Atlassian (TEAM) 29 Jan 212021 Q2 Earnings call transcript

Company Profile

Participants

Matt Sonefeldt	Head-Investor Relations
Scott Farquhar	Co-Founder and Co-CEO
James Beer	CFO
Mike Cannon-Brookes	Co-Founder and Co-CEO
Alex Kurtz	KeyBanc Capital Markets
Keith Weiss	Morgan Stanley
Ittai Kidron	Oppenheimer
Michael Turrin	Wells Fargo Securities
Arjun Bhatia	William Blair
Robert Majek	Raymond James
Walter Pritchard	Citi
Gregg Moskowitz	Mizuho Securities
David Hynes	Canaccord
Derrick Wood	Cowen and Company
Rob Oliver	Baird
Rishi Jaluria	D.A. Davidson
Luv Sodha	Jefferies
Jack Andrews	Needham
Quinton Gabrielli	Piper Sandler
Pat Walravens	JMP Securities
Fred Havemeyer	Macquarie
Ari Terjanian	Cleveland Research

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. Thank you for joining Atlassian's Earnings Conference Call for the Second Quarter of Fiscal Year 2021.

As a reminder, this conference call is being recorded and will be available for replay on the Investor Relations section of Atlassian's website following this call. I will now hand the call over to Matt Sonefeldt, Atlassian's Head of Investor Relations.

Matt Sonefeldt

Good afternoon, and welcome to Atlassian second quarter of fiscal 2021 earnings call. us joining for you today. Thank

Earlier today, On for shareholder Co-CEOs, Chief letter Atlassian's a Beer. and with our and have Farquhar the Financial release and commentary a James our call Scott as Mike Co-Founders well issued of results we Cannon-Brookes, and our quarter we today, financial second Officer, press company The to and site, items all XXXX. Investor blog supplemental also been the was posted posted On letter data our shareholder fiscal Atlassian Relation have we sheet. section have IR of our as posted website. also a on

the remainder brief of During will opening the Q&A. on then This call spend make we'll time statements. include remarks call, forward-looking and

and results, from expressed cause other factors Forward-looking statements. involve or results, the statements that forward-looking performance materially different achievements uncertainties actual to any be future implied by achievements performance known and or risks, or may unknown

not predictions as rely upon statements You should forward-looking future of events.

beliefs only statements filings Securities Further should assume these to or financial management's update affect XX-F on quarterly make could factors our recent section such no in included most including revise other and X-K. the our we represent to Form be titled or cease and obligation and that And and the statements results as the date they statements made. assumptions is with Exchange in information time, Forward-looking Commission the time to company's are such we current. of from Risk Factors change

or shareholder related our reconciliation financial letter a IFRS. they in and financial use financial our in are not and from number is measures with we superior versus updated our non-IFRS investor other A these available and and the for non-IFRS non-IFRS companies. measures. the used addition discuss financial be sheet IR equivalents, different measures There of to, their will nearest are earnings In IFRS non-IFRS today's substitute between and of non-GAAP on accordance measures limitations of IFRS measures performance measures may release, to call, to addition, during prepared These by a financial in in non-IFRS website.

During speaker. to question full that move next your the please upfront we can through easily Q&A, ask so

Lastly, we've customer annual Scott remarks. to XXth. XXth conference a hope for place call opening you that, Team this XXXX, to dates announced virtual I'll and taking see there. With We turn for April

Scott Farquhar

Thank the you these you during today. hope everyone hope joining We challenging read ones you for time your remain taken and We times. shareholder letter. to loved the safe

three focus. on to long-term focused tied we themes Atlassian's quarter, This

we're that server initiatives cloud. a in start to the multi-year strong First, off our to customers our migrate to

cloud Second, to large the goal we to TAMs serve our deliver to use launched like we in Jira QX. for will large Management, Fortune our that customers continue the the mission-critical across to deliver small and customers Service which products third, solutions XXX,XXX. through And innovation in continue to ultimate

$XXX steady results business Our against generated year-over-year. reflect XX% goals. In in we million revenue, QX, our up execution

subscription achieved We growth also revenue XX%. of

count total a out quarter, all over we to record XX,XXX customers new sizes, added of During net the XXX,XXX. bringing

of that are we work there's lies While these proud plenty of results, hard ahead.

to with Before us customers their thank inspire passion move continue who we to their and Mike want our and I employees Q&A, adaptability. for to

speaker. of pass potential the the unleashing to make call possible. You all I'll that, teams the With

me for called They operator. So the him I to speaker. say the word were waiting

Operator

Alex question line from first with of Kurtz Capital the comes [Operator Markets. Instructions] Your KeyBanc

open. line Your is

Alex Kurtz

question. Thanks Thanks. Yeah. taking for the

context changing little Is Just bit stood SMB there base? there. What that? Is out new a with something drove a key? customer that? the around on there adds, that strength certain of the customer the verticals Just

Scott Farquhar

X,XXX put of been What's really of they're and always the ratios our truly driver We They kind change we around it's this because funnel pretty managing changed number we've course, Also long-term lot. the funnels, product. it's all bounces monetization of had Atlassian. of did that know also small in what into XX,XXX of number the in right of and free. you'll of And or quarter bit and, those of the in proud lot It's changes around new very a -- is, a the customer customers. do Well, areas, question. growth. Yeah. the Great a smallest a smaller towards, not around lot guide immediate we a mix now, other customers. larger have change mix and the revenue you've being and QX, they're done a QX sort Alex, place we a us we for been customer if a about which while, with XX,XXX really of

so, any And ratio other quarters, probably greater a than than we we've more have I'd customers smaller with had before. say

great. it's think we So

I it's, to heisted testament again, into much that of roll great out I of forecast. products a our revenue there some and think try to is how demand sort But any there. for

