Atlassian (NASDAQ:TEAM) Q4 2018 Results Earnings Conference Call July 26, 2018 5:00 PM ET
Ian Lee - Head, IR
Mike Cannon-Brookes - Co-founder and CEO
Scott Farquhar - Co-founder and CEO
James Beer - CFO
Jay Simons - President
Matt Broome - Cowen and Company
Richard Davis - Canaccord
Rob Oliver - Baird
Heather Bellini - Goldman Sachs
Nikolay Beliov - Bank of America
Sanjit Singh - Morgan Stanley
Bhavan Suri - William Blair
John DiFucci - Jefferies
Michael Turits - Raymond James
Keith Bachman - BMO Capital Markets
Rishi Jaluria - D.A. Davidson
Jonathan Kees - Summit Insights Group
Pat Walravens - JMP Securities
Good afternoon, ladies and gentlemen. Thank you for joining Atlassian's Earnings Conference Call for the Fourth 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 website following this call.
I will now hand the call over to Ian Lee, Atlassian’s Head of Investor Relations.
Good afternoon, and welcome to Atlassian’s fourth 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, James Beer; and our President, Jay Simons.
Earlier today, we issued a press release and our shareholder letter with our financial results and commentary for our fourth quarter and full year fiscal 2018. These items are also posted on the Investor Relations section of Atlassian’s website at investors.atlassian.com. On our IR website, 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 any 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.
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.
In addition, during today’s call, we’ll 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 website.
One final note on our new revenue recognition reporting standard IFRS 15. The Q4 2018 and fiscal year 2018 results been provided today are based on a revenue recognition standard IAS 18. The financial targets we provided today for Q1 2019 and fiscal year 2019, are based on the new revenue recognition standard IFRS 15 which is equivalent to the revenue recognition standards ASC 606 which many of you are familiar with.
For compare, we have provided recast historical financial statements under the new standard IFRS 15 for full year, as well as fiscal 2017 and the full year and quarters of fiscal 2018 on our Investor Relations website.
I'll now turn the call over to Mike for his brief opening remarks before we move to Q&A.
Good afternoon. Thanks everyone for joining today.
Fiscal 2018 was another year of significant growth for Atlassian but financially and organizationally as we continued our mission to unleash the potential of every team. The fourth quarter of fiscal 2018 kept up the year with strong customer additions, revenue growth and free cash flow expansion. We added more than 6,600 net new customers, expanded revenue by 40% year-over-year and generated more than $64 million of free cash flow.
We ended the year with more than 125,000 customers, grew revenue by 41% year-over-year to $874 million and delivered approximately $281 million worth of free cash flow which equates to a free cash flow margin of 32%.
We passed several milestones during fiscal 2018. The migration of all cloud instances for Jira and Confluence users to our new AWS-based infrastructure, passing 100,000 cloud customers,, the one-year anniversary of the Trello acquisition, the launch of our new brand identity, $500 million in lifetime Atlassian marketplace sales, and 2.5 thousand employees worldwide including those in our new Bengaluru office.
Today as we look forward to fiscal 2019, we shared two updates to our strategy and product family in our shareholder letter. First we will be doubling down on supporting the needs of IT teams across companies of all sizes what we call the Fortune 5000.
Serving departments is an adjacent market we’ve been serving for years, yet we barely scratch the surface of the significant opportunity. This year you'll see us placing more emphasis on the IT market through our R&D investments, partnerships and marketing.
Second, we announced that we formed a strategic partnership with Slack. Atlassian currently has two offerings in the real-time communications market Stride and HipChat. As we completed our strategic planning coming into fiscal 2019, we concluded that although this market remains large the additional investment required to compete effectively is unlikely to generate returns that are comparable to those of our other products and the opportunities around us. We’ll be exiting our direct participation in the communication space with this partnership.
