Atlassian loses half its CEOs, but customers stay solid after Server products exit support

Discloses ongoing experiments with usage-based pricing

Atlassian co-founder and co-CEO Scott Farquhar has announced he will step down in August, leaving Mike Cannon-Brookes alone at the top of the Australian collaborationware company.

Both Co-CEOS pointed out that in the 23 years they’ve worked together, each has done different parts of the job at different times. Cannon-Brookes therefore won’t be taking on any responsibilities he hasn’t already handled before. The soon-to-be solo CEO also told investors “Atlassian has always been my number one professional priority and focus,” a likely signal that his interests in other ventures such as renewable energy won’t be a distraction once Atlassian lacks a backup boss.

Farquhar said he decided to depart after deciding to spend more time with his family and to “pursue some other passions I have, particularly philanthropy, investing, and to help grow and build the global technology industry.”

He will stay on as a board member and become a special advisor to the company, which on Thursday posted Q3 revenue of $1.2 billion and net income of $12.8 million, respectively a jump of 30 percent and a turnaround from a net loss of $209 million for the same quarter last year.

Cloud-hosted services accounted for $703 million of that revenue, but Atlassian’s datacenter products grew faster despite the company offering its most sophisticated services in the cloud. Execs attributed that strong performance of on-prem products to migrations brought on by the end of support for Atlassian Server products, which left customers the option to continue without support, migrate to datacenter products, or move to the Atlassian cloud.

On the company’s earnings call, execs said end of server support saw fewer customers consider or move to competitors than expected. Cannon-Brookes told investors that while some customers continue to use datacenter products, and therefore can’t use Atlassian’s cloud-only AI offerings, cloud migrations have become “a when, not an if.”

“I do not run into customers who say they will not go to the cloud,” Cannon-Brookes said. “I run into customers who say: ‘We can't go now because of this reason, or that reason, either internal reasons or Atlassian related reasons’.”

Atlassian will therefore enjoy the boost to datacenter revenues as customers migrate from Servers, but is more focused on building a product that encourages a new wave of migration from datacenter to cloud products.

The move to cloud may also bring a change to pricing strategies such as usage-based charging, instead of Atlassian’s current per-seat charges.

“We have historically almost all of our products on some sort of seat basis,” Farquhar told investors, noting that Atlassian has used some usage-based pricing for BitBucket pipelines.

“We are experimenting going forward with more usage-based,” he said, suggesting “We think that there is a world in the future where we do have some sort of usage-based pricing.”

No timeframe or scope for those changes were offered, with Farquhar promising only “more experimentation with that going forward.”

Investors and users were told that Atlassian sees AI as a big opportunity to increase revenue, with details of the tech that unlock users’ wallets to be unveiled at its Teams conference next week. ®

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