Atlassian Corporation · NASDAQ:TEAM
Atlassian — Atlassian Summit 2019 Investor Session
155 slides from Atlassian's conference presentation, Apr 10, 2019
Slide 1: Investor Session 2019
Investor Session 2019 April 10, 2019 S C OT T FA RQ U HA R MI K E C A NN O N - B R OO KE S J A Y S I M ON S S RI V I SW A N A TH J AM E S B E E R IAN LEE C O -F O U N DE R & C O - C E O C O - F O U ND E R & C O - C E O PR E S I D E N T CTO CFO I N V E S TO R R E L A TI O N S
Slide 2: Legal disclosure
Legal disclosure This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. All statements other than statements of historical fact could be deemed forward looking. At
Slide 3: Agenda
1pm Introduction Ian Lee, Investor Relations Welcome Mike Cannon-Brookes, Co-Founder & Co-CEO Agenda Go-to-market overview Jay Simons, President R&D overview Sri Viswanath, CTO Financial summary James Beer, CFO
Slide 4: Agenda
1pm Introduction Ian Lee, Investor Relations Welcome Mike Cannon-Brookes, Co-Founder & Co-CEO Agenda Go-to-market overview Jay Simons, President R&D overview Sri Viswanath, CTO Financial summary James Beer, CFO
Slide 5: Agenda
1pm Introduction Ian Lee, Investor Relations Welcome Mike Cannon-Brookes, Co-Founder & Co-CEO Agenda Go-to-market overview Jay Simons, President R&D overview Sri Viswanath, CTO Financial summary James Beer, CFO
Slide 6: Agenda
1pm Introduction Ian Lee, Investor Relations Welcome Mike Cannon-Brookes, Co-Founder & Co-CEO Agenda Go-to-market overview Jay Simons, President R&D overview Sri Viswanath, CTO Financial summary James Beer, CFO
Slide 7: Agenda
1pm Introduction Ian Lee, Investor Relations Welcome Mike Cannon-Brookes, Co-Founder & Co-CEO Agenda Go-to-market overview Jay Simons, President R&D overview Sri Viswanath, CTO Financial summary James Beer, CFO
Slide 8: Agenda
Agenda 1pm ~3:20pm Introduction Ian Lee Short break Welcome Mike Cannon-Brookes ~3:30pm Go-to-market overview Q&A Jay Simons Scott Farquhar, Co-Founder & Co-CEO R&D overview Mike Cannon-Brookes, Co-Founder & Co-CEO Sri Viswanath Jay Simons, President Sri Viswanath, CTO Financial summary James Beer,
Slide 9: Agenda
Agenda 1pm ~3:20pm Introduction Ian Lee Short break Welcome Mike Cannon-Brookes ~3:30pm Go-to-market overview Q&A Jay Simons Scott Farquhar, Co-Founder & Co-CEO R&D overview Mike Cannon-Brookes, Co-Founder & Co-CEO Sri Viswanath Jay Simons, President Sri Viswanath, CTO Financial summary James Beer,
Slide 10: Agenda
Agenda ~3:20pm ~4:10pm Short break Cocktails ~3:30pm 5pm Q&A Scott Farquhar, Co-Founder & Co-CEO End of session Mike Cannon-Brookes, Co-Founder & Co-CEO Jay Simons, President Sri Viswanath, CTO James Beer, CFO Ian Lee, Investor Relations
Slide 11: Agenda
Agenda ~3:20pm ~4:10pm Short break Cocktails ~3:30pm 5pm Q&A Scott Farquhar, Co-Founder & Co-CEO End of session Mike Cannon-Brookes, Co-Founder & Co-CEO Jay Simons, President Sri Viswanath, CTO James Beer, CFO Ian Lee, Investor Relations
Slide 12: Welcome
Welcome M I K E CAN NON - B RO OK ES | CO- FOU N D ER & CO- C EO
Slide 13: Go-to-market overview
Investor Session Go-to-market overview JAY SI M O NS | P R ES ID E N T
Slide 14: Agenda
Agenda Part One Part Two Part Three Part Four The enormous How we acquire & Who we serve, and Customer and opportunity ahead grow the base how we do it Partner Q&A
Slide 15: Agenda
Agenda Part One Part Two Part Three Part Four The enormous How we acquire & Who we serve, and Customer and opportunity ahead grow the base how we do it Partner Q&A
Slide 16: Unleash the potential of every team
OUR MISSION Unleash the potential of every team
Slide 17: Teamwork is vital and teamwork is hard
TEAMWORK IS VITAL AND, TEAMWORK IS HARD Future progress CONCEPT DEVELOPMENT depends entirely IDEA MARKET ASSESSMENT PRODUCTION on how teams work together GO TO MARKET PROTOTYPE
Slide 18: ...and it's getting more difficult
…AND IT’S GETTING MORE DIFFICULT NEW NEW NEW NEW INFORMATION TECHNOLOGY DYNAMICS EXPECTATIONS Product fragmentation, Connected devices, Remote working, Always-on, reliable, trapped knowledge, BYOD, AR + VR, freelance + gig secure, speedy, lack of a shared vision, machine learning, economy, networked
Slide 19: Solving complex, universal people & team challenges
Feedback + sparring Traceability and Shared goals source-of-truth + outcomes THE KEY Solving complex, Cross-team Shared coordination universal people & context team challenges Project status + Time-sensitive communication deliverables Dependency tracking
