July 14, 2024

Flex Tech

Innovation in Every Curve

T+1 is on the Radar for FX

Alex Blackmur, who spent the last 17 years managing Microsoft’s multi-billion-dollar balance sheet hedging program, joined 20-year-old global software development company, Atlassian, as treasurer last year. Blackmur speaks with Markets Media Group Senior Writer Julie Ros about his new role and the challenges of managing investments, FX hedging, treasury operations, and global cash management in today’s markets.

Let’s start with your background. You spent most of your career at one of the biggest companies on the planet. How did your career progress and what led you to Atlassian?

I joined Microsoft straight out of college and did a rotation program there for two years, eventually landing in treasury. I spent the first five years doing FX, then the next five managing part of the investment portfolio, and the last five were spent managing the FX team, strategic investments, and corporate finance.

 Alex Blackmur, Atlassian

I’m incredibly thankful for everything Microsoft has provided, and I wouldn’t have had this career without Microsoft. I miss many things about Microsoft – it’s an amazing company – but I’m super excited that I got this opportunity.

The role at Atlassian really represented a great opportunity at the right time at an exciting company. Here I oversee FX, debt capital markets, cash operations, bank accounts, etc – so it’s the core treasury team.

Tell me a bit about Atlassian and its culture. It sounds quite groundbreaking in its approach to remote working, and its commitment to social and environmental progress.

Atlassian develops collaborative software – the main one being Jira – which provides project management tools that help teams stay connected throughout the development lifecycle. There are different iterations that cater to different parts of an organization.

Our treasury team uses Jira and Atlassian’s other product, Confluence (which supports content collaboration), every day. Someone on my team will create a ticket when we do a money market or an FX trade, or if there’s a blotter to review – it’s a Jira ticket. I review it, assign it to somebody, and that’s how we move work forward. You can extrapolate it for just about any kind of work.

In terms of the company’s culture, there is a very clear and public set of values covering openness as a company, building with balance, placing the customer first, working as a team, and maintaining continuous improvement. The two co-founders work every day to evolve the company, while keeping it grounded in where we came from. They have huge ambitions to make work better for every team.

There is also a strong work from home policy called Team Anywhere. Atlassian is domiciled in the US, but the owners are Australian, so of the 10,000-plus employees, about a quarter of the company is based in Australia and many work remotely around the world. Atlassian is taking a big bet on remote work to demonstrate that people can do great work from wherever they are.

When we do meet in-person, there’s a real recognition of ‘intentional togetherness’. The idea behind this is that when you do get together, you should be really intentional about it – whether it’s for one-on-one meetings or for team gatherings. I’m based in Seattle and go into the office about once a week, although some people are in much more. I see my treasury and finance peers quarterly at an Atlassian office, which exist more as hubs. When we are in the office, we want to be intentional about it.

So how is the treasury set up – is it centrally managed? 

Yes, it’s all run centrally, but I do have people spread out all over. I have someone in Pittsburgh, Austin, I’m in Seattle along with another person, and we have one person in India. But it’s all one team that rolls up to me.

Do you still trade?

When somebody’s out, yes – I’m fully on board with jumping in. I always enjoy getting close to markets, but I also recognize it’s part of the evolution.

Do you actively hedge exposures? 

We do actively hedge on the FX side, the balance sheet, and the cashflow. We have an advanced layering strategy for cashflow hedging. It’s something we have some discretion over about how we approach levels, how much we hedge, and when we hedge within a clearly defined policy. The balance sheet is a little more mechanical.

Which currencies and instruments are you active in? Do you use single-dealer or multi-dealer platforms?

The big one’s Australian dollar just given the way that we’re structured in terms of revenue and expenses. So it’s less complex than what I’ve seen in other roles, but we certainly have room to add value. We just trade forwards at this point. No options, but we do go out up to 18 months on the cashflow hedging. We use FXall as our multi-dealer platform. All our brokers are on there and it flows into the treasury management system that we use for settlement and confirmations.

What are some of the challenges you’ve encountered in the role?

It’s always a challenge on the FX side aligning your exposures and forecasting – you want to be able to understand what drove the variances month-to-month or quarter-to-quarter so that you can get better on the FX side. We have added more currencies to the program. The way to really add value is to take more risk off the table.

How have market conditions been?

Aussie is our primary currency, and it’s effectively a proxy for China. As you know, China’s been pressured from a growth perspective and their policies having been playing a little catch up in sectors such as property which have been struggling. All of that has weighed on Aussie and other risk-oriented currencies. Then layer in the US rates story – obviously it’s come back a little bit – but dollar strength has been pervasive. So for us, it’s been challenging to keep up with in terms of the very weak Aussie.

But liquidity’s fine – we’ve had no problem executing. So, just given the fact that we’re not at the same scale as Microsoft, I never have a concern about us getting a trade done.

In terms of day-to-day trading, how does the workload compare?

Even though this company is smaller than Microsoft, at the end of the day, whether you’re trading one currency or 20, you tend to have to do a lot of the same stuff. It’s just a matter of more rows or columns on a spreadsheet. That said, for a balance sheet program, you still have to understand what are your liabilities? What are your funding needs? And for a revenue program, you still have to pull the forecast from the FP&A team and assess where your hedges are against that forecast. The hard part is the getting all the exposures in and making sure those are right.

Are there regulatory challenges that you’re keeping an eye on?

Making sure we’re on top of new disclosure requirements from the SEC is a big one. On the FX side, the change to T+1 settlement in 2024 means we’ll have less time to get things confirmed and settled, so we need to be prepared for that. We have to be very thoughtful about making sure everything is netting out and being followed up on very quickly to ensure we have received our side and that the counterparties received their side. This is especially important around quarter- and month-ends to ensure all the wires go out and we are settled so there’s not any issues when the new cutoffs really matter. On the buyback stuff, we’re drafting the documents and making sure our internal reporting can answer all the specified requirements and are conducting internal reviews for this.

Which FX market developments are on your radar?

The strong dollar has been problematic for any US-based company – in fact, a number of currencies have been at unprecedented levels, which is a broader macro issue. But from an FX mechanics perspective, nothing is necessarily keeping me up at night.

That said, the big question remains around Fed pricing and where rates go from here? For my part, I try to share my views internally so that we can have some view about what the macro picture looks like.

Interacting with the CFO must be new for you. How are you finding that?

It has been really exciting to be able to directly add value for things that matter at that level, whether it be the share repurchase program or M&A. We recently announced a $1 billion acquisition, so my team is responsible for making sure that money goes out and that we have it prepped and all that.

Anything on the horizon in terms of technology developments?

The company just moved our middleware to Oracle Fusion for ERP [Enterprise Resource Planning]. We want to get everything we can out of our treasury management system and just implemented some of the FX netting features to reduce wires. Our focus now is on cleanliness and automation work around settlements. We are also thinking about how AI can help us with some of our cashflow or exposure forecasting. That’s definitely on the horizon.