6-K 1 a6-kq2fy19quarterlyreport.htm 6-K Document

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 December 31, 2018
 
Commission File Number 001-37651

Atlassian Corporation Plc
(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 x 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
TABLE OF CONTENTS

1



ATLASSIAN CORPORATION PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. $ and shares in thousands, except per share data)
(unaudited)
 
 
Three Months Ended December 31,
 
Six Months Ended December 31,
 
Notes
2018
 
2017
 
2018
 
2017
 
 
 
 
*As Adjusted
 
 
 
*As Adjusted
Revenues:
 
 
 
 
 
 

 
 

Subscription
 
$
152,500

 
$
97,704

 
$
286,565

 
$
184,095

Maintenance
 
97,161

 
80,489

 
189,897

 
156,708

Perpetual license
 
25,778

 
21,444

 
47,617

 
40,892

Other
 
23,540

 
14,941

 
42,192

 
28,363

Total revenues
14
298,979

 
214,578

 
566,271

 
410,058

Cost of revenues (1) (2)
 
49,782

 
43,164

 
94,967

 
83,254

Gross profit
 
249,197

 
171,414

 
471,304

 
326,804

Operating expenses:
 
 
 
 

 
 

 
 

Research and development (1) (2)
 
131,364

 
101,324

 
255,744

 
196,186

Marketing and sales (1) (2)
 
68,950

 
44,519

 
121,212

 
89,611

General and administrative (1)
 
52,052

 
38,584

 
97,709

 
74,309

Total operating expenses
 
252,366

 
184,427

 
474,665

 
360,106

Operating loss
 
(3,169
)
 
(13,013
)
 
(3,361
)
 
(33,302
)
Other non-operating income (expense), net
 
32,592

 
(493
)
 
(204,656
)
 
(1,158
)
Finance income
 
7,659

 
1,568

 
14,925

 
2,823

Finance costs
 
(10,019
)
 
(7
)
 
(19,921
)
 
(16
)
Income (loss) before income tax benefit (expense)
 
27,063

 
(11,945
)
 
(213,013
)
 
(31,653
)
Income tax benefit (expense)
5
18,122

 
(52,264
)
 
15,753

 
(44,026
)
Net income (loss)
 
$
45,185

 
$
(64,209
)
 
$
(197,260
)
 
$
(75,679
)
Net loss attributable to:
 
 
 
 
 
 

 
 

Owners of Atlassian Corporation Plc
 
$
45,185

 
$
(64,209
)
 
$
(197,260
)
 
$
(75,679
)
Net income (loss) per share attributable to ordinary shareholders:
 
 
 
 
 
 

 
 

Basic
13
$
0.19

 
$
(0.28
)
 
$
(0.83
)
 
$
(0.33
)
Diluted
13
$
0.18

 
$
(0.28
)
 
$
(0.83
)
 
$
(0.33
)
Weighted-average shares outstanding used to compute net income (loss) per share attributable to ordinary shareholders:
 
 
 
 
 
 
 
 
Basic
13
237,740

 
230,208

 
236,979

 
229,182

Diluted
13
247,255

 
230,208

 
236,979

 
229,182

* As adjusted to reflect the impact of the full retrospective adoption of IFRS 15. See Note 2 for further details.
(1)Amounts include share-based payment expense, as follows:
 
 
Three Months Ended December 31,
 
Six Months Ended December 31,
 
 
2018
 
2017
 
2018
 
2017
Cost of revenues
 
$
3,766

 
$
3,180

 
$
7,285

 
$
6,172

Research and development
 
32,976

 
27,020

 
59,822

 
52,991

Marketing and sales
 
9,850

 
6,136

 
17,611

 
12,345

General and administrative
 
13,912

 
9,015

 
24,166

 
17,968



2


(2)Amounts include amortization of acquired intangible assets, as follows:
 
 
Three Months Ended December 31,
 
Six Months Ended December 31,
 
 
2018
 
2017
 
2018
 
2017
Cost of revenues
 
$
7,060

 
$
5,294

 
$
12,411

 
$
10,587

Research and development
 
21

 

 
21

 

Marketing and sales
 
10,368

 
9,023

 
19,356

 
18,045

The above consolidated statements of operations should be read in conjunction with the accompanying notes.

3


ATLASSIAN CORPORATION PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(U.S. $ in thousands)
(unaudited)
 
Three Months Ended December 31,
 
Six Months Ended December 31,
 
2018
 
2017
 
2018
 
2017
 
 
 
* As Adjusted
 
 
 
* As Adjusted
Net income (loss)
$
45,185

 
$
(64,209
)
 
$
(197,260
)
 
$
(75,679
)
Items that will not be reclassified to profit or loss in subsequent periods:
 
 
 
 
 
 
 
Net change in unrealized gain on investments classified at fair value through other comprehensive income, before tax

 

 
672

 

Other comprehensive income for items that will not be reclassified to profit or loss, net of tax

 

 
672

 

Items that will be reclassified to profit or loss in subsequent periods:
 
 
 
 
 
 
 
Foreign currency translation adjustment, before tax
408

 
195

 
(78
)
 
617

Net change in unrealized gain (loss) on investments classified at fair value through other comprehensive income, before tax
105

 
(446
)
 
415

 
(380
)
Net loss on derivative instruments
(658
)
 
(1,150
)
 
(3,009
)
 
