Earnings Call Transcript - TEAM Q1 2020

Operator, Operator

Good afternoon. Thank you for joining Atlassian's Earnings Conference Call for the First Quarter of Fiscal 2020. 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 Senior Manager of Investor Relations.

Martin Lam, Senior Manager of Investor Relations

Good afternoon, and welcome to Atlassian's first quarter fiscal 2020 earnings conference call. On the call today we have Atlassian's Co-Founders and Co-CEOs, Scott Farquhar and Mike Cannon-Brookes; our Chief Financial Officer, James Beer; and our President, Jay Simons. Earlier today, we issued a press release and a shareholder letter with our financial results and commentary for our first quarter of fiscal 2020. These items were also posted on the Investor Relations section of Atlassian's website at investors.atlassian.com. On our IR website, there is also an accompanying presentation and data sheet available. We'll make some brief opening remarks then spend the rest of the call on Q&A. Statements made on this call include forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our 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. For further information on these and other factors that could affect the Company's financial results, see our filings with the Securities and Exchange Commission from time to time, including the section entitled Risk Factors in our most recent Form 20-F and Quarterly Report on Form 6-K. In addition, 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 the 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 Data Sheet on our IR website. I will now turn the call over to Scott for opening remarks before we move to Q&A.

Scott Farquhar, Co-CEO

Thanks everyone for joining today. We’re off to a good start in fiscal 2020. This quarter we grew revenue by 36% year-over-year and generated more than $62.4 million of free cash flow. We also added over 7,000 net new customers during the quarter, bringing our total to more than 159,000 customers. This quarter we introduced two important new editions of our cloud offerings, Free and Premium. Our disruptive business model continues to win new customers, both large and small, and these new editions offer them more choice and capabilities. We want it to be easier and less costly for teams to get started in the cloud and grow with us as they need to adapt and become more complex. Premium illustrates the increased sophistication of our enterprise cloud offerings, providing large companies the flexibility and the tools they need. We are also excited to have acquired Code Barrel, the creator of Automation for Jira. As a platform for managing work and workflows, Jira is in a unique position to help automate manual steps in the workflow, allowing people and teams to advance work more efficiently. Automation is becoming increasingly valuable for customers because it helps them move faster and collaborate more effectively. Automation for Jira is already used by thousands of teams and is another important step as we continue to enhance our cloud products. We've provided more detail on these announcements along with many other updates in our shareholder letter issued early today. And with that, I'll pass the call over to the operator for Q&A.

Operator, Operator

Certainly. Your first question comes from the line of Heather Bellini with Goldman Sachs. Your line is open.

Heather Bellini, Analyst

Great, thank you so much for taking the question. I wanted to ask a little bit because there has been some concern over the past few days about, you know, if you've started to see any change in the customer buying patterns? I mean, I know you guys don't have a direct sales force, but I know James has obviously seen different cycles from time to time being at different companies, but any sense that there has been any change in the demand environment? And then I had a followup question just if you could share with us anything about any potential impact you saw from the price changes if there's a way to help think about the impact on the quarter whether we should be thinking about it more similar to kind of the fiscal year 2018 price increase where the timing was more similar or is it potentially more like last year in terms of the behavior in deferred revenue? Thank you.

James Beer, CFO

Hey Heather, let me start off with our answers. First of all, I wouldn’t say we've seen any material change in customer buying patterns. You know, we've been pleased by the results, the overall strength right across the product sets and our different deployment options, so no, nothing material in that regard. Reaction to the price increase? Jay, if you want to start off with that one and then I can come back on some of the timing items?

Jay Simons, President

I think similar to how we've reported in the past, it was in line with expectations. So I think customers and part of it is just around the plan that we do that goes into the increases that we do communicate to customers in the way we communicate those price increases to customers. So I think we're pleased with how it has been adopted.

James Beer, CFO

Yes, and in terms of the timing, we announced our price increases at the start of this past September and so just a couple of weeks earlier than was the case a year ago, and so more in line with the timing of fiscal 2018. And so for that reason, we expected that there would be some additional customer activity in Q1 as there was in Q1 of fiscal 2018 and that there would be potentially some of that bleeding over into Q2 as well again as there was in fiscal 2018.

