Good afternoon. Thank you for joining Atlassian's Earnings Conference Call for the Second Quarter of Fiscal Year 2022. 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 Martin Lam, Atlassian's Head of Investor Relations.

Welcome to Atlassian's second quarter of fiscal year 2022 earnings call. Thank you for joining us today. On the call, we have Atlassian's Co-Founders and Co-CEOs, Scott Farquhar and Mike Cannon-Brookes, our Chief Financial Officer, James Beer, and our Chief Revenue Officer, Cameron Deatsch. Earlier today, we published a shareholder letter and press release with our financial results and commentary for the second quarter of fiscal year 2022. The shareholder letter is available on Atlassian's Work Life blog and the Investor Relations section of our website, where you will also find our other earnings-related materials, including the earnings press release and supplemental investor data sheet. As always, the shareholder letter contains management's insight and commentary for the quarter. During the call today, we'll have brief opening remarks and then focus on Q&A. This call will include forward-looking statements, which may involve known and unknown risks, uncertainties, and other factors that could cause actual results, performance, or achievements to differ materially from those expressed or implied by

Thank you for joining us today. Happy New Year to everyone. Q2 was another strong quarter as we continue to see great momentum. It's extremely encouraging to see many of our past long-term investments reflected in our Q2 results. The Atlassian Marketplace, which we started in 2012, recently surpassed $2 billion in lifetime sales. Cloud apps now make up nearly half of all marketplace apps, and the rate at which customers are adopting cloud apps is outpacing our own cloud products. It's exciting to see our ecosystem grow at such a rapid pace, and for us to be able to expand the economy around Atlassian. IT was an area we were committed to doubling down on three years ago. Recently, Jira Service Management was recognized as a leader in the Forrester Enterprise Service Management Wave, with our strategy for ASM receiving the highest possible score. We also recently added Percept.AI to bring AI powered virtual agent technology to expand our frontline support capabilities. Our continued investment and innovation in the cloud platform are driving great results. This quarter, we added more than 10,000 net new customers, and quarterly cloud revenue grew 58% year-over-year. As you've already read in our shareholder letter, we're looking forward and laser focused on investing in the future. Hiring is our top priority. We deeply believe in a massive market opportunity in front of us, and investing in people is our path to seize these opportunities. Lastly, we hope you can join us for Team '22 in April. We are cautiously optimistic to be back in person with our customers and partners. We hope to see many of you there, but we're thrilled to also be able to host viewing parties around the globe and offer virtual options as well. With that, I'll pass the call to the operator for Q&A.

Thank you. Our first question comes from Alex Zukin from Wolf Research. You may proceed.

Hey, guys, congratulations on another wonderful quarter. I guess, maybe for me, how should we think about the results relative to your internal plan? And what were the two biggest areas that outperformed your expectations? And if you can, any bottlenecks to growth at the moment? And how are those different than maybe this time a year ago?

Well, thanks for the question. I start off by saying I was really pleased with the performance against our plans right across the board. We see very strong performance in both the cloud and data center businesses. If I were to pick out one product, it would be JSM. I think that's just really hitting the mark with customers, a big opportunity for us going forward. That has, of course, given us the confidence to raise our full-year subscription revenue guidance to around 50%, that's up from the mid-40s percent that we were talking about 90 days ago. And the other thing I would really highlight is I feel we're very much on track with our migrations timeline. So please bear that in mind. IT demand continues to be strong for both the cloud and data center businesses. I don't see bottlenecks there in the future. One of the other things I'm sure we'll talk more about is the continual progress we have with increasing the capabilities of our cloud quarter-by-quarter. As we do that, obviously, more and more of our currently behind the firewall customers are able to move over to the cloud. It's clear that they want to go in that direction, and increasingly, each quarter, we're making that possible. So we feel good about the opportunities in front of us.

Thank you. The next question comes from the line of Nikolay Beliov from Goldman Sachs. Sir, your line is open.