(971
)
Income tax effect
198

 
345

 
903

 
291

Other comprehensive income (loss) after tax that will be reclassified to profit or loss in subsequent periods
53

 
(1,056
)
 
(1,769
)
 
(443
)
Other comprehensive income (loss)
53

 
(1,056
)
 
(1,097
)
 
(443
)
Total comprehensive income (loss), net of tax
$
45,238

 
$
(65,265
)
 
$
(198,357
)
 
$
(76,122
)
Total comprehensive income (loss) attributable to:
 

 
 

 
 
 
 
  Owners of Atlassian Corporation Plc
$
45,238

 
$
(65,265
)
 
$
(198,357
)
 
$
(76,122
)
* As adjusted to reflect the impact of the full retrospective adoption of IFRS 15. See Note 2 for further details.
The above consolidated statements of comprehensive income (loss) should be read in conjunction with the accompanying notes.

4


ATLASSIAN CORPORATION PLC
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(U.S. $ in thousands)
 
 
 
December 31, 2018
 
June 30, 2018
 
Notes
 
 
 
 
 
(unaudited)
 
* As Adjusted
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
10
 
$
1,340,589

 
$
1,410,339

Short-term investments
3
 
303,772

 
323,134

Trade receivables
6
 
71,207

 
46,141

Current tax receivables
 
 
1,423

 
12,622

Prepaid expenses and other current assets
 
 
47,741

 
29,795

Total current assets
 
 
1,764,732

 
1,822,031

Non-current assets:
 
 
 
 
 
Property and equipment, net
7
 
63,716

 
51,656

Deferred tax assets
 
 
81,055

 
59,220

Goodwill
8
 
506,121

 
311,943

Intangible assets, net
8
 
120,942

 
63,577

Other non-current assets
10
 
188,378

 
113,401

Total non-current assets
 
 
960,212

 
599,797

Total assets
 
 
$
2,724,944

 
$
2,421,828

Liabilities
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Trade and other payables
10
 
$
119,831

 
$
113,105

Current tax liabilities
 
 
1,664

 
172

Provisions
 
 
7,504

 
7,215

Deferred revenue
 
 
383,776

 
324,394

Total current liabilities
 
 
512,775

 
444,886

Non-current liabilities:
 
 
 
 
 
Deferred tax liabilities
 
 
32,976

 
12,160

Provisions
 
 
4,326

 
4,363

Deferred revenue
 
 
33,056

 
18,477

Exchangeable senior notes, net
12
 
836,403

 
819,637

Other non-current liabilities
10
 
485,660

 
214,985

Total non-current liabilities
 
 
1,392,421

 
1,069,622

Total liabilities
 
 
1,905,196

 
1,514,508

Equity
 
 
 
 
 
Share capital
 
 
23,844

 
23,531

Share premium
 
 
456,404

 
454,766

Other capital reserves
 
 
665,934

 
557,100

Other components of equity
 
 
(1,158
)
 
(61
)
Accumulated deficit
 
 
(325,276
)
 
(128,016
)
Total equity
 
 
819,748

 
907,320

Total liabilities and equity
 
 
$
2,724,944

 
$
2,421,828

* As adjusted to reflect the impact of the full retrospective adoption of IFRS 15. See Note 2 for further details.
The above consolidated statements of financial position should be read in conjunction with the accompanying notes.


5


ATLASSIAN CORPORATION PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(U.S. $ in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
Other components of equity
 
 
 
 
 
Notes
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*As Adjusted

Balance as of June 30, 2018
 
 
$
23,531

 
$
454,766

 
$
557,100

 
$
(3,624
)
 
$
4,407

 
$
(844
)
 
$
(128,016
)
 
$
907,320

Net loss
 
 

 

 

 

 

 

 
(197,260
)
 
(197,260
)
Other comprehensive (loss) income, net of tax
 
 

 

 

 
(2,106
)
 
(78
)
 
1,087

 

 
(1,097
)
Total comprehensive (loss) income, net of tax
 
 

 

 

 
(2,106
)
 
(78
)
 
1,087

 
(197,260
)
 
(198,357
)
Issuance of ordinary shares upon exercise of share options
15
 
71

 
1,633

 

 

 

 

 

 
1,704

Vesting of early exercised shares
15
 
24

 
5

 

 

 

 

 

 
29

Issuance of ordinary shares for settlement of restricted share units (RSUs)
15
 
218

 

 
(218
)
 

 

 

 

 

Share-based payment
 
 

 

 
108,884

 

 

 

 

 
108,884

Tax benefit from share plans
 
 

 

 
168

 

 

 

 

 
168

 
 
 
313

 
1,638

 
108,834

 

 

 

 

 
110,785

Balance as of December 31, 2018
 
 
$
23,844

 
$
456,404

 
$
665,934

 
$
(5,730
)
 
$
4,329

 
$
243

 
$
(325,276
)
 
$
819,748

* As adjusted to reflect the impact of the full retrospective adoption of IFRS 15. See Note 2 for further details.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.



