All right, good morning, everybody. Day two of Citi's Global TMT Conference. I'm Fatima Boolani. I jointly head up the software research team here, if you haven't heard from me ad nauseam already. But, I am so thrilled to have Atlassian here with us, and the president of Atlassian, Anu Bharadwaj. Thank you so much for joining me on stage.
Thank you so much for having me, Fatima. It's wonderful to see you again.
Excellent. Well, I wanna get right into it, 'cause we've got a lot of ground to cover here. So, I'm gonna start at the highest level here, and then we can drill into, you know, more specific areas. But, you're coming up on 10 years at Atlassian.
Yes.
Congratulations. That's a big milestone. And the last one and a half years, you've been president. So you've obviously worn a lot of different hats at the company, from operations to product development to corporate development. So, wanna get a sense from you. You know, over the last decade, a lot has happened, but certainly over the last year and a half, a lot has happened at the company. So can you give us an overview of all of the progress you've made and under your purview, and the mile markers you've hit, and then conversely, some of the areas that you're still kinda working on as, you know, areas of opportunity?
Yeah, sure. Yes, 10 years is a long time, and it's been a fantastic journey at Atlassian. Over the past year, as you know, we've reached a number of interesting milestones as a company. We're now at close to $4.4 billion in revenue, with about $1.4 billion in free cash flow. So, FY 2024, last year, was a pretty great year for us. We also hit our first-ever billion-dollar quarter, both in revenue and subscription. Atlassian's also had a number of interesting milestones in terms of the products that we've built out. We released our Atlassian Intelligence capabilities in the platform, bringing gen AI right in context of people's workflows across Jira and Confluence.
Jira in and of itself is a $1.8 billion business that continues to grow at least as fast as the overall Atlassian business, which-
I have to remind people that's a 20-year-old product for you.
It's true.
Yeah.
Yeah. And it's fantastic, and it's particularly meaningful for me personally because I started at Atlassian as the lead PM for Jira, and Jira continues to be loved by both technical and non-technical teams. Well over half of our Jira users come from non-technical teams. And we also crossed the 300,000 customer mark, which is very unusual for an enterprise serving company, for a B2B Company, and we're lucky and fortunate to be serving that large a swath of customers. We had our first ever billion-dollar acquisition with Loom, which has continued to do very well. I'm very pleased with how we've performed with Loom post-acquisition. And overall, across the board, it's great to see customers continue to show strong interest and usage of our products.
One great example of that is our overall customers that have over $1 million in contract value that continues to grow 50% last year, which is, again, to your point, quite unusual for a company that has been around for as long as we have, which is just testament to the strong value and mission criticality that Jira and Confluence gets used in. Very pleased with the progress that we've made overall. In terms of looking ahead, the three big focus areas for us are around enterprise adoption, AI, and what we call the system of work, which is effectively the Atlassian portfolio of products that we offer customers, which typically gets deployed wall to wall.
In terms of enterprise adoption, over the last few years, we've made substantial investments in R&D to make sure that we tackle enterprise requirements around scale, reliability, data management, data residency, security, compliance, certification. So you see a lot of those milestones that we've put out on our public roadmap that we continue to deliver against, which has led to a lot of our data center enterprise customers now choosing to adopt cloud because of the enterprise readiness of our products. On the AI side, we've launched Atlassian Intelligence, as well as Rovo, our latest new AI SKU, which is an agent-building framework, which allows companies to really create their own agents for their own context, grounded in their own data.
And that has been very promising, and it's very early to market as well, and we continue to hear from customers. Thousands of customers have adopted Atlassian Intelligence already, so far, and I'm very pleased with the repeated usage that it gets, 'cause one of the interesting things about AI is, where are the use cases where you can unlock tangible productivity benefits? Domino's has been a great customer example that has used our Jira Service Management AI-powered virtual agent and has managed to deflect a majority of their service requests to the virtual agent instead of handling... getting it handled by their actual service teams. So pleased with the progress on AI. I think still early innings, so very much looking forward to seeing how that plays out.