Hi, thanks for taking my question. James, one for you: when will we start seeing the migration impact from server and data center to cloud in the numbers? And the loyalty discounts unwind over time. Are we talking maybe a year from now, two years from now? And as a follow-up to the team in general, as you move to the cloud, your pricing is really changing, and you started the company probably 20 plus years ago with a business model oriented around very low prices compared to the competitors. Now, for example, Jira premium is 15 bucks, and enterprise probably that it was higher, approaching the pricing of competitors. So I would think that's a major shift in strategy here. And how is that reflecting in the business model and the size of the company going forward in light of that context? Thank you.

Well, Nikolay, let me start the answer there. In terms of the impact from migrations, what we're saying is that for fiscal '22, so for the full-year, we would expect migrations to be driving mid-to-high single-digit growth in our revenue year-over-year. So you can contrast that, of course, to what I was just pointing out there in terms of our expectation of around 50% growth for subscription revenue in fiscal '22. And then I would add that in the quarter just past Q2, it was a very similar sort of figure, mid-to-high single-digit type contribution to the growth rate that we recorded in Q2. So that 64% subscription revenue growth of Q2, about mid-to-high single-digits coming from migrations. Just a couple of other things I would add. You referenced in your question their loyalty discounts. So today, and until the end of June, somebody moving over to the cloud from either server or data center, they would receive a 40% discount. Now, once we get into July, in a few months' time here, that discount will go down to 20%. So that's important to remember. The other thing I'd say is that when a customer migrates over to the cloud, of course, in the period that they made that migration, that's a very modest impact on our revenue. Obviously, the cloud business is recognized reasonably in terms of the accounting. So those are the three points to keep in mind. I'll add just on the back of claims around sort of our price philosophy that we've talked about, and there's no change to our pricing philosophy that hasn't really changed over the 20 years we've been running Atlassian. We've always priced for volume and we've talked about reaching the Fortune 500,000 and reaching millions of people around the world, and that's what we've always priced for. And so, what you've seen sort of in terms of how that's manifested in our current list prices over the years is we've made it cheaper consistently by making it more free over time. We've also captured more value at the higher end where we are providing more and more value for our largest customers. And of course, as you know, the cloud provides more value for customers. We take a lot of the management overhead away from customers by providing the hardware, and so our customers are happy to give us those responsibilities. Therefore, I don't see there being any real change to our pricing philosophy, and I continue to see us do more free to low end and more optimization at the high end as we deliver more value over time.

Thank you. The next question comes from the line of Michael Turrin from Wells Fargo. Your line is open.

Hey there. Thanks and congrats for me as well. And an impressive set of results here. Some of the commentary around ITSM and Jira Service Management stands out in the shareholder materials, even out Cameron picking the favorite, which I'm sure isn't easy. Maybe you could speak to what's driving the momentum there, how that's impacting the model, where that might be showing up and maybe what makes your service management the right product at the right time as you referenced in the customer section. Thank you.

Yes, it's Scott here. I'll take that one. We're going to Jira Service Management that's uniquely positioned to handle the convergence of developers and IT. We're seeing in the market these days that IT is no longer an island by themselves. It's no longer upgrading things that were handed on a CD over a weekend and taking people down. Developers in IT are working hand in hand to transform their organizations. There's no other vendor out there that has that sort of unique position of bringing data and IT together. The second aspect is, they're the only company that allows us to, they can handle the Fortune 500 all the way to the Fortune 500,000, as we've talked about that, and that comes from a deep focus on the end-user experience, which we've delivered on across our product range for multiple decades, and bringing that to IT has seen a lot of value there. You've seen us say we're going to invest in ITSM three years ago. You've seen a consistent drumbeat of innovation. We've done some acquisitions to add functionality, but most of it's been in-house innovation and building out the feature set across our entire product range. We're super excited that that's been recognized by analysts out there, which is great, but more importantly, being recognized by our customers who are adopting it in IT. So, pleasantly surprised, I mean it was our plan three years ago to do this and because we've got a great platform, we've been able to move relatively quickly and deliver all the value to our customers. We expect ITSM to continue to grow into the future.

Thank you. The next question comes from the line of Keith Weiss with Morgan Stanley. Sir, your line is open.

