Atlassian Corporation (TEAM) Earnings Call Transcript & Summary

All right. Good afternoon, everybody. My name is Tyler Radke. I co-head our U.S. software coverage here at Citi. Welcome to the end of day 2 for our Virtual Technology Conference. We're very happy to have Atlassian with us today. We have the Chief Revenue Officer, Cameron Deatsch, with us. Cameron, thank you for joining us from beautiful Lake Tahoe.

Thanks for having me.

So Cameron, I thought we'd just start, big buzzword, digital transformation. I think a lot of companies like Salesforce and ServiceNow talk about it. Atlassian has always had really strong traction with developers. Developers are a key to driving digital transformation. How would you encourage investors just to think about this high-level trend what it means for Atlassian's business?

Yes. So let's get in. So first off, you won't see Atlassian. We try not to get too hooked to buzzwords, right? So like digital transformation is like software and technology progressing how companies manage and operate their businesses and deliver value to customers, which is not a new trend. Like let's not turn around like Internet has been around for a while. People have been using technology to change how they run their businesses for quite some time. Granted over the last 1.5 years, that had to accelerate a lot more. As you know, restaurants are trying to figure out how to do mobile delivery. Every business is trying to figure out how to interact with our customers differently through technology. So there's definitely acceleration, but it's not a brand new thing. And that is a core area that -- where Atlassian really built its biggest muscle, right, today, which was empowering software development teams to ideate, innovate, ship great products, manage those products for customers, make that entire cycle be more productive. So that's a massive way that Atlassian continues to ride. And as long as there's more technology needed and more software development teams out there interacting with business teams, we're going to continue to ride that wave. The complementary wave to the digital transformation wave, if you want to call that, is that cultural wave that you see out there, which is every one of us over last year has just forced us to change how we work, right? And we believe that it's never going to be the same, the office-driven culture. Regardless of your company, there's always going to be some remote work. There's going to be some digital work. And we don't have the answers, but we know that it will be different than what it is today. And that's going to be a huge opportunity for us as we're trying to empower teams of all parts to be more productive.

Got you. Okay. I thought we could start and actually move next to the most recent results, which appeared to be really an inflection quarter for Atlassian, particularly in the cloud business. You delivered 50% subscription revenue growth and essentially raised your expectations for subscription growth by almost 10 points for this upcoming year. Could you just unpack the drivers of strength? What do you think is driving customers to migrate to the cloud now versus in prior quarters?

Yes. It's the culmination of a lot of things that allowed us to come up with that new subscription target and come out with a great year. So I would say it was just like -- it was not one thing that just executed. So I've been with the company for 9 years. I've been CRO since a year ago, July, which was the beginning of our fiscal year. And I'll tell you like going into that fiscal year, we had -- the effects of COVID just hit us. So we had actually one of our smallest new customer growth numbers. We saw churn affecting a lot of our smaller business customers. We're strapping down or shutting down businesses. We had just moved our -- one of our business models, which was offering trials of our software, to a free model where you use free for 10 users and you pay for your 11th. We were planning our server end-of-life message, which went out in February. And on top of that, we had launched a new addition strategy of our products where we had free, standard, premium and enterprise. So -- and then we had acquisitions. So there was like plenty of variability is the word we use when I was going in that job a year ago. The reality is 4 quarters later, across each one of those things that I mentioned, we executed in line or above what we were planning. So starting with the free transition. The free transition saw a bunch of customers who would have paid us very early. We saw a 3x of the amount of people clicking the Try button and then coming into the products, but obviously, it took us longer for them to turn into customers. But that, of course, did pay dividends, and you see that largely in our new customer numbers being larger than they ever have. So we widened that funnel of new customers in the door. The second piece is that addition strategy I mentioned. That standard, premium and enterprise has paid off as we put more capabilities in our premium addition and in our enterprise addition. We saw step changes in customers adopting those different additions. That's paid revenue dividends. Our churn rates basically came back and are better than they've ever been. And we saw many of those customers that actually left us came back -- got back into business, started using, but also our existing customers adding more users and our churn numbers getting way better than they've ever been. And then lastly, on our server end-of-life message where we said we're not going to sell server license anymore and you can renew for 3 more years, that was -- all of our customers understood the strategy. We met with many of them, and it did give that extra little boost of, okay, now it's time to start taking this cloud transformation seriously. Combining that with all the tech improvements we made in the cloud, and we saw our great cloud numbers go from, I think we had 70% quarter-over-quarter growth in our enterprise. We saw our channel go 300% growth on cloud sales our last fiscal year. And like I said, I just -- every enterprise customer I meet with, it's a when are we going to move, not if we're going to move discussion anymore. Now granted, a lot of customers still to move, it's going to take us a long time. But it's the culmination of each of those things that allowed us to get more confident with our subscription growth.

