Ian Lee - Head, IR Scott Farquhar - Co-Founder & CEO Mike Cannon-Brookes - Co-Founder & CEO Murray Demo - CFO Jay Simons - President.

Matt Broome - Cowen & Company Michael Turits - Raymond James John DiFucci - Jefferies Heather Bellini - Goldman Sachs Richard Davis - Canaccord Keith Bachman - Bank of Montreal Sanjit Singh - Morgan Stanley Bhavan Suri - William Blair George Iwanyc - Oppenheimer Jonathan Kees - Summit Redstone.

Good day, ladies and gentlemen. Thank you for joining Atlassian's earnings conference call for the First Quarter of Fiscal Year 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.

[Operator Instructions] I will now hand the call over to Ian Lee, Atlassian's Head of Investor Relations..

Good afternoon, and welcome to Atlassian's First 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, Murray Demo; and our President, Jay Simons.

Earlier today, we issued a press release and our shareholder letter with our financial results and commentary for our first quarter fiscal year 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 our 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. In addition, during today's call, we will 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 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 web Site.

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 a section titled Risk Factors in our most recent Forms 20-F and 6-K.

I will now turn the call over to Scott for his brief opening remarks before we move to Q&A..

Good afternoon. Thanks everyone for joining today. We had a great start to fiscal 2018. This quarter we grew revenue 42% year-over-year and generated over $62 million of free cash flow. We also added over 4,200 net new customers during the quarter and now have more than a 107,700 customers in total.

So Mike and I to see out of the quarter was hosting our largest ever user conference at Atlassian Summit. We had approximately 3,600 customers, partners and Atlassian’s come together in family day California. It’s messaging to meet with our customers and hearing how they are using our products to unleash the full potential of their teams.

And by the way every year by the store is contains of every type and size using our products and license that we never imagine when we started Atlassian 15 years ago. We also had great representation from the Atlassian user group members and leaders; we came from countries as far as field as Kenya, Japan, Russia and Chile.

Atlassian user groups are passion and community for the users they gather together in an event in their local cities pulling out network, and they play a key role in supporting the cloud environment products and the word announced model that fuels our growth.

We shared some exciting product developments at summit, a number of which we highlighted in our shareholder letter. One of the most notable announcements was I wanted to strive and your team communication product built from the ground up to help teams to in conversation into action.

Trello is behind just chat offering best-in-class team group messaging features the real time meetings including audio and video conferencing and screen sharing and collaboration tools to recording actions and decisions across teams. It was also great to see many of you in person at our first investor and financial analyst session at summit.

Mike, Jay, Murray three and I appreciate the chance to share more about our business and to challenge you directly. With that, I will turn the call over to the operator for Q&A..

[Operator Instructions] The first question comes from Gregg Moskowitz with Cowen & Company. Please go ahead..

Hi. This is actually Matt.

Yes sorry this is Matt for Greg, I think he is not able to get to the call right now, but how big is the development effort was behind the Atlassian team work platform and what do you think this means to your cross selling prospects over time?.

Scott here thanks Matt. With the Atlassian development platform is a single platform we’re building our cloud products to unify the way our products work.

We can feel and a lot of, so the wider unit of products we’ve got a system of elements which are things and ways of working inside our products such as tasks and decisions that are falling through all of that products.

And that development effort has been going on for the best part of the year and we are really excited about the way it differentiates our products against competitors in the marketplace, but also provides a unified way of working across all of that products and which will help our cross sell opportunities.

Now the first role is that probably best example of inside Stride on new products that we launched and that’s had great customer reaction not only for Stride but also is to comment with platform..

Okay great.

And I guess have you begun to see any early traction with the Atlassian Stack?.

Hey Matt this is Jay. Stack is relatively straightforward packaging of multiple datacenter products into a single offering.

We’ve seen, as we’ve commented earlier and certainly this quarter great attraction from the customer base towards datacenter and for customers that look to standardize expand the multiple parts of their business across software, IT and business teams and they want to upgrade to all versions of datacenter Stack is a really simple purchase vehicle.

So, I think we’re pleased with the adoption so far..

Okay great, thanks very much..

