Good afternoon. Thank you for joining Atlassian's earnings conference call for the second of fiscal 2021. 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. I will now hand the call over to Matt Sonefeldt, Atlassian's Head of Investor Relations. Good afternoon, and welcome to Atlassian's Q2 of fiscal 2021 earnings call. Thank you for joining today. On the call today, we have Atlassian's Co-Founders and Co-CEOs, Scott Farquhar and Mike Cannon-Brookes, as well as our Chief Financial Officer, James Beer. Earlier today, we issued a press release and a shareholder letter with our financial results and commentary for our Q2 of fiscal '21. The shareholder letter was posted on our company blog, and all items have also been posted to the investor relations section of Atlassian's website. On our IR site, we have also posted a supplemental data sheet. During the call, we'll make brief opening remarks and then spend the remainder of time on Q&A. This call will include forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from any 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, and we assume no obligation to update or revise such statements should they change or cease to be current. Further information on these and other factors that could affect the company's financial results is included in filings we make with the Securities and Exchange Commission from time to time, including the section titled Risk Factors in our most recent Form 20-F and quarterly Form 6-K. In addition, during today's call, we will discuss non-IFRS financial measures. These non-IFRS financial measures are in addition to and are not 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 they may be different from non-IFRS measures and non-GAAP 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 the IR website. During Q&A, please ask your full question up front so that we can easily move through to the next speaker. Lastly, we've announced dates for Team '21, our virtual annual customer conference taking place April 28th and 29th. We hope to see you there. With that, I'll turn this call to Scott for opening remarks. Thank you, everyone, for joining today. We hope you and your loved ones remain safe during these challenging times. We hope you've taken the time to read the shareholder letter. This quarter, we focused on three themes tied to Atlassian's long-term focus. First, that we're off to a strong start in our multi-year initiative to migrate our server customers to the cloud. Second, we continue to deliver mission-critical solutions for our customers across large counts through products like Jira Service Management, which launched in Q2. Third, that we will continue to use the cloud to deliver innovation to customers, small and large, in our ultimate goal to serve the Fortune 500,000. Our business results reflect steady execution against our goals. In Q2, we generated $501 million in revenue, up 23% year-over-year. We also achieved subscription revenue growth of 36%. During the quarter, we added a record 11,617 net new customers of all sizes, bringing our total count to over 194,000. While we're proud of these results, there's plenty of hard work that lies ahead. Before we move to Q&A, Mike and I want to thank our employees who continue to inspire us with their passion for customers and their adaptability. You make unleashing the potential of all teams possible. With that, I'll pass the call to the speaker. I called them the speaker. They're waiting for me to say the word operator. Your first question comes from the line of Alex Kurtz with KeyBanc Capital Markets. Your line is open. Yeah. Thanks for taking the question. Just on the new customer adds, the strength there, what drove that? Is there something changing with the SMB customer base? Is there certain verticals that stood out to you? Just a little bit of context around that. Great question. Because if you've been around for a while, Alex, you'll know that the new customer number bounces around a lot. We had about 3,000 in Q4 or 8,000 and a bit in Q1. Of course, 11,500 now. It's not a number we guide towards or we really manage into Atlassian. It's also always been a pretty small driver of immediate revenue, being the smallest of our customers. What's a change this quarter is a lot of the funnel changes we've done around free inside our products. In Trello, we changed some monetization funnels. A lot of those areas, which we're really proud of, they kind of put us in the right place for very long-term growth. They did change sort of the mix of customer ratios, and we do have a larger mix of smaller customers. I'd say more than any other quarters, we probably have a greater ratio of smaller customers than we've had before. We think it's great. I think it's, again, a great testament to how much demand there is for our products out there, but I'm hesitant to try and roll any of that into some sort of revenue forecast. Just looking at these new customer adds, were any of those potentially customers that churned in the first half of 2020 and they're back? I don't know if you categorize them differently if they did churn and they're back. I don't have numbers around that at hand, unfortunately. We have seen improved churn, in general, across most of our product base. Some of that is things we've done, and some of it could be macro trends as well. James, do you want to comment as well on that? Yeah. Just a couple of things to add to that, Scott. I would say that I was pleased with the customer count because it illustrates the mission-critical nature of the products that we serve our customers with, of all sizes, all across the board, from small, medium-sized businesses through to the largest corporations, governments, and so forth. Pleased by that churn, as Scott was saying there, has increased