6-K 1 a6-kq2fy21quarterlyreport.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, 2020
 
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 ☑ 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,
 Notes2020201920202019
Revenues:   
Subscription $310,675 $228,684 $588,639 $429,779 
Maintenance 131,276 116,877 258,970 226,948 
Perpetual license 22,124 29,051 44,261 53,795 
Other 37,284 34,113 68,995 61,593 
Total revenues12501,359 408,725 960,865 772,115 
Cost of revenues (1) (2) 79,482 65,761 153,166 128,040 
Gross profit 421,877 342,964 807,699 644,075 
Operating expenses: 
Research and development (1) (2) 241,064 172,420 473,299 348,302 
Marketing and sales (1) (2) 77,151 69,263 147,437 137,306 
General and administrative (1) 75,949 59,440 147,318 121,181 
Total operating expenses 394,164 301,123 768,054 606,789 
Operating income 27,713 41,841 39,645 37,286 
Other non-operating income (expense), net(545,749)104,214 (572,020)186,449 
Finance income 2,112 8,100 4,702 17,212 
Finance costs (91,448)(12,364)(104,023)(24,691)
Income (loss) before income tax expense (607,372)141,791 (631,696)216,256 
Income tax expense5(14,156)(17,717)(11,386)(22,862)
Net income (loss) $(621,528)$124,074 $(643,082)$193,394 
Net income (loss) per share attributable to ordinary shareholders: 
Basic14$(2.49)$0.51 $(2.59)$0.79 
Diluted14$(2.49)$0.49 $(2.59)$0.77 
Weighted-average shares outstanding used to compute net income (loss) per share attributable to ordinary shareholders: 
Basic14249,188 244,203 248,601 243,497 
Diluted14249,188 250,960 248,601 250,950 
(1)Amounts include share-based payment expense, as follows:
Cost of revenues$6,801 $4,407 $12,057 $9,119 
Research and development73,085 45,978 134,536 94,917 
Marketing and sales11,666 10,874 18,450 21,505 
General and administrative16,140 9,179 28,380 22,193 
(2)Amounts include amortization of acquired intangible assets, as follows:
Cost of revenues$5,413 $9,173 $10,832 $17,661 
Research and development42 42 83 83 
Marketing and sales2,317 3,925 4,616 7,611 
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 December 31,Six Months Ended December 31,
 Notes2020201920202019
Net income (loss) $(621,528)$124,074 $(643,082)$193,394 
Items that will not be reclassified to profit or loss in subsequent periods:
Net gain (loss) on investments classified at fair value through other comprehensive income3(24,091)(3,448)33,900 (19,378)
Income tax effect5,424 785 (7,752)4,421 
Other comprehensive income (loss) for items that will not be reclassified to profit or loss, net of tax(18,667)(2,663)26,148 (14,957)
Items that will be reclassified to profit or loss in subsequent periods:
Foreign currency translation adjustment7,426 230 8,485 (581)
Net change in unrealized gain (loss) on investments classified at fair value through other comprehensive income(1,552)10 (2,865)466 
Net gains on derivative instruments313,954 9,444 20,556 3,699 
Income tax effect (7,074)(1,129)(10,308)(1,213)
Other comprehensive income after tax that will be reclassified to profit or loss in subsequent periods12,754 8,555 15,868 2,371 
Other comprehensive income (loss), net of tax (5,913)5,892 42,016 (12,586)
Total comprehensive income (loss), net of tax $(627,441)$129,966 $(601,066)$180,808 

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)
NotesDecember 31, 2020June 30, 2020
(unaudited)
Assets
Current assets:
Cash and cash equivalents11$1,251,715 $1,479,969 
Short-term investments3534,498 676,072 
Trade receivables6157,543 112,019 
Tax receivables2,582 1,509 
Derivative assets3, 13263,622 327,487 
Prepaid expenses and other current assets54,653 46,730 
Total current assets2,264,613 2,643,786 
Non-current assets:
Property and equipment, net7103,861 97,648 
Deferred tax assets50,024 35,351 
Goodwill8686,858 645,140 
Intangible assets, net8123,759 129,690 
Right-of-use assets, net9204,004 217,683 
Other non-current assets11128,071 124,774 
Total non-current assets1,296,577 1,250,286 
Total assets$3,561,190 $3,894,072 
Liabilities
Current liabilities:
Trade and other payables11$189,345 $202,570 
Tax liabilities27,727 19,583 
Provisions22,986 14,291 
Deferred revenue652,330 573,813 
Lease obligations939,297 34,743 
Derivative liabilities31,418,559 1,284,596 
Exchangeable senior notes, net13735,660 889,183 
Total current liabilities3,085,904 3,018,779 
Non-current liabilities:
Deferred tax liabilities43,652 31,304 
Provisions10,631 9,493 
Deferred revenue33,951 27,192 
Lease obligations9215,566 229,825 
Other non-current liabilities2,346 2,173 
Total non-current liabilities306,146 299,987 
Total liabilities3,392,050 3,318,766 
Equity
Share capital24,963 24,744 
Share premium461,002 459,892 
Other capital reserves1,324,489 1,130,918 
Other components of equity118,160 76,144 
Accumulated deficit(1,759,474)(1,116,392)
Total equity169,140 575,306 
Total liabilities and equity$3,561,190 $3,894,072 