Alex Kurtz

And any them and half just if XXXX, the they're you if they back. differently, at didn't new looking customer were of those turned I customers back. potentially adds, in first categorize that turn these know their of don't

Scott Farquhar

that don't I numbers hand, have around unfortunately. at

our base. have across in improved We of seen churn general product most

of done as well. to on could Some James, and macro we've that well as comment it be that? of want do is you things trends some

James Beer

Yeah.

sized because to small, corporations, was add Just the governments, mission-critical the I to couple of with of so largest that to customers products serve businesses count we customer things nature pleased that, and of with across through Scott. board all I would it that forth. all illustrates sizes, our the from the a medium say the

churn, saying by. as have nicely, Scott recent that was increased, So, the improved that, quarters gone as please has by

right customers But serve. again, across custom and right. We improvements QX, improve, we all those of seen this we've are go QX sizes You different for in back see the some past of we've as did really our across seen we've churn our challenges account fiscal as right seen verticals, XXXX. that

by all themes. pleased So, those of we're

Alex Kurtz

you. Thank

Operator

comes the of question line Keith Stanley. with Weiss next from Your Morgan

line is open. Your

Keith Weiss

Excellent. questions. if the the One, two question really that, and of Thank you on spending that on kind have true squeeze environment, for you guys in idea of an If nice recovery. quarter. just I are kind taking really we where could overall

the that evidence up yet? CMDB you go You the talked seen just that's getting of better, Mindville your And we've equation, of of rates. like of sounds two, renewal as component further that, That and enabling integrated market? of to take but improving Have that about are on is kind kind that. any you on the traction we now in solution where particular ITSM product, that on have

Mike Cannon-Brookes

Mike Okay. here. Keith, it's

let take come the then on take back question spending the ITSM and Scott me James the -- and Let on one. environment I can

James Beer

is we what On the we obviously, environment, a pleased improvements. gradual are nice spending by see

a to of the it's many There's Now, And, our of that tools such customers. agile out critical work-from-home normal hard our of movements our really becoming frameworks. because feel I that. course, help a of as parse life. now process The business needs though to serving so are increasing part products is support

that weeks Mike? we've year So, we've pleased themes been and by recent seen in and months. last that the

Mike Cannon-Brookes

with customer results quarter customer reaction, an the mentioned, of Jira ago ITSM Yeah. you acceleration pleased question a far. the Management a adoption, quarter purchasing Look, so obviously been as very Mate, Mostly about interest launched now, Service can our there. model behavior. inside we've and I address and

into a facilities. overall integrated at of integrating great but of acquisitions, fully mentioned it CMDB moment, not as in Management mentioned, example you As Atlassian's plug-in both is those are philosophy as yet. smiley the Jira released and you building this Again, a Service

those in So, the be will quarters. coming coming

blurring that lines ITSM long-term drum strategy, software with constant needs of part teams company the beat from into At and the So, sort that development level, technical a you are IT and seeing development, software our ops have as their resonated we whole see improvements -- a end. one their between there. of of a DevOps as customers IT us, through of on and considered

large again, you our XXX,XXX very on well. ITSM So, the the as customer that's very, about example resonating us customer very adopting some from really way offerings letter, excited to as up we're big all gives customers, the and customers, And focusing cycle shareholder that. see Fortune adoption in a the broad with customers ISS very

Keith Weiss

That's to you, hear. guys. Thank Excellent. great

Operator

comes question Kidron next the line with Oppenheimer. from of Your Ittai

open. is line Your

Ittai Kidron

cloud Thanks. I'd much that focus guys. quarter. cloud to to migrate large two to many the on trying the customer. Congrats How -- there people, and along large small, the although, transition? not materially medium, about lot you're us quarter would that on how second, how with transitioned? to in group? appreciating could give that some like this a a then the sure be Can next And especially pricing great about, of you color or churn is customers you I'm recognizing in the that capabilities Hey, while a movement was of for on have benefits different, that customers years. the are of XX,XXX over the probably server this happy come think three and some

churn about about So, transition next help think over years? me of would in this how you the think -- couple

Scott Farquhar

question. Good Thanks.

XX,XXX and hit have move of period our period. an remind with multi-year over they maintenance server Firstly, end to just end-of-life a and to mean, server everyone across three we decision to customers make customers years have of I our move they before

move pretty wide across. customers have customers been to a we've friendly those very our So and we to for window

early very internal that. In do. said before. where when were -- across our in to about going we're overall are, bit got little a than it's we And exactly higher customers like moving metrics, that ever terms of -- doing levels higher numbers what we our we We've

new majority internally we choose that a you this that high expect numbers we were new our this the quarter And as through today reminded transition. of also as would Our measure cloud. for go customers --

our a So, have customers XX% of cloud. choose we'll

customers choose new cloud Now, today.

happy really indicators. leading with great. we're so, And That's the

customers, you all some Like churn, business all companies them I have cloud. I move to say, saves do largest the the get of with, to but with In our reliability. terms higher and the doing money, plans things, know saves they of when it hassle talk would

And ensure it's the all and we that we to most that had so help court them with move they In cases, and our us are scale to in the to partnered up migrate size cloud. across. can

indications but the now the or of got the is like, is customers' it churn a moment. pretty predict so, pleased what because at it hard on that time, we've in And to with period of I'm hands

And want to sort James, the you do to add that? anything of customer response.