and improved nicely as the recent quarters have gone by. Yes, you're right. We did see some challenges back in Q4 of FY 2020. As we've seen our churn improve, as we've seen our customer count go for this past Q2, we've really seen those improvements right across our verticals. Again, right across the different sizes of customers that we serve. We're pleased by all of those themes. Thank you. Your next question comes from the line of Keith Weiss with Morgan Stanley. Excellent. Thank you guys for taking the question. Really nice quarter. If I could squeeze in two questions. One, just on the overall spending environment, if you can give an idea of where we are on that road to recovery. You talked about improving renewal rates. That sounds like that's getting better, but just your take on where we are on that. Two, in particular on the ITSM product, now that we've integrated Mindville and you have that CMDB component of the equation, is that enabling the solution to go further up market? Have you seen any evidence of that traction as of yet? Okay. It's Mike here. Let James take the question on the spending environment and the traction, then I can come back on the ITSM one. On the spending environment, obviously we're pleased by what we see as a nice gradual improvement. It's hard to parse that out because I feel as though our products really are serving so many of the critical needs of our customers. There's increasing movement to agile frameworks. The work from home process is now becoming such a normal part of business life. Of course, our tools help support that. We've been pleased by the themes that we've seen in Atlassian in recent weeks and months. Mike? Yeah, mate, I can address the ITSM question there. Look, as you mentioned, Jira Service Management launched about a quarter ago now, and we've been very pleased with the results so far. Mostly obviously inside a quarter in our model, customer reaction, customer adoption, acceleration of purchasing interest behavior. As you mentioned, it is a great example of Atlassian's overall philosophy of both building and integrating smartly acquisitions, as you mentioned in the CMDB facilities. Again, those are released as a plugin at the moment, but not fully integrated into Jira Service Management yet. Those will be coming in the coming quarters. As a part of our long-term ITSM strategy, you see a constant drumbeat of improvements there. At a whole level, customers have resonated with us seeing the blurring of lines between IT and software development, as we are sort of the one company that can serve their needs from software development through ops, DevOps, and into their IT and technical teams on that end. That's really resonating with customers, and we're very excited about that. Again, focusing on the Fortune 500,000 gives us a very broad customer adoption cycle, all the way up to large customers, as you see from the ISS customer example in the shareholder letter. Some very big customers adopting our ITSM offerings as well. Excellent. That's great to hear. Thank you, guys. Your next question comes from the line of Ittai Kidron with. Your line is open. Thanks. Hey, guys, congrats on a great quarter. I'd like to focus on the 30,000 server customers that you're trying to migrate to the cloud over the next two, three years. Can you give us some color on how much movement was there this quarter in that transition? How many of the small, medium, large have transitioned? Second, how would you think about churn in this group? I'm sure a lot of people or some customers are probably not that happy about, although while recognizing and appreciating the benefits of the cloud and the capabilities that come along with that, pricing could be materially different, especially for large customers. Help me think about how would you think about churn in this transition over the next couple of years? Thanks. Good question. Firstly, just remind everyone, we have 30,000 server customers and we're aiming to move them over a multi-year period with end-of-life server, and our customers have three years to make a decision to move across before they hit our end of maintenance period. We've been very friendly to our customers, and we have a pretty wide window for those customers to move across. In terms of where we are, it's very early in that. When I look at all the numbers about our internal metrics, we're doing exactly what we said we were going to do. We've got customers moving across at higher levels than ever before. Our numbers internally that we measure for this quarter were a new high, as you would expect, as we go through this transition. Also a reminder that the majority of our new customers today choose cloud. Well over 95% of our new customers choose cloud today. We're really happy with the leading indicators. That's great. In terms of churn, when I talk with our largest of customers, the companies you would all know and do business with, they all have plans to move to the cloud. They say that it saves them money, saves them the hassle of doing things, gets them higher reliability. They are all partnered up with us to move to the cloud. In most cases, it's in our court to ensure that we have the size and scale, and that we can help them migrate across. It is hard to predict the churn on that life because it is in our customers' hands for a period of time. I'm pretty pleased with the indications of what we've got at the moment and the customer response. James, do you want to add anything to that? Just that back at Investor Day in November, we noted our expectation that around half of our 30,000 server customers would migrate in FY 2023 and beyond. Indeed, for our medium or larger sized customers, we would expect that ratio to be about two-thirds migrating in FY 2023 and beyond. Nothing