Finally, the system of work, which is the Atlassian portfolio. Lots of customers use Jira and Confluence in a mission-critical way. As I took the president role, one of the things I've done consistently is talk to two customers every week, one enterprise and one small/medium business, and the one consistent thread I continue to hear from all of them is the desire to understand how to use our products in an integrated, holistic fashion, so more and more customers come and ask us, "Help us adopt your products wall to wall, such that we can consolidate on a platform." Our product-led heritage has really put us in a place where we have a swath of 14 different product offerings that serve multiple teams.
And more and more customers ask us to help consolidate on a single Atlassian platform, such that different teams using different Atlassian products can really integrate themselves on one connected data model. So we've done a bunch of work there by bringing the two Jiras together into a single Jira that serves both technical and non-technical teams by bringing Loom into the fold and really helping customers adopt not only products, but practices and ways of working.
That's a very comprehensive view of the strategic imperative, so I wanna break that down a little bit more. So starting with the enterprise focus, and the strategy around really you know cementing your name, and your brand, and your awareness in the enterprise. So we can take this in with two vectors, right? So from a product perspective, I think you alluded to this a little bit, what are you doing, and what have you achieved from a pure product capability perspective to support some of your largest enterprise customers? And you know I think for the audience customer testimonials and anecdotes are super impressionable. So if you can talk from the lens of the customer. Domino's was a good example.
And then just from a go-to-market perspective, given that your ethos as a company has historically been very product-led, how does that change the philosophy about how you go to market to monetize these very large enterprises in a much more meaningful way?
Yeah, yeah, great question. So purely from a product perspective, the first part of the question, what have we done to support enterprise customers? We put out a public roadmap for customers to look at what's coming up in the future in order to support them, and what have we delivered already in terms of product capabilities. So there, it's classed into a few different categories. One around scale, which is the number of users that we can support concurrently on Jira and Confluence instances, and there you've seen us grow from 1,000 - 5,000 to a 100,000 to unlimited number of users on some of our enterprise editions.
Second category is around data management and data residency, so we've now gotten to six different data residency regions across the world, which is very important for enterprise customers, especially those that operate across multinational geos. Third category is around ecosystem support. So a lot of our enterprise customers use third-party applications to extend their use cases, and this has been important in terms of providing not only the API support, but a lot of our enterprise customers care deeply about security, privacy, and how their data is handled by these marketplace apps, not just with Atlassian first-party products.
So one of the things we had repeatedly heard was: "Give us the confidence that these third-party apps are just as safe and secure as Atlassian products are," which is why we introduced the Forge developer platform and certification of privacy and security compliance needs for our marketplace apps. So those three categories are really the ones that we have made progress in terms of serving enterprise customers, which is why we've unlocked a lot of data center enterprise customers coming into the cloud. In terms of a specific customer example, we recently had a large aerospace and defense company sign a hybrid ELA contract, which is basically a way for them to distribute their workloads across data center and cloud.
And the work that we've been doing on FedRAMP and some of the other data certifications, those are really the pieces that help enterprises adopt our cloud products. The public roadmap is very important in that a lot of enterprises, as you know, the way they make decisions is also in terms of what else are you going to deliver over time, such that it coincides with their adoption. We see a number of large enterprises use that. To the second part of your question around GTM, how is that evolving? As you know, with Atlassian products, I never have to go to a CxO and have this conversation of: "Here's what Jira does.
Do you know what Confluence does?" It's almost always a conversation of: "3,000 of your teams are using Jira and Confluence. If you had eight thousand of your teams consolidate on the platform, here are the obvious benefits you get." One obvious benefit being around cost. Another obvious benefit being around a connected data model just unlocks more insights, and your data can do more for you when everyone's on a single connected data platform. So our GTM strategy is very much built on top of that, which is different than a classical enterprise strategy of a classic top-down sale. Ours is more of a consolidation play. So to that end, our GTM play has very much always been to make sure that we explain the consolidation story. We help support the consolidation narrative for customers.
So what we have done over the past few years has really been an evolution of our GTM strategy to make sure that we have access to the right decision-makers, that we are able to help customers on the ground with consolidation, bring our channel partners to the conversation, and have them provide value-added services to help customers go through that multi-year journey. So you'll see us doing more and more of that on the GTM side.