Slack has acquired the intellectual property for Stride and HipChat cloud both of which we will discontinue. We will also discontinue HipChat server and data center and will be working with Slack to provide a migration path for all our customers across the four products.
Going forward will be deepening the existing product integrations between Atlassian and Slack as well as building new ones and will also be working together on marketing, sales and channel enablement activities.
As part of our partnership we've made an equity investment in Slack to reinforce the long-term nature and significance of this relationship. We’ll be sharing more information on this and many more highlights at our Summit Event in Barcelona from September the 3 to September the 5. Scott and I look forward to talking with all our customers and partners in Spain.
And with that, I’ll pass the call back to the operator for Q&A.
[Operator Instructions] First question comes from Gregg Moskowitz with Cowen and Company. Please go ahead.
This is Matt Broome in for Greg. So congrats on a very good quarter and the announcements of a very interesting partnership with Slack. I've got two questions there, firstly do you think that the revenue synergies can be meaningful going forward. And secondly you mentioned that you expect upon Slack around marketing sales and channel enablement, what does that means to the model? And will that undo changes to your go-to-market structure?
Yes, I can take the first one Matt. I'm not expecting that - as we said in the last call the Stride would have been material to our 2019 revenues and so we’re not making any comments specifically today about the opportunities in terms of working with Slack around go-to-market opportunities. I’d just like to say they're embedded within the guide that we've issued for fiscal 2019.
This is Jim, I got a market question. No material changes at all to the model the way that we approach going to market with Slack. We already share many, many joint customers and that are using existing integrations between the two products. I think as we mentioned in the shareholder letter we’re excited both companies were excited about improving those integrations and building more integrating between two products and actually both companies have similar go-to-market model already. So we think that you know that for the most part we’ll do what we've been doing.
And just one last one, are you able to give any color on the terms of the equity investment?
No, we’re not disclosing that. It’s relatively modest investment but we’re not going beyond that.
The next question comes from Richard Davis with Canaccord. Please go ahead.
So one question you know we had some other excitement by the way good job on making the move. But anyways we had some excitement with GitHub right and so you know there's some interesting things going on there particularly in terms of your business. So kind of you guys had put some - whatever press release is out but can you talk to us about kind of how you see early days what you think is happening longer-term, what you think is happening. And I guess as an ancillary question. As my developer friends are all jazzed up about some company called or some business called [Getlab] which I guess is similar to that but do you have any point of view on those guys? Thanks.
Thanks Richard, Scott here in Sydney. Obviously we followed Microsoft acquiring GitHub. We believe that Microsoft acquired GitHub largely for GitHub's strength in the open source community. And the business rationale there is to get the open source developers to buy [indiscernible]. We don't believe that GitHub to compete with Atlassian or to compete with our enterprise hosting solutions. What we do with the bucket and the developers.
Now we always had to invest in R&D and we've always invested well with R&D with well priced products and that’s driven a bit in all of our products. So we don’t expect that to change. The GitHub sales has 1000 of customers 10,000 of customers including 60 are Fortune 100 and across put the bucket into software across our cloud and server environments we touch more than 30 million user accounts. So we believe we’re priced well competitively versus GitHub and Getlab and nothing really changes there with the acquisition by Microsoft.
The next question comes from Rob Oliver with Baird. Please go ahead.
I just wanted to drill down a little bit on the commentary around increasing emphasis on the IT market in 2019. It does seem like a logical adjacency and clearly you guys have really good sense for how your customers are already using those products. So I want to get sense may if you can give us a little bit more color as to what some of those areas might be where you feel like there might be a need. And then how you would think about that relative to internal development R&D or perhaps acquisition? Thank you, guys.
Thanks for the question Scott again. The IT market is really appealing for us it is very logical adjacency for us. As we think about what we've done historically it’s not just your service desk that says IT. Confluence has used very heavily in IT departments. IT departments build all the software if your software gets used there as IT departments build and run software that use status page to communicate with their customers uptime and reliability. And so we already hear a lot of things for IT today.
