Atlassian (TEAM) 1 Aug 242024 Q4 Earnings call transcript

Good afternoon, and thank you for joining Atlassian's Earnings Conference Call for the Fourth Quarter Fiscal year 2024.

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 Martin Lam, Atlassian's Head of Investor Relations.

Welcome to Atlassian's Fourth Quarter and Fiscal Year 2024 Earnings Call. Thank you for joining us today.

me and have Financial Scott Binz. with co-CEOs, co-founders Officer, call Cannon-Brookes Mike Farquhar, the today, Atlassian's we and Joe On and Chief

the today, Atlassian's quarter of you fiscal press press XXXX. supplemental The Relation letter earnings results Earlier section is our commentary log year a also available and investor letter earnings-related our Investor on and fourth where with materials, life and find financial and sheet. our for shareholder published we work website, including release release other data shareholder the

shareholder commentary our always, letter the As contains management's and for insight quarter.

the time a brief on during opening our today, focus then So we'll Q&A. call remarks have and

call This statements. include will forward-looking

or known uncertainties or assumptions unknown risks, the we involve could any prove and incorrect, statements our such the materially by and make. expressed any uncertainties results if from the results of If Forward-looking statements materials forward-looking differ implied assumptions. risks or

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

in assumptions the statements Further should our these or the undertake update on time such performance management's revise Forward-looking made, affect filed and we could statements factors to in most the Factors be or is our time, other cease Securities no quarterly with recently section obligation as and we date annual only beliefs they statements that and and are information such to represent and including current. of financials change make and included to Exchange our reports. from business filings Commission titled Risk

for available in non-GAAP between GAAP. to of shareholder the and today's sheet and reconciliation financial non-GAAP not addition website. investor metrics. earnings release and financial our superior These we data GAAP measures on metrics measures discuss essential in also prepared to The accordance letter, is nonfinancial performance Relations Investor During are in are financial with call, will or

time. you for we'll With others one question Q&A Out on participate a We'd many as Mike at take the over for turn like in call possible. call, remarks. the to to of that, allow I'll of respect opening

us joining Thank you for all today.

in year billion for Atlassian, letter, already $X.X a 'XX environment. revenue, in and accomplished surpassed over free you've of flow shareholder billion in was cash read challenging FY $X.X As in our We and proud we've generated XXX,XXX all we're customer. an incredible

our continued of 'XX, steady shipping general availability. Intelligence, Service FY into agents drumbeat and Atlassian for We virtual in innovation Management compass Jira

We family Atlassian data closed to users also cloud and server Jira. We Rovo of into entirely millions welcomed the journey winding announced and X.X-year center. new and era our and introduced migrated an of down for Loom out successfully

data of we partner continue understand unified with experience automation to and with Atlassian cloud deeper the our the our As that such innovations power as analytics, and center provides AI. platform customers, they ultimate

deliver our collaboration of regions, Jira our in more cloud. toughest most made we've customers the The customer's solve in have the single and build instance journeys their achieved center new in XXX We've critical data that we largest a and continued pave some over conviction they this to team platform increasing supporting our way process data momentum cloud, spending unlocking to U.S. designation, capabilities to Cloud. residency are to strategy annually. to progress Atlassian $X and up solutions users FedRAMP public milestone to reinforces We complex the are XX,XXX out million X help scalability support map enterprise for helping in over as enterprise-grade customers seeing segment, our deliver These sector, the and now and on for the challenges. a in

path opportunity this a we just our alone. existing to billion annual excited seize revenue. are accelerate ever billion customer revenue X surpass We $XX including have $XX massive than And more our customer market to addressable across serviceable our a within in opportunity opportunity base and

Lastly, been XX had his to at honor put Atlassian this to last him and customers forward the the side Scott his a company,over me into continued to Scott. by the the words role. concept Board a over thousands X It on truly impact Atlassian look an adviser Thank a member years. I has Scott's company as as that of last the to of many and contributions It's is the on last you, and decades, side thousands in and as earnings is of impossible call. employees, hundreds special

And I to over that, will him. with turn it

And through we've our back I that. impossible. what just always the last can look Mike. one products only in It's believed customers to achieved met Atlassian. we've that building enable about seemingly of be prior X built teamwork Thanks, on that do the we've decades XX years, as