Slide 20: The collaboration landscape
THE COLLABORATION LANDSCAPE GENERAL COLLABORATION
Slide 21: General collaboration
GENERAL COLLABORATION We serve as the workflow engine for project collaboration, allowing teams across marketing, HR, operations, legal, design, etc to organize, Jira Software and Confluence are introduced to all employees on day 1 discuss, and complete shared work as “essential collaboration tools”
Slide 22: The collaboration landscape
THE COLLABORATION LANDSCAPE HR MARKETING CAMPAIGN PLANNING FP&A ONBOARDING COMMUNICATIONS BUDGET PLANNING GENERAL INTERNAL COMMS COLLABORATION LEGAL CONTRACT REQUESTS DESIGN ANALYTICS ACCOUNTING RESOURCE PLANNING WEEKLY REPORTS QUARTER CLOSE TRACKING FACILITIES EVENT PLANNING MANAGEMENT SUPPORT OPER
Slide 23: The collaboration landscape
THE COLLABORATION LANDSCAPE SOFTWARE ITSM & GENERAL DEVELOPMENT IT OPERATIONS COLLABORATION
Slide 24: Software development
SOFTWARE DEVELOPMENT We power agile collaboration between software developers & the rest of the org to plan, build and ship high-quality products Using Jira Software, they manage delivery and maintenance of all digital experiences seamlessly, across functions, and in service of transparency at all l
Slide 25: The collaboration landscape
THE COLLABORATION LANDSCAPE SOFTWARE ITSM & GENERAL DEVELOPMENT IT OPERATIONS COLLABORATION
Slide 26: IT service management
IT SERVICE MANAGEMENT We empower software developers and IT teams to rapidly and effectively respond to all requests Replaced spreadsheets with Jira Software and Jira Service Desk, for infrastructure changes and IT support scaling from a 100 to a 2,000 user license Using Jira, Confluence, and Jira S
Slide 27: IT operations
IT OPERATIONS We bring software developers and IT ops together to collaborate and resolve incidents Uses Opsgenie to help in their faster, so services are always operational preparation for and response to incidents that could disrupt the services they provide, keeping time- to-response under two mi
Slide 28: 1M companies in the world we can potentially serve
1M Total companies1 Atlassian customers2 companies in the world we can potentially serve 1Source: Capital IQ. 1.01M global companies with over $10M in annual revenue as of February 2019. 2Atlassian total customer count as of December 31, 2018 was 138,235.
Slide 29: Large markets with massive expansion opportunities
Large markets with massive expansion opportunities 23M+ software developers
Slide 30: Large markets with massive expansion opportunities
Large markets with massive expansion opportunities 100M+ technical team members 23M+ software developers
Slide 31: Large markets with massive expansion opportunities
Large markets with massive expansion opportunities 800M+ knowledge workers 100M+ technical team members 23M+ software developers Sources: Knowledge workers as of 2016 (Forrester Research), technical team members as of 2013 (Evans Data), software developers as of 2018 (Evans Data).
Slide 32: Who we beat, why we win
Who we beat Why we win The “dog’s breakfast” of Powerful, flexible, fragmented, narrow, and/or accessible, and universally unsophisticated tools relevant tools for any team Legacy incumbents Powerful, simple, versatile Platform plays Multiple landing points Point solutions / up-starts High-quality,
Slide 33: Agenda
Agenda Part One Part Two Part Three Part Four The enormous How we acquire & Who we serve, and Customer and opportunity ahead grow the base how we do it Partner Q&A
Slide 34: Our model
our model Build great products Great product × Easy trial needs great Pursue huge Low pricing product TAM × Low friction Open = pricing, easy Multiple LAND opps trial High volume & efficiency Sell online, Low prices, self-serve great value
Slide 35: We optimize for customer self-service
WE OPTIMIZE FOR CUSTOMER SELF-SERVICE - All pricing online - All products free to try - No forms or gates - No custom contracts - No hidden pricing - All purchasing made simple - Underpinned by great service
Slide 36: We operate on a consumer scale
WE OPERATE ON A CONSUMER SCALE 13.2M 2018 9.7M Monthly unique 7.1M 2017 visitors across our sites average for each fiscal year 2016 Monthly unique visitors across all main product domains.