Right. Right. That's a great summary. So I wanted to talk a little bit about some of the things you're putting in place to help incentivize those enterprise cloud adoption migrations. Can you kind of recap for us what initiatives you do have in place and just remind us kind of where we're at in terms of feature parity on the cloud product versus the data center product?

Got you. And I do apologize, it's remote work. We have construction going on in my house. So if you hear drills and banging, that's just something happening. The cloud transition in general is we have a bunch of things going. So first off, from a technology perspective, feature parity, like honestly, our end-user features are well ahead of our on-prem feature set for end users today. But you just get a richer, more cloud native experience. You get a better mobile experience. You get better log-in. Like there's just a lot of smoother things that -- for end users that delight end users. And we know when they move to our cloud, their customer satisfaction ratings go up. The biggest things historically that kept people from adopting the cloud were 3 big buckets. Scale, simply that, "Hey, we have 40,000 users. How are you going to support us?" Four years ago, we only supported up to 2,000 users. Now we support 30,000 natively on a single instance. And with our enterprise addition, which allows you to deploy multiple versions of our products, you can kind of get unlimited scale. So scale is less of an issue. The second set was really data privacy, security, compliance set of things. Think HIPAA, FedRAMP, data residency, Banfi in Germany, so -- which is places where we've had either direct road map against all of those things or we simply can discuss with customers. You can trust us with our data, and when our CSO can get in, then we can go toe-to-toe with any data privacy team and any company out there today. And then the last big bucket was extensibility. This is our marketplace, our ecosystem and all the integrations that people use with our products. We've launched Forge, which is our big thing where people can deploy apps in our infrastructure that integrate with our applications and extend them. The combination of those 3 big things is -- largely allowed us to go to just about any one of our enterprise customers and say, let's start the transition. On top of that, we have some pricing and discounting programs temporarily to move people.

Yes. Yes. So I wanted to ask you a little bit about that. So on the cloud discount program, I believe it's structured to decline every year. How much of that was a driver for the most recent quarter and just the timing of some of these deals, like folks buying before the price went up?

It gave -- I mean, it was a piece, right? When -- every time we roll off, any time you do any sort of price change or it's going to be more expensive to go later than sooner, people are going to go sooner. What I'd say is we have not seen that it's not like we just trained everything. The reality is those customers, it's less of the price. When I'm talking to these customers, price is not the blocker. It's the, okay, how are we going to get our data from here to there? What is our plan? Let's get through all these technical objections or concerns that we have. So yes, it did have some effect in Q4. But the reality is like it's -- we're still very much in line with our plans. And like I said, increasingly, like our customers are just starting to get the awareness and funding programs against the cloud transition.

Yes. And I guess, from -- as you inspect kind of the pipeline and look at these deals that are potentially coming into the cloud, how should we think about seasonality? I mean is this something that is kind of well aligned with the fiscal year-end or certain budget dynamics at customers? Or is this kind of a steady thing that you'd expect to see going through the year?

