| Financial Assets and Liabilities | Financial Assets and Liabilities Financial Risk Management The Group's activities expose it to a variety of financial risks: market risk (including currency risk, equity price risk, and interest rate risk), credit risk and liquidity risk. The Group's overall risk management approach focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Group. Management regularly reviews the Group's risk management objectives to ensure that risks are identified and managed appropriately. The board of directors is made aware of and reviews management's risk assessments prior to entering into significant transactions. Market risk Currency risk The Group operates globally and is exposed to foreign exchange risk arising from exposure to various currencies in the ordinary course of business. Our exposures primarily consist of the Australian dollar (“AUD”), Indian rupee, Euro (“EUR”), British pound, Japanese yen, Philippine peso and Canadian dollar. Foreign exchange risk arises from commercial transactions and recognized financial assets and liabilities denominated in a currency other than the U.S. dollar (“USD”). The Group’s financial risk management policy is reviewed annually by the Group’s Audit Committee and requires the Group to monitor its foreign exchange exposure on a regular basis. The substantial majority of our sales contracts are denominated in U.S. dollars, and our operating expenses are generally denominated in the local currencies of the countries where our operations are located. We therefore benefit from a strengthening of the U.S. dollar and are adversely affected by the weakening of the U.S. dollar. We have a hedging program in place and enter into derivative transactions to manage certain foreign currency exchange risks that arise in the Group’s ordinary business operations. We enter into master netting agreements with financial institutions to execute our hedging program. We recognize all hedging derivative instruments as either assets or liabilities on our consolidated statements of financial position and measure them at fair value. We have the rights to net certain hedging derivative assets and liabilities, but we currently present them on the gross basis. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting. Our master netting agreements are with select financial institutions to reduce our credit risk, and we trade with several counterparties to reduce our concentration risk with any single counterparty. We do not have significant exposure to counterparty credit risk at this time. We do not require nor are we required to post collateral of any kind related to our foreign currency derivatives. Cash flow hedging We enter into foreign exchange forward contracts with the objective to mitigate certain currency risks associated with forecast cost of revenues and operating expenses denominated in Australian dollars. These foreign exchange forward contracts are designated as cash flow hedges. There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange and forward contracts match the terms of the expected highly probable forecast transactions (i.e., notional amount and expected payment date). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange and forward contracts are identical to the hedged risk components. We measure ineffectiveness in a cash flow hedge relationship using the hypothetical derivative method. Ineffectiveness occurs only if the present value of the cumulative gain or loss on the derivative instrument exceeds the present value of the cumulative gain or loss on the hypothetical derivative, which is used to measure changes of expected future cash flow. Ineffectiveness mainly rises from the differences in the timing of the cash flows of the hedged items and the hedging instruments. It is our policy to enter into cash flow hedges to hedge cost of revenues and operating expenses up to 24 months. Balance sheet hedging We also enter into foreign exchange forward contracts to hedge a portion of certain foreign currency denominated monetary assets and liabilities to reduce the risk that such foreign currency assets or liabilities will be adversely affected by changes in exchange rates. These contracts hedge monetary assets and liabilities that are denominated in non-functional currencies. These contracts do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the monetary assets and liabilities being hedged. Foreign currency exchange rate exposure The Group hedges material foreign