The next question comes from Michael Turits with Raymond James. Please go ahead..

Hi guys, obviously really strong quarter. Maybe if you could talk about where the upside really came in the quarter and also specially is really strong on the billing side.

So, why did we see the big that disproportionately very positive upside to the deferred in the billings relative to revenue?.

Hey Michael. This is Murray. We had, this is further our eight quarter as a public company this was our strongest quarter sort of you know aggregate demand. We really saw a lot in our enterprise business, here by datacenter and server just sort of strong adoption across the board and we were just very pleased with the results along those lines.

We also saw particular strength in marketplace this quarter as well..

Yes. I saw that in the other lines, I was actually going to ask you about that.

And then I was embedded my question there was, question about what billings upside was even stronger than revenue obviously is more forward looking, but was it a bigger shift towards description or there was any benefit from duration and they are able to give you that particularly big boost into deferred side?.

Yes.

Again, along the same lines the subscription business, our datacenter being part of that, that’s a subscription go-to-market model for our customers, again for the larger organizations that we are seeing is tend of expanding beyond software and IT teams with the larger enterprise adoption and a lot of that is in datacenter which is a subscription offering.

So you will see that go to deferred revenue and then we’ll recognize the revenue over time..

If I can squeeze one more little one in, I appreciate it.

I just on tax rate, I think last quarter you actually looked at, well it looked like it was going to be higher tax rate we had expected and now we are in the shareholder letter its mentioned as the tax rate going down in 2018 relative to 2017, so maybe if you could help us out with that and if you could tell us what tax rate we got to use in and what the change is?.

We don’t guide it specifically what the tax rate under IFRS is very difficult. From a IFRS standpoint, we see it going down from 2017 to 2018, on a non-IFRS basis it’s actually going the other way and the target we provided on our July earnings call was embedded in the earnings per share guidance. We see no change to that.

Now under GAAP which everybody is sort of used to, you get us move the tax rate over the course of they under IFRS we can’t do that and because of the shift, the income in deductions in different jurisdictions around the world with different tax rates and things like that.

This particular quarter the shift working away where it was beneficial to the non-IFRS tax rate. But for the full year as we think about it as its built into the EPS target it’s going to swing back the other way and there is no change to the full year sort of embedded non-IFRS tax rate for fiscal 2018.

It’s a much more complicated tax rate process under GAAP..

Okay. Thanks a lot..

The next question comes from John DiFucci with Jefferies. Please go ahead..

Thank you. I have a question on the longer term annual price increase that you planned it to and still and I know it’s still early for this one and but it’s more a question around the philosophy here, because we’re getting more questions around that its obviously, you increase prices if sales keep up that’s a good thing.

But your mission is always been to deliver technologies to the masses of corporations and users that’s easy to consume and easy to use and part of that being easy to consume is price.

So can you just maybe talk to us a little bit about the, I realized in all of our work that customers get a ton of value out of their Atlassian products and especially relative to the competition.

But directionally how does an annual price increase in server and cloud products drive with your mission to deliver this to the, get everybody to use it?.

Hey John, so good question on the pricing, obviously this is one that’s getting a lot of attention. First of all we are not going to change our sort of, low price high value of customers. We are not that strategy, absolutely we are not changing. This is more just, really kind of tweaks on the margin in terms of the price increases.

Now our cost, obviously are going up every year, every single software vendor that we purchased from, they have a price increase which they could pass on to us.

And we believe that’s a better approach than what we’ve done in the past, so we may go a few years and we hit them with the, customer with the price increase its sales of their own planning, we just feel this is a much better way to go with it.

And we’ll make those decisions on what we do with price, each year as we go forward, if we are in recessionary environment might be that, but we don’t have a price increase that year other years we may have something more.

So it will be something that we’ll just kind of look at on year-to-year basis, but we are absolutely not going to change the value proposition that we give to customers which is incredible products, tremendous value at low prices, and our plan is not to do anything to disrupt that go-to-market model..

Great. That’s very clear Murray.