has changed in our perspective there. Very good. Thanks. Maybe just one follow-up on the perpetual license revenue, which clearly was still strong, and it's for obvious reasons people want to do things before February, I guess next week kicks in the licensing ends. With regards to upgrades, you've talked about how this collapse all the way through fiscal 3Q next year, fiscal next year. Do you suspect, though, that the upgrade activity is going to be robust, in the same way that perpetual license sales in this quarter was robust just because we're kind of heading into a deadline of expiration and, as you said, relative to your expectations that most upgrades of medium, large customers are going to be fiscal 2023 and thereafter, many are likely to upgrade near term in order to give them more time to complete the transition to the cloud? Yeah, let me take that one. In terms of license revenue, yes. We either have new license activity booked in that line or upgraded license activity. Just to remind everyone, we'll be curtailing new license sales in a few days time, February 2nd. We'll continue to allow customers to upgrade their licenses, expand the size, in essence, of their current licenses for another year or so. In Q2, it is fair to say that we did see more of that upgrading and new activity than we were previously forecasting. I would say, as we have now almost a month of Q3 behind us, that type of activity has continued into Q3. Of course, we would expect that to mean less activity downstream. I think there'll be upgrading activity playing out over the next year or so, but it does appear that some of that upgrade activity has been pulled in advance of the price increases that will play out next week as well. As you say, not surprising. Hard to precisely determine the scale of this pull-forward activity on the upgrade side. Of course, if you're interested in new licenses, you really have to act very quickly here before those new sales cease. Got it. Very good. Excellent. Thank you very much, guys. Good luck. Okay. Thank you. Your next question comes from the line of Michael Turrin with Wells Fargo Securities. Hey there. Thank you. First off, congrats to Mike and the Jazz on that 10-game win streak. Some impressive stuff there, too. James, maybe one on margin. You've consistently noted margins are expected to trend down in the second half of the year. We now have the Q3 guide. Just wondering if there's anything else from a seasonal perspective we should be cognizant of that could maybe make the shape of the second half look a little different than prior years. Just trying to make sure we don't over or under extrapolate what we're seeing into Q4 and beyond on the margin. Thank you. Well, a couple of thoughts there. First of all, just to reiterate what we've been now saying for two or three quarters, that through this harder macroeconomic period, we've really been looking to invest purposefully, and that continues. You saw strong headcount growth in the last quarter, good execution by our people teams in that regard. We see very significant opportunities in front of us, and we want to get after those opportunities. I think it's fair to say that Scott and Mike's experience back through the '08, '09 type downturn, macroeconomic downturn, was such that it was the right thing to do to invest through that period, and we're doing exactly that again at this time. Also, recall I'd spoken in the last call or two about some shorter-term revenue headwinds, things like the introduction of free additions, the fact that we're taking less marketplace revenue as we encourage our eco system developers to emphasize putting new cloud apps on the marketplace. We've also taken the decision to execute fewer pricing actions, particularly on the cloud side of our business, this year versus the past year. While the impact of COVID that we were talking quite a bit about two quarters ago, that is decreasing nicely as an impact on our financials. Clearly, we will continue, as I said in an earlier answer, to expect the server business lines, the license line and the maintenance line, to continue to contract in terms of their rate of change and so forth. Recall also that we have, in order to encourage our larger enterprise customers, those with over 1,000 users or so, to migrate to the cloud, we're offering them quite substantial loyalty discounts. We have some revenue headwinds. I would describe them as transitory in nature. They're very much really favoring the long term for a short term headwind. When you take those factors together, of course, we have seasonal factors like the payroll tax reset that happens at the start of every calendar year. Two different things to consider, we've baked all of that into the Q3 margin guide. As we've said elsewhere, we would expect second half margins to be down versus the first half margins. Appreciate all the detail. Thank you. Your next question comes from the line of Arjun Bhatia with William Blair. Your line is open. Hey, guys. Thank you for taking the questions. One of the things that stuck out to me in the shareholder letter was, I think you pointed out that cloud enterprise adoption is coming in ahead of expectations. I was hoping maybe you could just unpack that a little bit. Is that migrations that's driving that or are customers naturally upgrading once they've started using your cloud solutions for Jira and Confluence and JSM? Then, on the hiring side, are there any specific areas within R&D that you're targeting in the second half that we should be on the lookout for? Thanks, Arjun. I can take both of those. Look, on the enterprise side, I have to say we have two phenomenons going on there, so I'm not sure which one you're asking about, but let me answer for both. On the general enterprise customer, so