Heather Bellini, Analyst

Great, thank you so much.

Operator, Operator

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

Gregg Moskowitz, Analyst

Okay, thank you very much. Good afternoon guys. I found it interesting just in followup to Heather's question that your EMEA revenue growth actually reaccelerated this quarter just given again some of the macro and other concerns that we've all heard about. Is there anything that you would call out with respect to your strong execution in EMEA?

James Beer, CFO

Thank you, Gregg, for the question. Recall that over half of our partners are based in EMEA. We have over 500 partners around the world and they have tended to be quite active helping their customers, our customers, step in front of the price increases. We saw this in the last couple of years. And while that activity generally impacts our deferred revenue balance, there are, you know, I think as we've discussed in the past, a couple of revenue drivers there as well and so that is a part of what's driving those strong results both in EMEA and in APAC as well.

Gregg Moskowitz, Analyst

Okay, that's really helpful James, thanks. And then just as a followup, I realized that we're only one quarter of course into fiscal 2020, but just relative to your prior guidance for the cloud mix shift to cause a 100 basis point revenue growth headwind for the year, have you seen anything at this point that perhaps might tilt you in one direction or another or do you still feel that's probably the right landing spot for the cloud impact this year? Thank you.

James Beer, CFO

Yes, and I would continue to say that that 1 point headwind to revenue growth year-over-year is what we're expecting. Recall that there were three elements to that when we talked about it 90 days ago: the first, the launch of free editions of Jira Software and Confluence; the second flow that we would offer free trials of our cloud product to the user of that same product behind the firewall; and then the mix shift that you are referring to in the question. And one of the other things to recall is that we just rolled out the free versions of Jira Software and Confluence quite recently. So I continue to be of the view that that 100 basis point headwind is the right way to think about those three issues combined.

Gregg Moskowitz, Analyst

Okay, terrific, thanks very much.

Operator, Operator

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

Keith Weiss, Analyst

Thank you for taking the call and for a great quarter. I have two questions: first, regarding new customer additions, you've been adding customers at a strong pace, with net new customer growth this quarter at about 20% year-over-year. What factors contributed to this increase in new customers in Q1, and are there any elements that might not be sustainable throughout the year? Secondly, on the topic of another acquisition and the opportunities around Jira and core IT—there hasn't been much communication regarding this outside the IT department. Can you provide an update on how we're approaching the opportunity for Jira beyond the IT department? Is the focus still consistent with historical efforts to broaden the use cases beyond core IT applications?

Jay Simons, President

Hey Keith, Jay here. I'll take the first part and then hand it off to Mike on the second one. In terms of customer growth, you know really contribution across the board from all the major products that are contributing to the new customer adds. As we talked about last quarter, there is one component in there related to the monetization improvements that we introduced to Trello around board limits for team usage, and there is some nascent pent-up demand within the existing customer base that is contributing to the number, not in a materially outsized proportion, but it is in there. And that's maybe one component as we roll through a year of those monetization improvements in the base that will moderate a little bit.

Scott Farquhar, Co-CEO

And just one thing to add on to that briefly, we continue to see more than 90% of those new customers going straight to our cloud services. Mike?

Michael Cannon-Brookes, Co-CEO

Yes, hi Keith. We remain optimistic and are focused on the opportunities both within and outside the IT Department. You mentioned the acquisition of Code Barrel. Automation is an area where we already offer a variety of solutions, including in Trello, OpsGenie, and some features in Jira Service Desk. This allows us to enhance our automation capabilities across the entire Jira platform. When discussing non-IT teams, Jira Core is essential for business workflow and process management at various levels. This automation aligns perfectly with companies that are modeling different processes on Jira. It provides them with added capabilities. Additionally, in Service Desk, which has a strong presence in IT, it also adapts well to other flow-based teams in an organization, such as legal, finance, HR, or workplace management. Automation is effective in those areas too. While automation doesn’t impact Trello or Confluence or other products we offer to business teams, it is particularly robust for the entire Jira platform, both within and outside IT. Moreover, the core of our business is made up of talented individuals who originated from Atlassian, so we are very familiar with the team and believe they will perform excellently.