And if I might just a quick follow-up to Mike’s question or just to relate it anyway, very strong cash flow and by the results all across the board are really strong, but the cash from that is pretty impressive and I realize that gave some of the reasons as to why it was strong, but other than strong business momentum is there any other, are there any other reasons, I don’t see any, but are there any other reasons we should be aware of that we’re unique this quarter that we would be perhaps we shouldn’t expect going forward?.

Yes. Typically, John you know in our first quarter is the quarter that, we payout bonuses to our employees. So, we’ve been recurring it all year and then the payout is in our first quarter. So it tends to be a seasonally weak quarter and yet here we are, think it’s our second strongest free cash flow quarter that we had as a public company.

A few things that went into that, number one is that you can see the deferred revenue strong, you could see your calculated bookings, so that had a big part to do with it. We also on the side of the working capital side on payable just timing we’re not managing it.

We did have a little higher payables at the end of the quarter that work against us in Q2. So if you kind of think through the what we don’t guide quarterly free cash flow we’ll have it kind of go a little bit the other way on payables as you make some payments in the second quarter.

We had higher profits you can see that, with the addition of revenue that we had this quarter that it flowed through the operating margins.

So the leverage in the model, I think that had something to do with it and then for the full year, targeting $25 million to $30 million for CapEx, but some of the CapEx in Q1 kind of moved out into subsequent quarter. So all of that factored in, but it was really the strong, sort of deferred revenue was the primary driver of the free cash flow..

Which is reflective of the business momentum, really nice shaft guys. Thank you..

Thank you..

The next question comes from Heather Bellini from Goldman Sachs. Please go ahead..

Hi.

Can you hear me?.

Yes..

Yes..

Hello. Oh, great sorry about that.

Sorry about that, yes thanks for taking the question, I just wanted to ask about JIRA Service Desk for a second, wanted to ask about the momentum that you are seeing in the business if you could just kind of give us an update given it’s been a little bit from the introduction just wanted to see how that’s progressing.

And also just I know you introduced to the white label version, I think over the last three months or so, I was just wondering if you could share with us kind of how the initial uptick of that has been and kind of what drove you to offer that as an option? Thanks..

Hey Heather this is Jay. Firstly it’s been great momentum for JIRA Service Desk continues to be great, I mean we’re pleased with the traction that we’re seeing it, we’ve disclosed previously 25,000 organizations on JIRA Service Desk.

There continued to be great demand for the two dimensions that it serves, both customers and seek to improve the way that their service teams from IT to marketing better serve internal constituents and customers and then also for customers they want to better enable the service and support relationship with their customers especially where that is connected pretty deeply to JIRA software and kind of the internal technology teams are building some technology to their external customers are using.

So it’s great, I think you know we at summit for folks that were there, I think you would have continued to see a lot of excitement and interest around your service desk and maybe, just to see the dimensionality of it go back through the online sessions and you’ll see A B and B talk about how they are building in service culture with JIRA Service Desk, you will see Samsung talk about their deeper journey around ITIL and internal service management the trade desk talking about better client engagement through JIRA Service Desk.

So, it’s great, in terms of the white label question.

I was oh, right I’m sorry, we don’t call it that, yes its I think that continues to support the kind of external use case around service and support and it was widely requested feature part of the roadmap is thus inventing new and different ways for customer engaged clients, part of that is investing things that they need to do it more effectively, I mean that sort of a clear version of lot, in addition it’s just helping them brand the experience so it’s part of their interface to their customers.

We also offered localization just, because we are customer that has, we are coming as customers in hundreds of different countries and so, in addition to branding, real local language is a dimension that I think improve the relationship with between our customers and their customers..

Great, thank you very much..

The next question comes from Richard Davis with Canaccord. Please go ahead..

Hey thanks very much. So when we talk to our investors by the way guys that they love the selling model in the high R&D focus.

The only question that I regularly get is that they would love a little bit of color and kind of where the R&D is going, for example I saw you guys introduce some new Bitbucket and bamboo versions stock into some dev team guys and they are through about the scale, so I guess basically the question is, could you talk at least to the high level, how you would think about allocating developer effort between scale, between new functions, and then even I’ve talked to some guys recently about they’re talking about trying to put a layer security on top of the code at resting and motion, so just a little bit of color there would be super, helpful? Thanks..