Excellent, thank you guys for taking the questions. And congratulations on another really, really nice quarter. I wanted to ask about two probably in a quarter full a lot of eye-popping numbers, two the numbers that really stood out to me. One was data center seeing another acceleration in growth to 83%. Anything kind of one-time in nature we should be aware of in that number? I know there's a tough comp coming in Q3. So we're seeing that growth. But actually think about what drove that acceleration? And two, there was a comment about channel partner revenue growth accelerating, I think it was 130% growth year-on-year, anything in particular changing in that program that caused that acceleration? And if you can give us some type of sense that become more material channel that is starting to move the needle a little bit more for the broader Atlassian distribution strategy?

Good question, it is Cameron here. As far as the data center demand, the best way to look at that is it's just showing further commitment from our customer base into the Atlassian ecosystem, and it also highlights the mission criticality of our applications. As we continue to say that migration to the cloud is a multi-year journey; different customers are at different stages of that journey. That's half the data center for many of them is a step towards the cloud. All of them are well aware that cloud, our investments in cloud, our strategy on cloud and that cloud is in their future. But they're at all different levels of maturity. At one end, they're able to move over. The reality is if you look to last quarter, one-third of our cloud migrations came from data center customers. So we have proven that we can take the data center customer base to the cloud. The second one is around our solution partners in our channel, which are absolutely critical to our overall efficient go-to-market model that we have everything we do directly with my teams, and marketing and sales and customer success is amplified with our hundreds of solution partners out there in the market. Obviously, as you see in the numbers, the solution partners have been increasingly critical to our cloud migration process. The reality is that we provide a variety of incredible self-serve migration tooling for customers to move to the cloud. Many of our customers want help planning out their migration, managing the migration stuff, and partnering with Atlassian. This has allowed us to continue to show great growth. When I talk to large customers, the first thing I say is, hey, which partners are you working with? Who can we partner with to build this plan out hand in hand going forward.

And let me just add on to the first part of Cameron's answer there. In terms of data center growth, a couple of things also to remember in terms of Keith, you referred to something like a one-time nature. Think about the revenue recognition; the portion of the data center activities that we would contract with a customer is taken upfront. That's quite different from our cloud revenue accounting, which is fully recurring. And then the other thing I just pointed out, recall, we raised prices around this time last year on the data center, and the full effect of that is now flowing through. Both those things give a little extra fuel to the inherent demand that Cameron is referring to for data center.

Thank you. Your next question comes from the line of Fred Havemeyer with Macquarie. Sir, your line is open.

Hi, thank you very much, and congratulations on another really impressive quarter here. I wanted to ask, from your perspective, how does the hiring landscape for top tier talent? How is that evolving at this point? You mentioned throughout your investor letter that your hybrid work policies have been a strategic differentiator for your hiring practices. In addition to just offering hybrid and remote work options, are you seeing anything out there to suggest that top talent is now weighing either compensation packages or stock comp packages any differently in this more volatile environment, potentially favoring companies like Atlassian?

Thanks, Fred. It's Scott here. We've been really happy with our team anywhere policy, which allows people to work wherever they want. If they want to be in the office, that's great, although it's been a little harder through the pandemic, and wherever we have the legal right to employ them. We have seen a lot of our employees and new employees working remotely from existing offices, and we've seen existing employees move as well. So that's really great. We think that's going to be a long-term differentiator for Atlassian. I think that's going to be difficult for companies that don't have similar policies to attract and retain the best talent. In terms of compensation, we have seen some minor upticks in compensation. We were early to that, I guess ahead of many peer companies who anticipated seeing attrition take off before they addressed this. We’re really proud we've worked on that with our employees. There has been talk of the great resignation across particularly North America, but we haven't seen an uptick in the same ways that our peers have seen. Now, on the back of all that, we are setting aggressive goals for hiring into the future. We see such great opportunities across all three of the markets that we have talked about, and the way of going about that is building out our largely R&D functions to build out the products. You'll see an uptick in our investment over the coming quarters and years. We think that's going to pay off really well for us.