James Beer

customers in Day two-thirds nothing we FY has of expectation to our expect our XXXX changed about Just be server medium noted larger customers, And FY our XX,XXX half for or that XXXX size that ratio in like around and at that there. migrating our Investor beyond, indeed November, would beyond. migrate in in and we would and perspective

Ittai Kidron

was clearly -- which forgot maybe Very good. then kicks. I upgrades. on people do reasons before to And the just -- obvious perpetual revenue, strong want And but and things week follow-up still it's Thanks. we next to license February, to guess, for

your a going order through expiration? the as You've XQ way upgrade same you just term the after going that going time medium, to though, transition how more license large them be all gets fiscal because that year, to collapsed fiscal are complete heading and likely to of to most was many to robust in suspect be talked it Do expectations the this into that robust upgrades to in deadline you about of are cloud? next customers fiscal And in kind give XXXX the way activity is of to quarter said perpetual sales near year. upgrade we're relative next

James Beer

Yeah.

Let one. that me take

either In we'll licenses February the allow few terms their be curtailing Xnd. upgraded their another just new a size essence so. year or current both to of licensing have yes, And in to we revenue, new days And the continue remind or to we'll upgrade that license activity activity. in line time, license everyone, licenses, in expand of licensing for customers sales

has it expect that almost say, in to month less now us, would QX, we a activity that And, that is into more than new were would have downstream. of behind to that activity as So, upgrading course, we forecasting. QX type of did of And QX. we continued we I activity of and fair say see previously mean

that I play that playing pulled activity next think upgrade out appear activity the has year will of well. been or pricing some does there'll advance that be of the over in next out week so, upgrading increases as it but

And, new very surprising, hard in on said, of are those the determine upgrade pull licenses, this really you act before side. forward new not as if scale you to you quickly activity cease. So course, here precisely sales have the of to interested

Ittai Kidron

guys. much, Got very you luck. it. Very Thank good. Good Excellent.

Scott Farquhar

Thank you.

Operator

Turrin Michael Wells question line the Fargo with next comes Securities. from of Your

Your mind is open.

Michael Turrin

Hey, there. Thank you.

on streak. on congrats too. to maybe impressive Mike James, XX there win stuff off, that and margin. one First Jazz game It's

consistently the to year. down the half in the have We trend second noted margins now guide. expected You've are QX of

anything perspective shape else make years. of a So cognizant just maybe the there's the could be look seasonal than from prior half that different second wondering if we of a should little

trying extrapolate into to under make what or Just sure we're don't margin. beyond QX on we over and Thank you. the seeing

James Beer

of Well, thoughts. a couple

just quarters harder or for continues. macro three and all, reiterate now to through been looking saying two of to purposely First we've this we've what economic that that period, really invest been

on again less some quarter, off You this revenue free emphasize cloud economic on people us business fact experience significant shorter taking as time. additions. past we're was saw such Mike's fewer thing developers teams exactly versus regard. to execution to encourage revenue spoken good opportunities term introduction system the we're And do actions, to marketplace the strong to downtown macro opportunities. to that our Also, I two this in year XXXX, we side our cloud it's the fair we in last things in pricing the front period. our the tied recall of right putting particularly patent We execute of The to those last taken back And like through the headcount apps see growth And of also Scott we've in through that by think the doing to headwinds, wanted the and about down get call I've and new to that it was XXXX marketplace. that year. say that decision that invest or very

a terms said answer quarters business as earlier will Clearly, and ago, server impact with on And lines, in over those the So in discounts. contract financials. we're cloud, line have as to to so, and of thousand their loyalty about an that change substantial them while license recall quite continue talking rates larger decreasing our of migrate we the of I is two the nicely we encourage customers, to to line also an offering we so a to forth. maintenance COVID order that bit that our were quite the in impact or users to expect continue, the enterprise

transitory really short-term headwind. So, the in we some They're have very them -- much revenue long-term nature. describe headwinds. for would as a favoring I

course, factors that reset consider. few margins first that So, expect when elsewhere, you the tax as margins. like But we've the start said to we at the the And seasonal take of those of all second down payroll factors versus calendar would together, happens have QX margin of every we year, guide. into half to different be half baked we've things

Michael Turrin

detail. Thank the all appreciate you. I

Operator

You're William next line of comes question with Arjun from Bhatia Blair. the

Your open. line is

Arjun Bhatia

for Thanks taking questions. guys. Hey, the

maybe One that, a shareholder little once side, for driving Confluence was bit. that And they hoping on migration the the you're for? and or stuck we pointed I using of Is the upgrading I be naturally in within solutions the there unpack second because that areas on the ahead should to that lookout any then, out of JSM? Jira that started are -- targeting half that specific once R&D and class me hiring are think you things that's out cloud customers in your in adoption is coming letter enterprise expectations. was, that they've

Scott Farquhar

the me both. Thanks, asking say enterprise two but we take side, those. sure one going I on there, Arjun. about, can not both which I'm answer phenomenons Look, have to I to of so let on have you're

We the big of E. adoption editions our there standard, that through the really the goes enterprise that way premium cloud call the all pleased continued with from free Big all customer, literally the enterprise general across enterprise On and companies. and cloud so big, we edition

large scale, over customers, and no and traction thousand manners You've more, seen enterprise of customers, reliability with a compliance through the three investment last us get improvements better what performance matter in continuing access seats old better buy. with they and years through continued through standards, edition of and sort to

quarter, been Secondly, E pleased reaction our I've edition, of GA there. enterprise with the very we customers Big the during and so did the

in with whole program compliance months, levels testing had and data well standards, five So, the of access security edition of six instances. about lot customers us. of we've has lot a the for that the Again, early and residency a enterprise other as features last unlimited

get you unlimited So scale.