Slide 37: Scale, on a typical day
Scale, on a TUESDAY WEDNESDAY typical day AUGUST 8, 2017 AUGUST 8, 2018 $2.8M $3.5M SALES sales sales 6,841 8,063 unique domains unique domains 16,742 19,735 TRIALS unique domains unique domains
Slide 38: How we fuel word of mouth
HOW WE FUEL WORD OF MOUTH 500+ partners indirectly marketing and selling THE Atlassian products CHANNEL 15M THE USER visitors to the Community COMMUNITY site in the last 12 months 708 25,000+ Atlassian user group events 3rd party developers on across 178 cities in 2018 the Atlassian platform THE 76,
Slide 39: One user begets another, one customer begets another
One user begets another, one customer begets another We land inside an organization through one team, and expand organically to other teams
Slide 40: One user begets another, one customer begets another
One user begets another, one customer begets another We land inside an organization through one team, and expand organically to other teams We expand in multiple ways: Additional users & teams
Slide 41: One user begets another, one customer begets another
One user begets another, one customer begets another We land inside an organization through one team, and expand organically to other teams We expand in multiple ways: Additional users & teams Additional products + services
Slide 42: One user begets another, one customer begets another
One user begets another, one customer begets another We land inside an organization through one team, and expand organically to other teams We expand in multiple ways: Additional users & teams Additional products + services Premium offerings
Slide 43: One user begets another, one customer begets another
One user begets another, one customer begets another We land inside an organization through one team, and expand organically to other teams We expand in multiple ways: Additional users & teams Additional products + services Premium offerings Marketplace apps
Slide 44: One user begets another, one customer begets another
One user begets another, one customer begets another We land inside an organization through one team, and expand organically to other teams We expand in multiple ways: Additional users & teams Additional products + services Premium offerings Marketplace apps Additional use cases
Slide 45: How we land, how we expand
HOW WE LAND HOW WE EXPAND Self-service Self-service Channel In-product partners Enterprise advocates Channel partners
Slide 46: Self-service, In-product, Advocates, Channel
Self-service In-product Advocates Channel
Slide 47: Self-service, In-product, Advocates, Channel
Self-service In-product Advocates Channel
Slide 48: QCoa@a
& ] QCoa@a o Megatron Software project MEG board Board Backlog Active sprints Reports Releases Issues and filters Pages Components ‘Add Item Project settings Projects / Megatron Pages Here are some templates to get you started on that masterpiece. + Blank page Decision Meeting notes Product Retrospe
Slide 49: Project pages are powered by Confluence
Project pages are powered by Confluence Create, share, and collaborate on all your project docs in one place, with Confluence pages. Go Your billing contac Cancel your trial at any time emailed ten days before, in Manage subscriptions.
Slide 50: Megatron
+04 9 @.70 Megatron Software proj MEG board Board Backlog Active sprints Reports Releases Issues and filters Pages Components Add Item Project settings Projects / Meg: Pages Here are some templates to get you startet + Blank page Name should t Retrospective requirements: Contributors Ss One place fo
Slide 51: Roadmap
om) Roadmap Backlog Board Pages = ee = i=) Oo ta} You're in a next-gen project Give feedback Learn more Projects / Expanders Pages Here are some templates to get you started on that masterpiece. + Blank page Retrospective Product Meeting notes requirements Name Growth X-flow Initiative New Expanders
Slide 52: Self-service, In-product, Advocates, Channel
Self-service In-product Advocates CUSTOMER LOYALTY PARTNER PRODUCT ENTERPRISE Channel Billing Renewal Partner Tech pre-sales Enterprise assistance assistance assistance assistance assistance
Slide 53: Where they focus
WHERE THEY FOCUS Self-service Premium product introduction LEARN In-product Solution Partner referral Advocates Channel TRY ENTERPRISE Enterprise services introduction ADVOCATE Consolidated purchasing BUY
Slide 54: Atlassian partner types
ATLASSIAN PARTNER TYPES Self-service In-product Advocates Channel Solution Corporate Training Marketplace Partners Resellers Partners Vendors
Slide 55: Direct / indirect and channel sales by geo (FY18)
DIRECT / INDIRECT (FY18) CHANNEL SALES BY GEO (FY18) Self-service In-product Advocates Channel Direct Revenue Indirect Revenue Americas APAC EMEA
Slide 56: Product family
Cloud Premium Access Data Center Enterprise Services Jira Align Product Family ON-PREMISES CLOUD SERVICES SECURITY SCALING
Slide 57: Growing enterprise opportunity within installed base
There’s also a growing enterprise opportunity within installed base 7,500+ 13% Customers who are target Portion of this candidates for upgrade to opportunity currently Data Center or Cloud Premium captured Target customers and penetration estimates based on Atlassian internal analysis as of December