Our are is teams incredibly to developing bullish the of innovation us our positioned powered leading markets of next parallel in innovation started. Atlassian well companies enterprise customers. just it course, deliver those baking our at lives. discoveries and product see that saving not front the for forefront space medical entire in opportunities across about ever portfolio. to only feels value to our position massive strong like the stage products we're getting of and X ground than grow the I'm exploration And AI delivering of and across to

be present. to single past one you. pace the and what be but take I lesion People Before this Atlassian Mike want without to today a every it I every is without around wouldn't and thank the of or moment Atlassian wouldn't truth say I, world, is each close out,

emission dedication unlisting slightly a of seeing look forward your mission to team, continue and drive and wavering a pursue every proud. albeit I seat. to from potential to on incredibly different then Atlassian pie You make forward me

to the operator for Q&A. call With I'll the that, pass

question comes Keith from [Operator Morgan from Your first Instructions] Stanley. Weiss

the career. real working Congratulations on really over remarkable a years. It's a pleasure with you been

Do longer the the next XX% X the out growth of garner Can guys equation? guys real FY do guidance today of what guys 'XX -- term that coming reaction. you if to over FY us confidence of confident give that see year will, in into total you the FY seeing the aftermarket that So confidence the on, today's you disappointing in with to that that years. revenue XX% help you The to a term, We plus bridge are growth for go 'XX Where 'XX. going building equation the for not parts we're remain is investors. are in plus results? we the turn statement you as that XX% make like longer

are our of fundamental This pass FY we there difficult with will is the believe motion, to over FY with up what for 'XX Keith. then growth support. the execution 'XX and at us Joe. of comparables the keep and term, more to Day macroeconomic and a market set number of strong beyond. consistent around 'XX FY Mike in foundation shared the prior FY Investor uncertainty of Longer beyond Server end related for start, server purchasing And it back in May. in we Thanks, a event-driven the to mind, color. risks year growth and end with Despite Mats in I'll accelerate mechanically, I'll and evolution revenue very drivers are 'XX

being opportunities software, So collectively solid markets, CAGR. a our have large we double-digit it with in growing are the those Those work service at management. starts management and X

growth ways. then that have our in addressable several from base billion $XX can opportunity And drive we existing billion We alone. enterprise there, in a market $XX of customer with

to We of investing cloud to believe base those center, be And installed working 'XX migrations cloud. the will customers a enable given and of data in growth migrate from we're the the FY size hard driver to to continue beyond. revenue and

within existing Management, customers Compass, to In then move and addition to enterprise Loom expansion Product Discovery, to customers seat another additional migrations, Service as Rovo. Jira paid cross-sell like wall-to-wall enable Over our products Jira XXX,XXX more great we and opportunity. have is opportunity we adoption,

there to significant or which driver. ability to We premium which drivers but growth And in and a term, significant is addition like customer model products, another other pricing enterprise longer-term a have the then driver. upsell is growth, the our to not new are growth is

differentiated And around as with we with long-term lot unique then high-value AI, say a and graphs data roads, and position space of that in opportunity have believe there's we well. I'd lastly, a

years over base X primarily from customers expect perspective, customer is with overall, healthy center So And that we a very next drive large data of revenue continue to composed to cloud. in high the retention. logo

will So remain center on growth and be pricing from by and cross-sell. data seat expansion driven customers the that

is customer year-over-year. but segment, see more So We term, as overall traction risks up long enterprise with customers can the and particularly fundamental we're tough XXX,XXX over comparables there to big there. term, opportunity you navigate momentum demand us, than we the getting million in cited have spending are and XX% $X the in customer which in short in

in deliver these years. say, just I'd our So really confident excess we compounded And ever to growth remain then few annual good growth as of ability over rate in that. about XX% we feel overall, Mike? revenue

think to I suppose. -- speak will incredibly as out. Look, the look, given over side, he that number so an I reasons for spend those the on right, customers that WAN Most in well, more next Joe all speak is and the a you from answers cloud with, of there, take not incredibly if plays math nailed large view, his they from I stated figure the be confident to, in say Investor the Keith. we've non-math have and are the them. our fact, large of I I we tell The the customers Day time of the would confidence we to, qualitative I I math that XX% the for in customers years point more that a -- how continue were today at all the

pace, migrations how through high is in So customers cloud resonating have deliveries that and the our tell. will to that mature in between engineering we the in road the picking up gap have and data center the map and migration we stories ending in confidence that with the that's server

our mentioned analytics for those as Secondly, and by moving increasingly, reasons AI their customers as well platform delivery. large and cloud as

as quarter with larger FedRAMP process proven ability resonating our to we So saw is those with this deliver customers.

