Okay. Thanks, everyone, for joining. So thank you for coming to Atlassian Summit 2019 and today's investor session. Before we get started, I just had a few words from our friendly legal team. Today's session has been webcast and is available for viewing on the Investor Relations section of Atlassian's website at investors.
Alacian.com anytime you want. A recording of today's webcast will also be made available on the AI website. We will post the presentations from today's session on the AI website after the session has concluded. Statements made during today's session include forward looking statements. You should not rely upon forward looking statements as predictions of future events and the statements represent our management's beliefs and assumptions only as of the date such statements are made.
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 titled Risk Factors in our most recent forms 20 F and 6 ks. A quick overview of today's agenda. Secondly, I'm going to pass it over to Mike Cannon Brookes, one of our Co Founders and Co CEOs, for a few welcome comments. I'll then pass it to Jay Symonds, our President, for a go to market overview. Sri Vishwanath, our CTO, will do an R and D overview.
And last but not least, James, our CFO, will do a financial summary. We're going to have a short break, stretch your legs, and we'll have a group Q and A session up here. Scott Farquhar, our other Co Founder and Co CEO will be joining for that session as well. We'll go next right next door for some cocktails and then we'll aim to end about 5 o'clock today. As I mentioned, if you'd like to download any of the slides for today, they will be made available on the IR website following today's session.
So with that, I will pass to Mike Hinbrooks.
Hello. Hello. We're on? Austin, thank you. How are you all doing?
Good. Okay. We aim to have the best customer community. We're also aiming to have the best investor community. So we're going
to need a little more energy.
I know you've got lots of questions. I see you tied down here. He's got his questions ready to go. So it is good to see so many familiar faces. We do have an awesome investor community.
I have to say it's really great. You all push us to be better and ask us really interesting questions. So we've really enjoyed the journey so far and enjoy it. So thank you very much for being here. I know you've all traveled a long way to be here and it's a big day, lots of other things, so we really appreciate it.
We do have a great lineup for you today. As Iain mentioned, Jay is going to get up and talk about the markets we serve, the model, some more continual depth on the opportunity in front of us and how we think about going after that. And then, Shri is going to spend a time on a topic I know a lot of you are interested in, R and D and how we think about that, how it's organized everything else. And obviously, James will come up and elegantly cover the financial model and the results of all of the previous. What we're not doing today is covering products, product strategies, those types of things in detail as basically that's a large part of the broader summit.
I hope a lot of you went to the keynote this morning and seen some of those things. Obviously, we have Q and A at the end, but there's lots and lots of sessions. And also I don't encourage you we have the product keynotes. There are 4 this year just because we can't get everything into the sort of morning 1 or 2 keynotes at all. So we're spending a lot more time and energy on those products keynotes.
They are produced as per a normal keynote. And there are 4 of those, server data center, conference and Trello, the software teams, so Jira Software and Bitbucket and then the IT and Digital Transformation Group. Those will all be recorded and online. So you don't need to worry about kind of running around to see all of them. I know you're obviously all in here, but they are recorded.
You can obviously watch them from later. And then tomorrow, we have a general session. If you are still around tomorrow night, obviously, you're all welcome to the bash, which will be a whole lot of fun. Other than that, I will be back later this afternoon to answer Q and A alongside Scott and everybody else here on stage. And then both founders will be hanging out at the cocktails to have a beer and relax after a big day.
So with that, let me pass to Jay to kick things off and I'll see you a little bit later. Thank you
much. Mike on? Mike on, all right. I wish I had a great story for this. I got in a wrestling match with a ladder and a light bulb and realized like halfway down that I could have been a pretty good gymnast and then realized when I landed that no, I was in fact not a good gymnast.
So I'll be limping around for a few months. Maybe before we start, a quick thank you to Martin and Ian. I think we have the best IR team in the business. So yes, do we? And also thanks to you.
Thanks for being investors, maybe future investors, maybe lookie loos, everybody that's both in the room and online. Thanks for coming. Thanks for your interest. So there are hopefully four riveting chapters in the story I'm going to tell you today. Part 1 is really outlining the markets that we serve and that we plan, the opportunity in front of Atlassian.
The second is how we take our products to market and how the high velocity model works to win customers that are both small and super big. 3rd, I want to unpack some new dimensions of what we believe is our greatest asset, the customer base, many of whom are assembled here at Summit. And I hope that you get a chance at the event to walk around and speak to both customers and partners, because I think you'll be able to unpack a lot of insight from them if you pull them aside and just ask them what they're doing. If you don't have that opportunity, the 4th chapter is me bringing up both a customer and a partner have a direct conversation in front of you, so you can hear from them directly. So with that, here we go, fasten your seatbelts.
Part 1, just understanding what we believe is still an enormous opportunity in front of Atlassian. Our opportunity begins with something that's probably super familiar to you if you've been following along, our mission. The company's mission is to unleash the potential of every team. You heard that in the keynote. You've heard that at every keynote literally almost since the beginning of Summit.
And it's something that we've been diligently working towards ever since our early beginnings. The reason why is because we believe, maybe a head nodder, that teamwork is the currency of future progress. Any individual company, every company that's assembled here and every company that's not here, their future outcomes, their gains in efficiency, their unique competitive future competitive advantage is either going to be 1 or largely earned or accelerated by improving how their employees, how their people work better together. And teamwork is hard, it's messy. It's often a maze of ideas and concepts, plans and progress, data, dependencies, deadlines, lots to sift through.
And along the way and at the end, there's usually triumph and frustration like we've all been parts of teams that and we've seen how teamwork is hard. The demands on modern teams is increasing some of that complexity. So there's new data and new information and new software that we're using in our workplaces that is both incredibly valuable and opens up new opportunities for our companies. But along with it increases fragmentation, can hinder consensus and can hinder shared outcomes. New technologies from the phones in our pockets to the tablets that we walk around with, to new software that increasingly people are empowered to bring into their workplaces to do more.
New dynamics around teams, how teams are distributed, the increasing propensity for people to work at home part of the time and actually not be in the office, The freelancer, the gig economies, big generational changes in many of our workplaces. And then finally, just the increasing expectations that we can keep pace with the change around us. The ever increasing demands on always pushing forward, always moving faster, being more nimble and agile, making decisions faster with the software and tools that increasingly are helpful, but also always on and always present. So Atlassian has thrived by both improving teamwork in general, but also by uniquely positioned being positioned to solve what tends to
be the
most difficult challenges for teams inside of modern businesses. So we think about these very high stakes collaborative workflows and work that demands the highest degrees of everything you see on the screen, cross team collaboration, tracking of dependencies, shared context traceability, constant feedback inspiring, time sensitive deliverables where the outcomes are truly are high stakes and very important to the business. So everything you see on the screen is really what we're known for. It's why customers hire our products for the jobs that they do. If you zoom out on the markets that we serve, the broadest landscape of opportunity for us includes thousands of different use cases for thousands of different types of teams.
Our products provide the essential building blocks for better teamwork in general, managing shared projects, tasks and deliverables, creating and sharing content together as a team, the faculties for deeply contextual discussion and communication, those things are all improvements and necessary for just how people work together. Number of our products serve this really wide ranging market landscape. See them on the bottom left. And when you meet companies here at Summit, I encourage you to sort of dig into where are you using these products? Where did they start?
Where did they go? How are they being used? And I guarantee you, you will hear a multitude of different use cases across many of these unique companies. There won't just be 1, there won't just be 10, there will be hundreds of different things that they've applied our products to improve how their employees work. Twilio and HubSpot are really good examples of companies that drive an incredibly high degree of broad team collaboration communication through their use of our products.
Where Atlassian actually is part of every new hires on boarding for how to communicate and how to connect with colleagues and get more work done once they get indoctrinated into the company, matriculate into the company. So this creates for us an incredible number of opportunities to begin a relationship with a team or with a customer, a number of unique landing spots where any single team or any single user on a team can use 1 or more of our products to improve how their team works. It's as simple as signing up for an account online, inviting your team into the product and then beginning the process of improving your efficiency or improving the outcomes you're trying to drive collectively. There are, however, a couple of landing spots that we believe we are uniquely differentiated to land and win in. And where the teamwork is so complicated and so high stakes that tools like ours, products like ours are just absolutely essential.
You cannot do these collaborative workflows without many of our products. These land opportunities are both incredibly valuable to us and to our customers independently, but they also offer us this wonderful vantage point from which we can expand to many other things that we can help our customers achieve. So the first of these is probably familiar to you. It's where we got our start way back in 2002 with teams that were building software. And as you've heard us say many times, this collaborative workflow is not just the domain of software developers and engineers.
In 2019, and actually over the past decade, it increasingly has become the domain of a highly cross functional collaborative group of people that are all sharing the same pursuit of some sort of technology initiative. It involves coordinating this very highly diverse set of skills from developers to designers to program and product managers to participants within the business across finance, sales, marketing, IT. Many of the folks you meet will probably be from IT here, but they'll be from all walks of life inside of their companies. And many of them participate in this particular workflow around software development. So within the Fortune 500,000, which is the big macro market that we're going after, the department that we largely sold into initially and the department that has become some of the strongest advocates for what our tools can do inside of their companies is in fact IT.
In many organizations, IT and software development were just one department that were part of the same. It wasn't until you get into bigger companies where you created a divide and you had a software development part of the company, maybe an IT and operations part of the company. And DevOps, by the way, is sort of a functional bridge to kind of reunite those in companies that are really large and significant scale. So we've continually deepened our focus within IT, understanding additional collaborative workflows that we could help IT solve both for themselves and for parts of the business that they serve. One specifically is around IT Service Management.
And then from there, the broader service collaboration opportunity that exists in any line of business or any function in the business that's providing a service to the rest of the company. And then most recently around incident management and IT operations. So within IT service management, again, it's just one product, it's sort of a number of collection of products that can be used in concert to solve these problems more meaningfully for IT. Jira Service Desk is obviously a very popular product for companies to deploy that IT service and collaboration platform. Again, supporting their IT help desk is the canonical maybe first port of call, but also all the other service centers within the business that could help the business function and provide more collaborative service and support to their employees.
You saw a great example of that in the keynote this morning, if you saw it around legal and how easy it is to just spin up a very simple collaborative workflow around maybe document review. IT commonly deploys Confluence as a knowledge center hub for IT documentation collaborative content, sort of another really common product and then the other ones that we mentioned in the keynote. Around IT Operations and Incident Lifecycle Management, Opsgenie obviously provides a really critical first set of capabilities around modern incident response with alerting and raw stream and the incident workflows that do complement the work and workflows that largely pre exist in many of our customers inside of Jira and the Jira platform. Complementing that would be something like Confluence for the documentation that's part of the incident management workflow, the runbooks and the postmortems and what are the 12 steps that we actually want to run through in this particular type of incident? How do we actually update that post incident, so it reflects the best way that we could respond based on what we've learned.
And then naturally the real time communication of status page, so you can keep whether it's internal constituents or external customers connected and apprised of how you're responding to what's affecting them. Increasingly, as software eats the world, the complexity for IT of running this integrated patchwork of things they're building and things they're running and maintaining and things they're responsible for gets harder. And so the criticality of having a modern incident response process and tools and technologies that help that collaborative workflow run smoothly is equally critical. And that increases the opportunity for our products and for Atlassian. So how do you size all that?
It's the question you guys love to ask. One way is just by the number of companies that we can potentially serve in any of the number of ways that I've just described. And that is simply massive. We have nearly 140,000 companies that we count as active customers today. And there's estimated to be just over 1,000,000 companies with over 10,000,000 in annual turnover.
And so we're still really early in reaching the market potential just with companies that we have yet to sell to, let alone with companies that we've already sold one thing to with a lot of room to kind of expand other things that we could help them with. We also size our markets by the populations of users that we can begin with. A single activated catalyst for change inside of their team that's going to help spread what we can do that individual product, but also open the opportunity for other things. So developers, both inside and outside IT are obviously a key constituent for us. They have been since the very beginning.
They help open doors, not just for the initial problem that we can help solve, for all the other future problems that we can potentially help their company solve. Developers have been this important audience and kind of a mainstay with where we began. They're estimated to be 23,000,000 developers worldwide and growing as the demands on technology development technology transformation grow. We estimate that the teams of people that surround developers, that surround those 23,000,000 that are participating in this technology transformation and technology development is a multiple of the number of developers. And so this group of 100,000,000 includes designers and program and product managers and operations and quality assurance specialists and extended members of IT, kind of another very targeted group of people that we can begin just with a core set of landing spots.
And then of course, that's eclipsed by the nearly 1,000,000,000 knowledge workers around the globe who form multitudes of teams and multitudes of departments and projects, all looking for better ways to do what they're trying to accomplish together. We're chasing all of this. Our long term aspirational goal is that every knowledge worker in the world use at least one of our products every day. That's what we're working towards. So playing in such a large market means that we have kind of a dog's breakfast of different competitors that are alternatives that we're competing against or that customers that we're trying to win will compare us to or consider as a potential alternative.
And it's they differ by category, they differ by product. There can be a lot of them. From legacy incumbents that we're replacing, so things that preexist that are maybe a little long in the tooth, from large platform plays by companies like Microsoft or Google, small point solutions that are kind of upstarts in a particular category and try to build a slightly better mousetrap for maybe one part of an overall collaborative workflow. There's opportunity for open source, where a developer can take a piece of technology just because it's free and when they're very small. And then eventually as they evolve and mature or grow, they can graduate into our products.
And then naturally, there's just massive white space for collaborative workflows that are stitched together by the tools that are most common inside of businesses, which is e mail and office. And there's just a lot of that, that we can replace. The reasons that we win are pretty common, and again, you've heard them before. We win based on both the power and sophistication and the simplicity of our products, which is a really, really hard marriage. It's what Tree is going to talk a little bit about, but we work really hard to be able to cover the spectrum of being able to allow users to off road and to solve a number of really complicated problems, but to disclose that power progressively.