Maybe to ask the same question in a slightly different permutation is, you know, your million-dollar ARR customers are actually pretty small as a proportion of your base.
Yeah.
Right? So in a lot of ways, there is a ton of potential for you to change that proportion, right? But in the same breath, how do you not succumb to the pressures of having to sell to an enterprise in a top-down way? Because enterprises tend to buy in a certain way, right? So how do you stay true to your roots around how you're gonna expand without putting undue pressure on your sales and marketing investments, which are highly efficient right now? Because I think that's one of the questions we get a lot, right?
Mm.
Is that, you know, you don't actually have a conventional, classic enterprise sales motion. But to achieve more million-dollar ARR customer milestones, do you ultimately have to capitulate and go down that path? Why or why not?
Yeah. Yeah, it's a good question. And maybe to set context for what that opportunity is that you're referencing, last year, we grew our number of customers that spend over $1 million with us by 50%. So for a company at a $4.5 billion, 120 years of presence, that number is pretty startlingly high, right? That growth rate is quite impressive. And the way we think about the opportunity for enterprise is that if we did not get a single new enterprise customer starting today, and if we did not build a single new product starting today, just amongst the existing enterprise customers that Atlassian already has, just cross-selling our existing product base represents a $14 billion opportunity for us.
So that really speaks to your question of: How do you make sure that you take advantage of that upside opportunity with a GTM model that is very unique and tailored to our strengths? So to that end, what we do is we typically have conversations around two specific points. One is vendor consolidation and consolidation on a single Atlassian platform. For example, one of the customers that has done that is Rivian, who replaced five different tools around work management with a single Atlassian tool set and saved over $1 million in the process. So the cost benefits are pretty tangible and obvious, and that works in our favor. So a lot of the times, our go-to-market strategy is very much just demonstrating data around total cost of ownership.
And there are plenty of examples like Rivian, where consolidating on the Atlassian platform results in an obvious cost benefit.
What is that typically, that cost benefit for customers who do realize, you know, rationalization of tool sprawl? I mean, how do you, how do you typically see that quantified, and how do you demonstrate an ROI or business value against that so that you are monetizing that ROI?
Yeah, that, that's a pretty simple one, given the number of SaaS subscriptions that a typical enterprise has to wrangle with. And over the zero-interest era, there has been a lot of purchasing of multiple SaaS subscriptions-
Mm
... which tends to be a common enterprise customer problem, that they now want to consolidate such that their data isn't fragmented all over the place. And the way we demonstrate TCO there is pretty obvious in terms of the number of SaaS subscriptions that you don't really need versus consolidating on a single license, single subscription. Another great example is Reddit, that saved several hundreds of thousands of dollars a year by consolidating on multiple tools. Like I said, the weekly conversations that I have with customers, a common thread that comes up often is now that customers have fragmented their data in multiple places, what's the easiest and fastest way to really bring everything together on a trusted platform?
The fact that Atlassian has been used in a mission-critical way for decades at these companies really puts us in a good place for us to be the consolidator of that platform. A second obvious thing for enterprise customers, back to your GTM question around what we typically do, is we also have a very wide swath of customers. So we serve the Global 500,000, not the Global 500, necessarily. What we do is we tend to approach from multiple insertion points at the bottom and follow a coexistence strategy for several years, which can then be followed up by a displacement strategy. A great example is in JSM, for instance.
We had Hy-Vee, a great customer example of using Jira service desks across multiple points of sale across their company, leading to a fairly big wall-to-wall deployment. The number of agents they used ran into the hundreds compared to what we typically see, and so in terms of how JSM gets enterprise adoption is also very interesting for our GTM strategy because typically it starts out with a few agents getting used for an IT use case or an HR use case or an internal IT help desk use case, because the tools are built horizontally, they then get proliferated across multiple teams, leading to a 20-agent instance becoming a 2,000-agent instance.
And recently, we had a ServiceNow displacement in a customer, where the three primary points of advantage and causes for that displacement was, one, just the cost, the relative price across the two products, and second was time to value. A lot of our enterprise customers in a world of complexity really want to be able to self-deploy and see value very quickly, which JSM does. And the third is the ability to serve a wide variety of use cases, which Jira has always done, given 50% of our users have come from non-technical bases-
Mm-hmm
... and 50% from technical.
