6-K 1 a6-kq3fy21quarterlyreport.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 March 31, 2021
 
Commission File Number 001-37651

Atlassian Corporation Plc
(Exact name of registrant as specified in its charter)
 
Not Applicable
(Translation of registrant’s name into English)
 
Exchange House
Primrose Street
London EC2A 2EG
c/o Herbert Smith Freehills LLP
(Address of principal executive office)


Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:
Form 20-F ☑ Form 40-F ☐
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
 





QUARTERLY REPORT
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 March 31,Nine Months Ended March 31,
 Notes2021202020212020
Revenues:   
Subscription $349,915 $244,155 $938,554 $673,934 
Maintenance 132,921 119,628 391,891 346,576 
Perpetual license 31,308 21,002 75,569 74,797 
Other 54,584 26,797 123,579 88,390 
Total revenues12568,728 411,582 1,529,593 1,183,697 
Cost of revenues (1) (2) 84,888 70,655 238,054 198,695 
Gross profit 483,840 340,927 1,291,539 985,002 
Operating expenses: 
Research and development (1) (2) 244,098 204,148 717,397 552,450 
Marketing and sales (1) (2) 92,043 84,485 239,480 221,791 
General and administrative (1) 78,184 72,214 225,502 193,395 
Total operating expenses 414,325 360,847 1,182,379 967,636 
Operating income (loss) 69,515 (19,920)109,160 17,366 
Other non-operating income (expense), net150,662 (141,701)(421,358)44,748 
Finance income 1,464 7,199 6,166 24,411 
Finance costs (10,591)(12,435)(114,614)(37,126)
Income (loss) before income tax benefit (expense) 211,050 (166,857)(420,646)49,399 
Income tax benefit (expense)5(51,210)8,032 (62,596)(14,830)
Net income (loss) $159,840 $(158,825)$(483,242)$34,569 
Net income (loss) per share attributable to ordinary shareholders: 
Basic14$0.64 $(0.65)$(1.94)$0.14 
Diluted14$0.63 $(0.65)$(1.94)$0.14 
Weighted-average shares outstanding used to compute net income (loss) per share attributable to ordinary shareholders: 
Basic14250,279 245,504 249,152 244,161 
Diluted14255,128 245,504 249,152 251,255 
(1)Amounts include share-based payment expense, as follows:
Cost of revenues$6,495 $5,535 $18,552 $14,654 
Research and development63,699 57,071 198,235 151,988 
Marketing and sales11,774 11,397 30,224 32,902 
General and administrative16,296 13,519 44,676 35,712 
(2)Amounts include amortization of acquired intangible assets, as follows:
Cost of revenues$5,554 $6,645 $16,386 $24,306 
Research and development41 41 124 124 
Marketing and sales2,278 2,900 6,894 10,511 
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 March 31,Nine Months Ended March 31,
 Notes2021202020212020
Net income (loss) $159,840 $(158,825)$(483,242)$34,569 
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(4,574)26,180 29,326 6,802 
Income tax effect1,040 (5,800)(6,712)(1,379)
Other comprehensive income (loss) for items that will not be reclassified to profit or loss, net of tax(3,534)20,380 22,614 5,423 
Items that will be reclassified to profit or loss in subsequent periods:
Foreign currency translation adjustment(3,210)(4,182)5,275 (4,763)
Net change in unrealized gain (loss) on investments classified at fair value through other comprehensive income(1,151)196 (4,016)662 
Net gain (loss) on derivative instruments3(15,898)(20,565)4,658 (16,866)
Income tax effect 8,615 (9)(1,693)(1,222)
Other comprehensive income (loss) after tax that will be reclassified to profit or loss in subsequent periods(11,644)(24,560)4,224 (22,189)
Other comprehensive income (loss), net of tax (15,178)(4,180)26,838 (16,766)
Total comprehensive income (loss), net of tax $144,662 $(163,005)$(456,404)$17,803 