Keith Weiss, Analyst

Excellent. Thank you, guys.

Operator, Operator

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

Arjun Bhatia, Analyst

Hey guys, thanks for taking the question. May be I just wanted to follow up on the acquisition that you were just talking about, just to try to get a better understanding of how you might integrate this into Jira and how you might monetize it. I think that is largely sold through the marketplace today, but can you maybe just walk us through how monetization model might work, is this something that you plan to introduce on the premium products only or is this going to be widely available across all Jira tiers?

Scott Farquhar, Co-CEO

Arjun, Scott here. We've had some success when we acquired Butler and did something similar where we had a lot of success at incorporating part of it into our Premium offering, allowing part of it also in the standard offering for customers to get a taste of it. I think we'll also have some existing customers, particularly around; existing customers in terms of transition period. So there are a lot of things to consider there, but we do think it will help bolster our Premium offering at the time, and this is something our customers are really interested in.

Arjun Bhatia, Analyst

Great, thanks. And then maybe on the freemium products that you launched, the freemium for or the free tiers of Jira and Confluence, can you just give us a sense of what you're seeing from customers in the initial phases of this launch? I know it is still early, but are you seeing a big uptick of new customers coming into that free tier and maybe on the other side what are you seeing from existing customers that used to be paying, but might have moved down to the free tier? Thank you.

Scott Farquhar, Co-CEO

Yes, so if I think about our disruptive model over the years, like we've always tried to make sure our products were accessible for every size company: the start-ups that are coming out of university, people just starting with two or three person organization, all the way up to people that use our tools with 30,000, 50,000 people and expand that breadth. And that we've always had pricing to appeal to that. And if I would go back to 20 years when we started, only the Fortune 500 could afford software and we pioneered the model to make software affordable to companies of all sizes. Now if you go with free and premium, it has continued to improve that in the cloud. On the premium side, it is making sure our largest customers have the features that they need to continue their expansion in the cloud or to move their on-premises deployment to the cloud. And on the free side of things, it's about making sure those companies that at this moment we charge get to all the months, removing the barrier of the credit card; if we can remove that, we believe there will be a large increase in the funnel there. On the free, I mean your question was how much it’s opened the funnel. I am in a position to talk through that at the moment apart from saying that we are pleased by the results internally of how that is going, but it is still early days. We do want to look at some of those things over a long period of time and ensure that it really uplifts, but irrespective, it gets the short-term benefit. The long-term benefit is making sure that every single company of every size can use Atlassian's products.

James Beer, CFO

And to emphasize, what I was mentioning earlier about the effective free being embedded within that 1 point headwind to our revenue growth rate in FY 2020.

Arjun Bhatia, Analyst

Thanks, James.

Operator, Operator

Your next question comes from the line of Michael Turits with Raymond James. Your line is open.

Robert Majek, Analyst

Hi, this is actually Robert Majek on for Michael. It sounds like OpsGenie is doing really well as part of the Atlassian family. Can you just give us some more color there, the changes you have made that led to an accelerated growth rate and maybe more broadly, if you can just talk more about the long-term opportunity for that asset?

Scott Farquhar, Co-CEO

Michael, it is Scott here again. OpsGenie acquisition we just actually had a party in our office to celebrate one year of closing last night, so I described it seems like only yesterday. The acquisition is doing really well inside Atlassian and if you look at the space, the internet management companies around the world are struggling to figure out how to release software at a faster pace, how to keep up with their competitors, and there is a whole movement around things like DevOps, and a big part of that is ensuring that when you are managing these processes, that people are going to respond quickly and have the right people available, and that's what OpsGenie does. Now OpsGenie we're pleased with some of the integration that we've done on the product side, the identity side, and on the user space side, but I still think we have a lot of opportunities there to put those products together with our large existing base and we have seen a doubling of the rate of paid fee since we acquired the company. I think we've reported in our sales letter, and that's been great, and we still think we have a long way to go in terms of introducing our existing customers to the OpsGenie product.

Robert Majek, Analyst

I appreciate it.

