Good afternoon, ladies and gentlemen. Thank you for joining Atlassian's earnings conference call for the second quarter of fiscal 2017. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations sections of Atlassian's website following this call. I would now like to hand the call over to Ian Lee, Atlassian's Head of Investor Relations. Please go ahead.
Good afternoon. Welcome to Atlassian's second quarter fiscal 2017 earnings conference call. On the call today, we have Atlassian's Co-Founders and CEOs, Scott Farquhar and Mike Cannon-Brookes, our Chief Financial Officer, Murray Demo, and our President, Jay Simons. Earlier today, we issued a press release and a shareholder letter with our financial results and a commentary for the second quarter of fiscal year 2017. These items were also posted on the Investor Relations section of 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 involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management's beliefs and assumptions only as of the date such statements are made. In addition, during today's call, we will discuss non-IFRS financial measures. These non-IFRS financial measures are in addition to, and not as a substitute for, or superior to measures of financial performance prepared in accordance with IFRS. There are a number of limitations related to the use of these non-IFRS financial measures versus their nearest IFRS equivalents and may be different from non-IFRS measures used by other companies.
A reconciliation between IFRS and non-IFRS financial measures is available on 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 6-K. I'll 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, which is annual revenue growth of 36%, added over 3,100 net new customers, and ended the second quarter with more than 68,000 customers in total. We saw great growth across our business, with strong performance in our cloud, server, and Data Center products. As most of you are aware, the big news we announced just over a week ago were our plans to acquire Trello. Trello is a collaboration service and provides teams with a simple way to visualize and prioritize work. Trello has attracted a great following and continues to expand rapidly. Over the past year alone, Trello has nearly doubled its user base and now has over 19 million users in over 100 countries.
We believe that Trello is a great fit for Atlassian because it complements our products, extends our reach into business teams, and is strongly aligned with our strategy, business model, and culture. We expect the acquisition to close in the third quarter of fiscal 2017. As Ian mentioned earlier, we've shared more information on the quarter and Trello in particular in the shareholder letter that we published prior to this call. With that, I'll turn the call over to the operator for Q&A.
Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're 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 for a moment to assemble our roster. Our first questioner today is Heather Bellini with Goldman Sachs. Please go ahead. Ms. Bellini, your line has been open for questions.
Let's come back, operator, and move to the next question, please.
The next questioner is Gregg Moskowitz with Cowen and Company. Please go ahead.
Okay. Thank you very much, and good afternoon, guys. It's impressive to see your billings growth accelerate to the 40% level. I was curious if there was anything in particular that you saw with respect to either product uptake or customer follow-on deployments that might have helped to drive that higher.
Yeah. We had strong growth across our entire business that drove that. We did see an increase in revenue coming through our channel partners. There might have been some of it around the sort of year-end budget flush with some of the larger organizations, but it was broad across our business. We were quite pleased to see that we had that kind of growth in the quarter.
Okay, perfect. Thanks, Murray. I guess a question for either Mike or Scott. There's been a lot of noise in the chat-based workspace market with Microsoft Teams and Facebook. Can you talk about the competitive positioning of HipChat going forward?
Sure, mate. Look, we maintain our position being bullish about HipChat and how it's growing. We continue to invest in it as a product. I think it's a good validation of a space that's going to change how 900 million plus knowledge workers work together over the coming years. It's obviously still very early, so we continue to invest in HipChat and are excited about the prospects there.
Okay, great. Then just one last one if I could. Have you had a chance to look into customer overlap between Atlassian and Trello, and any color there would be helpful. Thank you.
Yeah, obviously we've go ahead, Jay.
No, go ahead.
Yeah, obviously we've looked at that, we'd like to go ahead and just close the acquisition first before we provide any specifics in that particular area. Clearly, that was one element that we considered as part of our acquisition of Trello.
Okay. Thank you.
Our next questioner today is John DiFucci with Jefferies. Please go ahead.
Thanks. Murray, first question for you. Is the guide down a little bit here on margin, is that all entirely due to Trello, or are there any other investments you're making that are causing that?
Well, John, there's two things. One is, yes, Trello is part of it. Also, as you'll see last year, if you look at our trend and operating margin through FY 2016, we sort of had a bit of a downward trajectory throughout the course of the year. There are seasonal elements in the third quarter that we're in now. That is when our employees get an annual salary increase, and we start with more employer taxes and things like that around payroll. That's part of it. Also, we're obviously bullish on our long-term opportunities, and so we're going to continue to invest for long-term growth.