we call that the little e enterprise, big companies, we're really pleased with our continued cloud adoption there across all the editions of cloud, and that goes from Free all the way through Standard Premium and the Enterprise Edition, big E. You've seen us over the last three years through access, through scale, through performance and reliability improvements, and continued investment in all manner of compliance standards, continuing to get better and better traction with large customers, with enterprise customers, sort of 1,000 seats or more, no matter what edition they buy. Secondly, we did GA our enterprise edition, so big E, during the quarter, and have been very pleased with the reaction of the customers there. We've had a lot of customers in the early access program for about the last six months, testing that with us. Again, the enterprise edition has higher levels of compliance and security standards, data residency, and a whole lot of other features, as well as unlimited instances. You get unlimited scale. Rather than buying one Jira Software instance and a second Jira Software instance, you pay obviously a higher price, but you get unlimited Jira Software instances. That allows you to create and segment your business as very large companies often need to do. You might have one for Europe and one for America, or you might have one for a certain department and one for a different department with different plugins, add-ons, exposition to other customers of your own as a company, et cetera. I'm very pleased with that adoption so far. Again, it's incredibly early days. It did only GA during the quarter. Obviously, we're working with all of the early access program customers The companies, I should say, to turn them into Enterprise Edition customers. There is naturally a flow upwards from standard to premium to enterprise, as customers grow and deepen their usage and adoption of Atlassian products. That's part of the ladder that we're trying to build there. On your second question, no specific call-outs in R&D. We continue to invest in hiring across the board in R&D, across product management, engineering design, and all manner of operations and engineering functions. That's across largely all of our offices. I would remind you of our Team Anywhere program, where we have announced six months ago and continue to announce to staff about hiring in lots more countries in the world and lots of parts of the world. That opens up our R&D pipeline to get that talent, hopefully largely no matter where it sits in the world, to work for Atlassian. It's been a very successful first six months, and we look to continue to deepen that in 2021. Perfect. Thank you very much. Your next question comes from the line of Robert Majek with Raymond James. Your line is open. Great, thanks. On the Enterprise Cloud front, you noted higher than expected initial demand for Jira Software Confluence and Jira Service Management. Can you just go into some more color there on the customer feedback you're getting? Is this dynamic enough to potentially change the timetable for large customer migrations? Thanks, Robert. It's Scott here. I think just to echo sort of the things that were sort of said earlier. We've seen the demand higher than we thought, but it's still very early days in terms of this, both on demand for large customers, as Mike talked about, and also demand for the enterprise product. At this stage, there's nothing to say different. We're really happy with, and I guess it's playing out as we expected in terms of the migrations. There's nothing there that I would change in our forecasts. Great. Thanks. Your next question comes from the line of Walter Pritchard with Citi. Hi. Thanks. Two quick questions. First, just on the data center side, I'm curious, you obviously have these plans well outlined for the server customers. Has outlining those plans and implementing them caused any change in terms of how data center customers are thinking about moving to cloud? Then just a quick second question for James around the gross margin impacts on cloud or just gross margin impacts generally. You talked about migration expenses and also just hosting costs. Can you help us understand which of those are bigger and how long you expect the migration expenses to be ongoing in COGS? Walter, it's Scott here. I'll take the first one, and then James can get into the details on the second one. The migration to cloud, whether it's server or a DC customer, the majority of our customers have medium to long-term plans to move to cloud. In areas where they're hesitant, it's the ball's in our court, because there might be some particular compliance requirement in that geography or something else that they're just waiting on us to do. The overwhelming demand is there. Obviously, with customers who have server licenses, they've got three years to make a choice where they land, whether they go to cloud or DC. The overwhelming majority want to move to cloud, and they're the discussions we're having. Of course, the customers on DC are also looking at the benefits of cloud, not having to manage their own upgrades and their hardware, getting the latest versions of our products, the increased collaboration that they can have, the lower maintenance costs, and they can put their staff on higher value activities. Those things are the same whether you're coming from server or DC. James, do you want to add to that? Yeah, sure. The first thing I'd note is that I am really pleased by how our gross margin has stayed at the level that it has as we've been able to build a business, 45% of which's revenue is coming from the cloud. I think that speaks a lot to the execution of the teams involved there. As we have indicated in prior calls, we would expect that particularly as