Operator, Operator

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

Alex Kurtz, Analyst

Yes, thanks. I just want to follow up on that thread just in your shareholder letter talking about the free tier doubling the pace of growth for OpsGenie from a user perspective. When you see that kind of result, is that how you might think about future M&A that you can really accelerate a product in the market where maybe as a standalone entity a company just can't get to that kind of growth rate and that might change how you think about future M&A or do you think that was really specific to the markets that OpsGenie serves? So I guess the question is, when you see that impact do you think you guys might want to be a little bit more aggressive in M&A?

Scott Farquhar, Co-CEO

I'll take that; it is Scott here, and Mike might want to add something at the end. When we think about M&A, we consider a couple of things. Firstly, it's got to be the right cultural fit for the company, that's first and foremost since we already had the same culture. Second, it has to be mission-driven, so it is not about acquiring companies that don’t align with our mission which has the potential of benefiting every team. And third is the business model fit; it's more difficult but not impossible to change a company's business model, for example, to take it from a volume high price to a high volume low price, which is a difficult transition. After that, we consider technical compatibility and other factors. And so, if we do find companies that align with our ambition, culture, and business model, we will consider them, and we believe that our base of 159,000 customers and millions of teams around the world represent a significant opportunity for them to be interested in other products that we can bring to market for them, both through acquisitions and new products that we will develop organically. So any opportunity is really large, and we're not about acquiring just for the sake of revenue. There are many things we could pursue that would yield short-term revenue but don’t contribute to our culture or mission and we want to be disciplined about avoiding those types of opportunities.

Michael Cannon-Brookes, Co-CEO

Yes, I would just add one small thing. Obviously, you've seen us make a series of changes in OpsGenie and we're pleased with how it's going. I do believe companies have a DNA. We obviously have a long-term philosophy that emphasizes making changes of that type over the long term. As Scott mentioned, with 159,000 customers we have a massive distribution engine for software, but you still need fantastic applications with really great feature sets. OpsGenie has the best features in the market, and we have the ability to introduce a disruptive price against it to really make a huge impact. I think that fits our DNA in a really good way. So part of the reason we've been so excited about the team since they've come on board is that we're starting to see some pretty good results, and we intend to keep pushing that forward.

Operator, Operator

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

Derrick Wood, Analyst

Great, thanks, and nice job on the quarter. I wanted to touch on what you're seeing in terms of the rate of activity from customers moving from server to either data center or cloud. And I guess on cloud specifically, now that you've got Cloud Premium out, I know it's still very early, but I mean, as you look over the next 12 to 24 months do you see migration being more gradual as enterprises slowly get more comfortable or do you see perhaps more of a hockey stick shape just with more acceptance of cloud and the advancements you're making with your premium SKU?

Jay Simons, President

Hey, Derrick, Jay here. We talked a little bit about this on the last call. I mean, we are seeing increasing interest in cloud generally but also in cloud from our server customer base. It is a part of what we've invested. We made big investments in migration tooling just to make that process simple. We've made some pricing calibration adjustments to make it easier for customers to move. And then we're working a lot more closely with customers to make sure that the planning for that move and the implementation of that move is smooth. I think in terms of the demand environment, it is increasing at a steady pace. What we signaled last quarter is just the investments that we've made over the past year have made us ready to ensure that when customers do want to move, because in some cases it's a replatforming, taking an instance that they have had three, four, or five years of history with and moving that smoothly from self-managed infrastructure to a cloud infrastructure that they no longer have to manage, provided by Atlassian. Data center, you know, has a slightly different trend and is basically an upsell from a standard version of server-on-prem to a high-availability instance of on-prem infrastructure, and that's still a motion that really large customers are choosing, which is fine because we're celebrating the customer's choice to either remain on-prem or go to cloud if they want to.

Scott Farquhar, Co-CEO

And just a couple of things to emphasize what Jay was saying: We're obviously very pleased with the rate of growth of our subscription business, which encapsulates both our cloud and data center business, so that grew 50% in Q1. And then you mentioned the potential effect of Cloud Premium. As I've said in the past, I wouldn’t expect cloud premium offerings for Jira Software and Confluence to drive a material revenue effect in FY 2020, and we see the benefits of that downstream.