And what we’re findings is we’re get increasingly pooled by IT departments to do more for them. A few reasons for that, one is that there why many of our customers are attracted by our relatively while pricing and our great feature parity and feature we provide. Two, those IT departments build more software and software becomes the more important part of what IT teams do and natural strength play very well into that.
And so you'll see us invest more in the R&D side of things in our marketing and go-to-market and across product development and what we bring to market. So I think you’ll equate to see a word from us across a range of our products.
The next question comes from Heather Bellini with Goldman Sachs. Please go ahead.
I had two questions I wanted to start out with you gave really impressive gross profit growth forecast for next year I guess for the current fiscal year. So I wanted to touch vis-à-vis, can you talk to us a little bit about how you're getting that gross margin benefit as you’re shifting more to the cloud. Are there some aspects of the economics that we should be keeping in mind and have you - is there anything you’re talking about in terms of how we should be thinking about that trending over the course of the next few years.
And then the other question would be just with Slack taking those communication assets that you mentioned. Just wondering how do you think about what the next leg of growth is if we look out a couple years down the road for Atlassian and kind of what do you see as kind of taking the reins from obviously what's a great business with Confluence and core Jira? Thank you.
Heather it’s James, let me start off with addressing the gross profit question there. We in Q4 drove a non-IFRS gross margin of 85%. So this was as we expected higher than the sequential figure Q3 recall was back at 83% and that’s because in Q3 we were still going through the process of accelerated depreciation against the internal these central assets that have now being replaced now but we have converted our cloud hosting over to AWS. So we did expect the Q4 would drive a higher gross margin and indeed it did.
So coming off that, we're expecting FY 2019 to drive 85% to 86% in gross margins terms. So it's really more of a continuation of the full year effect if you will of getting passed that accelerated depreciation that particularly hit some of the quarters of last fiscal year.
Stepping back from that I think you're right as we continue to move more of our mix to the cloud. We've said in the past and I would confirm that we would expect that there would be something of a gradual very gradual decline in gross margin as cloud becomes a bigger proportion of the overall Atlassian revenue mix.
It’s Mike here I can take the second half of the question or your second question. Look I think in terms of the next leg of growth you need to look around the business to say that's sort of already happening right. We have a plethora of opportunities around the business in the broad collaboration space in the software teams and in the IT team spaces.
And you’ve seen us make a series of moves over the last few years in the marketplace in Trello and more recently Atlassian Access. So we have great confidence in the opportunities we have around us and continue to make I think very pragmatic and fiscally responsible decisions to chase those markets that we are going after.
The next question comes from Nikolay Beliov with Bank of America. Please go ahead.
Hi, thanks for taking my questions. I wanted to go back to the change in strategy refocusing on the IT market. Just wanted to get some color on the focus going forward on the non-IT space do you guys feel like you need a land project like Jira here to kind of like gain more traction. Are you pulling back investment in the non-IT areas and really just like doubling down on IT going forward?
Nikola, yes Mike I can take that. I am not sure I quite understand the questions. We’re going to be increasing our focus on IT for sure as we've explained in the shareholder letter. At the same time we do believe the other areas we’re in we’ll continue to invest.
Trello is clearly a land product in the old team collaboration area with tens of millions of users and continuing to grow really strongly we feel very excited about the prospect there as it gets closer and closer to the Atlassian family.
Confluence obviously does very well across all sorts of all team collaboration and that’s before you get to Jira core, and Jira service desk enabling workflow activities in a business, as well as obviously service driven teams of all kinds into service desk. So definitely not an area that we are pulling away from in any major way we will continue to invest there.
And James the question for you billings accelerated this quarter from 34% in Q3 to 41% this quarter. Maybe you can just go through the puts and takes here and would billings in fiscal year 2019 follow a more normalized trajectory versus fiscal year 2018?