you you So second unlimited rather get you a software Jira but -- than higher instance, pay software software price, buying one instances. a instance in Jira Jira get obviously

very So to need that your often you allows companies and segment to do. as business create large

have America, to might departments your one different for certain for for for or company, as plug-ins, one might department and of with different You other one exposition you one have et Europe add-ons, own a cetera. and customers

naturally early customers we're adoption them quarter. it's It There flow enterprise, of as turn usage build And we're in incredibly to there. of premium So GA the is adoption trying part very working and customers to company, during should products. say R&D. the specific and did On program enterprise second the from only all -- Atlassian customers. with pleased upwards no into that's far. Again, their so edition that obviously, call the of access I a outs early latter days. standard question, And with to to your deepen grow that

of And ago that operations we design, you invest it in hiring talent, Anyway to sits world. world pipeline Atlassian across all across R&D hiring get continue the to dig successful logically, it's And about no in to opens been announce very the in functions. that Team multi-path lots for engineering for our and We and XXXX. world across our and about six all stop work months product would in that's hopefully to where continue six continue and more and that months have where announced offices and the remind board manner to of management, and engineering, Atlassian look we up countries that to to the matter of R&D program, in

Arjun Bhatia

you Thank very Perfect. much.

Operator

comes Robert Raymond question line of Majek James. next from with Your the

line Your is open.

Robert Majek

Scott, on the higher color Thanks and feedback And change potentially you Jira you some customer customer than migrations? noted Confluence demand Great. dynamic the large Service still enterprise is Can they're this on cloud, getting? there initial Jira more to put Management. for for expected enough timetable the software,

Scott Farquhar

Thanks Robert. Scott here.

the said very of days still it's things for lots echo of terms demand on than also about to higher talked of demand enterprise specific just seen early -- thought, think sort that we but these we sort we've have Mike and I in customers earlier, as product. parts demand

forecast. And playing this stage, we we is change out so happy -- in it's at and there Like the expected migrations. of say -- think Like, different. I there in pretty nothing terms our been guess, we're we've there's that really to so with, now would nothing as

Robert Majek

Great. Thanks.

Operator

Your line comes Pritchard question from Walter next Citi. the of with

Your line is open.

Walter Pritchard

Thanks. questions. quick Hi. Two

side, data on plans to terms curious, data generally. customers. plans well moving customers on And or outlining thinking those First, Has obviously in for then are just and gross cause of center impact cloud? cloud how the center you've James implementing outlined these second around change any server margin about margin gross for just I'm them impacts quick just the have question the

the bigger about talked to hosting beyond us expect expenses you and you long of in You also understand COGS? those migration expenses costs. are which and ongoing Can migration just how help

Scott Farquhar

requirement can the move the hesitant, to And have then one might particular waiting one. or to just first our customer, there clouds, and Walter, be or they're I'll in where in it's The us the whether get do. DC something made and take into of details Scott on long-term to that echo, because here. some else areas customers that majority the James server to on the geography migration cloud. they're it's compliance plans bolt-on second

majority, had they go we're so, cloud got overwhelming overwhelming to to choice. wait, server cloud And having. demand they or with who and make we early three to is They've Whether whether move the there customers and discussions obviously want years a DC the to licenses.

high server that? manage looking Like same, hardware, that the of collaboration also maintenance are have, DC and add you can getting the cloud, those from their on at do you're of our coming customers they the put costs activities. DC. products benefits their own or not course, in on that having things the whether upgrades stuff value James, increased can want versions are to latest the the to Of well to that

James Beer

Yeah. Sure.

has The coming by first is that from able that thing stayed I margin -- the how we've of is been as business to I am level the a which really cloud. build note XX% has revenue it pleased our at gross

capabilities But think and there. that over expect, have customers, would increased we're ready indicated speaks the data have of we how calls, move would So we've that the costs. cloud. we to as a lot customers to hosting to largest cloud, the also I the that those as involved the spoken And added customers to the about we so support in over we help prior execution server center see moving teams particularly our larger to

In our would of I be those about support the with few that to for larger over timeframe for talked in the we've next the costs, to customers timeframes consistent years, for terms the moving cloud. place expect those

more that, want around on pressure to and I can emphasize resources improvement, continuous having on efficient how would people a or our usage storage some also gross of whether that I said And whether support basis. margins. it's But to it's do help cost off do customers, cost that expect very helping really on our focused compute related so, we resources so downward we're

So, you about we're the of window gives our lines how part as cost of sold thinking along operating business. hope and a goods that of the to little

Walter Pritchard

Thank you both.

Operator

the Gregg line from Securities. Moskowitz comes with of Mizuho Your next question

is Your line open.

Gregg Moskowitz

this center just was curious sell micro when you first Thank this quarter? from characterize to what to and/or the the how very data would for deferred compared hear subscription forward kind -- how pull I'm of guess, prior. just And you Scott, for I as Thank James you're you. benefit demand revenue secondly much. revenue wondering then the off, quarter Okay. you just

James Beer

of question, part can take first the I Gregg. that

So, as really in modest. I maintenance forward terms in that quite of activity, QX describe would pull

Now primary forward remember last pull year that quarter. was the

a was QX so And of XXXX. larger effect fiscal much it in

Now, the I activity already more see little month January, earlier, we're as this play in of and revenue to maintenance QX expect out seeing is forward in as well. what we'd pull would -- I QX indicated in that

And so a around. what's things, this little different of time really. A couple

our First at of given be all, more we we've of business increases. more warning the that price place put data And in there into we've for course, week. a announcement. time, second, advance not were a the But the is center increase, both price to business, customers only of the next of this made the server sort and license, time also schedule

the apply as we're to I relatively making expect that to February really ahead expanding moves to so ahead pull license licenses as current some level. adding pull we've type because of has customers pull more pull center it modest can played increases that center, prior to Xnd. the Data think is price forward will the forward pull again, And around would you will in count, a forward QX It's of the there forward at as their forward in data there of And they of to so just a that size the that well. out server be been as QX what activity in apply sever end-of-life. of of different seen years,

Gregg Moskowitz

of broadly that data kind well. pull great. the of around tender just overall just helpful Thanks. as kind then Okay. forward, to but any speaking, quarter, referring That's demand be not would And in

James Beer

Yeah.

was In terms demand, of data overall, strong a relatively it centers quarter.

center encouraging think of increases. these part to to over of customers of price data ahead some I move our what partners seeing of European their we're is the some

was line. before, far part that the subscription the largest what that the of cloud a talked revenue recall So going growth. revenue by subscription business of on in is as part our we was But about

Gregg Moskowitz

Right.

you. Thank Okay. Great.