Slide 58: Global financial institution
GLOBAL FINANCIAL INSTITUTION $5,000,000 $3,750,000 A SINGLE INSTANCE One instance of Jira Software led to more users & instances, and then Confluence $2,500,000 $1,250,000 $0 FY05 - FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19YTD
Slide 59: Global financial institution
GLOBAL FINANCIAL INSTITUTION $5,000,000 $3,750,000 THE INFLECTION POINT More Jira instances, more Jira users, and first Jira Cloud instance $2,500,000 $1,250,000 $0 FY05 - FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19YTD
Slide 60: Global financial institution
GLOBAL FINANCIAL INSTITUTION $5,000,000 TAKING OFF $3,750,000 Opted into Bitbucket Server, more instances of Jira & Confluence Cloud, and Marketplace apps $2,500,000 $1,250,000 $0 FY05 - FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19YTD
Slide 61: Global financial institution
GLOBAL FINANCIAL INSTITUTION $5,000,000 INVESTING IN SCALE Brought on a TAM to help $3,750,000 scale, while adding more Jira and Confluence users $2,500,000 $1,250,000 $0 FY05 - FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19YTD
Slide 62: Global financial institution
GLOBAL FINANCIAL INSTITUTION $5,000,000 EXTENDING ACROSS ORGS More users, more instances. Added Jira Service Desk, and $3,750,000 upgraded to Bitbucket Data Center $2,500,000 $1,250,000 $0 FY05 - FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19YTD
Slide 63: Global financial institution
GLOBAL FINANCIAL INSTITUTION $5,000,000 FUTURE STATE PLANNING $3,750,000 Upgraded Bitbucket DC to 14K users. Continued to add users and instances across products. $2,500,000 $1,250,000 $0 FY05 - FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19YTD
Slide 64: Global financial institution
GLOBAL FINANCIAL INSTITUTION $5,000,000 GOING BIG ON DATA CENTER Multi-product upgrade to Data Center. Jira Software + Service Desk footprint expands. $3,750,000 Extends Bitbucket DC to 40K seat license. $2,500,000 $1,250,000 $0 FY05 - FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19YTD
Slide 65: Global financial institution
GLOBAL FINANCIAL INSTITUTION $5,000,000 STANDARDIZING ON ATLASSIAN Exponential increase in users, instances, & Data Center footprint across products. Reach 50K users on Jira! Exploring a move to the $3,750,000 cloud, and view us as a strategic partner. $2,500,000 $1,250,000 $0 FY05 - FY11 FY12 FY13
Slide 66: Agenda
Agenda Part One Part Two Part Three Part Four The enormous How we acquire & Who we serve, and Customer and opportunity ahead grow the base how we do it Partner Q&A
Slide 67: Customer base highlights
No signs of slowing 138,000+ customers and growing Customer base Diverse, expansive base Frictionless model allows for easy highlights adoption across functions, industries, sizes Momentum where it matters Solid, consistent growth in high-value areas (Data Center, Cloud)
Slide 68: Growth of our customer franchise
GROWTH OF OUR CUSTOMER FRANCHISE 140,000 2/3 of the Fortune 500 Across 190+ 105,000 countries 70,000 35,000 0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Slide 69: The large, untapped opportunity
THE LARGE, UNTAPPED OPPORTUNITY 2015 2018 51K 138K+ Customers Customers 78K 175K+ Starters Starters 320K Millions Free organizations Free users or organizations 2015 data as of September 30, 2015. 2018 data as of December 31, 2018. Starters includes unique organizations paying approximately $10 or l
Slide 70: Customer mix shifting
CUSTOMER MIX SHIFTING 150,000 While we continue to land new customers with Jira Software, new customers are landing 100,000 with our other products 16% 50,000 of all new customers1 in FY19 YTD 65,000+ land with Jira Service Desk, up 37,000+ from 4% in FY15 1Customers purchasing a single product 2015
Slide 71: Jira Software co-ownership
JIRA SOFTWARE CO-OWNERSHIP 3 Our large base of Jira Software customers Total average number of products owned serve as an important, durable growth lever. 2 Over time, they consistently purchase additional products. 1 0 1 2 3 4 5 6 Years after initial purchase Total average number of products owned
Slide 72: Jira user diversity
JIRA USER DIVERSITY 10% 25% 33% 48% 42% 42% Developers/engineers IT support Other Developers/engineers IT support Other Sample of 395k Jira Software Cloud users Sample of 75k Jira Service Desk Cloud users (agents & admins) Above data based on Atlassian study conducted in March 2019.
Slide 73: Cloud momentum
CLOUD MOMENTUM While we have a large (and happy) installed base of Server customers, new customers are choosing our Cloud products 90%+ 100K+ % of new customers number of customers choosing a Cloud that subscribe to at least product each quarter one Cloud product
Slide 74: Proportion of Cloud customers also growing
PROPORTION OF CLOUD CUSTOMERS ALSO GROWING 140,000 ~80% 105,000 70,000 ~60% 35,000 0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Customers with at least one Cloud product
Slide 75: Cloud reach and engagement
CLOUD REACH AND ENGAGEMENT 10M+ Cloud monthly active users Cloud monthly active user (MAU) figure measured as of March 2019 and has been de-duplicated across products.