so that customers, some -- -- you of products Discovery, have in it's new we new and the nascent is customers. the that products do when best had checks very As Tiraproduct the mentioned Rovo, with with of Loom, qualitative high we've in slate phases Joe

that and migration All of going drive journey. to are of those in cloud the exist those all

we we jointly. those have We're evolution I ability adoption continue as will go wall-to-wall a think, help deal shown those the as We've in a confidence more that I our than X lasts across moment their business. enterprises. one enterprise long-term largest capability the Lastly, increasingly that transition, with over And to customers that evolve and adapt places to at in as huge of decades.

hit bullishness out. that So those me given huge we've for that we'll numbers

comes question Fargo. Turrin next Your from from Michael Wells

free cash we're QX. seeing in margin, software. percent the XX-plus Objectively, XX% But guided you number XX-plus growth, flow not of percent of came across Joe, reported subscription the revenue spirit proud a for at lot XX%. something is, question The to

you provide what in lot if 'XX, hoping maybe just some into QX? of there's guidance cloud So factors and context a additional taking just the could fiscal delta to drove around account, approach anything pieces to you're consider. obviously, And help for us frame moving the

versus So here periods guidance any and compare helpful. contrast with is approach to the prior

Yes, awesome the for question.

revenue our You're later X and which our the year-over-year cloud driven high-touch in guided variance in deals, of landed data timing lower-than-expected by that to XX%. is quarter below One right, factors: than the range up migrations. there was slightly expend revenue of was center QX XX% in the enterprise from The slightly was

a take that deals later revenue I'll and landed one closed that factors in. in impacted deal recognition. and of the of those perspective, we drove a flip couple So just billings and than that. were expected, From quarter There dive each

evolution The high-touch characterize as go-to-market first what is I'd motions. the of our

migrations more larger, targeting complex And require anticipated. longer we're sales driving up cycles all in approvals. include to that products complex that some more adds we and are We more than cases, and deals large

and these Second, a we take through pricing on deals. disciplined always concessions oriented approach think long-term very and as we

be time. right And both don't economics and the close We deal deal or unusual willing what at natural to and a did this we're for driven. customer wait for we that's patient we're and do deadline certain a deal So the not quarter. for anything us, to

miss, you following smaller with migrations lastly, taking from to catalyst support are expect they Further, and driver hybrid that migration customers. customers data were cloud our Data the to on lower do many approach of we X-day with and absolute complexity that these the customers slightly migrate. our of The QX, time. server environments In when do to over largest basis data center from the a in X- can these center customers there lower from versus of do And servers. slightly so migrations migrated migrations. customers most then as center an QX than migrate, expectations, a migrations you'd terms like with is overall our complex Very these many to recently different the highlighted. of

the there. going secure innovation in destinations of Mike is there's quarter-to-quarter. R&D experience, And where a migrations see we're customers all it's there that to variability their product pace and it's cloud, best they of are the data be as So in about, plan the the pointed, our so overall, these and value ultimate and to get can clear delivering have our center talked

several question So timing of years. it's a just the the over like next what looks

what a we revenue say this outlook And question of part taken year prudent We the on different of your guidance believe risk-adjusted our we the 'XX. last factors. approach approach The than guidance given FY is taken here have year that X to did conservative to was and I'd more year a our a view this entering we have and ago. in is

the of risks execution motion. enterprise and to is related is evolution environment; our transformation uncertainty and go-to-market we in First the second see macroeconomic the

risk-adjusted so year gets macro than that it's our did we're the we've entering balances incorporates it trends inside the or seen whether last assumption risks realized macro related, year making a year the we guidance are a And the changes out view us ago. the as prudent form is -- that to uncertainty And company. worse over the there, and more with

about So hopefully, thinking in a terms guidance from perspective. color helps what we're of that

from The Ryan MacWilliams from next question comes Barclays.