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 capitalShare premiumOther capital reservesCash flow hedge reserveForeign currency translation reserveInvestments at fair value through other comprehensive income reserveAccumulated deficitTotal 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(643,082)(643,082)
Other comprehensive income, net of tax9,7048,48523,82742,016
Total comprehensive income (loss), net of tax9,7048,48523,827(643,082)(601,066)
Issuance of ordinary shares upon exercise of share options371,1101,147
Vesting of early exercised shares16(16)
Issuance of ordinary shares for settlement of restricted share units (RSUs)166(166)
Share-based payment193,537193,537
Tax benefit from share plans216216
2191,110193,571194,900
Balance as of December 31, 2020$24,963 $461,002 $1,324,489 $15,871 $12,244 $90,045 $(1,759,474)$169,140 

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 capitalShare premiumOther capital reservesCash flow hedge reserveForeign currency translation reserveInvestments at fair value through other comprehensive income reserveAccumulated deficitTotal Equity
Balance as of June 30, 2019$24,199 $458,166 $816,660 $(2,547)$4,372 $30,254 $(765,637)$565,467 
Net income193,394193,394
Other comprehensive income (loss), net of tax2,573(581)(14,578)(12,586)
Total comprehensive income (loss), net of tax2,573(581)(14,578)193,394180,808
Issuance of ordinary shares upon exercise of share options38948986
Vesting of early exercised shares3333
Issuance of ordinary shares for settlement of RSUs208(208)
Share-based payment147,734147,734
Tax benefit from share plans8181
Cumulative effect of applying new accounting pronouncement*(101)(101)
279948147,607(101)148,733
Balance as of December 31, 2019$24,478 $459,114 $964,267 $26 $3,791 $15,676 $(572,344)$895,008 
* Reflects the impact of adopting IFRS 16, Leases (“IFRS 16”) using the modified retrospective method. We adopted IFRS 16 on July 1, 2019.
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 December 31,Six Months Ended December 31,
2020201920202019
Operating activities   
Income (loss) before income tax expense $(607,372)$141,791 $(631,696)$216,256 
Adjustments to reconcile income (loss) before income tax expense to net cash provided by operating activities: 
Depreciation and amortization13,807 17,753 27,218 34,410 
Depreciation of right-of-use assets9,378 8,869 18,592 17,227 
Loss (gain) on sale of investments, disposal of assets and other51 (217)299 (264)
Net unrealized loss on investments750 — 750 — 
Interest expense3,594 3,516 6,996 7,099 
Net unrealized foreign currency loss4,874 3,183 10,441 946 
Share-based payment expense 107,692 70,438 193,423 147,734 
Net loss (gain) on exchange derivative and capped call transactions539,102 (106,423)566,598 (188,526)
Amortization of debt discount and issuance cost87,854 8,848 97,027 17,590 
Interest income (2,112)(8,099)(4,702)(17,211)
Changes in assets and liabilities: 
Trade receivables (37,145)(24,276)(45,523)(41,113)
Prepaid expenses and other assets 4,057 2,227 (7,361)(6,370)
Trade and other payables, provisions and other non-current liabilities 32,823 26,320 (14,561)(5,509)
Deferred revenue 61,297 77,223 83,933 108,779 
Interest received 3,298 7,591 7,454 16,270 
Income tax paid, net (21,486)(10,379)(28,961)(12,762)
Net cash provided by operating activities 200,462 218,365 279,927 294,556 
Investing activities 
Business combinations, net of cash acquired(9,700)(37,168)(42,164)(37,983)
Purchases of property and equipment(9,548)(7,010)(17,365)(13,123)
Purchases of investments (36,013)(263,122)(69,265)(586,878)
Proceeds from maturities of investments120,627 70,569 195,304 193,018 
Proceeds from sales of investments40,607 82,942 47,694 141,961 
Increase in restricted cash (2,162)— (2,162)— 
Payment of deferred consideration — — (185)— 
Net cash provided by (used in) investing activities 103,811 (153,789)111,857 (303,005)
Financing activities
Proceeds from exercise of share options225 331 1,147 986 
Payments of lease obligations(11,139)(9,357)(22,235)(17,027)
Payment of issuance costs for credit facility (4,445)— (4,445)— 
Interest paid  (3,294)(3,125)(3,294)(3,125)
Repayment of exchangeable senior notes (671,489)— (671,497)— 
Proceeds from settlement of capped call transactions 72,776 — 72,776 — 
Net cash used in financing activities(617,366)(12,151)(627,548)(19,166)
Effect of exchange rate changes on cash and cash equivalents4,546 109 7,510 (1,101)
Net increase (decrease) in cash and cash equivalents(308,547)52,534 (228,254)(28,716)
Cash and cash equivalents at beginning of period1,560,262 1,187,191 1,479,969 1,268,441 
Cash and cash equivalents at end of period$1,251,715 $1,239,725 $1,251,715 $1,239,725 
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 Core, 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, 2020, which was filed with the Securities and Exchange Commission (“SEC”) on August 14, 2020.
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, 2020, the consolidated statements of operations, comprehensive income (loss) and cash flows for the three and six months ended December 31, 2020 and 2019, the consolidated statements of changes in equity for six months ended December 31, 2020 and 2019, and related footnote information are unaudited. The consolidated statement of financial position as of June 30, 2020 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 December 31, 2020, and the results of operations and cash flows for the three and six months ended December 31, 2020 and 2019. The results of the three and six months ended December 31, 2020 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 and six months ended December 31, 2020. As events continue to evolve and additional information becomes available, the Group’s assumptions and estimates may change in future periods.
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, 2020, filed with the SEC on August 14, 2020.
3. Financial Instruments
As of December 31, 2020, the Group’s investments consisted of the following:
 Amortized CostUnrealized GainsUnrealized LossesFair Value
 (U.S. $ in thousands)
Debt Investments   
Marketable debt securities:
U.S. treasury securities$259,639 $1,148 $— $260,787 
Agency securities17,768 118 — 17,886 
Certificates of deposit and time deposits6,253 — — 6,253 
Commercial paper5,500 — — 5,500 
Corporate debt securities242,554 1,402 (2)243,954 
Municipal securities2,700 18 — 2,718 
Non-marketable debt securities750 — (750)— 
Total debt investments$535,164 $2,686 $(752)$537,098 
Equity Investments
Marketable equity securities$10,270 $85,958 $— $96,228 
Non-marketable equity securities5,500 — (250)5,250 
Total equity investments$15,770 $85,958 $(250)$101,478 
Total investments$550,934 $88,644 $(1,002)$638,576 
As of December 31, 2020, the Group had $534.5 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 $96.2 million, non-marketable equity securities totaling $5.3 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