Yes. I'd go definitely steady. Like any time we'll do the loyalty discount program changes or price changes on-prem, that will always drive blips. But in general, the way we're going right now, every month better be our biggest migration month, right, just the nature of it, and that's what's happening.

Right. Right. Okay. And I believe there's another kind of price increase or price discount going away July 1. Would you anticipate kind of a similar level of purchasing around that deadline? It's this year or maybe too early to tell?

I can't speak that far out. Like that's -- it's a few quarters from now between now and then. Obviously, our customers know about it. They know that -- they all know, okay, if we go a little bit sooner, we'll save a little bit of money in the short term, right? If they go along in the end, 3 years from now, it's all beyond with price anyway, so it doesn't change long-term dynamics. But it's like, okay, short term, budgets are constrained, let's go get this out the door. It gives a little bit more of a compelling event.

Right. Right. So you mentioned that price was not really the blocker here, right? It's just kind of a big company. Yes, there are certain sets of requirements that they need. What are some of the things on the operational side that you're doing to assist with the migrations? And how are channel partners helping you, too?

Yes. It's a critical big piece. So internally, we have stood up a customer success management team who take customers post deployment of our products or post once they move to cloud and are all about driving best practices, use cases and adoption within those accounts and handling any cloud objections that come up. Complementing that team is we have the cloud migrations management team as well as the migration support engineering team. Think of those as dedicated white glove teams that as soon as you say, we're going to start migration, you get a dedicated team. If you're over a certain size, that is your team. Their only job in life is to make sure you're moving your data to the cloud and using our migration tooling appropriately. And then the last piece is working with our solution partners, knowing that we do not do hands on keyboard. We're not moving the data for our customers. We're simply allowing them to -- giving them the tools in order to do it themselves. But a lot of those customers say, "I just want to pay someone to do that." And we basically have partner programs through partner enablement, partner training and dedicated campaigns. We have certain partners that we will actually introduce those customers to early in the program, early in the migration program. And then those partners get dedicated support engineers from Atlassian to once again to respond as quickly as possible if issues do arise with our customers.

Right. Right. And you referenced Forge earlier, which I think we heard on the last call, there was over 500 apps. Could you just kind of help us understand how much is that incentivizing customers to migrate over? And where do you see kind of that marketplace going over time?

Yes. It's -- Forge is an incredibly critical part of not just our cloud transition strategy but the Atlassian platform strategy. So for those of you who are out there, so Atlassian has always had a very large marketplace where third-party developers could basically build applications. This could be our customers. This could be our partners. This could just be a developer who's enterprise to build an app and either ship that to that app to a customer through our marketplace and that customer would run it on their own hardware; or that customer could -- or that app vendor could host their own app and integrate it, and we sell it through our marketplace. As our more and more customers, our large customers are getting -- moving to our cloud, they want us to host and manage those apps for them. They don't want a third party managing their data, and they don't -- sure don't want to manage it on their software servers anymore. That's what Forge really allows. Forge allows these third-party app vendors to build and run apps as well as our customers to build and run apps in the Atlassian infrastructure and the Atlassian platform. And that you get all the benefits of our platform. You get all of our security and compliance and identity. You unlock a lot of additional value. And we take the burden of running those applications for those third-party partners. That alone is a major burden off of the third parties because they don't have to manage infrastructure anymore and also a risk reduction for our customers significantly because now Atlassian is handling all the compliance stuff around that. So it's a huge piece. 500 apps is a -- we see massive adoption and new apps being built on Forge. Obviously, we have, I think, close to 3,000 in our marketplace. So it's still more to go do. But the marketplace knows that's where they need to get to, and our customers are driving that today.

I see. I see. Okay. And if we just think about the user base that you have at customers, right, I think we've seen some stats just on how that user base has expanded over time, good net expansion rates at Atlassian. How would you kind of describe that for investors, right? I mean I think on one hand, you are -- at the core developer-oriented platform, you also tap into a lot of different kind of line of business workers with Trello. What are some of the biggest drivers behind driving increased user adoption at customers?