6


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
 
Retained earnings
 
Total equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* As Adjusted
Balance as of June 30, 2017
 
$
22,726

 
$
450,959

 
$
437,346

 
$
2,215

 
$
4,289

 
$
(258
)
 
$
(14,584
)
 
$
902,693

Net loss
 

 

 

 

 

 

 
(75,679
)
 
(75,679
)
Other comprehensive (loss) income, net of tax
 

 

 

 
(680
)
 
618

 
(380
)
 

 
(442
)
Total comprehensive (loss) income
 

 

 

 
(680
)
 
618

 
(380
)
 
(75,679
)
 
(76,121
)
Issuance of ordinary shares upon exercise of share options
 
133

 
2,022

 

 

 

 

 

 
2,155

Vesting of early exercised shares
 
17

 
35

 

 

 

 

 

 
52

Issuance of ordinary shares for settlement of RSUs
 
245

 

 
(245
)
 

 

 

 

 

Share-based payment
 

 

 
89,478

 

 

 

 

 
89,478

Tax benefit from share plans
 

 

 
51

 

 

 

 

 
51

Reduction in deferred tax assets
 

 

 
(42,694
)
 

 

 

 

 
(42,694
)
 
 
395

 
2,057

 
46,590

 

 

 

 

 
49,042

Balance as of December 31, 2017
 
$
23,121

 
$
453,016

 
$
483,936

 
$
1,535

 
$
4,907

 
$
(638
)
 
$
(90,263
)
 
$
875,614

* As adjusted to reflect the impact of the full retrospective adoption of IFRS 15. See Note 2 for further details.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.


7


ATLASSIAN CORPORATION PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. $ in thousands)
(unaudited)
 
Three Months Ended December 31,
 
Six Months Ended December 31,
 
2018
 
2017
 
2018
 
2017
 
 
 
* As Adjusted
 
 
 
* As Adjusted
Operating activities
 
 
 
 
 

 
 
Income (loss) before income tax benefit (expense)
$
27,063

 
$
(11,945
)
 
$
(213,013
)
 
$
(31,653
)
Adjustments to reconcile income (loss) before income tax benefit (expense) to net cash provided by operating activities:
 
 
 
 
 

 
 

Depreciation and amortization
20,685

 
20,990

 
38,100

 
41,570

Gain on sale of investments and other assets
(2,357
)
 
(16
)
 
(2,347
)
 
(32
)
Net unrealized gain on investments
(47
)
 

 
(47
)
 

Net unrealized foreign currency loss (gain)
530

 
(142
)
 
108

 
(162
)
Share-based payment expense
60,504

 
45,351

 
108,884

 
89,476

Net unrealized (gain) loss on exchange derivative and capped call transactions
(31,348
)
 

 
205,005

 

Amortization of debt discount and issuance cost
8,433

 

 
16,766

 

Interest income
(7,545
)
 
(1,568
)
 
(14,811
)
 
(2,823
)
Interest expense
1,585

 

 
3,155

 

Changes in assets and liabilities:
 
 
 
 
 
 
 
Trade receivables
(17,769
)
 
(4,668
)
 
(23,140
)
 
(8,387
)
Prepaid expenses and other assets
(18,885
)
 
(3,023
)
 
(17,207
)
 
(328
)
Trade and other payables, provisions and other non-current liabilities
32,252

 
5,105

 
17,974

 
6,258

Deferred revenue
51,097

 
21,653

 
72,745

 
42,894

Interest received
6,981

 
1,361

 
13,721

 
2,791

(Income tax paid) tax refunds received, net
(743
)
 
(770
)
 
9,472

 
(2,027
)
Net cash provided by operating activities
130,436

 
72,328

 
215,365

 
137,577

Investing activities
 
 
 
 
 

 
 

Business combinations, net of cash acquired
(263,554
)
 

 
(263,554
)
 

Purchases of intangible assets

 

 
(850
)
 

Purchases of property and equipment
(7,807
)
 
(4,550
)
 
(18,523
)
 
(7,114
)
Proceeds from sales of property, equipment and intangible assets
3,000

 

 
3,721

 

Purchases of investments
(129,948
)
 
(124,787
)
 
(194,389
)
 
(227,128
)
Proceeds from maturities of investments
93,581

 
31,119

 
185,914

 
81,887

Proceeds from sales of investments
151

 
32,674

 
5,672

 
82,058

Increase in restricted cash
(552
)
 
(3,009
)
 
(552
)
 
(3,141
)
Net cash used in investing activities
(305,129
)
 
(68,553
)
 
(282,561
)
 
(73,438
)
Financing activities
 
 
 
 
 

 
 

Proceeds from exercise of share options
707

 
1,278

 
1,704

 
2,155

Payment of exchangeable senior notes issuance costs

 

 
(410
)
 

Interest paid
(3,194
)
 

 
(3,194
)
 

Net cash (used in) provided by financing activities
(2,487
)
 
1,278

 
(1,900
)
 
2,155

Effect of exchange rate changes on cash and cash equivalents
(11
)
 
(19
)
 
(654
)
 
191

Net (decrease) increase in cash and cash equivalents
(177,191
)
 
5,034

 
(69,750
)
 
66,485

Cash and cash equivalents at beginning of period
1,517,780

 
305,871

 
1,410,339

 
244,420

Cash and cash equivalents at end of period
$
1,340,589

 
$
310,905

 
$
1,340,589

 
$
310,905


* As adjusted to reflect the impact of the full retrospective adoption of IFRS 15. See Note 2 for further details.
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.