Slide 76: Durable, expansive customer relationships
Durable, expansive customer relationships YEAR OF CUSTOMER FIRST PURCHASE FY2018 FY2016 FY2017 FY2014 FY2015 FY2012 FY2013 FY2010 FY2011 FY2008 FY2009 FY2006 FY2007 FY2004 FY2005 FY2002 FY2003 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY
Slide 77: Expansion of existing customers
EXPANSION OF EXISTING CUSTOMERS 2,678 98% 124 FY18 retention rate ~ 90% 1,817 75 of $50K+ 1,245 customers purchased 3 or more 864 products 37 14 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 $50K+ CUSTOMERS $500K+ CUSTOMERS Retention rate: Customers who spent $50k+ in FY17 that were $50K+ customers in FY1
Slide 78: Land-and-expand in action
Global consulting firm $2,000,000 $1,500,000 $1,000,000 Land-&-expand $500,000 $0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 in action Large technology company $2,000,000 $1,500,000 $1,000,000 $500,000 LARGE CUSTOMER $0 GROWTH FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 F
Slide 79: Key GTM takeaways
Key GTM Large, expansive TAM Multiple entry and expansion paths takeaways Efficient land/expand model Model continues to gain strength with experience Fanatic customers, growing potential Our customers are our most important asset
Slide 80: Agenda
Agenda Part One Part Two Part Three Part Four The enormous How we acquire & Who we serve, and Customer and opportunity ahead grow the base how we do it Partner Q&A
Slide 81: Customer Q&A
CUSTOMER Q&A Robert Marchiori, GM, Transformation ANZ
Slide 82: Partner Q&A
PARTNER Q&A Zubin Irani cPrime
Slide 83: R&D Overview
R&D Overview SR I VI S WA NAT H | C TO
Slide 84: R&D investment is a differentiator for Atlassian
R&D investment is a differentiator for Atlassian 35-40% ATLASSIAN VS PEERS: R&D% OF REVENUES DURING FIRST $1B REVENUE YEAR Mean = ~15% Oracle Salesforce Palo Alto Networks Servicenow Microsoft Splunk Adobe Workday Atlassian FY91 FY09 FY16 FY15 FY90 FY18 FY99 FY16 FY19E R&D expenses as a % of revenue
Slide 85: Investment levers
Investment levers Products Scaling Cloud Operational Excellence
Slide 86: Investment levers
Investment levers Products Scaling Cloud Operational Excellence
Slide 87: Customer choice
Customer choice Cloud On-premises Server & data center Multiple deployment models
Slide 88: Our products solve customers' teamwork needs
Our products solve customers’ teamwork needs On-premises Products Cloud Products
Slide 89: Products in different stages
Products in different stages CORE EMERGING NEW - BUILD NEW - BUY
Slide 90: Customer value: continuously shipping features
Customer value: continuously shipping features JIRA SOFTWARE New issue Project-level Build New design view configuration information Improved Next-gen and navigation Feature flags roadmaps JQL dev search H2 FY18 FY19
Slide 91: Product spotlight
Product spotlight Enhanced security & control Configuration for SSO, password policies, and mandatory 2FA for an organization All Atlassian Cloud products Unified navigation between organizations and associated sites Empowered admins Ability to manage entire organization at scale
Slide 92: Cloud Premium
Announced early access… CLOUD PREMIUM FOR JIRA SOFTWARE & CONFLUENCE Guaranteed Unlimited Premium SLA STORAGE SUPPORT 99.9% availability No more file size or limits 24x7 dedicated support
Slide 93: Ecosystem enables extensibility of our products
Ecosystem enables extensibility of our products CLOUD PLATFORM SERVER PLATFORM DEVELOPER ENGAGEMENT AND VENDOR PROGRAMS MARKETPLACE
Slide 94: Customer quotes
Customer quotes "Congratulations on the new Jira "Loved the distraction free UI... “Confluence is the communication Software. Fantastic innovation the new editing experience in product that every company and a great example of listening Confluence is looking great. needs to keep teams on the same to
Slide 95: Investment levers
Investment levers Products Scaling Cloud Operational excellence
Slide 96: Cloud is gaining scale
Cloud is gaining scale 90%+ 100K+ 10M+ Of new customers Customers subscribe to at Total Cloud MAU choosing a Cloud least one Cloud product product each quarter
Slide 97: Cloud platform investments
Cloud platform investments SHARED COMPONENTS SHARED PLATFORM SERVICES SECURITY, PRIVACY & COMPLIANCE INFRASTRUCTURE & TOOLING
Slide 98: One user begets another; one customer begets another
PLATFORM IS INSTRUMENTAL TO OUR SUCCESS One user begets another; one customer begets another We land inside an organization through one team, and expand organically to other teams We expand in multiple ways: Additional users & teams Additional products & services Premium offerings Marketplace apps A
Slide 99: Better together
PLATFORM IS INSTRUMENTAL TO OUR SUCCESS Better together End users prefer Atlassian products because they work better together Product benefits Direct product benefits though new & differentiated features Cross-sell Directly grow MAU & revenue by helping users to discover new Atlassian products
