Atlassian Corporation PLC

NASDAQ:TEAM

Earnings Call Transcript 2018-Q2

[Operator]

Good afternoon ladies and gentlemen. Thank you for joining Atlassian's Earnings Conference Call for the Second Quarter of Fiscal 2018. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Atlassian's Web site following this call.

I will now hand the call over to Ian Lee, Atlassian's Head of Investor Relations.

[Ian Lee, Head, IR]

Good afternoon, and welcome to Atlassian's second quarter fiscal 2018 earnings conference call. On the call today, we have Atlassian's Co-Founders and CEOs, Scott Farquhar and Mike Cannon-Brookes; our Chief Financial Officer, Murray Demo; and our President, Jay Simons.

Earlier today, we issued a press release and our shareholder letter with our financial results and commentary for our second quarter fiscal year 2018. These items are also posted on the Investor Relations section of Atlassian's Web site at investors.atlassian.com. On our IR Web site, there is 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 our future results, performance or achievements expressed or implied by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management's beliefs and assumptions only as of the date such statements are made.

In addition, during today's call, we will discuss non-IFRS financial measures. These non-IFRS financial measures are in addition to, and not as a substitute for or superior to, measures of financial performance prepared in accordance with IFRS. There are a number of limitations related to the use of these non-IFRS financial measures versus their nearest IFRS equivalents and they may be different from non-IFRS measures used by other companies. A reconciliation between IFRS and non-IFRS financial measures is available in our earnings release, our shareholder letter, and in our updated investor data sheet on our IR Web site.

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

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

[Scott Farquhar, Co-Founder & CEO]

Good afternoon. Thanks everyone for joining today. We had a strong close to calendar 2017. This quarter we grew revenue 43% year-over-year and generated over $67 million of free cash flow. We now have more than $112,000 customers in total and after adding 4,825 net new customers during the quarter. This is the most net new customers we’ve ever added in a single quarter and another milestone in our way to serving a Fortune 500,000.

We saw solid demand across all our deployment options: cloud, server and data center. We continue to expand the customers of all sizes and across numerous industries and geographies. While alongside the growth of our business, Mike and I both are humbled and excited by the rapid expansion of the vibrant ecosystem surrounding Atlassian.

There are thousands of developers and vendors outside of Atlassian's who are creating apps that make our core products even more powerful and our customers even happier. Today our marketplace vendors offer more than 3,500 apps. And during the quarter, the Atlassian marketplace surpassed $350 million in total lifetime sales since its inception in 2012. In our shareholder letter, we highlighted three of our vendors who are helping to drive this growth.

Our developers and vendors combined with our global customer and partner base formed the foundation of the thriving Atlassian community. We will soon be going on the road on our first Atlassian team tour to spend more time with our community, to unveil new product updates, share the latest in team practices and discuss the future of team work. We will kick the tour off on February 8th in Amsterdam and then across the globe with a total of 10 stops on three continents.

Before we move to Q&A, I'd like to say a heartfelt thanks to our CFO, Murray Demo. This is his last earnings call with us before James Beer takeover as our new CFO. It's been a privilege to work with Murray over the past years, both in his capacity as CFO and as an Atlassian Board member before that. We wish him the best.

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

[Operator]

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the time Ittai Kidron with Oppenheimer. Please go ahead.

[Ittai Kidron, Oppenheimer & Co. Inc.]

Thanks guys and congrats on another great quarter. Couple of things for me. First of all on Stride it's still in limited access, early access. Can you give us some color on the feedback you’ve been getting from customers? What are some of the good things and bad things you’re hearing from customers and how soon we will see it generally available in the marketplace?