Mm-hmm.
Just connecting dev and ops, connecting dev and IT teams, is a natural consequence.
... you know, the term consolidation has popped up in many instances in our conversation. So, you know, one of the questions we get a lot is Jira and Confluence have been absolute powerhouses for you. So there's, you know, some lingering concern that are we at a point in the market 20 years in where there is a degree of maturity, there is a degree of saturation, right? So how do you sort of assuage or maybe debunk some of the concerns that, "Hey, you've had a good runway, but you've pretty much hit the folks and captured a good chunk of the market that you would?
Yeah.
So that, that argument around saturation, how would you counter that?
Yeah. I think there are two interesting data points to think about when thinking about market penetration of Jira and Confluence. Purely in the traditional hold of IT teams, technical teams that use Jira and Confluence, even if we just looked at the technical teams market, our total serviceable addressable market there is about $17 billion, and Jira is a $1.8 billion business. So, just purely mathematically, there is a big upside there to be gained. And from a qualitative perspective, when we talk to customers, an important data point is that about 50% of Jira and Confluence usage comes from software development teams or teams writing coding or writing applications as their fundamental day job.
However, the other 50% comes from non-technical teams that have nothing to do with coding or creating apps for their day job, and that segment is hugely untapped, right? And that segment is also way bigger than the technical teams segment in and of itself, and we've seen repeated points of success and evidence that we can reach those teams. So, Jira Product Discovery is a great example of how customers use Jira to really look at customer feedback, categorize those into themes, and make sure that that feedback gets addressed in the next wave of what they put out.
Jira Service Management's a great example of how help desks are used to serve different use cases, like HR teams that are trying to answer questions about payroll across different geos, and how do you really bring the power of AI to those workflows such that you can use agents to do a bunch of that work and capture even more users as your audience. So overall, I think about it as the number of people that we serve, even purely on the technical side, there's plenty of headroom to grow. And more importantly, we bridge technical and non-technical teams, which is a unique way that Atlassian products operate, and that represents an even bigger segment of users and market that we can address.
Okay, so we checked the box on Jira and Confluence.
Yeah.
We feel better about, you know, the fact that it's actually not as saturated as, you know, might be perceived. On JSM, you brought up a couple of examples, or one example rather, of a ServiceNow displacement. Can you paint the picture for us what the landscape here looks like, greenfield versus brownfield? What is your right to win in JSM, and how do we get this $600 million franchise to be a billion-dollar franchise in the next three years, hopefully?
So JSM, as you know, has been one of our fastest-growing businesses, and like you mentioned, is at a $600 million business right now, and is growing faster than the other two core businesses at Atlassian. There, fundamentally, like I said, we have three advantages in market. One is price, both compared to some of the-
Sure
... mid-market entries, as well as some of the larger enterprise vendors. JSM has been very much priced... Despite the price increases that we did last year, which were fairly substantial on Jira Service Management, we continue to be priced at a very, very competitive rate. Recently we had Forrester include us in our in the leaders quadrant across service management. They particularly called out our strategy of having an all-encompassing vision of where service management can be used. So the second place that second way that we are unique is really the horizontal nature-
Mm-hmm
... of our tools, such that we bridge not only the DevOps use case, which is the classical use case. We start with adjacent IT teams using Jira Service Management while Jira was getting used by developer teams, but also across, marketing campaigns, or finance teams trying to serve numbers to different, parts of the company. So just the horizontal nature in which we've embraced enterprise service management, not just as IT service management, is a unique thing for JSM that works in our favor. And lastly, like I said, the time to value.
I think the service management market has gotten to a place where it's many of the product offerings are needlessly complex, and a lot of customers complain about how they have to spend millions of dollars with consultants who then try to implement said service management product, making just the overall spend eye-watering. So in many ways, just the fact that Jira Service Management operates like a classic Atlassian product, where you can self-serve, you can deploy, and you can start seeing value within a matter of days, not months and years, is a big advantage.