Nikolay yes we were pleased with the Q4 billings results. Particularly we benefited from strong growth around our data center business around the cloud side particularly on the annual subscriptions to the cloud but also strong quarter on the service side with good upgrades and maintenance renewal performance as well.
So there is already nice mix across the board. In fiscal 2019 obviously in 2018 we discussed on our last call a certain amount of pull forward related activities that benefited the first half of fiscal 2018 and made things more challenging in Q3.
And that call forward was driven by the price increase activity that we rolled out particularly on the service side of the business back in October of last year. So nothing to specifically layout in terms of price initiatives for fiscal 2019 but safe to say that there is some presumption pricing activity embedded within our guide.
So we’ll obviously tell you more when we're ready to discuss the specifics there and it will really be the resulting customer behavior that will drive the billings profile that we would expect quarter-to-quarter as a result in fiscal 2019.
We just further observed of course that the specifics of any price increases are very important here in terms of the timing within a quarter that we would announce such an increase. And the amount of the advance warning that would go along between the announcement date and the effective date for any price increase.
So those will be the things that I would expect to drive the billings profile quarter-to-quarter somewhat in fiscal 2019 and we’ll keep you up-to-date on all of the specifics there as the year proceeds.
The next question comes from Sanjit Singh with Morgan Stanley. Please go ahead.
Thank you for taking the questions. I wanted to revisit guidance and make sure I understand some of the dynamics here. You guys came in above what sort of we were expecting and I think what the rest of us were expecting. And that to be clear that doesn’t include HipChat or Stride. Can you give a sense of what the contribution from HipChat and Stride was in fiscal year 2018.
Well let take that Sanjit. Perhaps I can just frame it more in terms of fiscal 2019 and that the announcements that we've made today around the communications space just provide a very small headwind to what otherwise would be in our plan for fiscal 2019 so just of the order of $1 million or so in revenue.
Understood, I appreciate that. And then I guess from a resource allocation standpoint you guys raise $1 billion there won’t have to be anymore efforts to support HipChat or Stride in terms of those extra resources , how are you guys thinking about deploying those recent anecdotes involved where new product innovation or M&A or was it just more resources in existing portfolio?
Look its Mike again. We’ve always maintained that we continue to demonstrate philosophically strong fiscal and operational discipline and a pragmatic the way we put our resources which is exactly why you see this decision.
We believe there are many, many opportunities around the business that we are investing in and as a result it's about choosing the best of those opportunities to put the resources that we have. We have absolutely world-class R&D and engineering team. We’re continue to grow it really strongly including as you see the new office in Bengaluru and we’ll continue the same way that we've been going for 17,18 years now in terms of investing continually. As we would say incrementally in the existing products that we have and also building out the new products that we continue to reduce in the market.
The next question comes from Bhavan Suri with William Blair. Please go ahead.
Thanks for taking my question and nice job on that reacceleration there. I guess I just wanted to first start off strategically if you think about communications you think about collaboration and you think about documents. You got compliments you got your service desk sort of workflow and obviously underlying all that is communications and I guess I just wanted understand a little more the thought process you guys obviously invested in Stride both HipChat and obviously okay we might see that the Slack or at least partner with Slack for that.
Just do you feel like that convergence of communications collaboration are something that could be softer partnership or do you feel like maybe communications a little more commoditize just sort of the thought process you guys went through this strategic view of sort of saying we’re not going to do we’re not going the communication piece of Stride and potentially partner with that just how you guys viewed that integrated environment because to me obviously it feels like it should be totally integrated I love to get thoughts on that?
I mean as I said it’s all about pragmatic decision-making and operational discipline for us. As we went into our FY 2019 planning we concluded that the communications space remains very large but that the level of investment required to compete wasn’t likely to generate the same returns as all of the other opportunities that we have around the business. And so it's about choosing where we’re going to invest and at the same time we believe we can effectively benefit from the market through this long-term partnership rather than through direct product investment.