8

ATLASSIAN CORPORATION PLC

NOTES TO CONDENSED 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 for team planning and project management, Confluence for team content creation and sharing, Trello for capturing and adding structure to fluid, fast-forming work for teams, Bitbucket for team code sharing and management and Jira Service Desk for team service and support applications.
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 34. Our accounting policies apply standards issued by the International Accounting Standards Board (“IASB”) and related interpretations issued by the IFRS Interpretations Committee. The consolidated financial statements have been prepared on a historical cost basis, except for financial assets and liabilities that have been measured at amortized cost, fair value through other comprehensive income or loss or profit or loss.
Effective July 1, 2018, we adopted the requirements of IFRS 15, Revenue from Contracts with Customers, (“IFRS 15”) as discussed below. All amounts and disclosures set forth in this quarterly report on Form 6-K have been updated to comply with the new standard, including certain prior period amounts as indicted by “as adjusted” in the consolidated financial statements and related notes.
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, 2018, which was filed with the Securities and Exchange Commission (“SEC”) on August 30, 2018.
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 December 31, 2018, the consolidated statements of operations, comprehensive income (loss) and cash flows for the three and six months ended December 31, 2018 and 2017, and the consolidated statements of changes in equity for the six months ended December 31, 2018 and 2017, and related footnote information are unaudited. The consolidated statement of financial position as of June 30, 2018 was derived from the audited consolidated financial statements included in the Group’s annual report on Form 20-F as adjusted to reflect the impact of the full retrospective adoption of IFRS 15. 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 December 31, 2018, and the results of operations and cash flows for the three and six months ended December 31, 2018 and 2017. The results of the three and six months ended December 31, 2018 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year.

9


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 and the accompanying notes. Management continually evaluates its judgments and estimates, including those related to revenue recognition, share-based payments, fair value of financial instruments, intangible assets and goodwill, useful lives of intangible assets and property and equipment and income taxes. 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.
New Accounting Pronouncement Adopted in Fiscal 2019
IFRS 15 was issued in May 2014, and amended in April 2016, and established a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to customers. Either a full retrospective application or modified retrospective application was permitted for annual periods beginning on or after January 1, 2018. We adopted IFRS 15 as of July 1, 2018, using the full retrospective method. 

The most significant impact of the new standard relates to our accounting for the on-premises term-based licenses. Under IFRS 15, if performance obligations are not sold on a stand-alone basis, then standalone selling price (“SSP”) can be estimated. Our term-based licenses include the delivery of software and support services as well as unspecified future updates. Under the previous standard, revenue for these contracts was recognized ratably over the life of the contract. However, under the new standard, we estimate SSP for the software license separately from the support and update services. License revenue is then recognized upon delivery of the initial software at the outset of the arrangement, and support is recognized ratably over the contract period.

We have a high-velocity, low-friction online distribution model that allows us to efficiently reach customers globally without the need to invest in a traditional commissioned salesforce. As such, the asset resulting from the costs to obtain and fulfill a contract is not material to our consolidated financial statements. 

We applied the new standard using the following implementation practical expedients:

For completed contracts that have variable consideration, we have elected to use the transaction price at the date the contract was completed rather than estimating variable consideration amounts in comparative reporting periods;

For all reporting periods presented before the date of initial application, we have elected to not disclose the amount of the transaction price allocated to remaining performance obligations and an explanation of when we expect to recognize that amount as revenue; and

We have elected to reflect the aggregate effect of all modifications that occurred before fiscal 2017 with respect to identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price to the satisfied and unsatisfied performance obligations.

10



Select condensed consolidated statements of operations line items reflecting the adoption of IFRS 15 are as follows:
 
Three Months Ended December 31, 2017
 
As Reported
 
IFRS 15 Adjustment
 
As Adjusted
 
(U.S. $ in thousands)


Revenues:
 
 
 
 
 
   Subscription
$
95,793

 
$
1,911

 
$
97,704

   Maintenance
80,362

 
127

 
80,489

   Perpetual license
21,764

 
(320
)
 
21,444

   Other
14,707

 
234

 
14,941

Total revenues
212,626

 
1,952

 
214,578

Total operating expenses
184,718

 
(291
)
 
184,427

Operating loss
15,256

 
(2,243
)
 
13,013

Income tax expense
51,042

 
1,222

 
52,264

Net loss
65,230

 
(1,021
)
 
64,209


 
Six Months Ended December 31, 2017
 
As Reported
 
IFRS 15 Adjustment
 
As Adjusted
 
(U.S. $ in thousands)


Revenues:
 
 
 
 
 
   Subscription
$
180,171

 
$
3,924

 
$
184,095

   Maintenance
156,677

 
31

 
156,708

   Perpetual license
41,694

 
(802
)
 
40,892

   Other
27,902

 
461

 
28,363

Total revenues
406,444

 
3,614

 
410,058

Total operating expenses
360,771

 
(665
)
 
360,106

Operating loss
37,581

 
(4,279
)
 
33,302

Income tax expense
43,292

 
734

 
44,026

Net loss
79,224

 
(3,545
)
 
75,679




11


Select condensed consolidated statement of financial position line items reflecting the adoption of IFRS 15 are as follows:
 
As of June 30, 2018
 
As Reported
 
IFRS 15 Adjustment
 
As Adjusted
 
(U.S. $ in thousands)


Current assets:
 
 
 
 
 
   Prepaid expenses and other current assets
$
28,219

 
$
1,576

 
$
29,795

Non-current assets:
 
 
 
 
 
   Deferred tax assets
64,662

 
(5,442
)
 
