Atlassian Corp Q1 FY2021 Earnings Call

Good afternoon and thank you for joining Atlassian's Earnings Conference Call for the First Quarter of Fiscal 2021. As a reminder, this conference call is being recorded and will be available for replay from 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. Please go ahead.

Good afternoon, and welcome to our Q1 Fiscal 2021 earnings call. Thank you for joining us today. On the call today, we have Atlassian's Co-Founders and Co-CEOs, Scott Farquhar and Mike Cannon-Brookes; and our Chief Financial Officer, James Beer. Earlier today, we issued a press release and a shareholder letter with our financial results and commentary for our first quarter of fiscal 2021. These items were also posted on the Investor Relations section of our website. On our IR site, we have also posted a supplemental data sheet. During the call, we'll make brief opening remarks and then spend the remainder of time on Q&A. This call will include forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management's beliefs and assumptions only as of the date such statements are made. And we disclaim any obligation to update or revise them should they change or cease to be updated. Further information on these and other factors that could affect the company's financial results is included in filings we make with the Securities and Exchange Commission from time to time, including the section titled Risk Factors in our most recent Form 20-F and quarterly 6-K. In addition, during today's call, we will discuss non-IFRS financial measures. These non-IFRS financial measures are in addition to, and not a substitute for or superior to measures of financial performance prepared in accordance with IFRS. There are a number of limitations related to the use of these non-IFRS financial measures versus their nearest IFRS equivalents, and they may be different from non-IFRS and non-GAAP measures used by other companies. A reconciliation between IFRS and non-IFRS financial measures is available in our earnings release, our shareholder letter and in our updated investor sheet on the IR website. During Q&A, please ask your full question upfront so that we can easily move through to the next speaker. Also, please be patient if we encounter any disruptions or challenges. Lastly, we’ve announced two additional items in conjunction with our financial results this quarter and we filed Form 6-K announcing the successful close of a $1 billion senior unsecured delay.

Thank you, everyone, for joining today and for your continued support. We hope you and your loved ones are healthy during what continues to be a dynamic time for everyone, including our customers, partners and employees. We hope you've taken the time to read the shareholder letter. This quarter, we've been transparent in describing the many different long-term initiatives that we're focused on as a company. This includes our recent announcement focused on migrating our customers from server products to the Cloud. In Q1, we posted strong results, adding over 8,600 net new customers, generated $460 million in revenue up 26% year-over-year, and realizing solid non-IFRS profitability of $61 million in free cash flow. We've got several product wins as well, including achieving FedRAMP certification for Trello Enterprise, strengthening our partnership with Slack, launching Atlassian Ventures, and closing the Mindville acquisition which accelerates our ability to offer customers a comprehensive ITSM experience. Looking forward to the rest of fiscal 2021, we’ll continue to focus on playing offense for the long-term. All of our choices and actions focus on making our customers successful and drive us through $5 billion and beyond. Before we move to Q&A, Scott and I both want to thank our employees who continue to be an inspiration for us in these challenging times. Thank you for sharing your passion with our customers, especially as they move to the Cloud. You make unleashing the potential of all teams possible. With that, I’ll pass the call to the operator for Q&A.

Your first question comes from the line of Michael Turrin from Wells Fargo. Your line is open.

Hey, there. Thanks and good afternoon. On the Cloud migration, I'm sure there will be a number of questions on it. Obviously, super early and appreciate there's an Investor Day upcoming, which we're certainly all looking forward to. But any initial feedback you've gathered from customers and partners early on to share? And I think it's unquestionably the right strategic decision. But in terms of the risks to be aware of, how you think about the potential friction, a hard and fast timeline can add to the equation. And you mentioned some of this in the letter as well. But can you talk through some of the steps you're taking to help ensure this transition as frictionless as possible? Thank you.