Mm-hmm
... for us in terms of capturing customer attention. So what we have seen is in terms of greenfield versus brownfield, to your question, typically we enter at the mid-market range or the smaller range, where the tools we are displacing are often email or Excel sheets rather than structured workflows. And once teams start seeing how easy it is and how valuable it is, they tend to then start replicating it across multiple other companies, sorry, multiple other teams across the company, thus getting wall-to-wall coverage.
One of the other smaller company examples we see often are IT teams themselves not being able to manage the volume of requests, then go off and really evangelize to other product teams, other functional teams, how they can use Jira Service Management in their day-to-day existence. Customer support, customer service is another common use case that we see. We recently did a Zendesk replacement at an American food company, which again, saw all three of the things that I said. It was an improvement in total cost of ownership based on the price, it was easier to see time to value, and it really connected the customer support and the development teams together such that it made the overall customer experience a lot better.
I know part of your remit is to think about pricing strategy. You talked about 14 distinct SKUs in the portfolio, but fundamentally the business has been more of a seat count or seat-based orientation as it relates to monetization, right? And look, we've kind of gone through the vicissitudes of the macro, and there has been, you know, headcount, you know, variabilities, and that certainly impacted the business. So how are you thinking in broad strokes about kind of your sensitivity to predominantly seat count and seat-based model? And how do you maybe mitigate some of the pressures around that? You know, certainly that's been an area that's gated a lot of your cloud momentum, and we'll get to the cloud business in a second.
But just at a high level, you know, the modalities of pricing and how you're thinking about that, especially as the portfolio grows, especially as you drive towards more tool consolidation.
Yeah. Yeah, so in terms of pricing, our overall philosophy has been pretty consistent and steady, and I don't see that changing in the near term. But what is that pricing philosophy? We very much price for value, and we have steady price increases across the entire portfolio that customers have now come to understand and expect, right? So, across-
Is there, is there fatigue around that? I have to kind of put the elephant in the room, because there has been a very consistent cadence of pricing increases over the course of the last three years at least, right? Like clockwork, every October, every January-
Yeah
... you do have, you know, these price increases. So, you know, is there a level of fatigue, if you can address that?
There is definitely not any sense of fatigue that I hear from customers around pricing, primarily because in Atlassian we spend a fair amount of our budget on R&D, which is unlike most other enterprise companies, and that enables us to deliver the kind of innovation and customer value that justifies these price increases, so if you just look across the board at any of our cloud products over the past year, we've delivered both value in terms of driving upsell, where the premium editions, the enterprise editions continue to get a lot of features around automation and analytics and scale and performance, and now AI, Atlassian Intelligence, distributed through those editions, and each of the different products continue to get features that are applicable to specific product personas that consume these products.
So the price increases are very much in tune with the amount of customer value that we're able to deliver, thanks to the innovation engine that we have. But overall, in terms of the philosophy, we like to keep a consistent, steady drumbeat of price increases commensurate with the value that we're delivering. In terms of seat-based versus not, I do think that there is an interesting exploration there around consumption-based pricing, which we will really think through, especially in an AI world, where we talk about virtual agents, which will be different than a seat-based model. But I think of it as an addition. In addition to our existing seat-based model, there will also be a few consumption-based pricing components.
I wanna take a step back and talk to you about the architectural shift in the portfolio that you've been quarterbacking, right? The whole move away from server to data center to cloud, right? So at present, you're essentially kind of running the R&D organization around the data center customer base, and the cloud customer base. So, from that standpoint, you know, the data center business has been very strong.
Yeah.
You talked about some hybrid ELAs earlier. So, what is sort of the next set of milestones that you're hoping to achieve now that you've, you know, completely sunset server and you know any forms of predecessor perpetual form factors?
Yeah
... you know, running the business around Data Center and Cloud? And then specifically, what that journey for a customer is gonna look like from Data Center to Cloud to ultimately drive much more robust momentum in your Cloud business, because that's where you want to be.