[Scott Farquhar, Co-Founder & CEO]

Thanks for the question. It's Scott here. You are right. I mean, Stride we had an early access program and we put away within -- we had so much demand for the product and the feedback we’ve had so far has been overwhelmingly positive. Our customers really liking -- they’re liking the differentiated features. The fact that Stride is -- it allows you to get work done and also with the whole communication platform rather than just a shared product, so they’re giving exact feedback about that. The differentiated features, actions and decisions which we put in, in order to help people progress work, we are getting a lot of great feedback around that. And so -- and in the coming months we will move it from a early access sort of waitlist [ph] program to the general availability, but we don't have the exact release date at this time.

[Ittai Kidron, Oppenheimer & Co. Inc.]

Got it. And then a second question, Murray, maybe you could give us a little bit more collar on -- very nice customer addition count. Is there are any color you can give around that in what product areas it was stronger than what you thought? What areas where maybe a little bit softer? And then also just one question on the tax rate, just given the change in the tax procedure here in the U.S, how should we think about modeling your non-IFRS tax rate going forward?

[Murray Demo, CFO]

Hey, Ittai. It's Murray. I will turn it over to Jay to talk about the customer count and then when he is done we will come back and talk about the tax rate.

[Jay Simons, President]

Yes, just quickly to Ittai, obviously we’re really pleased with the add in the quarter. There was pretty strong demand kind of universally across all products and platforms, no real colors to highlight. Net customer adds does move around a bit quarter-to-quarter and so even though we’re really proud of the nearly 5K we added this quarter. It's kind of a drop in the bucket around the Fortune 500,000 we are chasing.

[Murray Demo, CFO]

Yes, in terms of the tax rate, couple of things to kind of point out makes us a little bit different. First of all, our fiscal year, half the year is at the 35 rate in the U.S., the other half is at 21. So we’re not like other calendar companies where they’re starting the calendar 2018 where you get a full-year of benefit of the rate. And secondly, we are a U.S and Australian company and so you’ve got a blend that way. When you kind of put all that together for fiscal '18, sort of the second half of the year for us, we are not seeing a whole lot of benefit. That’s going to show up in fiscal '19, we get a full-year of the U.S benefit in other activities that we’ve got is where we see that. Also just since you bought up the tax rate, I just want to comment on one thing regarding our Q3 and Q4 EPS. While our Q3 EPS target, our implied Q4 EPS target in the full-year, we’ve got quite a swing in the tax rate that’s embedded in the EPS targets for Q3 and implied for Q4 and it's strictly from IFRS. The full-year nothing is changing. Just under IFRS it's quite different from GAAP. We are not just in a position to smooth it out like you can in GAAP and we get these wild swings, there's nothing going in there other than just the way IFRS calculates it. And so the focus should be more on what our full-year rate that’s sort of implied in the EPS targets and not to get too focused on the Q3 EPS and imply tax rate in the Q4 rate.

[Ittai Kidron, Oppenheimer & Co. Inc.]

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

[Murray Demo, CFO]

You know we are not providing any targets for fiscal '19, but we'd expect to see a lower rate as we go into '19 and we will provide more details on that as we get to the point of giving our fiscal '19 guidance.

[Ittai Kidron, Oppenheimer & Co. Inc.]

Got it. Good luck guys.

[Murray Demo, CFO]

Thank you.

[Operator]

The next question comes from Gregg Moskowitz with Cowen & Company. please go ahead.

[Gregg Moskowitz, Cowen & Company]

Okay. Thank you and congratulations everyone on a good all-round quarter as well. Scott, you said that cloud, server, and data center all did well. But over the course of the last six months or so, have you seen any change with respect to the mix of new or existing customers adopting your cloud offerings? Or do you say that that’s been stable overall?

[Scott Farquhar, Co-Founder & CEO]

Gregg, good question. The -- as we’re seeing for a long time the trend is towards cloud clearly from us and other companies you see. But nothing has really changed over the last quarter. We still continue to see strength in cloud, server, and data center, and so there is some particular inflection point and we think there is a still a long business in there behind the firewall server deployments for a long time.