Maybe at alongside for next go also Does and to how so opportunity Mike, seasoned point? into into And like hear migration on hire transitioned is your a Atlassian? from head enterprises of new products I into want this team make organization what's far enterprise thoughts sense your selling or more selling more sales reps sales. for new it out go-to-market the to the sales Atlassian

question. start to Ryan, I Maybe let a from talk certainly can great level. Yes. that. It's the high me

I Atlassian as think another this go-to overall. categorize in I evolution motions would

adapting technological You've of service times, a customers. AI, pretty successful tough seen this history do to is and to our changing environment, way like we support many Atlassian us but advancements the make the before also adapting and

our of effective the successful, all efficiency serves go-to-market have motion best-in-class a well, us is that financial right? enterprise given resulting a and engine highly as customers an enviable current Our and flow profile. the in We that margin aware has obviously and profile huge highly flywheel customers SMB and volume you're of. And cash

made period. that and have migrate time. When business we center would world. the significant center, learned in very added the customers a in cloud we history business sell data And we obviously, data we in go-to-market, of say, and to cloud, over I built cloud support building evolutions and significant of a a advocates. XX-year shown we've enterprise introduced series When over We a added

in added be the success seen And customers we and upsell explain cloud. of do that. added a that the then able we And points muscles as in enterprise enterprise. us premium and We've in their proof to of the premium strong have to of additions adoption additions recently, more moving. You've and

have we a adapt confidence over to of continue us had time So gives done. that as can we evolve series and we've evolutions

points of base. our now As and years We evolve revenue over better sell, motion And got serve continuing we're in $X and those X support the we've cloud, to time we've delivery talked our largest go-to-market million spent great enterprises. R&D service X about enterprises the proof of there. or to the the to evolving opportunity more in than lot last existing a

are XXX Atlassian we of base got continue too. change of keep keep north to desire portion think and evolution. think said, not place very things can work. As levels, to $X evolution at can and of the you -- million, that what do we more that that we've one than adapting customers that's and It's the saying and spending in improving important and to that I the strongly it's worth we a that expect that is seen a changing that customer to grow at special highest

us say the there on prided making economics as economical you've ourselves a we do would decisions, deal We've is discipline I always ever continually enterprise do. understanding the First, grow as our as than better being company. in and now as seen capital efficient before that, we

those looking of is of evolution continue Secondly, to of our multiple the the help Part long-term is businesses. years seeing and in change. complex how and and opportunity and to this XXXX with incredibly do business Fortune to serve our focus we how out them doesn't enterprise evolve and largest their going grow that to so needs forward the part of

land SMB for a Fortune of maintaining X.X remain XXX so that growth number in XXX,XXX incredibly customers, efficient enterprise is our and right? enterprise SMB customers Fortune for Lastly the our of focus the for all the Fortune motion XXXX. flywheel and the are business motions primary we additive will evolving. From to is keep customers as in important the

customers. Now continue go-to-market levels muscles of focus needs on question, part as of -- your the are business. well we to a we There to of continue largest growing look, our talent experience grow as the to we our areas we the within to talent on enterprise as focus that have we strengthen will lot second our

grow I excited say, sure to evolution We and together to this pricing. proven thread would continue and them manage a improve really go-to-market about I'm ability multiple we'll machines, But have that. and carefully,

next Your William question Bhatia from Arjun from Blair. comes

FedRAMP, in lot a I the before existing take customers assume you there can out I'm the the progress how Are can calendar federal long on Or you cloud? there. touch before customers buying more start federal D.C. a you have QX? over to of unlock opportunity. like of process curious making cloud? to might still some If here on a that deals migrate play It those bit in you're we it can sounds occurs is little to cycle

of also I who of I certainly entities can volume in center. have there's In, a of take customers center do doubt themselves. also are in light a necessarily capabilities. easier in with FedRAMP Look, number data working we no for government need to customers huge entities are government But would government them very data And who have may be businesses large that. service if they the obviously, FedRAMP who have large not we or say government

not you're about the around government, it's So large is I'm which businesses the sure aware. very segment, the just a as government well, as

We with we've cloud with delivery them time at. of journey the before last we've where on our I capability items or there. point aware XXX% to at hit have and to at keep FedRAMP a really we're room And quarters, lot this customers say couple as and of customers. will our continue work important those of a developed is the of on road our The map resonates