Yes. The -- one of the most fun and also frustrating parts of my job is we have so many expansion vectors once we land a customer because we can expand through platforms, take them from on-prem to cloud. We expand through additions, go from free to standard to premium. We can cross-sell customers multiple products in our portfolio. And then we can have our marketplace as well, right? And then you have pricing dynamics and everything else. So like there's all -- there's no shortage of ideas. You got that. But we got to prioritize. The -- but the core of it, I think you hit the nail on the head is all that comes down to getting more users in these companies using us for more use cases. And historically, as you mentioned, we are a very software development-focused. Start with the software development team. And as digital transformation happens or whatever you want to call it, as more teams need to interact with the development teams, we become that platform for software development teams working with business and IT teams. We've expanded greatly beyond that, and we really look at the world as 3 separate markets. I would point you to our Investor Day 6 pages we wrote last November. It's probably the clearest view of our strategy. But we basically look at agile DevOps as a single market with a certain amount of users, and that's very much our core where we're the most mature. Complementary to that is the IT service management market, getting after more IT use cases, more IT agents but even help desks for finance teams, HR teams, legal teams. So that's a whole set of other use cases that we are expanding to. And then the broader market of work management for all broader collaboration use cases. And that's really is any user trying to figure out different ways to work with their team or across teams. And that's where products like Trello and Confluence are continuing to accelerate.

Yes. Yes. Yes. I guess a question for you. I mean as the Chief Revenue Officer and a really complex set of different ways you can up-sell customers and then you throw in how much of a self-service motion a lot of Atlassian customers are, like what are you focusing kind of your direct sellers do in terms of the most profitable, successful up-sell motions? Like where are you finding the most success there today?

Yes. The -- so first off, the Atlassian does -- our enterprise advocate team was our direct sellers team, complemented by our amazing flywheel and our incredible channel. It's not just about independent sales. So it's a system. They only cover a subset of our enterprise customer base. We do not put sellers against landing new customers. We basically rely on our flywheel. Pays off we only got 23,000 new customers without paying commission on a single one of them last quarter. So it's one was like that's -- we're good at landing new customers. And it's only when an enterprise customer gets to a certain size of investment with us as well as has a certain potential where we know they have more users there that we can go get or more products can go use where we will put them into our enterprise advocate teams. Right now, the #1 goal for those teams is obviously the cloud transition, right? That is addressing all of those things I mentioned. They're #1 goal. Hey, customers, let's build that plan to get you to our cloud, either as an all-in-one motion or in pieces over time. Complementing that, Jira Align, which was the AgileCraft acquisition, is a very executive CIO-level enterprise cell that comes with large -- larger deals that we know customers adopt that. It's a step-change in our relationship. And increasingly, over the last few months, we've stepped up our Jira Service Management direct-selling efforts into the IT service management use cases in our mid-enterprise and enterprise customer base.

Right. Okay. Okay. Makes sense. So going back to the flywheel and the free trial motion that you have or free version of kind of most of your products, how have you seen kind of new use cases evolve there? I mean, obviously, having a free product out there targeted at a wide range of users, and to your point, I mean, kind of the new customer growth has been super impressive for Atlassian. But are there some interesting new use cases that you're now seeing that maybe you hadn't seen before and can kind of expand the total opportunity?