We also think that net-net that's the best thing for the customers in the long-term across the products that we’re going to build and the products that will be served through the partnership and by continuing to build deeper and deeper integrations between Slack and the Atlassian family of products that's the way we believe will be the best for the future of the business.
And then I’ll just quicker to Jira service desk I guess just as you look at that business I love to understand sort of where you’re seeing growth and is your service desk serving a sort of a landing point for new customers that may not be subscribed to other product. So is it starting to be sort of standalone initial sale and sort of love to get some color of growth existing versus new? Thank you.
It’s Scott here. Jira service desk as we said before many times its one of our faster growing products in the Atlassian's suite. It does serve a couple different audiences it serves some customers that want to service their customers externally so somewhere our customers used it for external helpdesk. But many of them use it internally as both serve and IT helpdesk and also we're seeing increasingly for people to use it for other workflow applications inside the business and not just typical IT helpdesk but our HR team provides service to their customers.
The legal team provide service to their customers we see those use cases as well. Originally we sold very heavily into existing base. You can imagine we have realized customer base and so that’s the place we start with. We are seeing that more sale beyond the customer base and as we turn our hands more to IT, we’ll be looking to win more customers outside of their existing customer base with not only Jira services desk but all the other products I mentioned earlier that several IT customers.
The next question comes from John DiFucci with Jefferies. Please go ahead.
I had two questions about the Slack partnership so when I think of Atlassian customer satisfaction or customer delight it's always been an important tenant in the business of Atlassian. The good news is Slack has a similar approach regarding its customers but how involved are you going to be in this transition of customers of four products to Slack products I guess I don't know maybe it seems important to me?
John it’s Mike here. Yes, look customer satisfaction is incredibly important to both companies. We’ve already spend a lot of time working with them on how we’re going to manage that and our teams will continue to work on it going forward. It’s obviously of critical importance that customers are able to continue their communications infrastructure being up and running and at the same time migrate the data migrate their history their file that have shared et cetera across if they choose to migrate services.
So that’s something we’ll be working together with them on obviously owning the customer experience if you like on both ends of that transition enables us to do a really good job I believe for the customer going forward.
Thanks Mike that's good to hear and then and James I think this is one is for you. You said you only could see $1 million or so of headwind in revenue in your guide based on this. But your discontinuing four products I guess I mean you’re obviously not going give us details of this but can you tell us is there a revenue share or something because in understanding those products had more than $1 million in revenue obviously right. So some something more if you can give us yeah?
Yes what I would add John is really further to what Mike saying we’re going be very involved in the process of migrating our customers the ones that wish to move over to Slack. And so that process will drive some revenue for us and that will tend to offset some of the revenue that we would otherwise have been expecting to drive out of products like Stride. So the net effect is that small million dollars type headwind in fiscal 2019 versus what we would otherwise have planned.
The next question comes from Michael Turits with Raymond James. Please go ahead.
I wanted to come back regarding the IT investment strategy and I think double down I think Rob and Nikola asked these questions. But can you try to be more specific on what you'll be doing in terms of that incremental IT investment product and around go to market. And also I guess this was Nikola are we clear there is no change even in the near term but it seems like a prioritization of IT versus non-IT strategy?
Michael it’s Scott here. I love to give you all the nitty-gritty data what we’re going to do but we don’t sort of pre-announce product changes and other things before we get them in the hands of our customers. And so I can't get into the exact details apart from just saying as a broad company level initiative where we're looking to focus is IT and we can largely because that our customer base are asking us for that. If you think about the changes in IT - the space is lot more on agile workflows and IT being much more responsive. And then what are the IT departments are also having service driven enterprises both services is in providing services internally.
But they’re also looking to run services in the cloud. And so one of those are practices that IT is adopting really come out of the software world and a lot of things that we have a long history of providing product in. And obviously the extensions as we work with our customers on the things - on the gaps that we have in our product portfolio today.