Okay, great. Scott or Mike, I guess it looks like all your businesses are strong, but I'm just curious, when we look out across the world and not just at Atlassian, but at the rest of software, are you seeing any trends on how customers are consuming your products? For instance, what I'm really driving at, is there any acceleration in cloud versus on-prem consumption?
It's Scott here. As we've talked about before, about three-quarters of our new customers come in to our cloud products today. Cloud is definitely the long-term future. Because we have both cloud and server offerings, we're very agnostic as to the particular timeline over what that future happens. We have customers on both products that are very happy, and we're investing in both sides of the business. We're pretty agnostic to the trend, but the long-term trend is definitely towards the cloud.
Okay, great. I'm sorry, I just have to Trello because this is the opportunity to ask about it. It seems like something that can be sold on its own, as it has been, or even become part of a lot of other things. Could you talk a little bit more about how you see that going forward? Is it something that just will be another line item in a purchase order or purchase on the web, or may you also sort of take that technology and integrate it with some of your other technologies?
John, look, we obviously are hugely bullish about the potential for Trello as a standalone product. This is not something to be folded into other products that we have. It has a lot of unique capabilities, as well as fitting very well into our broader product family. Obviously, it expands our reach into business teams, which is a part of our goal. Unleash the potential of all teams across the Fortune 500,000. We're going to continue to penetrate more and more business teams. Trello obviously does that very well. You can see from its reach and momentum, 19 million users, almost doubling in the last year across 100 different countries. Very big geographic spread. This by itself has great momentum as a product that we're very excited about.
If you think about the types of work that teams do, there's a lot of different types of work, and no two teams work the same way. We really think Trello fits very well into the family there because where Jira does very well at structured, process-based type of work, and Confluence is obviously completely unstructured. Trello fits very well in between them with a free-form, unstructured approach, but enough of a structure, a scaffold that you build yourself, to work out what the work is there that needs to be done in the middle. The last thing I would say that sort of relates to your previous point as well, Trello does sell very well into home teams and is used by people in their home team as well as their work team.
The ability to use it in your home life, if you like, with a small group of people, whether you're planning a wedding, whether you're planning a renovation, managing some sort of process like this, or even just collaborating with your wife about what you're going to do for the kids. We are seeing that in the consumerization of IT, where people are taking those products then into the workplace. They're more familiar with them. This is really a vanguard of that trend.
Great. Thanks, guys.
Our next questioner today is Jason Valkov with Robert W. Baird. Please go ahead.
Great. Thank you for taking my questions. First one, you mentioned a competitive win in an aerospace manufacturer for Service Desk. I was just wondering if you could elaborate more on the dynamics of a competitive win like that. For instance, are customer success reps involved at all there, or is that purely driven by the customer? Just more generally, are you seeing more competitive displacements like that as you grow into larger enterprise deals?
Yeah. Hey, Jason. This is Jay. As we mentioned about Jira Service Desk, as a product that can start with a known kind of IT helpdesk use case. Again, the example that we highlighted in the letter, that was a competitive migration from an existing helpdesk. Where we might have a channel partner in that organization working that particular use case. The virtues of the product allow it to expand to service use cases across the business, from marketing to sales to finance and HR. I think that's the real opportunity with Jira Service Desk is landing within IT and then expanding to all the other functions for the types of collaborative service applications they're going to run.
Great. That's helpful. Then just one follow-up. This is for Murray. It looks like full-year guide was, if you back out Trello increase, about $9 million-$10 million. Is there any FX we should be thinking about there, or no FX effect to guidance there?
We sell in US dollars, so there's no impact on revenue. One of our largest expenses is Australian dollars. We have our hedging program going right now. At this point, we've done a good job, I think, of sort of muting any kind of movement from a currency standpoint. Really nothing is, from an FX standpoint, is having an impact on our guide.
Great. Thanks, guys.
Thank you.
Thank you for taking the question. I wanted to get your updated view, Scott or anyone on the team, on how the expansion outside of software is going along two dimensions. First, maybe into broader IT with Service Desk in this bucket. Also, how would you sort of assess the expansion into the business market? Where are you guys seeing good signs of progress, and where do you think you have room to improve?