In December 2020, the Group sold a marketable equity security following an assessment of investments. The fair values on the dates of sale were $38.1 million and the accumulated gains recognized in other comprehensive income were $28.1 million.
As of June 30, 2020, the Group’s investments consisted of the following:

 Amortized CostUnrealized GainsUnrealized LossesFair Value
 (U.S. $ in thousands)
Debt Investments
Marketable debt securities:
U.S. treasury securities$294,103 $2,017 $(2)$296,118 
Agency securities24,280 306 — 24,586 
Certificates of deposit and time deposits15,399 — — 15,399 
Commercial paper31,937 — — 31,937 
Corporate debt securities305,448 3,205 (2)308,651 
Municipal securities2,700 28 — 2,728 
Total debt investments$673,867 $5,556 $(4)$679,419 
Equity Investments
Marketable equity securities$20,270 $79,917 $— $100,187 
Non-marketable equity securities3,750 — — 3,750 
Total equity investments$24,020 $79,917 $— $103,937 
Total investments$697,887 $85,473 $(4)$783,356 
As of June 30, 2020, the Group had $676.1 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 $100.2 million, non-marketable equity securities totaling $3.8 million, and certificates of deposit and time deposits totaling $3.3 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
 December 31, 2020June 30, 2020
 (U.S. $ in thousands)
Recorded as follows:   
Due in one year or less$417,901 $443,324 
Due after one year119,197 236,095 
Total debt investments$537,098 $679,419 

10

Fair value measurements
The following table presents the Group’s financial instruments measured and recognized at fair value as of December 31, 2020, by level within the fair value hierarchy:
Level 1Level 2Level 3Total
(U.S. $ in thousands)
Description
Assets measured at fair value
Cash and cash equivalents:
Money market funds$53,094 $— $— $53,094 
Commercial paper— 159,030 — 159,030 
Corporate debt securities— 4,504 — 4,504 
Short-term investments:
U.S. treasury securities— 260,787 — 260,787 
Agency securities— 17,886 — 17,886 
Certificates of deposit and time deposits— 3,653 — 3,653 
Commercial paper— 5,500 — 5,500 
Corporate debt securities— 243,954 — 243,954 
Municipal securities— 2,718 — 2,718 
Current derivative assets:
Derivative assets - hedging— 35,655 — 35,655 
Derivative assets - capped call transactions— — 227,967 227,967 
Non-current derivative assets:
Derivative assets - hedging— 1,048 — 1,048 
Other non-current assets:
Certificates of deposit and time deposits— 2,600 — 2,600 
Marketable equity securities96,228 — — 96,228 
Non-marketable equity securities— — 5,250 5,250 
Total assets measured at fair value$149,322 $737,335 $233,217 $1,119,874 
Liabilities measured at fair value    
Current derivative liabilities:
Derivative liabilities - hedging$— $226 $— $226 
Derivative liabilities - exchangeable feature of exchangeable senior notes— — 1,418,333 1,418,333 
Total liabilities measured at fair value$— $226 $1,418,333 $1,418,559 