Rich, its Scott here. Our R&D is a, it’s a broad area, as you think about our products that we sell on the quality of our products not the quality of our sales people and so we are going to continue to invest strongly in our R&D to make sure that we have market leading products in all of the segments that we operate in.

As I mentioned in our Investor Day, we’ve had some of that effort over the last year has been re-platforming in cloud to set it up for the next level of growth and to have ability to serve larger customers in the cloud, sort of its been some energy there where you still improving our mobile products, there is a lot of growth we see there in terms of making sure our products line across mobile.

And you’ve seen us continuing in investing in all the products we have with the that’s built from scratch or an acquisition we continue to invest in R&D to make sure those products are best-in-class.

At summit we launched our team platform as I mentioned earlier and that team platform is a standard way of working across all of that products and you probably thought most accurately in launch of Stride, but a lot of things we’re doing there rolling through all of that products which we believe gives us an advantage on the individual product basis this is competitive.

But also advantage in cross sell and allowing us to more seamlessly move our customers across our entire products..

Got it. So, multiple fronts in a good way. Thank you..

The next question comes from Keith Bachman with BMO Capital Markets. Please go ahead..

Hi good evening gentlemen, thanks for taking the question. The first is I wanted to follow DiFucci and go back to pricing for a second.

In the original context was saw it that pricing would be help of a low single digits, I think in your shareholder letter you reiterated that you, our check that your trade show and otherwise would suggest, we haven’t found any customers that we’re going to that push back at all on the price increases.

And so it just it seems like there would be more health in low single digits, but what are we missing from that?.

Keith, so far the expectations, our expectations going into it in terms of the customer reaction is pretty been on track, a lot of the price increases that we’re putting forward this year are going into like subscription type models, you are not going to see the flow through all sort of recognized this year, it’s going to go into deferred revenue and come off over time.

We have some customers that have decided, they might have had more than 10 users in the cloud and then they downgrade the 10 user and usually get the start price and save money that way or they move from monthly to annual.

So there are some customers that are making some decisions around that, so I’m going to go ahead and, renew my maintenance and advance of my maintenance that the price increase on maintenance.

So, you get a little, we get a little movement forward on our bookings, kind of saying but we don’t get the revenue, because we are trying to get it ahead of the price increase.

All of these things went into sorting through what it meant for our revenue targets for the year and so, everything at this point is on track and everything is factored into the guidance that we’ve got for this year of 841 to 847.

I would also just add a little bit on that is that, as you kind of look at the model over the course of the year as you get into the second half of the year, we’re going to go up against sort of the Trello we acquired in the third quarter and so the comparison get little tougher as sort of a regulating impact on the growth rate of our revenue and it was just, this is one quarter into the year we’re off to a terrific start but, we’re getting improved and as we think about our revenue targets for the full year and we’ll see another quarter here and we’ll be in a position to give you an update on the next call in terms of how we are doing for revenue overall for fiscal 2018..

Okay, great. Thanks, certainly off to a good start.

Murray perhaps this is for you, but I’ll throw it out to what our audience, the cloud foundation was discussed at the analyst event a few months ago, and just wonder visit what are the benefits that shareholders should be thinking about as it relates to new cloud foundation, I mean it seems like faster time to market would be certainly one and perhaps even more leverage on the R&D side.

But why don’t you just open that up, how should we be thinking about the cloud foundation and benefits to your organization going forward?.

Yes. I’ll make a few comments on that Keith and I’ll open up to my colleague to say would like to add anything to it. From a shareholder perspective, clearly moving to third-party cloud and all the tools that with its going to allow us to innovate a much more rapid rate. We’re in the abs business; we are not in the, managing datacenter business.

And so looking to third party to do that, they are going to be able to scale much more effective than we are; it is much more cost effectively.

So, as you look at out of the gross margin over time while we’ll see more and more of our business behind cloud that runs in a lower gross margin than our server business will be more cost effective with a, with a third-party running that. And then you know going from, single to multiple tenant and all of that.

Again it’s just innovation being cost effective, as far as adding on to that, so that’s all good for the shareholder that’s good for the customer if anybody who wants to add on to that as far as from a customer perspective..