Slide 100: Acquisitions: continued investment & scaling
Acquisitions: continued investment & scaling Trello Opsgenie Butler Jira Align
Slide 101: Vertigo: a massively transformational undertaking completed
Vertigo: A massively transformational undertaking completed December 2017
Slide 102: Realizing Vertigo advantages
Realizing Vertigo advantages Faster dev Better Grow with our Lower cost speed performance customers to serve More frequent deployments Spin up cloud presence Be able to break the 2000 More cost-efficient and access to AWS services where our customers are, for user limit and support larger hosting st
Slide 103: Scaling Cloud: our progress
SCALING CLOUD: PROOF POINTS Our progress
Slide 104: AWS regions globally provide better latency
6 AWS REGIONS GLOBALLY PROVIDE BETTER LATENCY TO CUSTOMERS Ireland Frankfurt US West US East Singapore Sydney
Slide 105: We are increasing user limits
SCALING TO LARGER CLOUD CUSTOMERS We are increasing user limits 2k -> 5k -> 10k early access program
Slide 106: Compliance certifications increase appeal of our products
Compliance certifications increase appeal of our products FY16 FY17 FY18 FY19 • DR tests • DR program • GDPR • Integrated ERM • Trello • PCI • SOX • BC/DR program • Maturing BC/DR/CM • SOC2 Type II • ERM • Jira/Confluence • Crisis Management • Jira/Confluence • ISO27001/18 • 508/VPAT • Opsgenie • Ji
Slide 107: Data encryption at rest
DATA ENCRYPTION AT REST ENABLED FOR NEW CUSTOMERS / IN-PROGRESS FOR EXISTING CUSTOMERS
Slide 108: Getting leverage from infrastructure investments
Getting leverage from infrastructure investments ~50% FLAT Growth in R&D headcount 230%+ Growth in infrastructure team size Growth in number of microservices Growth in R&D headcount and infrastructure team size from July 2017 to March 2019. Growth in microservices from July 2016 to February 2019.
Slide 109: Serving customers more efficiently
Serving customers more efficiently… -55% COST Dramatic reduction in cost to serve a Cloud user Cost to serve a user for Jira and Confluence Cloud from July 2017 to March 2019.
Slide 110: ...while improving performance for Confluence
…while improving performance for Confluence… +25% PERFORMANCE INDEX (APDEX) Significant improvement in response time Performance index (Apdex) for Confluence Cloud from July 2017 to March 2019. Performance index from xxxxx.
Slide 111: ...and improving performance for Jira
…and improving performance for Jira BACKLOGS LOAD SIDEBAR NAVIGATION BOARDS LOAD 80% 100% 50% Faster Faster Faster Performance statistics for Jira Cloud next gen. Performance index from xxxxx.
Slide 112: Investment levers
Investment levers Products Scaling Cloud Operational excellence
Slide 113: Operational excellence categories
Operational excellence categories People Practices
Slide 114: People: we attract global and remote talent
PEOPLE: WE ATTRACT GLOBAL AND REMOTE TALENT WITH A STRONG ENGINEERING BRAND Gdansk (partner site) SF NYC Ankara Austin Mountain View Bengaluru Remote Sydney
Slide 115: Strong values and a learning culture
Strong values and a learning culture Open Play, as a Build with Be the Don’t #@!% company, no team heart and change you the customer bullsh*t balance seek
Slide 116: Practices: operational excellence
PRACTICES: Security CONTINUOUSLY YOUR TEAM IMPROVING OPERATIONAL EXCELLENCE Quality Reliability Example: ServiceQuest - SAMPLE 20 15 10 5 0 Atlassian’s operational maturity model MEDIAN Compliance Service Design
Slide 117: Operational excellence: our progress
OPERATIONAL EXCELLENCE: PROOF POINTS Our progress
Slide 118: Increased stability while serving more customers
Increased stability while serving more customers 120 100 80 60 40 Issues 20 0 Jan 2017 Apr 2017 Jul 2017 Oct 2017 Jan 2018 Apr 2018 Jul 2018 Oct 2018 Jan 2019 Jira & Confluence - performance related support L1 ticket load Jira and Confluence performance related support L1 ticket load data from Janua
Slide 119: Increased dev speed while reducing defects
Increased dev speed while reducing defects 3X -90% -25% Deploys per day Deploy time Contact index We have increased We have decreased the This has resulted in a deployments / day time to deploy significant decrease in support tickets per user (Contact Index) Deploys per day growth is average deploym
Slide 120: Investment levers
Investment levers Products Scaling Cloud Operational excellence
Slide 121: Atlassian R&D has a broader impact on the business
ATLASSIAN R&D HAS A BROADER IMPACT ON THE BUSINESS DEPLOYMENT PRODUCTS THAT ROBUST MODELS SELL THEMSELVES MARKETPLACE Types of teams Sophistication of users SCALABLE SELF-SERVICE PLATFORM Range of customer size Product customization GO-TO-MARKET TOOLS GEOGRAPHIC DISTRIBUTION
Slide 122: R&D propelling Atlassian beyond $1B in revenue