Yes. And at this point, it's broadly yes. And I think a lot of that is that -- is driven by that wave that we spoke about earlier, which is everyone is trying to figure out these new ways of working. No one has the right answer, but they're willing to go try new stuff. So after that broader wave that Atlassian is writing, it's probably good to talk about specific products. So if you look at Trello and Confluence, they're probably our 2 most mature as far as used outside of technology teams in organizations to attract status ideas and work within teams, to collaborate around more complexity marketing programs, marketing budgets, what have you. But we also launched 2 new products in the market over the last year, Jira Work Management, which was a nontechnical focused version of Jira for managing complex workflows for teamwork; as well as Team Central, which is a new product launched through our Point A program, which was not about managing work in Team Central but communicating the status of projects to the broader organization. Now I'd hate to say -- it's hard for me to say, oh, well, we just struck a thread with marketing or it's just the finance organization that's taken off. That hasn't happened. It is across the business, many different use cases using our products in different ways. We do, of course, look to ourselves. A lot of it's like our first guinea pigs around all of this. So there are plenty of marketing use cases. There's plenty of financial -- finance use cases. Tons of people team and HR use cases. Think about HR onboarding of new employees that we're continuing to not only build features for in our products but also market more actively into the customer base.

Okay. How do you think about -- so we talked about this really successful sales funnel, free users. How are you thinking just about your ability to convert that? I mean we have seen kind of several quarters of record net new customers, sometimes hard for us to see like the size and profile of those. But how do you just think about converting those free users?

It's -- so that move from trial based to the free model, like -- and just say, we tested it a few times with small pockets of customers before we decided to pull the lever and say we're going all-in on free. The hilarity is we launched free right when COVID hit. So it was one of those points where it was like -- it was imperfect math to understand how much of our new customer number was going down because we launched free and those customers are going to take longer to convert and how much was macroeconomic. I'll tell you, that concern we had went away completely effectively in the back half of last calendar year. We tracked each of those cohorts up. We tracked their conversion rates to paid plans over the previous trial paid plans, and it's basically been net positive ever since. In addition to that, we've tripled the amount of people that have come in and clicked the Try button, right? So like the amount of people that historically would have been turned away by a trial are now coming and using our products. And even if they haven't converted to a paid customer yet, they're using our products and not a competitor's product. So that can feed the flywheel down the road for many, many years. And then the last piece on that is we've -- now we have all these users on the free plans, we've been able to optimize the free experience to make it even easier for them to add more users and then convert to paid plans. And that's just constant testing with our growth team.

Right. Right. Okay. Yes, makes sense. I wanted to ask you about some of the products specifically. But on Jira Service Management in the ITSM space, what are you seeing, I guess, kind of your more complex customers? I mean are you running up against -- we always see the question, are you running up against ServiceNow? Is it largely a greenfield opportunity? Do you -- are you replacing a legacy ITSM? Just help us understand what you're seeing on the...

First time I heard that question, actually. Yes. So if you look historically at Atlassian, right, Jira Service Desk was the product that was an IT help desk tool, very simple to use, organically growing, cross-selling into our base, huge SMB adoption with these power users were like, "Hey, listen, we can make Jira do more than what we're using it for. Let's use it for our IT help desk capabilities." But we consciously didn't go after those hard core enterprise IT service management use cases. Part because of the maturity of the product, part because of the opportunity we saw, part is just the readiness of where we saw our organization go. About a couple of years back, we saw more and more of our customers pulling us, right? Like our larger enterprise customers, deploying Jira Service Desk at the time to large enterprise IT use cases and then asking us, hey, we need these features or we have these apps in your marketplace that we're using. We really would appreciate if you guys took this in-house and build as an integrated offering. We made the strategic decision to say, you know what, it is time. We're ready. The product is mature enough. And through organic development in-house as well as the acquisitions of Mindville for asset management, Opsgenie for incident management, pro forma for rich forms, code barrel for automation and a few other things, we've been able to round out the IT service management offering, thus, creating Jira Service Management. That has only accelerated our penetration with our SMB customer base and allowed us to actually go into our enterprise customer base with an offering that meets most of their requirements. We just actually came out on the Gartner Magic Quadrant for the first time for the IT service management as a visionary in the visionary quadrant in the first time we were on that quadrant. They also call us out as the fastest-growing vendor in the market, in that particular market segment that they've seen. So our strategy is paying dividends. I will tell you right now, rarely with our use cases are we going in and trying a big top-down IT service management play. We are very much running the Atlassian play, which is patience, started the department, start at the division, start at an organization. The closer they are to their software development team, the more value we can provide. And we can basically get more and more feet in the door within those organizations, and eventually, they'll standardize over a period of years.