59,220

   Other non-current assets
112,221

 
1,180

 
113,401

Current liabilities:
 
 
 
 
 
   Deferred revenue
340,834

 
(16,440
)
 
324,394

Non-current liabilities:
 
 
 
 
 
   Deferred tax liabilities
12,051

 
109

 
12,160

   Deferred revenue
19,386

 
(909
)
 
18,477

Equity
 
 
 
 
 
   Accumulated deficit
(142,570
)
 
14,554

 
(128,016
)
Adoption of IFRS 15 related to revenue recognition had no impact to cash provided by or used in operating, financing, or investing activities on our consolidated statements of cash flows. 
Updated Significant Accounting Policies

Except for the accounting policy for revenue recognition that was updated as a result of adopting IFRS 15, 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, 2018, filed with the SEC on August 30, 2018, that have had a material impact on our condensed consolidated financial statements and related notes.

Policies and Judgment
Under IFRS 15, revenues are generally recognized upon the transfer of control of promised products or services provided to our customers, reflecting the amount of consideration we expect to receive for those products or services. We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.
Revenues are recognized upon the application of the following steps:
1.Identification of the contract or contracts with a customer;
2.Identification of the performance obligations in the contract;
3.Determination of the transaction price;
4.Allocation of the transaction price to the performance obligations in the contract; and
5.Recognition of revenue when, or as, the performance obligation is satisfied.
The timing of revenue recognition may differ from the timing of invoicing our customers. We record a contract asset when revenue is recognized prior to invoicing. Contract assets are netted against any related contract liabilities in the statement of financial position. Our revenue arrangements include standard warranty provisions that our arrangements will perform and operate in all material respects, the financial impacts which have historically been and are expected to continue to be insignificant. Our contracts do not include a significant financing component.
Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require judgment.

12


We allocate the transaction price for each contract to each performance obligation based on the relative SSP for each performance obligation. We use judgment in determining the SSP for products and services. We typically determine a standalone selling price range for our products and services which is reassessed on a periodic basis or when facts and circumstances change. For all performance obligations other than perpetual and term licenses, we are able to determine SSP based on the observable prices of products or services sold separately in comparable circumstances to similar customers. In instances where performance obligations do not have observable standalone sales, we utilize available information that may include market conditions, pricing strategies, the economic life of the software, and other observable inputs to estimate the price we would charge if the products and services were sold separately.
Our products are generally sold with a right of return, we may provide other credits or incentives, and in certain instances we estimate customer usage of our services, which are accounted for as variable consideration when determining the amount of revenue to recognize. Returns and credits are estimated at contract inception and updated at the end of each reporting period if additional information becomes available. Variable consideration was not material for the periods presented.
Revenue Recognition

Revenue recognized from contracts with customers is disaggregated into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. We report our revenues in four categories: (i) subscription, (ii) maintenance, (iii) perpetual license, and (iv) other. In addition, we present revenue by geographic region in Note 14.

Subscription revenues

Subscription revenues consist of fees earned from subscription-based arrangements for providing customers the right to use our software in a cloud-based-infrastructure that we provide. We also sell 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. Subscription revenues are driven primarily by the number and size of active licenses, the type of product and the price of the licenses. Our subscription-based arrangements generally have a contractual term of one to twelve months, with a majority being one month. For cloud-based services, subscription revenue is recognized ratably as services are performed, commencing with the date the service is made available to customers. For on-premises term-based licenses, we recognize revenue upfront for the portion that relates to the delivery of the term license key and the support and related revenue is recognized ratably as the services are delivered over the term of the arrangement.

Maintenance revenues

Maintenance revenues represent fees earned from providing customers unspecified future updates, upgrades and enhancements and technical product support for perpetual license products on an if and when available basis. Maintenance revenue is recognized ratably over the term of the support period.

Perpetual license revenues
Perpetual license revenues represent fees earned from the license of software to customers for use on the customer’s premises. Software is licensed on a perpetual basis. Perpetual license revenues consist of the revenues recognized from sales of licenses to new customers, increases in the number of users within an existing customer and additional licenses to existing customers. We recognize revenue on the license portion of perpetual license arrangements on the date of product delivery in substantially all situations.
Other revenues
Other revenues include fees received for sales of third-party apps in the Atlassian Marketplace, technical account management, and training services. Revenue from the sale of third-party apps via Atlassian Marketplace is recognized at the date of product delivery given that all of our obligations have been met at that time and net of the vendor liability portion, as we function as the agent in the relationship. Revenue from technical account management is recognized over the time period that the customer has access to the service. Revenue from training is recognized as delivered or as the rights to receive training expire.