Hi, this is Mike. The customer feedback has been largely as we expected. So, we've had the expected range of responses, I would say, our customer base has been wonderful in coming to us with questions. We've given a long timeframe here. So there's multiple years. When you sit down with the customers and explain how we’ve structured the decision, this is a three-year end-of-life timeframe. And there are a lot of options for you. Our teams have done an amazing job with content to help customers through that journey. So we've got, I think, 10 or 12 different language translations, there's over a million words of content out there, which I'm told is longer than the entire Harry Potter series. This has truly been a company-wide effort to make sure that this is handled well with a customer-first lens and try to be as clear and empathetic to customers as possible as we move through that. Obviously, as we discussed in Q4, we think we're ready to make this transition. It's been a long-term journey we've been working on for a long time. And this is just the next step on that journey, particularly. We've had a more than decade-long history now building Cloud products and a multi-year investment in our Cloud platform. We really believe, as we showed from more than 95% of new customers, we're at the right time to move our customers across. But necessarily this is an announcement that for some customers it's a little tricky to receive. And I think the team has done a fantastic job. And we will succeed in guiding everyone through that over time.

Great color. Best of luck. Thank you.

Your next question comes from the line of Keith Weiss from Morgan Stanley, your line is open.

Thank you guys for taking the question. Really nice quarter, this quarter in terms of the new customer growth. I don't think we've seen a number that strong in quite some time. Two questions, well one question on that. In the letter, it sounds like you guys don't expect that level of customer gains to maintain on a go-forward basis, if we could talk about why not like sort of what is going to bring those back down on a go-forward basis. And then maybe one for James. On the guidance for the full-year and the slowing down, it seems like the line is going to have to slow down for the remainder of the year. Like I get what's going on with licenses, I get what's going on with maintenance, and in the marketplace, I don't quite get kind of what the pressures are on subscriptions, could you dig into that a little bit for us and sort of why the shift towards Cloud doesn't have a more immediate positive impact, at least on the subscription line?

Yes, Keith, I would take both of those. So first of all, on the customer additions, yes, we were very pleased with that figure. A couple of things that I think probably helped somewhat in this quarter. First of all, you recall that in Q4, we had a relatively low customer add number. What we talked about there was COVID-related churn effects impacting some of our Cloud customers in particular. I think part of what we've seen here is, in essence, a little bit of a pull forward of that churn from Q1 into Q4, as those customers were experiencing obviously, very tough macroeconomic conditions. Some of those who perhaps might have churned in Q1, under normal circumstances, ended up churning earlier in Q4. The other thing I'd point to is that we obviously have established free versions of Jira Software, Confluence, and Jira Service Desk in the market now. As a result of doing that, we've curtailed our Cloud Starter offering. For those folks, we've seen a nice portion of them moving up to a fully standard Cloud license, and therefore being counted in our definition of a customer. So both of those things wouldn't expect those to be recurring necessarily in the coming quarters. But certainly, yes, we're very pleased with that customer number. That's a nice illustration of the power of our land-and-expand model. To the revenue picture, a few thoughts on this one. During this next phase of the Cloud transition, we've really given our 30,000 or so server customers the control to pick their migration path and the timing of that move. This will introduce a degree of variability into our financial model, likely over the coming handful or so quarters. Given this variability, we wanted to provide everyone with something of a framework as you consider revenue growth during this transitional period. I think of that framework as having five themes to it that we've generally discussed with you previously. First of all, consider COVID-19 and the resulting challenging macroeconomic environment that's created for our customers. Q1 in this regard was quite encouraging versus Q4 of the last fiscal year in terms of the figures, and based on what we've seen in Q2 and those numbers so far, we continue to be encouraged. Thus, we're assuming that this headwind diminishes steadily but will still be a factor in our revenue results, including the subscription line in particular, because we've seen, obviously, our smaller customers generally use our Cloud products, we would see that being a factor over the next handful of quarters.

That was a robust answer. One quick follow-up when just thinking about license revenues, basically getting cut in half or down 50% year-on-year, does that include an assumption of any potential pull forward by the server customers to try to like top up on server licenses in the near-term? Or do you not think that's going to happen?

Well, I think there will be some pull forward activity. As in previous years, we're giving customers time to think about how to step in front of those price increases that come into effect on February the 2nd. So yes in our modeling, we do try to predict some amount of that pull forward. But that's always a challenging exercise; I'd say it's more difficult this year because this time, we've actually announced the end-of-life of server, so how customers will adjust in their pull forward activity really remains to be seen over the next several weeks.

Got it. That's very helpful. Thank you.

Okay, thanks.

Your next question comes from the line of Walter Pritchard from Citi, your line is open.

Hi, thanks. Just to build on the last one, we talked a lot about server. And that's pretty clear with the end of license and so forth. Around data center, how are you expecting that the news that you put out around server will impact the larger customers who are on data center who may look at this move and say, data center isn’t the path that Atlassian is going with the innovation in Cloud, do you expect even though it's not directly out there that you'll have sort of induced behavior change there as well?