11

The following table presents the Group’s financial instruments measured and recognized at fair value as of June 30, 2020, by level within the fair value hierarchy:
Level 1Level 2Level 3Total
(U.S. $ in thousands)
Description
Assets measured at fair value
Cash and cash equivalents:
Money market funds$439,947 $— $— $439,947 
U.S. treasury securities— 5,599 — 5,599 
Agency securities— 8,749 — 8,749 
Commercial paper— 167,248 — 167,248 
Corporate debt securities— 27,365 — 27,365 
Short-term investments:
U.S. treasury securities— 296,118 — 296,118 
Agency securities— 24,586 — 24,586 
Certificates of deposit and time deposits— 12,052 — 12,052 
Commercial paper— 31,937 — 31,937 
Corporate debt securities— 308,651 — 308,651 
Municipal securities— 2,728 — 2,728 
Current derivative assets:
Derivative assets - hedging— 16,879 — 16,879 
Derivative assets - capped call transactions— — 310,608 310,608 
Other non-current assets:
Certificates of deposit and time deposits— 3,347 — 3,347 
Marketable equity securities100,187 — — 100,187 
Non-marketable equity securities— — 3,750 3,750 
Total assets measured at fair value$540,134 $905,259 $314,358 $1,759,751 
Liabilities measured at fair value
Current derivative liabilities:
Derivative liabilities - hedging$— $1,507 $— $1,507 
Derivative liabilities - exchangeable feature of exchangeable senior notes— — 1,283,089 1,283,089 
Non-current derivative liabilities:
Derivative liabilities - hedging— — 
Total liabilities measured at fair value$— $1,509 $1,283,089 $1,284,598 
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:
TypeValuation TechniqueInputs
Money market fundQuoted price in active marketN/A
Marketable debt securitiesQuoted market price to the extent possible or alternative pricing sources and models utilizing market observable inputsN/A
Marketable equity securitiesQuoted price in active marketN/A
Non-marketable equity securitiesPublicly available financing round valuationN/A
Non-marketable debt securitiesDiscounted cash flowTiming, probability, and amount of forecast cash flows associated with liquidation of the securities
Foreign currency forward contractsDiscounted cash flowForeign currency spot and forward rate
Interest rate
Credit quality of counterparties
Exchange feature of exchangeable senior notes
Black-Scholes option pricing modelsStock price
Time to expiration of the options
Stock price volatility
Interest rate
Capped Call DerivativesPrior to December 31, 2020: Black-Scholes option pricing models

Stock price
Time to expiration of the options
Stock price volatility
Interest rate
As of December 31, 2020: Quoted market price obtained from counterparty banks*
N/A
Exchangeable senior notesQuoted market priceN/A
*As of December 31, 2020, the Group changed the valuation technique of capped call derivatives from income approach to market approach, which is a more meaningful indicator of fair value.
Level 3 financial instruments
In April 2018, Atlassian Inc., a wholly-owned subsidiary of the Company, issued $1 billion in exchangeable senior notes (“the Notes”) and entered into related capped call transactions. Please refer to Note 13, “Debt” for details. The embedded exchange feature of the Notes and capped call transactions (“Exchange and Capped Call Derivatives”) are classified as Level 3. The exchange feature of the Notes is valued using a Black-Scholes option pricing model. The Group used stock price volatility implied from its listed options with a shorter term for valuation of the exchange feature of the Notes, which makes this an unobservable input that is significant to the valuation.
The stock price volatility as of December 31, 2020 was 41.2%. As of December 31, 2020, a 10% higher volatility, holding other inputs constant, would result in an approximately $7.8 million higher unrealized loss for the three and six months ended December 31, 2020.

13

The following table presents the reconciliations of Level 3 financial instrument fair values:
 Capped CallEmbedded Exchange Feature of NotesNon-marketable Investments
 (U.S. $ in thousands)
Balance as of June 30, 2020$310,608 $(1,283,089)$3,750 
Settlements or purchases
(72,776)421,489 2,500 
Losses
Recognized in other non-operating income (expense), net
(9,865)(556,733)(750)
Recognized in other comprehensive income (loss)— — (250)
Balance as of December 31, 2020$227,967 $(1,418,333)$5,250 
Change in unrealized gains (losses) relating to assets and liabilities held at the end of the reporting period
Recognized in other non-operating income (expense), net
(4,986)(456,027)(750)
There were no transfers between levels during the three and six months ended December 31, 2020 and 2019.
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 LocationDecember 31, 2020June 30, 2020
(U.S. $ in thousands)
Derivative assets - hedging
Derivatives designated as hedging instruments:
Foreign exchange forward contractsCurrent derivative assets$32,637 $14,195 
Foreign exchange forward contractsOther non-current assets1,048 — 
Derivatives not designated as hedging instruments:
Foreign exchange forward contractsCurrent derivative assets3,018 2,684 
Total derivative assets$36,703 $16,879 
Derivative liabilities - hedging
Derivatives designated as hedging instruments:
Foreign exchange forward contractsCurrent derivative liabilities$— $1,164 
Foreign exchange forward contractsOther non-current liabilities— 
Derivatives not designated as hedging instruments:
Foreign exchange forward contractsCurrent derivative liabilities226 343 
Total derivative liabilities$226 $1,509 

