Atlassian hits $1b in revenues, ramps up AWS footprint
Atlassian CTO Sri Viswanath doesn’t want to talk about persistent speculation that the company is being eyed by an acquisition-happy Google Cloud Platform (GCP).
“We don’t comment on market rumours” he tells Computer Business Review in a call, after a pause. Then, picking his words carefully: “We’re focussed on growing the company and we’re doing extremely well.”
Atlassian, founded in 2002 – and best known for its proprietary issue/bug tracking product Jira, used widely through the DevOps tool chain – is indeed growing strongly.
The company reported its most recent quarterly earnings [pdf] on January 17, 2019.
Headlines included hitting $1 billion in annual revenues (calendar year) for the first time.
Total revenue meanwhile was $299 million for the quarter, up 39 percent year-on-year and the company closed the quarter with over 138,000 customers.
Despite the rapid growth, Viswanath says the company does not have any “quota-carrying sales people”. Growth has been organic with a “land and expand” model led by IT team demand, he says.
The Sydney-headquartered company meanwhile has itself made a number of acquisitions in recent months.
Along with the acquisitions – for example of OpsGenie, which added a range of incident management tools to Atlassian’s Software-as-a-Service portfolio – it is investing heavily in new products and existing product user experience (UX) and integration.
That investment is significant: Atlassian ploughed a whopping 47 percent of last quarter’s revenue back into R&D. Over the full calendar year the reinvestment figure is “roughly” 35-40 percent of revenues going back into product development, Viswanath says.
So where’s the investment going – and what’s the growth plan?
A major strategic push is a focus on IT, the former Groupon CTO and VMware veteran tells Computer Business Review: “IT teams are becoming more like software teams”.
“They’re starting to use lots of SaaS products and use lots of code. They increasingly need incident management as there are going to be incidents when you use software. Not just to solve problems but afterwards to make sure you learn from them.”
“We have a sweet spot in that we started strategically with software, but now we cover human-to-human interactions in the software space too”.
That’s not, he pointedly notes, something rival ServiceNow (also, perhaps unsurprisingly, rumoured to be a GCP acquisition target) is doing. He’s coy on any new product development: if it’s happening, it’s staying under wraps for now.
The company meanwhile offers 11 products, including four under the Jira line (spanning project and issue tracking, IT service desk and customer service, incident management and “business management”).
Then there’s document collaboration tool Confluence – customers include Audi and Domino Pizzas – visual collaboration product Trello and git code management tool Bitbucket. A lot of that R&D investment goes into making sure these tools all work seamlessly together, he’s keen to emphasise.
Atlassian CTO: New Datacentres
Atlassian is now entirely cloud-native after an 18-month migration to AWS that started in 2016, the company emphasises. And this week (one of the reasons for the call, from Atlassian’s perspective) it announced three new AWS availability zones.
These comprised the addition of Frankfurt to its European footprint (Atlassian cites a rapidly growing European users base; it already has an AWS region in Dublin); Sydney for Australasia and Singapore for APAC. With application data replicated across multiple AWS Availability Zones, speed for customers gets a boost and resilience too.
Viswanath led the AWS migration after joining in 2016 and is pleased to see Atlassian expand its cloud footprint.
Speaking about the initial migration, he said: “We went from single-tenanted to multi-tenanted architecture. It took about 18 months during which we migrated all of our customers over. It’s been a huge boost for us as a company. We did it from scratch; we didn’t have a DNA of running in a public cloud.”
The benefits are myriad, he notes: “Previously it took 24 hours to deploy a line of code. Now we handle multiple deployments a day. That’s a huge boost to speed of innovation. It also gave us performance/footprint in new locations: that makes us closer to our customers, meaning performance is better.”
It’s now using “most” of AWS’s myriad services, including RDS, DynamoDB and SQS. “We’re also looking at moving to Aurora [AWS’s relational database]” he adds.
Is he open to multi-cloud solutions?
“We’re definitely always looking at other technologies too.”
A real focus for Atlassian meanwhile, is using microservices to refine its product offering.
(Microservices are an architectural approach to building applications that breaks an app down into its core functions. Each function – called a service – can be built and deployed independently, meaning individual services can function (and fail) without negatively affecting the others.)
Atlassian CTO Sri Viswanath notes: “The general premise with microservices is having smaller teams that can move faster, focus on business logic. If you set it up right there are a bunch of benefits as you scale. We are very thoughtful on the people side; we have very strong values.”
“That’s vital as culture is extremely important when you to microservices. If you don’t get it right, you get chaos in the system. If you’re going to do it you need to invest in an operational maturity model.”
Wrapping up: “Innovation is the lifeblood for Atlassian. We want people to love the products… we need to make sure our users love us.”
With the company rapidly paring its operating losses ($3.2 million for the quarter just reported; $13 million the same quarter in 2018) and adding 6,551 net new customers during the quarter, its clear its users appreciate the products.
Does Google Cloud too? Watch this space.