R&D propelling Atlassian beyond $1B in revenue while growing free cash flow USD in millions REVENUE FREE CASH FLOW CUSTOMERS $1,197 140,000 $375 $881 105,000 $281 $627 70,000 $457 $184 35,000 $95 0 FY16 FY17 FY18 FY19E FY16 FY17 FY18 FY19E FY02 FY04 FY06 FY08 FY10 FY12 FY14 FY16 FY18 FY19 revenue es
Slide 123: R&D overview - takeaways
R&D overview - takeaways Products Scaling Cloud Operational excellence Maniacally focused on delivering Building the foundations of a Investing in people & practices to best-in-class products to our $10B+ revenue company scale effectively and efficiently customers
Slide 124: Financial Summary
Financial Summary JAM ES B EER | C FO
Slide 125: Scaling beyond $1B in revenue while growing cash flow
SCALING BEYOND $1B IN REVENUE WHILE GROWING CASH FLOW USD IN MILLIONS $1,197 REVENUE FREE CASH FLOW $375 G R $881 CA 8 % R $281 3 G CA $627 8 % 5 $457 $184 $95 FY16 FY17 FY18 FY19E FY16 FY17 FY18 FY19E FY19 revenue estimate represents the midpoint of the target range of $1,195M-$1,199M provided as o
Slide 126: A patient flywheel business model
A PATIENT FLYWHEEL BUSINESS MODEL Build great products Easy trial Pursue needs great huge product GREAT PRODUCT TAM × We deliver value before a LOW PRICING sale…and our initial ‘Starter’ × pricing is an exceptional value Open pricing, easy AUTOMATION Multiple LAND opps trial = HIGH VOLUME Sell onlin
Slide 127: Low CAC drives R&D
A PATIENT FLYWHEEL BUSINESS MODEL Build great products • Low touch drives low customer acquisition costs…that fuels our R&D Easy trial Pursue advantage needs great huge LOW CAC product TAM • Our high volume model and focus on easy and free initial access explains our DRIVES focus on user count Open
Slide 128: Our customer base continues to grow
OUR CUSTOMER BASE CONTINUES TO GROW 175,000 150,000 125,000 100,000 75,000 50,000 25,000 0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Customers “Starters”
Slide 129: ...and expand their Atlassian footprint over time
…AND EXPAND THEIR ATLASSIAN FOOTPRINT OVER TIME YEAR OF CUSTOMER FIRST PURCHASE FY2018 FY2016 FY2017 FY2014 FY2015 FY2012 FY2013 FY2010 FY2011 FY2008 FY2009 FY2006 FY2007 FY2004 FY2005 FY2002 FY2003 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2
Slide 130: Our business within a given quarter continues to be remarkably linear
100% 80% OUR BUSINESS % of Quarterly Sales 60% WITHIN A GIVEN QUARTER CONTINUES TO BE 40% REMARKABLY LINEAR 20% 0% 0 10 20 30 40 50 60 70 80 90 Days Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19
Slide 131: Revenue mix by product
REVENUE MIX BY PRODUCT All other products Jira Software + Confluence FY13 FY14 FY15 FY16 FY17 FY18
Slide 132: We expect recurring revenues to continue to grow
WE EXPECT RECURRING REVENUES TO CONTINUE TO GROW • New customers are choosing our Cloud offerings • Customers are scaling from Server to Data Center offerings • Additionally, revenue from the Atlassian Marketplace is growing and a majority of this revenue is recurring 84% 82% 80% 77% FY15 FY16 FY17
Slide 133: Our licensing and deployment models
OUR LICENSING AND DEPLOYMENT MODELS Licensing Model You Host Perpetual Subscription Server Data Center Deployment Model We Host Cloud
Slide 134: Deployment model economics: Jira Software
Deployment Jira Software model Example: revenue recognized for 500 users in Year 1 economics $24,800 Revenue Maintenance recognized revenue: $17,250 Server vs Cloud ratably $12,400 Revenue Subscription Revenue Perpetual recognized revenue ratably recognized license revenue: upfront at $12,400 time o
Slide 135: Deployment model economics: Jira Software
Deployment Jira Software model Example: cumulative revenue recognized for 500 users economics Year 2 $37,200 $34,500 Maintenance Year 1 Year 1: $12,400 Server vs Cloud $24,800 Maintenance Maintenance $17,250 Year 2: $12,400 Subscription Perpetual Subscription Perpetual license Perpetual license lice
Slide 136: Deployment model economics: Jira Software
Deployment Jira Software model Example: cumulative revenue recognized for 500 users economics Year 3 $51,750 $49,600 Year 2 Maintenance Server vs Cloud $37,200 Year 1 $34,500 Year 1 Maintenance Maintenance Year 1 Year 2 $24,800 Subscription Maintenance $17,250 Maintenance Subscription Maintenance Ye
Slide 137: Deployment model economics: Jira Software
Deployment Jira Software model Example: cumulative revenue recognized for 500 users economics Year 5 $86,250 $74,400 Year 3 Server vs Cloud $51,750 $49,600 Year 2 $37,200 $34,500 Year 1 $24,800 $17,250 Server Cloud Server Cloud Server Cloud Server Cloud Server maintenance Cloud annual subscription S
Slide 138: Deployment model economics: Jira Software
Deployment Jira Software model Example: cumulative revenue recognized for 2,000 users economics Year 2 $96,000 Year 1 Maintenance Server vs Maintenance $48,000 Subscription $45,600 Year 2: Subscription $12,400 Data Center revenue $30,400 Subscription Maintenance Perpetual revenue license Server Data