Yeah. Yeah, so, the migration journey has been a multi-year journey for us, and as you noted, the Server end of life was one of the very important milestones for us as a company. Not just as a business, but also it represented a more symbolic moment of on-premise products, the oldest line of products that we started with, where we have made a very clear signal to customers that we want them to be on Cloud. Cloud is really the ultimate destination. It's a question of when, not if. So with that categorical declaration around we want all customers to be in Cloud, our innovation has all focused primarily on the Cloud.
Over the last year, the migrations that we've had have not only come from the Server customer base, but a bulk of it has come from our Data Center customer base. These are customers that technically don't have to move, like the Server end of life caused Server customers to move, but they chose to move because the amount of innovation on Cloud and the compelling reasons to be on Cloud far outweigh the reasons that they would remain on Data Center. Looking forward, we expect that momentum to continue, but the customer base that remains on DC tends to skew a lot more enterprise-
Mm
- compared to our server customer base. But what that means is that's going to be a bit more of a complex and time-consuming journey compared to a lot of our small, medium businesses that have already migrated to the cloud, which was a lighter weight lift.
Mm.
In order to facilitate that, what we are doing is running a number of different programs supported internally, which we call a ride-along program. A lot of our PMs and engineers really pair up with our large enterprise customers to help support their journey from Data Center to Cloud, giving them day-to-day support, offering advice on reference architectures, on how the deployment should look like on the other side, et cetera. A second way we help them is through channel partners that can really stay with customers through every step of their journey, especially as they navigate these multi-year complex journeys from Data Center to Cloud. And Hybrid ELA, like you mentioned, a number of our large enterprise customers...
Recently, we had a large bank with thousands of seats make the step from DC to cloud using the hybrid ELA model, which allows for a staggered journey, where they move some of their workloads-
Mm
over to Cloud to enjoy the benefits of the new user experience, the new products that are available, Jira Product Discovery, Compass. A lot of them purely available on Cloud, while they migrate their existing workloads as more and more of our certifications come online.
Mm-hmm
... over to Cloud. So I expect that over the coming year, we will continue to invest in the three R&D categories that I described at the beginning of our conversation around data management, scale, ecosystem, app support, and that customers will continue to have that multi-year sort of staggered journey over to Cloud.
You recently announced a CRO transition. So given the number of parallel imperatives and initiatives that you have cooking-
Yeah.
How do you expect to partner with a new incoming CRO? Any updates on that to share would be also helpful. But how do you expect to partner with this new CRO in achieving a lot of these objectives, right? Really handholding a lot of your customers to eventually get them to the cloud destination, then getting them to spend more, getting them to buy more. You know, how does that sort of trickle downstream in the way then you think about sales incentives and sales compensation?
Yeah, yeah. So, right now we are looking for a CRO. We're in the process, and the reason why we even started doing that, as we explained in the earnings call, is really we've reached a scale with our enterprise customers. With the $14 billion addressable opportunity that I talked about, and with the stack and breadth of product offerings that we have, really, the next set of problems for us to address as a company is: how do we scale that machine? How do we really meet enterprise customers where they are in terms of deal complexity, in terms of procurement, in terms of customer success, so not just delivering these products, but also making sure that we help them adopt and deploy and grow and expand.
Because cross-sell is an important part of the business model for us, as you know, and that really will require us to handhold our customers and encourage more adjacent use cases in a bit more of a proactive fashion than we've done before. So to that end, I think it's highly important that our incoming CRO understand the dependence between the self-serve model and the enterprise model. Because we're not the classic top-down sales-
Right
... of let's just sell a bunch of seats and then figure out how that gets deployed.
Mm-hmm.
It's a lot more of there is usage in customers already, so the way that the CRO will have to partner with the R&D team is really going to be quite close and unique to the Atlassian business model. So one of the advantages of that is that because we have a strong self-serve motion, which allows us to land and expand in enterprise companies, in many ways, the CRO is free to focus on purely the procurement, the delivery, and the go-to-market portion of this because we have a strong foundational base. The other side of it is really around: how do we make sure that as we evolve to serve these enterprise customers, we continue to be successful with the cross-sell and expansion of adding more products? That, that is secured by the product innovation engine-
Mm
... that we've invested in, and this is one of the things that takes long, patient investment. So Point A Products, addition of Rovo, Atlassian Intelligence, Jira Product Discovery, Compass, Atlas, a lot of our products is really a good proof point of the CRO's freedom and flexibility to say, "Okay, here's an ever-increasing swath of products that we can offer to our customers.
