Earnings Call: Q3 2017

Apr 27, 2017

Good afternoon, ladies and gentlemen. Thank you for joining Atlassian's earnings conference call for the third quarter of fiscal 2017. As a reminder, this conference call is being recorded and will be available for replay from the investor relations section of Atlassian's website following this call. I will now hand the call over to Mr. Ian Lee, Atlassian's Head of Investor Relations. Please go ahead. Good afternoon and welcome to Atlassian's third quarter fiscal 2017 earnings conference call. On the call today, we have Atlassian's co-founders and CEOs, Scott Farquhar and Mike Cannon-Brookes in Sydney, and our Chief Financial Officer, Murray Demo, and our President, Jay Simons, in San Francisco. Early today, we issued a press release and shareholder letter with our financial results and commentary for the third quarter of fiscal year 2017. These items are also posted on the investor relations section of Atlassian's website at investors.atlassian.com. On our IR website, there's also an accompanying presentation and data sheet available. We'll make some brief opening remarks and then spend the rest of the call on Q&A. Statements made on this call include forward-looking statements. Forward-looking statements include known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management's beliefs and assumptions only as of the date such statements are made. In addition, during today's call, we will discuss non-IFRS financial measures. These non-IFRS financial measures are in addition to, and are not as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. There are a number of limitations related to the use of these non-IFRS financial measures versus their nearest IFRS equivalents and may be different from non-IFRS measures used by our other companies. A reconciliation between IFRS and non-IFRS financial measures is available in our earnings release, our shareholder letter, and our updated investor data sheet on our IR website. Further information on these and other factors that could affect the company's financial results is included in 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 10-K. A quick housekeeping note before we proceed with the rest of the call. Many of you should have received the save-the-date email for our main U.S. user conference, Atlassian Summit, which is being held in San Jose from September 12th through the 14th. The primary days of this event are September 13th and 14th, when we'll host most of the open sessions and keynotes. This year, we will also be holding our first investor and financial analyst session. We'll provide more details in the near future, but please mark those dates on your calendars. I will now turn the call over to Scott for his brief opening remarks before we move to Q&A. Good afternoon. Thanks, everyone, for joining today. We had another great quarter. We achieved revenue growth of 36% year-on-year and generated over $68 million of free cash flow, which is more than the annual free cash flow we recorded for fiscal 2014 or fiscal 2015. Like last quarter, our performance was broad-based. We achieved solid growth across our product families and across our cloud server and Data Center products. We closed the acquisition of Trello in February, and we're tremendously excited to have Trello on board and part of the Atlassian family. Including Trello, we finished the quarter with over 85,000 customers. Our goal is to unleash the potential of teams in the Fortune 500,000. While we still have a long way to go to reach that target, we're making great progress and have the target of 100,000 customers firmly in our sights. In our shareholder letter, we noticed that we just passed the 2,000-employee mark. Mike and I never imagined we'd get to this size when we started the company in 2002. It's been a privilege to work with so many talented colleagues over the years. The strong results we've just announced were only possible because of the team around us. A quick shout-out to every Atlassian everywhere. You've been key to helping us get to where we are today. You'll be key to our future growth. With that, I'll turn the call over to our operator for Q&A. We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Gregg Moskowitz of Cowen and Company. Please go ahead. Thank you very much and good afternoon, everyone. Congratulations on a good quarter. Scott, just wanted to follow up on your brief comment regarding the contribution in the business from all the three areas. In Q2, you saw really strong Data Center performance. How would you characterize the Data Center business this quarter by comparison? Is it a continuation of that trend? Any additional commentary would be helpful. Hey, Greg, this is Jay. While we don't break it out, it was another great quarter for Data Center. I think as we said last quarter and the quarter before, there had been high demand for this product when we introduced it. We've expanded the Data Center offering to include nearly all of our key major products, and I think we've been happy with the growth. I think there's a lot of room for us to continue to reach out to customers that are looking to deploy our products with the capability of high availability and zero downtime, upgrading things that are important for really big companies. I think we're really proud of what we've accomplished so far. Terrific. In the shareholder letter, you alluded to upcoming price increases, and I know that it's certainly premature to discuss that in depth, but just from a high level, can you say if this will pertain to some on-prem products, cloud products, or both? Also, if you were able to just perhaps provide any color on the underlying rationale behind the