Scott here, moving around datacenter allows us to wide out more datacenters in a global sense, what easy to [indiscernible] is time and cost and distraction to do that, I mean what are we doing ourselves.

And so that allows us to serve our global customers better, and watch our performance from latency, but over time that allow us to working on the jurisdictions where that have sent data requirements. We also it’s for logic customers over time and when we have 2000 years of limit, we are working towards we are moving out over time.

And thirdly it allows us to have sort of platform and we introduce identity manager product at summit which also for those large customers out there to innovate faster and we see they are going to [indiscernible] datacenters, so we can think on building perhaps our customers and they are seeing the benefit there already..

Yes that goes about saying at the end of the day, it we believe if we lead to more revenue on lest cost, so I think that’s what shareholders are working for..

Okay, as I’ll sneak one more for Jay and if I could and, Jay in the new tough grade call it just over 4,200 and change.

Was there any different in complexion of what the key customers are initially bailing which I assume is still you are in Confluence, but was there any difference in the composition of the products associated with the new customer ads versus say the last number of quarters?.

Not materially no, I mean we see, we continue to see increase adoption in JIRA Service Desk as a first product is that expand the dimension out, dimension already that I talked about earlier.

But on the whole pretty consistent, across product portfolio and also deployment model between cloud and server where three quarters those customers are beginning their journey with us in the cloud..

All right fair enough. Many thanks..

Okay. The next question comes from Sanjit Singh with Morgan Stanley. Please go ahead..

Thank you for taking the question, congrats on a nice quarter.

And I wanted to talk about to on Heather’s question on JIRA Service Desk, I sort of feel where it points to a growing opportunities there a lot of traction in the mid-market, my question is in terms of okay go-to-market model maybe look as just a services and support model that product seems a little bit different over the year, try and buy like JIRA and HipChat and now Stride, is there any other type of investment you guys are doing to promote adoption of JIRA Service Desk that’s different from our services or go-to-market perspective versus the rest of the product portfolio?.

Hi this is Jay I’ll talk about that one. Again not materially, in terms of difference, it’s straight in line with the way that we approach go-to-market and customer acquisition on other products.

JIRA Service Desk are like everything else in the portfolio, you can begin with the particular service team internally and so you can start with either IT or you can start with marketing, I think the into the home market of all of our products is, I think is of adoption configurability, whether or more complex service collaboration these cases are business processes be at for JIRA Service Desk or otherwise, we’ve got a channel of solution of partners over 400 wide, 400 strong and countries all over the world and that we’ve enabled and equipped to kind of configure the process for more complexity and they can also add the expansion for a customer that might began with, one particular use case and expand others it was just loads of opportunity I think for them to bring in an expert to help kind of can they see organization for other opportunity and also the complete, for the more complex opportunity.

So, that’s probably now that we start I think into the channel can begin there they can go into really large automotive organization and with their knowledge and experience of JIRA Service Desk begin to math that to really complex in the middy opportunities.

And so it’s not necessarily one to actually I think if you look at the volume of customers that we acquired really began, I think in the way that all of our products began sort of small and expand over time based on the success of the product..

That’s super helpful Jay.

And then maybe one for Scott or Mike, in terms of the expansion into business teams, we have multiple ways to do this now with Confluence, JIRA core, Trello and now Stride and so in terms of as we look into the rest of fiscal year 2018, can you give us a sense of what the Playbook might be now that you have a broader portfolio, how you might trying to attack customers or to attract teams in this segment of the market that might have been different versus the past couple of years?.

Yes, thanks Sanjit, look our, we’ve told you guys many, many times our goal to go after the Fortune 500,000 and to do that with all the teams to unleash the potential of every team nothing in that goal and aspiration is changing, we passed the 100,000 customers this quarter, so it’s a big milestone on that journey.

In terms of going after the teams outside of software and IT, difference or change to the model to the go-to-market approach Trello lands in all sorts of different teams that is start and then expand the cross in organization, similarly with Stride, similarly with as you mentioned with JIRA Core, JIRA Service Desk.