So I can’t go in great detail apart from this is sort of company level initiative that will you'll see go to market. You will see our pricing and packaging, you'll see in products that we bring to market over the coming years.
The product question was just to make it clear that is this sort of is this definitely not a prioritization in the near term of IT versus non-IT because obviously moving outside of IT for teams of all sorts has been a big part of the company mission?
Look Michael one of the reasons we’ve made the strategic partnership with Slack announced between us today is the - all the area of the business are having such opportunity that we need. We’ve got plenty of places to invest and we have investments across non-IT which Mike talked about earlier. Then we have investments in IT obviously as a result of increased focus there we are always spending more of our focus on IT than we had historically so you'll see more of that going forward.
The next question comes from Keith Bachman with BMO Capital Markets. Please go ahead. Once again that's Keith Bachman with BMO Capital Markets. Your line is open.
I wanted to broaden out a question that was asked earlier I understand why you migrate the properties that you have to Slack it's still not clear to me once those are migrated what are you getting from the partnership. In other words what is Slack going to give you is it a revenue share you're already doing some marketing with them around some of your other property. So once but the transition is completed what is the nature of the partnership with Slack?
Sure Keith look we’re not disclosing the individual details of the partnership at a financial level obviously other than the high level that we’ve talked about the timing flows in the investment. I do think we are getting a lot from a closer collaboration with them. We're collaboration company and this by partnership you can see as an example of a collaboration at a company to company level between best-of-breed partners and best-of-breed companies in their own areas for the benefit of our collective customers.
Our focus is going to continue to be on building the best products that we can and the R&D centric model that we have. And so I think you’ll continue to see us doing that. Obviously we’re going to build deeper integrations, obviously we’re going to continue to make sure that our customers can use the product family together with Slack communications platform as efficiently and easily as possible.
Then my follow-up perhaps in the context of the guidance going forward, your subscription revenue this quarter was once again incredibly strong. As you think about the context of the guidance you provided, can you give us any puts and takes on how we should think about subscription revenue?
Well I would just observe both our cloud products and the data center products the part of - behind the firewall business that are both accounted for in subscription revenue. Both continue to grow very nicely and we’re very pleased by the recent performance and for the plan that we put together for the coming fiscal year. So that's an area that would certainly be looking for a significant strength in the overall accounts.
We will of course be lapping last year's benefit on the cloud side from per user pricing. So we’ll see some benefits in Q1 and then that process will have fully lapped out. And of course recall also that Q4 just finished that was the first quarter, the full quarter where we had lacked the Trello acquisition from a year or so ago.
[Operator Instructions] The next question comes from Rishi Jaluria with D.A. Davidson. Please go ahead.
Thanks for taking my questions, nice to see some continued momentum in the business. Two questions, I mean first wanted to circle back and talk about GitHub. For some of the folks in the valley I spoke into there has been some negative pushback to the acquisition that some developers are fearing some long-term vendor lock in with Microsoft and then always talking about lots of neutrality. Has there been kind of an ability to capitalize on this with your Bitbucket and may be a strategy to continue to grab these types of customers that turn off hearing a big acquisition like that.
And then on the second question just around Trello acquisition. About a year old now I can you just give us a sense to how it has been trending relative to your initial expectations. Thanks
It’s Scott here. When we - the GitHub acquisition was announced we did see a sort of more one-time spike from the sign-ups on our Bitbucket cloud instance. But I think there is a little uncertainty it start and then people had to take a wait and see approach.
We do believe that what we’ve seen over the last couple of months since that announcement is sort of nothing materially changed in our customer acquisition. But I expect to see that play out overtime one way or another, always - something happening on day one. And would Mike answer the Trello question.
Look we’ve included Trello obviously going forward and in the past as we mentioned beforehand a year ago I suppose. Trello was around a $20 million of the revenue number for FY 2018. And we were materially over that, I think you could say for the year. So we maintained strong bullishness on Trello as an acquisition and its ability to move all teams forward in a way that they communicate and collaborate as a part of the Atlassian family.