13


New accounting standards not yet adopted
In January 2016, the IASB issued IFRS 16, Leases, which supersedes the existing leases standard, IAS 17, Leases, and related interpretations. The standard introduces a single lessee accounting model and requires a lessee to recognize leases on its statement of financial position represented by right-of-use assets and lease liabilities. The standard also contains enhanced disclosure requirements for lessees and is effective for the Group beginning on July 1, 2019. We will adopt the IFRS 16 standard using the modified retrospective approach, under which the cumulative effect of initially applying the standard will be recognized as an adjustment to the opening balance of retained earnings on the date of initial application. Due to the adoption of IFRS 16, we expect the total assets and total liabilities to increase, as right-of-use assets and lease liabilities will have to be recorded for those items that were previously “off balance sheet.” We expect the right-of-use assets and lease liabilities to be material.
3. Financial Instruments
Investments
As of December 31, 2018, 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
$
62,886

 
$
2

 
$
(34
)
 
$
62,854

   Agency securities
7,490

 

 
(27
)
 
7,463

   Certificates of deposit and time deposits
45,224

 

 

 
45,224

   Commercial paper
47,509

 

 

 
47,509

   Corporate debt securities
144,751

 

 
(369
)
 
144,382

Non-marketable debt securities
10,114

 
47

 

 
10,161

Total debt investments
$
317,974

 
$
49

 
$
(430
)
 
$
317,593

Equity Investments
 
 
 
 
 
 
 
  Non-marketable equity securities
$
13,000

 
$
672

 
$

 
$
13,672

Total equity investments
$
13,000

 
$
672

 
$

 
$
13,672

Total investments
$
330,974

 
$
721

 
$
(430
)
 
$
331,265

As of December 31, 2018, the Group had $303.8 million of investments which were classified as short-term investments on the Group’s statement of financial position. Additionally, the Group had certificates of deposit and time deposits totaling $3.7 million and non-marketable investments in privately held companies totaling $23.8 million, all of which were classified as long-term and were included in other non-current assets on the Group’s statement of financial position.
As of December 31, 2018, the Group’s marketable debt investments were classified as instruments at fair value through other comprehensive income. Fair value changes of marketable debt investments that have been recognized in other comprehensive income are recycled to profit or loss upon sale of the financial asset. The Group’s non-marketable debt investments were classified as instruments at fair value through profit or loss. Fair value changes of non-marketable debt investments have been recognized in other non-operating income (expense), net.

The Group has irrevocably designated the non-marketable equity investments as instruments at fair value through other comprehensive income. Changes in fair value of these non-marketable equity investments are recognized in other comprehensive income and never reclassified to profit or loss, even if the asset is impaired, sold or otherwise derecognized.


14


As of June 30, 2018, the Group’s investments consisted of the following:

 
Amortized Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
 
(U.S. $ in thousands)
Debt Investments
 

 
 

 
 
 
 

U.S. treasury securities
$
52,809

 
$

 
$
(109
)
 
$
52,700

Agency securities
22,097

 

 
(82
)
 
22,015

Certificates of deposit and time deposits
58,824

 

 

 
58,824

Commercial paper
35,372

 

 

 
35,372

Corporate debt securities
158,538

 
14

 
(669
)
 
157,883

Total debt investments
$
327,640

 
$
14

 
$
(860
)
 
$
326,794


As of June 30, 2018, the Group had $323.1 million of investments which were classified as short-term investments on the Group’s consolidated statements of financial position. Additionally, the Group had certificates of deposit and time deposits totaling $3.6 million which were classified as long-term and were included in other non-current assets on the Group’s statement of financial position. 

As of June 30, 2018, the Group’s debt investments were classified as instruments at fair value through other comprehensive income. Fair value changes of debt investments that have been recognized in other comprehensive income are recycled to profit or loss upon sale of the financial asset.

The table below summarizes the Group’s debt investments by remaining contractual maturity:
 
As of December 31, 2018
 
As of June 30, 2018
 
(U.S. $ in thousands)
Recorded as follows:
 

 
 

Due in one year or less
$
300,632

 
$
277,087

Due after one year
16,961

 
49,707

Total debt investments
$
317,593

 
$
326,794

Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
IFRS 13, Fair Value Measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either, in the principle market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability.
IFRS 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The fair value of financial instruments traded in active markets is included in Level 1.
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely

15


as little as possible on entity-specific estimates. If all significant inputs required to measure the fair value an instrument are observable, the instrument is included in Level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. For recurring fair value measurements categorized within Level 3 of the fair value hierarchy, the Group uses its valuation processes to decide its valuation policies and procedures and analyze changes in fair value measurements from period to period.
Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Group's assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and considers factors specific to the asset or liability. There were no transfers between levels during the three and six months ended December 31, 2018.

16


The following table presents the Group’s financial instruments measured and recognized at fair value as of December 31, 2018, by level within the fair value hierarchy:
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(U.S. $ in thousands)
Description
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Cash and cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
655,952

 
$

 
$

 
$
655,952

U.S. treasury securities

 
7,724

 

 
7,724

Agency securities

 
2,945

 

 
2,945

Certificates of deposit and time deposits

 

 

 

Commercial paper

 
65,587

 

 
65,587

Corporate debt securities

 
6,139

 

 
6,139

Short-term Investments:
 
 
 
 
 
 
 
U.S. treasury securities

 
62,854

 

 
62,854

Agency securities

 
7,463

 

 
7,463

Certificates of deposit and time deposits

 
41,563

 

 
41,563

Commercial paper

 
47,509

 

 
47,509

Corporate debt securities

 
144,382

 

 
144,382

Prepaid expenses and other current assets:
 
 
 
 
 
 
 
Derivative assets - hedging

 
52

 

 
52

Other non-current assets:
 
 
 
 
 
 
 
Certificates of deposit and time deposits

 
3,661

 

 
3,661

Derivative assets - hedging

 
10

 

 
10

Non-marketable debt securities

 

 
10,161

 
10,161

Non-marketable equity securities

 

 
13,672

 
13,672

Derivative assets - capped call transactions

 