And so we can onboard somebody with a product that is very simple and a team of 5 or a team of 10, they can get kind of connected to it and then over time discover that it's got superpowers that it discloses to them when they're ready. We also win because we've got multiple ways to land and then multiple ways to expand. And so even where we don't win a particular point category and most of the things that I've mentioned, we can we work very closely and co opt the alternative that we may have lost for whatever reason we lost and still surround that particular technology with a bunch of other things that provide value to the customer and over time earn us an opportunity potentially to swap that initial thing out. We win because of the investments in our products, continuous investments in making them better, building the highest quality enterprise software for the best value and the best price. And I think you'll hear that echoed out in the halls.
We focus on ease of use and viral adoption, I'll get to that. We win on the strength of the ecosystem, the economy that's built around us. And then largely we win because the people out in the halls and the people that are not here and out in the workplaces become fanatical about how our products are used and the difference that they make. And we work really hard to never lose that because that is sort of the most potent advantage within the company. Okay.
That's part 1. On to part 2, which is how we acquire and grow our customer base. You're familiar with our model, really simple mathematical formula here, which combines great products with low price and great value and constantly focused on removing friction and making it ever easier for the customer to both serve themselves and be served in the way they want to be served. And that all multiplies into the bottom line, which is like a highly efficient business that pursues a large volume of new customers that we both land and expand. So it all begins with that top highlighted box, which is building incredible product and pursuing a really large TAM with multiple opportunities to land.
To do that, we have to focus on value, continuing to improve the product and offering it at incredible prices to customers. To reach that large market opportunity, we focus on selling online and removing as much friction from the customers' path as possible, so they can do as much as they can on their own, should they choose, many do. To do that, we have to be transparent basically with our products and our pricing, making the product very easy or simple to try. To do that, we have to go all the way back to the top and really invest in continually improving and refining the products that we're offering to customers. It's a very simple model.
We focused on continuing to make it better and improving it over our 17 years. Part of the emphasis that I mentioned was around customer self-service. And a big piece of this is as being as open as possible and as simple as possible with a model to the customer. So all of our pricing is available online. There is you'll never find a little box that says, want to know how much this cost, call us and ask us.
We just tell customers how much it is. All products are free to try. There are forms and gates. If we have a really valuable white paper that we think will benefit everybody, we just put the white paper up. We don't put it behind some e mail contact form that limits basically the potential value that that white paper could give to the market and to everybody.
There are no custom contracts, no hidden prices, all purchasing is made simple. And all of that is underpinned by incredible service that we want to make sure that the customer at any point, if they need help or if they're at a size or complexity where they could benefit from additional assistance that we're right there, and we're helping them. We operate at really unique scale for an enterprise software company. This is aggregated unique traffic to our web properties for each of the past 3 fiscal years and nearly since the time that we took the public stage. And our funnels are consumer sized.
And so the way we operate them is a lot more like a consumer company than a traditional B2B company, get into some of that in a second. All of that interest in what we do and how we do it and the problems that we solve and how our products work yields a pretty steady and unique rate of daily commerce. So those of you that either watched the replay of this presentation before this one or here in the room a little over a year ago, might remember this slide. We picked a day, August 18, 2017, and we unpacked it for you. And so on this day, which happened to be a Tuesday, we generated $2,800,000 in sales from roughly 6,800 unique domains, unique companies.
So that's a lot of commerce, a lot of different transactions. That's upgrading, downgrading, adding users, adding products, adding add ons from the marketplace, becoming a product a customer for the first time. That whole mix within those companies, they're doing any number of hundreds of different things with our products. On that same day, 16 over 16,000 unique companies began a trial of 1 or more of our products. So a lot of volume.
So fast forward a year later. Again, not so random just because we wanted to show you a year over year compare here. But this is August 8, 2018, happened to be a Wednesday. And in that day, we generated $3,500,000 in sales from 8,000 unique domains. On that same day, nearly 20,000 unique domains, unique companies began a trial of 1 or more products.
And so this is the way the flywheel works. It turns day in, day out, even on Saturdays, even on Sundays, and yields relatively predictable and stable. James is going to talk about that growth over our entire lifecycle. Where does that all come from? So a lot of it comes from the basics of continuing to serve the customer, build better products, one foot in front of the other stuff.
The most important fuel of our growth is word-of-mouth, It is happy customers, like we don't really have anything else. If we have unhappy customers, that's how our model works and so we'll suffer. So we care deeply about this economy that's sort of built around us in terms of our customers and partners. Customers are here. They can be really fanatical.
There are in our user community, we have an online kind of experience where they can come and connect to each other. And there have been 15,000,000 unique visits to that community over the last 12 months. We also host user driven user group meetings, where in Boston, there's a user group leader of sort of the Boston, Atlassian community locally And they'll gather all the customers that they can in Boston on a relatively frequent cadence to talk about what they could be doing better and where they're using our And increasingly And increasingly, Atlassian products are becoming a job description. So there's 76,000 jobs on LinkedIn, careers on LinkedIn that actually have Atlassian products like JIRA as a skill set. And training here is a big part of Summit and training was oversubscribed where people are trying to get certified and learn how to become an administrator of our products, so they can drive more change inside of their companies.
Channel is an important part, I'll cover that in a minute, but over 500 partners that indirectly help market and sell and spread the word, most importantly, help apply and stretch our products to solve unique problems for customers in their particular markets. And then the ecosystem, which is largely represented in the Expo floor, is sort of the 3rd really important part of this viral word-of-mouth system. We have 25,000 developers that build on top of the Atlassian platform. Some of those or many of those are in independent software companies that can build a commercial application that they list in the marketplace. Many of them will be developers that work for their own companies that are making use of our extensibility and APIs to improve the leverage that they already have within our platform.
The marketplace itself has generated over $500,000,000 $500,000,000 in cumulative sales since we launched it. So we are a land and expand model kind of on steroids. And it continues to grow and flourish. We work to land a new customer in all the ways that I just described, any number of landing points and then through any number of teams. That initial land opportunity, even when it's small, opens future doors for us to expand and grow with that particular customer.
So these are the ways that we do it. That initial team can expand by adding more users or by expanding to additional teams. Any one of those teams that we've expanded or began with can add additional products or services to the ones that they already own. Where that same company can add additional instances of the same product and maybe a different part of the organization, And often those parts of the organization might not even be connected. They might be 2 wholly independent parts of a big company that are using our products unbeknownst to each other.
We can upgrade existing customers to premium versions of the products that they're running as they begin to scale and grow, like the data center product line or for on premises or the cloud premium product line that we announced in the keynote this morning. At multiple points and really at any point, customers can expand our products with applications and extensions and additional value from our ecosystem in the Atlassian marketplace. So these apps expand the core functionality of the platform and the things that we build the platform to do and serve, increasing the value and the stickiness of our products and what they're being used for and help offer additional capabilities and functionality to customers where they need it. Throughout all these, we can expand the types of use cases of our products and reach other parts of the customer's organization. So the example of the legal help desk is an example of this, where we can actually start with an IT with Jira Service Desk, but market additional use cases of the product through that initial IT help desk.
And sort of that kind of viral expansion can help expand the number of users, expand the way the product is deployed into other parts of the business. So we land most of our customers, 90 high 90% of them through self serve. And that high velocity flywheel, we make it so easy to discover, to try, to buy, to just get going with the thing. And we work really hard to make sure that the product is actually going to seal the deal. It's going to land the use case and help get that customer going.
Our channel complements us by landing customers in mostly non English speaking markets where they might need additional some additional TLC or assistance. And then also by working on more complex enterprise opportunities largely with expansion. We expand both through self-service and in product cross flows, and I'll give you some example of those. For larger enterprises, we can work on expanding them to premium offerings through our enterprise advocate team, our direct sales function, but often through our channel. And those two teams work really closely together with large enterprise expansion opportunities.
So I want to take you through kind of each one of these and just give you an example, not exhaustive, because we're doing in some of these cases lots and lots of different things. But just to give you a flavor of what we mean by them. So self-service is maybe obvious, it's a head nodder. Once a customer has come and they've discovered JIRA and they try it and they stick it in there, customer has come and they discovered Jira and they try it and they stick it in their team and they get going, they've gone through this process of understanding that there's a bunch of other things that are available to them. They've seen our store.
They've been cross marketed to other things that they could potentially use even on the way through evaluating that first initial thing. So there's a lot of companies that can come back and say, I'm going to add the second thing, I'm going to add the third thing and I know how to do it because I've already done it once, I've got my count, it's simple. We can up the sophistication level around how we cross flow users, not just companies, but users into additional instances. So this is a really simple example, where in the navigation menu of product A, call it Jira, I can highlight for you that there's other applications that you should try. And you can simply click that button and turn them on inside of your instance.
And the real value for us is that in a traditional cross sell motion, you would be selling to 1 person or you would go into the company and you try to gather as many people as you could to influence. And if we have a 500 user deployment, we can cross flow to all 500 users. And so we use that opportunity as a cross sell target for everybody that is an active user of the particular instance. We do it carefully. We're really smart about it because you don't want to bash people over the head with a blunt instrument of try product B.
So here's a more sophisticated example. So this is again inside of Jira. So this is take my word for it if you've never used it, but this is a screenshot of Jira. What we're doing in this case is we're saying, hey, you may want to add content in context to this Jira instance. There are content types that are really relevant for this particular workflow, like a retrospective or a product requirements document or meeting notes or a decision.
And down in the bottom, you see, hey, we could create one place for the documents that you need to create and share with your team. I want to do that. Click the button, pop open a dialog, and we're basically walking this individual user, again, 1 of 500 through a trial onboarding flow. We're saying, okay, you took us up on it, you want to try to add docs, collaborative documents to your Jira instance. So we're going to talk about what that means down in the bottom, they click it to try.
Would you like to notify the other members on your team that you've turned this on, right? Would you like all the people that are part of this Jira project to also be included in the trial of this collaborative content system that you're the additional capability you're adding. Really smart way for us to flow users from one product into another without beating them mercilessly over the head. So we also have a really large customer service, not really large, but sort of an expansive customer service and sales team to make sure that we are meeting the customer where they need additional care or need additional service, meeting them there. And so on the left, we've talked about these groups before.
On the left, there is a post sales customer service function. So if I'm a customer that has a billing challenge or the original sponsor that last thing left the company and I can't figure out how to swap them out and take ownership of the account, All of that is self-service enabled, but maybe I just want somebody to help me walk through it. We can help there. We've got people that can help with retention and renewals, loyalty advocates. We've got advocates that specifically work with partners and some of their kind of volume billing motions.
We have a group of advocates that presales will help answer questions for evaluators on the way through that high velocity funnel. Then we have a small team, there's about 25 of them now of enterprise advocates that work with really large customers on the premium upsell motion into data center or to cloud premium. And then naturally the channel spends a lot of time on that. So enterprise advocates are once we have an established large enterprise account, they're effectively an account management function, whether they'll introduce themselves as John Jay, I'm your account manager, I'm here to basically help explain additional things that would be valuable to you as you continue to grow and adopt and expand the usage of Atlassian. I can also introduce you to solution partners in the channel that know how to take our products and do things at scale for large companies like yours or in your specific industry or in your specific geo that would potentially be valuable to you.
There are additional services I can introduce you to like a for fee technical account management service. So somebody that's dedicated to your account a day a week, dollars 75,000 a year, that they are effectively a very deep strategic technical advisor that can understand how our products are used and how to grow them. And oftentimes, there's a big company that has lots of commerce that's sort of been spread over many years that they want an account manager to help organize for them alongside additional things that they're buying. So we also have the channel. In the Solution partners tend to be their consulting and service delivery specialists that focus on all of the parts of the market landscape that I mentioned.
We do work with corporate resellers, because oftentimes larger customers want to buy through a dedicated selling agent, especially in government. We have additional training partners that can do in classroom delivery of our core curriculum certification curriculum all over the world. And then naturally, we have the marketplace vendors. So the channel touches about onethree of our revenue and index, as I mentioned earlier, in mostly non English speaking markets, you see them over indexed on the right in Europe and Asia Pacific. And then also in large enterprises where there's more opportunity for the consulting and the service delivery, that's kind of the bedrock of most of their businesses.
Once we've landed and we proved value, we create much, much easier expansion opportunities for ourselves in larger enterprises across our deployment platform. So this is an example or this is a sample of about 5 different ways that we can upgrade or upsell or take customers through different paths once they've established and understand the value of what our products already do. So the data center family is for on premises customers using our server products. It is a premium version of the server product that supports customers at scale. Cloud premium is the same thing, both for large server customers who want to move to cloud or for growing cloud customers that want to take advantage of premium features and upgrade into that product.
We have enterprise services like the TAM and premium versions of our technical support offering. Access is a premium security product, not just for large customers, but tends to be in more desirable for large global companies using cloud products. And then Jira Align, which we talked about in the keynote, formerly known as AgileCraft is another product that is largely oriented at much larger enterprises with 1,000 or more users of Jira that is using Jira probably pervasively at the team and tribe level and wants to connect their program management functions, business stakeholders, more senior parts of their business to all the work that is already happening at the team in tri global and Atlassian. So that's largely a product oriented towards scaling agile and large enterprises. Our data center business is just a great single example of how this motion works for us.
We introduced the data center products a little over 3 years ago. And while customers can begin with data center, and if you look at the pricing, I think we've been thoughtful about where the overlap is between server. So we could land them. It's not the real focus. We're not trying to land a new customer on data center.
We're happy for them to start on server. And as they've proven the value with server and they get to a point where they're better to scale on data center, that's when we focus on introducing them to it. But they already understand the mission criticality of sort of what the product is providing to their business, but they need a different architecture to run it on prem. We are still early in penetrating the opportunity for both this product and the cloud premium product. And so on the right, the customers that we're targeting would have more than 500 users on a single instance of Jira as an example.
And that's sort of a customer that we would talk about upgrading to the data center version of Jira were to cloud premium if they want to move to cloud. So we're less than 13% kind of penetrated just in this opportunity and these are server customers that could go in either one of those two directions. So let's unpack land and expand with a single example. This is a customer, a large financial institution that has been a customer for more than 10 years. And they started with a single Jira instance way back in 2,005, I think literally installed on a machine under somebody's desk.