[Gregg Moskowitz, Cowen & Company]

Okay, perfect. And then just a question for Murray. I’m wondering if you could help us or parse for us the impact, if you will, to Q2 billings and revenue from any early maintenance renewals from customers who perhaps wanted to get ahead of the Jan 1 price increase and part of the reason for my asking the question is also to sort of make sure the street has some help with respect to modeling the March quarter appropriately as well? Thanks.

[Murray Demo, CFO]

Yes, Gregg. That’s a good question. It's obviously something that we’re very focused on as well as trying to understand any of this if you want to call it pull forward bookings that’s related to the change in pricing. One of the things that we’ve learned through the change in pricing on server, but also in cloud is that the customers are most sensitive price. They tend to take action fairly quickly around the time of the announcements. And what we saw is actually that we probably saw even a little more of this sort of pull forward bookings in the first quarter than we did in the second quarter, because we announced it in the first quarter. And what we also saw that was a little bit different was some of our customers chose to go multiyear and you can see that on the balance sheet under the long-term deferred revenue. So they’re locking in with us for a number of years. They made a decision they wanted to go ahead and buy server maintenance revenue for multiyear upfront, and we saw some of that. But as you got into this -- later into the second quarter, it seem to be all kind of behind us and it was more pronounced in the sort of September, October timeframe is where we saw it. So we’re pleased obviously to have that, but obviously a longer term we'd rather had them renew under the new pricing, because that wouldn’t necessarily be a little bit of less revenue for us over the longer term, but we’re always happy to see customers that are committed to us for the longer term.

[Gregg Moskowitz, Cowen & Company]

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

[Murray Demo, CFO]

So what we saw there was in the first couple of months which was Q1, which we talked to all of you about during that call and everything is that, we expected some customers to kind of downgrade from being a -- call it a customer on monthly and kind of drop to the 10 user level where they could get the starter pricing. Some went to annual and we had factored all that into our calculations. All that kind of activity just -- kind of went away as we got into the second quarter and part of the reason why we saw a stronger customer account is actually lower churn in cloud. So, our customers that were sensitive to price, they did with a -- wanted to do around that, but it's really been -- as Jay said, well received. Its behind us. We continue to be a leader obviously in low price, high value and it's always very successful. We are on track with the guidance we provided around the change in the cloud pricing of low single-digits for the year that’s right on track. And so, at this point after five months, we’re very pleased with the results we’ve seen and how highly correlated it is to all the modeling that we’ve done in advance.

[Gregg Moskowitz, Cowen & Company]

That’s very helpful. Thanks very much guys.

[Operator]

The next question comes from Bhavan Suri with William Blair. Please go ahead.

[Bhavanmit Suri, William Blair & Company]

Hey guys, can you hear me okay?

[Scott Farquhar, Co-Founder & CEO]

Yes, definitely Bhavan.

[Bhavanmit Suri, William Blair & Company]

Yes, great. Thanks and congrats. Yes, hi, guys. So, I guess, two questions. One for maybe Jay and the guys here. So that we seem sort of continued momentum around Service Desk, JIRA Service Desk, you guys certainly talked about it, talked about in last quarter a lot. I guess, when you think about some of the larger deals you’re seeing there and you think about the main competitor there, what do you think in terms of is the gap there? When JIRA was early on, there was a sort of gap with Rally. No one really talks about Rally anymore. So now comparing that to JIRA Service Desk and some of the competitors there and obviously investment side, do you think there is a material gap and sort of how far behind those guys do you think you might be from an enterprise deployment perspective of JIRA Service Desk versus say ServiceNow or some of the other smaller guys like Cherwell [ph] or whatever?