the larger customers, the larger server and data center customers move over to the cloud, that we would see increased hosting costs. We've spoken also about how we have added to our support capabilities so that we're ready to help those customers moving over to the cloud. In terms of the timeframe for those support costs, I would expect those to be in place for the next few years, consistent with the timeframes that we've talked about for our larger customers moving over to the cloud. I would expect some downward pressure on gross margins. Having said that, I really do also want to emphasize how we're very focused on continuous cost improvement, whether it's around our usage of compute and storage resources or whether it's related to helping our support resources people help our customers so that we can do that on a more cost-efficient basis. That, I hope, gives you a little window as to how we're thinking about and operating along the lines of the cost of goods sold part of our business. Thank you both. Your next question comes from the line of Gregg Moskowitz with Mizuho Securities. Your line is open. Okay. Thank you very much. I guess, first off, I'm just kind of wondering, James, how you would characterize the revenue and/or deferred revenue benefit from pull forward this quarter as compared to what you saw one year prior. Just secondly, for Mike or Scott, just curious to hear how the demand was for data center subscriptions this quarter. Thank you. I can take the first part of that question, Gregg. In terms of maintenance pull forward activity, I would describe that in Q2 as really quite modest. Now, remember last year, that was the primary pull forward quarter. It was a much larger effect in Q2 of fiscal 2020. Now, what I would expect to play out in Q3, and as I indicated a little earlier, we're already seeing this in the month of January, is that we see more maintenance revenue pull forward activity in Q3 as well. What's a little different this time around? A couple of things, really. First of all, we've given our customers more time, more advance warning of the price increases. Second, of course, not only is there a price increase both for the server and the data center business, scheduled to be put into place next week, but this time we're also end-of-lifing the server business. We've made that announcement. Really what played out more so in Q2 is you can think of it as pull forward at some level. It's a different type of pull forward to that that we've seen in prior years because the pull forward has been customers adding to their license count, expanding the size of their current licenses ahead of the moves that we're making around server end-of-life. Data center, relatively modest pull forward there in Q2 as well. Again, I would expect there to be pull forward activity ahead of the price increases that will apply to data center just as they will apply to server as of February 2nd. Okay, that's great. Just broadly speaking, not referring to any kind of pull forward, but just around kind of overall data center demand in the quarter, that would be helpful as well. Thanks. Yeah. In terms of data center demand, overall, it was a relatively strong quarter. I think part of what we're seeing is some of our European partners encouraging some of their customers to move over to the data center ahead of these price increases. That was a part of what was going on in the subscription revenue line. As we've talked about before, you recall that the cloud business is by far the largest part of our subscription revenue growth. Right. Okay, great. Thanks, James. Thanks. Your next question comes from the line of DJ Hynes with Canaccord. Your line is open. Hey, guys. Congrats on the results. James, one for you. There's a comment in the prepared remarks that said, you're growing increasingly confident in the economics of the free edition strategy. Look, clearly the top of the funnel's really working, right? You already talked about that. What is it that you're seeing that's giving you confidence in the economics of those customers, right? Is it just a lower CAC or are you seeing expansion activity that's outperforming your expectations? Again, any color there would be helpful. Yeah, sure. What we do is study very closely each cohort of free customers that join us each month. We track their progression, whether it be as they add to their user counts, then go beyond the 10 user free limit, or whether their progression is before they get to 10, they decide that they really need and appreciate the functionality that our standard cloud offering, or even our premium cloud offering contains. They make that switch from free to a paid edition in that way before they get to the 10 user level. We watch this, as I say, very closely cohort by cohort. While I noted earlier that for FY 2021, we would continue to see this as a net revenue headwind. As we watch the cohorts, we see the trend lines are quite clear. That gives us confidence about the future of this initiative. I think it's an excellent example of how we've taken a long-term view. We've made a decision to take a short-term headwind for the long-term benefit down the track. Mike, were you going to add something? Yeah, thanks, James. DJ, I just wanted to add a couple of small points there, I suppose. We've had a lot of questions on free. Firstly, I would think of free as much less thoroughbred and much more Clydesdale in terms of how it's going to give us a long-term kind of diesel engine, like pull up the hill, right? The reason for that is, it builds a big base of customers and potential customers underneath our business that will mature into customers, small and large, over the next many, many years, right? It's a multi-year impact. It's a long-term investment that we're aiming