14

The following table sets forth the notional amounts of our derivative instruments as of December 31, 2020 (U.S. $ in thousands):
Notional Amounts of Derivative Instruments
Notional Amount by Term to MaturityClassification by Notional Amount
Under 12 monthsOver 12 monthsTotalCash Flow HedgeNon HedgeTotal
AUD/USD forward contracts:
Notional amount$339,838 $18,868 $358,706 $236,915 $121,791 $358,706 
Average forward rate0.7038 0.7318 — 0.6793 0.7557 — 
EUR/USD forward contracts:
Notional amount9,675 — 9,675 — 9,675 9,675 
Average forward rate1.2141 — — — 1.2141 — 
Total$349,513 $18,868 $368,381 $236,915 $131,466 $368,381 
The following table sets forth the notional amounts of our derivative instruments at June 30, 2020 (U.S. $ in thousands):
Notional Amounts of Derivative Instruments
Notional Amount by Term to MaturityClassification by Notional Amount
Under 12 monthsOver 12 monthsTotalCash Flow HedgeNon HedgeTotal
AUD/USD forward contracts:
Notional amount$393,705 $8,441 $402,146 $256,890 $145,256 $402,146 
Average forward rate0.6610 0.6844 — 0.6536 0.6754 — 
EUR/USD forward contracts:
Notional amount7,205 — 7,205 — 7,205 7,205 
Average forward rate1.1179 — — — 1.1179 — 
Total$400,910 $8,441 $409,351 $256,890 $152,461 $409,351 
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,
2020201920202019
(U.S. $ in thousands)
Gains (losses) recognized into general and administrative - ineffective portion$— $(24)$31 $(72)
Gross unrealized gains (losses) recognized in other comprehensive income (loss)$18,738 $6,840 $28,296 $(1,190)
Net gain (loss) reclassified from cash flow hedge reserve into profit or loss - effective portion:$4,784 $(2,604)$7,740 $(4,889)
Recognized in cost of revenues90 (150)91 (348)
Recognized in research and development4,230 (1,739)6,895 (3,176)
Recognized in marketing and sales20 (56)59 (133)
Recognized in general and administrative444 (659)695 (1,232)
Change in fair value used for measuring ineffectiveness:
Cash flow hedging instruments$18,738 $6,816 $28,327 $(1,262)
Hedged item - highly probable forecast expenditures18,738 6,840 28,296 (1,190)

15

4. Expenses
Income (loss) before income tax expense included the following expenses:
 Three Months Ended December 31,Six Months Ended December 31,
 2020201920202019
 (U.S. $ in thousands)
Depreciation:   
Equipment$545 $477 $1,115 $934 
Computer hardware and software508 257 919 515 
Furniture and fittings866 750 1,717 1,416 
Leasehold improvements4,116 3,129 7,936 6,190 
Total depreciation6,035 4,613 11,687 9,055 
Amortization: 
Patents and trademarks301 2,038 601 3,959 
Customer relationships2,233 2,009 4,450 3,854 
Acquired developed technology5,238 9,093 10,480 17,542 
Total amortization7,772 13,140 15,531 25,355 
Total depreciation and amortization$13,807 $17,753 $27,218 $34,410 
Employee benefits expense: 
Salaries and wages$153,236 $111,213 $298,671 $219,531 
Variable compensation25,028 19,228 49,039 39,132 
Payroll taxes11,441 8,672 24,455 18,843 
Share-based payment expense107,692 70,438 193,423 147,734 
Defined contribution plan expense9,008 6,723 17,506 13,111 
Contractor expense5,561 7,973 15,295 15,735 
Other18,391 13,304 37,916 27,452 
Total employee benefits expense$330,357 $237,551 $636,305 $481,538 

5. Income Tax
The Group reported a tax expense of $14.2 million on pretax loss of $607.4 million and a tax expense of $11.4 million on pretax loss of $631.7 million for the three and six months ended December 31, 2020, respectively, as compared to a tax expense of $17.7 million on pretax income of $141.8 million and a tax expense of $22.9 million on pretax income of $216.3 million for the three and six months ended December 31, 2019, respectively.
During the three and six months ended December 31, 2020, the Group recorded income tax benefit of $1.9 million and $18.6 million, respectively, to increase the combined carrying value of U.S. and Australian deferred tax assets. The adjustments in carrying value of deferred tax assets are a result of year to date realized and unrealized investment and foreign exchange hedging gains that support their recognition. In addition, after the acquisition of Mindville, AB (“Mindville”), the Group recorded $5.4 million of income tax expense in Sweden upon transfer of Mindville’s intellectual property to the U.S. For details of the Mindville acquisition, please refer to Note 10, “Business Combinations.
During the three and six months ended December 31, 2019, as a result of a reduction in the U.S. deferred tax liability related to unrealized investment gains upon which the Group was relying to support recognition of its U.S. deferred tax assets, non-cash charges of $0.8 million and $4.4 million, respectively, were recorded to tax expense to reduce the carrying value of these assets.
The Group’s effective tax rate substantially differed from the United Kingdom’s income tax rate of 19% primarily due to the recognition of significant permanent differences during the three and six months ended December 31, 2020. Significant permanent differences include non-deductible charges relating to the Notes and related capped call transactions, research and development incentives, losses and other future tax benefits for
16