currency denominated monetary assets and liabilities using balance sheet hedges. The fluctuations in the fair market value of balance sheet hedges due to foreign currency rates generally offset those of the hedged items, resulting in no material effect on profit. Consequently, we are primarily exposed to significant foreign currency exchange rate fluctuations with regard to the spot component of derivatives held within a designated cash flow hedge relationship affecting other comprehensive income. The following table sets forth foreign currency sensitivity analysis of a hypothetical 10% change in exchange rate of the U.S. dollar against the Australian dollar to our cash flow hedging portfolio: Foreign Currency Sensitivity Effect on other comprehensive income, before tax 2021 2020 (U.S. $ in thousands) Foreign currency forward contracts - cash flow hedging: U.S. dollar +10%, decrease in fair value of foreign currency forward contracts $ (39,416) $ (26,999) U.S. dollar -10%, increase in fair value of foreign currency forward contracts 39,416 26,999 Equity Price Risk The Group is exposed to equity price risk in connection with our Notes, including exchange and settlement provisions based on the price of our Class A ordinary shares at exchange or maturity of the Notes. In addition, the capped call transactions associated with the Notes also include settlement provisions that are based on the price of our Class A ordinary shares. The amount of cash we may receive from capped call counterparties in connection with the capped calls is determined by the price of our Class A ordinary shares. The Group is also exposed to equity price risk in connection with our equity investments. The Group’s marketable equity investments are susceptible to market price risk from uncertainties about future values of the investment securities. The following table sets forth equity price sensitivity analysis of a hypothetical 10% change in share prices: Equity Price Sensitivity Effect on other non-operating expense, net Effect on other comprehensive income, before tax 2021 2020 2021 2020 (U.S. $ in thousands) Fair Value change of the Exchange and Capped Call Derivatives: Increase in our share price of 10% $ (107,880) $ (192,641) $ — $ — Decrease in our share price of 10% 106,241 184,784 — — Fair value change of marketable equity investments: Increase in respective share prices of 10% — — 11,041 10,019 Decrease in respective share prices of 10% — — (11,041) (10,019) Interest rate risk During the fiscal year ended June 30, 2021, the Group 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 Credit Facility matures in October 2025 and bears a variable interest rate. Please refer to Note 16, “ Debt ” for the details of the Credit Facility. The Group is exposed to interest rate risk arising from our variable interest rate Credit Facility. The Group’s financial risk management policy is reviewed annually by the Group’s Audit Committee and requires the Group to monitor its interest rate exposure on a regular basis. We have a hedging program in place and enter into derivative transactions to manage the variable interest rate risks that arise with the Group’s Term Loan Facility. We enter into master netting agreements with financial institutions to execute our hedging program. Our master netting agreements are with select financial institutions to reduce our credit risk, and we trade with several counterparties to reduce our concentration risk with any single counterparty. We do not have significant exposure to counterparty credit risk at this time. We do not require nor are we required to post collateral of any kind related to our interest rate derivatives. We enter into interest rate swaps with the objective to hedge the variability of cash flows in the interest payments associated with our variable-rate Term Loan Facility . The interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The interest rate swaps are designated as cash flow hedges and measured at fair value. As of June 30, 2021, we have entered into interest rate swaps with a total notional amount of $650 million. In addition, our cash equivalents and investment portfolio are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely impacted due to a rise in interest rates. As of June 30, 2021, the Group had cash and cash equivalents totaling $919.2 million and short-term investments totaling $313.0 million. The following table sets forth an interest rate sensitivity analysis of a hypothetical 100 basis point change in interest rates. