Atlassian's share price has taken a sharp dive after the Australian collaboration corporation revealed decent results, but predicted its on-prem products would grow faster than its cloud.

As The Register recently reported, Atlassian is months away from ending support for its Server products, leaving users with a choice of moving to the A-Cloud or paying for at least 500 seats worth of Datacenter licenses. Atlassian effectively decided to kill off its Server products because it wants to be cloud first.

On Atlassian's Q1 2024 earnings call, execs acknowledged that some customers won't move from their Server licenses before the February 2024 end of support milestone. Co-CEO Scott Farquhar even noted that "half of the migrations we're getting [to cloud] are from Datacenter."

Even with that shift of emphasis to the cloud, Atlassian's earnings announcement [PDF], released Thursday, saw it forecast 2024 cloud revenue would grow at between 25 and 30 percent - but its Datacenter products would deliver approximately 31 percent growth.

In Q2 Datacenter licenses were forecast to bring 33 per cent year-over-year growth, compared to a predicted 25.5 percent to 27.5 percent bump for cloudy cash.

That outcome is not Atlassian's macro plan. Indeed, in the folksy shareholder letter [PDF] the biz publishes each quarter, penned by co-founders Mike Cannon-Brookes and Scott Farquhar, it introduced a metric designed to "enable investors to evaluate our progress against our strategic priorities" - the number of customers who generate more than $10,000 in annualized recurring revenue from the cloud.

"This measures our ability to successfully shift customers to the cloud and expand within our existing customer base," the letter beams, noting that the number of such customers grew 18 percent year on year in Q1 2024.

But elsewhere in the same letter, the co-CEOs warn that "Attracting new customers is critical" - adding that Atlassian is "increasingly focused on moving existing customers to the cloud and driving expansion within our massive base."

Yet on the earnings call, chief revenue officer Cameron Deatsch revealed that new customer acquisition has slowed - at least for paid customers.

The Register feels it impossible not to applaud this quarter's missive, if only for the lovely
DEVO reference in the subhead - "Ship It. Ship It Good" - used to highlight recent Atlassian product releases.

Another interesting nugget in the letter is that Atlassian is seeing "nearly twice as many applications per role - a credit to our legendary culture, inspiring mission, meaningful values, and hyper-flexible approach to distributed work."

The surfeit of applicants "affords us the privilege of being incredibly selective," the co-CEOs wrote - without mentioning the early 2023 workforce rebalancing exercise that saw 500 staff let go by email.

Revenue for Q1 2024 was $977.8 million - up 21 percent year on year. A net loss of $31.9 million was a worse result than the $13.7 million from the previous year.

Second quarter revenue was forecast between $1,010 million and $1,030 million.

Cannon-Brookes and Farquhar were upbeat about recent product releases and acquisitions, and their strategy of enabling collaboration across technical and non-technical teams.

But investors were not impressed. In after hours trading, Atlassian shares fell from $181 apiece to around $162, visiting a low of $156.11 along the way. ®

https://www.theregister.com//2023/11/03/atlassian_q1_2024/