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Sydney-headquartered productivity software group Atlassian (NASDAQ: TEAM) continues to record double-digit revenue growth as subscriptions grow within its 300,000-strong customer base, with total sales reaching close to US$1.19 billion ($1.8 billion) in the September quarter.
The US$49 billion behemoth's flagship software development and collaboration tool Jira was traditionally more IT-centric in terms of its target market for users, but now it has become more embedded across organisations in numerous departments, which helped contribute to a 33 per cent lift in subscription revenue to US$1.13 billion.
Total revenue growth was 21 per cent, which chief financial officer (CFO) Joe Binz attributed to growth in Atlassian's cloud and data centre offerings.
By geography, the Americas is the largest source of revenue at US$584.5 million but Europe, Middle East and Africa (EMEA) is growing at the fastest rate of 24 per cent as revenue in the region gets tantalisingly close to the US$500 million mark.
In a letter to shareholders, co-founder and CEO Mike Cannon-Brookes noted that today roughly 50 per cent of Jira users are from business teams, illustrating how the portfolio of Atlassian's products can bring all types of teams together to solve complex problems.
"I’ve met with dozens of CEOs and CIOs at our largest customers over the past few months and listened to the challenges they face," Cannon-Brookes said.
"All are increasingly looking to technology as a way to drive their businesses forward and create a source of competitive differentiation.
"Digital transformation and AI adoption aren’t just limited to technology teams; they impact every team. Our platform spans software, IT, and business teams, making Atlassian uniquely positioned to bring these teams together through our differentiated System of Work."
These trends have not yet brought Atlassian into profitable territory as it reported a net loss of US$123.8 million for the quarter, although this was an improvement on an almost US$197 million loss in the fourth quarter.
Atlassian's operating loss halved on the previous quarter to US$32 million, but the result was worse year-on-year as gross margins were flat and operating expenses rose 22 per cent due to higher employment costs.
Operating cash flow of US$80 million actually represented a 52 per cent decline year-on-year, driven by higher annual employee bonus payouts, partially offset by stronger collections. Meanwhile, R&D spending was up by more than a quarter year-on-year, and marketing and sales spend rose by around 6 per cent.
In other news at Atlassian, the group has announced a new share repurchase program of up to US$1.5 billion that will start once a current US$1 billion program is completed.
Cannon-Brookes also revealed Atlassian would have a new chief revenue officer, Brian Duffy, starting on 1 January 2025.
Duffy has 18 years of experience at SAP and his most recent role there was president of cloud - a role in which he launched built and scaled ‘RISE with SAP,’ a strategic initiative to move customers to the cloud. Within two years he took RISE from being an initiative to multi-billion dollar business.
Following his time at SAP, in May 2023 Duffy became CEO of SoftwareOne where he set the company up for its next phase of growth and deepened relationships with customers and partners.
"Brian’s experience in sales transformations is vast with nearly two decades in the technology industry," says Cannon-Brookes.
"Beyond the leadership Brian will bring in sales and customer success, his public company CEO experience will bring unique depth and breadth to our amazing exec team.
"Brian will officially join us on January 1, 2025. We can’t wait to have him join the team."
Atlassian shares were down 1 per cent at US$188.54 when the market closed, but indicative pricing shows they could rise substantially when the market reopens. In the year to date, TEAM shares are down 16.82 per cent since 2 January, although they have the potential to recover to that level if current bidding interest continues.
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