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur: Interest Rate Sensitivity Effect on other comprehensive income, before tax 2021 2020 (U.S. $ in thousands) Change in market value of debt investments: Interest Rate +100bps, decrease in market value of debt investments $ (1,888) $ (5,397) Interest Rate -100bps, increase in market value of debt investments 259 1,617 Change in market value of interest rate swap: Interest Rate +100bps, increase in market value of interest rate swaps 24,845 — Interest Rate -100bps, decrease in market value of interest rate swaps (20,635) — Credit risk The Group is exposed to credit risk arising from cash and cash equivalents, deposits with banks and financial institutions, investments, foreign exchange and interest rate derivative contracts, and capped call transactions related to our issuance of the Notes, as well as credit exposures to customers, including outstanding receivables and committed transactions. Credit risk is managed on a Group basis. The Group has a minimum credit rating requirement for banks and financial institutions with which it transacts. The Group’s investments are governed by a corporate investment policy with a minimum credit rating and concentration limits for all securities. The Group is exposed to credit risk in the event of non-performance by the counterparties to our foreign exchange and interest rate derivative contracts and our capped call transactions at maturity. To reduce the credit risk, we continuously monitor credit quality of our counterparties to such derivatives. We believe the risk of non-performance under these contracts is remote. The Group's customer base is highly diversified, thereby limiting credit risk. Our credit policy typically requires payment within 30-45 days, and we establish credit limits for each customer based on our internal guidelines. The Group does not hold collateral as security or call on other credit enhancements. The Group manages its credit risk with customers by closely monitoring its receivables and contract assets. We continuously monitor outstanding receivables locally to assess whether there is objective evidence that our trade receivables and contract assets are credit-impaired. An impairment analysis is performed at each reporting date using a provision matrix to measure ECLs. The provision rates are based on days past due. Please refer to Note 9, “ Trade Receivables ” for the details of receivables, credit concentration, and ECL allowance. Liquidity risk Liquidity risk is the risk that the group will encounter difficulty in meeting its obligations associated with its financial liabilities as they fall due. The Group’s primary source of cash is cash generated from business operations. The table below presents the contractual undiscounted cash flows relating to the Group’s financial liabilities at the balance sheet date. The cash flows are grouped based on the remaining period to the contractual maturity date. The Group has sufficient funds, including its cash, cash equivalents, short-term investments, expected cash flows from operations and access to the Credit Facility, to meet these commitments as they become due. The Group may enter into financial transactions to secure additional funding to supplement existing cash flows or to maintain financial flexibility. Contractual maturities of financial liabilities are as follows: Less than 1 year 1 - 3 years 3 - 5 years More than 5 years Total (U.S. $ in thousands) As of June 30, 2021 Financial liabilities: Trade and other payables $ 266,497 $ — $ — $ — $ 266,497 Lease obligations (1) 48,297 77,768 65,227 91,131 282,423 Derivative liabilities 11,438 669 — — 12,107 Exchangeable senior notes (2) 1,109,593 — — — 1,109,593 $ 1,435,825 $ 78,437 $ 65,227 $ 91,131 $ 1,670,620 As of June 30, 2020 Financial liabilities: Trade and other payables $ 202,570 $ — $ — $ — $ 202,570 Lease liabilities (1) 41,584 109,015 54,325 92,158 297,082 Derivative liabilities 1,507 2 — — 1,509 Exchangeable senior notes (2) 2,211,244 — — — 2,211,244 $ 2,456,905 $ 109,017 $ 54,325 $ 92,158 $ 2,712,405 (1) Lease obligations represent undiscounted lease payments excluding certain low-value and short-term leases, refer to Note 12, “ Leases ” for details. (2) The amount related to Notes represent the if-exchanged value using stock price as of June 30, 2021 and 2020, respectively. Refer to Note 16, “ Debt ” for details. Capital risk management For the purpose of the Group’s