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)
NotesMarch 31, 2021June 30, 2020
(unaudited)
Assets
Current assets:
Cash and cash equivalents11$1,151,450 $1,479,969 
Short-term investments3412,872 676,072 
Trade receivables6193,155 112,019 
Tax receivables3,161 1,509 
Derivative assets3, 13189,776 327,487 
Prepaid expenses and other current assets54,341 46,730 
Total current assets2,004,755 2,643,786 
Non-current assets:
Property and equipment, net7100,707 97,648 
Deferred tax assets44,652 35,351 
Goodwill8719,160 645,140 
Intangible assets, net8128,285 129,690 
Right-of-use assets, net9194,476 217,683 
Other non-current assets11130,983 124,774 
Total non-current assets1,318,263 1,250,286 
Total assets$3,323,018 $3,894,072 
Liabilities
Current liabilities:
Trade and other payables11$233,458 $202,570 
Tax liabilities54,087 19,583 
Provisions25,041 14,291 
Deferred revenue779,987 573,813 
Lease obligations939,218 34,743 
Derivative liabilities3884,883 1,284,596 
Exchangeable senior notes, net13542,055 889,183 
Total current liabilities2,558,729 3,018,779 
Non-current liabilities:
Deferred tax liabilities37,049 31,304 
Provisions10,906 9,493 
Deferred revenue93,831 27,192 
Lease obligations9205,565 229,825 
Other non-current liabilities4,270 2,173 
Total non-current liabilities351,621 299,987 
Total liabilities2,910,350 3,318,766 
Equity
Share capital25,088 24,744 
Share premium461,012 459,892 
Other capital reserves1,423,220 1,130,918 
Other components of equity102,982 76,144 
Accumulated deficit(1,599,634)(1,116,392)
Total equity412,668 575,306 
Total liabilities and equity$3,323,018 $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(483,242)(483,242)
Other comprehensive income, net of tax2,2015,27519,36226,838
Total comprehensive income (loss), net of tax2,2015,27519,362(483,242)(456,404)
Issuance of ordinary shares upon exercise of share options381,1201,158
Vesting of early exercised shares30(30)
Issuance of ordinary shares for settlement of restricted share units (RSUs)276(276)
Share-based payment291,839291,839
Replacement equity awards related to business combination523523
Tax benefit from share plans246246
3441,120292,302293,766
Balance as of March 31, 2021$25,088 $461,012 $1,423,220 $8,368 $9,034 $85,580 $(1,599,634)$412,668 