And in that same year, they added Confluence or sort of over the 1st handful of years. And so this is cumulative spend on the chart, 'five to 'eleven. I think cumulative was like $133,000 over that period of time. So relatively small, kind of began at the team level, started to expand. In 'twelve, they grew considerably.
So the annual contract value, I think, at 'eleven was $58,000 and in 'twelve, they grew to 326,000 in fiscal 'twelve. So that came from rapid user expansion and instance expansion of Jira. So they added additional instances of Jira for other parts of the business. They also added their 1st cloud subscription in that year in 2012. 2013 was a little slower period of expansion in large part because the customer was mostly on server and remember the licensing model for server has a perpetual license upfront and the maintenance and support was 50%.
So in 2013, they added less licenses, but there's a lot of renewal business in 2013. In 'fourteen, they got started with Bitbucket, which grew very, very quickly inside of this company. At the end of the year, they'd upgraded to 7,000 users, developers on Bitbucket. They also continue to add more cloud instances of both Jira and Confluence across the company, made big investments in the marketplace in 'fourteen, I think deepening their commitment around our platforms and how we are used. In 'fifteen, you see them investing for scale.
They added a TAM, and that was the 1st year that we actually offered the TAM service, demonstrating how strategic important the products were to them and how they wanted to figure out different ways to leverage them and continue to add more users to Jira and Confluence, continue to expand in cloud, added portfolio, which is a portfolio planning product kind of at the team and tribe level, where Jira in 'sixteen, continued to add more users around the world, upgraded to Bitbucket in 'sixteen, continue to add more users around the world, upgraded to Bitbucket Data Center, their first premium upgrade of a product of ours. In 'seventeen, doubled the size of their Bitbucket instance to 14,000 users, began to put in significant expansion plans for how they were going to use Atlassian more broadly. 'eighteen upgraded a bunch of Jira Software and Jira Service Desk instances to data center, expanded their Bitbucket data center user count to 40,000 developers. And then in the first half of 'nineteen in our two reported quarters, they added a whole bunch of stuff. And so a bunch of DC, non DC instances of products, They have a single instance of Jira Software that has 20,000 users.
They have more than 50,000 users across their different instances of Jira Software, looking to expand to another 15,000 employees, potentially up to 65,000 users. We still have a lot of opportunity here. So by no means have we covered all the bases inside of this, but it's a good example of this repeated pattern of beginning with a product expanding, expanding, expanding, finding additional usage across their business. Okay. Part 3, a bit more detail about the customer base.
We work really hard to grow this customer base. We have 138,000 and with no signs of slowing, it continues to grow at scale, diverse across industries, geographies, shapes and sizes are a testament to the model. And we're successfully growing, expanding it in the highest value areas to both us and our customers and companies that are both small and really large. So we've grown it consistently over 16 years. I think today, as I said, we have nearly 140,000, 138,000 customers in over 190 countries.
We have 2 thirds of the Fortune 500, so still room to grow, I think across both those dimensions and a good demonstration of supporting with our model really, really, really large multimillion dollar a year enterprise companies and then really small wherever they are across the globe. We shared a deeper breakdown of our customer base when we first took the public stage at the end of 20 15. We just crossed 50,000 customers according to our relatively conservative definition of a customer for us. And that is a unique domain, a unique company that spends at least $10 a month on at least one of our products, in a single product. So below the line of those 50,000 customers, we shared with you that we had an additional 78,000 unique companies that did pay us money for the use of our products, but it was below that $10 a month threshold.
And below that, an additional 320,000 organizations that were using our products for free. And so the free versions of products where they didn't have to pay. At the end of 2018, this is where we are. We had 130 we have 138,000 customers according to that paid customer definition. There are over 175,000 starters today.
And so those are companies that are spending money on subscriptions to our software, but below that $10 a month. And then below that, 1,000,000 of free users or organizations that are using free versions of our products, which today includes Bitbucket, Trello, Opsgenie. So in 2015, just to give you a couple of comparison points, in 2015, we went public with that 50,000 active customers, 37,000 of them were using Jira, Jira Software. Fast forward today, with 138,000, 65,000 of them have Jira Software, which is about just less than half 47,000. I think this shows both the diversification of the customer base and our product portfolio over time, but also highlights, as we've mentioned, an opportunity just for our flagship product within the base of customers that we've built.
We continue to land and expand and land a large number of new customers with Jira Software, But we also land customers with other products, obviously, as that's grown. So an example on the right is in so far in reported fiscal 2019, 16% of all new customers that landed with a single product did so with Jira Service Desk. And that is that's quadrupled in the past 3 years. So you see another dimension of where inside of IT we can begin with your service desk and then expand out. Cross sell and product ownership is obviously a goal of ours.
Over time with the customer base, we've got lots of different ways obviously where we can land them and expand them. Jira Software is a common land product and this shows the cross sell expansion rate over time of customers that began with Jira Software in 2010. And then how the entire customer base since 2010 that began with Jira Software has added products. And so the co ownership rate of that particular Jira Software LAN cohorts. So on average customers add their second product sometime in their 2nd year.
And on average, over 6 years, most customers have 3 products or more. Diversity of users is also an important and probably underappreciated property of our products, even some of our most technical products like Jira Software has a really diverse population of users. So this is a survey of nearly 400,000 just cloud customers and shows that developers and engineers, people writing code, Jira Software is largely for that particular collaborative workflow, are less than half of the total user population of this cloud cohort, with IT support and other users in line of business making up the difference. On the right, similar survey for Jira Service Desk, which also shows similar diversity amongst developers, IT and line of business. In this case, we're highlighting the agent user.
So an agent of Jira Service Desk. Obviously, the audience for requesters and ticket creators for Jira Service Desk would be even more diverse and much larger. Talked about cloud momentum for a while, which for us follows the broader secular shift is generally in the market towards software as a service and cloud. Over 90% of net new customers we had in the quarter begin with a cloud product, 1 or more of our cloud products. And today, over 138,000 active customers, 100,000 of them have active subscriptions to 1 or more cloud products.
So again, those 2 snapshot comparison points at the end of fiscal 'fifteen, we went public, 50,000 customers, approximately 60% of them had a cloud subscription at the end of fiscal 'eighteen. We had 126,000 customers at the end of that date, approximately 80% had at least 1 cloud product. So one of our earliest company, BHAGS, big hairy ass goals, was in fact that 50,000 customer number. And it was one we set really, really early on in our infancy and felt at the time maybe it would be really, really hard to achieve. And it was a proud moment when we hit it right before we went public.
One of our current BHAGs around customers is to achieve 100,000,000 monthly active users of our products, which is pretty rarefied error for business software. I think maybe only Microsoft, maybe Google, you guys might know better than I do, but you can count them on one hand. And that's what we're shooting for. Today, we count over 10,000,000 unique monthly active users of our products in the cloud, just in the cloud, not including the server customer base. So these are users that are active and engaged by a pretty stringent definition each month.
They go on vacation for a month, they don't count, they drop out. We care deeply about tracking both this and NPS, the satisfaction rate for individual users of our products. And in large part, because again back to word-of-mouth, many of our users, many of these 10,000,000, they didn't choose us. We were chosen for them. Someone brought them into the team and say, hey, I've got a good idea.
Let's do it this way. And if they did it for 900 or 900 people, those are people that we have to win the hearts and minds of. And so we work really, really carefully to make sure that everybody is engaged and active and happy. Take that feedback constantly to make sure that we're improving. Almost done.
Net effect of all of this is this continuous rate of new customer acquisition expansion over time. You've seen this cohort chart before. It shows the cumulative effect of land and expand all the way back to 2,002, our very beginning, each color band is a class of customers. Each year shows increasing spend as they do all of the commerce that I described earlier. There's a couple of things worth highlighting here.
First, that initial 2,002 cohort spent less than $20,000 in that 1st year. That same customer cohort in fiscal 'eighteen spent $2,100,000 think there's like 11 companies in that cohort. 2nd, the size of each initial cohort naturally is a bit bigger as we go on and as we continually land large numbers of new customers with lots more things that they can purchase in that first initial year. And finally, the cohorts expanding more over time, thanks to the growth of our portfolio and our offerings, our growing brands, the improvements that we make in the products, the improvements that we make to our model. And so how we do things like cross flow, all of that kind of feeds in to how this works.
We shared the growth within the large company cohort with you previously. So customers spending more than $50,000 annually has grown to over 2,600 unique companies, up 47% year over year. The logo retention rate in this cohort is at 98%, and 90% of these customers own 3 or more products. On the right, customers spending more than $500,000 annually has grown to 124 organizations, up 65% year over year. And then last slide, I shared this last year too, but these were just two other examples of land and expand in action, a big consulting company and a large tech company, kind of shows where they started and sort of how they've grown with us as we've matured and offered more and got better at offering those things.
This is both customers in fiscal 'eighteen. And again, similar with the large financial institution example, lots of room to grow, lots of additional problems to help these companies solve. So key takeaways, big market, lots of opportunity in front of us, efficient land and expand model that continues to get better within time, we continue to focus on improving it. And the most important thing that you could connect with here is not us, it's with the people outside the room. They're what matter most to us, and I think you'll hear great stories.
So with that, I'm going to bring up 2 great stories to share with you, 2 chairs. Round of applause for Rob. Rob has almost come to actually like I think Melbourne is farther from Sydney.
Yes, probably a bit. Couple of miles.
So you beat most of the Aussies from Alaskan. So we've got about 15 minutes. And maybe just begin with some background on you, who you are, who you work for, they know it's ANZ Bank, but maybe just set some context around your role and what the banks what's going on in the bank today?
Sure. So I'm Rob Marchiori. I lead our transformation to the new ways of working. And if you look at the Australian banking landscape, about 2 years ago, our CEO, I think, rightfully looked forward and said, we've got a lot of changes in the regulatory landscape that are coming. So in Australian Banking, we've got Open Banking, we've got digital banking licenses, so very similar to the U.
K. Model. That's going to bring a lot of change. We've also got Sydney is a hot bed for FinTechs. So there's a lot of innovation coming and just the general pace of customer expectations on Australia Banking, which is actually quite a digital banking economy there.
And so we said we have to get faster at being able to shift the kind of the old 3 year strategy, big programs lasting multiple years just wasn't going to cut it. So we started on this journey to move towards new ways of working. So we've moved about 10,000 to we've moved about 15,000 people into these new ways of working. We use the tribe squad model, so very small cross functional teams, business and tech aligned. And along that journey, we've had to figure out how we were going to essentially implement a new operating model.
And that's what we've been up to the past few years is really rolling out that new operating model to the bank.
And like what outside of maybe some technology we'll get into, what are the changes that kind of affected the bank like over the past couple of years?
Yes. So again, largely, we've had really everything in the Australian banking industry. We've had a Royal Banking Commission, attention from the government looking at the banking industry, that's brought a lot of regulatory changes. We've had, again, a move towards the regulators really trying to lock down, which has made it a more challenging environment. But I'd say most importantly, it is this drive towards open banking and the digital banking environment, which is creating this environment where we have to be able to move at pace.
We've got other competitors coming in to the area like Alibaba and others in the Asia Pacific region that are quite interested in Australia. So that's created this environment that we knew we had to completely change the way we bring our products to our customers.
And how many employees currently in the bank? Yes. And also one thing that you mentioned, but just to prompt you, you talked about maybe the demographic shift through this transition that or transition that happened in that population.
Yes. So if you look at ANZ, we're a company of about 40,000 employees. We have in this new way of working, we have now 900 about 900 squads, and we probably have about 100, 110 tribes. So our tribes are typically around units of around 200 people or around 15 squads making up the tribes. As we made that shift as well, we very much shifted the composition of the teams.
We've moved to significantly more engineers. We have removed projects, any concept of projects. We're capacity based now, so we don't have projects and programs anymore. We really drive the whole company off of themes, features, stories, epics, and we fund that capacity based model instead of funding a project based model. So it's been a massive shift in the way we work and the way we organize ourselves and also the makeup of the teams underneath moving to much more hands on doers.
And it's a flatter organization is the last thing. We've gone from 11 layers in the organization from the CEO to the most junior person to about 6 layers. So a big transformation.
And what products of ours do you use? So
we use we have we're now on data center. So we use data center on premise. We have Jira and Confluence really at the core of a big chunk of that transformation, which we can talk more about how we're using those. But we're also using, in addition to that, we have Bitbucket, which is driving some of our dev pipelines, especially our cloud native products that we're starting to push out. We have teams that are using Jira Service Desk.
Our main IT function doesn't use Jira Service Desk, but we're seeing Jira Service Desk picked up more and more because as part of this shift, we're moving to IT as a service. So we're trying to get our internal groups to expose their capabilities as services so that we can reduce dependencies across the bank because dependencies are one thing that slow big organization down. And we've seen Jira Service Desk used by those smaller teams, very similar to the announcement today in the keynote, where they're able to make their services available. We use Trello as well for quick boards that we start up. And we're really looking forward to actually using Jira Align.
So we're not currently using AgileCraft, but we've been in talks with them for probably close to a year prior to the acquisition. And now we are looking to kick a pilot off in May because that's that portfolio level management for us is at the scale we're operating is absolutely critical. And because it's such a critical piece of our business, we wanted to be pretty confident in the product we chose there. And that's why I think with the acquisition and moving over to Atlassian, it's we're much more confident in the fact that that's going to stay aligned with Jira and Confluence, which is really driving a lot of transformation.
That's right. Maybe you touched a little bit on, but maybe around Jira Software and Confluence, describe in a little more detail how the products are used, how that's changed through this transformation that banks undergone and then maybe where you see it headed. What's the potential for those products inside of the bank?
Yes. It's just been a massive uptake. A lot of the products were in the bank. So we've been using Atlassian software for years in pockets. With this transformation, though, we knew that we had to really have something that would enable our new operating model, and that's where Jira and Confluence really are at the center of that.