price increases, that would be useful. Greg, yes. In terms of the pricing, what we've got in the shareholder letter, we have not communicated to customers, and so that's why we're We're trying to provide information now to the financial community, we don't want to get in front of our customer communication. We're leaving it the way it is right now and not signaling to any specific area of the business. What we want to do is two things. One is we want to make sure that all investors are aware of this. They may miss it when the communication comes out. We want to make sure everybody's aware of it when that happens at some point in the future. Two is, obviously, everyone's going to try to figure out, well, what does this mean in terms of the financials for fiscal 2018? We provided that it will have an impact of low single-digit points of revenue growth. We just want to underscore that low. That'll help everyone try to sort through what to make sense of that in terms of the revenue for fiscal 2018. We'll have more to discuss on this topic on our next earnings call when we're in a position to talk more about it. Okay. Thanks, Murray. Just one last one, if I could, on Trello. You mentioned in the press release that Trello added almost 13,000 paid customers on a net basis. About how many total Trello customers are there in your paid base? I'm just trying to get some sense of customer overlap, if that were possible. Yeah, we haven't- Mike here. Yeah. Go ahead, Mike. Mike here. We haven't disclosed that. We only disclosed, obviously, the net new contribution that Trello brings. There's overlap as well underneath that. For people, obviously, looking at the customer number over time, we need to explain where it has a big jump up. The only sort of extra stats we've put in there since the close of the acquisition this quarter, obviously, it's now past 22 million users and was 19 and change when we announced the acquisition in January. Right. Exactly. All right. Terrific. I'll just add one thing to that, Gregg, which is the number of customers that are overlap are far smaller than the ones that are net new to us. Even for those that may be overlap, if it's like in one department of a large company in Europe and one department in North America, there's still a huge opportunity in those quote unquote overlap customers in terms of just more seats and more products. Okay. That's terrific. Thanks very much, guys. Our next question comes from Ittai Kidron of Oppenheimer. Please go ahead. Thanks. Congrats, guys, on a good quarter. Murray, just wanted to touch, kind of going back to Trello about the impact in the quarter. I think you were looking for $1 million in the quarter, and I think you got it for $4 for the year. Are you still on track for that, or you're running a little bit ahead of that? We did note that it was one in Q3, and we achieved that one in Q3. We're targeting three in Q4. We are going through that whole thing with the deferred revenue. We've noted that there was about $2 million of deferred revenue that we booked after the haircut. We did take a haircut there. We were able to recognize some of that deferred revenue did go to revenue in Q3, and it will in Q4. So far, we're on track, yes. Very good. Quite pleased with the results. That's great. Then going back to the price increases that you alluded to that we'll get some more detail on. I'm not going to ask you about the details about price increases. Maybe you can give us a little bit of the color on why do you feel you need to do them here. Are you not seeing any competitive pressures? I'm just trying to kind of get into the drivers behind it. Not necessarily the numbers, but the logic. We'd prefer to say more at a later date on that. We don't take these things lightly. We put a lot of work into the analysis that went into this, and we're very thoughtful with it. At this point, we prefer not to talk about it and rather just kind of focus on our commercial operations and communication to customers. When we're in a position to say more to the financial community, we will. We did provide today sort of the financial implications of our decision. Very good. All right. Good luck, guys. Thank you, Ittai. Our next question comes from Bhavan Suri of William Blair. Please go ahead. Hey, guys. Can you hear me okay? Yes, we can, Bhavan. Yep. Great. Thanks. Congrats, obviously, and really nice job, especially on that free cash flow number. I guess, let me dive in a little bit here. As you look at the collaboration space, you added Trello, but obviously Hipchat's pretty well integrated with Jira, and you're seeing Slack, obviously, with Jira being a big integration. Can you just talk a little bit how Trello fits into that? Is Hipchat going to be part of that, or do you look at sort of a different collaboration product that fits with the Trello user base, sort of a posted, more integrated sort of collaboration, communication, chat interface? How should we think about how those three products will sort of interact going forward? Yeah. Thanks, Bhavan. It's Mike here. Look, I think all of our products have various connections, pathways, integrations between them, right? Trello comes into the family and works very well with Hipchat. It works very well with Confluence. It actually works quite well with Jira. You've seen us in the quarter launch already integrations with Bitbucket, Hipchat, Confluence, and Jira for Trello to allow those customers using both for different purposes to connect them in various different ways. I think you'll see, obviously, some of the products appeal more to the broader all teams market. Trello obviously has a huge broad penetration. You can see that in the base of 22 million users around the world and the rapid growth that it's undergoing. I think you'll see that both drawing our products in, but also we have a huge customer base within which Trello is still, I think, relatively unknown, there's good opportunities in both directions. I don't think there'll be discrete sets of products as much as you describe it, as much as there'll be a web of connected applications, both inside the Atlassian family and then outside the Atlassian family. We intend to be a really good citizen in playing in all of those to put the customer need first, right? Whichever way they want to connect products together. Got it. Fair enough. Then, obviously, Trello's had pretty tremendous growth, right? 