Thanks, Sanjay. It's Scott here. We're still really early in that opportunity. As you know, we're incredibly well-renowned among software teams, and historically that's been the land. It's little known that most of the users using our products today are not writing code. People using all of our products are in broader business teams today. We're bottoms-up in an organization and we start with small teams, it's sort of, we struggle to quantify that. We are really happy with the progress in sales of Jira Service Desk. Jira Core, though a little bit newer, is going great in terms of broader business teams. Obviously, Trello helps round out that capability. I do think they're very complementary to everything. Trello is complementary to our existing product set there. Another example that we have is our enterprise and Data Center areas of the business.
As we know, Data Center flows into that subscription line. Still a small part of that, but it's growing really strong, and really those products only kick in when you have thousands of users. The growth of those products is indication of how widely we're deployed inside organizations.
Great. No, I appreciate that. I thought the comments on the partners this quarter was interesting, given a lot of the debate on whether you guys are sustainable without enterprise sales. Whereas it seems like your partners are being really productive. I wanted to get a sense of how much of the business is going through your partners and whether you have any sort of goals, either in terms of number of partners or increasing the partner capacity that you're teaming up with.
Yeah, Sanjay, we did have strong growth with our channel partners. It was stronger as we went in through December. Part of it is for larger organizations, when they buy software, they tend to have partners that they work with that they buy all their software from. It's not a surprise where we're seeing sort of larger deployments from these organizations, that they're buying from their preferred partner, and that's flowing through to us. We've got a broad expert and partner channel that Jay can add onto here, but we did see it in the quarter. Data Center was a big part of that. Larger server offerings for broad deployment. It's a number of factors that were sort of aligning to drive that.
I'd just add that the channel really supports the land and expand part of the model, where they can start, as the example I gave with Jira Service Desk, with kind of a really known use case within IT, and then help organizations expand with that product and others to reach other parts of the business. Also, keep in mind that Summit, I think is a good activation point for just the customer base and the channel and the Data Center in particular. There are a number of really high-demand features like zero-downtime upgrading that I think kind of help drive growth within Data Center through the quarter, and the channel plays a really important role in that.
Great. Thank you.
Our next questioner today is Bhavan Suri from William Blair. Please go ahead.
Hey, guys. Thanks for taking my question, congrats on the numbers there. Just to start off a little bit on Jira Service Desk, just some color on how growth has progressed with the product. Then obviously at the conference, you announced the customer-facing version of Jira Service Desk. I know it's early, but just sort of have you seen uptake? What does that look like initially? What sort of size deals are you seeing there in terms of number of agent seats or things like that? Just some color there would be great, too.
Sure, Bhavan. Yeah, look, obviously to be clear, at Summit, we announced a series of features more in the customer service angle for Service Desk. What is interesting, what we are seeing is service teams adopting Service Desk for help desk and then starting using it for customer service, different teams. There is a lot of different usages in the sort of broad category of service teams. The goal, obviously, is for us to be able to land in any of those and expand to the other ones. Look, the product is going very strongly, very excited about the position. It is built on a huge foundation in Jira that gives us a great advantage in the advanced workflow and fields and things, capabilities that we have had for many years now. We continue to invest strongly there, and we are very positive about the opportunity.
Summit was a great reaction from customers. I just want to add something to that, Bhavan, is that because of our business model, we sell bottoms-up in an organization, and because we have such attractive pricing for our customers, our customers are finding thousands of use cases for our products that we do not really even go head-to-head in any sort of competitive battle there because we get in bottoms-up and spread across. That could be public-facing customer support, which was one of our most popular features. That was really requested by our customers. It is being used for help desks in other parts of the organization that typically would not have thought that they would use a help desk, and a market that is not really able to be accessed with a top-down or a sales team.
Really, the business model allows us to be more successful and often find use cases that are not captured by anyone previously.
Got it. Guys, it is helpful. Turning to Confluence, we sort of seen Confluence displace SharePoint in a couple of cases, and I was wondering if that is an anomaly or you are actually seeing that become a trend where sort of the workflow/content management, document management piece that Confluence provides, especially if it is bottoms up from developers, is a regular displacement of SharePoint. Is that something you are seeing a lot of from a growth perspective or a displacement perspective, or is that something that is sort of an anomaly?
