Atlassian Corp (TEAM) 2018 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen.

Thank you for joining Atlassian's earnings conference call for the second quarter of fiscal 2018.

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 Ian Lee, Atlassian's Head of Investor Relations.

Good afternoon, and welcome to Atlassian's Second Quarter Fiscal 2018 Earnings Conference Call.

On the call today, we have Atlassian's co-Founders and CEOs, Scott Farquhar and Mike Cannon-Brookes; our Chief Financial Officer, Murray Demo; and our President, Jay Simons.

Earlier today, we issued a press release and a shareholder letter with our financial results and commentary for our second quarter fiscal year 2018.

These items were also posted on the Investor Relations section of Atlassian's website at investors.atlassian.com.

On our IR website, there's also an accompanying presentation and data sheet available.

We'll make some brief opening remarks and spend the rest of the call in 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.

In addition, during today's call, we will discuss non-IFRS financial measures.

These non-IFRS financial measures are in addition to and not as 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 measures used by other companies.

A reconciliation between IFRS and non-IFRS financial measures is available in our earnings release, our shareholder letter and our updated investor data sheet on our IR website.

Further information on these and other factors that could affect the company's financial results is included in the filings we make with the Securities and Exchange Commission from time to time, including the section entitled Risk Factors in our most recent Forms 20-F and 6-K.

I will now turn the call over to Scott for his brief opening remarks before we move to Q&A.

Good afternoon.

Thanks everyone for joining today.

We had a strong close to calendar 2017.

This quarter, we grew revenue 43% year-over-year and generated over $67 million of free cash flow.

We now have more than 112,000 customers in total and after adding 4,825 net new customers during the quarter.

This is the most net new customers we've ever added in a single quarter and another milestone on our way to serving the Fortune 500,000.

We saw solid demand across all our deployment options: cloud, server and data center.

We're continuing to expand with customers of all sizes and across numerous industries and geographies.

Alongside the growth of our business, Mike and I are both humbled and excited by the rapid expansion of the vibrant ecosystem surrounding Atlassian.

There are thousands of developers and vendors outside of Atlassian who are creating apps that make our core products even more powerful and our customers even happier.

Today, our Marketplace vendors offer more than 3,500 apps.

And during the quarter, the Atlassian Marketplace [occur] -- passed $350 million in total lifetime sales since its inception in 2012.

In our shareholder letter, we highlight 3 of our vendors who are helping to drive this growth.

Our developers and vendors, combined with our global customer and partner base, form this foundation of the thriving Atlassian community.

We'll soon be going on the road on our first Atlassian Team Tour to spend more time with our community, to unveil new product updates, share the latest in team practices and discuss the future of teamwork.

We'll kick this tour off on February 8 in Amsterdam and then cross the globe with a total of 10 stops on 3 continents.

Before we move to Q&A, I'd like to say a heartfelt thanks to our CFO, Murray Demo, as this is his last earnings call with us before James Beer takes over as our new CFO.

It's been a privilege to work with Murray over the past years, both in his capacity as CFO and as an Atlassian board member before that.

We wish him the best.

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

(Operator Instructions) Our first question comes from Ittai Kidron with Oppenheimer.

A couple things for me, first of all on Stride.

It's still in limited access, early access.

Can you give us some color on the feedback you've been getting from customers?

What are some of the good things and bad things you're hearing from customers?

And how soon will we see it generally available in the marketplace?

Thanks for the question.

It's Scott here.

You're right.

I mean, Stride, we had an early access program and we put a waitlist in.

We had so much demand for the product, and the feedback we've had so far has been overwhelmingly positive.

Our customers are really liking it.

They're liking the differentiated features.

The fact that Stride is -- allows you to get work done and also as a whole communication platform rather than just a chat product.

So they're giving us great feedback about that.

The differentiated features, Actions and Decisions, which we put in, in order to help people progress work, we're getting a lot of great feedback around that.