And so no change to our model to go after those teams, we focus on, I guess you’ve seen us spend a lot of time and effort in the last couple of years on design, we’ve talked about it a lot at the summit user conference in terms of continuing to drive the product experience to appeal to a broader and broader set of users obviously that helps us across the business, but doesn’t change in anyway the go-to-market merchant to attract those customers..

That’s great, thanks Mike. And then last one from me, in terms of for Murray, if we look at, I think at Analyst Day, you talked about customers greater than 50k having these really strong but no risk.

Can you give us a sense of what percentage of the revenue base or what percentage of ARR does that core part represent?.

Yes, we haven’t provided that specific information, yes we haven’t done that, this quarter I can just tell you that we had particular strength in the enterprise as, you know our datacenter offerings continue to expand. So, I have seen some really success there, but as far as, that specificity we just haven’t provided that level of information..

Fair enough. Congrats again..

Great, thank you..

The next question comes from Bhavan Suri with William Blair. Please go ahead..

Hey guys thanks for taking my question and congrats nice job there.

Just one maybe for Jay to start off with, I am going to touch on Service Desk, Jay when you look at the partners and you know before JIRA Service Desk they were obviously selling JIRA, but as you look at the platinum partners specifically are they shifting the mix and selling the Confluence JIRA Service Desk whether they still strongly pushing JIRA.

And then just a second part of that is have you seen them start to sell deal than larger volume sizes or they still working with small wheels and expanding or they to be coming with a larger sort of, family or 1000 seat deals dynamics of the platinum partners and sort of what’s driving the growth there in terms of deal size and product?.

Yes thanks for the one. So platinum partners tend to focus on more complex larger organizations and so the enterprise opportunity that exists for datacenter and in the cloud with new releases identity manager that’s where they are going to play.

I think there, these are companies that have a service and consulting business, primary growth engine and so they are looking for more complex landscape that they can basically take, maybe initially a starting point with one product and then expand that across the portfolio.

And so that’s where they gravitate even within platinum merits and specialization so, there are solution partners that will focus primarily on Confluence and kind of the broader content collaboration opportunities that provides to them.

There are partners that’s focused, focus maybe particularly on JIRA Service Desk around ITSM ITIL and they are platinum partners that focus specifically on just the technology opportunity that continues to grow as more and more companies become technology companies first.

So, I think it’s really wide and diverse, there is no one size fits all, but I would say that platinum tender orient more towards enterprise.

And I think the other part of our partner network that we haven’t talked a lot about is just the marketplace which is the whole other dimension both across small and large opportunities where our ecosystem continues to flourish to build additional capability that those smaller large companies need across the dimensions that we serve..

Yes Jay that was very helpful color, I guess, one last, one quick one from me just to follow-up on that.

So when you look at the platinum partners and you look at your investment in partner go-to-market education finding new partners all the rest of that, you are not aggressively there is no sale motion, so let me go get a customer to buy totally get that, but is there a motion to develop partners and enhance the platinum, I mean do you see customer demand coming in such that you want some of these more complex partners or do you think sort of the mix is pretty good right now?.

We think the mix is pretty good, I mean we’re always looking for additional expertise and capabilities.

So, I think where there is, I’ll mention JIRA Service Desk again, I think the Service Desk opportunity I think for the global 2000 is a little bit different and probably does benefit I think from expertise both in terms of the product and the opportunities.

But also by vertical we have solution partners that focus specifically on automotive and so you understand how to take that product and really configure it around that opportunity.

So I think this, we also look for we talked about this at the Analyst Day, but we announced that the partners help to serve is geographic one where customers in Germany benefit I think from our intimacy with folks in the market that speak their language that kind of understand how their businesses are different in those particular market.

And so, we I think generally we the 400 strong I think are good, but we continue to recruit and filling where there is certain gaps. One other, one thing to tack on at the end, when we think about verticals like automotive, another one is government. So I think there is a big opportunities specially in U.S.

fed and we announced relationship with Carahsoft which is primarily a reseller but, we’ve got a whole ecosystem solution partners understand us specifically to deal with the government and the opportunity for our products in that capacity..

Great, great. That was really helpful. Thank you guys and congrats again..

The next question comes from George Iwanyc with Oppenheimer. Please go ahead..

Thank you for taking my question.