Scott here, I’ll take that. Look, what we've said to our customers is some of our largest customers are choosing to remain on data center because they have a longer timeframe that they want to migrate, and we're continuing to invest in our data center product. Just a reminder, for some of those who haven't read all the announcements, we ended the server product, but our data center product continues to be something Atlassian builds upon, supports, and continues to invest in. That said, I've talked to a number of CIOs over the last three months, from everything from regulated industries, banks, European customers, and every single one of those CIOs has a plan to move to our Cloud. When they're in a regulated industry or a European customer, it's just a matter of when, so our data center product will be critical to making sure that customers are supported over their timeframe for migration. However, we expect that all our customers will migrate to the Cloud over the medium term.

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

Okay, thank you very much for taking the question. James, I wanted to circle back, I guess on fiscal 2022, because clearly, there are some puts and takes and you alluded to some of them. But I guess as I think about it, on one hand, there will be an additional loss of perpetual license revenue. There will be significant ongoing migration incentives. But on the other hand, you're going to get more benefit from the upcoming price increases, more conversions from free to paid. The loyalty discounts in year two for large customers naturally won't be as significant. Now in the shareholder letter, you said that fiscal 2022 will also be negatively impacted by all of the changes that you've recently made. But just to be clear on this point, any revenue headwinds will be greater in fiscal 2021 than in fiscal 2022. Correct?

What I was talking about, Gregg was as I kind of walked through that five-point framework with the different timeframes that will be relevant for each of those factors, you've got a lot of moving parts. I'd say the net of all this is that the revenue growth rate would begin improving again, beyond the next year or so. So, in the lesson, we use similar words in my section. But that's how I think you should consider the trajectory of the revenue growth rate pattern.

Okay, that's helpful. Thanks, James. And then just a quick follow-up, there was a comment that the current expectation is that there will be lower take rates on the sales of cloud apps through the Atlassian marketplace, I suppose over the rest of the year for the near-term anyway, and just kind of wondering what will be the case?

Yes, there, we’re just very much looking to continue to provide rich incentives for our app ecosystem partners to build more cloud apps and have them be in our marketplace. Obviously, that marketplace started out life many years ago as a server-based marketplace. More recently, within the last year and a half or so, we've really focused on expanding the data center apps as well. With this very clear focus we have as a company now on the cloud transition, we want to make sure that our customers can gain access to the same sort of functionality that they really benefit from in the current apps behind the firewall, available in the cloud as well. So we just want to make sure that the financial incentives for our app developers line up with that. As we mentioned in the past, we’ve designed those as temporary incentives.

Okay, perfect. Thank you.

Okay.

Your next question comes from the line of Alex Kurtz from KeyBanc Capital Markets. Your line is open.

Thanks for taking the question. I just want to circle back to the blog post that you put out a couple of weeks ago about the changing server pricing. But you also have a comment on the blog post around future cloud pricing. I know today in the shareholder letter blog posts, which seems to imply that the customers in the advantage pricing program might eventually be moved up to the list price. So maybe just help me navigate that and what that could mean for a potential cloud price increase for those cloud customers?

This is James, I'll take a crack at that, Alex, but you broke up there in the middle part of your question. So you can correct me if I'm not answering it. In terms of what we've talked about in that blog post a couple of weeks ago, yes, we’re raising prices effective February the 2nd for our server and data center products. We note in the shareholder letter that while yes, you've got to be very thoughtful about user tiers and product combinations for specific price outcomes. If you're a customer, directionally from a modeling perspective, they equate to about 15% increases year-over-year. We're very explicitly not raising cloud prices this year versus the case where we have done that, in whole or in part in previous years. In terms of your reference to advantage pricing, yes, there were some price adjustments for current customers. When we've rolled some of these price increases through, we've always wanted to be thoughtful about the degree of change that the customer is experiencing in terms of price. In each of these situations, the end result is list price. However, it just takes longer than just an immediate step function up to the new list price. It’s just reflective of customers' current budgets and those sorts of things. So does that provide what you’re asking?

Yes, it does. So just to be clear, the advantage pricing plan is probably for a very small sub-segment of your cloud customers?