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 income34,56934,569
Other comprehensive (loss) income, net of tax(17,958)(4,763)5,955(16,766)
Total comprehensive (loss) income, net of tax(17,958)(4,763)5,95534,56917,803
Issuance of ordinary shares upon exercise of share options611,4241,485
Vesting of early exercised shares57(25)32
Issuance of ordinary shares for settlement of RSUs312(312)
Share-based payment235,256235,256
Tax benefit from share plans217217
Cumulative effect of applying new accounting pronouncement(101)(101)
4301,424235,136(101)236,889
Balance as of March 31, 2020$24,629 $459,590 $1,051,796 $(20,505)$(391)$36,209 $(731,169)$820,159 
* 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 March 31,Nine Months Ended March 31,
2021202020212020
Operating activities   
Income (loss) before income tax benefit (expense) $211,050 $(166,857)$(420,646)$49,399 
Adjustments to reconcile income (loss) before income tax expense to net cash provided by operating activities: 
Depreciation and amortization13,906 14,738 41,124 49,148 
Depreciation of right-of-use assets9,418 8,945 28,010 26,172 
Loss (gain) on sale of investments, disposal of assets and other836 (591)1,135 (855)
Net unrealized loss on investments1,250 — 2,000 — 
Interest expense3,316 3,482 10,312 10,581 
Net unrealized foreign currency loss (gain)(266)(4,119)10,175 (3,173)
Share-based payment expense 98,264 87,522 291,687 235,256 
Net loss (gain) on exchange derivative and capped call transactions(150,665)141,783 415,933 (46,743)
Amortization of debt discount and issuance cost7,275 8,955 104,302 26,545 
Interest income (1,464)(7,200)(6,166)(24,411)
Changes in assets and liabilities: 
Trade receivables (35,420)29,902 (80,943)(11,211)
Prepaid expenses and other assets (3,691)(1,224)(11,052)(7,594)
Trade and other payables, provisions and other non-current liabilities 47,784 30,961 33,223 25,452 
Deferred revenue 186,880 4,958 270,813 113,737 
Interest received 3,018 8,146 10,472 24,416 
Income tax paid, net (14,455)(3,088)(43,416)(15,850)
Net cash provided by operating activities 377,036 156,313 656,963 450,869 
Investing activities 
Business combinations, net of cash acquired(41,460)— (83,624)(37,983)
Purchases of property and equipment(5,365)(6,742)(22,730)(19,865)
Purchases of investments (24,254)(364,603)(93,519)(951,481)
Proceeds from maturities of investments135,245 232,239 330,549 425,257 
Proceeds from sales of investments1,092 95,680 48,786 237,641 
Increase in restricted cash — — (2,162)— 
Payment of deferred consideration — — (185)— 
Net cash provided by (used in) investing activities 65,258 (43,426)177,115 (346,431)
Financing activities
Proceeds from exercise of share options11 499 1,158 1,485 
Payments of lease obligations(11,303)(9,308)(33,538)(26,335)
Payment of issuance costs for credit facility — — (4,445)— 
Interest paid  (922)— (4,216)(3,125)
Repayment of exchangeable senior notes (591,550)(2)(1,263,047)(2)
Proceeds from settlement of capped call transactions 63,305 — 136,081 — 
Net cash used in financing activities(540,459)(8,811)(1,168,007)(27,977)
Effect of exchange rate changes on cash and cash equivalents(2,100)(5,608)5,410 (6,709)
Net increase (decrease) in cash and cash equivalents(100,265)98,468 (328,519)69,752 
Cash and cash equivalents at beginning of period1,251,715 1,239,725 1,479,969 1,268,441 
Cash and cash equivalents at end of period$1,151,450 $1,338,193 $1,151,450 $1,338,193 
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 March 31, 2021, the consolidated statements of operations, comprehensive income (loss) and cash flows for the three and nine months ended March 31, 2021 and 2020, the consolidated statements of changes in equity for nine months ended March 31, 2021 and 2020, 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 March 31, 2021, and the results of operations and cash flows for the three and nine months ended March 31, 2021 and 2020. The results of the three and nine months ended March 31, 2021 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year.
8

Use of estimates
The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgments and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgments and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which forms the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions and may materially affect the financial results or the financial position reported in future periods.
In January 2020, the World Health Organization declared a novel coronavirus (“COVID-19”) a Public Health Emergency of International Concern, and a pandemic in March 2020. The impact of COVID-19 continues to unfold and the extent of the impact will depend on a number of factors, including the duration and spread of the outbreak, its severity, the actions taken by governments and authorities to contain the virus or treat its impact, the effectiveness of current vaccine treatments, and how quickly and to what extent normal economic and operating conditions can resume. The Group considered the impact of COVID-19 on the assumptions and estimates used, including the allowance for credit losses for accounts receivable, the creditworthiness of customers entering into revenue arrangements, our impairment assessment of assets, the fair values of our financial instruments, and income taxes, which require increased judgement and carry a higher degree of estimate uncertainty. The Group determined that there were no material adverse impacts on the consolidated financial statements for the three and nine months ended March 31, 2021. 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 March 31, 2021, 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$215,341 $768 $(4)$216,105 
Agency securities13,757 55 — 13,812 
Certificates of deposit and time deposits9,253 — — 9,253 
Corporate debt securities172,889 703 — 173,592 
Municipal securities2,700 10 — 2,710 
Non-marketable debt securities2,000 — (2,000)— 
Total debt investments$415,940 $1,536 $(2,004)$415,472 
Equity Investments
Marketable equity securities$10,270 $81,385 $— $91,655 
Non-marketable equity securities12,000 — (250)11,750 
Total equity investments$22,270 $81,385 $(250)$103,405 
Total investments$438,210 $82,921 $(2,254)$518,877 
As of March 31, 2021, the Group had $412.9 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 $91.7 million, non-marketable equity securities totaling $11.8 million, and certificates of deposit and time deposits totaling $2.6 million all of which were classified as long-term and were included in other non-current assets on the Group’s consolidated statement of financial position.
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.
9