Derrick Wood, Analyst

Got it, okay, thank you.

Operator, Operator

Your next question comes from the line of Nikolay Beliov with Bank of America. Your line is open.

Nikolay Beliov, Analyst

Hi, thanks for taking my questions. Just a followup on the last question, you've put in place channel incentives, product incentives, and pricing incentives to steer the Silver customer base to the cloud version. Do you envision this being like a free process or over five to six years kind of transition of that installed base and $400 million worth of maintenance to cloud?

Jay Simons, President

I mean the transition will happen over years; it will be gradual.

Nikolay Beliov, Analyst

Okay. And James, question for you: You're right in the revenue guidance for the year in line with the Q1 base, I'm just wondering what kind of puts and takes you are considering for the rest of the year as you provided the updated guidance for the year? Thank you.

James Beer, CFO

Yes, well, versus the midpoint of our original guide 90 days ago, we've obviously raised beyond the Q1 beat quite substantially, and this reflects our ongoing confidence as I said right at the outset of the call across the products and across the deployment options, so really that's the logic behind the moves we've made today on the guide.

Nikolay Beliov, Analyst

All right, thank you.

Operator, Operator

Your next question comes from the line of Gray Powell from Deutsche Bank. Your line is open.

Gray Powell, Analyst

Great, thanks for taking the question. So you are an absolutely dollar basis. You added more revenue to the subscription line than any prior quarter ever. I know you're not going to give exact numbers to me, but broadly speaking, how much of that is being driven by just normal demand versus customers shifting from server to cloud?

Jay Simons, President

Well, I would say that the gradual server-to-cloud transition is only momentum, but I would really say, when you think about that subscription growth rate it just represents the underlying strength of both the cloud business and the data center business. So we're pleased that both of those business lines are growing very substantially.

Gray Powell, Analyst

Got it, thanks.

Operator, Operator

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

Unidentified Analyst, Analyst

Hi, this is Brent Thill. Congratulations on a strong quarter. I have a couple of questions: first, considering the impressive year-over-year subscription growth rate of 50% this quarter, I recall you mentioned last quarter that subscription growth would exceed 40% year-over-year. Is there any update on that? Secondly, this is the first time you have implemented price increases on the data center product. Have you received any initial feedback from customers regarding that?

Scott Farquhar, Co-CEO

Yes, so let me take the first part of that. So in terms of the subscription business, we guided at the outset of the year that we thought we could beat 40% growth year-over-year. Obviously the Q1 result is a very nice down payment if you will on achieving that objective, so nothing to update around that at this time. In terms of the price increase activity around data center customers, Jay, would you want to take that one?

Jay Simons, President

Yes, no. One reaction, I mean the price increase at data center was super nominal. As we mentioned, it was the first adjustment we made to data center pricing since introducing it three years ago.

Unidentified Analyst, Analyst

Great, thank you.

Operator, Operator

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

Jack Andrews, Analyst

Good afternoon. Thanks for taking the question. I was wondering if you could speak about the broader demand trends and competitive landscape as it relates to Trello. It seems like in this broader collaboration space, more companies are increasing some focus in investments there. So I was just wondering, are you seeing any sort of inflection in the demand for more general collaboration tools?

Jay Simons, President

Look, I mean I would say more general collaboration tools continue to grow as business evolves. People are getting more comfortable with using these types of tools as the workforce becomes more familiar with mobile-based collaboration apps and similar solutions. However, nothing unusual in the last quarter over a general shift towards collaborative tools, but as we would say, there's specific demand. So why would I get a Jira Confluence? Other tools we have are actually modern collaboration tools, and they have all of the modern collaboration features from our platform but focused on specific demands, whether it be project management, workflow management, or document collaboration, but nothing particularly changing other than a general movement in our direction, which is obviously where we intend to be.

Jack Andrews, Analyst

Great, thank you.

Operator, Operator

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

Rishi Jaluria, Analyst

Hey guys, thanks for taking my questions, two here. First on Trello, I mean now up to 50 million users, can you maybe help us understand if you've seen particular traction in the specific industries, lines of business within the organization, specific geographies and alongside that on the monetization side; I know you introduced board limits for team usage recently and that seems to be helping, but maybe help us understand what the path to monetization for Trello looks like going forward? And then on the Automation for Jira and the acquisition there, maybe just help us understand the technology a little better; is this similar to the Butler acquisition for Trello or is this more robust, maybe even slightly similar to an RPA offering? Thanks.