Yes, the advantage to cloud customers were those you may recall a year ago for the higher user tier part of our cloud pricing structure. Certainly, a year ago, we had relatively few customers in that part of our customer base. Yes, we moved prices up for those higher cloud tiers. For those customers who have gone early to the larger scale end of the cloud, we're giving them more time to come up to list. Yes, that's a relatively small proportion of the overall cloud user base.

Thank you.

Alex, it’s Scott Farquhar here. Just to chime in and add to James that that's a great question on the detail. But philosophically, we want to get our customers to the cloud. When I talk to companies big and small, they want to move across to the cloud. We know that over time, because we solve a lot more problems for them, and take a lot of the management overhead from them, the scalability issue, and the hardware costs, because we handle all that on their behalf, they're willing to pay higher prices in order for us to optimize their operations. The cost savings are significant. In many cases, if you have a team of five or six people managing our products, when you use our platform, that's down to one person now. We have a case study showcasing this, and so those cost savings, we can capture some of that. The aim, in the short term, though, is to make it an absolutely easy decision for people to move across without getting into discussions in their organization, it's about moving across, and we try to make the cost and price relatively the same in the first year of transfer and over time, step them back up to capture more of the value that we're providing. There's a lot of ways you could slice it differently. We think this approach is very customer-friendly. We've always thought about the long-term customer relationship. We have from planning level to CIOs in very large organizations, and we want to maintain great relationships as we provide more and more products for them while also ensuring that smooth transition.

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

Thanks, and good quarter guys. Leaving the cloud on the side for a second. Scott and Mike maybe can talk about Trello. In the work management space, maybe you could talk about progress over there and maybe fine-tune to kind of differentiation with it and although it is public, how do you see the landscape? How do you see your competitive positioning there and opportunities ahead? And then for James, just kind of following up on the data center side of the equation, correct me if I'm wrong, that is a term business. So that shows up in subscription revenue? Can you tell us the magnitude of how much of your subscription revenue is tied to on-premises, not to cloud, perhaps number of customers? I think it was 30,000 enterprise customers, what would be the count on the data center side?

Sure, Ittai, this is Mike. On the work management side, I can give you some color. You saw us in the quarter specifics. We got support for Trello in FedRAMP, as Trello is doing well in the government sector and continues to grow there. The broader story is around Trello in the enterprise as the extremely large Trello user base continues to grow, how that is starting to get into larger organizations, like the government, obviously indicated from that. At the same time, Trello continues to broaden the appeal of its product. You've seen us do a lot of work with what we call Trello Views, so changing the way that you see the data that's inside Trello, and also embedding Trello into a lot of other places. In a broader sense, I would say look, that work management for all continues to be one that we’re spending a lot of time in. Confluence continues to grow very well. You've seen us with the Halp acquisition in terms of providing a service management experience inside of Slack and other messaging tools, which is used by IT certainly, but increasingly used by other teams where that's a much more familiar interface for them to provide a service management capability. We're credibly positive about all the things we have going on in that area. Continued innovation and the continued enterprise growth of work management tools bodes very well for us in that space.

And Ittai, this is James. Data center has accounted for in the subscription revenue line. A way to think about that is that subscription in Q1 represented 60% of total revenue. Recall in the past, we've said that the cloud business is just a little shy of 50% of total revenue at this point. So that gives you directionally a sense for the scale of the data center business. In terms of customer counts, some of the other data points we've offered, now we have 180,000, 200,000 plus total customers. We have talked about 160,000 cloud customers. Again, that gives you a little bit of a sense as directionally of the overall customer count.

Your next question comes from the line of Brent Thill from Jefferies, your line is open.

Hey guys, this is Luv Sodha on for Brent Thill. Nice quarter and great investments on the cloud side, I wanted to ask a couple of questions. One was, in terms of server, you provide great color on server to cloud pricing. I was wondering what would be the case in terms of any color you could provide on server to data center pricing, in terms of what the difference is and what the migration process entails there? And then the second question was around the Mindville acquisition that you closed this quarter? Obviously, how does it position you relative to the competitors in that marketplace in the ITSM space? Thank you.