capital management, capital includes issued capital, share premium and all other capital reserves attributable to the equity holders of the parent. The primary objective of the Group's capital structure management is to ensure that it maintains an appropriate capital structure to support its business and maximize shareholder value. The Group manages its capital structure and adjusts it based on business needs and economic conditions. During the fiscal year ended June 30, 2018, the Group issued $1.0 billion of the Notes for working capital and other corporate purposes, including acquiring complementary businesses, products, services or technologies. During the fiscal year ended June 30, 2021, the Group entered into a $1.5 billion Credit Facility. The Group will use the net proceeds of the Credit Facility for general corporate purposes, including repayment of existing indebtedness. Refer to Note 16, “ Debt ” for details. To maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares, or consider external financing alternatives. The Group does not have any present or future plan to pay dividends on its shares. Fair Value Measurements The following table presents the Group’s financial assets and liabilities as of June 30, 2021, by level within the fair value hierarchy: Level 1 Level 2 Level 3 Total (U.S. $ in thousands) Description Assets measured at fair value Cash and cash equivalents: Money market funds $ 20,966 $ — $ — $ 20,966 Agency securities — 4,600 — 4,600 Commercial paper — 149,347 — 149,347 Short-term investments: U.S. treasury securities — 209,948 — 209,948 Agency securities — 5,752 — 5,752 Certificates of deposit and time deposits — 6,653 — 6,653 Corporate debt securities — 87,948 — 87,948 Municipal securities — 2,700 — 2,700 Current derivative assets: Derivative assets - foreign exchange hedging — 3,333 — 3,333 Derivative assets - capped call transactions — — 124,153 124,153 Non-current derivative assets: Derivative assets - interest rate swaps — 3,147 — 3,147 Other non-current assets: Certificates of deposit and time deposits — 2,600 — 2,600 Marketable equity securities 110,409 — — 110,409 Non-marketable equity securities — — 11,750 11,750 Total assets measured at fair value $ 131,375 $ 476,028 $ 135,903 $ 743,306 Liabilities measured at fair value Current derivative liabilities: Derivative liabilities - foreign exchange hedging $ — $ 8,058 $ — $ 8,058 Derivative liabilities - interest rate swaps — 3,380 — 3,380 Derivative liabilities - exchangeable feature of the Notes — — 760,689 760,689 Non-current derivative liabilities: Derivative liabilities - foreign exchange hedging — 669 — 669 Total liabilities measured at fair value $ — $ 12,107 $ 760,689 $ 772,796 The following table presents the Group’s financial assets and liabilities as of June 30, 2020, by the level within the fair value hierarchy: Level 1 Level 2 Level 3 Total (U.S. $ in thousands) Description Assets measured at fair value Cash and cash equivalents: Money market funds $ 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 - foreign exchange 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 securities 100,187 — — 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 - foreign exchange 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 - foreign exchange hedging — 2 — 2 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. Determination of fair value The following table sets forth a description of the valuation techniques and the inputs used in fair value measurement: Type Level Valuation Technique Inputs Money market fund Level 1 Quoted price in active market N/A Marketable equity securities Level 1 Quoted price in active market N/A Marketable debt securities Level 2 Quoted market price to the extent possible or alternative pricing sources and models utilizing market observable inputs N/A Non-marketable equity securities Level 3 Publicly available financing round valuation N/A Non-marketable debt securities Level 3 Discounted cash flow Timing, probability, and amount of forecasted cash flows associated with liquidation of the securities Foreign currency forward contracts Level 2 Discounted cash flow Foreign currency spot and forward rate Interest rate swaps Level 2 Discounted cash flow Forward and contract interest rates Exchange feature of the Notes Level 3 Black-Scholes option pricing models Stock price Capped Call Derivatives Level 3 Prior to December 31, 2020: Black-Scholes option pricing models Stock price On December 31, 2020 and after: Non-binding quoted price obtained from counterparty banks * N/A Exchangeable senior notes Level 2 Quoted market price N/A * On December 31, 2020, the Group changed the valuat ion technique of capped call derivatives from income approach to market approach, which is a more meaningful indicator of fair value given the Group’s intention to settle the Notes and related capped call derivatives earlier than their contractual maturity. Level 3 financial instruments disclosure In April 2018, Atlassian Inc., a wholly-owned subsidiary of the Company, issued $1 billion in Notes and entered into related capped call transactions. Please refer to Note 16, “ Debt ” for details. 