Thank you. Your next question comes from the line of Steve Enders with KeyBanc. You may ask your question.

Okay, great. Thanks for taking the question here. I just want to ask about the exiting of the CTO. I want to get a bit of sense for what the kind of plans are to manage his responsibilities going forward and how the company is thinking about that at this point?

Yes, Steve it's Mike. I can take that one. Look, he’s obviously been an absolutely fantastic leader in technology over the last six years. He's taken us into the cloud and then continued to build a truly world-class cloud platform. We couldn't be happier with what he's done. His superpower has been building high-performance teams and a great leadership team, so we're in an incredibly good situation in engineering. We'll be very sad to lose him as he moves on to another phase in his life, which is understandable, but I have no doubt we'll be able to find more talent internally and externally. We're in an incredibly good position. We've, over the long term, had a clear philosophy on culture and building a sustainable company. Part of that is about leadership transition and continuing to move forward in all of our departments. I feel incredibly confident about where we are in our technology and engineering functions.

Your next question comes from the line of Keith Bachman with Bank of Montreal. Sir, your line is open.

Many thanks. James, I wanted to put this one to you if I could. You announced pricing changes, that would be effective on Feb 15th for data center and server. I wonder if you could characterize what you think the impact has been or will be prior to the 15th. For those pricing changes, see some pull in of demand and/or any characterization of post of those two particular areas in data center and server? Thank you.

Yes, sure, Keith. At the end of the day, it’s obviously the customer that makes the decision as to whether or not they're going to early renew their investment that was at last year’s pricing ahead of these price changes. We can't really predict given the volume of customers that potentially had this offer available to them. When you look at the price changes themselves that we announced a few weeks back, they vary by product by user tier, which is very normal for us. I would think of those as approximately mid-teens percent type growth in price across server and data center. I would expect that to begin flowing into our P&L in the fourth quarter in a more meaningful way. There may well be some event-driven customer purchasing ahead of those price increases, as we saw in Q3 of the last fiscal year. Again, at the end of the day, the customer really decides. This is why we've been talking for some time now about a certain amount of variability in our financial model, as our customers go on this journey from server to cloud.

Thank you. The next question comes from the line of Fatima Boolani with Citi. Your line is open.

Thank you. Good afternoon, and thank you for taking my questions. I get to telephonically meet you again. The question for you is with respect to the concurrent acceleration that we've seen in the cloud and data center business. Now, I was hoping you could put into context how both those businesses can sort of enjoy this degree of concurrent acceleration, especially considering you had mentioned that about a third of the cloud performance being attributable to data center migration. So I'm just curious as to if you can walk through some of the dynamics there, and if you can also give us a frame of reference for how much of that cloud performance in the prior quarters was driven by migrations from data center. Just to have the frame of that context. Thank you.

Sure, I can take that one. Let's start with migrations. I mentioned earlier that what we would expect, and in fact, what we saw in Q2 was about a mid-to-high single-digit impact on our subscription revenue growth from migrations. Now, important to note that when we think about cloud migrations, about a third of that activity is coming from data center. In context, when you think about the growth rate of the businesses that we're recording, both cloud and data center, migrations are important but are relatively a small part of the overall picture. The key drivers for the cloud are quite significant beyond migrations. First, I think most importantly, we continue to do an excellent job of expanding our user accounts at our current cloud customers. We brought 10,000 new customers to the company, they're all effectively going to cloud. Once they are in the cloud, we're doing a very nice job of expanding user count. I would also highlight the growing impact we're making with our customers on premium and enterprise editions. This really goes to our overall editions strategy that starts with free, standard, then premium, then enterprise. We've really got those four editions now pretty much right across our broad portfolio of products. I think that's tremendously important as we're seeing customers get more incremental value as they step up the ladder. We've spoken about how pleased we've been with that activity. And of course, you saw us roll out a mid-single-digit pricing increase a few months ago now. That generally layers into the P&L when you think that most of our customers are on a monthly subscription, so those are really the important drivers in context.

Thank you. The next question comes from the line of James Fish with Piper Sandler. Sir, your line is open.