Slide 139: Deployment model economics: Jira Software
Deployment Jira Software model Example: cumulative revenue recognized for 2,000 users economics Year 2 $96,000 Our Data Center products illustrate our strategy of offering multiple Year 1 product editions in line Server vs with the needs of differentSubscription Maintenance customer $48,000 $45,600
Slide 140: Typical contract duration
Deployment Typical contract duration model economics SERVER DATA CENTER CLOUD LICENSING Maintenance Term licenses Subscriptions MODEL contracts ANNUAL TYPICAL ANNUAL ANNUAL DURATION MONTHLY Long-term Contract FY19 revenue: $1.2B deferred duration revenue at 12/31/18 was only $33M FY19 revenue estima
Slide 141: Pricing philosophy: high value, low price leader
Pricing We are uniquely positioned as the High value, Low price leader High Philosophy Price Methodlogy Low Going forward Low Perceived value High
Slide 142: What informs pricing changes
Pricing What informs pricing changes Internal knowledge Customer feedback Philosophy Experienced team Data analysis Qualitative Quantitative of specialists Methodology Systematic identification External validation Financial modeling & of pricing opportunities & quantification operational planning Go
Slide 143: Pricing changes
Pricing changes FY18 FY19 Server - all products Server - all products 10% 25% up to 500 users; INCREASE 15% above 500 users Cloud - most products Cloud - Jira Software/Core & Confluence ~10% above 100 users Data Center - all products Data Center - all products NO CHANGE Server Starters Server Starte
Slide 144: Pricing: going forward
Pricing Going forward • Continue to review pricing and packaging strategies routinely • Determine our pricing and packaging plans based on each customer Philosophy segments’ needs and the value we bring to address these needs • Analyze elasticity carefully and survey potential customer reaction • Su
Slide 145: Our differentiated model has led to...
OUR DIFFERENTIATED MODEL HAS LED TO… Non-IFRS S&M 15% as % of revenue At Tw W Se Sa Ze Ta Bo Sp N ew or la b rv le lu n x ili le de s kd ic s nk o Re si a fo en sk ay u an rc lic ow e 36% Non-IFRS R&D as % of revenue Sa Se Sp N Ze Bo Tw Ta W At ew or la bl rv le lu nd x ili s kd ea ic s n o es Re si
Slide 146: Focused on allocating resources to drive long-term returns
FOCUSED ON ALLOCATING RESOURCES TO DRIVE LONG-TERM RETURNS Disciplined and patient investment Stop investment where we do approach where we see sustainable not see attractive returns growth + attractive return potential • Hipchat • Platforms for future growth • Stride • Product editions • New organi
Slide 147: Industry leading revenue growth + free cash flow margin
INDUSTRY LEADING REVENUE GROWTH + FREE CASH FLOW MARGIN RULE OF 40 67% Revenue growth rate + FCF margin Based on implied FY19 revenue estimate at the midpoint of the target range of $1,195M-$1,199M provided as of January 17, 2019. Based on implied FY19 free cash flow estimate at the midpoint of the
Slide 148: Atlassian financial framework
Emphasize the growth of recurring revenues Atlassian Prioritize R&D investments to further scale our financial Cloud and Data Center businesses Continue to review pricing annually and systematically; framework remain the high value, low price leader Optimize R&D efficiency across deployment types an
Slide 149: Observations
Observations Early in a very large TAM Product investments solve our customers’ increasingly complex collaboration challenges and create sustainable advantage Cloud first Focused on R&D efficiency and effectiveness Ultra-efficient go-to-market model
Slide 150: Observations
Observations Strong presence in technical and non- technical teams IT offers significant growth Business model drives substantial revenue and free cash flow growth Skilled and disciplined management team with long-term focus
Slide 151: Q&A
Q&A Scott Farquhar, Co-Founder & Co-CEO Sri Viswanath, CTO Mike Cannon-Brookes, Co-Founder & Co-CEO James Beer, CFO Jay Simons, President Ian Lee, Investor Relations
Slide 152: Thank you!
A Thank you! fl
Slide 153: Appendix
Appendix
Slide 154: Reconciliation of IFRS to Non-IFRS
Reconciliation of IFRS to Non-IFRS: Research and development expense Q3’18 Q4’18 Q1’19 Q2’19 Total (LTM) % of Revenue Research and development $108,544 $111,046 $124,380 $131,364 $475,334 46% Less: Share-based payment 25,347 20,271 26,846 32,976 105,440 10 expense Less: Amortization of acquired — —
Slide 155: Reconciliation of IFRS to Non-IFRS
Reconciliation of IFRS to Non-IFRS: Net Cash Provided by Operating Activities Reconciled to Free Cash Flow FY2016 FY2017 FY2018 Net cash provided by operating activities $129,542 $199,381 $311,456 Less: Purchases of property and equipment 34,213 15,129 30,209 Free cash flow $95,329 $184,252 $281,247