Right. Right. How do you think about kind of extending Jira Service Desk and Service Management beyond IT into use cases like legal and HR? Have you kind of had success landing there? I know it's not necessarily like a heavy sales motion. But just kind of in terms of that organic customer adoption, have you seen that interest kind of departmental heads [ for service ]?

Yes. For sure. And a lot of it is maybe it's someone who signed it up for IT help desk, right? They're going to -- we're going to run our IT request through this, which is -- usually, we have -- Atlassian has so many incredible customers out there, like I jump on, these are the people that are like go the Atlassian community events, they jump on, they're wearing the Atlassian T-shirt. Even when they're yelling at me that something is wrong, it's all part of the family. But they're incredible about finding those use cases across the business where like, oh, this -- like the legal team is kind of running in a new issue. They hate using email to track contract updates. Well, we can start to click up this fast. So it's really about empowering those IT teams, these power users of Jira Service Management to go off and solve a lot of these other department's problems and needs. So we see that happen a lot, and that's kind of like that enterprise services management extension of what IT service management evolves into. But also increasingly, you see customers back to this new way of working where I used to sit next to [ a person ]. I could track that work really easily, where I'm just trying to figure out, I got 9 different teams come to me. I need a way to actually organize this more easily and tell people the status of stuff. Jira Service Management is free for up to 3 agents. People are coming in, setting up a little help desk, getting their SLA set up, and maybe just a single lawyer in a 20-person company or a 40-person company might be using that to manage their inbounds versus using email. And we see those use cases increased and rehappening.

I see. Okay. So I think investors, the feedback I always get on Atlassian is they really appreciate the transparency that Atlassian provides. I think -- and you share that with customers. I think at the same time, one could argue that regular price increases, kind of end of life-ing of products could cause some friction with customers. I'm sure you've never had to deal with any of those tricky conversations. I guess how do you ensure that your customers stay happy and continue to wear those T-shirts while at the same time, you are kind of raising the prices a little bit? Just how do you minimize the churn and keep everyone happy?

We are a business. That's the -- so the heart of that is the company values. I've worked for plenty of enterprise software companies. We talked about values but did not live the values. I can -- and it's the weirdest thing. People don't believe it, but like we hire people and they come out like, holy cow, Atlassian truly does live by our values. And 2 of the biggest values we have are open company nobleship, which is -- my view is we are transparent. That are transparent as much as it's possibly in legal to be with customers, with employees, you name it, with our partners, with our investors, you name it. And the second is DFTC, don't f the customer. Like 2 things I live by, right, which is when we make big decisions like, hey, we're going to end of life the server business. Like we are eyes wide open, that's going to be painful for some of our customers. And like you can Google me and you can see all the conversations I had on our community. I talked to many, many different customers about that like and my view is that's the message I personally gave to our customers. And I'm -- if they're coming in like I'm the first one on the call to explain that, hey, we're not screwing you over. This is in line with our strategy, the best way we can provide the most value to you over the long term, okay? Do they have to be happy about it? No. But do they understand it? Absolutely. And that just requires a little bit of interaction and touch. So that's the server piece. As far as pricing longer term, I always use my -- I started in 2012 with Atlassian where the most expensive thing you could buy from us was $8,000. It was an unlimited license of Jira that's $8,000 with a $4,000 renewal. And the first thing I did was we raised those prices to $24,000 with a $12,000 renewal. And like we were really, really stressed about it. And the reality is like it's just no insurance. Like people adopted the technology, and we've increased our prices like pretty diligently. But we track our churn. We are very open with our customers on when we're doing price changes. We're very open on how they can avoid them by purchasing early or upgrading to something else. Like we give them all the options, and we give them plenty of time to manage their budgets or, God help, look to an external competitor. And my -- that's always like one is like, hey, listen, if you go to a competitor because of pricing, we've messed up our entire business model. And if that's the case, please call me directly because I need to get our CEOs on the call. And the reality is that rarely is the case.

