Atlassian places big bet on AI, ramps up recruitment as quarterly losses widen

Revenue growth is slowing at the software titan, prompting a 10pc share price plunge. But co-founder Scott Farquhar says the company is focused on retaining staff and beefing up AI.

Atlassian founders Mike Cannon-Brookes (left) and Scott Farquhar say the company has a competitive advantage when its comes to AI.

Atlassian’s billionaire co-founder Scott Farquhar says the software titan is “playing offence on talent” and ramping up its artificial intelligence capabilities as its losses deepen.

After shedding about 5 per cent of its workforce earlier this year, Mr Farquhar said Atlassian was now focused on “adding and retaining” staff, with new hires across its senior leadership and broader business.

He was speaking as Atlassian shares — which are listed on the Nasdaq — fell more than 10 per cent in extended trading in the US on Thursday evening after revenue growth slowed for the fifth consecutive quarter and the company said many customers “will wait until the last moment” to migrate to its cloud platform.

The company has been stepping up its AI capabilities. It bought Loom — a platform that provides AI-powered and asynchronous video messages for $1.5bn — its biggest acquisition in dollar terms last month, and this week took over Melbourne software firm Airtrack to enhance its Jira service management product.

AI is fundamentally about harnessing data to solve complex problems, and Mr Farquhar said Atlassian had a competitive advantage in this regard.

Atlassian co-CEO and co-founder Scott Farquhar says the company is playing offence on talent.

“If you want to train AI on data inside your organisation, that data cannot be isolated to a few people. As a customer, you have decades worth of data that’s available to train their AI on and help them make decisions — that’s a really big part of our advantage,” Mr Farquhar said.

“We have breadth in what we do in terms of the workloads and what people use our products for span the entire organisation. That allows us to get very unique data sets to make decisions across the entire organisation.”

But Mr Farquhar said it still takes people to realise the company’s goals and it has been hiring, including appointing Zeynep Ozdemir as its chief marketing officer, Vikram Rao as chief trust officer and promoting Kevin Egan to chief sales officer.

“We’re also playing offence on talent,” Mr Farquhar said. “Atlassians are the cornerstone of our success, and we’re focused on adding and retaining amazing talent across the company.”

In a letter to shareholders, Atlassian said it was receiving almost twice as many applications per role advertised compared with last year. “This affords us the privilege of being incredibly selective, looking for people who have experience with the journey we are on (e.g. AI, platform, video) and can help us move faster,” the company said.

It comes as Atlassian widened its net loss to $US31.9m ($49.7m) from $US13.7m in the three months to September 30. Revenue surged 21 per cent to $US978m.

Growth has been slowing after the first quarter of last financial year delivered a 31 per cent gain on the same period in 2021.

Atlassian shares fell 10.2 per cent to $US162.90 in extended trade. Excluding that fall, the company’s shares had gained 43.4 per cent so far this year, giving it a market value of $US46.9bn.

Atlassian has been migrating its 265,000 customers to its cloud and data centre services ahead of it ending support for its server products next year, which is expected to drive variability in earnings.

Total revenue for the current quarter is expected to be $US1.01bn to $US1.03bn — in line with analysts estimates of $US1.02bn.

It expects cloud and data centre revenue growth, year-on-year, to rise 30 and 31 per cent respectively this financial year.

Chief revenue officer Cameron Deatsch, who will leave the company at the end of the year, said the company has been “aggressively” approaching customers in and effort to migrate them from server to cloud products.

“But obviously there are many customers out there that will wait till the last moment before they make this decision. And we see that today in our enterprise pipeline,” Mr Deatsch said.

“We have a healthy pipeline with enterprise migrations, going up over the next few months. What I want to be very clear here is you know, post February, we still will have many migrations. So many customers came out and said ‘don’t worry, we will be going from server to either data centre or preferably cloud’.

“But for those customers that choose data centre, we will continue to be migrating those data centre customers to the cloud in the coming years. So the short answer there is yeah, we do expect to see a flurry of activity over the next few months.”

Originally published as Atlassian places big bet on AI, ramps up recruitment as quarterly losses widen