So our at can all future into is other map. that cloud online we're scale, and to to to they that the map road road you compliance, as performance can that things look just building to talk to

the we've next ELA. can cloud move on as signed call customer XX-year give in inroads they've the have of reasons such they It's the a for of forward. quarter map FedRAMP series examples sort as a that made a a customer are a why signed of Atlassian. hybrid and of years have stated security They road stated couple company. and and out deal ELA global defense to and We aerospace I to very large moved who hybrid

and segment. is for as to So we your the but the bring well that FedRAMP, great also can there. we've gives And residency designation obviously, in-process as okay key confidence this other own IPR all and as compliance that customer confidence data as us encryption move well, way capabilities great of be move shipped gives that we

strength ELA lot customers to some loads to is for that for so center enable the a to test very on-premise reason period workflows cloud, It time. cloud. and continue the hybrid that and multiyear these cloud for state workflows will and a they'll a will lets and of will a data have And do being company multiyear there. the move in Again, before And customers. of loads over There probably hybrid and them that moving to we need So them see learn migrating. they they start is large cloud. journey entirely as that move about into that, the

over see Confluent Atlassian latent center enterprise. have a service kind a next thousands Grand that's ability it a of huge big think to running latent and will I This unlock for that our demand products demand years. for a unlock even customers. government confident sometimes can hundreds, their Sedran in pattern with government these And of way, XX across cloud lot of customers start This that larger to the think for I'm and that and about be of few is Atlassian, is a strength huge ability. we'll adjacent

Hynes from comes Your question DJ from Canaccord. next

This is DJ. Luke for on

So was some folded you've customers to the insight into hoping from received into you response JW get since Jira. I

X you've been messaging heard interest anything non-technical driving and regarding those a and that from both in it's audiences? a change? teams marketing from And of Just terms across positive standpoint whether technical

categorically, Luke, with they're for their is they realize lot They fantastic is whether easy continued a or whether so, company, Core their very, competitive advantage. nontechnical The in going certainly, resonant reason incredibly to realize patents business, customers to and view. core has point last technology to That say and databases, sharper doing one a over advancements that and very And Atlassian care positive can work a been to technical is they're on in era. it's content of there. technology technology-driven The customers. communicate win business question. their health rockets companies. teams the to of forward data right, back very great their I teams able whether to building system in few building from a or closely them answer. work that a or fundamental quarters customers' our comment important are the being technology-driven is is technology of cars incredibly a advantage and is or work be they forth and in that realize or to tools exchange that getting

nontechnology Management well why, merge doing product, the as Jira and has also those teams it. one X the incredibly been That's on well incredibly Jira factors for received allow a a that decision X work although goals we very into Work That customers. by technology to to reasons to single the series and was together. of it It were they took bullish stories allows of We achieve them have to to a leads right? Atlassian. have, We where

the combination Jira consolidate work their many is talk a took that the and business cloud Management allows on Jira a incredibly that singular Rivian teams. We timing era X $X.X Software, for platform. tools expanded them to because and work of them. to tools use have save of management cases company the for management And works other it Firstly, the million annually other to and very can over us important, different Atlassian consolidate Atlassian they consolidation for like Work where due on and Cloud in and to customer well Jira

to the our or XX% organization proportion, count small the technology us And to organization. secondly, seat because teams relatively or from organization for XX% it a an allows X% depending be within expand Atlassian, on

need. teams we've expansion Ravin they all and got have of to platform of products. Atlassian that example still capabilities is The And project both work, we've the where organization is that workflows and of XX% and due XX% where to other a that the our system seen the underlies for seed consolidation business good

move. we do about that they is continue it need what explain as good do deliver trying motions term, this that to also and the how in and to Atlassian and to we go-to-market and with. incredibly customers it's product our So long customers we them in over reception in our help what and understanding customer to portfolio, R&D our And from listening

Your next Citi. question Fatima Boolani from comes from

you're Joe, you book specific execution this you. the that I a go-to-market enterprise are the fiscal into for could assumptions motion were to need very and reference 'XX for for some layers in question of Earlier, couple changes consideration go kind a explicit I'd business is of into of to in making. just taking some was the and quota flexing you're really the you kind due specific risks you way deeper is departure Kevin, stream attainment variables to the dose about or relatedly, that more arrive And of that things that. thinking conclusion? and like changes sales productivity what and and assumptions at or flowing we of considering organization the you're appreciate of how hoping variant granularity.