We have gone through a process to onboard and consolidate all of our Jira instances that we had and Confluence instances into 1 data center instance. That really helps us, especially as we start to try to look at the portfolio level of the planning we're trying to do cross tribe, cross squad, so those 900 squads, all of them, with the exception of maybe 50, which we're going to complete in the next month or so, are onboarded onto our Jira data center now. The usage is really starting to go through the roof because remember those 900 squads are business and tech combined. They really are cross functional squads. If you look at our Australia retail, we've got all the business people as well as the tech people combined into those tribes I talked about.
So there's no separate product management organization outside of those tribes and squads. It really all is combined in there. And so they're all using as the small team based squads, Jira to manage their sprints, to manage their quarterly planning. So we tend to do big room planning, PI planning and they're using really Jira as the heart of that as well as where we're trying to align what they're doing up to our strategy, which is yes, which is where you start talking about Jira Align.
And then what percentage of like Jira Software users, as an example, are developers or
Yes, it's probably about it's probably about 50% of the users are what we'd call engineers. The other 50%, probably 40% of that is the business. So we do have a large chunk of the business. It's primarily when I say the business, it's primarily our product management teams and our retail and our institutional banks, primarily our Australia retail. We are also starting to roll it out to even our talent culture.
So our HR group is the next group that's going through this transformation to the new ways of working. And so even there, we're starting to see that our HR teams are starting to use it. So pretty much as we shift more and more of the company towards new ways of working, they're kind of going natively straight onto Jira
and using Jira. Do
you get the CEO on boarded yet?
He is. He is. He definitely is. He one of the unique things about ANZ's transformation, it was very much led well, the support for it to move to new ways of working came from Shane Elliott, our CEO. That has been great.
Many of the companies I talk to about their transformations and how things are going after we talk for maybe 10 minutes, they're a little envious that we have such great support from our CEO straight on down because to do the size of transformation, it's really key. So yes, Shane is on there and more and more we're trying to drive what we call our quarterly investment process. So we have a forum called the QIR, which is Shane Elliott, our CEO and our Exco, so our Board of Directors, our Management Board as well as our Board of Directors. They're starting to use Confluence primarily, I don't really see Jira. They're starting to use the Confluence pages where we expose what we're doing with our themes, which is the highest level of our structure to try to help set funding for the quarter.
So that's been really interesting to see at that level and usage by the ex co.
Why us? Like why us and our products? Like what are the things you appreciate about it that sort of helped us expand inside of
the bank? Yes. I think two things. 1 is, we're changing the way we deploy new software in the bank as well. So the days of rolling out a standard is really gone.
Our users have to choose the software that they want to use. And so that has really helped with moving to Atlassian because we're listening to what our teams need. We're not trying to anymore kind of have this ivory tower, well, I'm going to set the standards for the bank and push software out. We're listening to the team and the teams are asking for Atlassian. It was pretty obvious where we needed to go when I look back a couple of years ago.
In addition to that, I think the scale would be the second thing I'd talk about. So it's great to do that in pockets, but when we wanted to move at scale to have a single view of the company across the products and wanted to scale data center up, we very much saw that Atlassian was moving in that direction and could support us in the scale that we wanted.
How does the bank think about cloud, like both today and the future? Do you use cloud software as a service in the bank? And where is the bank headed? Yes.
So we're very much looking at cloud kind of across the piece. We want to just in general, when we talk cloud for the bank, we want to get a significant percentage of our what we call our material workload, which is what our regulator, Opera, considers to be any workload in the cloud that has data about our customers in it. We would like to increase that significantly over the next couple of months. So we're working very closely with all 3 main cloud providers, Amazon, Azure and GCP, Google Cloud as well. And more and more, we're trying to get all our services on the cloud.
We're going to be moving data center actually onto AWS in the next couple of months just to help us scale. And I'd say, in general, we're very cloud friendly. We're talking with the regulators on a monthly basis in Australia, New Zealand as well as in Asia Pacific, places like HKMA in Hong Kong as well as MAS in Singapore are probably the key regulators that we're talking to about, especially banks moving their material workloads into the cloud. So that's definitely where we're headed.
Last one, 2, Carter. What have you seen us working on either here prior to Summit that you're most excited about? And then conversely, what could we be doing better for Ansett and for you?
Yes. Well, I'll answer that kind of in 3 parts. I mean, one, I think the some of the product announcements are really exciting and well aligned. Excited about things like mobile, not necessarily for remote, but actually to help enable squads and tribes in their stand ups and things like that, which is a bit of a different usage pattern for mobile. You sometimes think of somebody moving cards around on a beach, that's not quite it for us.
We really want to enable our teams in their stand ups and mobile is really key for that. The continued move into the portfolio space is really key for us. So things like AgileCraft, Agile Jira Align now has been really exciting for us, because we are starting to learn that that's really the next level of maturity for us is to kind of link our strategy to our stories. And if we can do that and if your products can help us do that, it's going to really start to give us a hockey stick, we think, in productivity. I guess and then finally, it's just the continued ease of use.
So our users have to continually want to continue to use these products. I guess on the flip side, kind of where yes, where I'd want you to keep moving more is definitely the scalability. We'd eventually like to look at running our data center, not just on AWS, but potentially use your cloud product. So that's a natural stepping point for us. And we keep expanding out.
And so bringing products that help us scale to handle new ways of working, both in terms of our technology pipelines, helping us industrialize those is really key and helping us really move into that whole portfolio management and being able to that scale. We think we're going to continue to add a lot of users onto the platform, a lot more business users. We're going to start getting even into our branches and our operations staff. So as we start to do that, being able to scale and grow with us would be really key.
Rob, thanks for being a customer. Thanks for coming and doing this today. Thanks. Thanks. One more, come on up, Zubin.
So we've pulled you off the show floor, which has got to be hard work. Thanks for coming. Maybe start by telling everybody who you are, who your company is, a little bit about the company and where you've come from and where you're at today. Sure.
Name is Zubin Rani, CEO of C Prime. I founded the company about 12 years ago. We're actually a very large agile consulting firm the business of doing transformations for clients, and obviously very large Atlassian partner. And as you know, we do DevOps and ITSM work along with that.
And so what are sort of the market or solution areas that C Prime focuses on? You didn't I don't think you got to hear my explanation of it before, but where do you focus and what is the demand environment around where you focus and look like?
Sure. So we obviously started in the Agile space, a lot of it come from Agile teams and that's obviously the maturity of Agile is to it's all about scaled Agile. It's top down large scale transformations, how to organize thousands of people sitting in hundreds of teams. So, that's a huge part of demand that we see. DevOps, obviously, how do you then now give those teams tools to automate the work they do and then that kind of leads right into ITSM and working with IT to support that.
So, really kind of the end to end, that's where we're seeing demand on kind of both sides of that. And then we're now starting to there is a big wave pushing in the business side of the house saying, we have to think about how we work and operate differently and optimize it, right? It's a globally competitive market. I think companies are they have to transform or die. And I think the lot of executives we're talking to are like, we need to transform.
And so the amount of the appetite for change is much higher than we've ever seen and it's not only tech, but it's all across from product tech to how we run internally as a business.
Yes. Where are your customers like geographically?
So we're primarily North America. We service a lot of multinationals with headquarters in the U. S. We do have a global team, but primarily about 90% of our businesses here in North America.
And then what departments or functions do you primarily interface with in working with us?
Working with you?
Like working with our products.
Working with our products.
Like inside of your customers like
Yes, I mean, so a lot of work in their tech groups, software teams, building products, internal applications, IT teams for IT some work, operation, we can see shared services and ops genie, really coming up quite a bit. And then we're starting to get pulled into other business groups that are like, oh, we want to use Jira to solve this problem.
Okay. And your core areas where C prime is focused, who are you with the customer? Who is the competition? Like who are you typically either replacing or is the customer evaluating alongside us? And then 2 parter, has that changed over time?
You've been at this for 12 years.
Yes.
Like how is that kind of landscape shifted from back then to now?
So it's definitely shifted quite a bit. So, I'd say in the Agile space, 3 or 4 years ago, we were seeing rally in Version 1. Version 1 basically died when they combined with CollabNet, Rally with the Broadcom merger, they were falling off for many years. One of our most popular products is our Rally to Jira migration toolkit. And we just we've seen huge waves that we don't even see RFPs anymore against anyone else's.
In the Agile space, it's done, right? And I think every client now is we're using Jira. And I think the one gap that we were seeing was, which you guys have solved with Jira Align is, how do we scale now from enterprise top to bottom? I'd say the other thing we see is, obviously, Jira Service Desk, the big competitor there is ServiceNow. Not really a big competitor, because they're only in 3000 or 4000 customers.
And we see we're rolling out your service desk to basically full ITSM stack. So, a lot of vacant clients that it's greenfield or it's pulling off Remedy. We've done a couple of service now to Jira Service Desk projects as well. So, we see a lot of opportunity there. And there's also a lot of just greenfield people using Excel, like people just don't have a solution.
So, you're putting in Service desk to solve people getting out of email and spreadsheets.
When it is competitive, what helps you win?
I mean, it's a great product. So people love the product. The price of value is amazing. You can't get a product that works as well as Jira works or Atlassian works for the price. And so, having a strong reputation is also a big thing.
It's just it gets pulled in. And we see a lot where someone leaves, joins a new company, first thing they do is they call us, hey, we want to bring in Atlassian. And that just happens like so many times.
What are the biggest opportunities that you're investing in or C Prime is investing in? And that you see sort of around the market or for C Prime to growth?
Yes. I mean, I think the big obviously, it's supporting the massive shift to cloud, right? Obviously, we're an AWS advanced partner. We support cloud, aligning our services around that. And I think a lot of it's helping businesses run better.
And we like to marry process and tech together. And I think we've been very successful tying kind of the Atlassian stack with helping businesses transform. So, continuing the large scale enterprise from top down, not just CTOs, but CEO level down, helping organizations really figure out how to build a strategy and execute against that. And they can see and measure that progress. I think that's the biggest area that we are investing in a significant way.
How long have you been in Ecosystem?
We've been we joined in 2012.
That's broke. And how have you seen it change in sort of the in those 8 years?
Yes. It's mean, it's amazing how much it's grown, the ecosystem itself. I mean, it's the number of apps, the quality of apps, the customers that are using, not just using Jira, but using the whole platform. So, we've seen, we have a lot of clients that will buy Jira data center, Bitbucket, Confluence and they'll roll 10,000 people onto all the platforms at once. And we've seen more and more customers look to consolidate and build these large scale enterprise instances and move thousands of people on them.
And they do it much faster than they even plan to. They'll build an instance and they'll say, yes, we need 5,000 people and they'll call 6 months later saying, we actually need to go up to 7,000 now. And the rate of upgrades is actually just tremendous. And I think you said downgrade earlier, we've never had a customer ever downgrade, use it here because the adoption is quite impressive.
It's trying to be balanced.
Okay.
Who is the profile of a typical C prime customer?
We're enterprise platform. So with a bank, so I can name all the banks, Capital One, American Express, Bank of America, Wells Fargo, Bloomberg, Guardian, so large insurance companies as well, Prudential, High-tech, Apple, Oracle, Tesla. Oracle is a fun one because they're actually one of our biggest tech clients and they use a lot of Atlassian products inside, whether that's Jira Service Desk, actually ripping it. We're doing a project and now we're ripping out Remedy and putting in Jira Service Desk. And we have another Jira Service Desk inside Oracle, which is ripping out Oracle's Service Desk and putting in Jira Service Desk.
Yes, large tech, retail, finance.
And were most of your customers existing Atlassian customers before they found you?
For the most part, when we go to a customer, they'd like, we have Jira in this pocket, right? So they have some experience and exposure. We may be working with a buyer that's not necessarily use it, but they know that another group uses it and they like it. And that's why they're evaluating or they've already decided to go with Jira. And it's a matter of helping them scope how to get from A to B.
Yes. Last question, 2 parter, I asked Rob too. What are you most excited about? And then and actually, let me reverse the order just to be balanced. What could we be doing better for you?
What could we do more of? And then the second part is what are you most excited about that you see they're seeing here or that you see us working on?
Yes. And I think Jira Align is solving the biggest problem we had. It's a big it was the biggest gap in terms of biggest gap and biggest opportunity. And I think with the acquisition, it's accelerated a tremendous amount of conversation. So obviously, as you bring the products together and making sure that integration happens or kind of continues to improve and you've done that with other products, but that integration is key for our success to be able to sell that scale story.
The second part of this one was
What opportunities you're most excited about? It sounds like it's the same.
It's the same, Matt. And I think cloud too, I mean, it's exciting to see the cloud premium. I think the platform you guys have done with Cloud is tremendous and we've seen never seen them. The customers that call us now, everyone is looking to go to Cloud. How do I get to Cloud?
And I think the pace of innovation you guys have really kind of accelerated is impressive because you're ahead of the market and you're pushing further ahead. And I think that's obviously as a partner, that's great because we're tied to your success.
You're helping. Zubin, thanks for coming. Thanks for being a partner. Zubin, everybody. I think that's it for me.
I'm going to bring up our CTO, Shri. Oh, clicker.
Thanks, Jane. Is that good? Yes, better. I am Sri Viswanath. I'm CTO of Atlassian.
I run engineering. And today, I'm representing entire end to end cycle of designing, building and running our software with teams of engineering, product management and design. I'm super excited to be here to be able to say how we invest in R and D and how it's fueling our growth. This chart shows the investment of our peers, R and D investment, when they cross their $1,000,000,000 in revenue. As you can see, Atlassian is at the top of the list.
We invest 35% to 40% of our revenue on R and D. We get this question a lot from all of you, why do we invest so much? And in fact, the last 30 minutes from Jay was all about that. It's all about the massive opportunity that we have ahead of us. Our investment in R and D helps us capture that opportunity through innovation.
Innovation is the lifeblood of Atlassian, and we have been innovating for the last 15 plus years. And we strongly believe that our investment higher investment in R and D has led to our success so far and will continue to do so into the future. We are a long term focused company. We want to build a sustainable business. To figure out our investments, we start with our mission.
You heard this multiple times. Our mission is to unleash potential of every team. And teamwork is a complicated problem, and we know it takes years to fulfill. With that context, we categorize our investment levers into 3 different areas. Cover products.