So looking at Trello you had nice decisions there again what type of cross over you are seeing from the Trello user base into your other products at this point?.

Hi George, this is Mike. Look we’ve always been incredibly happy with how Trello’s user base is continuing to grow and that the broad appeal it has to the potential billion knowledge workers out there.

We’ve shared quite clearly that our main objective there is to have the team, the Trello team continue to do the things that has made them successful as a team as a product.

And our primarily focus is on the momentum that exist within Trello; we aren’t rushing into cross selling and cross to base between Trello and the other Atlassian family in vice versa. We were focusing on doing what makes sense on both businesses; obviously at summit we shift a number of integrations with other Atlassian family products.

So we’ve now got Trello and Confluence, Trello and JIRA, we shift embedded Trello inside a Bitbucket so a really deep integration between those products. And obviously things like the Stride meetings of audio and video meetings and conferencing inside of Trello board, so going the opposite direction.

Those integrations are obviously going to help customers flow back and forth, but there is no explicit or active cross selling activity going on to monitor just trying to continue the momentum that Trello has..

Thanks and then just broadly on a broad products competitive basis are you seeing any changes in the market either relative to your price changes or just normal product development?.

This is Scott here.

We remain really confident on our competitive position in all the markets that we operate and we haven’t really seen anything over the last quarter, the changes to market dynamic in any way as mentioned that the plus increases there are still retain our great go-to-market model of being, huge incremental value for our cross sell that hasn’t changed anything on our market competition..

All right, thank you and congrats on the strong results..

The next question comes from Jonathan Kees with Summit Redstone. Please go ahead..

Great, thanks for taking my questions. My questions are actually just a follow-up to some of the questions that have been asked, there is some bit pieces of the answer provided, but I guess I wanted to get a more complete answer possible.

In regards to the cross selling, you talked about the Service Desk and there is platinum partners who are dedicated to Service Desk, I guess just curious in terms of I would like to Service Desk and other new products like Trello you explained pretty well on Trello and that you did also at the Analyst Day.

Other new products how many of them are like leading into the original positive of JIRA and Confluence or is it still mainly JIRA and Confluence that are leading to the new products?.

It’s Scott here. One of the intervenes that model is by having lots of products is very positive with our customers; we don’t have one main product that lands the majority of our customers.

We go across our products that they whole lands new customers and then the cross sell on those and both active on our part and just as customers naturally move from one product to the next, it’s not an easy motion to math compared to the other company that land with one product and add the add-ons now we have a diverse product portfolio.

So that makes us incredibly resilient of the business, but to have some model externally and as we add new products into that mix we see the same properties and that’s the way we look forward the products we build and acquire that have the same property that landing new customers and enabling us to cross sell across the business and sort of, we haven’t seen any real change in that, I mean we have been pleased with the Trello acquisition and replaced with the momentum of the JIRA Service Desk, but if landing new customers and cross selling our existing base, but I couldn’t sort of knockout anything more specific on a product by product basis..

And I guess, the assumption in that the majority of revenues are still-- and then after that confluence that's starting to diminish as you are getting the other products starting to take lead as you are saying there is so many other products going on.

You don't have the original products that are dominating the product lead and the original sale lead and like you did in the past. I guess that's a fair assumption then..

Yes. Scott here. We are not going to publicly, I think disclose the next one, during conference made up a large percentage of revenue and they continue to be a really strong products.

And but obviously as we grow, we bring on new products, so we build and acquired and that percentage indeed in software and confluence and [deep rises] [ph] over time as we grow all that products..

Okay, great. That makes sense. And if I can, my last question, my second question really is, in regards to, this is for Murray, not so much the number of customers who are purchasing enterprise and percentage of MR, that you haven't disclosed.

But, you have disclosed for the customer account; the customer is paying $500,000 and greater, so customer is paying $50,000 and greater, I was wondering if you could share that for this quarter?.

Hey, Jonathan. We are doing that on an annual basis. So, we will do that at the end of our fiscal year. So, we are not providing an update on it this quarter. But, clearly we made progress once again this quarter, we just haven't disclosed the exact numbers and we will do that on our call at the end of fiscal 2018..

Okay, great. Something to look forward to. Thanks a lot guys and congrats on the quarter..

