expansion—Our success is dependent on our ability to expand the relationship with our existing base of customers. Since our founding, the aggregate sales from

customers acquired in any fiscal year have expanded since they first purchased an Atlassian product, through the addition of more users, teams and products.

•

Predictability of Sales—As we are not dependent on a traditional sales model and rely on a high-velocity online distribution model, we have historically experienced a linear quarterly sales cycle. Once teams begin working together with our software, we become embedded in their workflows, becoming a system for engagement within organizations. This makes it difficult to displace us and provides us with steady and predictable revenue.


•

Positive Free Cash Flow—By reducing customer acquisition cost and establishing a revenue model that has scaled linearly, our model has allowed us to have positive free cash flow for each of the last 10 fiscal years.

Our Growth Strategy

Our growth strategy is to make our software accessible to every organization, team and user to help them get work done. We intend to continue this approach by adding customers, developing new products, expanding in existing customers and pursuing selective acquisitions.

Key drivers of our growth strategy include:

•

Protect and Promote Our Culture—Our culture is at the foundation of everything we do and fuels our business strategy and success.


•

Continue to Refine Our Unique Business Model—We will continue to develop the technology and products that enable our customers to easily adopt and use our products over the Internet.


•

Increase Product Value—We intend to continue to increase the value of our software to customers by providing them with a broader, integrated set of products.


•

Grow the Atlassian Marketplace and Partner Ecosystem—The Atlassian Marketplace is an open platform that allows independent vendors and developers to continue to develop add-ons and extensions that extend our platform and generate millions of dollars in revenue for both the third-party vendors and for us.

Risk Factors Summary

Our business is subject to numerous risks and uncertainties, including those highlighted in "Risk Factors" immediately following this prospectus summary. These risks include, but are not limited to, the following:

•

Our rapid growth makes it difficult to evaluate our future prospects and may increase the risk that we will not continue to grow at or near historical rates.


•

We may not be able to sustain our revenue growth rate or maintain profitability in the future.


•

The markets in which we participate are intensely competitive, and if we do not compete effectively, our business, results of operations and financial condition could be harmed.


•

Our distribution model of offering and deploying our products via both the cloud and on premises increases our expenses, may impact revenue recognition timing and may pose other challenges to our business.


•

Our business depends on our customers renewing their subscriptions and maintenance plans and purchasing additional licenses or subscriptions from us. Any decline in our customer retention or expansion would harm our future results of operations.

•

If we are not able to develop new products and enhancements to our products that achieve market acceptance and that keep pace with technological developments, our business and results of operations would be harmed.


•

If we cannot continue to expand the use of our products beyond our initial focus on software developers, our ability to grow our business may be harmed.


•

We invest significantly in research and development, and to the extent our research and development investments do not translate into new products or material enhancements to our current products, or if we do not use those investments efficiently, our business and results of operations would be harmed.


•

If we fail to effectively manage our growth, our business and results of operations could be harmed.


•

If our current marketing model is not effective in attracting new customers, we may need to incur additional expenses to attract new customers and our business and results of operations could be harmed.


•

If our security measures are breached or unauthorized access to customer data is otherwise obtained, our products may be perceived as insecure, we may lose existing customers or fail to attract new customers, and we may incur significant liabilities.


•

The dual class structure of our ordinary shares has the effect of concentrating voting control with certain shareholders, in particular, our co-chief executive officers and their affiliates, which will limit your ability to influence the outcome of important transactions, including a change in control.

Corporate Information

The legal and commercial name of our company is Atlassian Corporation Plc. We were registered in Australia in 2002 and reorganized into the United Kingdom in 2014. See "Corporate Structure" for additional information.