Hey, guys, this is Quinton on for Jim, thanks for taking our questions. Customer additions this quarter were really strong again. Is this kind of 10,000 that adds the right level moving forward? Or do we back to more fiscal '20, fiscal '21 levels? As a quick follow-up, what would you say is the education of channel partners with selling the cloud products? Are we at the bottom of the ninth inning with one or two legacy partners to go, or is there significant education left within the channel? Thank you.

Cameron, do you want to start off with that one?

Sure. Yes, as far as the new customer additions, I have to call out just how incredible this machine we've built is in go-to-market, that we can routinely get 10,000-plus net new customers in the business, while maintaining our efficient go-to-market span. In addition to that, I have to call out two years ago, we made that change to the free model. In addition to the 10,000 paying customers coming in with more than two users, we've also had thousands more teams and companies choosing us and using us in the market for free. This shows us how much demand there is and why people are choosing us. The number itself fluctuates quarter-to-quarter for a variety of reasons, changes in the funnel, seasonality, you name it. Let's be focused on the individual quarter numbers and look at the longer-term trend. We've added over 51,000 customers over the last 12 months, which, when I started with this company many years ago, it was a fraction of our overall customer base. We've just been able to continue to evolve and make that efficient go-to-market model work. As far as it means being an Australian company, most of our Aussie counterparts don't understand what any of these means. The reality is we continue to train, certify, partner with and engage our partners in these migrations; it's a multi-year journey. Some of the partners are well ahead and taking all migrations, many of the other partners are going through these trainings and bringing people in. So plenty more to do there. But I'll say they are critical to our migration story and our execution there.

No, I think you covered it. Thank you.

Thank you. The next question comes from the line of Arjun Bhatia with William Blair. Sir, your line is open.

Thank you. Mike, congrats on the quarter. Mike, certainly, again in the shareholder letter, it seems like hiring was a key area of focus. I think you stated that building new products in R&D would be a priority as you scale when you scale your developer talent. I'm curious if you can share any particular areas of focus that you have out in the market from a product perspective, that maybe is not addressed by the product portfolio today?

I can take that, Arjun. There are a few markets that we are operating in that are very large. We have different levels of maturity in each of those markets, and underpinning our ability to go after these markets is the Atlassian platform that we've spent over a decade building out. When I look at the investments we're making, the areas of the three different markets we've talked about, those investments are required to help our customers make those migrations across the cloud, and continued investments in the platform that we've built out over those years. You're seeing the benefits come through in our migration numbers, but they're also benefits in our ability to launch new products, as you've seen with Point A. We can launch new products to the market pretty quickly. I wouldn't see huge changes in the market. I think as the platform continues to mature, the ability to work across given IT will be like chips and guacamole. That's a unique ability we have to do that. Work management for all is built on a great platform to really unify work across the entire organization. Again, we're uniquely positioned to do so.

I mean, I just wanted the question started in hiring and ended in markets, so I'm not sure which angle you're trying to go on. I think Scott's point about the platform is really key. Our platform, we believe, is one of our strengths in executing against the large opportunities we have in all of our markets and around the business. Building that platform takes a world-class engineering team at a very large scale. You see us making continued improvements in things like Team Anywhere in our culture, impressing our long-term thinking as a business, and also executing against those opportunities. I want to emphasize we are going to invest and we believe in those opportunities, and at the core of that platform is a truly world-class engineering organization.

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

Thanks, guys, and great numbers. I have a couple of questions. One on work management, you haven't talked too much about that. Maybe you can give us a little bit more color on the progress there. Maybe number of customers, so you mentioned that on service management, maybe there you can mention that our work management. Then the second question more of a general one, regarding the customers that have transitioned to the cloud. Can you talk about how the expansion activity of customers that migrate to the cloud is different than the expansion activity of customers who remain on-premise?