Well, I can perhaps take the first part of the question in terms of the economics of moving from server to data center, really quite similar to the situation when customers elect to move over to the cloud for our larger customers in the thousands-plus seat grade, we would again look to offer material discount levels, less than those that we will be offering someone moving over to the cloud, but still material discount levels over a multiyear period. This is a similar approach, reflecting the comments that Scott and Mike made earlier that the data center is very much still a deployment option that we continue to invest in for the future. So I'll pass over to Mike or Scott for the Mindville part. Mike?

Thanks, Luv. Thanks James, and thanks Luv for the question. Look, we continue to be incredibly excited about what’s going on in the ITSM space as we continue our long-term journey in that space. It really has been a series of years now. I think if you zoom out, you can look at that and see how kaleidoscope of options, there are many ways that companies can provide ITSM solutions. I do think what we’re doing is bringing that into pretty sharp focus. If you look at our offerings continuing to mature and the way we've taken Jira Service Desk, and then adding Status Page for external communication, adding Opsgenie to provide rostering and real-time management capabilities of your team and bringing them into incidents. Obviously, adding Mindville for CMDB capabilities. So asset management of all types, alongside service management capabilities we’ve released. We’re providing a single pane of glass that can look across your IT operations and development teams. As teams and companies are increasingly bringing their development teams closer to their IT teams, we're providing a singular set of offerings that run across that. As we continue to integrate them and add the Atlassian platform under all of them, we're obviously incredibly excited about both the growth of the space but also the uniqueness and clarity that our offering brings to what is otherwise quite a blurry space. We're investing heavily there and you'll continue to see us having big investments in that space.

Your next question comes from the line of Jack Andrews from Needham, your line is open.

Good afternoon, thanks for taking my question. I want to ask about the work you're doing or initiatives you have in place to gain more leverage with some global systems integrators, particularly thinking about something like Jira Align. How important is it to engage with these types of partners for you these days?

Scott here, and thanks for the question, Jack. Systems integrators are great partners and have been a huge part of Atlassian’s success. We have a great partner network with hundreds of partners around the world, particularly in Europe, where we have a strong presence. Many of our larger engagements with customers on the larger side involve working with a systems integrator on those transformations. If you think about digital transformation, a lot of what needs to get accomplished in those organizations isn't simply the deployment of software, it's about changing the way these organizations work to implement agile transformation or scaled agile framework, and so forth. These systems integrators are crucial to be on the ground to assist in these transformations. Particularly, our migrations, as people transition to the cloud, is a huge opportunity for our systems integrators. We've seen some of our best partners build migration practices already if you go to the cloud. That's been a great source of business for them and a great way for our customers to get across to the cloud faster. Of course, we continue to provide depth in our portfolio to CIOs in terms of returning from the Jira framework and Confluence, all the way up to Jira Align, which effectively handles the CIO's dashboard about how their organization is enabling digital transformation. Again, this makes us more strategic for customers, and our customers look to partners to help them deploy and roll out.

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

Hey, guys, thanks so much for taking my questions. Just two quick ones. First, if we do kind of the back of the envelope math, you've got roughly 60% of your customer base using a hybrid, some products on-premise, some products in the cloud. Can you give us a little bit more color on what these sorts of situations look like? Are they using Jira on-premise and Trello in the cloud? Or is it a departmental level thing where the initial adopters are using Jira Server Data Center, and new teams are jumping straight to Jira Cloud? The second question is thinking through the longer-term COVID impact over the past couple of quarters. You've identified some of the headwinds from SMB exposure and payment duration. Looking out longer term, especially considering that it's looking likely that we're going to be in a much more distributed workforce even after the pandemic, how do you think that changes the necessity for your solutions and the demand environment? Thanks.

Great questions. Firstly, I'm not sure the back of the envelope is necessarily right with 60% of customers. However, we've said in the past that 95% of our new customers are using our cloud offerings. We don't disclose overlaps, but I can talk through the reasons for that. One of the advantages of cloud is the speed of intake. You don't need to deploy hardware, you don't need to create space in your data center. Even among our largest customers that have deployed wall-to-wall with our data center or server offerings, when they have new projects where they want to be off the ground quickly, many will deploy a cloud version of our products. We find that it’s often the departments within those customers using cloud and in many cases, as they migrate to the cloud. Thus, the cloud really speaks to the ease and speed of getting started. When it comes to the distributed workforce, what we observed in the initial days of COVID was a spike in our web traffic, roughly 10%, where while not a huge spike, existing customers used our products more frequently due to the lack of physical notes and whiteboards. There's a huge opportunity for this because once you track work in a product like Jira, Trello, Confluence, or any of our products, there's potential for automation, which we’ve made considerable investments in. There have been recent announcements about how we’re using data and machine learning to route work to the right people, leading us to believe there's considerable opportunity for our products to assist with workforce management. Interestingly, I've learned from CIOs that their agendas now align more with the CEO's agendas than ever before. The previously marginal overlap has shifted, now considering CEO discussions on workforce management, productivity in remote settings, and serving customers differently online. CIOs are now responsible for the digital structure of the workplace and can provide an open and transparent cultural framework. Hence, CIOs are turning to us as a trusted partner for organization transformation.