19 million users, which had grown 50%, now 22 million, literally in a quarter. Is there something on the marketing viral side? Because obviously Jira, with developers, and you think about your approach to developers as forums, and they all talk to each other, and it drives this viral approach with some marketing, but there's sort of this viral, I use Jira, it's great, the next guy uses Jira, it's great. Trello obviously seems like it's doing really well, but in a sort of fairly different market. How do you think about bringing those two communities together? Does it make sense to bring those communities together? Is there any learnings you guys have picked up from one, from Trello, that you could bring to sort of Jira, Confluence, Bitbucket, Hipchat, et cetera? Look, I think the Trello team obviously did a fantastic job, we're super excited to have them on board. There's certainly learnings we can take from how they've grown Trello around the world internationally, a lot of different markets, and really tackling that end user growth, in a lot of small, medium enterprises around different parts of the world, different market segments. There's certainly a lot we can learn from them. We obviously have a fantastic go-to-market model and marketing engine, that we have our own strengths that work very well. I think bringing the two together, there's certainly a lot of shared strengths we can get there. The opportunity belonging both existing Atlassian family and obviously the newest member in Trello is just massive. We're very excited about that opportunity 22 million against 1 billion knowledge workers on the planet, we've got some headroom. We're excited about that. One last one quickly for me for Murray. Murray, obviously R&D, and I would never tell you to stop R&D, obviously, because technology companies live in R&D, but at some point, you're going to get great scale out of that. When should we think of R&D starting to ramp down as a % of revenue, just given scale more than anything else? Or do you think at least for the foreseeable future, it kind of stays where it is as a % of revenue? Thanks for taking my questions, guys. Bhavan. We're going to continue to invest in R&D. It's the lifeblood of the company. Obviously, as time passes, we would expect to see some scale just because of the revenue growth, as much as it really is on the expense side. For right now, we're going to continue to invest. We've got a large market opportunity, there's just a lot more for us to do to capture that. We think we've got a model that generates good profitability and tremendous cash flows. We like the model. We like our opportunity. We're going to continue to invest. Makes sense. Thanks, guys. Congrats again. Thank you. Our next question comes from Michael Turits of Raymond James. Please go ahead. Hey, guys, this is Austin Dietz filling in for Michael. Just a question around the Atlassian Stack bundle. What's been the impact on your products? Do you feel like you have it priced properly, and would you say it's driving more revenue? Thanks. Hey, Michael. Yeah, it's basically a bundling of all products for customers that are looking in a single instance to kind of standardize across the portfolio, I would say. There's a small number of customers that are going to take everything. We do think that there's a nominal discount when you buy multiple products at once. Again, I think it's a relatively immaterial kind of impact because there's a small customers are going to choose everything all at once. Okay, great. Thanks. Our next question comes from Richard Davis of Canaccord. Please go ahead. Hey, thanks. It seems to me that if you guys are going to get as big as I think you can, that you're going to have to be more than a gaggle of one-off tools. When you sit down, how do you think about communicating that differentiation that you have over, we all know the cool point solution guys. How do you differentiate yourself there in terms of communications? Also, what are you doing on the programming front to make components of your platform more connectivity and stuff like that? Because the way I think about it is a little bit like what Microsoft did when they unified the Office suite. You're trying to do it at a different layer. Thanks. Hi, Richard. Yeah, it's Mike here. It's a great question. We're constantly spending time on trying to make sure that our applications play better together. At the same time, we've always been wary of building a sort of a walled garden suite approach. I think the way the SaaS world is working, people will use lots and lots of different applications from lots and lots of different vendors. We need to play well with people outside the building. Much to, I think it was Ittai's question earlier about connections in and out of the different products. We certainly invested a lot in making them play together. You can see that in various different fronts. Obviously, the design language that you've seen us implement over the last couple