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
 March 31, 2021June 30, 2020
 (U.S. $ in thousands)
Recorded as follows:   
Due in one year or less$361,772 $443,324 
Due after one year53,700 236,095 
Total debt investments$415,472 $679,419 

10

Fair value measurements
The following table presents the Group’s financial instruments measured and recognized at fair value as of March 31, 2021, 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$55,269 $— $— $55,269 
Commercial paper— 103,437 — 103,437 
Short-term investments:
U.S. treasury securities— 216,105 — 216,105 
Agency securities— 13,812 — 13,812 
Certificates of deposit and time deposits— 6,653 — 6,653 
Corporate debt securities— 173,592 — 173,592 
Municipal securities— 2,710 — 2,710 
Current derivative assets:
Derivative assets - hedging— 18,641 — 18,641 
Derivative assets - capped call transactions— — 171,135 171,135 
Non-current derivative assets:
Derivative assets - hedging— 50 — 50 
Other non-current assets:
Certificates of deposit and time deposits— 2,600 — 2,600 
Marketable equity securities91,655 — — 91,655 
Non-marketable equity securities— — 11,750 11,750 
Total assets measured at fair value$146,924 $537,600 $182,885 $867,409 
Liabilities measured at fair value    
Current derivative liabilities:
Derivative liabilities - hedging$— $2,228 $— $2,228 
Derivative liabilities - exchangeable feature of exchangeable senior notes— — 882,655 882,655 
Non-current derivative liabilities:
Derivative liabilities - hedging— 302 — 302 
Total liabilities measured at fair value$— $2,530 $882,655 $885,185 

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
On December 31, 2020: quoted market price obtained from counterparty banks*
N/A
Exchangeable senior notesQuoted market priceN/A
*On 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 March 31, 2021 was 38.7%. As of March 31, 2021, a 10% higher volatility, holding other inputs constant, would result in an approximately $4.6 million lower unrealized gain for the three and nine months ended March 31, 2021.

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
(136,081)812,975 10,250 
Losses
Recognized in other non-operating income (expense), net
(3,392)(412,541)(2,000)
Recognized in other comprehensive income (loss)— — (250)
Balance as of March 31, 2021$171,135 $(882,655)$11,750 
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
322 (177,051)(2,000)
There were no transfers between levels during the three and nine months ended March 31, 2021 and 2020.
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 LocationMarch 31, 2021June 30, 2020
(U.S. $ in thousands)
Derivative assets - hedging
Derivatives designated as hedging instruments:
Foreign exchange forward contractsCurrent derivative assets$18,531 $14,195 
Foreign exchange forward contractsOther non-current assets50 — 
Derivatives not designated as hedging instruments:
Foreign exchange forward contractsCurrent derivative assets110 2,684 
Total derivative assets$18,691 $16,879 
Derivative liabilities - hedging
Derivatives designated as hedging instruments:
Foreign exchange forward contractsCurrent derivative liabilities$523 $1,164 
Foreign exchange forward contractsOther non-current liabilities302 
Derivatives not designated as hedging instruments:
Foreign exchange forward contractsCurrent derivative liabilities1,705 343 
Total derivative liabilities$2,530 $1,509 