Your next question comes from the line of Derrick Wood from Cowen and Company, your line is open.

Great, this is actually Nick Altmann on for Derrick. Thanks for taking our questions. You guys have talked about your hiring plan for this year and you've said the bulk of the hiring is going to be going to R&D. I guess when you look at the product portfolio, where are the pockets that you guys will be focused on the most from an R&D perspective? And I guess how much of the effort is going to be directed around furthering the cloud enablement of the portfolio versus net new offerings?

Nick, look firstly, I would zoom out and state that, as we said a few times, we're in three very large markets including work management for all software Agile, DevOps, and the IT and ITSM market. One of our strengths is not only are these three fantastic markets that are incredibly critical to customers and companies out there, they are connected at various points. One of Atlassian’s strengths is having products with tight connections. Confluence runs across all three, Jira as a platform runs across all three, and Trello is increasingly used in different areas across all three. Having products to connect between these markets, as we mentioned, software coming closer to IT, the IT department becoming more involved in all sorts of work management capabilities necessitates R&D investment. Continuing to bring products together allows customers to reuse data across different spaces. We're building out our cloud infrastructure to handle all the enterprise needs of customers and develop the necessary automation and data platforms, as Scott has mentioned. Yes, we will continue to invest in R&D across many areas, but our platform will see considerable investment. This includes elevating our marketplace and utilizing the increasing data we have to provide better insights and automation. There are many prototypes and teams continuously exploring new products; some of these become external offerings, while others merge into existing applications as features. With our business model allowing ongoing investment in R&D, we can ensure the ongoing innovation. Both long-term thinking and capability to execute are reasons for our success for nearly two decades and we are committed to this.

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

Great, thanks. Can you update us on the customer transition from standard to premium skews? What has the customer feedback been like on premium? What's the mix today? And where can that mix go as we look out a few years?

Rob, it’s Scott here, we're really pleased with the customer adoption of premium. In the last 18 months, we've introduced premium and enterprise versions of our cloud offerings. Previously, there was really only one price point for software like Jira or Confluence, and we've now created tiering in those structures. Our premium target is ramping up now. That's widely adopted and the Enterprise version is in the early stages. We’re very happy with the premium adoption of our products. We're still adding more features that will increase adoption rates and customer satisfaction has been extremely high. The premium version includes feature differentiation and provides benefits for mission-critical customers, which has proven to be valuable to our customer base. Overall, we’re excited and optimistic about this movement.

Okay. And with the launch of Atlassian Ventures, can you help us frame the positive impact that might have on the ecosystem as well as future marketplace revenues?

Sure, I want to add something on premium and enterprise additions in the cloud. Remember that most customers will tend to migrate as migrations are going very well. We're up about 90% year-on-year in terms of user migrations, although we still have a small base. As we increase this with tools and partnerships, that's going to grow. Most customers will likely migrate first to cloud standard and then over time as their confidence in Atlassian’s Cloud increases and they require more features, they'll hopefully move up through premium and enterprise depending on their journey. Regarding Atlassian Ventures, we're incredibly excited about this. We've made several investments in the past as Atlassian. This represents our maturation as a company, with a formal brand, budget, and team focused on this. We can better serve the ecosystem and economy around Atlassian. This isn't solely about acquisitions. There's a significant amount of work to be done in investments and partnerships, and as we mature in stature as we become part of the significant tech economy, this is a great step for us, all executed with Atlassian’s overall pragmatic and long-term focus on how we operate. This is certainly not a short-term effort.

Your next question comes from the line of Jim Fish from Piper Sandler, your line is open.