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 table below present stock price volatility sensitivity analysis of the fair value change assume a 10% higher volatility, holding other inputs constant: Stock Price Volatility Sensitivity Effect on Other non-operating expense, net 2021 2020 (U.S. $ in thousands) Stock price volatility range as of fiscal year end 39.3 % 39.2% - 42.8% Fair value change of the exchange feature of the Notes $ (1,347) $ (21,973) Fair value change of the Capped Call Derivatives — (15,393) The following table presents the reconciliations of Level 3 financial instrument fair values: Capped Call Embedded exchange feature of Notes Non-marketable investments (U.S. $ in thousands) Balance as of June 30, 2019 $ 214,597 $ (851,126) $ 3,000 Purchases — 1 750 Gains (losses) Recognized in other non-operating expense, net 96,011 (431,964) — Balance as of June 30, 2020 $ 310,608 $ (1,283,089) $ 3,750 Change in unrealized gains (losses) relating to assets and liabilities held as of June 30, 2020 Recognized in other non-operating expense, net $ 96,011 $ (431,964) $ — Balance as of June 30, 2020 $ 310,608 $ (1,283,089) $ 3,750 Settlements or purchases (203,093) 1,155,484 10,250 Gains (losses) Recognized in other non-operating expense, net 16,638 (633,084) (2,000) Recognized in other comprehensive income (loss) — — (250) Balance as of June 30, 2021 $ 124,153 $ (760,689) $ 11,750 Change in unrealized gains (losses) relating to assets and liabilities held as of June 30, 2021 Recognized in other non-operating expense, net $ 14,764 $ (308,820) $ (2,000) Recognized in other comprehensive income (loss) — — (250) There were no transfers between levels during fiscal years 2021 and 2020. Investments As of June 30, 2021, the Group’s investments consisted of the following: Amortized Cost Unrealized Gains Unrealized Losses Fair Value (U.S. $ in thousands) Debt Investments Marketable debt securities: U.S. treasury securities $ 209,567 $ 407 $ (26) $ 209,948 Agency securities 5,750 2 — 5,752 Certificates of deposit and time deposits 9,253 — — 9,253 Corporate debt securities 87,626 322 — 87,948 Municipal securities 2,700 — — 2,700 Non-marketable debt securities 2,000 — (2,000) — Total debt investments $ 316,896 $ 731 $ (2,026) $ 315,601 Equity Investments Marketable equity securities $ 10,270 $ 100,139 $ — $ 110,409 Non-marketable equity securities 12,000 — (250) 11,750 Total equity investments $ 22,270 $ 100,139 $ (250) $ 122,159 Total investments $ 339,166 $ 100,870 $ (2,276) $ 437,760 As of June 30, 2021, the Group had $313.0 million of investments which were classified as short-term investments on the Group’s consolidated statements of financial position. Additionally, the Group had marketable equity securities totaling $110.4 million, non-marketable equity securities totaling $11.8 million, and certificates of deposit and time deposits totaling $2.6 million which were classified as long-term and were included in other non-current assets on the Group’s consolidated statements 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. As of June 30, 2020, the Group’s investments consisted of the following: Amortized Cost Unrealized Gains Unrealized Losses Fair Value (U.S. $ in thousands) Debt Investments Marketable debt securities: U.S. treasury securities $ 294,103 $ 2,017 $ (2) $ 296,118 Agency securities 24,280 306 — 24,586 Certificates of deposit and time deposits 15,399 — — 15,399 Commercial paper 31,937 — — 31,937 Corporate debt securities 305,448 3,205 (2) 308,651 Municipal securities 2,700 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 securities 3,750 — — 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 statements 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 which were classified as long-term and were included in other non-current assets on the