Look, Bhavan, I wouldn't call it an anomaly. I also wouldn't say we're seeing a huge amount of it, right? Given our model, it can sometimes be hard to see these things. People often run Confluence alongside SharePoint. There's actually an integration between the two of them, for sharing search content and other content between the two. Obviously, from a product point of view, Confluence is a lot easier and more frictionless to actually use and get content to your colleagues. It's also open by default, goes back to Atlassian's values that we believe that the content should be open and broadly shared, which tends to lead to a greater viral adoption as well within the products. Obviously, Confluence is very tied into a lot of modern tools that people use today, which I think things like SharePoint can sometimes struggle with.
Obviously heavily tied into things like Jira and Confluence, but a whole lot of other products that enterprises use. Confluence in the marketplace, there's a huge number of integrations with all sorts of products that modern teams are going to use, which makes Confluence a great option that the larger products like SharePoint can struggle with.
Got it. Then one quick one for me on Trello. You sort of broke out the split between or sort of described the home life and the work life. Just any idea what percentage is work teams versus home teams, or is that something hard to do? Then Trello's obviously doubled users, but it's still a fairly small revenue base. Just sort of how you guys think about approaching the way to monetize the $19 million or whatever percentage we do monetize out of that. That's it for me. Thanks. Thanks for taking my questions, guys.
Sure. Look, on the work versus home split, we haven't disclosed any numbers there. Except to say that we're targeting work teams as a company, so obviously that's important to us, it wouldn't make a lot of sense if there wasn't a big component-
Right
of our customer base.
Right.
We're all into wedding planning, but not as a corporate objective. Look, on the broad side of things with Trello, we're just extremely bullish about how it goes. I think you'll see that there. It is very early in its monetization journey, right? I think you'll see that they've only been monetizing the product for about two and a bit years. That's in line with Atlassian's patient for revenue sort of philosophy. We're very culturally aligned with that team there. We'll be growing all the numbers.
Great. Thanks, guys.
Our next questioner today is Brent Thill from UBS. Please go ahead.
Hey, Murray, just back to John's question on the operating margin. Last year, you guided third quarter to 12%. You're guiding similarly for this third quarter. Can you just give us any sense why you're not seeing more leverage there?
Brent, again, we do have the salary increases for the employees starting January 1st. That's third quarter. Starting the employer payroll taxes again in the third quarter. We've got the Trello business coming in that we've signaled as dilutive this year, that's affecting the margin as well. That's kind of how it is. We continue to invest in the business, going forward. That's what's factored into those targets. That's kind of how we're looking at for the third quarter. I'd also, just if I could, just for a moment there, Brent, is just the way to think about it. This year, obviously, the revenue that we're guiding that's related to Trello is post the haircut on deferred revenue, it has more of a compressing effect on margins this year.
As we get into 2018, obviously, that starts to roll off, we're in a little bit of a different situation. You got to bear in mind that we're not getting all the revenue, in a sense, because of that haircut that would be more helpful to margin. We're not in a position right now where we're giving a specific EPS number for dilution this year because of we got to close the books and get the purchase price allocation sorted out, and finalize all that. The IFRS to non-IFRS reconciliations we have to provide.
I think if you kind of look at our beat on EPS in Q2, you kind of look at where we were on EPS last quarter in terms of guide for the year, kind of what we're doing now, I think everyone can kind of back into what that EPS dilution would look like for fiscal 2017. We did say when we made the announcement that it would be neutral to slightly accretive on a non-IFRS basis in terms of EPS for fiscal 2018. Just so everyone understands the assumptions there, is we're not assuming any revenue synergies. There's no cross-sell factored into that. It's all coming through cost synergies contributed from both sides to get to the neutral to slightly accretive.
Okay, thanks. I think last quarter you mentioned the deceleration in the Americas growth was related to the larger cloud uptake. Is that the case again, given the deceleration in growth?
Well, I think this quarter the growth was just slightly up from Q1, at 34% versus 32.6% last quarter.
Yeah, I'm talking year-over-year.
All of our geographies, they grew from Q1 to Q2 in terms of those growth rates. The growth we saw in revenue and deferred revenue in the quarter, it was just broad-based across essentially all product families, cloud and server, and geographies. Very broad-based.
Thanks, Mike.
Our next questioner today is Michael Turits with Raymond James. Please go ahead.
