You fire 'em, we'll hire 'em: Atlassian sees tech layoffs as HR heaven
But investors aren't impressed by losses and unpleasant outlook
Atlassian sees the current round of layoffs and hiring freezes across the tech industry as an opportunity on which it hopes to capitalise – even as its own share price slumps.
"There's a lot of incredible people in the market who may only come on the market once a decade and we have an opportunity to pick those staff up now," co-founder and co-CEO Scott Farquhar told investors on the company's Q1 2023 earnings call.
Atlassian plans to "be really thoughtful around how many we hire and where we hire, but our experience is that we can come out really strongly on the other side by selectively picking up staff that other people are letting go," he added. Last quarter Atlassian added 989 staff, and it plans to keep hiring.
However, the company had a tough quarter on the balance sheet: revenue of $807.4 million represented a 31 percent year-on-year jump, but delivered a $34 million operating loss which was at least far better than the $411 million loss for Q1 2022. Atlassian posted a profit in Q4 2022.
Atlassian shrugged off the loss – mostly – preferring to focus on data about adoption of its products.
The company has an unusual routine at results time. Most public companies issue a press release and a few pages of numbers, then stage an earnings call that opens with a lengthy formal presentation before around 20 minutes of Q&A. Atlassian instead leads with a Shareholder letter, in which Farquhar and fellow co-CEO Mike Cannon-Brookes offer a folksy take on the company's affairs – often laden with Australian vernacular and emojis.
This quarter's letter states "Atlassian is not immune to the broader macroeconomic environment" and has observed its impact in a continued slower conversion rate of free instances to paid plans; plus a slower rate of growth in paid seats from existing customers as companies slowed their pace of hiring."
But shareholders were also told "We're not seeing any changes in our competitive position or in the inherent demand for our products. Looking across our customer base of 249,000+, there has been no overall decrease in usage or change in churn."
Shareholders from outside Australia may have trouble deciphering a section in which Farquhar and Cannon-Brooks wrote "With the end of support for Server products coming up in February 2024, we're putting in the Hard Yakka removing blockers and smoothing the way to the cloud."
"Hard Yakka" is an Australian vernacular term, purportedly borrowed from an indigenous language's word for work. It's most commonly associated with a popular workwear brand known for its range of gear aimed at manual laborers who value kit that can survive a sweaty day of exertion under the hot antipodean sun but still look good enough to wear out for a session soaking up oceans of amber fluid at night.
And there you were thinking that cloudy developers have it easy: clearly not at Atlassian, if they're doing Hard Yakka.
- Dead people could be designated authors of Atlassian Confluence docs and that can't be changed
- Critical hole in Atlassian Bitbucket allows any miscreant to hijack servers
- After eleven-year wait, Atlassian customers promised custom domains in 2023
- Atlassian smartens up security, licensing admin tools
But we digress: Farquhar said Atlassian was born in the dotcom crash, survived the great recession of 2008/09 and comes into the current crisis confident it knows how to escape a downturn in improved condition.
Judicious hiring is one aspect of that plan, but the co-CEOs and other officers all said Atlassian doesn't need to change much.
"We have the right products, the right leaders, and the right strategies in place to come out of this downturn in an even stronger position," the letter states. The transition from legacy server products to cloud is "rolling like thunder" and customers see the effort to migrate from on-prem product as freeing their people for more productive work.
The Smart Links integration offering introduced in September 2022 is apparently going to excite more customers to adopt Atlassian's cloudy products.
Not everything is going perfectly, of course. "We're not yet where we want to be on emissions or equitable representation among our staff, but we're excited to build on this progress as we believe that understanding the connections between people, customers, communities, and the planet is essential for building a 100-year company," the shareholder letter states.
Another problem is that the market thinks much of the above is not good news. Atlassian forecast Q2 revenue of between $835 million and $855 million, which is lower than predicted.
That shortfall saw the company's share price take a dive from $173.84 to $128.49 within half an hour, before rebounding to end the day at $139.70.
Some Hard Yakka clearly awaits to restore it to greater heights. ®