Thanks sales it the or terms Yes. in high enterprise for the in of a motion. keep I'll fairly we execution question. at go-to-market risk see level our that transformation evolution of

is there out, pointed transition leadership there. you As

been develop you your think to forecasting want capability we've over highlighted it's in the of space. investing we in the the we mind over fact continue that just as would to something year. And next then you like that the say And that's back about And always keep and time. a nascent so I build

foundation. you're evolve as to against more level and to going that. change. have involves But build make more and we our doing We a to continue risk execution progress, in that continue that, And of we're whenever that

I'll factors, the in and those Mike the fill from let high big So details a X on in level, are fill

thanks Kevin Fatima, to an sales incredibly and transformation leadership but leader and the team up great right. to years, start us and an from gratitude view, of and dedicated of I has He's the want role foundation for our point for Look, want been incredibly built sales a I with for strong question. to my has of nothing this number played continued function set Yes. guess he's -- evolution. make I

thanks myself to have from from call just and context. in that out So with great them Scott

we for we said, I searching built I term, can we CRO, is That well short I incredibly first to in engine customers. continue personally involved look, the the the scale. XX our for led we've are business. next today with strong be to I strongest and the And have incredibly there across and executive we the team. have and had continue a heavily the As ever transformational go-to-market Also, argue guess, underway. an drive at search ever-increasing years, phase would

strongly lead we confident can incredibly business that So through evolution. the

hopefully the has prudence I that that of careful focus that this openness the the other you've through to and our And are factors I more of of he long well guidance think going as but we us transformation, things seen in think as as it spoken there. well mentioned is in the on explanation Joe go what thought light prudence light term. from and about into other we

lastly, And multiyear and and return targets, side. confidence Investor historical reiterate both revenue vent the we side would the to out the at our that Day, on those deep and we've on would I in operating CAGR given belief maintain revenue margin

Thill from comes question next Your Jefferies. from Brent

as can wiggle and -- central to putting you into room. yourself know more to a guide a ultimately, challenging been investors in anything changed here? that Is the number. factors. of forecast, in really assumptions give know, forecast a are It's it's been Joe, more confidence this given the approach lot cloud But different asked are more investors conservatism thing is that I the give they to question has you change little believe your

Or XX The long-term tactical differently time? on second one the now XX% this still guided you a a a follow-up just we top in is over Should believe pit and line, your months think ] you growth? of stop 'XX more about ago, guidance of period was [ X

thanks Brent, question. Yes, the for

a of and reiterate risks the the In One the see and approach that second, more that drivers and is approach. we the guidance transformation uncertainty see about. I'll terms And do go-to-market terms our revenue on talked macroeconomic of I said conservative a earlier are in It to evolution uncertainties environment. the side. for year. risk and our we're reason being what risk-adjusted to the is the this guidance, related earlier, that just different approach, we the And undergoing in we execution question

into risk-adjusted the And and year net result this that view into than have we've taken year. is did going we that account. last a all So prudent the year of we more

growth of -- the months earlier compounded has we plus when made we in Investor the changed on revenue. So talked have X that. X-year We Day about rate Nothing annual a since that. last drivers XX%

earlier continue behind about around the drivers to on that. and confidence we We call the that, reiterate our talked

question next from Alex Research. Zukin Your Wolf from comes

just margin should on maybe the it would the to guide to actually that to that helpful 'XX, the think that the investors that be side flat? in recall I Similar tailwinds that such similar -- in margin headwinds or possible letter of were understand. it's unpack around fiscal operating you at should fiscal kind margins commented on in that if is 'XX least investors onetime just framing, to ex the nature how

gave at the of total in tailwinds because if onetime light that of actually closer but look think is you 'XX. I these If the for you that's of that, end guide growth, for guide I XX% revenue conversion to adjust server

from of appears And is closing understand maybe to recur. that's timing enterprise because enterprise guide side, So us obviously little that's bit. deals frame just just the presumably, the on conservatism. not it informing help maybe migrations on that But help side, better a the your the certain more incorporating that commentary going that

that. a is shot at Yes, I'll Joe. this take Alex,

I think are what the the from margin. all, margin started factors first year-over-year there operating operating perspective of and an are driving that you lower

in benefited operating HX. in basis significant non-GAAP be margin from to mind, basis server margin XXX 'XX. That point as FY out, marketplace approximately we out, points center than in about lower XXX to in non-GAAP our the points. revenue expect operating was outperformance That's related FY you data 'XX about support Keep to impact XX.X%, FY 'XX. our and you As and pointed

for you margins that FY And flat roughly be impact, our normalize will when operating year-over-year. 'XX so

will revenue increase, cloud the and And server while do the up of migrations server we terms in won't less expect they will decelerate growth -- In past deceleration support. And cloud we the there, migrations and make now 'XX. migrations. contributions that from driver comps revenue is the primary FY data believe center we're for to

talked for environments Given of hybrid pointed motions. account period. about incorporated, as out, and the enterprise those with play our worsening assumptions risks a as macroeconomic go-to-market many to over customers, the prudent migration path earlier, for impact you We've out will many we've execution deployments. of in multiyear also evolving

some are that the those of are So cloud that revenue. driving factors year-over-year in

call, about long our we of we server FY additional remain expect the 'XX we premium optimistic from of and in and talked we products and Now in to drag revenue pointed the lap out drive to upsell term enterprise cross-sell earlier. having cloud accelerate said that growth support additions products that to as and seat improving expansion,

from next Gregg comes Moskowitz Your from question Mizuho.