James Beer

Thanks.

Operator

comes Your with next of the from DJ question Hynes Canaccord. line

Your open. is line

David Hynes

guys. on one Hey, for you. James, results. Congrats the

growing in that the about edition clearly strategy. it prepared in a look, So but you're free a there what that's really there that, already be You of again? of Any customers, are helpful. top remarks that's activity expansion talked lower working, just And tack is seeing was the is the would the you comment funnel the those you're that expectations outperforming right? or Is economics given it said, competence color you right? your seeing

James Beer

Sure. Yeah.

cloud So of because and free each whether go what customers or XX us whether limit or be track that their user we that month join they they our they to our they do very each the before accounts appreciate get the free and functionality cloud the contains. cohort beyond need to study they XX, it and progression add is we decide is progression, really the standard then offering even closely premium user offering

years switch that they to make a edition so before And from paid free for XX the level. way a in that they get

cohort. I this, So as very say by cohort closely we watched

we while, clear, confidence cohorts, headwind. see are future of this I and a revenue lines XXXX, that noted this net But as trend initiative. we see for as earlier we continue that the the us would quite fiscal so And to gives about the watched

taken long-term to a a take the down view. decision excellent for how we've going headwind Mike, track. I example are short-term a We've to add the something? made think it's benefit of an long-term

Mike Cannon-Brookes

DJ, Thanks, lot Yeah. of had want a James. I points add small on free. suppose. We've couple just questions I to there of a

customers like as that much the big hill, engine, to up It's reason much a of customers thoroughbred that It's would long-term multi-year free we're kind for the in usage. more is large most I terms many And but base over and I small metric pull closely important into extremely mature aiming And that of the potential right? going impact. with right? free, us. track will it's and self it diesel next that of at the long-term a we us stress business would our clearly underneath give years, for builds less active investment how a many, is, style think and a customers Firstly, cloud of

don't things using away that giving we're additions these them. people that Our free use people free

value, a stage, philosophically active those additions. track Atlassian and and believe we years a usage once of So to make continue getting value long-term XX they're how spend of can firmly if sure time to we be at hill. customer they getting are customers hit We will out trying looking up that marching edition free lot that of the pay we're they said

in that's the The us is reduction for specifically and second important editions of sell. flow the part really for free cross friction cross

and for they they instance in that pay Confluence card company, makes its So Jira credit that you -- have trial for a if example, XX out discovers to to software would -- previously people, the a and weren't administrator have if XXX and where someone instance, may a has that Confluence of software or the sense. get connections Jira

start as those of a trial can Confluence they users. Now of any free

So start users that their as in And is first discover or products increased, that of the we customer that we potential anyone to editions company. more the product, trials existing the also more right? in we have ability an products with alongside new to have a have product, free second

by that and thinking. modest go expand stress would of of are ability aiming small given it's impact, revenue impact, our these sort we for our all pretty multi-year wall-to-wall is to free. I Again, and customers increased part So a are long-term

David Hynes

thoroughbred, makes sense. analogy. a that Thank perfect a can that get and so more I'm No, cloud like building built I And Yeah. you. behind

Operator

Your next of Wood line Cowen and Derrick comes the with Company. from question

open. is line Your

Derrick Wood

the you level over a you Pretty hear in X,XXX the and why from just this throw the migration. sell on uptick. customers? a adopt picked little and deal. of have it's maybe but upsell, else to my conversion curious And how the be talked then about you think Is capture Any cloud? read they seen won of customers the including during downtick I thought I'll to you maybe my revenue I competition when biggest kind small the share can You've questions. potential second just -- works with when cross see of Trello user to server count in what had the bit on revenue one. interesting Thanks mid-market, bit early, revenue and migrate from one you a customers little in of taking for a may first early terms applications anything and My Trello. one about users Great. of know

Scott Farquhar

part I can of take that. the first

In terms migrations, cloud much service very that that's along to our I revenue say from would tracking we've seen the expectations. result of the

illustrations on question, I gave point time. framed work ones pointed think, for in small, we this the you out, as helpful medium sized how the customers of migrating are at you economics As that some, generally the those

topic. yeah, So, pretty consistently our that's tracking discussions the of previous with

revenue in tailwinds So Net-net, it headwinds of a initially least smaller wouldn't describe on material the size, yes, the some QX. at the I modest on medium-sized. as driver

Mike Cannon-Brookes

can journey. Trello I take Matt, in be its early the Trello monetization question. to Look, continues And

we the I again, it As stat, time settled a we XX million accounts. ago, a believe had passed year released

learn view. from we're use Obviously, working released a Trello's journeys on Investor of enterprise in continuing Trello point relatively would monetization point certainly have more it's some at of good looks X,XXX in obviously base and large is the particularly in Trello, enterprise I to monthly the say. than there very that. view ladder, sort work larger it the or software the for win that X,XXX users then and uses Management. of if and small, We the free uses size think premium that business scale, we free are comparison whole XX but million Jira through magnitude class the But a to standard it's of Jira that a customer you to from order demonetization is it's equivalent us. not Trello, million that we So editions equivalent, customer have Enterprise, about possibly of Service ladder it's of of number and Trello thousand mentioned active our in and from That's XX that Day.