And so as in the coming months, we'll move it from a early access sort of waitlist program to the general availability, but we don't have the exact release date at this time.

Got it.

And then the second question, Murray, maybe you can give us a little bit more color on very nice customer addition count.

Is there any color you can give around that?

And what product areas it was stronger than what you thought, what areas were maybe a little bit softer?

And then also, just one question on the tax rate just given the change in the tax code here in the U.S. How should we think about modeling your non-IFRS tax rate going forward?

Ittai, it's Murray.

I'll turn it over to Jay to talk about the customer count.

And then when he's done, we'll come back and talk about the tax rate.

Yes, just quickly, Ittai.

Obviously, we're really pleased with the adds in the quarter.

There was pretty strong demand kind of universally across all products and platforms, so no real callouts to highlight.

Net customer adds does move around a bit quarter-to-quarter.

And so even though we're really proud of the nearly 5k we added this quarter, it's kind of a drop in the bucket around the Fortune 500,000 we're chasing.

Yes, in terms of the tax rate, a couple things to kind of point out makes us a little bit different.

First of all, our fiscal year, half the year is at the 35 rate in the U.S. The other half is at 21.

So we're not like other calendar companies where they're starting the calendar 2018 where you get a full year of benefit of the rate.

And secondly, we are a U.S. and Australian company, and so you've got to blend that way.

When you kind of put all that together for fiscal '18, so the second half of the year for us, we're not seeing a whole lot of benefits.

That's going to show up in fiscal '19 when we get a full year of the U.S. benefit and other activities that we've got is where we'll see that.

I also, just since you brought up the tax rate, just want to comment on one thing regarding our Q3 and Q4 EPS.

Well, our Q3 EPS target, our implied Q4 EPS target and the full year.

We've got quite a swing in the tax rate that's embedded in the EPS targets for Q3 and implied for Q4, and it's strictly from IFRS.

The full year, nothing is changing, just under IFRS.

It's quite different from GAAP.

We're just not in a position to smooth it out like you can in GAAP and we get these wild swings.

There's nothing going on there other than just the way IFRS calculates it.

And so the focus should be more on what our full year rate is sort of implied in the EPS targets and not to get too focused on the Q3 EPS and implied tax rate and the Q4 rate.

Is there a way then to think about what our full year fiscal '19 tax rates could be, some sort of a bracket range around that?

We're not providing any targets for fiscal '19, but we'd expect to see a lower rate as we go into '19.

And we'll go and provide more details on that as we get to the point of giving our fiscal '19 guidance.

The next question comes from Gregg Moskowitz with Cowen and Company.

Scott, you said that cloud, server and data center all did well.

But over the course of the last 6 months or so, have you seen any change with respect to the mix of new or existing customers adopting your cloud offerings?

Or do you say that that's been stable overall?

Gregg, good question.

The -- as we've seen for a long time, the trend is towards cloud, clearly, from us and other companies you see.

But nothing has really changed over the last quarter.

We still continue to see strength in cloud, server and data center.

And so there hasn't been some particular inflection point, and we think that's still a long business in our behind the firewall server deployments for a long time.

Okay.

Perfect.

And then just a question for Murray.

I'm wondering if you could help us -- or parse for us the impact, if you will, to Q2 billings and revenue from any early maintenance renewals from customers who perhaps wanted to get ahead of the Jan 1 price increase.

And part of the reason for my asking the question is also to sort of make sure the Street has some help with respect to modeling the March quarter appropriately as well.

Yes, Gregg, that's a good question.

It's obviously something we are very focused on as well as trying to understand any of these, you should want to call it, pull forward bookings that's related to the change in pricing.

One of the things that we have learned through the change in pricing on server, but also in cloud, is that the customers that are most sensitive to price, they tend to take action fairly quickly around the time of the announcements.

And what we saw is actually that we probably saw even a little more of this sort of pull forward bookings in the first quarter than we did in the second quarter because we announced it in the first quarter.