which no deferred tax asset has been recorded, non-deductible share-based payment expense, and taxes in foreign jurisdictions with a tax rate different than the United Kingdom statutory rate, primarily Australia.
6. Trade Receivables
The Group’s trade receivables consisted of the following:
As of
 December 31, 2020June 30, 2020
 (U.S. $ in thousands)
Gross trade receivables$158,573 $113,175 
Expected credit loss allowance(1,030)(1,156)
Total trade receivables$157,543 $112,019 
As of December 31, 2020, no customer represented more than 10% of the total trade receivables balance. As of June 30, 2020, one customer represented more than 10% of the total trade receivables balance.
7. Property and Equipment
Property and equipment, net consisted of the following:
 EquipmentComputer
Hardware
and
Software
Furniture
and
Fittings
Leasehold
Improvements and Other
Construction in ProgressTotal
 (U.S. $ in thousands)
Cost as of June 30, 2020
$9,652 $12,065 $19,687 $103,100 $11,261 $155,765 
Additions1,066 170 762 4,171 9,952 16,121 
Disposals(176)(1,322)(33)(5)— (1,536)
Effect of change in exchange rates57 18 147 637 1,855 2,714 
Cost as of December 31, 2020
10,599 10,931 20,563 107,903 $23,068 173,064 
Accumulated depreciation as of June 30, 2020
(5,618)(8,611)(8,388)(35,500)— (58,117)
Depreciation expense(1,115)(919)(1,717)(7,936)— (11,687)
Disposals145 895 29 — 1,073 
Effect of change in exchange rates(41)(17)(58)(356)— (472)
Accumulated depreciation as of December 31, 2020
(6,629)(8,652)(10,134)(43,788)— (69,203)
Net book amount as of
December 31, 2020
$3,970 $2,279 $10,429 $64,115 $23,068 $103,861 
Construction in progress is related to costs associated with development of additional office space in Sydney, Australia.
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.
17

Goodwill consisted of the following:
 NotesGoodwill
 (U.S. $ in thousands)
Balance as of June 30, 2020$645,140 
Additions1041,360 
Effect of change in exchange rates358 
Balance as of December 31, 2020$686,858 
There was no impairment of goodwill during the six months ended December 31, 2020.
Intangible assets
Intangible assets consisted of the following:
 Patents,
Trademarks
and Other Rights
Acquired Developed TechnologyCustomer
Relationships
Total
 (U.S. $ in thousands)
Cost as of June 30, 2020$27,795 $214,744 $128,502 $371,041 
Additions— 8,200 1,400 9,600 
Disposals(220)(6,900)(310)(7,430)
Cost as of December 31, 202027,575 216,044 129,592 373,211 
Accumulated amortization as of
June 30, 2020
(23,205)(147,146)(71,000)(241,351)
Amortization charge(601)(10,480)(4,450)(15,531)
Disposals220 6,900 310 7,430 
Accumulated amortization as of December 31, 2020
(23,586)(150,726)(75,140)(249,452)
Net book amount as of
December 31, 2020
$3,989 $65,318 $54,452 $123,759 
As of December 31, 2020, 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; Ankara, Turkey, Stockholm, Sweden and Gdansk, Poland, under leases expiring within one to nine 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
 December 31, 2020June 30, 2020
 (U.S. $ in thousands)
Assets
Right-of-use assets$204,004 $217,683 
Liabilities
Lease obligations, current39,297 34,743 
Lease obligations, non-current215,566 229,825 
18

The following table presents information about our leases on our consolidated statements of operations:
 Three Months Ended December 31,Six Months Ended December 31,
 2020201920202019
 (U.S. $ in thousands)
Depreciation of right-of-use assets$9,378 $8,869 $18,592 $17,227 
Interest expense on lease obligations1,759 1,947 3,566 3,963 
Short-term leases expense79 613 264 1,718 
Low value leases expense336 30 624 30 
The following table presents supplemental information about our leases:
 Three Months Ended December 31,Six Months Ended December 31,
 2020201920202019
 (U.S. $ in thousands)
Cash outflows:
Principal portion of the lease obligations$9,380 $7,410 $18,669 $13,064 
Interest portion of the lease obligations
1,759 1,947 3,566 3,963 
Short-term leases and low value leases
931 995 1,775 1,961 
Total cash outflows$12,070 $10,352 24,010 $18,988 
Additions to right-of-use assets
$1,032 $9,804 $4,612 $13,669 
As of December 31, 2020, we have entered into leases with future lease payments of $91.2 million that have not yet commenced and are not yet recorded on our consolidated statements of financial position. These leases will commence between the remainder of fiscal year 2021 and fiscal year 2022 with non-cancelable lease terms of 2 to 12 years.
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 three and six months ended December 31, 2020 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$1,235 
Tax receivables, current166 
Prepaid expenses and other current assets668 
Property and equipment, net52 
Right-of-use assets, net403 
Intangible assets9,600 
Goodwill30,039 
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 ValueUseful Life
(U.S. $ in thousands)(years)
Developed technology$8,200 5
Customer relationships1,400 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.
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.

20

Fiscal year 2020

Code Barrel
On October 15, 2019, we acquired 100% of the outstanding equity of Code Barrel Pty Ltd (“Code Barrel”), a workflow automation tool for Jira. Total purchase price consideration for Code Barrel was approximately $39.1 million in cash. In addition, the Company granted $27.0 million worth of restricted shares of the Company to key employees of Code Barrel, which are subject to future vesting provisions based on service conditions and accounted for as share based compensation.
Code Barrel is the creator of ‘Automation for Jira,’ a tool for easily automating several aspects of Jira. The acquisition of Code Barrel enhances Jira by helping customers automate more of the time-consuming and error-prone tasks in Jira. We have included the financial results of Code Barrel 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, 2020 because the effect of the acquisition was not material to the financial statements.
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$1,970 
Intangible assets15,900 
Goodwill23,124 
Trade and other payables(617)
Deferred revenue(600)
Deferred tax liabilities(639)
Net assets acquired$39,138 
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 Australia 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 deferred tax liabilities were primarily a result of the difference in the book basis and tax basis related to the identifiable intangible assets.
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:
Fair ValueUseful Life
(U.S. $ in thousands)(years)
Developed technology$13,700 4
Customer relationships1,800 3
Trade name400 1
Total intangible assets subject to amortization$15,900 
The amount recorded for developed technology represents the estimated fair value of Code Barrel’s workflow automation technology. The amount recorded for customer relationships represents the fair value of the underlying relationships with Code Barrel’s customers. The amount recorded for trade name represents the fair value of Code Barrel’s brand recognition as of acquisition date. The purchase price allocation was finalized in fiscal year 2021 without further adjustment.
Halp
On May 11, 2020, we acquired 100% of the outstanding equity of Halp, Inc. (“Halp”), a message-based conversational help desk ticketing solution. Total purchase price consideration for Halp was approximately $17.6 million, which consisted of approximately $17.0 million in cash and $0.6 million in fair value of replacement shares attributable to service provided prior to acquisition. We issued 9,929 replacement shares and the fair value
21