Group’s consolidated statements of financial position. The effects of the Group’s investments on the consolidated financial statements were as follows (amounts presented are prior to any income tax effects): Fiscal Year Ended June 30, 2021 2020 2019 (U.S. $ in thousands) Unrealized fair value movements on marketable debt investments recognized in other comprehensive income $ (4,779) $ 5,750 $ 1,355 Gains recognized into profit or loss on sale of debt investments 65 697 15 Unrealized fair value movements on non-marketable debt securities recognized in other non-operating expense, net (2,000) — — Fair value movements on equity investments recognized in other comprehensive income 48,080 41,255 38,662 The table below summarizes the Group’s debt investments by remaining contractual maturity based on the effective maturity date: As of June 30, 2021 2020 (U.S. $ in thousands) Recorded as follows: Due in one year or less $ 265,679 $ 443,324 Due after one year 49,922 236,095 Total investments $ 315,601 $ 679,419 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 calls as discussed in Note 16, “ Debt. ” The fair value of the hedging derivative instruments were as follows: As of June 30, Statement of Financial Position Location 2021 2020 (U.S. $ in thousands) Derivative assets - hedging Derivatives designated as hedging instruments: Foreign exchange forward contracts Current derivative assets $ 3,325 $ 14,195 Interest rate swaps Other non-current assets 3,147 — Derivatives not designated as hedging instruments: Foreign exchange forward contracts Current derivative assets 8 2,684 Total derivative assets $ 6,480 $ 16,879 Derivative liabilities - hedging Derivatives designated as hedging instruments: Foreign exchange forward contracts Current derivative liabilities $ 5,336 $ 1,164 Foreign exchange forward contracts Other non-current liabilities 669 2 Interest rate swaps Current derivative liabilities 3,380 — Derivatives not designated as hedging instruments: Foreign exchange forward contracts Current derivative liabilities 2,722 343 Total derivative liabilities $ 12,107 $ 1,509 The following table sets forth the notional amounts of our hedging derivative instruments as of June 30, 2021 (U.S. $ in thousands): Notional Amounts of Derivative Instruments Notional Amount by Term to Maturity Classification by Notional Amount Under 12 months Over 12 months Total Cash Flow Hedge Non Hedge Total Forward contracts: AUD/USD forward contracts: Notional amount $ 623,321 $ 24,627 $ 647,948 $ 397,184 $ 250,764 $ 647,948 Average forward rate 0.7563 0.7718 0.7569 0.7563 0.7579 0.7569 EUR/USD forward contracts: Notional amount 11,040 — 11,040 — 11,040 11,040 Average forward rate 1.2025 — 1.2025 — 1.2025 1.2025 Total $ 634,361 $ 24,627 $ 658,988 $ 397,184 $ 261,804 $ 658,988 Interest rate swaps: Notional amount $ — $ 650,000 $ 650,000 $ 650,000 $ — $ 650,000 Average fixed rate 0.81 % 0.81 % 0.81 % 0.81 % The following table sets forth the notional amounts of our hedging derivative instruments as of June 30, 2020 (U.S. $ in thousands): Notional Amounts of Derivative Instruments Notional Amount by Term to Maturity Classification by Notional Amount Under 12 months Over 12 months Total Cash Flow Hedge Non Hedge Total AUD/USD forward contracts: Notional amount $ 393,705 $ 8,441 $ 402,146 $ 256,890 $ 145,256 $ 402,146 Average forward rate 0.6610 0.6844 0.6757 0.6536 0.6754 0.6757 EUR/USD forward contracts: Notional amount 7,205 — 7,205 — 7,205 7,205 Average forward rate 1.1179 — 1.1179 — 1.1179 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): Fiscal Year Ended June 30, 2021 2020 2019 (U.S. $ in thousands) Forward contracts: Gross unrealized gains (losses) recognized in other comprehensive income (loss) $ 19,302 $ 3,048 $ (8,369) Net gains (losses) reclassified from cash flow hedge reserve into profit or loss - effective portion $ 35,077 $ (13,663) $ (9,908) Recognized in cost of revenues 1,326 (807) (713) Recognized in research and development 28,490 (9,647) (6,935) Recognized in marketing and sales 400 (273) (194) Recognized in general and administrative 4,861 (2,936) (2,066) Change in fair value used for measuring ineffectiveness: Cash flow hedging instruments $ 19,312 $ 2,889 $ (8,345) Hedged item - highly probable forecast purchases 19,302 3,048 (8,369) Gains (losses) recognized into general and administrative - ineffective portion 10 (159) 24 Interest rate swaps: Gross unrealized loss recognized in other comprehensive income (loss) $ (233) $ — $ — |