 
150,329

 
150,329

Total assets
$
655,952

 
$
389,889

 
$
174,162

 
$
1,220,003

Liabilities
 
 
 
 
 
 
 
Trade and other payables:
 
 
 
 
 
 
 
Derivative liabilities - hedging
$

 
$
8,397

 
$

 
$
8,397

Other non-current liabilities:
 
 
 
 
 
 
 
Derivative liabilities - hedging

 
225

 

 
225

Derivative liabilities- embedded exchange feature of the exchangeable senior notes

 

 
457,955

 
457,955

Total liabilities
$

 
$
8,622

 
$
457,955

 
$
466,577






17


The following table presents the Group’s financial instruments measured and recognized at fair value as of June 30, 2018, by level within the fair value hierarchy:
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(U.S. $ in thousands)
Description
 
 
 
 
 
 
 
Asset
 
 
 
 
 
 
 
  Cash and cash equivalents:
 
 
 
 
 
 
 
  Money market funds
$
693,596

 
$

 
$

 
$
693,596

  Commercial paper

 
29,118

 

 
29,118

  Agency securities

 
7,989

 

 
7,989

  Corporate debt securities

 
1,000

 

 
1,000

  U.S. treasury securities

 
18,968

 

 
18,968

  Short-term investments:
 
 
 
 
 
 
 
  U.S. treasury securities

 
52,700

 

 
52,700

  Agency securities

 
22,015

 

 
22,015

  Certificates of deposit and time deposits

 
55,164

 

 
55,164

  Commercial paper

 
35,372

 

 
35,372

  Corporate debt securities

 
157,883

 

 
157,883

Prepaid expenses and other current assets:
 
 
 
 
 
 
 
  Derivative assets - hedging

 
60

 

 
60

Other non-current assets:
 
 
 
 
 
 
 
Certificates of deposit and time deposits

 
3,660

 

 
3,660

  Derivative assets - hedging
 
 
3

 
 
 
3

  Derivative assets - capped call transactions

 

 
99,932

 
99,932

Total assets
$
693,596

 
$
383,932

 
$
99,932

 
$
1,177,460

Liabilities
 
 
 
 
 
 
 
Trade and other payables:
 
 
 
 
 
 
 
  Derivative liabilities - hedging
$

 
$
5,213

 
$

 
$
5,213

Other non-current liabilities:
 
 
 
 
 
 
 
  Derivative liabilities - hedging
 
 
204

 
 
 
204

Derivative liabilities - embedded exchange feature of the exchangeable senior notes

 

 
202,553

 
202,553

Total liabilities
$

 
$
5,417

 
$
202,553

 
$
207,970


Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

Embedded exchange feature of the exchangeable senior notes and capped call transactions

In April 2018, the Group issued $1 billion in exchangeable senior notes (the “Notes”) and entered into related capped call transactions. Please refer to Note 12 for details. The embedded exchange feature of the Notes and capped call transactions (“Exchange and Capped Call Derivatives”) are measured at fair value using Black-Scholes option pricing models that utilizes both observable and unobservable market inputs.

Exchange and Capped Call Derivatives are classified as level 3 as the Group uses stock price volatility implied from options traded with a substantially shorter term, which makes this an unobservable input that is significant to the valuation. In general, an increase in our stock price volatility would increase the fair value of the derivatives and would result in a net loss. Other significant inputs to the valuation includes our stock price and time to expiration of the options, which are observable. An increase in our stock price would increase the fair value of the derivatives and would result in a net loss. As time to expiration of the options decreases with passage of time, the

18


fair value of the derivatives would decrease. The future impact on other non-operating income (expense), net depends on how significant inputs such as stock price, stock price volatility and time to expiration of the options change in relation to other inputs.

The stock price volatility as of December 31, 2018, ranged from 41.2% to 44.7%. As of December 31, 2018, a 10% higher volatility, holding other inputs constant would result in approximately $38.5 million of additional loss for the three and six months ended December 31, 2018.

Non-marketable investments

Non-marketable equity securities are measured at fair value using market data, such as publicly available financing round valuations. Non-marketable debt securities relate to a convertible note issued by a private company without quoted market prices. To estimate the fair value of the non-marketable debt securities, we use the income approach utilizing our estimates of timing, probability, and amount of cash flows associated with liquidation of the securities. Financial information of private companies may not be available and consequently we will estimate the fair value based on the best available information at the measurement date.

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, 2018
$
99,932

 
$
(202,553
)
 
$

Purchases

 

 
23,000

Gains (losses)
 
 
 
 
 
Recognized in finance income

 

 
114

Recognized in other non-operating income (expense), net
50,397

 
(255,402
)
 
47

Recognized in other comprehensive income

 

 
672

Balance as of December 31, 2018
$
150,329

 
$
(457,955
)
 
$
23,833

 
 
 
 
 
 
Change in unrealized gains (losses) relating to assets and liabilities held at the end of the reporting period


 


 


Recognized in finance income

 

 
114

Recognized in other non-operating income (expense), net
50,397

 
(255,402
)
 
47


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 12.
We enter into derivative transactions to manage certain foreign currency exchange risks that arise in the Group’s ordinary business operations. We recognize all derivative instruments as either assets or liabilities on our consolidated statements of financial position and measure them at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting.
We enter into master netting agreements with select financial institutions to reduce our credit risk and contract with several counterparties to reduce our concentration risk with any single counterparty. We do not have significant exposure to counterparty credit risk at this time. We do not require nor are we required to post collateral of any kind related to our foreign currency derivatives.
Cash flow hedging
We enter into foreign exchange forward contracts with the objective to mitigate certain currency risks associated with cost of revenues and operating expenses denominated in Australian dollars. These foreign exchange forward contracts are designated as cash flow hedges.