of the replacement shares was based on grant date stock price of the Company. In addition, we granted $4.1 million worth of restricted shares of the Company to key employees of Halp, which are subject to future vesting provisions based on service conditions and accounted for as share based compensation.
We acquired Halp to provide customers a standalone solution that allows them to turn their internal messaging tool into a help desk. For customers using Jira Service Management or similar service management tools, Halp integrates their messaging tool seamlessly with their established workflows. We have included the financial results of Halp in our consolidated financial statements from the date of acquisition, which have not been material to date. Pro forma results of operations have not been presented for the twelve months ended June 30, 2020 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$664 
Trade receivables36 
Prepaid expenses and other current assets22 
Deferred tax assets475 
Intangible assets5,350 
Goodwill12,322 
Deferred revenue(50)
Deferred tax liabilities(1,237)
Net assets acquired$17,582 
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 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 following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:
Fair ValueUseful Life
(U.S. $ in thousands)(years)
Developed technology$4,400 6
Customer relationships850 6
Trade name100 1
Total intangible assets subject to amortization$5,350 
The amount recorded for developed technology represents the estimated fair value of Halp’s message-based help desk ticketing technology. The amount recorded for customer relationships represents the fair value of the underlying relationships with Halp’s customers. The amount recorded for trade name represents the fair value of Halp’s brand recognition as of the acquisition date. The purchase price allocations are preliminary and subject to revision as additional information existing as of the acquisition date but unknown to us may become available within the respective measurement period (up to one year from the respective acquisition date). 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:
22

As of
 December 31, 2020June 30, 2020
 (U.S. $ in thousands)
Cash and bank deposits$1,031,057 $823,985 
Amounts due from third-party credit card processors4,030 7,076 
U.S. treasury securities— 5,599 
Corporate debt securities4,504 27,365 
Agency securities— 8,749 
Commercial paper159,030 167,248 
Money market funds53,094 439,947 
Total cash and cash equivalents$1,251,715 $1,479,969 
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.
Other non-current assets
Other non-current assets consisted of the following:
As of
December 31, 2020June 30, 2020
(U.S. $ in thousands)
Marketable equity securities$96,228 $100,187 
Non-marketable equity securities5,250 3,750 
Security deposits4,174 4,873 
Restricted cash11,343 9,174 
Other11,076 6,790 
Total other non-current assets$128,071 $124,774 
As of December 31, 2020 and June 30, 2020, 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 facility leases and was not available for the Group’s use in its operations.
Trade and other payables
Trade and other payables consisted of the following:
As of
 December 31, 2020June 30, 2020
 (U.S. $ in thousands)
Trade payables$46,211 $30,738 
Accrued expenses64,576 76,358 
Accrued compensation and employee benefits45,447 72,627 
Sales and indirect taxes10,480 9,009 
Customer deposits10,199 7,897 
Other payables12,432 5,941 
Total trade and other payables$189,345 $202,570 

23

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 December 31,Six Months Ended December 31,
 2020201920202019
(U.S. $ in thousands)
Deferred revenue, beginning of period$624,941 $500,376 $601,005 $468,820 
Additions562,699 486,548 1,046,141 881,494 
Subscription revenue(310,675)(228,684)(588,639)(429,779)
Maintenance revenue(131,276)(116,877)(258,970)(226,948)
Perpetual license revenue(22,124)(29,051)(44,261)(53,795)
Other revenue(37,284)(34,113)(68,995)(61,593)
Deferred revenue, end of period$686,281 $578,199 $686,281 $578,199 
The additions in the deferred revenue balance are primarily cash payments received or due in advance of satisfying our performance obligations and deferred revenue acquired through business combinations.
For the three months ended December 31, 2020 and 2019, approximately 34% and 33% of revenue recognized was from the deferred revenue balances at the beginning of each fiscal year, and for the six months ended December 31, 2020 and 2019, approximately 43% and 42% 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 December 31, 2020, approximately $721.6 million of revenue is expected to be recognized from transaction price allocated to remaining performance obligations. We expect to recognize revenue on approximately 93% of these remaining performance obligations over the next 12 months with the balance recognized thereafter. 
Disaggregated revenues
Marketplace apps revenue totaled approximately $33.2 million and $30.1 million for the three months ended December 31, 2020 and 2019, respectively, and totaled approximately $61.1 million and $54.2 million for the six months ended December 31, 2020 and 2019, respectively, which is included in other revenue.
The Group’s revenues by geographic region based on customers who purchased our products or services are as follows:
 Three Months Ended December 31,Six Months Ended December 31,
 2020201920202019
(U.S. $ in thousands)
Americas$245,059 $198,798 $475,437 $379,627 
EMEA200,016 165,157 378,085 307,049 
Asia Pacific56,284 44,770 107,343 85,439 
Total revenues$501,359 $408,725 $960,865 $772,115 
Revenues from the United States totaled approximately $214.6 million and $172.9 million for the three months ended December 31, 2020 and 2019, respectively, and totaled approximately $417.1 million and $330.8 million for the six months ended December 31, 2020 and 2019, respectively.
24