[Mike Cannon-Brookes, Co-Founder & CEO]

Yes. Hey, Bhavan. This is Mike. I can take that. Look, obviously we remain really excited about JIRA Service Desk, right. It is as you mentioned one of our fastest-growing product areas. As we said, I think last quarter it was past 25,000 organizations now. So we are really happy about how it's coming along. I do think it's pretty differentiated to the competition, specifically in the way we think about service teams. It does a great job in IT and technical teams, but we see a much broader blue Ocean in the service teams within an organization, much more focus on the broader business team, so legal, finance, HR and all the other teams that are effectively servicing other groups within an enterprise. And I think that's the main differentiation that flows from a philosophy into the product and into everything else. At the same time, one of the other differentiations of JIRA Service Desk obviously is bringing our ecosystem to bear. You’ve seen it is a great quarter for the marketplace and the ecosystem is really humming along nicely inside JIRA Service Desk of providing expansions, use cases and useful value in different parts of a business.

[Bhavanmit Suri, William Blair & Company]

That’s helpful. Thanks. Then -- and then one quick follow-up here just on R&D. You guys have sort of talked about R&D allocation, you’ve talked about a fair amount of effort replatforming for the cloud, the team platform on Mobile, but as you think about optimizing R&D and obviously that’s really the biggest expense you guys have, how do you guys think about through '18? And then I'm not asking about '19, because I know Murray will shoot me down about '19 targets, but over the next 3 to 5 years sort of the optimization allocation R&D, just sort of how you guys think about that will be helpful? Thank you.

[Murray Demo, CFO]

So in terms of R&D, Bhavan, yes, we were not talking about '19 right now, but we are going to continue to invest. It's -- we just think we have got such a large market opportunity here. There is so many things we can do. We are going to continue to invest. It's been one of the clear differentiators and competitive advantages that we have in the marketplace and we are going to continue to invest and try to drive revenue growth and get margin expansion through leverage. At this point, there is nothing that -- sure, we’re going to look to optimize everywhere we can in terms of being efficient, but we are going to continue to invest for the long-term that's been what Scott and Mike and the team have done here for the 15 years and we are not going to change that approach.

[Bhavanmit Suri, William Blair & Company]

Got it. Thanks guys. Congrats again.

[Scott Farquhar, Co-Founder & CEO]

Thank you.

[Operator]

The next question comes from John DiFucci with Jefferies. Please go ahead.

[John DiFucci, Jefferies]

Thank you. I have a question for Murray and it's kind of a follow-up to Gregg's question, Murray. And it's try to get some help in modeling this going forward. No matter how you look at the numbers, they look strong, but in this quarter billings growth and even more importantly the current billings growth, so again the change in short-term deferred revenue it was about equal to revenue growth. Whereas in the recent past, frankly over the last year and half, billings growth has been greater than revenue growth. And I was just kind of trying to figure it out, I mean, you’re in the low 40s percentage growth which is pretty amazing given your scale. But should we start to see that -- I mean, the guidance implies that the growth comes down a little bit, but frankly the guidance has implied that for a while now. But when we are looking forward just so we’re sort of prepared, it seems to me that with that sort of an indication that we will start to see the growth still be very meaningful, but not continue to accelerate like it has -- with the revenue growth it has over the last year and half. Does that make sense?

[Murray Demo, CFO]

Well, it's a great question. There is a lot of things going on there. I think if you look at the first quarter and the second quarter, one of the advantages we have had is that we are getting bookings and we are getting revenue from Trello that didn’t exist in the prior year. And as we go into the second half of this year now, we are going to have the Trello compared. Obviously there is no purchase accounting haircut on bookings, it's just on revenue. So in Q3, Q4 we have got the Trello bookings from last year that we’re now going to be comparing to. So we’ve got some of that. We also have when these price increases kind of worked a way through, we will see some of that where the bookings in revenue can shift. And in the first quarter, we just had an easier compare. Q1 of '17 was a tougher quarter as we had talked before just because we believe the Olympics and the Euro Soccer and all that stuff that was going on in Q1 of '17. We saw this a little softer on the booking side and then we came back stronger in the second quarter '17 and so that gave us a more favorable compare in Q1 of '18. The -- but as we go into the second half of the year, a big part of what you're seeing is the compare relative to having Trello now in the base. Over the longer term, obviously there is going to be a lot of large numbers et cetera that we will be facing like any company, but as far as here in the second half, it's the Trello compare that’s -- it's causing some of this -- it looks like the growth rate isn't what was in the first half.