Trello's the with like I Trello organization freeform model see reason a ultimately using clients. is about this and companies think to capabilities and flexibility handle an workloads different all inside manner of you its potential very

of lot lots and in give that So, class workflow advantages of solve organizations. to whole again, manage manner if in those for Team huge freeform small the and we and large exciting it's adaptability and the is XX a to in lots whilst for things months a their Enterprise couple of users, of that up to Again, plug keeping larger a in in use that different go anyone Trello see And And hands cases and manage flexibility you the nature you'll users guess. in their problems control as business coming Trello manage to boards do to gives of continue a to a almost those Trello I company, Trello. organizations data, time.

its forward to exciting to really We things and future. work on look Trello continue to

Derrick Wood

color. Great. Helpful Thanks.

Operator

Rob Baird. of from comes Oliver with question line next the Your

Your line open. is

Rob Oliver

a follow-up. guys Jira my Year is then everybody. question Happy My for New Thanks taking Management and Service have I quick Great. on to question.

desk As know DevOps, product from Agile, Any service attacking it's still up Management within management. I the Jira work migrate IT you things color more cloud. Obviously, see Jira in that to ITSM the department, Service and sort earlier, cloud customers, seeing, network question as come And the just incentivizing on had ways that you're apps around and a the as partner migrate. expansion others. the people partners the you're -- with games of mentioned product early then,

to obviously You in many are used touch. very of events stuff. active light your very But guys and a partners even but physical with are are very not, selling partners

So, partners, you satisfied migration, adapting environment I'm whether current plus this and here very real the you important you're as curious in to your role they're Thank progress see. the just guys much. play that XXX with how a

Mike Cannon-Brookes

time, a going the seats ambitious, specifically, are that's the XX and a customer being feature being on very to release small having to in large seats I or whether would opportunity seat serve functionality and in differences say JSD terms XX,XXX XX from broader from not of that Sure. in say, long purposes some we massive things too I we say adoption see full ITSM, expansion lot early to Look more a expansion. seek seats the again, seats. and XX,XXX JSM -- to the would particular of that that a having that product of going embedded offering other with customer Obviously market

last continue functionality continue of that CMDB product we ITSM. that IT, thing the though, than I stress the that One we would about out And invest that when into in is would our and a in things coming the other is talk all I while. think I over all put possibility. automation, We us to ITSM it JSM gives to packages still invest that connections the broaden have broader just very to set. than we've aggressively

that platform. trust, I advantage they great of think with Jira about the strength rest ITSM department as you We that IT we have teams say IT offerings connection using in lot IT. JSM terms to functionality of can a providing that those other the their take departments partnership that's And a then the IT of organization. of gain for broader why of

in does Atlassian Core Trello broader we the indeed Atlassian use that Jira lots So creating to workflow a different Jira or I'll answer start they Scott provide department, one on within That's in department to department Core. it bring bring the the all all products start do workflow solve expansion applies the we let often parts of and finance help and about our what to respect of as platform other that gained workflows for Confluence as on for marketing Trello applications them. that can IT the seat to but department, the And once really to of broader within the network. and platform. IT and the partner They organization. trust department, cases much to that legal to That's and Jira Enterprise.

Scott Farquhar

you it's a Thanks would The Mike. peak align as partners, been … know part of many of

Mike Cannon-Brookes

[ph]. screen Scott's think there blurring I out

Scott Farquhar

is a network. for Europe in Sorry. have a huge advantage to It partner us

We have have department. not services extends entire Atlassian globe. network the a partner And does

direct time by And training so And, margins course more And forth. so spend around of other world. well. at as also know, from network moment towards using our where with our we the are that the we and customers partner and network this we partners provided them training, And things margins. our demand to our offerings, course, of we cloud is services on our really the is as incentivize are a lot

Rob Oliver

Thanks a lot, guys.

Operator

the with question from of comes next Davidson. Rishi D.A. Your line Jaluria

Your open. line is

Rishi Jaluria

improving much Hey, quick taking so guys. to my questions. momentum. Thanks continuing see Two business and Nice for ones.

large net rate And pricing? talked inertia? thinking it At be expansion you a not -- that to Is maybe little it comment the First, customers. guess the you is on What been a from customers that XXXX Day, to to XXX% it two-thirds large been customers we Is about made? has on has I I'm it the customers large until expansion of then Is follow-up, FY expecting metric mid by disclose going beyond. or net migrate to and place been the just just push ask in that Is that investment and and annually XXX% incentive? metric surprised and that? to you mid migration. cloud or cloud wanted pushback migrating? made of the rates. has about have not enough back how to medium I plan How And incentives that for Thanks. trending? about given be the that's server to to should amount Analyst

Mike Cannon-Brookes

the first one. on take will I second and Scott, one James chime in the

these three to they ones and organizations. We've recently, realize company the are this the company. to well, in CIO to our cloud, is, had -- said, large there's Atlassian customers at server large -- For and thing migrating from one is to technology instances these us applications talk server mission-critical sorry a a mission-critical four of good

ERP. is of One them our

a of and them stopped products these of of automation, because products down. is is usually we One one go Atlassian kind when Salesforce them

applications And the migrate a all I move benefits it to appreciate the to today, systems the that of a where they a downtime employees. so plan for matter. would find takes the to want sort thing and amount practical companies for there, is are they these when really -- cycles that that want get, these for minimize while of It the plan the If insight. mission-critical it, budget gets is their

get applications. specific. certain There areas on while of to them say and I would inertia are the customers there's we specific a that just those and move mission that nothing -- nothing around takes delight to us with our compliance look no improve certifications. working in things will certification as criticality But there's geographies continue so those hit at us that and makes to And a that really Atlassian there's I

James Beer

question, given metrics, the and at And importance terms years. second a we of on the the deeper the dive offering obviously wanted cloud to coming then your just the in of Investor our cloud of company Day, little in to part business our

customers. XX% say talked point at we expansion about our being you our yes, larger growth that a XXX% year-over-year medium net and sized that So rate for larger and the at XXX%

update as those our will continue we expect And migration statistics. so, can journey, cloud periodically we along that you

Operator

comes next Your from question the Thill Brent with line of Jefferies.