Hi, Ittai. Look, I can take both of those. Firstly on work management flow. The first thing I would say is the fact that we get this deep into the call and we talked about our huge opportunities in IT. We haven't mentioned Agile DevOps and software teams or work management, which I think is an example of us spending an hour talking about IT. I would say we continue to be incredibly bullish on the work management space. We're doing an incredibly good job with Trello by continuing to make that part of our platform, part of our offerings while having a standalone flavor to it. Work management continues to power along; it's very new out of Point A program innovation, adding a different flavor on project management. We're incredibly bullish on things like Ten Central and other things coming at Point A as well. I feel very comfortable with where we stand; we believe there will be lots of different ways of attacking the broad work management problem. Before we even mention something like Confluence. We're really excited about how that continues to evolve. I will say we talk a lot about digital transformation changing software teams and IT teams. A big part of that is also a cultural transformation in how the software and IT teams work with the rest of the business. We have three different markets, we believe in all of them very deeply. They are tied together at the core of how every company is changing as a software technology base and also changing culturally to be more dynamic and more agile. That's why we're in those three markets. In terms of cloud expansion, it's a pretty simple story, actually. The ease of adopting a second product in the cloud, our ability to understand what customers are using, and hence recommend other alternatives for them, either to get more people in their team on board or try this other product, is just a lot faster and easier. But it’s a single click in the cloud, nothing to install, nothing to try. With free, you can quickly get ten users started. So our ability to help customers expand is just much higher in the cloud. You see that in greater and quicker expansion numbers for customers. We have to have the product to deliver that value, but our ability to help customers, and guide them with less friction in the cloud is just high.

Our next question comes from the line of Rob Oliver with Baird. Please ask your question.

Great. Thank you. Good evening, guys. Thanks for taking my question. Cameron, you alluded to this earlier in your remarks, and Scott, Mike, I'd love to hear your view. You guys continue to knock down a lot of the global compliance standards that are out there that really are, I assume are inhibitors to many large enterprises and governments really going wholesale into the cloud. I'd love to hear a little bit about some of what you've seen in terms of as you knock those down, how that backlog has been converting and then maybe some of the other global standards out there that you're excited about that you guys hinted in the letter that there's more to come imminently? Appreciate it, thank you very much.

For sure, it is part of our continued momentum, right? One of the bolts is to see us just continue momentum and incremental improvement every single quarter. It's something we've done for just shy of 20 years now, and we'll continue to do. The area you've asked about in terms of cloud standards and compliance and governance and the whole suite that comes with that in every different geography in the world. We believe that it will continue to be a challenge for every SaaS company going forward as there are more companies, more geographies, more legal conditions. So we have to build a world-class engineering organization and a platform underneath that cloud product that allows us to quickly adapt to that market as it changes and continue to add the standards that our customers need and ask us to support. We have done that over time and you continue to see us improving that every quarter, whether it's data residency in Australia for financial companies or whether it's BaFin in Germany. We’ve continued to do that and we'll continue to do that. We’ve seen a lot of examples that every time we add support for a different geography or standard, we unlock a portion of our customer base to move to the cloud. It’s not a singular unlock, it's a series of ingredients but it just increases the overall momentum of customers to the cloud. For sure, we continue to work on performance and scale for the larger customers in the cloud. We'll also continue to work on compliance and regulations and standards and also work on extensibility, which is equally important. The reason I mention that last one is Forge sort of a future extensibility standard and technical framework builds these compliance and regulatory standards at the core, which is incredibly difficult to do. We believe in extensibility for our customers going forward, and it has long been a hallmark of Atlassian. I think in a higher compliance environment, that's going to be incredibly important for us going forward in the cloud. We're seeing that in the adoption of Forge via those enterprise customers in the cloud, where it handles the regulatory standards for them.

Thank you. The next question comes from the line of DJ Hynes with Canaccord. Please ask your question.

Hey, guys, congrats on the continued success here. I have a product question for Mike or Scott, I presume. There are a handful of visual collaboration tools in the market that are seeing really strong growth. I know you guys recently invested in Miro. What is it about visual collaboration that makes it hard for you to replicate? Like why invest or partner in that space versus doing it on your own?