19


To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. We include the forward element of these hedging instruments in the hedge relationship and on a quarterly basis qualitatively assess whether the hedges are expected to provide offsetting changes against the hedged items. The effect of the cash flow hedges determined to be effective is recognized in other comprehensive income and impact profit or loss in the same period or periods as the hedged items are recognized in profit or loss. Amounts reclassified from cash flow hedge reserve to profit or loss are recorded to the same functional expense as hedged item or items. Gains or losses related to the ineffective portion of cash flow hedges, if any, are recognized immediately in the same functional expense as the hedged item or items. We measure ineffectiveness in a cash flow hedge relationship using the hypothetical derivative method. Ineffectiveness occurs only if the present value of the cumulative gain or loss on the derivative instrument exceeds the present value of the cumulative gain or loss on the hypothetical derivative, which is used to measure changes of expected future cash flow.
It is our policy to enter into cash flow hedges to hedge cost of revenues and operating expenses up to 24 months.
Balance sheet hedging
We also enter into foreign exchange forward contracts to hedge a portion of certain foreign currency denominated as monetary assets and liabilities to reduce the risk that such foreign currency will be adversely affected by changes in exchange rates. These contracts hedge monetary assets and liabilities that are denominated in non-functional currencies and are carried at fair value with changes in the fair value recorded to other non-operating income (expense), net on our consolidated statements of operations. These contracts do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the monetary assets and liabilities being hedged.

The fair value of the derivative instruments were as follows:
 
 
 
 
Fair Value
 
 
Statement of Financial Position Location
 
As of December 31, 2018
 
As of June 30, 2018
 
 
 
 
(U.S. $ in thousands)
Derivative assets
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
  Foreign exchange forward contracts
 
Prepaid expenses and other current assets
 
$
27

 
$
39

  Foreign exchange forward contracts
 
Other non-current assets
 
10

 
3

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
  Foreign exchange forward contracts
 
Prepaid expenses and other current assets
 
25

 
21

Total derivative assets
 
 
 
$
62

 
$
63

Derivative liabilities
 
 
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
 
 
  Foreign exchange forward contracts
 
Trade and other payables
 
$
7,990

 
$
5,006

  Foreign exchange forward contracts
 
Other non-current liabilities
 
225

 
204

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
  Foreign exchange forward contracts
 
Trade and other payables
 
407

 
207

Total derivative liabilities
 
 
 
$
8,622

 
$
5,417

The following table sets forth the notional amounts of our derivative instruments as of December 31, 2018 (in U.S. $ thousands):

20


 
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
Foreign exchange forward contracts
$
173,421

 
$
14,552

 
$
187,973

 
$
161,979

 
$
25,994

 
$
187,973

The following table sets forth the notional amounts of our derivative instruments at June 30, 2018 (in U.S. $ 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
Foreign exchange forward contracts
$
188,633

 
$
12,492

 
$
201,125

 
$
180,898

 
$
20,227

 
$
201,125

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 December 31,
 
Six Months Ended December 31,
 
2018
 
2017
 
2018
 
2017
Gross unrealized (loss) gain recognized in other comprehensive (loss) income
$
(3,442
)
 
$
(273
)
 
$
(7,174
)
 
$
1,595

(Loss) gain reclassified from cash flow hedge reserve into profit or loss - effective portion
$
(2,784
)
 
$
877

 
$
(4,165
)
 
$
2,566

Gain (loss) recognized into profit or loss - ineffective portion
$
6

 
$
12

 
$
(2
)
 
$



21


4. Expenses
Income (loss) before income tax benefit (expense) included the following expenses:
 
Three Months Ended December 31,
 
Six Months Ended December 31,
 
2018
 
2017
 
2018
 
2017
 
(U.S. $ in thousands)
Depreciation:
 

 
 

 
 

 
 

Equipment
$
305

 
$
315

 
$
592

 
$
591

Computer hardware and software
395

 
4,154

 
809

 
8,093

Furniture and fittings
492

 
357

 
919

 
661

Leasehold improvements        
2,044

 
1,848

 
3,992

 
3,593

Total depreciation
3,236

 
6,674

 
6,312

 
12,938

Amortization:
 

 
 

 
 

 
 

Patents and trademarks        
2,062

 
1,748

 
3,918

 
3,495

Customer relationships
8,327

 
7,274

 
15,459

 
14,550

Acquired developed technology
7,060

 
5,294

 
12,411

 
10,587

Total amortization
17,449

 
14,316

 
31,788

 
28,632

Total depreciation and amortization
$
20,685

 
$
20,990

 
$
38,100

 
$
41,570

Employee benefits expense:
 

 
 

 
 

 
 

Salaries and wages
$
82,643

 
$
65,061

 
$
161,305

 
$
126,868

Variable compensation
13,059

 
7,866

 
27,601

 
14,903

Payroll taxes
6,798

 
5,593

 
14,507

 
10,784

Share-based payment expense
60,504

 
45,351

 
108,884

 
89,476

Defined contribution plan expense
5,272