We’re all internally really happy with Trello like the culture fit has been fantastic, we’ve narrowed a great management team it really fits like part of Atlassian like we were separated at birth and as Mike said financial performance is being stronger than we had - than we put in our forecast so we’re really happy with that.
And the next question comes from Jonathan Kees with Summit Insights Group. Please go ahead.
Thanks for taking my questions and congrats on the quarter. I just have a couple specific question actually. This partnership with Slack is it safe to assume that they’re going to be your partner of preference in terms of communications platform. You have a couple of partners communication platform in your Atlassian marketplace like  which also has like a Slack type of service and obviously [indiscernible].
Is this just going to be more of a preference with Slack as the partner of choice? And then second I wanted to ask more of I guess lesser mentioned product status page, you're still meeting expectations and is there - if you can give any qualitative script in terms of the monetization for that and for fiscal 2019 that will be great? Thanks.
Sure Jonathan I take the first one, I’ll leave for Scott to take the second one. Look the partnership is obviously made between Atlassian and Slack and we’ll continue to build deeper and deeper integrations between the two products.
At the same time, we do have our marketplace and we do have integrations with lots of other communication vendors through the marketplace and through many other channels. We've always maintained a very open perspective when it comes to the marketplace in terms of APIs that are available and other things.
So I think you’ll continue to see other vendors obviously building on the marketplace to serve their customers need but from our perspective we’re focused on building the best integrations for people that you Slack as a communications’ platform and they use the Atlassian family products across those integrations.
And you can see that the marketplace continues to power along strongly right as does the broad strength of the economy that exists around Atlassian in partners, vendors and in all the people but the work around the company and we’re very happy to have them all.
On Statuspage just reminding everyone out there, Statuspage is a small company we acquired I think about year and a half ago. And they provide a way of communicating our uptime or downtime the status of key services to customers. And so companies around the world that are cloud companies use Statuspage to communicate with their customers when their service is up or down.
And that product is going really well, its fits our suite really well in terms of you think about companies moving to the cloud every company is going to need to communicate their availability and uptime to their customers. And so we see an order demand for Statuspage. Now we can’t breakout that individually unfortunately, but it's been a strong acquisition for us.
The next question comes from Pat Walravens with JMP Securities. Please go ahead.
Congratulations on the execution this quarter. Scott and Mike obviously you guys have been remarkably successful some things that work occasionally some things don't. I’m just wondering what lessons if any you feel like you may have – you’ve take taken away from the HipChat Stride experience?
Sure Pat I can take that. Look we have a philosophy about how we approach enterprise software and that comes with a very strong model that you’re well aware of in terms of a high level of R&D investment, a high level of customer focus and delivery. And then a very friction free high-volume approach to the market in terms of sales and marketing.
So that that model comes with certain investments. It requires a lot of discipline, it requires a lot of patience and it requires making high decisions to start things and obviously to move away from things as they go.
You'll see us continue to stick to that model and those philosophies as we move forward as we have for 17 or 18 years now. And we do believe that philosophy in the model ends with the results that you’ve seen and you can feel free to judge us on those.
And if I could follow-up just a little bit, what is it about communications what are the investments that we’re going to be particularly difficult is it around the sales?
Look it's just as a space. As we said the investments required to continue to compete effectively with all of the players in the market. We didn't deemed to be as worthwhile away to play in a space as a partnership especially compared with the other opportunities that we have around the business. We are spoiled for opportunity in the spaces that we’re in, and we’re continuing to invest in those using the same discipline model that we've had in terms of approaching enterprise software.
Okay, seeing no further questions in the queue. This concludes our question-and-answer session. I would like to turn the conference back over to the management team for any closing remarks.
I just want to thanks everyone for joining our call today. We appreciate your time and look forward to keeping you updated on our further progress. Thank you everyone.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.