Yes, I can take that, DJ. Look, we believe in having a broad spectrum of opportunities in that market. With Atlassian Ventures, we're trying to make sure that we are investing and partnering in high-quality enterprise SaaS companies that are partners of Atlassian. You've seen us do that in the past with Zoom and Slack and others, and more recently with Miro across our markets, as well as a whole host of smaller, up-and-coming names. Visual collaboration in general, look, it's a very busy category, I would say because it's such a broad option. It used to be called whiteboards, but it's not really a whiteboard. It's a whole series of different things that you can do there. It’s a bit like saying as one way to do project management. If you’re a five-person marketing team, you do project management utterly differently than if you're 5,000 engineers building a bridge. Project management is a very broad term and I would say the same thing for visual collaboration. It’s a broad term. There are a lot of fantastic products in there, and obviously, we believe in the ones that we use and the ones that we've invested in. In general, our customer philosophy is being partnered and integrated with all of the best-of-breed SaaS products that are out there, allowing our customers to make those choices and just making sure that all the data they have in any Atlassian product is easily connected and integrated with all the data they have in any other product.

Next question comes from the line of Brent Thill with Jefferies. Please go ahead.

Thanks. On Trello, you've been pretty clear over $50 million on the platform yet I think monetization is still low. Can you walk through how you expect to potentially change that over the next year or maybe not? And for James, Americas at least in our model look like the best quarter in 13 quarters. I know that the comp was a little easier but is anything standing out there in the Americas that perhaps you haven't seen in past quarters? Thanks.

Brent, I can take the first part on Trello monetization. I do not have much new news for you, but I can repeat our stance here. I mean, Trello, we focus first on continuing to grow, demonstrating the size of Trello, going after the Fortune 500,000. We think of that as a very large scale. There are a billion knowledge workers out there trying to do all sorts of different things that Trello is very, very useful for. You've seen us continue to improve the product with views, smart cards to integrate third-party data, as we just talked about, and a whole series of continued product improvements. That said, we've gotten better at monetizing Trello almost every year that we've had it on the platform and continue to do so. But I will say that we put usage before monetization when it comes to Trello. You see it getting closer to the Atlassian platform in various ways in terms of the Atlassian account and identity and all sorts of different things. We are very patient in doing those things correctly, and we continue to make Trello a huge product that's beloved by its users. We put that first. But it's a pretty nice business for us and we continue investment. James, I will leave you there.

Yes, just follow up on that. One of the things we've done around Trello pricing has been to bring in a standard position. This is an example we talked about price increases at different points on this call, a good example of where many indications show we are actually lower. Again, to stimulate the sort of demand that Mike is referring to. In terms of the Americas result, yes, it was a strong year-over-year growth rate for the Americas. I just want to point back to one of my earlier comments about data center having very strong growth in the quarter. We do have this portion of the customer commitment that is taken upfront in terms of revenue recognition in the quarter in which the customer signs with us. The U.S. and Americas, particularly the U.S., is home to a good number of our largest customers. A certain amount of timing effect makes for a very strong Americas year-over-year growth rate.

Thank you. And the next question comes from the line of Gregg Moskowitz of Mizuho. Your line is open.

Okay, thank you. I remember when you launched Atlassian Marketplace that was less than a decade ago, and here we are at $2 billion in lifetime sales. It's incredible. My question here is with cloud now comprising nearly half of the apps in the Marketplace and with take rates continuing to be discounted as an additional incentive, are we sort of at a tipping point? In other words, are we at a stage where you're seeing app development and usage really accelerate?

Yes, Scott here. Look, we're really proud of the marketplace. I remember the plane where Mike wrote the original code that went into the marketplace and got us started. For us to get from there to $2 billion in lifetime sales is amazing. More importantly, that’s $1.5 billion of money that’s going back into the ecosystem, right? We've got such a strong and powerful ecosystem around Atlassian. For over a decade, we’ve had goals around the ecosystem outside of Atlassian to be larger than Atlassian itself, both in terms of the number of people working on it and the revenue there. We're really, really proud about the jobs and everything we've created around Atlassian and how we all benefit from that. In terms of the cloud and tipping points, obviously, Forge our app development platform in the cloud takes care of a lot of things that developers used to have to do themselves, such as writing their own servers. We take care of that, which lowers the barrier to entry for new people to build functionality inside of applications. We’ve seen in our server-based applications that all the early adopters of these new technologies are people using them internally to integrate with different processes to automate things themselves or to build extra functionality that is unique to that particular company. Oftentimes, this leads to people starting a business using those things and making them more generic or flows to our existing marketplace partners who are building out on the Forge capabilities.