And what we also saw that was a little bit different was some of our customers chose to go multiyear, and you can see that on the balance sheet under the long-term deferred revenue.

So they're locking in with us for a number of years.

They made a decision they wanted to go ahead and buy server maintenance revenue for a multiyear upfront, and we saw some of that.

But as you got into the -- later into the second quarter, it seemed to be all kind of behind us, and it was more pronounced in the sort of -- September, October time frame was where we saw it.

So we're pleased, obviously, to have that.

But obviously, longer term, we'd rather have them renew under the new pricing because that would, in theory, be a little bit less revenue for us over the longer term, but we're always happy to see customers that are committed to us for the longer term.

That's great.

And Murray, have you seen any uptick in churn following the cloud and server price increases just over the past few months or so?

So what we saw there was in the first couple of months, which was Q1 and which we talked to all of you about during that call and everything, is that we expected some customers to kind of downgrade from being a, call it, a customer on monthly and kind of drop to the 10 user level where they could get the starter pricing.

Some went to annual, and we had factored all that into our calculations.

All that kind of activity just kind of went away as we got into the second quarter, and part of the reason why we saw a stronger customer count is actually lower churn in cloud.

So our customers that were sensitive to price, they did what they wanted to do around that.

But it's really been, as Jay said, well received.

It's behind us.

We continue to be a leader obviously in low price, high value and we feel it was very successful.

We're on track with the guidance we provided around the change in the cloud pricing of low single digits for the year.

That's right on track.

And so at this point, after 5 months, we're very pleased with the results we've seen and how highly correlated it is to all the modeling that we had done in advance.

The next question comes from Bhavan Suri with William Blair.

So I guess 2 questions.

One for maybe Jay and the guys here.

So we've seen sort of continued momentum around service desk -- JIRA Service Desk.

You guys certainly talked about it, talked about it last quarter a lot.

I guess when you think about that and you think about some of the larger deals you're seeing there and you think about the main competitor there, what do you think in terms of is the gap there?

When JIRA was early on, there was a sort of gap with Rally.

No one really talks about Rally anymore.

So now comparing that to JIRA Service Desk and some of the competitors there and obviously investment, so do you think there's a material gap?

And sort of how far behind those guys do you think you might be from an enterprise deployment perspective off your service desk versus, say, ServiceNow or some of the other smaller guys like Cherwell or whatever?

Bhavan, this is Mike.

I can take that.

Look, obviously, we remain really excited about JIRA Service Desk, right?

It is, as you mentioned, one of our fastest-growing product and product areas.

And as we said, I think last quarter it's passed 25,000 organizations now, so we're really happy about how it's coming along.

I do think it's pretty differentiated to the competition, specifically in the way we think about service teams.

It does a great job in IT and technical teams, but we see a much broader blue ocean in the service teams within an organization, much more focus on the broader business team: so legal, finance, HR and all the other teams that are effectively servicing other groups within an enterprise.

And I think that that's the main differentiation that flows from a philosophy into the product and into everything else.

At the same time, one of the other differentiations of JIRA Service Desk obviously is bringing our ecosystem to bear.

You've seen it's a great quarter for the marketplace, and the ecosystem is really humming along nicely inside JIRA Service Desk of providing extensions, use cases and useful value in different parts of the business.

That's helpful.

And then one quick follow up here just on R&D.

You guys have sort of talked about R&D allocation.

You talked about a fair amount of effort re-platforming for the cloud, the team platform and mobile.

But as you think about optimizing R&D dollars, and obviously that's really the biggest expense you guys have, how do you guys think about that through '18?

And then I'm not asking about '19 because I know Murray will shoot me down about '19 targets.

But over the next 3 to 5 years, sort of the optimization allocation in R&D, just sort of how you guys think about that will be helpful.

So I -- so in terms of R&D, Bhavan, yes, we're not talking about '19 right now, but we're going to continue to invest.

It's -- we just think we've got such a large market opportunity here.

There are so many things we can do.

We're going to continue to invest.