Thank you..

[Operator Instructions] The next question comes from Alex Kurtz with KeyBanc Capital Markets. Please go ahead..

Yes. Thanks guys for taking my question.

When you look at the annual guidance, just relative to the last couple of questions around execution -- strong execution in the enterprise space, how do you guys figure out how to kind of model for that over the next couple of quarters as those customers sort of grow and revenue contribution and trying to balance that again, so do the smaller accounts in there and there were current revenue profile?.

Well, really no change to how it's been working. I mean we have [land] [ph] expand model. So, we are going through making assumptions on what we are going to land each quarter in terms of new customers and what the expansion rates are, renewal rates et cetera. So there is no real change in all that.

We are not trading off like large enterprise or small customers. Our products can scale across that entire spectrum or going after that Fortune 500,000, which are small businesses and large enterprises. So, it's just more of the same in terms of the model.

What you are seeing is, is that on the expense side there is customers, it's gone from one team to five teams to ten teams and now with the data center offering and allows them to expand even further -- could be 10 to 1000 of users. And so, this patient for revenue model where it expands over time with large organizations.

We continue to tell land with new customer each quarter is a very powerful model. But, no real change in how we are modeling it going forward. And we are excited with start of our first quarter..

All right. Thanks..

The next question comes from Gregg Moskowitz with Cowen & Company. Please go ahead..

Great. Thank you. Hi, guys and apologies. I couldn't get on earlier just navigating multiple calls. I had just one other question for Scott or Mike or Jay. You mentioned that some of that you only have 18 enterprise advocates and obviously the business has great momentum. You have a strong self-service model.

But, given that we are talking about Fortune 500, Global 2000 type customers that traditionally expect more handholding. Wondering if you could just talk what gives you comfort that this is running at or near in optimized level? Thanks..

Well, we have been practicing it for about 15 years and so that's maybe -- the model continues to get better and better. But, I think we have a lot of experience with it.

Enterprise advocates which really acts on looks like a connoisseur service for large enterprise or once we mentioned of how service and support really good companies, the channels and other.

And self-service is the third, data center business, when we first initiated it, that wasn't available on the shopping card and part of its growth has come from allowing customers to take that upgrade path on their own when they are ready.

And if they need additional service and care from us, you have gotten an enterprise advocate and then a broader advocacy channel that can help them. And they also have our solution partners that can work pretty closely napping out additional opportunity and helping guys through that upgrade path.

So, I think the results and say a lot that we continue to look for opportunities to improve but we are pleased with our momentum so far..

Gregg, I just have one thing which is, we obviously invest more in R&D than other companies and one of the things is that the products have to be very useable, very early in the adoption, so that expansion can occur and so we put a tremendous amount of effort into usability immediately after a customer puts into production and it does cost more in R&D, but it allows this model of the work and for the expansion in large enterprises as much as in smaller organizations..

Terrific. Thanks guys..

The last question comes from Patrick Walravens with JMP Group. Please go ahead..

Great. Thanks and let me add my congratulations.

Murray can I ask, are you still leaving us effective December 31, and maybe Mike and Scott, how is the search going for someone to replace the irreplaceable Murray and what characteristics you are looking for?.

This is Murray. We are still focusing on that December 31 and I've still got a few months to go here, so still chugging along..

Its Scott here. We have got the search ongoing and it's been really, finally surprised by the great candidates that we have been attracting, the quality of the people that we are speaking with.

I think this speaks positive, the strong reputation lasting and great opportunity for the right person and we will keep you updated on it further since we -- as we find someone..

Great.

Could you comment on what were some of the most important things are that you are look forward as you talk to all these people?.

Yes. I mean the key one perhaps is finding people that have seen scale and the right fit for us and we have a great opportunity here and we are attracting people with those attributes..

Okay. Thank you..

Okay. This concludes our question-and-answer session. I would like to turn the conference back over to Mike Cannon-Brookes for any closing remarks..

I would just like to say thanks everyone for joining the call today. We really appreciate your time and look forward to keeping you updated on our progress as we go forward..

The conference as now concluded. Thank you for attending today's presentation. You may now disconnect..