Thank you. Our last question comes from the line of Steve Koenig with SMBC Nikko. Your line is open.

I appreciate it. Most of my questions have been asked. Let me also congratulate you on the quarter and on the very low employee turnover metrics that we're seeing from LinkedIn, especially in sales. I just think it's remarkable. I guess what I'll ask about that is a little bit in the weeds. The price increases are happening on February 15. You talked a little about the impact that could have on the coming quarter. What kind of customer behavior could we expect in the subsequent four quarters with respect to like those customers that maybe have renewed early to take advantage of locking in the price? And then would they be looking to convert to cloud within the next four quarters? Would there be a greater incentive to convert to cloud? How do we think about that even if it's qualitative.

Yes, thanks for the question. This is Cameron here. Every time we do some price changes, obviously, customers have the ability to make a choice. I was on a call with an executive of a very large pharmaceutical company just this week, largely talking about his options going forward, which is one, you can renew, that's fine. That's an option going forward, renew your data center licenses as we continue to plan for cloud. The second is, we can start planning out a few small cloud projects for some teams, or we can go all in on cloud and get it all done. It comes down to your prioritization and what your company's readiness is. After a 30-minute conversation, he basically gave me the all-in on cloud option, like this is fine; we have a cloud mandate; we need to prioritize the work; let's just get it done now. The reality is, that's how we prefer that optionality for our customers, that we're not forcing them down any path; that is what's going to work for them and their projects and the value we can deliver. Even if they renew today, we have plenty of programs and practices in place that two months from now or four months from now, or six months from now, if they want to move to cloud, we will absolutely make that happen from a licensing perspective. We do not hold them to a 12-month cycle for these decisions based on efforts; we can get them cloud licenses and dip their toe in the cloud. So a lot of this comes down to the customers' appetite to take on the IT project that is migration more than anything. For most of our customers, they are more than ready to go cloud. Almost all of them have the cloud mandates, and it just comes down to timing of budgets, prioritization, and IT projects.

Thank you. Our last question comes from the line of Pat Walravens with JMP Securities. Your line is open.

Thanks very much. It is Joey Marincek on for Pat, appreciate the question. Can you just give us some more color on the Percept.AI acquisition and then sort of how you're going about M&A going forward? And then separately, what are you looking for in your next EPS? Thank you so much.

Great, squeezing with three questions at the end. Let me take Percept.AI first. It's a fantastic team focused on AI in specifically in a service management and customer service manner. Again, AI is relatively domain-specific to make a huge impact at the moment. I see this as a part of our continual improvement in the ITSM space, both organic and inorganic, to make sure we have the best set of ITSM tools around. We also have ongoing investment in machine learning and smarts as we continue to put this at the core of our platform. I always say that our customers shouldn't need to know that we care about AI and machine learning, but we bake it deeply into the platform. This is about continuing to improve in the area of service management for any service-driven enterprise out there. I can pass to Scott on M&A philosophy.

That sounds great, Mike. We’re lucky we have the company; we have a track record of building new products and a track record of partnering in our ecosystem. We’ve talked about on the call, long track records of successful M&A, both really small tuck-ins and medium-sized companies like Trello, which we acquired as an extension of our product lines. I won’t dwell on all three now—we’ll acquire over time. The number one thing we will get is alignment; they always have to misalign with our mission. They need to fit culturally with Atlassian. Everything else after that—go to market, technology, and other things—are second to that. There’s been no change to our M&A philosophy over a long decade; we continue to look for assets that fit really well alongside Atlassian.

Thank you. This concludes our today's conference call. Thank you for participating. You may now disconnect.