[John DiFucci, Jefferies]

Okay, great. That's helpful. And if I could, just a quick follow-up. And I know it's really early, a few weeks into the quarter, but have you seen any change in business momentum? I know you have a pretty linear quarter. I mean, which is really unique in the software space. But have you seen any change in business momentum over the last few weeks after the price increase?

[Murray Demo, CFO]

Well, again on -- if we look at the cloud, the price increases went in around July 31, that’s well passed us. On server, we had -- John, as you know that on license it was October 1, and then now maintenance is on Jan 1. And the business in general is -- the environment is good and so we’re not like commenting specifically, but so far -- through the end of December we’re quite pleased and there is nothing has changed in the tone of business sense.

[John DiFucci, Jefferies]

Got it. Okay. Thanks a lot. Nice job guys.

[Scott Farquhar, Co-Founder & CEO]

Thanks, John.

[Operator]

The next question comes from Michael Turits with Raymond James. Please go ahead.

[Michael Turits, Raymond James]

Hey, guys. I’ve two questions. First, I know you said that you did well across all deployment models, but can you comment and drill down a little bit on datacenter and the stalked bundle? And then talk about how much of a shift there might be there if successful? How much benefit that has been to billings? Then I have another question.

[Jay Simons, President]

Hey, Michael. It’s Jay. It just continues to do well. We are pleased with it. No outsized contribution relative to past quarters. There continues [technical difficulty] server base. For customers largely with more than 500 employees that are looking to move to datacenter that provides better high visibility and architecture to support the kind of scale. And the other indication in datacenter growth we talked about in the past, I think it shows kind of the broader standardization as companies move from technical teams to IT to business teams. Stack is kind of a small part of removing purchase friction. For companies that want to buy all those of the data center family at once, Stack makes the purchase of all datacenter family products once easier. But there is going to be a handful of customers that do that. A lot of them are going to start maybe with JIRA and then expand to Confluence and expand with JIRA Service Desk etcetera. And then finally just the channel is a really important contributor to data center growth. They work with a lot of our larger customers and tend to help them move from the original server deployment to the data center one.

[Michael Turits, Raymond James]

Thanks. Thanks, Jay. And then my follow-up perhaps is for you as well. As you’re getting more adoption across the enterprise, obviously you are sticking with your frictionless model, but has there any change at all in go-to-market as you have to deal more with centralized ISIT [ph] with procurement? Obviously, you’ve got the enterprise advocates. How is that transition going?

[Jay Simons, President]

It's not only transition we got enterprise advocates in the business for a couple of years and there isn't a material change in the model at all and we described it in detail at the Investor Day. The focus for the company is just to make purchasing easy for customers, especially at scale. And so, we do that by building a product that people can try on their own, by publishing pricing, so they don’t have to call us and ask us what it is by creating service teams like the enterprise advocates and then through our channel to help them when they need extra help if there is things that they can't do on their own. And I think the results of the business -- I think is validation that’s working and we’re really pleased with how it's going.

[Michael Turits, Raymond James]

Okay, great. Thanks, Jay. Again great quarter everybody.

[Scott Farquhar, Co-Founder & CEO]

Thank you.

[Operator]

The next question comes from Heather Bellini with Goldman Sachs. Please go ahead.

[Heather Bellini, Goldman Sachs]

Great. Thank you. A lot of the questions have been answered, but I just wanted to know if you could share with us a little bit about the momentum you have been seeing with Trello and kind of how you’ve seen that evolved since the acquisition, and the type of customer synergies you might be seeing in kind of leveraging the vast installed base that you guys already had?