at with free, right? Clearly, we track extremely closely active usage, and I would stress that is the most important metric for us. Are people using these free editions? No point giving away free things if people don't use them. We spend a lot of time trying to track active usage and working out how we can make sure the customers are getting value out of those free editions. We firmly believe philosophically, if they're getting value, once they hit that tenure stage, they will pay and continue to be a long-term Atlassian customer, so marching up that edition hill. The second part that's really important for the free editions for us is the reduction of friction, specifically in cross-flow and cross-sell. Where you may have, for example, a Jira Software instance that has 50 or 100 people, and someone discovers Confluence and its connections to Jira Software in that company. Previously, they would have to, if they weren't the administrator, get out a credit card and pay for a trial of the Confluence instance, if that makes sense. Now they can start a free trial of Confluence as any of those users. Their ability to discover new products that we have as an existing customer is also increased, right? The more users we have in the first product, the more that we have a potential to start trials of second products or free editions alongside with anyone in that company. Our ability to expand and go wall to wall is increased by free. Again, I would stress it's pretty modest revenue impact given these are all small customers and we're aiming for that multi-year impact, part of our sort of long-term thinking. Yeah. That makes perfect sense. I'm built more like a Clydesdale than a thoroughbred, so I can get behind that analogy. Thank you. Your next question comes from the line of Derrick Wood with Cowen and Company. Your line is open. Great. Thanks for taking my questions. My first one, I know it's early, what have you seen in terms of the revenue implications when customers migrate from server to cloud? I think you talked about small customers may see a little bit of a downtick in revenue capture, mid-market, maybe a little bit of an uptick. Any early read on revenue conversion, including the potential to upsell, cross-sell during the migration? I'll just throw in my second one. Pretty interesting win with Thoughtworks and their 8,000 users on Trello. Is this one of the biggest customers you've had adopt Trello from a user count level? Just be curious to hear maybe why they picked you over the competition and anything else you can share about how you won the deal. I can take the first part of that. In terms of the revenue result that we've seen from the server to cloud migrations, I would say that's very much tracking along to our expectations. As you pointed out, as you framed the question, we gave some, I think, I hope, helpful illustrations of how the economics work for small, medium-sized customers. Those are generally the ones that are migrating at this point in time. Yeah, that's tracking pretty consistently with our previous discussions of the topic. Yes, some headwinds on the smaller size, at least initially. Some modest tailwinds on the medium size. Net net, I wouldn't describe it as a material driver of the revenue in Q2. Matt, I can take the Trello question. Look, Trello continues to be early in its monetization journey, as we say all the time. A year ago, I believe we released a stat it had passed 50 million accounts. From the point of view of size and scale, the 8,000 users mentioned at Thoughtworks is relatively small, obviously in comparison to the 50 million users of Trello, and the 10 million monthly active user number that we passed that we released, I believe at Investor Day. That said, from Trello's point of view, obviously we're continuing to learn from the customer base and work on the monetization journeys there in Trello. Working through its monetization ladder, if you think about its equivalent with free business class and Trello Enterprise, it's sort of equivalent to the free standard premium enterprise ladder of editions that we have in Jira Software and in Jira Service Management. 8,000 users is not a particularly large enterprise Trello customer, I would say. We certainly have some that are an order of magnitude or more larger than that. It's a very good win for us. I think the reason you see companies like Trello using this is ultimately about Trello's flexibility and its capabilities and potential to handle all manner of different workloads with a very free form model inside an organization. Its adaptability to lots and lots of different use cases and almost anyone in a large company gives Trello huge advantages to solve a whole manner of workload problems for those larger organizations. Again, as we continue to do in business class and in Trello Enterprise, is give those organizations that control to manage their data, to manage their users, and manage the boards whilst keeping that flexibility and free form nature of Trello in the hands of the users, I guess. You'll see a lot of exciting things coming up in Trello. Again, a small plug for Team '21, if you go to that in a couple of months’ time. We continue to work on really exciting things for Trello and look forward to its future. Great helpful color. Thanks. Your next question comes from the line of Rob Oliver with Baird. Your line is open. Great. Thank you guys for taking my question. Happy New Year to everybody. My question is on Jira Service Management. Then I have a quick follow-up. As you see customers, and I know it's still early, migrate from Jira Service Desk up to Jira Service Management in the cloud. Obviously that product's attacking more things within the IT department, agile DevOps, ITSM, work management. Any color around sort of the