We focus on making our products best in class, so we create champions who propel our word-of-mouth business model. Scaling cloud. We invest heavily in building cloud for a bigger scale. There's a secular trend of moving to cloud, and the opportunity in cloud is ever increasing, and we want to realize that. Lastly, operational excellence.
We have a stellar R and D organization where we are upping the bar on our operational excellence, and we want to make sure that we build our products and run our products better than our customers. Let me first cover products. We are very focused on customers. We give customers choice, so we have cloud
and
we have on premises offerings, server and data center. This choice gives us to capture the larger market. The development process for each one is very different. So we have optimized having a separate team for both and each of them optimized for delivering the best customer value. In addition to building these 2 different systems, we also enabled the migration path from server to cloud.
And as customers move to cloud, we also enable the hybrid state, which they'll be to make sure that the migration is smooth. We are a multiproduct company. We are building point products that solve customer needs. And this is critical, right, to understand why we do this. We build products, and you saw this in Jay's chart, we build products in software teams, IT teams and products that can be used in the whole company wall to wall.
This multiproduct approach is critical for our land and expand model. Customers take one product, they use it and then they start once they are familiar and they love the product, then they expand into the second product. Specific example, Airbnb. Airbnb has done exactly the same thing. Airbnb engineering department uses Jira Software.
Their IT uses Jira Service Desk for the whole company. And the Confluence is used across the whole company, and they're being expanded. We use the Horizon framework to think about our investment levels. Core, these are mature products that make big money for Atlassian, and we want to keep innovating on these core products. Jira Software is an example.
Emerging, these are products that will become core in time. Jira Service Desk is getting there. And new, we constantly look to solve new use cases, and we want to build those ourselves. And as we figure out what to build, if there is a product in the market that can accelerate us, we buy those companies and add to our portfolio. Though we aren't religious about specific percentages for each of these, this framework helps us to figure out and think through what investment levels, and it varies every single year.
Let's take Jira Software as a specific example of a core product. We have been constantly innovating on Jira Software for the last 15 plus years. And in fact, 10 to 12 years ago, we redid Jira to adapt to the agile wave that was starting then. 8 years ago, we launched cloud and redid how we ran Jira in cloud. 3 years ago, we redid the architecture on cloud, which I'll touch upon.
In the last year, we have completely redone the user experience for Jira. We have launched a brand new user experience. As far as redesigning the core Jira view issue page that's at the center of the whole experience. These ongoing investments help us to solidify the position of Jira and to make sure that we can be best in class and have a broader appeal to the users. Let me also give you an example of a new product, Atlassian Access.
We launched it last year. Today, we have hundreds of thousands of users. Access adds huge value to our customers. That's a security layer with single sign on, 2 factor auth, password policies and such. It gives additional controls for admins and easy navigation, and it provides integration with existing identity providers.
This Atlassian Access is unique for Atlassian. It's an organization wide product, but it's still aligned with our land and expand model, right? Each of the teams can still buy different products and a different buyer, the IT admin, can come in and have an umbrella of Atlassian Access to secure everybody in the company. The beauty of this is we can actually monetize freemium products, free products once we add those support. And I'm actually proud to say Atlassian Access is built 100% on the cloud platform, which I'll talk about in a bit.
I'm excited about our Cloud Premium announcement that we did in the keynote. Our premium product is the most powerful product in Atlassian of Atlassian Cloud yet. This enables our larger customers with more complex use cases that need higher SLAs to make them successful. There's a lot of work that goes behind to have these higher SLAs, and I'm proud of the team that worked on this. In addition to building our products, we have built a thriving ecosystem that Jay touched upon.
It's impossible for Atlassian to build all the features that customers ask, and we believe in enabling tens of thousands of developers and share in the economic value. And the way we do it is to create platforms for both cloud and platform or cloud and server. We have a developer engagement program for developers and vendors so we can help them build apps. Then we have a marketplace where customers can find and use these apps. This is great for our customers.
This is great for our customers because it gives better retention. And to date, we have done more than $500,000,000 in GMV. It gives custom fit solutions, which solves very specific need for a specific industry that we would never build. Customers love us. This is what we need, some quotes from our customers, including the middle one in the center is for the Redux that we have done on the user experience for Jira.
This helps create champions who play the key role in the word-of-mouth model. So I covered products. Let me talk about cloud and how we are scaling cloud. Cloud is gaining scale. Here are some numbers: 90% plus new customers coming on cloud, more than 100,000 customers on cloud with at least 1 cloud product, more than 10,000,000 MAU on cloud monthly active users.
Because of the investment we have made in the last few years, we are set up really well to be able to scale even further. And let me go through some of those. The first big area in cloud to make cloud successful is platform. Platform covers a broad range of areas that are non product specific. Shared components could be the common look and feel across all different products and we provide libraries in a single place.
Shared platform services. These are back end services that are common across all different products, identity and commerce. And in fact, if you take commerce, commerce engine that we have automates the whole buying process, and we do more than 200,000 transactions per month. We take security, privacy and compliance very seriously. In the last year, we have done the GDPR compliance.
We just didn't do GDPR just because it was needed. We actually built it in the platform in identity service so that every new product that we build or products that we buy automatically is GDPR compliant and more. And lastly, infrastructure and tooling. This is the foundation of how developers inside Atlassian build cloud. We have built a platform as a service framework that everybody uses that gives us leverage across the board.
Jay explained our land and expand model. The platform that I just described greases this land and expand model and makes it smoother for our customers to adopt new products. Here are the benefits. Products work better together. So for example, if you are in Bitbucket and you have a Jira issue, click on the Jira link.
It automatically brings the Jira view page with all the details. Customers don't have to log in again because of all the things that we have done in the platform. We can ship new and differentiated features that are shipped in the platform automatically across all different products. We have shipped a brand new editor that's fabulous. And there are features like mention that are smart in terms of it knows the people that you interact with and shows you the list of people that are most relevant for at mentioning.
Those features are available across multiple products. And platform also helps us cross sell. And Jay gave some examples. The other example is programmatically, we can figure out if a person is typing in a long form text in Jira, we can automatically show a link on Confluence and move the content and have them get into Confluence. We are very thoughtful in integrations, and we provide support to make sure that we can scale the acquired companies.
We have acquired a bunch of companies in the last few years. Trello, we acquired a couple of years ago. We have provided support and increased the engineering, more than doubled engineering, in fact, in the last 2 years. And they've continued to have a very healthy monthly active users growth. Opsgenie, we bought last year, and we have already done the identity integration.
So we are very thoughtful in figuring out what kind of integration is needed for different kinds of acquisitions, and we enable those through our R and D. I was here 18 months ago talking about vertigo. And at that point, I had talked about and described vertigo and I'd said we'd finish by December. And I'm proud to say we actually finished it on date. And Vertigo was a project where we disbanded our data centers and moved our products to AWS and in the process also did architectural changes to make it multi tenanted and cloud native.
In the presentation, I had listed the benefits that Vertigo would give: faster dev speed, better performance, growing with customers and lower cost to serve. And let me show you what progress we have made because of vertigo and also all the other things that we have done the last couple of years. We now have 6 AWS regions across the globe to provide much better latency for our customers for a snappier experience. We also have data centers in Frankfurt, for example, where there's data locality rules, and in the future, we'll be able to accommodate those regulated industries. We have been increasing the user limit count that we have on cloud.
We had 2,000 user limit a couple of years ago. Last year, we increased it to 5,000. And today, we just announced a 10,000 user early access program. And our goal is to make sure that we don't have any limits and we don't talk about this at all. Large customers care about compliance.
There's a lot on this slide, lots of jargon. But the main takeaway is we have been on this journey, and we're investing to make sure that we get these certifications. And compliance certification increases appeal of our products. Data encryption. Data encryption is important for every customer.
We have implemented data encryption at rest for all customer stores in cloud. Starting today, all new customers coming in have their data encrypted at rest by default, and we are in the process of encrypting all the existing customers and would finish will finish in the next few months. We not only have encryption at rest, we also have encryption and protection in transit. We are getting leverage from our infrastructure investments. We have grown, if you look at top left, we've grown R and D headcount in the last couple of years.
This is roughly 2 years, 1.5 to 2 years. We have increased the number of microservices in the new architecture, but we have kept our infrastructure team flat in the same period of time. And the reason we are able to do this is twofold. One is we, of course, moved to a modern architecture, which has enabled us to scale. And second is we have been focused on automation and tooling and making sure that we build this foundational platform as a service.
We are more efficient in serving our customers. In fact, in the last one point five years, we have dropped the cost of serving a customer by more than 50%. This is impressive given we invested in all those 6 regions that's all included in the cost. In fact, we have done this while improving performance. For Confluence, we have improved the performance index by over 25%.
That's a significant improvement for our customers. And we have done similar for Jira. In fact, for specific pages that are critical for our customers that are most used, we have increased it somewhere between 50% to 100%. That's significant and a huge win. So I've covered products and how we are investing in scaling cloud.
Let me spend some time on operational excellence. Operational excellence is how we scale and how we do things. This is extremely important for building a sustainable long term company. When I think about operational excellence, there are 2 areas: people, which is our biggest investment and practices, which includes rituals and practices and processes that are used to maintain a high bar and have overall effectiveness. We have a strategic advantage in hiring.
We attract global talent. We are in all these different dev centers. And we have also embraced remote, so we can hire talent where they are. Last year, late last year, we started a new dev center in Bengaluru in India. That's a high density location, and we expect to grow there, and we're hoping it gives us financial leverage in the future.
It happens to be a low cost. We also have a very strong brand, and the uniqueness for us is when developers and engineers walk in the door for interview, they already know Atlassian. They've used it every single day, and they are passionate about our products. That really helps us to build amazing products. We have a strong foundation for the longer term success because of our values and culture.
Values and culture are extremely important for building a company. And we don't have it just on the wall in the offices. We actually live that every single day. We embrace innovation and learning with various different practices like Ship It, which is our hackathon that happens every quarter. Let's talk about practices.
Practices are important for continually improving our operational excellence. We have various different practices across the entire R and D, starting with we dogfood our products, which is we use our products ourselves. In fact, across the board, because our products are for teams, we use it in every team, every product across the whole company. And that's important because we get we are very self critical. We get so much feedback from our own employees makes it so that our products are much better.
We're also very data driven. We invest in data engineering and growth engineering, and we do AB tests, and we have a growth mindset to close the loop and get the feedback from customers. I want to talk about operational maturity model. We launched a new model. We call it ServiceQuest.
It has 5 different pillars: security and reliability, service design, compliance and quality. It's unlike other companies. We made this a bottoms up approach where every single team across R and D discloses their operational maturity across these 5 pillars And they have very specific goals every quarter to improve and push and get better and raise the bar. And this is important because it helps us to scale as we add more engineers and scale R and D. This having this distributed approach is critical for us to keep scaling and still maintaining this high bar in the new architecture.
And for me, running all of engineering, 16 will be easy for me to figure out how it is aggregated and which teams are doing well or not so we can set specific goals and provide resources to improve. Let's see some proof points on how we have done on operational excellence. In the last couple of years, we have increased stability of our cloud products. In fact, when vertigo was done, this is the graph of performance related tickets. We pretty much reduced the number of performance tickets, and we have kept it low as we have added customers.
This is pretty important for our customer satisfaction. We have increased dev speed significantly and reduced deployment time. If you zoom back 3 years ago, we used to deploy once a week, and deployment used to take 24 hours to roll out globally. Right now, we can do the same deployments in less than 1 hour, and we deploy multiple times a day. It's a night and day shift from where we were.
In the process, we have also made our products better by reducing defects. We've reduced the support tickets per user by 25%. And as a testament to our operational success, historically, we have always frozen the deployments when there are key events, events like this, summits, every year for the last several years. But this time, we are not doing a code phrase. In fact, at this time, there's probably multiple deployments happening in the cloud as I speak.
That's a testament to the maturity that we are achieving, and we'll continue to push that bar. All right. We have looked at products, scaling cloud and operational excellence. I want to summarize. Atlassian R and D has a broader impact on business than in any other company.
We build products that sell itself with different types of teams, software, IT and every team. We have users who are new and sophisticated 15 year old, 15 years of experience on our products. We have customers who are 2% start up to Fortune 500 Companies. And we have customized products that work in various different industries. Not just that, we have different deployment models I talked about, scalable platform that we are implementing.
We have a thriving marketplace and ecosystem, and we have automated the buying process and the go to market process and build tools. And we are in more than 170 countries across the globe. We are proud to say that the higher investment in R and D is paying off. We have crossed $1,000,000,000 in revenue and growing cash flow with strong customer growth. So let me summarize the takeaways from this presentation.
We are maniacally focused on delivering best in class products to our customers in software, IT and every team. We are building the foundations of a $10,000,000,000 company with multiple products and a scalable platform. And we are investing in people and practices to scale effectively and efficiently for the longer term. Thank you.
Well, thank you very much for coming today and spending time with us. I'm going to start with a little bit of an overview of the business model, echo quite a few of the themes that you heard from Jay and then take a slightly deeper look at a couple of topics. First of all, our licensing models and the revenue implications of them and then look at our pricing practices and then wrap up with an overview of our financial management principles and some summary observations from the afternoon. So given that Sri just showed you this slide, I thought I'd show it to you again. We like it.
Clearly, FY 2019 has continued the steady and impressive growth of both revenue and free cash flow, a 38% CAGR over the 4 year period for revenue, 58% for free cash flow. So how do we think about this business model that has created these results? And again, you've seen this diagram from Jay earlier, but really it all begins with great products addressing a huge TAM. And we describe our business model as a patient one. It's easy to initiate a free trial or start up a free version of Trello or Bitbucket.
And then it's particularly inexpensive to buy a starter license for your team. And in these ways, we're delivering real value to our users really even before they're counted as a customer. So a patient model in terms of the revenue result. And then adding automation and dedicated channel partners further reduces friction to getting started with our products. And the result of all of this is high volumes of new customers and users.