[Mike Cannon-Brookes, Co-Founder & CEO]

Yes. Thanks, Heather. It's Mike. Look, Trello continues to power along and we're really happy with its progress. As we’ve said previously, we are not even at the end of year one in terms of an integration program of the business, the team et cetera. And our main goal is maintaining the momentum of the product and business that Trello already is before we look at the opportunities potentially in combining the customer bases and we have a lot of time to go through and continue to do that. We're pretty happy in how the Trello team fits with the culture of the border Atlassian family, and I think on all sides it's been a great success so far. The one thing we are doing is we’re certainly not standing still. So the product of Trello has had a number of improvements over the last period of time. And if you are looking at shareholder letter you can see that we have officially introduced Trello to the Japan market as a single example in November. We have the localized products and some partnerships and some marketing and things that we did down there, which is a good example of something that Atlassian brings to the table we already had. The office there in Oklahoma, so we could use that as a leverage point to get Trello into the Japanese market, but a lot of the things you talk about is still ahead of us.

[Heather Bellini, Goldman Sachs]

Okay, great. Thank you very much.

[Operator]

The next question comes from Sanjit Singh with Morgan Stanley. Please go ahead.

[Sanjit Singh, Morgan Stanley]

Thank you very much and happy New Year to the team. Murray, maybe I want to start with gross margins that has been trending down for several quarters now and I’m sure that’s related to the accelerated depreciation. Can you give us a sense of how we should think about gross margin going forward? Is there a quarter when gross margin starts to plateau after we get through this accelerated depreciation base?

[Murray Demo, CFO]

Yes, Sanjit. So in terms of the gross margin, that's correct. We have been going through a transition here where we have been accelerating the depreciation on the server equipment that we’re running around data centers. Obviously, we are really excited about the fact that what the engineering team has done to get us to our new cloud platform and we have actually reassessed the need for the remaining equipment and its useful life and its going to depreciated through the third quarter which is what we are in now and we'll come to a close. And that's kind of depressing the gross margin here in the third quarter than its going to be -- the implied numbers on the fourth quarter it gets better. As we kind of go on from there, it's just going to be the -- obviously we are going to have a little bit of a benefit in '19 versus '18 because they don't have the accelerating depreciation. But at the same time, our business is moving to the cloud and the cloud runs at a lower gross margin like in all the other SaaS companies where we’ve to incur the cost of hosting the application, servicing those applications. And so as you look at '19 there will be sort of a little bit of a battle between the relief we get on the accelerated depreciation versus more transition to the cloud. And then as we kind of go on from there, that transition continues to -- that secular trend moving to the cloud, there just got be a modest probably impact on lowering the gross margin over time as that transition goes to cloud. But we are obviously very pleased with our overall gross margins where we stand today. The server business which has very good gross margin is not going away overnight. So it continues to be very strong, you can see that in our results just this past quarter. So that's also been a good lift for us from a gross margin standpoint.

[Sanjit Singh, Morgan Stanley]

Great. That’s super helpful. And the follow-up is on sort of the HipChat customer base. Any sort of details on how they are thinking about potentially upgrading to Stride or maybe sticking with their deployments or even potentially moving off to a comparative solution? What are the conversations been like with the HipChat customer base and how do you see their deployment plans moving forward?

[Scott Farquhar, Co-Founder & CEO]

Yes, good question. It's Scott here. We recommend all of the HipChat customers in the cloud upgrading to Stride and we actually have really strong migration parts for all of those customers. It's a very famous process and we are already migrating customers from one to the other. And so we're seeing great excitement amongst the HipChat base for all the new features and the -- through the change in the product when they move from HipChat to Stride, so that's really going well. And we continue to sell HipChat behind the firewall for those customers that want something that they can deploy inside their network.

[Sanjit Singh, Morgan Stanley]

In terms of getting them migrated, getting the cloud customers migrated over, is there any sort of timeframe that we should think about or was that happen over the next two quarters or a year, any timeframe that makes sense?