13. Debt
Exchangeable Senior Notes
2023 Exchangeable Senior Notes
In April 2018, Atlassian, Inc., a wholly-owned subsidiary of the Company, issued $850 million in aggregate principal amount of Notes due on May 1, 2023. In May, 2018, the initial purchasers of the Notes exercised their option to purchase an additional $150 million in aggregate principal amount of the Notes, bringing the total aggregate principal amount of the Notes to $1 billion. The Notes are senior, unsecured obligations of the Group, and are scheduled 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.
The exchange feature of the Notes requires bifurcation from the Notes and is accounted for as a derivative liability. The Notes embedded exchange derivative is carried on the consolidated statements of financial position at its estimated fair value and is adjusted at the end of each reporting period, with unrealized gain or loss reflected in the consolidated statements of operations. The fair value of the exchange feature derivative liability was $1,418.3 million and $1,283.1 million as of December 31, 2020 and June 30, 2020, respectively.
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 capped call transactions are accounted for as derivative assets and are carried on the consolidated statements of financial position at their estimated fair value. The capped calls are adjusted to fair value each reporting period, with unrealized gain or loss reflected in the consolidated statements of operations. The fair value of capped call assets was $228.0 million and $310.6 million as of December 31, 2020 and June 30, 2020, respectively.
The current or non-current classification of the embedded exchange derivative liability and the capped call assets corresponds with the classification of the Notes on the consolidated statements of financial position. The classification is evaluated at each balance sheet date, and may change from time to time depending on whether the exchange conditions are met. As of December 31, 2020 and June 30, 2020, the closing price exchange condition has been met and the Notes, exchange derivative liability, and the capped call assets were classified as current. Please refer to Note 3, “Financial Instruments,” for details on the valuation of exchange feature derivative liability and capped call assets. During the six months ended December 31, 2020, we have settled a few early exchange requests for an immaterial amount of the Notes.
For the three months ended December 31, 2020, we repurchased $250 million principal amount of the Notes in privately-negotiated transactions for aggregate consideration of $671.5 million in cash and unwound the related capped calls for net proceeds of $72.8 million.
The Notes are Level 2 instruments, and the estimated fair value of the Notes was $2,144 million and $2,234 million as of December 31, 2020 and June 30, 2020, respectively.
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 December 31, 2020 and June 30, 2020, were as follows:
As of
December 31, 2020June 30, 2020
(U.S. $ in thousands)
Principal amount $749,991 $999,999 
Unamortized debt discount (13,704)(105,963)
Unamortized issuance cost(627)(4,853)
Net liability $735,660 $889,183 
The effective interest rate, contractual interest expense and amortization of debt discount for the Notes for the three and six months ended December 31, 2020 and 2019 were as follows:
25

Three Months Ended December 31,Six Months Ended December 31,
2020201920202019
(U.S. $ in thousands)
Effective interest rate4.83 %4.83 %4.83 %4.83 %
Contractual interest expense$1,465 $1,562 $3,027 $3,125 
Amortization of debt discount$83,488 $8,460 $92,259 $16,820 
Amortization of issuance cost$3,824 $388 $4,226 $770 
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.
The Group incurred debt issuance costs of $4.4 million in connection with entering into the Credit Facility. As of December 31, 2020, no amounts have been drawn under the Credit Facility.
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. As of December 31, 2020, the Group was in compliance with all related covenants.
Reconciliation of assets and liabilities arising from financing activities:
 Capped Call AssetsNotes, NetEmbedded Exchange Feature of NotesCredit FacilityAccrued Interest
(U.S. $ in thousands)
Balance as of June 30, 2020$(310,608)$889,183 $1,283,089 $— $1,042 
Cash flows72,776 (250,008)(421,489)(4,445)(3,294)
Amortization of debt discount and issuance cost— 96,485 — 543 — 
Fair value changes9,865 — 556,733 — — 
Accrual of interest— — — — 3,356 
Balance as of December 31, 2020$(227,967)$735,660 $1,418,333 $(3,902)$1,104 

14. Earnings Per Share
Basic earnings per share is computed by dividing the net income (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.
26

A reconciliation of the calculation of basic and diluted net income (loss) per share is as follows:
 Three Months Ended December 31,Six Months Ended December 31,
 2020201920202019
(U.S. $ in thousands except per share data)
Numerator: 
Net income (loss) attributable to ordinary shareholders:$(621,528)$124,074 $(643,082)$193,394 
Denominator: 
Weighted-average ordinary shares outstanding—basic249,188 244,203 248,601 243,497 
Effect of potentially dilutive shares: 
Share options and RSUs— 6,757 — 7,453 
Weighted-average ordinary shares outstanding—diluted249,188 250,960 248,601