And that high velocity, low friction model drives, of course, low customer acquisition costs, Hence, our focus on user accounts, which, as we noted earlier today, is now in excess of 10,000,000 users for our cloud products. And while our customers generally start small, they consistently grow their usage of our products over time, creating increasingly sticky relationships with us. And of course, those low customer acquisition costs feed through to low sales and marketing costs as a percent of revenue, which in turn allows us to drive a long term advantage in the scale of our ongoing R and D investments. So to illustrate some of these business model points, 1st, our steadily growing customer count really illustrates the land vector of the business model. And recall the point that Jay made about there being 1,000,000 companies with over $10,000,000 in revenue around the world, you contrast that to our current customer count, just below 140,000.
Giving you some sense for how early we are in this journey. Remember, the definition of the customer count is an organization, a unique domain bringing us approximately $10 per month. And so that specifically excludes those starters, recall the big iceberg type chart that Jay showed a little earlier. So that definition of a customer excludes the starters that we have both trying and using our cloud and server products. If you add those starter products, you get an incremental 175,000 organizations paying for Atlassian's products.
And so of course, that's another important potential vector of our growth, again, at a low customer acquisition cost. And of course, beyond these organizations are all of the free users of products such as Bitbucket, Opsgenie and Trello. So, Jay showed you this one as well. I think you've seen this a number of times over the years, our cohort chart very much illustrating that expand vector of our relationship with our customers. So he defined this one, I won't do that again for you.
And that example that he noted of that first cohort back in 2,002 expanding from $18,000 or so of spend with us to over $2,000,000 in fiscal 2018. Our high volume model continues to drive relatively smooth levels of activity during a quarter. So really quite different to the case of so many other enterprise software companies. This helps us with predictability and also allows us a greater degree focus on building the company for the long term rather than making any particular quarter. And while another of Jay's points was the significant runway that we still have ahead of us both for Jira Software and for Confluence, In recent years, we've really nicely diversified our revenue drivers as new products such as Jira Service Desk and Trello have grown.
And of course Access, Opsgenie, AgileCraft, now Jira Align will add to this theme in FY 2019 and beyond. And we expect our already high percent of recurring revenue as a percentage of total revenue to continue to grow as now over 90% of our new customers are choosing 1 or more of our cloud services and many of our server customers are choosing to scale up to our data center subscription offerings. And indeed, this 84% that I have here on the slide, 84% of recurring revenue, that's defined as our subscription revenue plus the server maintenance revenue. Really, the total of our recurring revenue is a little higher still because the majority of our marketplace revenue that's accounted for in the other revenue line is also recurring in nature. And of course, this relatively high percentage of recurring revenue is part of why we focus on revenue as our metric of top line activity.
So now I'd just like to take a few minutes to review some of the details of our licensing models and their related revenue structures. I think you know we have 1 traditional perpetual license model and 2 subscription models. So the server business where the customer runs their own software is our perpetual license model, while the data center business still self hosted by the customer, but that comes in the form of a subscription. And of course, our cloud businesses use a subscription licensing model. So here, we're contrasting the revenue structures of our server business versus the cloud business.
And for illustrative purposes, we're looking at Jira Software at the 500 user tier level. But the same themes really apply across the business. So in year 1, the server revenue on the left there is made up of 2 equal parts, the perpetual license taken upfront and then also the 1st year of maintenance in a one:one ratio. So driving in year 1 a greater proportion of recurring revenue based on that fifty-fifty split than would be traditional for an enterprise software company. And as you can see, the total server revenue in year 1 is greater than that from the equivalent revenue driven by the cloud subscription for the same product at the same user tier.
Now, we move to the 2nd year and we're looking at cumulative revenue now. And here, the cloud service, as you see, is materially narrowing the gap on cumulative revenue versus the server offering since the cloud subscription price, the annual cloud subscription is higher in price than the annual maintenance charge on the server side of the business. And to continue this extrapolation, by the time we get to year 3, you see how the cumulative cloud revenue is greater than the equivalent revenue coming from the server offering. And just to further magnify this point, by the time you get to year 5, you see a really quite materially higher cumulative revenue from the cloud versus our server offering. So it's important to bear this in mind as we continue to grow our cloud business significantly faster than our server business in the coming years.
Using a similar format, we're going to take a brief look at the server versus data center picture. So here, we're looking at the 2,000 user tier pricing. So with our data center business, we're delivering higher customer value to our larger behind the firewall customers who are looking for greater industrial strength, if you will, in terms of the capabilities that they seek things like clustering to drive high availability, enhanced scalability features, those sorts of things. So here, even in year 1, the data center revenue you see is significantly higher than the equivalent server revenue consistent with that additional customer value that we're offering. And of course, in subsequent years that gap only expands cumulatively since the data center subscription price is higher than the ongoing annual maintenance price for the server offering.
Indeed, the data center is a good example of our overall strategy of tailoring different additions of our products to the particular needs of different segments of the customer base. And you heard today about the launch of our premium offerings. So this is another good example of this additions strategy. Another notable aspect of our business structure is the average duration of our licensing models. So both the server and data center businesses have a standard 1 year duration, while our cloud services can be bought on either an annual or a monthly basis.
And you see here a significant majority over 75% as illustrated by the pie chart there on the right of our customers are electing to choose the monthly subscription versus the annual offering. And these durations very much explain the relatively small amount of long term deferred revenue that we have on our balance sheet relative to the size of our annual total revenue, again supporting our focus on revenue as our top line metric. Now moving from licensing models to pricing. The first point I would want to make is that since the inception of the company, Lassian has been the high value, low price leader and we plan to remain so. 2nd, I'm thrilled with the skill and thought that we bring to considering pricing and packaging moves.
We have an experienced team, a well honed analytical process, very much informed by customer research and a lot of detailed implementation planning that goes into each pricing and packaging initiative. And we do a very thorough job of following up on each initiative to analyze the results and learn accordingly for future practice. And during the past couple of years, our pricing and packaging team has been busy identifying, implementing and tracking a number of very specific and targeted initiatives, some of which have raised prices, others of which have seen us stand pat and still others situations where we elected to lower prices, all very much in service of our strategy of remaining the high value, low price leader. So going forward, we'll continue to routinely assess our pricing and packaging options. We'll have the customer value equation very much in the forefront of our minds as we make our decisions.
We'll analyze our potential moves thoroughly and we'll continue our extensive surveying of the results. So now coming back to the overview of our business model. Our ultra efficient sales and marketing model for which we acquire and grow customers in huge volumes, in turn fuels a sustainable advantage in terms of our significant investment level in R and D that you've been hearing about from Shri. We're very much a product first company and product and platform innovation are key to our success. We take a disciplined and patient approach to investing to drive long term returns.
For example, our focus on creating platforms that Sri articulated will accelerate our ability to bring new products to market over time. And we're releasing new additions of our products consistent with the needs of different market segments, while also adding value to new customers with new product offerings, both organically and inorganically, and making it easier for customers to do business with us via our website. We've also shown that we can take tough decisions where we don't see attractive long term returns. The Stride HipChat decision of several months back was a good example of this and we'll continue to be disciplined in our thought processes in this way. The net result of our business strategy is a strong combination of both revenue growth and profitability.
Before I wrap, I want to summarize our financial principles for you. We'll continue to emphasize the growth of recurring revenues as our cloud and data center businesses continue to grow faster than our server business, very much consistent with our R and D focus. We'll also continue to thoughtfully assess our pricing and packaging options and focus on both the efficiency and effectiveness of our considerable R and D spend. We will continue to modestly increase both operating and free cash flow margins over time and target 3% annual share dilution. So to sum up some of the themes of the afternoon before we have a break and then go to Q and A.
We're early in addressing a very large and diverse TAM. We're growing as the importance and complexity of collaboration and teamwork increases for all companies. And we believe we have a significant runway ahead of us to grow our access and uSpy teams of all types across industries and geographies. Our extensive product investments create a sustainable advantage for us. We build products that solve our customers' increasing collaboration challenges.
Our products are easy to get started with. They're easy to use. They're flexible and extensible with the help of a very significant and important ecosystem of apps and developers. Our product development work is primarily focused on the cloud, consistent with where our customers are increasingly choosing to start their journey with Atlassian. And as a part of this focus on the cloud, since we were together for the previous of these events.
We've been busy, as Shri spoke to, building a hosting infrastructure and working on a platform of common componentry for our cloud offerings. These initiatives demonstrate our long term focus on driving effectiveness and efficiency as we invest substantially in new products, additions, platforms and our ecosystem. We've discussed our ultra efficient go to market model that very much focuses on delivering value to the customer ahead of the sale. And the result is a high volume of customers that's coming at a low acquisition cost, allowing us to recycle additional investment into R and D in very much a flywheel effect. We have a strong presence with both technical and non technical teams.
Software developer focused teams are expanding as software grows its impact on every company. Non technical team members are already regular Atlassian users in their roles as members of software development teams. But in addition, they're regular users, as you've been hearing this afternoon and I'm sure around the halls here of Confluence, Trello and Jira Core. And as Jay described, the breadth of the field here is massive and we're well placed to tap this opportunity across a multitude of types of teams. In particular, IT offers significant growth potential.
It's often the home of the software developer and it's a natural adjacency with many of its own collaboration challenges. We're well on the way to serving IT customers with Jira Software, Jira Service Desk, Opsgenie, Access and we're confident of more opportunities ahead. The combination of strong products and an efficient go to market model yields strong revenue growth and robust free cash flow margins, as illustrated by our Rule of 40 slide. And last and most certainly not least, we have a skilled and experienced management team with a long term value creation focus. Our founders' interests are very well aligned with those of shareholders since Scott and Mike together own the majority of the company still.
And they have a long and successful track record of identifying products, building products that are addressing growth markets, all with the mindsets focused around driving long term durable advantages that will create attractive financial returns. So with that, let's take a break for a few minutes, 10 minutes or so and we'll be back for the Q and A. Thank you.
Ladies and gentlemen, please take your seats. Our program is going to reconvene in 5 minutes. Thank you. Is this one on? Testing.
Testing. It sounds like it's on now. Okay. All right. Thanks, everyone.
So this is open Q and A. So kind of free form suggest, put your hand up and we'll ask questions.
Thanks, Ian, and thanks guys for the presentation. It's very informative and helpful, and it was great also seeing all the users. Clearly, they're very excited. I had a couple of questions. 1 to Mike and Scott on the portfolio itself.
If you'd go to the website 2, 3 years ago, there were like 3 things there and now there's 7, 8, and it's, I guess, every quarter growing. So how do you think about complexity from a purchasing standpoint? You've made it clear that it's very easy, everything is transparent. But are you getting to a point where people can get overwhelmed and not understand where they need to start and how to go? And when the 7 things sometimes just by reading a simple description, it's not entirely clear what is it that I need to start with.
So how do you make sure that people are extremely focused and know where they should start and kind of grow from there? And then the second question for you, James, on pricing. Premium was introduced. My gut feel tells me on a very short time frame, every product will have a premium tier. Help me think about what is that premium relative to your current base pricing?
And how does that close the gap relative to the competitors? Because you've been very clear about the past in the past that your price very low relative to the peers, that this is the premium on par with peers? How do you think about the discount relative to that? And how does that work with your future plans to increase prices? Are both premium and base now going up?
Or the premium is the new price increase? How do I think about that?
You want me to go first? I mean, I can ask philosophically about the portfolio. Jay might be able to answer more of the detailed website questions, I suppose. We still try to land a single team in a single product, in a single organization once first, and we make them successful and then we get them to a second either a team or a second use case or a second product, right? That is really, really important, and we keep philosophy core because it's very hard to land 5 teams in 5 products in a single team at the same time without like somebody saying, hey, you need this portfolio of things, let me put all these things together, right?
If there's a human being, they can do that automatically. It's very hard to do that. We do need to get better continually. I'd say we're pretty damn good at it, but there's a lot we can continue to do about helping people understand the portfolio once they're in that one product and when do we talk to them about it, how do they go across. That can sometimes be deceiving because if you go to the website, you kind of see everything.
Most people don't come to the front page of the website and go, what do I need and look around, right? That's not really the way that they come to us, right? They land on Trello and just sign up for Trello or they land on Bitbucket or they land on Jira Software, like they know what they're looking for, for Part 1, and then we just keep the model. So that doesn't change actually with the number of products that we have. Obviously, the more solution partners and other people, they have can have different approaches, but we stay pretty core to that is pretty important.
I don't know if
there's anything you have from the website perspective.
No, just you heard us using analogy before that when you come into the store, you're looking for come into the clothing store looking for a pair of pants. Like we're not going to necessarily try to get you to try on everything at once in the store and walk out with a jacket and a belt and a pocket handkerchief and socks and shoes. We can you can see those things. And as I mentioned in my example, even in some of the initial flows through Product 1, if you look at like Jira's website as an example, there is I think really smart, subtle nudges towards other things that would make Jira more valuable. We don't try too hard to say try all those things at the same time because we know we've got an opportunity once we plant roots with Jira to kind of expand your usage of both Jira and then the other things that would add value to it.
And then on your pricing we'll be in the coming weeks getting into the specifics of premium pricing and so forth for the product set. But more broadly, I would expect that in the coming year or so, the premium products would be a relatively immaterial part of the overall scale of our revenue. But that there's significant opportunity here. The pricing philosophy is very much obviously lined up with the value that those premium products are offering to our customers. And you'll see us continue to add value to those premium additions.
I mentioned in my talk about the strategy of these additions of our products very much tailored to specific customer market segments. And I think you should expect us to continue to add value to those premium offerings. And of course, that will allow us to be compensated for that additional value over time. But again, we take a patient approach to this, and I think it's an important way in which we're really thinking clearly about the different segments of our customer base and their specific needs.
If I might add one thing philosophically that I think is important. People often mistake looking at the pricing page for the way the customers operate, right? And understand you're sort of all probably very spreadsheet y people, etcetera. So you got the price, that's not how customers operate. It's important to try to put a customer lens on the whole thing.