One of the things you mentioned at your Investor Day that really struck me was a cloud customer has a 2x higher propensity to expand.
Right.
Right? And that probably comes with a better expansion velocity as well.
Yeah.
So you can correct me if I'm wrong there.
Yeah.
But then there's a chicken-and-egg situation 'cause you also talked about, hey, Data Center actually has the preponderance of some of your largest, maybe most complex customers, right? So we talked some, a bit about some of the blockers, right? You know, there's reticence from Data Center customers to maybe move to the Cloud for a variety of reasons. But what can you do-
Mm-hmm
... to really streamline that path? Because I also think, you know, in adjacently and tangentially, you've been taking more of a carrot-based approach, 'cause all of the new product innovation and the goodies, like Atlassian Intelligence, are only available in the cloud. So how do you kind of grease the wheels of migration so that you can ultimately monetize better? Because there are customers that are very happy on data center, so how do you change that behavior, and what's in your control there?
Yeah, so fundamentally there, I think the incentives around innovation don't change. So I talked to a number of Data Center customers that are struck by how much better the user experience is on the Cloud side and how many more offerings we have on the Cloud side. AI is a predominant one that comes up often there. In terms of there's just technologically, AI, analytics, automation, a lot of things that you can do on Cloud that you just cannot do on Data Center. And we have clear evidence to show that pull, that attraction works very well for Data Center customers. The flip side of it is the end-of-life question for Data Center. At some point of time, we might have to do that for Data Center like we did for Server, but it's not in the near future-
Mm
... for sure. So, really, what is within our control and what actually works very well for us is the pull, the carrot approach that you're talking about, in terms of pure innovation and in terms of the expansion and cross-sell working well too. But one thing that I do wanna call out is, expansion and cross-sell, is better on Data Center than on Server, better on Cloud than on Data Center, but it doesn't all have to happen at one shot. This is why the hybrid model is a great model for us in terms of moving workloads and adding new products, works as a very effective way of cross-sell and expansion for us.
So even if a small portion of the workload moves to cloud among our larger enterprise customers, that gives us the entry point to attach more new seats.
Mm
... of cloud-only products, which can then work very effectively as cross-sell.
I know my last question for you is, you know, we talked about the momentum and the drivers and vectors for growth, but ultimately you're constrained by resources, right? So resource allocation-
Mm-hmm
... both from an organic perspective and inorganic. So with all of these kind of product innovation priorities you have, you know, how are you thinking about the broader OpEx and specifically R&D envelope? And then, you know, you haven't been shy about doing M&A, so what is your perspective and eligibility, rubric, and framework, and criteria, to introduce assets like Loom? You just did another acquisition-
Right
... Rewatch earlier this week, I think, or last week, so just how that kind of dovetails into the way you're thinking about resource allocation and investments.
Yeah, sure. So we will continue to be smart and prudent about the kind of M&A that we can do, such that we can expand the audiences that we serve, and we can improve the adjacencies that we have in the market. Loom-
Has the bid-ask spread in the private markets compressed relative to the-
ZIRP era?
It has definitely been different, for sure, and Loom has been a great example of an acquisition that works very well with the product ethos that we have and the asynchronous collaboration use cases-
Mm
... that we serve, as well as the go-to-market motion of, enterprise adoption riding on top of a strong self-serve motion. So you can expect us to continue on the M&A path with assets that make sense from a product and GTM perspective. In terms of overall growth itself and R&D, we've always been a company that has focused on R&D, and we will continue to do that. So I would expect we'll see some kind of scale efficiencies as we grow and scale as a company. But it very much is going to be a place where we continue to focus on building and innovating, and building the future for our customers.
So expect that R&D will continue to be one of the most important investments that we will make, and we'll be smart and efficient about it as we scale.
Wonderful. Thank you so much for the time. I really appreciate it. It's always a fantastic conversation.
Thank you so much for having me.
Thank you.