of And CRO a your term? how questions a Mike, 'XX couple define you fiscal transformation? looking, earlier. as for do as you go-to-market you're both Atlassian, new sales how much and But leading foresee go-to-market do sales specifically, more said, on had in an as I expertise changing over the well transformation. longer with follow-up a enterprise you the enterprise from

revenue say R&D increasing we of spend much are sort XX%, moderating very Look, continue Day, our say when to a that that. what and of is gave marketing at Investor a long-term question. as about And -- sales XX% we we spend roughly how north interesting targets our that, Gregg, thinking and from range, moving percentage our of be long-term would I I'd an company. talked that I mean,

it spend the And would efficiency, that So in that implied and good capital other you increase is. spending, that, argue I the especially in can the you spending, compare careful companies, our of a right? calculation see there'll we're to a when be moderate And in cautious way. relatively ROI on in and very increasing where the it's comps market but at

we that advantages because most and to that's fundamental our believe software spending after comparatively are. companies efficient be still still other marketing on on transition -- comparatively sales R&D and where high We'll

about an and Think manner. adjustment that in as So this evolutionary

deep we we is huge the with customers part demand transform evolution, some the of their helping Now are $X and how lighten have our center largest XXX in continue them spending how And about our we data in than a more partnerships transformation to increasingly take those million. of build right? customers businesses. This is

by when smart customers And that data that to we're are example our with benefit we years of the business, started I talking customers. the is we through something now familiar talked looking how And ago, $XX,XXX that be XX, to years XX about ways largest on this you history incredibly want when we're that nowadays, are it's Atlassian. evolve they're center think the ever-increasing that want them, to there That's very at to numbers philosophies and speak the They were a across what They and ultimately the transforming mean we products. way portfolio of and those to customers out when transformation our we betting of enterprise our of along that moving had. in about case, Atlassian were -- understand and of partnership how company we've evolution customers. customers. make continues largest we we but how sell the support hard their are I've to think that a In this works. $X,XXX that roll they scale, build we successful

switch. to not a swap point model, a will I or additive out our Lastly, that believe this is we

makes numbers companies. us enterprise motion a customers, motion which that ending is great those other we the the capital-efficient have We SMB in product-led flywheel large customers, enterprise efficient of more also at landing but than for what in growth have

in together work they So

Your Kash Goldman comes next from question Rangan Sachs. from

the clearly, more a company. certainly for can these goal transitions the So question And you Mike, is to you're way. as a very in be with on hard, successful come out

what strategy, lessons product And we As are learned tweaks the you've I all to come how be out of learned? out go-to-market. we've difficult further the the come most challenging can from times guess ahead. and there mostly the transition,

the an you to that position. learned to from strategy bandwidth have are going going a in things also, And enviable So what you're the adopt that company forward? perspective, you're

had. internally question, that the but I before being and there are what, to then you're more Board the talked Scott, on very CRO. about potentially rambling you as now, But accelerate. how How he's about in What one depth bit the big company all course, get Joe start the get more the curious I to in of done little questions you the different fill. were CEO are there? And I'm wanted to exist talked about twice that -- differently that and some this I a through of first it's stuff. very place a is things I out now you you are the with little know the just the how mean hear complicated long quant to shoes for looking You're you levers

few Look, a I'm Kash. that one. Sure, say I'd I'm things. guessing take going to

team. Firstly an with would I I saying executive we incredibly think strong start have

I'm going with So shoulders. team. to a look, my ultimately And all great question that. lot fall we this implication at your does, doubt on of very of a the no accountable But is level, comfortable executive have high there's a

well We going out motion that's leadership that on at quarter. is something of July years. the X and the great are the play sales a for this been and have This with and team moment, a transformation quarters evolution and not is something this This it starts we familiar having over while.