Hey, guys. This is Austin Deeds filling in for Michael. I was wondering, how impactful is the move to the Data Center pricing model in the cloud, and what impact did that move to subscription have on the revenue this quarter? Thanks.
Yeah. We haven't provided those specific numbers. The move to Data Center probably has more impact, just because, under the perpetual model, we'd get 50% of that upfront. Data Center is just growing very fast. We have not provided specifics on it. I think it's important to remember that we've kind of been subscription-esque really since the beginning because we have such a high maintenance rate relative to the perpetual license. That transition from perpetual and maintenance to subscription is just so much less than you see with other software companies that are making that big move in terms of the deployment models.
Great. Secondly, if I may, I know a fair amount of customers came into the Statuspage acquisition, so I'd just be curious to hear how many efforts to cross-sell any Atlassian products to this base have been to date.
Look, Michael, it's Mike here. I think we're really early in the Statuspage story. Again, they haven't been with us for, what is it, six months now, I guess. We've got a lot of things we want to do in the Statuspage business itself that we're really working hard on, before any sort of major efforts to cross-sell into the Atlassian base. There's a lot of revenue and customer synergies already between the two. We have a lot of shared customers, so there's a natural kind of thing that happens there. There's nothing explicitly we're doing at the moment, really focusing on the product and Statuspage itself. A really nice data point that Trello was actually a Statuspage customer, you can see from the public website before they came on board. That was just nice.
Yeah. I just think it's also important to understand that our patient for revenue model and not having those sort of direct sales forces out there, which also means that we have to be patient for cross-sell as well. Clearly, there's tremendous cross-sell opportunities for us. It's not like that we have this direct sales force all over the world that's going in the next day, and pushing Statuspage as part of the portfolio. It's more in our sort of patient model through our funnel, our engagement engine.
Great. Thanks, guys.
Our next questioner today is Heather Bellini with Goldman Sachs. Please go ahead.
Great. Most of mine have been answered, thank you for taking the questions. I guess I just had one. I was wondering if you could share with us a little bit of kind of how you're thinking about HipChat and Bitbucket, just share with us maybe any cross-sell trends into the installed base, in general, maybe how you see your portfolio of products permeating through an organization, then I've got a couple follow-ups.
Hey, Heather. This is Jay. Remember, the virtues of our product portfolio allow us to land and expand through a couple different dimensions. At a really high level, remember, we're focused on a couple of kind of key universal capabilities that teams need. The ability to share and manage work and projects, the ability to create content together, where for development teams, part of the content they're creating is code that's managed in Bitbucket, then communication. I think with both HipChat and Bitbucket, they are simultaneously opportunities for us to land and begin a relationship, in the case of Bitbucket, with a development team that might start with code and then expand through Jira Software to better manage software projects, expand with Confluence and HipChat to better manage content communications.
With HipChat, it's a vehicle that allows us to land with teams that start with communication first, maybe because they're small, maybe because they have some other products that they're going to plan to replace with the rest of our portfolio over time. I think land and expand, which you've heard us talk about before, is vital to the model. In the customer examples that we included in the shareholder letter, I think you see that kind of the natural expansion opportunity that exists both with one team that might start with our products like a technical team or IT and expand out to business functions.
Lastly, you heard in the server business, I just think it's worth restating the data point that that kind of expansion as companies look to serve a myriad of different teams in their organizations with our products to help them work better. That drives standardization within really large organizations around Atlassian products. That includes Jira, the Jira family, Confluence, Jira Service Desk, Bitbucket, HipChat, that's kind of the real opportunity over time for us, is to continue to do that.
I was just wondering specifically if you had any stats that you could share directionally, how multi-product customers and maybe the average number of products per customer.
We don't break that out. Other than just to talk about as we've shared in the past, HipChat's kind of momentum around the number of teams it's supporting with kind of the volume of messages that it's sending, with products like Jira Service Desk, with 20,000 organizations now adopting Jira Service Desk. Previously we've talked about customers at Summit where they'll share sort of like the wide percentage of teams that are using the Jira family and Confluence. I think the number that we shared was over 35% that were using product by business teams. That's.
Kind of the natural expansion of moving from one product to many and moving from one team to many.