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The following table sets forth the notional amounts of our derivative instruments as of March 31, 2021 (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$450,722 $67,823 $518,545 $354,141 $164,404 $518,545 
Average forward rate0.7392 0.7656 — 0.7303 0.7692 — 
EUR/USD forward contracts:
Notional amount10,216 — 10,216 — 10,216 10,216 
Average forward rate1.1944 — — — 1.1944 — 
Total$460,938 $67,823 $528,761 $354,141 $174,620 $528,761 
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 March 31,Nine Months Ended March 31,
2021202020212020
(U.S. $ in thousands)
Gains (losses) recognized into general and administrative - ineffective portion$(15)$(12)$16 $(84)
Gross unrealized gains (losses) recognized in other comprehensive income (loss)$(3,170)$(23,329)$25,126 $(24,518)
Net gain (loss) reclassified from cash flow hedge reserve into profit or loss - effective portion:$12,728 $(2,764)$20,468 $(7,652)
Recognized in cost of revenues587 (171)678 (519)
Recognized in research and development10,043 (1,954)16,938 (5,130)
Recognized in marketing and sales140 (64)199 (197)
Recognized in general and administrative1,958 (575)2,653 (1,806)
Change in fair value used for measuring ineffectiveness:
Cash flow hedging instruments$(3,185)$(23,341)$25,142 $(24,602)
Hedged item - highly probable forecast expenditures(3,170)(23,329)25,126 (24,518)

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4. Expenses
Income (loss) before income tax benefit (expense) included the following expenses:
 Three Months Ended March 31,Nine Months Ended March 31,
 2021202020212020
 (U.S. $ in thousands)
Depreciation:   
Equipment$531 $578 $1,646 $1,512 
Computer hardware and software491 254 1,410 769 
Furniture and fittings865 793 2,582 2,209 
Leasehold improvements4,146 3,527 12,082 9,717 
Total depreciation6,033 5,152 17,720 14,207 
Amortization: 
Patents and trademarks261 994 862 4,953 
Customer relationships2,231 2,100 6,681 5,954 
Acquired developed technology5,381 6,492 15,861 24,034 
Total amortization7,873 9,586 23,404 34,941 
Total depreciation and amortization$13,906 $14,738 $41,124 $49,148 
Employee benefits expense: 
Salaries and wages$164,680 $119,555 $463,351 $339,086 
Variable compensation26,221 24,421 75,260 63,553 
Payroll taxes27,687 19,982 52,142 38,825 
Share-based payment expense98,264 87,522 291,687 235,256 
Defined contribution plan expense10,694 9,187 28,200 22,298 
Contractor expense3,946 9,661 19,241 25,396 
Other22,206 16,995 60,122 44,447 
Total employee benefits expense$353,698 $287,323 $990,003 $768,861 