Your line open. is

Luv Sodha

is for again on This quarter. Sodha nice on Congrats Brent guys. Thill. Luv the Hey,

that cloud in last question the then top quarter? I a quick bit real was, negative One migration, digging the on guess, little of me. the server headlines to have I se? couple did that a migration. an momentum versions of this you've that you continued cloud from Thank XXX%, the per free the that any And you. deeper any saw on billings questions Just on or revenue that funnel -- increase momentum quarter, the was think, has second seen of impact,

James Beer

there. I can So the take part first

QX, In balances. Anything we're progress free as obviously to with either pleased of I in And results terms No, Scott we've in anything I already terms there, material revenue off addition earlier that it but speak impact Mike? add revenue. to deferred Okay. our wouldn't what on in describe our or wouldn't versions, to the covered the a server of item of cloud migration billings. in to to

Luv Sodha

Thank you.

Operator

of next Jack comes line with the question Your Andrews from Needham.

Your line is open.

Jack Andrews

and see Align. update for thanks wanted afternoon question. us I on Good you an provide taking if to my could for

products. about your fastest You Align is talked one revenue growing how previously of

is selling through just cross it’s how of from terms it’s in where it’s growing organic whether share context -- the growth curious there? any and can is coming really if so, And you how kicking or was there’s just in means --

Scott Farquhar

right? one predominantly my Jira. It’s here. existing we something have you. These sold kind that organization. using across I’d On not of existing again, is acquisition in sales long And cycle. this with our actually is sale Jiras where team and Scott customers are So, that on Thank say go many primarily I’ve to got products, customers, customer Hi. Align, our the

was scale our We are from want the the understanding we level to organization. doing all we executive and and better at a ideal sort digital way of happening through up level Agile engineering the transformation transformation and what want

so, problem. they’re how exact we is get we our do up course, what looking solution and saying this going And, And Align the customers solve lot of of for. is a

across more organization. And that out these organization. to some got It’s new is across with is we closely so, that but own collaborate is And mission-critical with may really teams customers' the and We're an are transformation. and do something that their I is is with think department, terms them customers. they’re in teams. and adopting to sector companies They thing the works It every And our to from as saying the that helps Align, Confluence here existing of talk It entire they’re coming And thing of struggling they is not benefits our say of were transformation can be kind cases benefit really acquisition don’t it of rolling used one talk practices that digital teams to there’s that to customer this base. software their software every us need When going address entire the that it software anything so the company. even. to many upsell, in you in goes -- we’ve benefiting, in happy out organization. just how their coming very the software products customers. transforming things the within most actually how of with that

whole broad So digital up of organizations CIOs, the news transformation the in level, can CTOs bunch and C help and to who are asking of think, conversations solve them I is trend, even at their turning that Atlassian we how CEOs problem. up

Jack Andrews

much. very you Thank

Operator

the from comes Piper line question with next Your Sandler. Fish James of

open. is line Your

Quinton Gabrielli

seen We're how the maybe the in And taking adoption prior specific with Really ways Hey, teams. more wondering seen in the guys. Quinton you. acceleration of to This Atlassian from our if the users on new competition non-technical of years. any non-technical compared world? communicating for you’ve products are viewing throughout Thank you pandemic, the adopting we’ve question. Thanks their for employees is Jim.

James Beer

as day, in remotely, where different me their let say they they question people from working pandemic work changing first. to answer to to how more they allow they keep Obviously, as working work, work change Good consistent home, are Look, people like habits, order multi but locations. we Quinton. the work from

like It’s most the working asynchronous XX-minute will get that teams days. a remote or our see products now send live I in -- happened, then a have asynchronously, on start the to as more to often with meetings in the attend help meetings. you a might beforehand they in will Confluence office help start where pre start help whiteboard link our might will we collaborate method page it increased fundamentally much We we often it, Trello on pre you usage meeting. then pages efficient and board used a to and a you Zoom very you and will right? products, our As have rate use where with has naturally comments we activity page, rate, an same if meetings a a you because someone Confluence people read

we of areas Again, how difference or leading in sort work products. hockey I sort activity improvement would but in days and these working think, usage, broader their and more It’s our are that the sort management on have in Obviously, digital companies think, not to example look, areas suddenly a target lead acquisition, focused suppose. a our of for us that broader going guess. in ASN, innovation buy at step use week, very new well to people that products, on you very might space, One platforms. in a we et jump version is the bullish. those change. Trello. get in called And continue driving, continue will, usage for might customers. So, trends of a run inside things us and be with continued which as some jump. a I be and say, products to continues Trello, work a say, do of about helping Confluence and of is stick I to we think work the to of all they with I step slow online a a day acquired our expansion, we’re it’s not it’s change that all a They messaging more structuring of of huge wall-to-wall company of decide already more long-term In customers are march to cetera it’s to happy market. the to Halp, progress knowledge

providing and management the the a to messaging sometimes Service Slack service that’s those within is within do in to messaging will see within And service products Management tool, back just that That increasingly And and during you -- work Jira integrating continue of because things. things and think, this rest back in like people to tools. and something as processing it that leading pandemic, service that within adoption sometimes are people for Halp in on construct from Slack stable. looking in work-from-home, and So, the like the like connecting that all products. the the benefit the Teams the again, end now messaging Teams ecosystem we Microsoft I Slack the all of Atlassian ways work provision