Heather, this is Mike. Heather, this is Mike. Just to echo Murray's comment from before, but maybe from a founder lens. That patience for revenue, we believe, gives us great strength and great predictability. When you think about cross-sell or HipChat, Bitbucket to other products, that cross-sell doesn't come through a sales motion. That cross-sell comes much more through logical and thought through integrations between the products and paths for the customers to move from A to B. It can take time for them to find those paths, time for us to build those paths. Those paths don't apply to all customers using all products. We continue to invest there. That's where you see some of our R&D dollars going, is in building those paths that give us great strength over time in the logical patient cross-sell.
Okay. Thank you. Just one last quick one. Obviously, you guys are the low-cost provider in your go-to-market strategy. I'm just wondering, in areas like Jira Service Desk, for example, where you've obviously started to see some very good success, are you starting to see your competitors change their pricing to try and respond to the success that you're having?
Heather, it's Scott here. Without talking about any individual competitors, what we've found over the sort of 15 years of running Atlassian is that the philosophy that a company takes early on about how they go to market is really difficult to change. We've had a philosophy that we believe markets are way larger than many of our competitors do. We talk about the Fortune 500,000. Many of our competitors really target the Fortune 500. It's one thing to sort of say, I have low prices, but you need your entire organization to be built up around high volume, low touch models. The patience that we have by not having venture capital for a long period of time, all those things add up to our model.
It's not a matter of someone trying to match our price, and many of them can't do that just the way they're set up. We feel pretty comfortable about the model we've got and how difficult that is to replicate.
Okay. Thank you very much.
Our next questioner today is Patrick Walravens with JMP Securities. Please go ahead.
Oh, great. Thank you very much. I was wondering on the, sort of following up on the competition side, do you see the competition trying to evolve? There's sort of more copying, I would say, of your broader messaging. Do you think that there's anything that you would do differently over time as they do evolve?
Look, sorry, it's Mike here, Pat. You certainly see people copying messaging and things over time, and they're welcome to do whatever they want to do. We're pretty used to that now after 14 years. The thing that's hard for them to copy is the business model and the synergies we have between the product and the level of R&D investment in focusing on the customer, and the pricing model, and the way the sales machine that we have works, right. Those three and the way they tie together is incredibly hard for somebody else to copy. Yep, they can put the same text on their website, but that tends to be way less relevant to customers than the entirety of the picture and the system that we have built.
You sometimes see that too, we're often slightly amused by seeing some trumpeting of a customer win, for example, where we have lots and lots of deployments in that individual customer, 10 or 20 different servers running, and someone else will trumpet a single customer win. That doesn't make any sense to us. Because of the way we go to market, right? They can't copy the hundreds of different landing spots that we have within that company that grow up into a Data Center standardization as their adoption of Atlassian products continues to grow.
Great. Thank you.
Our next questioner today is Ittai Kidron with Oppenheimer. Please go ahead.
Thanks, congrats guys, on a great quarter and a good acquisition. Murray, I wanted to follow up on the Trello acquisition details. You've talked about how you had to write down the deferred. Can you give us maybe a little bit of a perspective on how long will it take to get Trello to the same revenue run rate it would've had if you didn't have to write down the deferred?
The majority of their business is going to be on annual agreements. You're going to have at most 12 months of deferred revenue. That's going to be rolling off as we go forward here. We'll have more to say about fiscal 2018, but the impact is really primarily on fiscal 2017.
Okay. Very good. Then, headcount. I didn't see it in your slides. Is there a way you can give us an update on what was the headcount change in the quarter?
Yeah. We increased by 55 heads in the quarter from Q1 to Q2. There was hiring across the whole business. The majority of the primary area was in R&D, as you would expect.
Very good. Then lastly, Scott, again, with bringing Trello in, it makes complete sense. I guess the question is, how do you avoid confusion for customers, the ones that would've been interested in Jira Core? How do you kind of fine-tune pitching Jira Core to them versus Trello, and do you envision teams using both? If you can help us kind of understand how you are going to create that differentiation and lack of confusion, that'll be great.
Sure. Thanks, Ittai. Look, that's really important for us. It's important to know that Jira Core and Trello serve very different purposes, we're going to continue to sell both products into customers.
That they work very well together. They're very complementary. Again, the important thing to note there is that there's lots of different kinds of teamwork. It's our job to communicate the types of teamwork and the types of teams in the types of organizations, be they small or large, and which product works best for them at a given time, and how they work together, and how you'll flow through the set of products. Jira Core works very well for managing structured processes. You're not going to do your quarterly financial close for a public listed company in Trello. That's not going to make sense to you. We have to make sure that the more structure you have in your process, the more compliance, the more control that process is.
