Scott Farquhar steps down as Atlassian co-CEO as group swings to profit

Mike Cannon-Brookes will take on solo CEO duties at the software titan as co-founder Scott Farquhar steps down after 23 years to focus on family and philanthropy.

Mike Cannon-Brookes (left) and Scott Farquhar founded Atlassian 23 years ago and have helmed the company jointly ever since.

Scott Farquhar will step down as Atlassian co-chief executive after almost quarter of a century in the role, leaving his fellow co-founder Mike Cannon-Brookes to run the company to “capitalise on its strengths in the AI era”.

Mr Farquhar announced his departure as the software titan delivered a “milestone quarter”, with its net income swinging to $US12.8m ($19.63m) in the three months to March 31 from $US209m net loss in same period last year.

He and Mr Brookes founded the company in haze of the dotcom bust in 2001, with the goal of never having to a wear suits and earn at least $48,500 - more than what their friends in consulting made.

Together they steered the company to a Nasdaq listing and a market value of $US51.47bn, with pair becoming billionaires before their 40th birthdays.

Mr Farquhar said it was a difficult decision to step away from his executive duties but the move would allow him to “spend more time with his young family, improve the world via philanthropy, and help further the technology industry globally”.

Atlassian co-founder Scott Farquhar. NCA NewsWire / David Mariuz

“While there is never a perfect time to make this change, I take comfort in my decision knowing Atlassian is so well placed for the future. We have a world-class cloud platform and the best team we’ve ever had,” he said.

“Our new Point A products are gaining real traction, AI is providing new and exciting opportunities, and we have over 300,000 cloud customers consolidating around Atlassian.”

Mr Farquhar’s resignation sent Atlassian shares 6.3 per cent lower to $US185.99 in after-hours trading in the US on Friday.

This was despite Michael Turrin of Wells Fargo saying Atlassian’s results were “quite strong in a still tough environment”. “I think the stock is initially reacting more to surprise news from Scott,” Mr Turrin said.

Mr Farquhar is known for pioneering ‘product led growth’ with Mr Cannon-Brookes, which involved focusing on ecommerce and letting people find and buy the software themselves rather than rely on a team of expensive sales people.

One of their first customers was ­American Airlines, which spent more than $1000 without speaking to anyone at Atlassian.

“It’s been 23 years since Mike and I started Atlassian, fresh out of university. We got to work on the heels of the dotcom bust and unbeknownst to us, we were kickstarting the Australian tech industry

“We started what is now known as ‘product led growth’ by selling business software online with no salespeople, and 23 years later, we continue to innovate by leading the world as the largest company committed to remote work with Team Anywhere.”

Mr Farquhar said Atlassian software has helped launch rockets, including assisting in landing the Mars Rover, to ensuring cars roll off the production line and Domino’s pizzas are delivered on time.

“Our solutions are woven into the fabric of teamwork worldwide. We’re unleashing the potential of teams in every corner of the world, and beyond.”

Mr Farquhar’s last day as co-chief executive will be August 31. He will remain on Atlassian’s board and assume a ‘special adviser’ role.

Mr Cannon-Brookes said Mr Farquhar has made a contribution at Atlassian that is “impossible to quantify”.

“Starting with just the two of us in 2001, to a global company of over 11,000 employees and over $US4bn in annual revenue, Atlassian would not be the company it is today without Scott. I am truly grateful to have had him by my side every day for the last 23 years,” Mr Cannon-Brookes said.

“Scott and I have both worn every hat over the last two decades, so I’m confident in taking over full responsibility of the company. I’m incredibly excited about the massive opportunities that we have in front of us.”

Atlassian‘s Scott Farquhar. Picture: NCA NewsWire / Dylan Coker

Mr Farquhar’s resignation comes as Atlassian revenue surged 30 per cent to $US1.19bn in the third quarter.

Mr Cannon-Brookes said subscription revenue growth vaulted 41 per cent year-on-year, with Atlassian achieving record free cash flow of $US555m – an increase of 59 per cent.

“It’s been a milestone quarter for Atlassian,” he said.

“Today, Atlassian is a cloud-majority company. We have over 300,000 customers using our cloud products and have seen a 3x increase in paid seats in cloud since we announced end-of-support for Server three and a half years ago.

“We have a significant opportunity to drive durable, long-term growth as we continue to execute against our cloud road map and deliver innovation across our cloud platform. We’re excited to share more at our flagship customer event next week, Team ’24.”
Mr Cannon-Brookes will host the customer showcase in Las Vegas next week. He said the company was moving to capitalise on the AI era.

“By combining the transformative power of AI with our 20-plus years of data and insights into how teams plan, track, and deliver work, we can increase the velocity at which teams move work forward.

“And because we lead with R&D (research and development), as opposed to marketing or pricing, we focus on shipping high-quality features that drive user adoption by delivering value from day one.”

Last quarter, Atlassian began shipping new AI features, including the capability to create automation rules in its Jira software using natural language. “With a simple description of what to automate, users can quickly create automation rules and let Atlassian Intelligence take care of the intricate process of formulating these rules,” Mr Cannon-Brookes said.

“This is just the tip of the iceberg when it comes to the customer impact we can make in the AI space. We have the talent, resources, and platform capabilities to harness the unique data and deep knowledge of teamwork we’ve built over years of helping millions of teams drive mission-critical work forward.”