Quinton Gabrielli

you. Thank it. Got

Operator

Securities. Walravens next from JMP Pat question comes Your line the with of

is open. line Your

Pat Walravens

congratulations. Thank add And I’ll you. my Great.

different So, I’ll a to topic little here. go

know best that So, is whole that your really our that so six on pandemic within organization, but And I’m I’m in day over the your could it’s obviously that. August, our the thinking has But how employees ends sure guys, and a for helps Zoom months? thing the full you after announced topic permanently exhausting. about last the find solutions you with even I work-from-home just wondering, evolved employees. not I

Scott Farquhar

come want we they up one outside And Scott that. particularly they our work-from-home, they if one can loyal is choose diverse pool, And and talent our Valley. -- employees if in of if think think think here. chime is tap in reasons can why anywhere And done and to can others really Atlassian us. us they we work I successful, that. we’ve call the very to is It’s it can Obviously, opens work into If Team this, an heritage of to of has our want. Anywhere really our anything. offices, talent do I choose pool for We that it allowed which been do why in of Silicon they to that Australia. the add amazingly

of we’re And yeah, cities to the to that lack value echoes our around Zoom of think our we been able aren’t time with and world. day nearby into spend know areas. the family, those that take tap a the -- team friends from they many that’s center the moved really employees meetings excited full reinvigoration the that local executive somewhere know great. community, of the what of advantage ability I found has live. more kind success so, of communities of to around and where many and I of the to But myself is I about

you freedom we things or a travel into our are like our the that And at office. commute look this a the to steady of time aren’t are a can we of And or pandemic. you so, policies employees back happen family from And there to lot back world working will and hours -- in really two we in willing like I’d home your exercise spend what other there. state remind the building so world year. you are school, from a kids and can that middle and gives God with different that when that’s that flexibility will

and into can the normal will We hopefully move we rollout vaccine a more see state.

and we improve I a time get like that Atlassian. it lot improvement we’ll of that don’t here about. is spend spirit continually something make is continuing as and cloud it thinking all so, right see We you’ll self well. try to everything So, relentless think

Pat Walravens

Great. for Thanks perspective. that

Operator

line the from Macquarie. comes Havemeyer of question with next Fred Your

line Your is open.

Fred Havemeyer

for about my I'm very this. much Thank really Hey. on curious perspective question. you taking your

environments? funnel? looking sorry within work kind remote a work evolution their work, terms software business are the team IT this in And -- in in alignment Agile paradigm new what planning based IT of these seeing of that remote of can remote is -- Our for for cycles the of more the hybrid work. are work companies How remote support or you design

Scott Farquhar

work you customers of is back across find in already I communication the they it’s terms tracked our like quote, is Scott interesting think, more I in fashion, large number It’s great Confluence future organization, went meetings. in it if benefits to by kind share this would of heavily on design, pre-pandemic, which working remote distributed. a here. weighting is And digital were your asynchronous unevenly the of their just tools reaping information rather already that than work of the here,

are what and is whole And pandemic that saying in the is seen up. Zoom we’ve on of world cases, a already catching using day-to-day so, in who everyone sort Many many now people basis else it.

places. our already We’re Agile seeing Confluence and in many products, many with used customers using being Jira and Trello

to always, And and we’re obviously, people been vanguard hasn’t products new this. been we’ve about work. huge of sort step at change a change. in working. But a how sort there the of with has So, some it I thinking things they’re guess, I cater of Atlassian, don’t think how there’s

Fred Havemeyer

Thank you.

Operator

Your Instructions] next question [Operator Terjanian comes line the Cleveland Research. Ari from of with

line Your open. is

Ari Terjanian

end-of-sale? in And -- what I is more say the on Thanks the was just on Hi, customer that server couple the in second, seen At there color of for you guys recent any the guys. Analyst October wondering taking in of click large you if behavior you double could is question announcement how of yeah, and ago, deals. the you’ve terms performance Thank results. you. would the -- congrats Day since this talked surprise biggest quarter. around about strength the and months

James Beer

how that them of post surprises obviously, deals, options large prepared that has part tend I I server to to consistent announcement second that Because trends our the stats timing EOL hard Scott forth, that? or into move would right at execute terms would were out that update and you the terms say way for. And just to say so announcement. analyzed that terms each last a your out off. the in with of have the we of kind question, I But just And this that with for team customers and that’s consistent very really announcement, add think Day. continue laid planned thought would and in make paid for to a the so of that So, really year. that’s went customers planning, we fabulously for in how announcement. are, anything their that in I we in reacted the of had we would thinking Analyst that about say Mike, laid the

Scott Farquhar

No.

focus -- all don’t pull Atlassian time a spend or I free really long-term thoughtful from James. long-term And migration most much focused really Like, time, the that. product on take it. well, just seen of build think forward to or like you with and really like quarter-to-quarter, portfolio and of anything cloud as we it but it’s I we’re we’ve or Mike we with whether month-to-month, volatility said

time and the spending our the in about We’re future thinking our customers of cloud. companies

to question, and you think last So, the question? it it’s I I’d last on thank and -- being yeah, I mean, appreciate I of our with we journey say for -- you all a can that’s

Operator

no turn are remarks. Mike this questions at the I’ll to for call Yes. time. There further closing back

Mike Cannon-Brookes

you and and I you quarter. world. to you that our attending your safe call questions so here. Team kick-ass thank families the hope XX, for the to you And next you and time the Thank believe, in have before reminder much just I for that. very weekend. attend is a talking much And next everyone. write-ups. call, around earnings Hello, a stay very And forward conference thoughtful Hope being challenging for look the we this on annual

Operator

Ladies Thank and gentlemen, this for concludes today’s conference you participating. call.

You disconnect. may now

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.