of years, bringing the products together so there's a familiarity moving between them. That makes a big difference in the office world. You had shortcuts that were the same. For example, you know how to operate Excel, you know how to operate PowerPoint, that sort of thing. You've also seen at Summit last year, we previewed the new home experience, for example, bringing a lot of the applications together to give you sort of a centralized dashboard and experience of moving across apps. You see the same sorts of things on mobile. You'll see us continue to harmonize across the applications to allow better experiences, which customers quite obviously work out. It gives us an advantage when they're picking a second or a third tool. At the same time, we're very cognizant of the need to play well with all of the other applications that they use outside of our stack. We're always balancing between those two. Perfect. Thank you so much. Our next question comes from Rob Oliver of Baird. Please go ahead. Hey, thank you, guys. This is really a follow-up to Richard Davis's question. As you guys land with more products at the enterprise level, can you talk a little bit about how you're leveraging the expert partner network, to manage that expand, which I think addresses one of the concerns out there, that you guys eventually are going to need a sales force and things like that. How you're managing that partner network would be great. Thank you. Yeah. Hey, Rob. This is Jay. Short answer is no differently than we've done for years. We've got a number of different land points we can land with virtually any product, Jira, Confluence, Hipchat, Bitbucket. Both expand with other products, expand with additional use cases as either we, through our marketing or our channel through direct touch with the customer, expand the number of use cases that those products can be applied to. We can also expand, in the case of the server products, through that Data Center upgrade path where as customers onboard hundreds to thousands to tens of thousands of users on a particular product or multiple products, they seek to basically have a high availability solution because the products have become mission-critical. Again, the approach is no different than what we've done nearly since our inception. We've got a great network of partners in hundreds of different countries that work with customers intimately in understanding the expansion paths and what the products can apply to. We try to make that also friction-free in the way that we market the products and expand the use cases that they can apply. The Data Center upgrade path is also a relatively friction-free path that they can understand, and when they're ready, move to it. Great. Thanks, Jay. Our next question comes from Sanjit Singh of Morgan Stanley. Please go ahead. Thank you for taking the question, and congrats to the entire team for another strong quarter. I want to actually ask a question about the marketplace business from two standpoints. The first, from just a financial perspective. It's a low base, but we see growth accelerating year-over-year, and I just wanted to get a sense of if you can talk through some of the things that are driving momentum in the marketplace business. Secondly, from a more strategic standpoint about the openness of the Atlassian platform. Do you see a situation where an Atlassian product or the Atlassian platform can provide a gateway to other common applications so that a user can essentially stay within the Atlassian environment, but connect to common applications, and just spend more time on the Atlassian platform? Is that part of the product strategy here longer term? Hi, Sanjit. Look, the marketplace is doing very well. Very happy about how it's continuing to grow. Obviously, it plays a really important role for our customers in fulfilling a lot of other use cases in and around our products that let us further fill out. When you see the marketplace growing, I think it's both a credit to all of the vendors in there that are really spending time in those customers and finding those use cases and building them on top of our applications. It's also a great example of the commerciality of the marketplace working really well attracts and begets vendors. You see quite a lot of vendors now growing their software businesses, significantly having a second product, a third product, and that's just a really great virtuous cycle that we're in at the moment in terms of marketplace growth. You see that for anyone who's been to Summit for the last couple of years, the size, professionalism, and sophistication of the vendor community in the exhibits, in their marketing is just continuing to grow as they build out great products around the Atlassian family, and that's a fantastic story for both sides. I'll pass over to Scott for the second question there. The gateway to other applications, when you think about it, Hipchat, Jira, Trello, they're places where people often start their day and where a lot of work and movement of work happens. It makes sense. We have a lot of integrations between those products and other third parties, and people use them as the launching pad. People will have conversations and things inside Hipchat and more than just having a link to those applications, those applications can actually build rich experiences inside Hipchat, so they don't need to leave for the casual use case. It is the starting point for third parties. Now, obviously, we have a huge identity system that captures a lot of users and their teams inside organizations, and that's something that we're increasingly leveraging with third parties to make it easier to log in to those third parties using