It's been one of the clear differentiators and competitive advantages that we have in the marketplace, and we're going to continue to invest and try to drive revenue growth and get margin expansion through leverage.

And at this point, there's nothing that -- sure, we're going to look to optimize everywhere we can in terms of being efficient, but we are going to continue to invest for the long term.

That's been what Scott and Mike and the team have done here for 15 years, and we're not going to change that approach.

The next question comes from John DiFucci with Jefferies.

I have a question for Murray, and it's kind of a follow-up to Gregg's question, Murray, and it's trying to get some help in modeling this going forward.

No matter how you look at the numbers, they look strong.

But in this quarter, billings growth, and even more importantly the current billings growth, so looking at the change in short-term deferred revenue, was about equal to revenue growth.

Whereas in the recent past like, frankly, over the last 1.5 years, billings growth has been greater than revenue growth.

I'm just kind of trying to figure it out.

I mean, you're in the low 40s percentage growth, which is pretty amazing given your scale.

But should we start to see that?

I mean, the guidance implies that growth comes down a little bit, but frankly, the guidance has implied that for a while now.

But when we're looking going forward, just so we're sort of prepared, it seems to me that, with that sort of an indication, that we will start to see the growth still be very meaningful but not continue to accelerate like it has -- the revenue growth has over the last 1.5 years.

Does that make sense?

I mean, it's a good question.

There's a lot of things going on there.

I think if you look at the first quarter and the second quarter, one of the advantages we've had is that we're getting bookings and we're getting revenue from Trello that didn't exist in the prior year.

As we go into the second half of this year now, we're going to have the Trello compared.

Obviously, there's no purchase accounting haircut on bookings.

It's just on revenue.

So in Q3, Q4, we've got the Trello bookings from last year that we're now going to be comparing to.

So we've got some of that.

We also have -- when these price increases kind of work their way through, you will see some of that where bookings and revenue can shift.

And in the first quarter, we just had an easier compare.

Q1 of '17 was a tougher quarter, as we had talked for before, just because, we believe, the Olympics and the Euro soccer and all that stuff that was going on in Q1 of '17.

We saw just a little softer on the bookings side, and then we came back stronger in the second quarter of '17.

And so that gave us a more favorable compare in Q1 of '18.

The -- but as we go into the second half of the year, a big part of what you're seeing is, is the compare relative to having Trello now in the base.

Over the longer term, obviously there's going to be the law of large numbers, et cetera, that we'll be facing like any company.

But as far as here in the second half, it's the Trello compare that's causing some of this.

It looks like the growth rate isn't what it was in the first half.

Okay.

Great.

That's helpful.

And if I could, just a quick follow-up.

And I know it's really early.

You're a few weeks into the quarter.

But have you seen any change in business momentum?

And I know you have a pretty linear quarter, I mean, which is really unique in the software space.

But have you seen any change in business momentum over the last few weeks after the price increase?

Well, again, on -- if we look at the cloud, the price increases went in around July 31.

That's well past us.

On server we had, John, as you know, the -- on license was October 1 and then now maintenance is on Jan 1. And the business, in general, is the environment is good.

And so we're not really commenting specifically.

But so far through the end of December, we're quite pleased and nothing has changed in the tone of business since.

The next question comes from Michael Turits with Raymond James.

Two questions.

First, I know you said that you did well across all deployment models.

But can you comment and drill down a little bit on Data Center and the Stack bundle and talk about how much of a shift there might be there, how successful -- how much of a benefit that has been to billings?

And then I have another question.

Michael, it's Jay.

It just continues to do well.

We're pleased with it.

No outsized contribution relative to past quarters.

There continues just to be strong demand in the server base for customers largely with more than 500 employees that are looking to move to data center that provides better high availability and an architecture to support the kind of scale.

And the other indication in data center growth that we've talked about in the past is I think it shows kind of the broader standardization as companies move from technical teams to IT to business teams.

Stack is kind of a small part of removing purchase friction.