Hey, guys, this is Quinton on for Jim, thanks for taking our question. Just two high-level questions from us. First, IT operations represent a massive and somewhat new opportunity for Atlassian. Is there any way to assess the revenue contribution today outside of the core software dev market? Additionally, have you seen any material changes in the hiring of developers or IT professionals that may help expand Atlassian usage?

Scott here, and Quinton great questions. We're observing continuous overlap of the Dev and IT markets. If we compartmentalize them into three boxes, these days, most IT tasks involve software. A lot of what IT operations involve is the management of software. We believe we have a unique advantage as the vendor that powers more software teams than anyone else on the planet. We believe there lies a tremendous opportunity to bridge these two areas. Our products provide extensive capabilities in project planning and management - Jira and Confluence do an incredible job here, handling everything from adding items to a Sprint backlog to Jira Align’s management of large-scale teams. Many vendors operate along these lines, and we partner with numerous vendors in code, test, and deploy settings as well as in run, manage, and support roles. We've made significant investments in this area over the past few years, and through various products including Jira Service Desk, which has been around for a while now, our status page for external communication, and recent investments like Mindville for ITSM. This category of investment is critical for us as developers now often oversee the technologies they create and we don’t break out as much, but developers are usually involved in operational support. Regarding hiring, there's been a dramatic increase in demand for IT professionals and developers as a result of the accelerated digital transformation caused by the pandemic. Organizations express a desire to recruit developers; if that fails, they want to enhance productivity by streamlining workflows with Atlassian tools. Hence, we're seeing a rise in workflow applications like our products, where non-developers can utilize our platform without requiring in-depth software skills.

Your next question comes from the line of Arjun Bhatia from William Blair. Your line is open.

Hey, guys, this is Dylan Becker on for Arjun. I appreciate you taking the time for the question. I wanted to touch on Trello as you've made some changes here in 2019 with the paywalls and the acquisition of Butler. How has the monetization of the product changed? How are you measuring the success from this product looking into fiscal 2021? Thank you.

Thanks, Dylan. We've been on a long-term journey with Trello and have always stated that the most important goal is to keep the product growing as a whole. Trello is a substantial product with tens of millions of users and is continuing to grow rapidly. From a long-term perspective, having that user base maintain growth is our top priority. We’ve been clear about that. We have been applying Atlassian’s expertise in pricing and packaging to maximize both customer outcomes and Atlassian outcomes, enabling us to continue to invest in the product. This journey has been going well and as you mentioned, the changes implemented have positively impacted Trello's contributions to Atlassian's top line. Initiatives like Butler provide greater differentiation. We are continuously working on Trello’s views, including providing new ways to visualize data with additional views in public beta now. This ongoing effort to enhance visuals enables us to create different monetization strategies as we progress. Our continued emphasis on maintaining a vast user base while ensuring Trello's place within the Atlassian family is crucial for long-term growth.

Your next question comes from the line of Ari Terjanian from Cleveland Research. Your line is open.

Hi guys, thanks for taking the question, and congrats on the results. I want to double-click on the comment regarding code app development. It's an area we're seeing increasing strength this year around price communications and tracking. Any thoughts around furthering efforts here? Forge has been a great first step, but can you provide additional color on new use cases and ways you're seeing people utilize Atlassian as a low-code platform in this environment? Thanks.

Apologies.

Hang on, we've lost you, Scott.

Sorry, one of the benefits we've had over the long-term of Atlassian is that our products are incredibly flexible. Our customers apply them for a variety of purposes. We’ve seen Atlassian products used for everything from HR, recruiting, onboarding employees to finance processes, including complex quarterly calls for NASDAQ-listed companies. Notably, our products are quick to roll out, widely used within organizations, and customizable from merely adjusting interfaces and configuring workflows to the deployment of complicated applications through Forge and the marketplace. Use cases are vast, evidenced by companies like Twitter utilizing Atlassian products to manage hundreds of different service types, from legal to HR. Customers utilize Atlassian as a platform to manage workflows across their organizations. As Mike mentioned, our ongoing investment in the platform fuels its growing use for diverse applications.

There are no further questions at this time. I’ll pass the call back to Scott Farquhar for closing remarks.

Thanks everyone for joining our call today. We appreciate your ongoing support and we really hope that you and your loved ones remain safe and healthy. We hope to see all of you at Investor Day on November the 17th. Thanks a lot.

That concludes today’s conference call. You may now disconnect.