Atlassian. I just want to add one thing there, Sanjit, that I think is important that people sometimes miss. If you think about both Confluence and Trello. They often play a really important coordination role across lots of other enterprise applications that the customer may be using. You'll often see Trello cards representing maybe work items in an HRIS system or software code or CRM sales customer records. They use Trello to move across all those applications in a single board. They have a single kind of interface to lots of different applications, where each card then links through to a further deeper enterprise application in vertical. That's a really powerful place because we're across a lot of different applications with a very flexible way of working. You can't do that inside an HRIS application or a CRM application. You need a sort of layer above both of them. Confluence has the same aspects in terms of creating a piece of content and then pulling in lots of different third-party SaaS application content, first party from our family as well, and then presenting a view or a document across that with links through. In both cases, we become a starting point. I don't think that's an often given attribute, but both of those are really powerful in doing that. That's great insight and context. Just one follow-up. At the Amazon event in San Francisco last week, they announced CodeStar. I guess just a question here on a topic just to revisit. For product engineering teams and for product development teams, is there necessarily a strategic reason for your development platform, your development suite to be next to the data strategically? Does that make sense, or is it something more along that they just want to be able to run it whatever environment they feel most comfortable? On the data storage side of things for developers, as we increasingly see, storing bits in the cloud is more of a commodity, as you're seeing in other markets. What the actual proprietary and the bit that people pay us for is how people interact, the teamwork that happens around that. Where the bits are stored on disk is less relevant, the teamwork aspect is the area that Atlassian has a deep history of doing well at. Competitors can come and offer the disk storage part, but people look to us for how teamwork happens. In development, there's these workflows that we have built things around, and those workflows may start in Jira, they may then go to Code, they go to Design, then they come back. There's actually a lot of different applications involved in a developer's workflow, but it's Jira that coordinates that workflow for a wide number of our customers. Got it. Thank you very much. Our next question comes from Ben McFadden of Pacific Crest Securities. Please go ahead. Hello, Ben. Pardon me. Our next question actually comes from Nate Cunningham of Guggenheim. Please go ahead, sir. Hi, guys. Thanks for taking my question. For Murray, I'm curious about the Q4 op margin guidance. It seems to imply a pretty small increase in sales and marketing spending. Is that the right way to think about it? From a percentage of revenue perspective, should we expect to see that continue to come down to the levels we were seeing in 2013 and 2014? No, we haven't really provided specific guidance around each of the OpEx categories, R&D, sales and marketing, and G&A. In the fourth quarter, which we're in now, we have our European Summit. It's our first Summit in Europe, an Atlas Camp. There's going to be marketing spend that's going to happen this quarter in and around this major event. Based on that, I wouldn't think of it along that somehow we're going to see more leverage there. We are targeting approximately 14% in the fourth quarter. We just did 15%. It's another quarter of investment for us, but in the area of sales and marketing in particular, we've got a very exciting Summit next week that we definitely are investing in to make sure it's a success. Okay. Thank you. Our next question comes from Ben McFadden of Pacific Crest Securities. Please go ahead, sir. Hey, guys. Thanks for taking my questions. I know you're doing well with the Data Center offerings on the enterprise side. I just wanted to start with sort of the cloud offering and the fact that it caps out at 2,000 users. I'm just curious as to what degree you're seeing customers sort of reach fairly close to that 2,000 mark, and to what degree do you plan on increasing the functionality on how many users can access the cloud option over time? Or is it more about proving the value proposition as far as upgrading to something like the Data Center offerings? Hey, Ben. It's Jay. The short answer is, as we see increasing demand for larger instances in the cloud, we'll increase that capacity. We see that increasing today. I think historically larger customers have selected to choose the server products for various reasons. As we've mentioned with the success of Data Center, there's an upgrade path where for really large mission critical usage, they have that as an option. Back to I think what we've celebrated as a company is just customer choice. Whether you're a small company or a large company, we want to give you options that are preferable to you, whether you want to run it behind a firewall on your own infrastructure, whether you want to run it on our infrastructure in the cloud, or even in a hybrid situation where you might want a private cloud on AWS. I think we're committed to all those options for companies of all shapes and sizes. Great. Murray, I think a lot of the questions on earnings calls this month have been around ASC 606. I know you're tied to IFRS 15, I believe. I was just curious as far as whether anything's