For companies that want to buy all of the data center family at once, Stack makes the purchase of all Data Center family products at once easier.

But there's going to be a handful of customers that do that.

A lot of them are going to start maybe with JIRA and then expand to Confluence and expand with JIRA Service Desk, et cetera.

And then finally, just -- the channel is a really important contributor to data center growth.

They work with a lot of our larger customers and tend to help them move from the original server deployment to the data center one.

And then my follow-up perhaps is for you as well.

As you're getting more adoption across the enterprise, obviously, you're sticking with your frictionless model.

But is there any change at all in go-to market as you have to deal more with centralized IT, with procurement?

Obviously, you've got the enterprise advocates.

How is that transition going?

It's not really a transition.

We've had Enterprise Advocates in the business for a couple of years, and there isn't a material change in the model at all and we described it in detail at the Investor Day.

The focus for the company is just to make purchasing easy for customers especially at scale.

And so we do that by building a product that people can try on their own, by publishing pricing.

So they don't have to call us and ask us what it is, by creating service teams like the Enterprise Advocates and then through our channel to help them when they need extra help if there are things that they can't do on their own.

And I think the results of the business, I think, is validation that that's working, and we're really pleased with how it's going.

The next question comes from Heather Bellini with Goldman Sachs.

A lot of the questions have been answered.

But I just wanted to know if you could share with us a little bit about the momentum you've been seeing with Trello and kind of how you've seen that evolve since the acquisition and the type of customer synergies you might be seeing and kind of leveraging the vast installed base that you guys already had.

Yes, thanks, Heather.

It's Mike.

Look, Trello continues to power along, and we're really happy with its progress.

As we've said previously, we're not even at the end of year 1 in terms of an integration program of the business, the team, et cetera.

And our main goal is maintaining the momentum of the product and business that Trello already is before we look at the opportunities potentially in combining customer bases.

And we have a lot of time to go through in continuing to do that.

We're pretty happy in how the Trello team fits with the culture of the broader Atlassian family.

And I think on all sides, it's been a great success so far.

The one thing we're doing is we're certainly not standing still.

So the product of Trello has had a number of improvements over the last period of time.

And if you're looking at the shareholder letter, you can see that we've officially introduced Trello to the Japan market, as a single example, in November.

We had the localized product and some partnerships and some marketing and things that we did down there, which is a good example of something that Atlassian brings to the table.

We already had the office there in Yokohama, so we could use that as a leverage point to get Trello into the Japanese market.

But a lot of the things that you talk about is still ahead of us.

The next question comes from Sanjit Singh with Morgan Stanley.

Murray, maybe I want to start with gross margins.

That has been trending down for several quarters now, and I'm sure that's related to the accelerated depreciation.

Can you give us a sense of how we should think about gross margin going forward?

Is there a quarter where gross margin starts to plateau after we get through this accelerated depreciation phase?

Yes, Sanjit.

So in terms of the gross margin, that's correct.

We've been going through a transition here where we've been accelerating the depreciation on the server equipment that we run in our own data centers.

Obviously, we're really excited about the fact that -- what the engineering team has done to get us to our new cloud platform, and we've actually reassessed the need for the remaining equipment and its useful life and it's going to be fully depreciated through the third quarter, which is what we're in now and we'll come to a close.

And that's kind of depressing the gross margin here in the third quarter and then it's going to be -- the implied numbers on the fourth quarter, it gets better.

As we kind of go on from there, it's just going to be the -- obviously, we're going to have a little bit of a benefit in '19 versus '18 because we don't have the accelerated depreciation.

But at the same time, our business is moving to the cloud, and the cloud runs at a lower gross margin like in all the others SaaS companies where we have to incur the cost of hosting the application, servicing those applications.

And so as you look at '19, it will just sort of be a little bit of a battle between the relief we get on the accelerated depreciation versus more transition to the cloud.