5. Income Tax
The Group reported a tax expense of $51.2 million on pretax income of $211.1 million and a tax expense of $62.6 million on pretax loss of $420.6 million for the three and nine months ended March 31, 2021, respectively, as compared to a tax benefit of $8.0 million on pretax loss of $166.9 million and a tax expense of $14.8 million on pretax income of $49.4 million for the three and nine months ended March 31, 2020, respectively.
During the three and nine months ended March 31, 2021, the Group recorded income tax expense of $9.3 million to decrease and tax benefit of $9.3 million to increase, respectively, the combined carrying value of U.S. and Australian deferred tax assets. The adjustments in carrying value of deferred tax assets were 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 $5.5 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 nine months ended March 31, 2020, the Group recorded income tax benefit of $5.8 million and $1.4 million, respectively, to increase the carrying value of U.S. deferred tax assets. The adjustments in carrying value of deferred tax assets were a result of year-to-date unrealized investment gains that support their recognition.
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 nine months ended March 31, 2021. 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 which no
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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
 March 31, 2021June 30, 2020
 (U.S. $ in thousands)
Gross trade receivables$193,661 $113,175 
Expected credit loss allowance(506)(1,156)
Total trade receivables$193,155 $112,019 
As of March 31, 2021, 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, Net
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 
Additions1,143 170 862 3,308 14,731 20,214 
Disposals(176)(2,694)(68)(1,266)— (4,204)
Effect of change in exchange rates18 (3)103 359 1,580 2,057 
Cost as of March 31, 2021
10,637 9,538 20,584 105,501 27,572 173,832 
Accumulated depreciation as of June 30, 2020
(5,618)(8,611)(8,388)(35,500)— (58,117)
Depreciation expense(1,646)(1,410)(2,582)(12,082)— (17,720)
Disposals145 1,442 37 1,264 — 2,888 
Effect of change in exchange rates(13)(26)(140)— (176)
Accumulated depreciation as of March 31, 2021
(7,132)(8,576)(10,959)(46,458)— (73,125)
Net book amount as of
March 31, 2021
$3,505 $962 $9,625 $59,043 $27,572 $100,707 
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.
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Goodwill consisted of the following:
 NotesGoodwill
 (U.S. $ in thousands)
Balance as of June 30, 2020$645,140 
Additions1074,631 
Effect of change in exchange rates(611)
Balance as of March 31, 2021$719,160 
There was no impairment of goodwill during the nine months ended March 31, 2021.
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— 20,600 1,400 22,000 
Disposals(220)(6,900)(310)(7,430)
Cost as of March 31, 202127,575 228,444 129,592 385,611 
Accumulated amortization as of
June 30, 2020
(23,205)(147,146)(71,000)(241,351)
Amortization charge(862)(15,861)(6,681)(23,404)
Disposals220 6,899 310 7,429 
Accumulated amortization as of March 31, 2021
(23,847)(156,108)(77,371)(257,326)
Net book amount as of
March 31, 2021
$3,728 $72,336 $52,221 $128,285 
As of March 31, 2021, no development costs have qualified for capitalization, and all development costs have been expensed as incurred.
9. Leases
The Group leases various offices in locations including, Sydney, Australia; the San Francisco Bay Area, California, New York, New York, Austin, Texas, and Boston, Massachusetts, in the United States; Amsterdam, the Netherlands; Manila, the Philippines; Bengaluru, India; Yokohama, Japan; 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
 March 31, 2021June 30, 2020
 (U.S. $ in thousands)
Assets
Right-of-use assets$194,476 $217,683 
Liabilities
Lease obligations, current39,218 34,743 
Lease obligations, non-current205,565 229,825 
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The following table presents information about our leases on our consolidated statements of operations:
 Three Months Ended March 31,Nine Months Ended March 31,
 2021202020212020
 (U.S. $ in thousands)
Depreciation of right-of-use assets$9,418 $8,945 $28,010 $26,172 
Interest expense on lease obligations1,714 1,902 5,280 5,865 
Short-term leases expense86 148 351 1,866 
Low value leases expense386 79 1,010 110 
The following table presents supplemental information about our leases:
 Three Months Ended March 31,Nine Months Ended March 31,
 2021202020212020
 (U.S. $ in thousands)
Cash outflows:
Principal portion of the lease obligations$9,589 $7,406 $28,258 $20,470 
Interest portion of the lease obligations
1,714 1,902 5,280 5,865 
Short-term leases and low value leases
611 615 2,387 2,576 
Total cash outflows$11,914 $9,923 35,925 $28,911 
Additions to right-of-use assets
$— $— $4,612 $13,669 
As of March 31, 2021, 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 nine months ended March 31, 2021 because the effect of the acquisition was not material to the financial statements.