new cloud management believe markets, everything from And to footprint scale and being increase BYOK broken customer This data enterprise XXX and I in the As We're evolution. in just to right? There's customer of all continuing more we is here, an opportunity an the north million. would we can FedRAMP. us, have $X residency in base to say, now that for our is than our entirely of the out motion you've customers you we to see, for the not work hard have in nothing of This have The the improve as right? amount have into a strong and shift a of teams. at system a Jira footprint. done Service from get rolls work enterprise, huge stretch and said, mix on more and as R&D additive grow and business as of we ITSM, in the the we time. come how Management investment through we seen long moment more software back and And collaboration is

we think there, the to go I after that. we're So is going and feel opportunity

making a was it largest talk event of in we've DC that terms you lessons about as these builds, us pipeline lot of XXXX when confidence of terms have and those our execution ever in customers great continue event -- informs go see think us movements. also but I we learned enterprise often from that held comes and what launches, solutions product in things, through. to was a sales we huge for look, we

ability our I of through company worried less has the team, I XX-odd we then what incredibly as leaders and and would that or always get and more we go personal that executive to and that's that, and you'd at strength X,XXX confident to. collective the a through and the guess, this we workload as that our feel evolve. a on team I'm business to have intend have say, to our personal mission. the staff and can the looking to Atlassian do about ability say learn XX,XXX we after people I been go

Your next from Altmann question from comes Scotiabank. Nick

Altmann. on Gomes John for is Nick This

You guys product of outlined interesting Loom examples terms the in Analyst some the and adjacencies Day the core. at with

And the there. a to thinking Loom of sense contribution? So be you that quarters now a for we pertains a been us for goal any FY about couple posts Loom better Can has it of part should of 'XX, you give cross-selling do how lag now. have traction as

take Mike I'll then follow that, part and will of on. Yes. Thanks for the question.

it on about operating Loom for growth of [ margin impact expect Loom for prior will have to with FY our FY ] the operating to revenue And I'll Loom we to over dilutive margins. and asked impact expectations, You overall be 'XX, 'XX expect consistent turn And to within year. guidance on to we our the revenue have the 'XX X.X FY Mike points slightly that about cloud cross-sell. X

few would I loan. things say a on

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Your from BMO. next question comes from Keith Bachman

to conversations some a to on had I bit being to that Joe, I year, we wanted wanted outlook And Vegas. we cloud comments as data for conservative center. I the in on direct think your particularly, to this and more appreciate the the you. about outlook. in And tie the of

contribute how you particular, relates and what as year? contribution you about the the realize that X in targets thinking would are How that it order to out amongst seats but others, thinking from you've to the variables are pricing. for Just those laid in about

is were expansion not sign. Yes. trend consistent encouraging a make. our Thanks perspective, to Keith. the data QX question, a From That's paid for one rates But point in an QX. to

the are risk-adjusted And And FY took that to expansion assuming in macroeconomic. see pressure approach 'XX. we so in continued speaks around we'll seat that paid we

in increases FY of expect pricing, prior. the 'XX be revenue a we has have In to that throughout terms driver been continue to pricing will cloud growth and of year. That

similar going forward. should a expect impact you FY in to so And see 'XX

today. Thank to you. for for That's the turn will Mike all have I we over call the now questions remarks. time closing

sure Thanks, questions note continued and some for at I'm all is call, today, everyone, last just your the questions for. thoughtful end of a small level I to I the add today. you've personal Appreciate It a earnings want which guess very tail joining on spread is all in Scott's support. call and here.

a you, thank business magical huge lucky know an long together. contribute time behalf for a And enough for many me, on Atlassian set the to come. place add fantastic it there of from in treat leaving it They any XX-odd a will project better to else. when Atlassian leave to them rather continued one of with object, only there's are he want day benefit. down team Scott. decades that the more have with that it thus they as person done One who's and XX,XXX is now, personally, a for they finished members, should they that's better present you thanks and work to a to you've get gets Scott and one they how one X it. than all and the if graduates is better. a underestimation and Atlassian I place found of the things the company. owe thing not past that for founded and are for that Scott I found staff if than to better is for he but all Atlassian today the different of Atlassians just leadership company everybody and he founded, sits current new construction -- and said I than of And away we And they said left thing better the should a joined to than leave it with than place that at because with when leave we walk work a is And everything We we the the better think gratitude they and that's

in very lot wish the endeavors. have to me. you you a do weekend. day, kickass great for future We'd everyone, much all to With have best thank So love that, and a a