Even if we have a product that's the same price as a competitor, they often start by selling that thing. If we have a customer that's already sort of marching through a whole realm of products, even if the price turns out to be the same, our sales cost can be drastically different because we already have that customer on board, they're already buying a bunch of staff, they're already using a bunch of staff, they're already a brand association, etcetera. So the sort of raw boxes of mathematical comparison is not as useful as thinking through the customer journeys.
On identity, is that a category that you have to own long term or does it end up potentially like something like Slack where you just partner with best of breed?
I don't think we need to own identity long term. There's people like Okta out there, Microsoft, there's plenty of identity providers out there. I don't think that's something that we need to own long term to be successful. We do build things around identity in our server based offerings. We have a product called Crowd that allows people to have an identity system across all of our products in our sort of behind the firewall environment.
And in the cloud, we released to Access in the last year. And Access allows people to hook up with their identity systems whether SAML single sign on and how much of other functions people want around that. But we don't have to own the backbone at this stage.
Hi, thank you. I wanted to ask 2 questions. Jay, we'll start with you. In your slides, you laid out when you're thinking about growth, a number of different factors of growth. As you think about the next 2 years, how are you thinking about the distinctions between the expand portion of the equation with your existing customers versus the land portion?
Which is going to be more meaningful? Many companies give us examples of 75% of the growth over the next couple of years is from the installed base and 25% is from new logos. How are you just thinking about that philosophically? And then I'll just ask my second question is there's been a lot of talk about Align today. It seems like it's an exciting product.
Your customers are certainly excited about it. How should we be thinking about that specifically as we think about the next 12 months as being additive to the model? If you could just give us any dimensions around that.
So in terms of Dura Line, I would when we announced the transaction, revenue base of the company. Obviously, we have relatively robust margins. And so when you contrast that with the relatively young company of AgileCraft, we will see operating margin dilution. So around 0.5. In terms of our non IFRS margin op margins in the current fiscal year, about 1 point for the IFRS margins.
And I would expect that while we've been very pleased with the customer reaction to Jira Align that we would continue to see some margin dilution in fiscal 2020 as well. So to the first question?
I'll only take the first question, which is about landing new customers versus expanding customers. I think we've been we've done both well historically. We're landing thousands of customers every quarter. We don't actually care really on a quarterly basis. It moves around just depending on what happens.
So but generally, the trend is we require more and more customers over time. But once your installed base gets bigger, like the fact the incremental that the new people take, it's got to grow sort of double exponentially to even maintain the same percentage. It just gets naturally smaller over time. And so the way I think about it is every additional customer we add has the opportunity to sell all of our products new. But every existing customer, there's a sort of lesser expand possibility.
So a new customer is worth more to us long term than an existing customer. But that said, in our existing customer base, we are like a fraction percent penetrated in terms of what is out there. I just chatted with some larger customers just before I came here. And one of them is like, oh yes, we run Jira with 45,000 people inside our organization and we want to do this thing and that thing and scale it in a different way. And we're just rolling out Confluence to 140,000 people across our entire organization.
And we're just getting started with that. It will be available. I can't tell you how many people are going to use it, but it's going to be in the default set that we could all our employees. So I guess we think about both. And anytime we add something to the portfolio, if it brings in new customers and even expand our existing customer base, that is really, really valuable for us.
So whether it's new products or it's acquisitions, we think about how they do both. But there's not a mathematical number I can give you about that. So it's also important to remember the middle category of customers, right? So because someone is a customer, that's one logo. So quite often, we can land a lot of times in the same customer.
So when we think about land, we think about all the spots around the company and those do eventually coalesce. But if you look at other enterprise software companies, they often land 1 customer. They're single sort of install. So our land and expand motion ends up looking quite different. What looks like expand because the customer number doesn't ratio to everything else is often land for us in a large company where we have 10 people here and 20 people here and 50 people here and 100 people here in a different product.
And so we do make sure that we think about those as land, right? 2 people on far side of the world in the same company buying something is not expand for us.
I had a question on Align as well. It was you didn't you bought the company 3 weeks you already have rebranded the company, you already have customers up there talking about it. Can you talk to us about a couple of things? Number 1 is, the use cases, how big that market really is? And then how did you come to buy them?
That would be really helpful.
Okay, try to talk about that.
So short answer is just clear signal from the market and from our customer base. And it's a company we've been working with for a while. The name is not coincidental. AgileCraft did a really good job of building on top of Jira. And AgileCraft's value to the organizations that subscribe to it is in leveraging where Jira is used at the team and tribe level at scale already and helping connect that team or Tribe will use of Jira up into the project and portfolio management offices and sort of the executive functions inside of the business in the way that you heard Rob describe.
And so, I think we are already working, have been working with them. We heard a really strong signal from customers. And then when you look at sort of build versus buy calculus, they had already done an incredible job of building a product that was very JIRA like on top of or integrating JIRA in a way that is just natural for customers. So, I think when you ask customers how is this used around the floor, you're going to hear it's just a natural extension of where we're already using Jira delivering even more value through Atlassian as we scale Agile to the company.
And for those of you who may have gone to all the details of Jira Align yet, the way I explain it is that fewer companies that are going through digital transformation,
it's a bit of a buzzword at the
moment, but effectively it's they need to a 10,000 So if you take, say, ANZ Bank that's in Australia, so 10,000 people working under the CIO in development and testing and everything they've got there. And they want to move from a waterfall based process, so where they would produce binders of requirements, might take a year to produce all the requirements and then hand up those binders of requirements to developers and then might take 2 years for the developers to then build the product. And of course, they get wrapped in the market by a lot of faster startups and mainly software companies that can move a lot faster than 3 year release cycles. Now startups and these big banks are all using Jira in the same way at the sort of team level. And they say, no, we need to be more agile.
So we need to move from this sort of waterfall 3 year process to, okay, we want to do sprints, we want to do things faster. And then when that's all happening, previously, executives used to say, great, I can tell you what's in that binder and I make sure it's going to deliver the business value. When we go now to saying, well, actually, let's push decision making down to the teams, to those people who should be making the decisions, they're the ones actually making the trade offs about what software to build and how to build it. I want to push all that decision making down. How do I ensure that those people, those 10,000 people are doing the things that tie up to my corporate objectives?
And that bit in the middle between the software and the way work is tracked on a day to day basis and the company objectives, that's where Jira Align comes in and allows executives to make sure that the work getting done by 10,000 people really delivers the value that the CIO and the CEO have told to the Board.
So question for Scott or Mike or Jay. During the keynote, you announced enhanced migration tools for server customers moving over to cloud and any on premise attendees here now get up to 2,000 cloud subscriptions for free. So my question is, historically, there really hasn't been much external emphasis on getting your server customers to migrate to cloud. And I know that you're not forcing your customers to move over, but does this signal a change in philosophy to some degree?
I can take that. I don't think I mean, it's not a change in philosophy. It's just that we've told our customers for years now, this is sort of a decade long transition. We want to be excellent at everything and we have to help you manage this transition, right? And we've been very clear with them all week, last week and we'll be clear with them next week.
We're with you today. We understand what you need today. We have teams working on that. But we have to build well ahead, right? I think what you're seeing is our 2, 3 years of investment in the enterprise side of cloud and hence the bigger customers starting to say, okay, I see I can go that way.
Now there's a whole lot of factors around that. You mentioned migration tools, again, something we've been working on for a while. So that's all just part of a general long movement. I would be surprised if the customers were surprised. Certainly, if you've been to the last 4 summits, you've seen this sort of consistent drumbeat of messaging where we're explaining we're doing, and it goes back to value of being open, right?
We're not we're being very open about, hey, this is where we're headed, right? We think naturally we will end up as a cloud first company and we will end up as a cloud only company at some stage in the distant future. But that doesn't mean we're going to say you have to move today, but we're going to show you how we're helping you get there. We're not abandoning you. So I think we're just very open about our philosophy, and these are just the latest set of improvements and features that you're seeing across all of that spectrum of things.
Okay. That's helpful. And then Mike, if you were to fast forward and look sort of 2 years from now, would you expect that the cadence of your installed base server customers moving over to cloud is faster than what you have kind of observed over the past couple of years or more or less about the same? How do you sort of envision that?
It's hard to pick that. I mean, we've said that 90% of our new customers choose to start in the cloud now, and that's you've sort of seen the number move over time, but how fast the existing store base moves. And again, some of them don't forget, they don't need to move the whole thing. They're teams and projects, and it's about us being a partner of theirs as a vendor at a holistic level, especially for the big ones. So they'll maybe start a new instance for a new area in cloud and they might still have a large on prem one, but we need them to see the cloud can handle their needs.
And then they'll learn and that will happen over time. But again, that's up to them. There's a question
in the back.
I think someone has the microphone already.
All
right, great. Thanks. Yes, so I'm
just trying to frame up the opportunity with the Align product. So just maybe as a generic example, let's say, I'm a large customer. I'm spending $100,000 per year with you today. I decided to go all in on the line. What could that potential upsell be?
Just a ballpark number.
Trey, do you know the numbers off the back of your head?
Yes. I mean, if you're spending $100,000 on Jira, you would have I'm just trying to do that math for us to understand. I mean, basically, like for every Align for every 5 Jira users, there's probably an Align user and that's sort of the rough math. And Align, if you look at the price on the website, it's significantly more expensive. It's like $40 a month, up to like $80 a month per user.
And so, it can be Jira line is can be a multiple of what customers are spending on Jira server, not necessarily on Jira data center. But it is a product that largely we are targeting customers that have more than 1,000 active users of Jira. And so they tend to be the bigger customers of Jira Software and the Jira platform generally.
Got it. Thanks.
From talking to some of your customers at lunch, they were very appreciative that you integrate with so many other vendors. And when asking them more about that, some of the integrations that you have are actually with competitive products or products that could be competitive. So your integrations is making it easier for those customers to use competitive products rather than using your products. So can you just tell us what your thinking on that is? And if you plan to change that dynamic at all in the future or go ahead with that?
It's a strange and interesting world we live in, it? That you compete with people, integrate with people, and in many cases, they're all the same and different products. So we won't change. Our philosophy has been the same since we started. There's no change in what we do.
We've always integrated with what we consider the best sort of products out there in the market, multiple ones in a category whether or not we have something ourselves in that category. We do believe over time that our reputation as a great vendor to work with, that the products themselves have great features and the fact that if we own both ends of the integration, we can make it a tighter integration than we can if we only own one end. We think all those benefits over time mean that people will standardize more on Atlassian products. But we don't try and do it by saying, well, actually, if you're a Jira customer, you can't be a customer of 1 of our competitors. We think that's not a really good way to maintain a strong market position.
Thanks. Just wanted to get a sense of your strategy maybe with Trello. I mean, it's a great product, easy to use. What's the strategy though? Is it making it more robust?
Is it marketing maybe more towards non technical users? Or is there another way to think about that? Thanks.
Yes, look, I mean, Trello has been an awesome journey actually. I mean, as we said at the time, we were buying Monster and it's seemingly bigger Monster today than it was then. So look, 1st and foremost, the strategy of Trello is to continue the momentum it has, right? We're past 35,000,000 users. The product continues to be used worldwide by all sorts of teams, home teams, work teams all over the place, right?
That's been the primary part of the strategy. We've said that loud and clear I think every single time. It monetized relatively well and we continue to learn about that and continue to make changes as we understand the Trello base more. Again, I would go back to philosophically, we're thoughtful, we're patient, we're long term. We're not going to make any radical changes in something like Trello.
We want to make sure we understand that we understand the base, etcetera. You have seen us in the last few months, quarters make a few tweaks around the edges of Trello. We've made some changes to the recently with the enterprise offering adding more value there. If you watch the Trello Confluence product, you'll see some of the details. Continually make the enterprise offering more robust.
The team just continues to turn away and do a good job at that. We have made a bunch of other sort of changes around the monetization and pricing of it at the lower tiers. But we continue to be patient and learn. Priority number 1 is still to make sure that Trello continues to grow and then over time integrate with the border Atlassian ecosystem. But There's an interesting evolution of products like Trello that mirrors some of their products.
And Trello itself starts often as many people using individually. At home, many people maybe here nodding like you use Trello yourself. And they use it at home, then they bring it with their team at work. I think we had some stat, it was over half of people using Trello were using it in some way at work. And then people use it their team, then it goes to other teams.
And at some stage, and we're still very early in this, the organization has a standardization conversation. So actually this tool is very productive for these teams. How about we just make it a standard thing? I log in with my single sign on and suddenly I've got an ability to use that product. So we're seeing that more and more and then a lot of things around again start smaller teams we've done with all of our products.
But it does get to a stage where people just want to say, hey, I'll make it the standard product for all my employees so that they can be productive, as productive as this group is over here.
Thank you guys for the Analyst Day. Very useful information. I wanted to dig into one of the numbers that I think Jay gave in his presentation talking about the 7,500 customers that are good targets for data center or premium. Can you tell us a little bit about like who those customers are? Kind of what's the cut off that makes them sort of the attractive upsell opportunity?
And any detail like what percentage of the business to those types of customers represent? And is that kind of aligned to excuse the point, is that aligned to Jira line of where you'd expect to sort of upsell that
solution? That specific number was server customers that have more than 500 users of a single instance of a data center product. And so remember those customers have more than just one product, a lot of them. And so there's for just the data center opportunity, largely selling an existing server customer with more than 500 users to upgrade them to data center That was sort of like part of the size of that market. That is the same market that we can sell and migrate or move to cloud when they're ready to move to cloud.
Now the premium cloud market is actually bigger than that, because there's lots of customers that are going to take advantage of Cloud Premium for just the feature set or that they'll grow into or they'll start with Standard or they'll start with Premium, but that was sort of just that. In terms of the overall size, I mean, they tend to be larger the larger server customer cohort. Keep in mind, it's 7,500 to 140,000 companies. And so they can tend to spend more on the server side of the business. And then we focus on taking them on those upgrade paths.
The I think about the Jira line is probably a little bit of a bigger company than that particular core. They may have 1,000 users of Jira, not necessarily 500, although it is kind of the same bucket of customers, right? I mean, if you've got 500 users, you could use Jira Align depending on your organization and how you're structured and what you're trying to accomplish around the transformation that Scott mentioned. But they tend to be the Jira Line customer tends to be global 2 ks, global 3 ks, large, very active and pervasive usage of Jira?