The following table summarizes the preliminary estimated fair values of assets acquired and liabilities assumed as of the date of acquisition:
Fair Value
(U.S. $ in thousands)
Cash and cash equivalents$1,235 
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.
Chartio
On February 26, 2021, we acquired 100% of the outstanding equity of Chart.io, Inc. (“Chartio”), a data analytics and visualization tool that allows users to create dashboards and charts using their various data sources. Total purchase price consideration for Chartio was approximately $45.6 million, consisting of $45.0 million in cash and $0.6 million in equity. In addition, the Company granted $4.5 million worth of restricted shares of the Company to key employees of Chartio, which are subject to future vesting provisions based on service conditions and accounted for as share based compensation.
The acquisition of Chartio brings an analytics and data visualization solution to Atlassian’s products, including Jira Software, Jira Align and Jira Service Management. We have included the financial results of Chartio in our consolidated financial statements from the date of acquisition. Pro forma results of operations have not been
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presented for the three and nine months ended March 31, 2021 because the effect of the acquisition was not material to the financial statements.
The following table summarizes the preliminary estimated fair values of assets acquired and liabilities assumed as of the date of acquisition:
Fair Value
(U.S. $ in thousands)
Cash and cash equivalents$1,035 
Accounts receivable266 
Prepaid and other assets40 
Deferred tax assets3,009 
Developed technology12,400 
Goodwill33,271 
Deferred revenue(682)
Trade and other payables(676)
Deferred tax liabilities(3,095)
Net assets acquired$45,568 
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The goodwill balance is primarily attributed to the assembled workforce and expanded market opportunities. The goodwill balance is not deductible in the U.S. for income tax purposes. The fair values assigned to tangible assets acquired, liabilities assumed and identifiable intangible assets were based on management’s estimates and assumptions. The fair value of acquired receivables approximates the gross contractual amounts receivable. The deferred tax liabilities were primarily a result of the difference in the book basis and tax basis related to the identifiable intangible assets. The amount recorded for developed technology of $12.4 million represents the estimated fair value of Chartio’s data visualization technology and is amortized over six years.
Other fiscal year 2021 business combination
On October 27, 2020, we acquired 100% of the outstanding equity of a privately held company in Poland that primarily provided outsourced software development and support services to Atlassian for a cash consideration of approximately $10.6 million. The purchase price was allocated to net liabilities of $0.7 million and goodwill of $11.3 million. The goodwill balance is primarily attributed to the assembled workforce and is deductible in U.S. and not deductible in Poland for income tax purposes.
Our purchase price allocations are preliminary and subject to revision as additional information existing as of the respective acquisition dates but unknown to us may become available within the respective measurement periods (up to one year from the respective acquisition dates). The primary areas of the purchase price allocation that are not yet finalized are fair value of contingencies.
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:
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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 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.
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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:
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As of
 March 31, 2021June 30, 2020
 (U.S. $ in thousands)
Cash and bank deposits$988,705 $823,985 
Amounts due from third-party credit card processors4,039 7,076 
Commercial paper103,437 167,248 
Money market funds55,269 439,947 
U.S. treasury securities— 5,599 
Corporate debt securities— 27,365 
Agency securities— 8,749 
Total cash and cash equivalents$1,151,450 $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
March 31, 2021June 30, 2020
(U.S. $ in thousands)
Marketable equity securities$91,655 $100,187 
Non-marketable equity securities11,750 3,750 
Security deposits4,320 4,873 
Restricted cash11,343 9,174 
Other11,915 6,790 
Total other non-current assets$130,983 $124,774 
As of March 31, 2021 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 facilities 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
 March 31, 2021June 30, 2020
 (U.S. $ in thousands)
Trade payables$50,538 $30,738 
Accrued expenses79,870 76,358 
Accrued compensation and employee benefits67,912 72,627 
Sales and indirect taxes11,577 9,009 
Customer deposits9,090 7,897 
Other payables14,471 5,941 
Total trade and other payables$233,458 $202,570 