seat expansion you're seeing as people migrate? Just a question on the partner network, James, you had mentioned earlier some of the ways you're incentivizing the partners with cloud apps and others. You guys are obviously very used to selling with a very light touch, but many of your partners are not. Many of your partners are very active in physical events and stuff. I'm just curious, as your partners, 600+ play a real important role here in this migration, how they're adapting to the current environment and whether you're satisfied with the progress that you see? Thank you guys very much. Sure, Rob. Look on JSM, I would say too early in the release of that particular product to see massive differences with JSD having, again, not being in the market that long in terms of adoption and seat expansion. Being a broader feature offering and having embedded the Opsgenie functionality and some other things to serve a lot more purposes. For JSM specifically, we are ambitious, I would say that we see that seat expansion over time, whether that's a small customer going from 50 seats to 80 seats or a very large customer going from 10,000 seats to 15,000 seats. I think JSM gives us all of that possibility. I would stress that we continue to invest very aggressively in that product set. We still have the CMDB functionality coming out, and continue to invest in automation, all the other things that we've put into the ITSM packages over the last little while. One thing I would broaden that, though, is when we talk about our connections to IT, it is broader than just ITSM, right? Think about ITSM as IT teams using JSM for IT. We gain great connection, trust, a partnership with those IT departments that we then have a lot of other offerings that they can take advantage of in terms of that IT department providing functionality to the rest of their organization. That's where you see the strength of the broader Jira platform. They start to bring in Jira Core, they start to bring other products to provide workflow applications, and solve lots of different use cases and workflows for other parts of the organization. That's often the IT department creating that workflow for the legal department, the marketing department, the finance department, but all within that one Jira platform and all within the broader Atlassian platform. That applies as much to Confluence as it does to Jira Core or indeed, to Trello and Trello Enterprise. That's about our broader Atlassian seat expansion once we've really gained the trust and respect of that IT department and what we can do to help them. I'll let Scott answer on the partner network. Yeah, thanks, Mike. The partners, as many of you would know, have been a big part of Atlassian. I think Scott's getting Europe out there. Oh, sorry. James, you got me? I did. Okay. Yeah, it's a huge advantage for us in Europe to have a partner network. Our partner network spans the entire globe. Atlassian does not have a services department, and so our services are really provided by our partner network around the world. As we know, we incentivize them with margins, and we also spend a lot of time on training and so forth. Of course, we are using training margins and other things to direct our partner network more towards our cloud offerings, as that is, of course, where the demand from our customers is at the moment as well. Thanks a lot, guys. Your next question comes from the line of Rishi Jaluria with D.A. Davidson. Your line is open. Hey, guys. Thanks so much for taking my questions. Nice to see continuing and improving business momentum. Two quick ones. First, going back to the comment that's been made on the server customers and not expecting mid to large, or two-thirds of mid to large customers to migrate until FY 2023 and beyond. I guess I'm a little surprised by that metric, just given the incentives that you have in place to push migrations. What has been the pushback from customers on migrating? Is it just the amount of investment that has to be made? Is it not enough incentive? Is it pricing? Is it inertia? Then follow up, I just wanted to ask about cloud net expansion rates. At the Analyst Day, you talked about 121% cloud net expansion rate and 130% for medium and large customers. How has that been trending and is that a metric you plan to disclose maybe annually or how should we be thinking about that? Thanks. Scott here. I'll take the first one, and James can either chime in on the second one. For these server customers and the large ones migrating from server to cloud, one thing to realize is these instances are mission-critical in our organizations. We had the CIO of a large technology company talk to us recently. They said, "Look, three or four mission-critical applications at Atlassian, sorry, at this particular company. One of them is our ERP, one of them is our salesforce automation, and one of them is Atlassian's products, because we literally stop when these products go down. When these mission-critical applications are there, these companies want to plan for it, plan the budget cycles for it. If they could click their fingers and move today, they appreciate all the benefits that they would get. As a practical matter, it takes a while to plan and migrate these systems where they really want to minimize the amount of downtime for their employees. There's nothing specific there. I would say there's areas that Atlassian will continue to improve on around compliance and certification in certain geographies. That takes us a while to get those things, and customers are working with us to move as we hit those certifications. There's nothing specific that I look at that makes them delay, really just inertia and the mission criticality of our applications. Just on the second part of your question. Obviously, at