Atlassian co-founders are $6b richer after earnings update

In a letter to shareholders, Mr Farquhar and Mr Cannon-Brookes reiterated their promise to investors to improve margins in the 2025 financial year, after sacking 500 staff, introducing tougher employee performance metrics and restructuring its engineering organisation.

“We aren’t afraid to make tough tradeoffs in support of durable growth that others shy away from, even when it may be uncomfortable in the short term,” the co-founders wrote.

Following the announcement, Atlassian’s shares climbed to $US213.70 in extended trading after closing at $169.65 in New York. Before Friday morning’s rally, Atlassian’s shares had risen 33 per cent so far this year, and remain 27 per cent lower than a year ago.

The company now has more than 250,000 customers, adding 20,000 customers during the fiscal year, although it said free users were taking longer to convert to paid accounts due to macroeconomic conditions.

During the period, Atlassian migrated millions of users to the cloud, helping lift cloud revenue to more than $US2 billion.

Earlier this year Atlassian also introduced new generative artificial intelligence features to its software which is only available through its cloud products, which is accelerating customers’ cloud migrations, the company said.

The virtual assistant, dubbed Atlassian Intelligence, draws on OpenAI’s latest advancements in large language models and Atlassian customers’ unique data.

“We can enhance generic AI answers with contextual information on a per-customer basis. The result is exceptionally useful output, tailored to each customer’s unique knowledge base and organisational structures,” the co-CEOs wrote.

Unlike Microsoft or GitLab, Atlassian has not set pricing for its AI features. Mr Cannon-Brookes said Atlassian was focused on developing the products and getting more customers to use them before thinking about monetisation.

“Our philosophy is to lead with R&D to build and then customer value before thinking about monetisation. I know there may be others in the industry who go the other way around,” Mr Cannon-Brookes said.

“Those [Atlassian AI] features are now in the hands of the order of thousands of customers, and we are working every single day to make sure that those features deliver customer value and actually used first.”

The company is forecasting a 25 to 30 per cent growth in its cloud revenue in FY24 and revenue between $US950 million and $US970 million in the first quarter.

Three years after moving to a remote-first model, Atlassian said over half of the people it hired in FY23 live more than two hours away from an office. The company said it had continued to benefit from wider tech layoffs, by picking up specialised talent.

On average, 67 per cent of Atlassian’s 10,000-strong global workforce comes to the office at least once a quarter.

The company also announced that its chief revenue officer, Cameron Deatsch will leave the business in December, after almost 11 years with Atlassian.