Right. Right. And I guess, along the lines of company values, when you are kind of having these philosophical questions around how hard do we turn the knob on pricing, how are you just kind of thinking about customer ROI and value delivered to that customer? And how big is that gap in your mind today of like how much value you're providing versus where the customers [ think ]?

How much more can we raise prices? Not the -- listen, the -- I was just on a call with a very large financial services institution that was moving from our on-prem products to the cloud. And it was going to be a step change in their investment with us, right? It's from a few hundred thousand to a few million, right? Just all-in when you have apps and partner, all that stuff. It was like it was a big investment. But I -- and he, the CIO of this company, was just getting on me a little bit of like, hey, this is actually a pretty big change for how -- what we've historically been paying with you. And I just tried to step back and said, well, what is your global IT budget? And very, frank, $2.1 billion. And like, okay, and I said -- and I just -- and I had a conversation like, okay, and then how critical are our products in enabling your software development and IT teams that are part of that $2.1 billion? And he was very honest. He's like, listen, if you're not the most critical, you're top 3. And I said, okay, so the problem is not the value we're driving. The problem is the historic pricing of what you've budgeted for our products, right? He said absolutely and said, okay, well, help me -- help like -- help what proof do we have to point? Is it more developer satisfaction? Because I have those stats. Is it improved productivity once you move to our cloud? Like we can build those models to help justify that business case. It does not mean that there's infinite we can just charge whatever we want. But the reality is as we increase our prices, it does create more scrutiny. We need to show that we're delivering commensurate value and then work with them on everyone quantifies their ROI a little bit differently and being smart about helping them build those business cases. Historically, we didn't have to do that at all because our prices were so inexpensive. Now as we're becoming more competitive in the market, it requires a little bit more diligence, but nothing we can't handle.

I see. I see. And I guess, with those conversations, I mean, now we saw some really interesting stats on the momentum that you saw in large enterprise cloud conversions over. I mean do you find that those maybe pushback on the initial sticker shock is -- that's coming up less, you're having to hop on more of those calls just now that you have the proof points out there and the referenceability?

Yes. It's the -- like the early adopters who are like we have a cloud mandate. We don't care about the cost. We have to do this, the CIO told us, right? Those are nice ones, right? And there's just technical objections. And then you kind of have the early-stage, late-stage adopter, where you have like, okay, we have a real financial conversation. Procurement gets involved. They're trying to squeeze us for everything. The best part is Atlassian's pricing model. Everyone gets the best price when you buy from Atlassian. There's no one-off deals like every customer and you're the biggest company, like everyone, like, here's the price. It's on the website, you get the same price, if you call me today or tomorrow or the last day of the quarter. So -- and it's on us to justify that pricing. Here's the business, and we have ROI templates and business cases and Forrester total economic impact reports. Like we have all the data to support it, but allows us to think about pricing holistically for all of our customers, not just one-off negotiations. Do back -- people back at it? Of course, they do. Prices go up. They're going to they want to constrain that as much as possible. But we stand by it. We can justify it. And if it's not this quarter, it will come next quarter, the quarter after.

Right. Right. Okay. I'm curious, as you look at your organization, do you feel like there's areas that are kind of underinvested from either sales capacity or support? So I'm sure you'd say I'd love to quadruple the size of my sales force. But just kind of curious where you see the biggest kind of sales investment opportunity.