[Scott Farquhar, Co-Founder & CEO]

At least as you know publicly stating a timeframe where it's sort of -- have all the pieces in place to gracefully [ph] move customers, but we want to be sensitive to their timeframe tables to make sure they will have a great experience. So we haven't got a sort of definitive end day on that at the moment.

[Sanjit Singh, Morgan Stanley]

Got it. Thank you very much, Scott.

[Operator]

The next question comes from Richard Davis with Canaccord. Please go ahead.

[Richard Davis, Canaccord]

Hey, thanks. Most has been asked, but basically one of the questions I have got from investors was last year you bought Trello, so you obviously had a bunch of people, but you did pay higher revenue multiple. What is your opinion right now kind of the valuation expectations for possible M&A targets and how does that inform your interest in future purchases? Thanks.

[Mike Cannon-Brookes, Co-Founder & CEO]

Yes. Hi, Richard. It's Mike again. Look, I mean, we obviously didn't comment on the target or valuations of where other people sit at. I think there is a very complicated times in working out what works for both parties at a given time in a given market and for given opportunity. Again, we continue to use M&A as one of a series of tools that we have over the last 15 years to build the business both on small sort of tuck-in acquisitions through to obviously more transformative ones like Trello and we keep scanning the market that’s out there. Again we’ve been very efficient stewards of the capital over time. I think our record speaks for itself there and we intend to continue to be so.

[Richard Davis, Canaccord]

Okay. Thank you.

[Operator]

The next question comes from Jonathan Kees with Summit Research. Please go ahead.

[Jonathan Kees, Summit Research]

Hi, great. Thanks for taking my questions and my congrats also for the quarter. Just wanted to ask a couple of questions. One being on more strategic part. You talked about before your Atlassian expand strategy with corporate customers, and I'm sure the bulk of it like with this quarter is still the traditional JIRA and Confluence and selling the more usage and additional products. Just curious if during the quarter, have you seen any change in terms of the Greenfield for like Service Desk or even Bitbucket and HipChat in terms of those sales and even the other way where they are selling up to JIRA and Confluence?

[Scott Farquhar, Co-Founder & CEO]

Jonathan, it's Scott here. Our business is always depending on what’s sort of landing and expanding from a lot of different products and so you’re right we’ve landed JIRA and Confluence, but Bitbucket lands a large number of customers as it does Trello, as HipChat and Stride. And the cross-sell parts aren't sort of linear. There are sort of other companies out there in the market that have one very clear LAN [ph] product and then they expand and have sort of tuck-in add-ons on the back of that. We haven't got that, we actually sort of have been lucky, we got a large number of areas that we land with. And so as -- with Stride comes out in the market we say that lands new customers. Obviously the acquisition of Trello helps us win more customers than we were previously. But there is nothing over the last sort of period of time where that’s an inflection point on landing with one particular product or a change in the mix. It's just that all the products get better at landing customers as we add more features and as we have more brand awareness in the marketplace.

[Jonathan Kees, Summit Research]

Okay, great. That was helpful. And my last question is more of a housekeeping. You have in the past talked -- given a count for like Trello customers. Even the Service Desk count you just referenced last quarter is kind of greater than 25,000. I'm sure an updated number will be greater than 25,000. Is it greater than 30,000. And for Trello, we will be curious what the latest number would be? I’m sure its greater than 25 million, which is what you refer to last quarter. You guys have been great in terms of providing those numbers in the past and obviously you’re proud in terms of the performance, you’ve been happy with the performance, so any updated numbers in terms of that will be great.

[Mike Cannon-Brookes, Co-Founder & CEO]

Yes. Hi, Jonathan. We don’t have any updated numbers to either of those two. We continue to be happy with the performance of both. Again the 25 million users in Trello is from summit last year, so it's only 3 or 4 months ago.

[Jonathan Kees, Summit Research]

Okay, great.

[Murray Demo, CFO]

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

[Jonathan Kees, Summit Research]

Okay, great. Thanks for the clarification. Good luck, guys.