Generally, as a company gets bigger or a team gets bigger, it's going to make a lot more sense in Jira Core for a business team to run as you get that. At the same time, if you have a very unstructured process, so a blogging calendar or planning a marketing campaign, brainstorming, whatever you might be doing, that's going to work much better in Trello. Depending on how much structure you have, they're going to be quite different. We believe that no two teams work in the same way, and it's our job to make sure that people understand when the different tools are applicable for different challenges they have and may vary from day to day. At the same time, that those tools do work very well together.
Once you have one, you can flow into the next one, or you can use them in concert for a given process.
Got it. That's helpful. Do you think that the competition for you changes now that you're adding Trello? Are there other companies that you think you're going to rub up against a little bit more with this company in your portfolio?
Look, we've always had a lot of competition for each individual product. I think at the Atlassian-wide level, I don't believe the competitive map changes, particularly with this acquisition, from the sort of large-scale view. At the same time, it's not something that we spend a huge amount of time obsessing on. We've always tried to focus very much more on the customers and how our individual products are serving their needs and growing and serving more of their needs than responding to what others are doing.
Got it. Very good. Congrats and good luck, guys.
Thank you.
Again, if you would like to ask a question, please press star then one. Our next questioner today is Ben McFadden with Pacific Crest Securities. Please go ahead.
Hey, guys. Thanks for taking my questions. I just want to start with the fact that your growth, both on the revenue side and the billing side, seemed to accelerate a little bit in the quarter. I'm just wondering if there's any shift in seasonality that takes place in this model for the December end quarter, given the fact of how much larger these Data Center deals are, or whether this is just continued execution on your growing portfolio of solutions.
I guess if you were to look at it from the budget flush December, there must be some element that we're benefiting from there. I think that that's a seasonal factor. That's part of it. It's so broad-based. It's across all the geographies. It was just strong performance. It's just a continuation of what we've been focused on for the last number of 14 years and just seeing more broader deployments. We're just seeing more larger organizations that are moving from a bunch of servers, and they're moving to Data Center, which comes at a higher price, and they're just getting thousands of users. That whole kind of broader adoption theme, we clearly saw that in the quarter. Not to sort of beat on the old pricing benefit thing, but this was the last quarter that we just got a little fraction.
We would have been slightly more benefit in the previous quarter. To see revenue growth higher this quarter, relative to last quarter and facing, if you will, older that headwind was very pleasing to us in terms of our overall performance as well as the deferred revenue, calculated bookings that some have looked at.
I wonder if you could just help us understand how much of Jira Core traction is coming from new customers versus existing customers. Tying that into the Trello acquisition, is there an opportunity from a cross-sell standpoint for Trello to potentially derive more viral adoption of Jira Core than Jira Software has historically done? Just any color you can provide there would be great.
Ben, it's Scott here. Jira Core primarily to date has been an expand product for us. With 68,000 customers, there's a huge opportunity inside our existing install base to expand. It's a lot cheaper for us to acquire those customers for that product. Trello, one of the reasons we were attracted to that is its install base of 19 million users, of which they've achieved about half of, or just under half of those in the last year. It has incredible momentum in acquiring new users and new customers. To echo some things Mike said earlier, Trello is less structured than Jira Core. It is used for more ad hoc use cases.
A team of one or two get a huge amount of value from Trello, whereas we say traditionally, Atlassian's products provide value once you're a much larger team and have more structure and process. We're really pleased that it really allows us to acquire customers much earlier in their life cycle and for many more ad hoc use cases. Once we've got them, upselling them to Jira Core, once they need more structure, upselling them to Jira Software once they become a larger software team, and cross-selling all the product suite we have. Not really. It's an opportunity for us at some stage down the line.
Great. Thank you.
Once again, if you would like to ask a question, please press star then one. It looks like we have no further questions. I would like to turn the conference back over to management for any closing remarks.
Thanks, everyone, for joining the call today. We really appreciate your time. We look forward to keeping you updated on our progress as we go forward. Thank you very much.
The conference has now concluded. Thank you all for attending today's presentation. You may now disconnect your lines.