And then as we kind of go on from there, as that transition continues to that secular trend, moving to the cloud, there's just going to be a modest, probably, impact on lowering the gross margin over time as that transition goes to cloud.

But we are obviously very pleased with our overall gross margins, where we stand today.

The server business, which has very good gross margin, is not going away overnight.

It continues to be very strong.

You can see that in our results just this past quarter.

So that's also been a good lift for us from a gross margin standpoint.

Great.

That's super helpful.

And the follow-up is on sort of the HipChat customer base.

Any sort of details on how they're thinking about potentially upgrading to Stride or maybe sticking with their deployments or even potentially moving off to a comparative solution?

What have the conversations been like with the HipChat customer base?

And how do you see their deployment plans moving forward?

Yes, good question.

It's Scott here.

We recommend all of the HipChat customers in the cloud upgrading to Stride, and we actually have really strong migration paths for all those customers.

It's a very seamless process, and we're already migrating customers from one to the other.

And so we're seeing great excitement amongst the HipChat base for all the new features and the sort of change in the product when they move from HipChat to Stride.

So that's going really well, and we continue to sell HipChat behind the firewall for those customers that want something that they can deploy inside their network.

And in terms of getting them migrated -- getting the cloud customers migrated over, is there any sort of time frame that we should think about?

Will that happen over the next 2 quarters or a year?

Any time frame that makes sense?

At this stage, we're not publicly stating a time frame.

We're sort of -- they have all the pieces in place to gracefully move customers, but we want to be sensitive to their time frame -- tables to make sure they have a great experience.

So we haven't got a sort of definitive end day on that at the moment.

The next question comes from Richard Davis with Canaccord.

Most of this has been asked, but basically, one of the questions I got from investors was last year, you bought Trello.

So you obviously added a bunch of people, but you did pay a high revenue multiple.

What is your opinion right now of kind of the valuation expectations for possible M&A targets?

And how does that inform your interest in future purchases?

Yes, Richard, it's Mike again.

Look, I mean, we obviously don't comment on the targets or valuations of where other people sit at.

I think these are very complicated times in working out what works for both parties at a given time and a given market and for a given opportunity.

Again, we continue to use M&A as one of the series of tools that we have over the last 15 years to build the business, both on small sort of tuck-in acquisitions through to, obviously, more transformative ones like Trello, and we keep scanning the market that's out there.

Again, we've been very efficient stewards of capital over time.

I think our record speaks for itself there, and we intend to continue to be so.

And the next question comes from Jonathan Kees with Summit Research.

Just wanted to ask a couple of questions, one being on the more strategic part.

You've talked about before your land and expand strategy with corporate customers.

And I'm sure the bulk of it, like with this quarter, is still the traditional JIRA and Confluence and selling them more usage and additional products.

Just curious if during the quarter if you've seen any change in terms of greenfield for like Service Desk or even Bitbucket and HipChat in terms of those sales and then even the other way, where they are selling up to JIRA and Confluence.

Jonathan, it's Scott here.

Our business, as always, is dependent on what's sort of landing and expanding from a lot of different products.

And so you're right.

We've landed JIRA and Confluence.

Bitbucket lands a large number of customers, as does Trello, as does HipChat and Stride.

And the cross-sell paths aren't sort of linear.

There are sort of other companies out there in the market that have one very clear land product and then they expand and have sort of tuck-in add-ons on the back of that.

We haven't got that.

We're actually sort of lucky that we've got a large number of areas that we land with.

And so as we -- when Stride comes out in the market, we see that lands new customers.

Obviously, the acquisition of Trello helps us win more customers than we were previously.

But there's been nothing over the last sort of period of time where that's an inflection point on landing with one particular product or a change in the mix.

It's just that all the products get better at landing customers as we add more features and as we have more brand awareness in the marketplace.

Okay.

Great.

That was helpful.

And my last question is more of a housekeeping.

You have in the past talked -- given a count for like Trello customers, given a Service Desk count.

You just referenced last quarter's count of greater than 25,000.