Well, there's what I would say and then, if my team was on, what they would say because they're all saying we're all constrained. So first off, as a company, we were -- we went into our last fiscal year trying -- with a plan to hire 1,000 employees, right? We're going to be -- we're going to accelerate through -- we end up higher 1,500. So we are growing as a business. And not growing out more enterprise sales motion. We have plenty of headcount to go higher there. And I've told my new Head of Enterprise Sales, [ Greg I ], Kevin Egan, who is Head of Americas sales at Slack, understands collaboration, understands SaaS. As I simply go to him and say, listen, as soon as you have more pipeline than you can prosecute, we can absolutely go hire more. But that's not a challenge right now. We stood up our customer success management team, which is a new muscle to drive use case, best -- better adoption of our products and companies and then all of those migration teams that I mentioned. So there's no shortage of net new investment from a headcount perspective. But as the head of go-to-market, it is my job to preserve the most efficient go-to-market model in enterprise software. Now like I call it that. We run at 15% of revenue, our go-to-market. And why that is important to me that I live within that bucket is by doing that, we can overinvest in R&D and keep our prices low. And if I can overinvest in R&D at the best products and more products at the best price, it makes it a hell of a lot easier for me to sell more products. It feeds that 15%. So that's -- like that's part of the company strategy that I always aim to preserve. Now okay, maybe take a few marketing dollars, put into sales or sales dollars put into marketing, I can do that reallocation, but preserving the business model is critical to us.

Right. Right. I guess just as you talk to customers, anything they're really pushing you on product-wise that you guys are prioritizing from an R&D perspective?

The bulk is the -- and so all of our road maps are public. You can actually -- that was one big thing we did when we end of life server. We're like, listen, there's a whole bunch of stuff coming in cloud. Let's put that all on the website. We do quarterly webinars with our enterprise customers, like we are like open and transparent, very transparent on what our road maps look like and how they change. And they're around those 3 big buckets I talked about, basically, scale, data privacy regulations and extensibility. Those are 3 big areas about the cloud transition. After that, I could talk -- like it's -- there's an infinite amount of product. Like they always want more features that I can go build like you just back -- but once again, I'll put in those 3 big markets that we talked about, right? Agile DevOps, a lot of that is around integrations, better data and insights into what's happening in my software development tool chain. IT service management, a lot of that is making all these things that we bought and acquired, work seamlessly together to build these incredible IT service management use cases. And in work management, for all, it's things like templates, better out-of-the-box workflows, newer experiences, mobile experiences, so that more departments and more use cases can adopt their tools.

Yes. I know we only had a couple of minutes here, but just on the work management and collaborative work management category, like how much of this -- you obviously have Trello out there and really good traction. But is this something that you feel like you really want to dominate longer term in terms of market share? And how are you just kind of investing against that cloud [ investment ] opportunity?

So our company -- like our BHAG, our big, hairy audacious goal, as a company is to get to 100 million monthly active users. There is no way we get to that purely through agile DevOps and IT service management. There's simply just not that many IT people and dev people out there. So like our company mission, strategy goal and our mission, unleashing the power of every team is every team. So we absolutely will continue to grow and focus and expand our investments in that work management for all category. Some differences of what makes Atlassian unique there is, one, we do not believe there's just going to be 1 product or 1 solution that all of a sudden will solve every team's work management needs. Like teams are way too complex, way too different, way different types of use cases and departmental use cases where 1 tool that does everything is a faulty way of looking at it. We believe it will be multiple products. So we do have multiple products like Jira Work Management and Trello and Confluence, and we're building more to address all different types of teamwork in that broader, very, very large work management for all category. And then we invest in line with our very diligently as we always had, Atlassian is a smart company about how we think about go-to-market. Now we can invest, we can have a little bit more lenient cap-to-LTV ratios, but we don't just go out there and spend $2 to make $1. We can be patient. We can use the power of the Atlassian platform to increasingly grow in that market. And that's what we're doing.

Yes. Great. Well, with that, I think we're right at time. Cameron, thanks so much for the great discussion. Good to see the continued momentum and values of Atlassian, and I appreciate you joining us.

It's a pleasure, Tyler. Thank you.

And thanks to all the investors who joined. We'll see you tomorrow.

Thanks, everyone.