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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 March 31,Nine Months Ended March 31,
 2021202020212020
(U.S. $ in thousands)
Deferred revenue, beginning of period$686,281 $500,376 $601,005 $468,820 
Additions756,265 489,405 1,802,406 1,293,076 
Subscription revenue(349,915)(244,155)(938,554)(673,934)
Maintenance revenue(132,921)(119,628)(391,891)(346,576)
Perpetual license revenue(31,308)(21,002)(75,569)(74,797)
Other revenue(54,584)(26,797)(123,579)(88,390)
Deferred revenue, end of period$873,818 $578,199 $873,818 $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 March 31, 2021 and 2020, approximately 19% and 22% of revenue recognized was from the deferred revenue balances at the beginning of each fiscal year, and for the nine months ended March 31, 2021 and 2020, approximately 34% and 35% 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 March 31, 2021, approximately $902.3 million of revenue is expected to be recognized from transaction price allocated to remaining performance obligations. We expect to recognize revenue on approximately 88% of these remaining performance obligations over the next 12 months with the balance recognized thereafter. 
Disaggregated revenues
Marketplace apps revenue totaled approximately $50.0 million and $23.4 million for the three months ended March 31, 2021 and 2020, respectively, and totaled approximately $111.1 million and $77.6 million for the nine months ended March 31, 2021 and 2020, 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 March 31,Nine Months Ended March 31,
 2021202020212020
(U.S. $ in thousands)
Americas$272,297 $206,291 $747,734 $585,918 
EMEA232,727 160,556 610,812 467,605 
Asia Pacific63,704 44,735 171,047 130,174 
Total revenues$568,728 $411,582 $1,529,593 $1,183,697 
Revenues from the United States totaled approximately $238.7 million and $180.2 million for the three months ended March 31, 2021 and 2020, respectively, and totaled approximately $655.8 million and $511.0 million for the nine months ended March 31, 2021 and 2020, respectively.
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Revenues from Germany totaled approximately $58.0 million and $36.6 million for the three months ended March 31, 2021 and 2020, respectively, and totaled approximately $146.5 million and $107.9 million for the nine months ended March 31, 2021 and 2020, respectively.
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 $882.7 million and $1,283.1 million as of March 31, 2021 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 $171.1 million and $310.6 million as of March 31, 2021 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 March 31, 2021 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 nine months ended March 31, 2021, we have settled a few early exchange requests for an immaterial amount of the Notes.
For the three and nine months ended March 31, 2021, we repurchased $200 million and $450 million principal amount of the Notes in privately-negotiated transactions, respectively, for aggregate consideration of $591.6 million and $1,263.0 million, respectively, in cash and unwound the related capped calls for net proceeds of $63.3 million and $136.1 million, respectively.
The Notes are Level 2 instruments, and the estimated fair value of the Notes was $1,441 million and $2,234 million as of March 31, 2021 and June 30, 2020, respectively.
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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 March 31, 2021 and June 30, 2020, were as follows:
As of
March 31, 2021June 30, 2020
(U.S. $ in thousands)
Principal amount $549,925 $999,999 
Unamortized debt discount (7,527)(105,963)
Unamortized issuance cost(343)(4,853)
Net liability $542,055 $889,183 
The effective interest rate, contractual interest expense and amortization of debt discount for the Notes for the three and nine months ended March 31, 2021 and 2020 were as follows:
Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
(U.S. $ in thousands)
Effective interest rate4.83 %4.83 %4.83 %4.83 %
Contractual interest expense$1,099 $1,563 $4,126 $4,688 
Amortization of debt discount$6,178 $8,563 $98,436 $25,382 
Amortization of issuance cost$282 $388 $4,508 $1,158 
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 March 31, 2021, 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 March 31, 2021, 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 $— $1,042 
Cash flows136,081 (450,072)(812,975)(4,445)(4,216)
Amortization of debt discount and issuance cost— 102,944 — 1,358 — 
Fair value changes3,392 — 412,541 — — 
Accrual of interest— — — — 4,934 
Balance as of March 31, 2021$(171,135)$542,055 $882,655 $(3,087)$1,760 
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