[Scott Farquhar, Co-Founder & CEO]

Thank you.

[Operator]

The next question comes from Pat Walravens with JMP Securities. Please go ahead.

[Patrick Walravens, JMP Securities]

Oh, great. Thank you. Let me add my congratulations. So I would love to drill down a little more on Bitbucket and to understand -- you guys like to talk about sort of the philosophy and the differentiation and in this case maybe sort of the philosophy and the differentiation when compared to GitHub and how the whole open source development plays into that?

[Scott Farquhar, Co-Founder & CEO]

Yes. Great question. Bitbucket has millions of users that use it on a monthly basis. It's a very, very popular card hosting service. Years ago we chose to differentiate from some competitors by really focusing on where you go to do work as opposed to sort of host open source projects and that differentiation actually flow through the numbers of the features that we put into the product that make it appealing to businesses who want to do work around security features, around performance, around even just how teams are organized in the products. Look, the integration with JIRA continues to be a big differentiator for that product as well because people don't choose these products in isolation and one of our team's great strength is that not only do we interact with ourselves and our competitors, but as we add more products and as we sort of have more of a solution for our customers and increasingly look to ask for -- to provide more their solutions to their problems. Obviously, the fact that it's an Atlassian product and works with the rest of the products are a big differentiator as well.

[Patrick Walravens, JMP Securities]

Great. Thank you. And then if I could sneak one more in. In my model, you are about three quarters away from hitting that $1 billion run rate, which has been an oddly difficult hurdle for a lot of software companies. And I'm just wondering how you guys think about that? Is it sort of a totally artificial barrier and you can just keep doing exactly what you're doing or do you think -- have you been thinking sort of hard about how we scale through that?

[Scott Farquhar, Co-Founder & CEO]

It's Scott again. Look, years and years ago, we’ve always set big ambitious goals for Atlassian when we were I think a handful of people in a shared office we set a goal of having 50,000 customers and that took us about 10 years to get there and that was a really big celebration. And we’re setting goals for active users and so forth, adding to the future as well. And so revenue goals are really nice and I think it's great for us to be up there with a very few select companies that have reached that milestone, if and when we do cross that milestone. But for us the sort of things we get our staff engaged and get me and Mike excited about the impact we have in the world which is often around usage and size of the customer base versus a dollar metric.

[Patrick Walravens, JMP Securities]

Okay, great. Thank you.

[Operator]

[Operator Instructions] The next question comes from Nat Cunningham with Guggenheim. Please go ahead.

[Nat Cunningham, Guggenheim Securities]

Hi, guys. On Atlassian Home, it sounds like you've been getting good feedback so far. And I realize it's early, but have you seen any behavior like increasing engagement or more multiproduct usage among customers that are participating in that beta?

[Scott Farquhar, Co-Founder & CEO]

It's Scott again, just on the Atlassian Home. We are still very early in that rollout and we've been doing tests with customers and we do see great results there, but not as great as the other prepared to sort of share them publicly and we’re still early in the rollout of Home across all of our products. And so while we are seeing a lot of engagement sort of on a one-to-one product basis, we are still early in the sort of multiproduct engagement cycle. We’ve done some experiments in that area and we are seeing some great improvements to how we are cross-selling or cross promoting products, but nothing I could give you concrete numbers on at this stage, apart from this being very happy with those results.

[Nat Cunningham, Guggenheim Securities]

Thanks, Scott.

[Operator]

Seeing no further questions, this concludes our question-and-answer session. I’d like to turn the conference back over to Mike Cannon-Brookes for any closing remarks.

[Mike Cannon-Brookes, Co-Founder & CEO]

Yes, I just like to say thanks everyone for joining the call today. We appreciate your time and look forward to keeping you updated on our progress. And I just like to send out a final thanks to Murray Demo in his final earnings call. Thanks everyone for today.

[Operator]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.