I'm sure an updated number will be greater than 25,000.

Is it greater than 30,000?

And for Trello, we'll be curious what the latest number would be.

I'm sure it's greater than 25 million, which is what you referred to last quarter.

You guys have been great in terms of providing those numbers in the past, and obviously you're proud in terms of the performance.

You've been happy with the performance.

So any updated numbers in terms of that would be great.

Jonathan, we don't have any updated numbers to either of those 2. We continue to be happy with the performance of both.

Again, the 25 million users in Trello is from Summit last year, so it's only, what, 3 or 4 months ago.

So...

And Jonathan, excuse me, just to clarify, that 25,000 is organizations, not customers.

The next question comes from Pat Walravens with JMP Securities.

So I would love to drill down a little more on Bitbucket and to understand -- you guys like talked about sort of the philosophy and the differentiation, and in this case, maybe sort of the philosophy and the differentiation when compared to GitHub and how the whole open-source development plays into that.

Yes, great question.

Bitbucket has millions of users that use it on a monthly basis.

It's a very, very popular cohosting service.

Years ago, we chose to differentiate from some competitors by really focusing on where you go to do work as opposed to sort of host open source projects.

And that differentiation actually flows through to numbers of the features that we put into the product that make it appealing to businesses who want to do work around security features, around performance, around even just how teams are organizing the products.

Look, the integration with JIRA continues to be a big differentiator for that product as well because people don't choose their products in isolation.

And one of our team's great strength is that not only do we interact with ourselves and our competitors, but as we add more products and as we sort of add more of a solution for our customers and increasingly look to us for -- to provide more of their solutions to their problems.

So obviously, the fact that it's an Atlassian product and works with the rest of our products is a big differentiator as well.

Great.

And then if I could sneak one more in.

In my model, you're about 3 quarters away from hitting that $1 billion run rate, which has been an oddly difficult hurdle for a lot of software companies.

And I'm just wondering how you guys think about that.

Is it sort of a totally artificial barrier and you can just keep doing exactly what you're doing?

Or do you think -- have you been thinking sort of hard about how we scale through that?

It's Scott again.

Look, years and years ago, we've always set big, ambitious goals for Atlassian when we were, I think, a handful of people in a shared office.

We'd set a goal of having 50,000 customers.

And that took us about 10 years to get there, and that was a really big celebration.

And we're setting goals for active users and so forth, adding to the future as well.

And so revenue goals are really nice, and I think it's great for us to be up there with a very few select companies that have reached that milestone, if and when we do cross that milestone.

But for us, the sort of the things we get our staff engaged and get me and Mike excited about is the impact we have in the world, which is often around usage and size of the customer base versus a dollar metric.

(Operator Instructions) The next question comes from Nate Cunningham with Guggenheim.

On Atlassian Home, it sounds like you've gotten good feedback so far.

And I realize it's early, but have you seen any behavior like increasing engagement or more multiproduct usage among customers that are participating in that beta?

It's Scott again, just on Atlassian Home.

Look, the -- we're still very early in that rollout, and we've been doing tests with customers.

And we do see great results there, but not at a stage I'd be prepared to sort of share them publicly, and we're still early in the rollout of Home across all of our products.

And so while we're seeing a lot of engagement sort of on a one-to-one product basis, we're still early in the sort of multiproduct engagement cycle.

We have done some experiments in that area, and we're seeing some great improvements to how we're cross-selling or cross-promoting products.

But nothing I could give you concrete numbers on at this stage, apart from just we've been very happy with the results.

Seeing no further questions, this concludes our question-and-answer session.

I would like to turn the conference back over to Mike Cannon-Brookes for any closing remarks.

Yes, I'd just like to say thanks everyone for joining the call today.

We appreciate your time and look forward to keeping you updated on our progress, and I'd just like to send out a final thanks to Murray Demo in his final earnings call.

Thanks, Mike.

Thanks, everyone, for today.

The conference has now concluded.

Thank you for attending today's presentation.

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