Difference there between oh, hang on, I think we're going to get the difference between premium additions and access. So access is squarely targeted at the IT department and the IT team across all of the users that you have in your entire Atlassian world. So a higher user potential, but generally, if you got an IT department that's caring about all these things and needs all this sort of audit logs and controls and integration with Okta and you're generally trending towards those bigger companies. Premium is more advanced users of those products. So it's their sort of orthogonal in how they behave access for the IT department.
Now in a small company, the advanced users are often the IT department. So as you get down to the sub-five 100s, they're probably the same group. North of 500, they can often be different groups, right? You can have a super advanced Jira admin that says I need premium over here and a bunch of other Jira people running around Jira instances, which are relatively simple even in a company, and I'm totally fine with what I have. So they are a bit orthogonal in how we think about them.
Yes. At the keynote, you guys talked about Jira Service Desk and showed how it could be used in business domains, HR, facilities, legal, I think was the actual demo. How new is that in moving outside of IT into business domains? And as you, I guess, broaden the breadth of the platform, is that something that makes it more competitive upmarket with larger companies?
I'll take that one. So we've I mean Jira Service Desk has always been able to have that functionality there. We some competitors in that market package and sell that separately as a separate bundle with different pricing and so forth. We keep it simple. One thing to use for every single team across your organization and we do find that to be quite a popular use case.
We're getting started on it. We haven't really made as much noise around it. There's nothing from a product feature perspective that we need to do. It's more of a making sure that people are aware that we have to do that. Still, I don't think legal wakes up in the morning and says, I want to service desk for myself, right?
So often that happens via IT because the IT department looks at use cases and how do they make it more easy to use for those use cases. And so that sort of the pitch this morning is make sure IT teams go out there and enable the business. We also find channel partners often get brought in to do that as well. So it's another route to market for that. But the thing called, I think Enterprise Service Management is the larger buzzword on that and there's analysts talking about it and we expect that we will do really well on that.
Martin,
do you want
to cover that side of the room?
Thanks. Scott, like you said, digital transformation is kind of a very common buzzword and the words agile are like very commonly used in boardroom vernacular and earnings calls and whatnot. The ANZ example that was its new CEO that came in and catalyzed a lot of push down there. And so my question is, are you seeing more tops down drive for your business? And I mean your AgileCrafts acquisition obviously speaks to that.
And really what I'm getting at is, do you get more tops down push down? How does that change of the things we've known about your business when it comes to linearity and the customer journey, how long that kind of takes to virality?
Let me answer the first bit and Jake can chime in on the second. We are totally seeing this being a boardroom conversation these days, which seems like a little bit of a bit late to the party because in software development, the Agile manifesto was written in 2001 and we're in 2019. And I scratch my head and say, why is it that suddenly this is all sort of the exciting thing today when it's we've been doing this for such a long time. And what I found is that large companies, established companies are waking up and realizing that their really biggest competition is software companies, whether it's startups or other companies that are digital natives, that's the biggest competition, whether you're in media or transport or entertainment, everyone is realizing that software companies are the competition. So one, they're losing customers to these software companies.
But what's happened recently is they're now actually starting to lose their best staff to these software companies as well. As a result, the Board, some of that starts flowing through the numbers, employee satisfaction, their growth rates. And the Board has said, hey, Mr. And Mrs. CEO, you need to fix this.
And the CEO turns around and says, all right, well, my CIO who's been there for a long time, who was probably part of the problem needs to go. And you see a lot of CIOs come in, new CIOs and the first thing they do is they say, I want to move my products to cloud because I want to free up my internal IT people that spend a lot of time racking servers and upgrading stuff. I want to free that all up and give it to the cloud vendors to handle. Secondly, I need to turbocharge my development team internally. I need to be building more software for my customers and I need to move them to be more agile instead of waterfall.
And the third thing you see is that they are now tasked with empowering every employee to be more productive. And we are seeing that and they are now saying, great, I need to standardize Atlassian's tools like Confluence and Trello or we see things like Zoom being deployed wall to wall. So they're the things that get tasked with the CIO and it's definitely coming down. In terms of business model side of things, though, we don't see that changing stuff out there because we have channel partners they can call up if they want to have a top down conversation because we're not going to be ones doing the services. We have no channel conflict at all.
We have 500 channel partners. So we handle that if it's a top down decision. But often because we're a standard, particularly JIRA, but often our other products are well, are just so well deployed already inside the organization. The COO just takes the shackles off and says, hang on, let's just deploy this wall to wall instead of where we are today. So I don't see it changing our go to market.
Jay, do you want to add
one thing in between that
I think is really important. Scott didn't kind of give you the one why there and it's important if you look at the keynote, if you look at all the things we do, sometimes people ask why we invest so much in practices in all the other bits and pieces around teamwork other than you guys seem to believe in this stuff, which is great, but it seems highly polished and that's exactly why, right? That CIO that saying you're now responsible for employee productivity, he's kind of always been responsible for employee productivity. But in the past, employee productivity meant I gave a new version of Word or I made your desktop faster or something like this. Now employee productivity is changing how teams work together, how the organization is structured, how work gets done.
And what's really people look to us as a brand, as a company to say, how does Atlassian do this? And so sharing our practices turns out to be a great marketing engine, but also gives us kudos in our boardroom as someone that comes in. I was with a large customer who said, I don't want McKinsey or BCG. I want you guys to come in and tell me how you work, right? Because those guys are doing a different thing, right?
And you just do a practical dance. So that's the reason I think that practices, the things that we talk about, which are the ways that we work, we have a rule that we don't share things that authentically we don't use internally as practices, is really, really important from a sort of a brand halo, a brand breadth perspective because those CIOs are being told, I need like I need methodologies to do this, I need practices. It's not about selling software for us, but it does help us get into those conversations really, really nicely.
I guess kind of continue on that question.
How do your customers
kind of measure the ROI?
And like particularly like for
faster deposit growth or faster loan growth or better employee retention or like how do they when they're particularly these large deployments like multimillion dollar deals, are there real tangible ROIs that they're seeing that you can measure and go to other large customers and say, look at these they got these huge returns?
Someone once told me you can sell painkillers or you can sell vitamins. And at this stage, the way that conversations are coming, they're not coming to us saying, can you give me some ROI of how to do this? They're coming to us and saying, we need to become more agile as an organization or we die. So under that model, like the ROI is not even factored in. It's literally we are getting eaten by other people.
We know we need to transform the way we work internally. How do we do it is the question is all about how, not sort of what or why. Might also point out, Jira Align is entirely from customers that come and say, I have a lot of people doing Agile, like they're generally more advanced on that journey. And they have all these people doing how do I tie it to business outcomes? As you saw, Steve, that is like their biggest pitch is you have lots of people running software and doing all this stuff.
You have all these business outcomes. Jira Align is literally about aligning the two things together and trying to give you insight. It's not magic. You have to think through what you're trying to tie to and where the goals are of the organization, but it is trying to align and solve that problem for people that are probably one step further down that digital journey.
Thanks very much. On the when you're adding new features and new companies and you're buying them and building them out, where is the integration layer? Is it at the API layer? Is it the UI layer? And how hard is that to do as you kind of bring in more and more kind of interesting things into the platform?
All of that and Shruti might be able to add it. If we think about ACK acquisitions, just as a broad thing, the first thing we care about is culture. Secondly, we care, do they share our mission. 3rd, do they share our business model close enough we can do it. And then after that, we will get everything technical after that, right.
So that's sort of where it fits in the stack. We're still building out our platform as Atlassian like that's we built our sort of technology platform. And as we've done acquisitions that we've got lots of products, we have a user management platform that we're almost finished doing that. That's been a big investment, but that allows people to onboard. You've seen Opsgenie, we acquired them 6 months ago.
Today, we announced they're on our user management platform. We have a UI platform. Same, Opsgenie, 6 months ago we acquired it. Today, we've announced that we've replatformed that onto our UI platform. So there's a few modules that we believe user management is a big one.
UI depending on how integrated the products need to be. Our billing in commerce at sort of the back end, that's an area where I still think we have some improvement to make to put things on the same bill for customers. So we're very sort of we want to have a standard platform by how the way work moves across an organization, but we're very specific about what we do in the order we implement stuff.
You covered the main things. Even in my slide deck, I had the two examples where Trello, we focused on growing MAU and for Opsgenie we have already done the identity integration, so it depends on the business goal on what we need to achieve.
So as you get into these larger deployments, how does the buying change? And to what degree, like how does the interface with Atlassian change? And maybe it's a little bit with the billing and the commerce, but for somebody who goes all in, who are they talking to since you guys don't have the dedicated salesperson? And are you having to change the number and type of people at Atlassian who are kind of interfacing with those large enterprises?
Yes, so larger enterprises we've explained previously, have an enterprise advocate, they have an account manager. The bigger companies have somebody that's dedicated to them. It is a relatively small team and so they have a lot of coverage area in part because of the efficiency that Mike described earlier and the efficiency of just the way the model works in part because we also work really closely with the channel for some of those opportunities. But a large company will know that they've got somebody if they need to talk to that will respond to them and help them and also explain other things that they can move into.
You're looking lonely, so I figured I'd ask you something. Actually looking for sort of when does the piece dividend from Vertigo start to show up in terms of you had all these R and D resources going into rewriting all the code. You freed those up about a year ago. And so somewhere in here, I'd start to look to see some new product development as those people got repurposed. So that's sort of question 1.
And then question 2 is that some of the announcements today around forecasting and such look like they were echoes of existing Amazon services, which is a good thing. But how much can you leverage existing AI or other functionality that you can get off AWS? And again, when should we start seeing that flow through in terms of the product?
Yes. On the second one, we use all the Amazon services that are out there. In fact, you pick an Amazon service, I'll tell you we use that. And that's in the philosophy of if there is a service that's in the market, we don't want to reinvent it. We want to focus on adding value to our customers.
So we absolutely leverage the platforms that are out there, right? So that's definitely on that. What was your first question? Yes. So once we finished Vertigo, we absolutely moved all the some of the people out.
You saw my note on keeping the infrastructure team flat. Even though we have added lot more on the rest of R and D, we have kept the infrastructure flat, which is a team that actually worked on vertigo and we had increased it a little bit, but then we brought it down back to the original number and we have stayed flat as we have grown.
It's also worth noting that the Tre's infrastructure team is heavily involved in building out a lot of the things that we have seen in terms of cloud scale after moving to Vertigo, some of the cloud premium offerings. We've got guaranteed SLAs now. We've done a lot of work to make sure that we can hit those reliably. Obviously, encryption at rest, the whole bunch of the stuff that privacy, security, the access, identity control. So there's a lot of things that as we continue to do the enterprise part of the cloud journey and make sure that we are sort of world class at every stage there, that's not just getting to the cloud, that's continuing to add value there in those type of offerings.
So
if you say,
well, they're not new products, well, but they're sort of underneath cloud premium and access and things that are, I would say,
new products. Time for one final question, if there is one. Is that, sorry?
Could you Shri, could you tell us us what are the main constraints right now keeping you with that 10,000 user cap that you mentioned? And for those of us new to the story, could you just remind us what the economics of the marketplace are in terms of take rate and all that?
Yes. So on the 10,000 limit, we have been thoughtful in increasing the limit. The user limit is actually a proxy for all the other dimensions that we have for scaling. And it's confusing if we say you can scale beyond certain number if you do these three things and not do those things. So what we are trying to do is to make sure that we have an awesome experience across all the dimensions of scaling that we have in the back end.
So we have been continually creating new microservices that scale in that dimension. We are trying to optimize code. We are replacing with newer systems. So as we do those, we have been thoughtful in increasing. Our goal, like I said, is not to talk about limits at all in the future.
It's also worth noting, and we can come back to whoever answers the take rate. I talked to a customer yesterday who thanked us for our philosophy on user limits. And I said, why is that? He's like, well, we've used a lot of other SaaS services. They were like, yes, we can take 25,000 people.
We'll take 50,000 people, and then we have this horrible 2 years as they're trying to get through. So we don't want to be in that thing, that realm. And it was interesting to see a customer actually point that out to me at the enterprise function because they're a big on prem customer, they're going to wait until we get to their point. But they see us on that journey, they see the progression and they're really confident and happy. But I think that goes to our philosophies kind of engendering customer satisfaction and love over a long term period of time.
I mean, they're they see us very trusted. Secondly, access does not have the same user limit, right? So if you use access with more people than 10 ks or 5 ks, 10 ks is in early access, early ERP, Atlassian Access can handle a much larger directory than that and then you can have multiple JIRAs for example underneath that at 5 ks each today or 10 ks. So it's not necessarily a total cap on the size of your cloud deployment. And take rate?
Take rate for the marketplace is, I mean, 25% is the simple way to think about the economics roughly. We said long said that our goal there is really, no, don't think about 25%. That's what we use to sort of maintain and grow and invest in the marketplace. It's a 75%. So if you do the math in reverse and think about how much money we've invested in all of the small vendors out there on the show floor, go talk to any of them.
And I like to get investors asking me how many employees they had last year. Anyone with 20 people would have 10 people last year. Anyone with we have now marketplace partners that have 100 employees plus, which is insane for us when we think about starting a company and all these companies that have appeared around us and on top of us. It's pretty daunting, but we take it really seriously and they're all having a great time, which is really good.
Great. Okay. Thanks, Ron. That's the end of the formal session today. Thanks for being attentive for the last few hours.
We're all going to move over right next door there, the next room over for cocktails and the whole executive team will be there. So thanks very much. And then some more questions are best. Thank
you. I just want to say a huge thank you to everyone in this room. You do a lot of work around Atlassian, whether you're writing out reports to other people or you're investing your own money or investing money on behalf of your clients. It's a lot of companies you could spend time with. I've got to know quite a few of you over this period of going public the last couple of years.
I just want to say a huge thank you for all that investment of time and we take it very seriously and we enjoy spending time with you and hopefully we can see you next door in a few moments. Thanks a lot. Great.
Thanks,