changed as far as how you think about your rev rec going forward, and how that could potentially be impacted by some of these new standards coming out. Of course, like in all companies, we're looking at that. We don't have a plan right now to go change how we operate. Our cloud business, we're not going to see a change. In our server plus maintenance business, we don't see that there's going to be a change. It would just be in this Data Center area where we might see some revenue move to being recognized up front, not totally on a subscription basis. At this point, we're not looking to change how we operate. That obviously could change in the future, but we're not in that position. We're trying to retool our whole business so we can get some kind of revenue recognition treatment. We just don't see it impacting us that greatly, and with the model we have today, we think works really well for customers. It would have to be more customer-driven than it's going to be on the financial side. Great. Thank you. Our next question comes from John DiFucci of Jefferies. Please go ahead. Hey, guys. Thanks. You got Zach for John here. Could you comment on the, I think Jira Core was released early last year, how you're seeing it progress versus the Jira Software product? Kind of in that same vein, how are you seeing adoption outside of the traditional software user within customers? Scott here. We're pleased by the launch of Jira Core. It's going really strong outside of our core technical market. We said some stats from last year is that at Summit last year, over half of our base at Summit have used Jira Core, which is in tremendous growth. We haven't disclosed individual stats around that beyond saying that we're still early in that progress outside of technical teams. Jira Core and Trello work hand-in-hand inside organizations for, Trello is more when you don't need a workflow around things, and Jira Core is when you do want workflow and more customizability and audit trails and other things inside organizations. Those two continue to work really well together. Yeah, we're pleased with how Jira Core's going. Great, thanks. If I could get one more. On the competitive front, you've got Slack and Teams out there making at least some noise publicly. I was just wondering if you've seen any changes or expect anything to materially change in the way you approach go-to-market or even at customers you talk to. Hey, Zach, it's Jay. No, not really. I mean, we've been in the market for 15 years. The competitive dynamics haven't really changed much in that time. Some of the names have changed. At a high level, it's a big market that we're continuing to grow into. I think one of our main advantages is the strength and kind of breadth of the team portfolio. We're building multiple products that fulfill really critical needs for teams to better manage work, create and share content, communicate through real-time messaging and video. Even in a situation where we're losing head-to-head against one particular competitor in a category, we still have an opportunity to sell around that competitor, and we often do. I think naturally, in any market, it's sort of one foot in front of the other, but we feel good about our footing. Okay. Yeah, that makes sense. Thanks a lot, guys. Again, if you have a question, please press star then one. Our next question comes from Keith Bachman of BMO Capital Markets. Please go ahead. Hi, this is Michael Lilinshtein in for Keith Bachman. I just have two questions. One is continuing on the competition, Microsoft recently acquired Intentional Software. Their mission statement's similar to you guys, which is helping teams be more productive. I'm curious, have you guys seen them in the past? Do you see this trend moving forward with more Microsoft moving into similar product spaces that you're in? Scott here. Intentional Software isn't something we've come across in the past, ever. From the little I know, they're sort of more of a research house than shipping software. I'm interested to see what Microsoft does with them, but we haven't come across them in the past or seen anything that they do. Okay. I guess, on the last quarter, I feel like you guys mentioned channel partners had some pretty good influence on some of the sales. I'm just curious, are you seeing more channel partner influence versus, I guess, the viral marketing moving forward or in this recent quarter? Hey, Michael. Not materially different. I think they're both working hand-in-hand. Remember we're a word-of-mouth business that's chasing the Fortune 500,000. The channel kind of complements that really high volume automated focus by removing additional friction for customers where they need it, especially in local markets where they don't speak English. I think they've had another positive impact on the company in this quarter, but not materially different than they've had in the past. Okay. Makes sense. Thanks, guys. I would just add, this is Murray, just we had a little higher receivables last quarter because we did have a little bit of that budget flush, and some of that does tend to come through the channel. This quarter, the receivables came down a little bit as we collected on that and kind of more normalized in terms of where we are on a kind of a seasonal basis, not being on a calendar year end. Makes sense. Thanks, guys. This concludes our question and answer session. I would like to turn the conference back over to Mike Cannon-Brookes for any closing remarks. Thanks, everyone, for joining the call today. We really appreciate your time and look forward to keeping you updated on our progress as we go forward. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.