Scott Farquhar, Co-CEO

Rishi, I'll certainly take the first half there, and I guess I could take the second half too. Look on Trello, we continue to be extremely positive. As we said in the shareholder letter, we passed 50 million registered users this quarter which is again a huge jump from last year and continues to power along really nicely. So as we say pretty much every quarter to you guys, the first call is to continue Trello growing the way it is growing and I think we're sort of ticking up along that trajectory. Those users are all across the globe. It is a very global phenomenon. It is an application that works as well on Android in Brazil as it does on a desktop in America or Australia. So in terms of its global application, it is very, very large and I think we're showing in the numbers that we can continue to grow it very strongly. We are, as you mentioned, starting to monetize it more over the last six to 12 months, so there are good traction happening there. Just in terms of managing how we separate between the free and paid offerings, you mentioned board limits, along with a few other small tweaks in pricing we've made. I would just say again that this comes down to my long-term patient philosophy as a company and our expertise at optimizing pricing for different customer groups to drive growth and deliver value to Atlassian after we deliver value to our customers and Trello is no different there. The only difference, which I will point out, is that we're still not actively cross-selling users to other Atlassian products yet. It is on the list; we will get there, but we're not actively doing that today. The other part is around automation for Jira; look, technologically I'm not sure what angle you want on that. It is similar to Butler in some ways in terms of how it works, and automation is obviously built completely differently inside of the Jira stack. It is a very different environment. For the basics of things like APIs, sure you could use it to automate some of this, but it doesn't compete with traditional RPA tools in that way. It is more about automating repetitive tasks that you don’t necessarily need to do. For example, our legal team uses Service Desk heavily to manage incoming contracts and move them around. They can look for missing fields, missing data, and other information and trigger automatic responses back to the user to get more details or to move it to the next step in the workflow without requiring any of our skilled lawyers to spend time moving tickets around, which they shouldn’t have to do. Right? They want to focus on high-value work that leverages their expertise and Automation just lets us take that to millions of Jira instances around the world. So I think we're quite positive about the impact it can have.

Rishi Jaluria, Analyst

All right, great, that's helpful. Thank you.

Operator, Operator

Your next question comes from the line of George Iwanyc with Oppenheimer. Your line is open.

George Iwanyc, Analyst

Thank you for taking my question. So just another on Code Barrel from an expense perspective, is the acquisition going forward some expenses and that's kind of embedded with maintaining the operating margin guidance?

Scott Farquhar, Co-CEO

Yes, that's correct, George. We've embedded all of that within the guidance.

George Iwanyc, Analyst

Yes, are you accelerating investment in other areas internally as well?

Scott Farquhar, Co-CEO

Well, I wouldn't point to any particular acceleration driven by the acquisition per se. Yes, obviously, we're very pleased to be adding the Code Barrel team, and as I say, we will take it into account within the guidance we've issued.

George Iwanyc, Analyst

Okay, and just broadly speaking on the IP side, has the competitive dynamics changed at all with the ramp-up of Jira Service Desk and OpsGenie and all the other efforts that you are doing?

Scott Farquhar, Co-CEO

Yes, Scott here. The competitive dynamics I don’t think have changed significantly over the last couple of quarters, and we feel increasingly confident that our position in IP, as we've sort of mentioned before, is becoming increasingly intertwined with software, and that's an area that we have a really strong market position which we believe comes from our large number of software developers and tools to help them be productive, and as those teams work closely together, they will have one stack to pull those things together, which contributes to our optimistic view of the market.

George Iwanyc, Analyst

Okay, thank you.

Operator, Operator

There are no further questions at this time. I will turn the call back over to the presenters.

Scott Farquhar, Co-CEO

Thanks everyone for joining the call today from Mike and Scott down in Sydney, and James and Jay up in San Francisco. We appreciate your time very much and look forward to keeping you updated on our progress as we travel into the future. Thank you.