Atlassian to offensively price itself through the post-pandemic patch

Claims to be ‘unscathed’ last quarter, will keep hiring and maybe acquiring


Atlassian has re-iterated that its business model is “playing offense in stormy weather” and will use the coronavirus crisis to acquire customers with freebies and maybe make some opportunistic acquisitions.

The Australian collaboration organisation posted its Q3 results on Thursday, with revenue of $411.6 million representing a 33 percent year-over-year jump and a nice improvement on guidance of $295m to $399m revenue for the quarter. That translated into a loss of $19.9m and executive comment that the company emerged “unscathed” in the quarter ending March 30th.

Co-CEOs Scott Farquhar and Mike Cannon-Brookes popped out a letter to shareholders in which they were supremely upbeat, telling investors that Atlassian used $10 software to get through the 2009 financial crisis and plan to use cut-price code to get through this one.

The company has therefore released free cloud editions of its products and the co-CEOs told investors they “have the potential to significantly expand our user base, build new long-term relationships, fuel word-of-mouth advocates, and drive millions of user insights to improve our products. We’re happily making the trade-off again, choosing long-term gain over short-term ROI.”

“Over the coming months, we’ll continue to maintain hiring momentum and up-level our talent, just like we did in 2009. We’ll look for innovative ways to leverage our competitive advantages and lessons learned from the past. We believe the more we use tools like pricing and packaging and smart acquisitions, the more share we’ll gain in massive markets and the stronger our platform will be over the long-term.”

Investors were told cloud remains a big part of the company’s plans. 125,000 of 171,000 customers are already there and on-prem-to-cloud migrations jumped 60 percent across the last year of business.

Asked if April numbers looked soft, execs replied that performance appears steady and Atlassian’s customers are spread across enough sectors and business sizes that it thinks it can ride out a COVID-19-created slump. That 85 percent of revenue is recurring and increasing quantities come from subscriptions were also cited as suggesting stability, while strong customer acquisition figures across the quarter were welcomed as having the potential to strengthen future balance sheets.

Indeed, as other firms braced for impact, Atlassian said it hired more people in March 2020 than it had ever hired in any previous month.

The company has $2.1 billion in cash and short-term investments to play with and plenty of free cash flow, too.

But behind all that optimism lay some less-lovely numbers, specifically a full-year prediction revenue between $1.584bn to $1.599bn. That’s a little softer than the Revenue $1.59bn to $1.5bn predicted when the company last reported numbers. Investors didn’t like the look of that wobble and sent the company’s share price down around four percent. ®


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