Investor Day, we wanted to dive a little deeper in terms of offering some cloud metrics, given the importance of the cloud business to our company in the coming years. Yes, we talked about ARR, 35% growth year-over-year at that point. The net expansion rate, as you say, at 121%, and that being a larger figure, 130%, for our medium and larger-sized customers. As we continue along our cloud migration journey, you can expect that we will periodically update those statistics. Your next question comes from the line of Brent Thill with Jefferies. Your line is open. Hey, guys. This is Luv Sodha on for Brent Thill. Congrats again on a nice quarter. Just a couple of real quick questions from me. One was digging a little bit deeper on the server-to-cloud migration. I guess, did that have any impact, any negative headwinds on billings or unearned revenue per se? The second question was on the momentum that you're seeing with the free cloud versions. Last quarter, I think you noted that you saw an increase of 175%. Has that top-of-the-funnel momentum continued in this quarter? Thank you. I can take the first part there. In terms of server-to-cloud migration impact on billings, no, I wouldn't describe it as a material item in Q2 for either our revenue results or for the deferred revenue. In terms of the free versions, we're pleased with, obviously, our progress there. I wouldn't speak to anything in addition to what we've already covered in earlier announcements. Anything to add to that, Scott or Mike? Okay. Thank you. Your next question comes from the line of Jack Andrews with Needham. Your line is open. Good afternoon. Thanks for taking my question. I wanted to see if you could provide an update for us on Align. You previously talked about how Align is one of your fastest-growing revenue products, and so just was curious if there's any context you could share in terms of just where the growth is coming from and how it's growing, whether it's through organic means or is cross-selling really kicking in there? Thank you. It's Scott here. On Align, James, that is primarily sold to our existing customers. This is not something that where we go in with a sales team and have long customer acquisition sales cycles. These are existing customers using our products, predominantly Jira, they say, "Actually, I've got one or many Jiras across my organization. We are doing an agile transformation, a digital transformation, we want better executive-level understanding, we want to scale up our agile from what was happening at the engineering level all the way through the organization." So what we get is a lot of our customers calling us up and saying, "How do we solve this problem?" Of course, Align is the exact solution they're looking for. So I don't think there's anything in terms of. It really is an upsell to our existing customer base. We're very happy with the acquisition and how it works with our customers. It is one of many things that helps us in our customers' digital transformation. That is something when we talk with customers, it used to be that software teams did their own thing in a department. These days, software is mission-critical to every company. We talk to companies across every sector, and they're really saying that the thing they're struggling with is how they transform their organization. In most of these cases, that transformation is coming from their software teams. They're actually adopting practices in software and rolling them out across the entire organization. That's benefiting not just Jira or Align, but that benefits Confluence. Those teams need to collaborate more closely across their entire organization. It's going to benefit some of the new products we've got coming out to address this need. That broad trend, I think, is ending up in a whole bunch of conversations at the C-level, CIOs, CTOs, and even CEOs of organizations who are turning up to Atlassian and asking how we can help them solve their digital transformation problem. Thank you very much. Your next question comes from the line of James Fish with Piper Sandler. Your line is open. Hey, guys. This is Quentin in for Jim. Thanks for taking our question. Really throughout the pandemic, we've seen employees adopting new ways of communicating with their teams. We're wondering if you've seen any acceleration in the adoption of Atlassian products from the non-technical users, maybe compared to more prior years. How are you viewing the competition in the non-technical specific world? Thank you. Good day, Quentin. Look, coming out to the pandemic question first. Obviously, as more people are working from home, working remotely, changing their work habits, as we like to say, they change where they work, but they keep how they work consistent in order to allow people to work from lots of different locations. As that has happened, you naturally see increased activity and usage in our products, because our products fundamentally help people working asynchronously. They help teams collaborate, they help you get on the same page. Where you might have used a whiteboard beforehand in an office, now you might use a Trello board. If you have a remote meeting, as you know, I live on Zoom most days. We often start Zoom meetings with Confluence pages as a pre-read. It's a much more efficient asynchronous method. We will often start our meetings with a 10-minute pre-read where someone will send a link to a Confluence page. We will all read it and add comments for 10 minutes, and then we will start the meeting. These sort of things are driving, I think, a difference in how people think about working and structuring their day in knowledge work in broader areas, and leading to activity and usage in our products. Again, it's not a hockey stick jump or a step change jump, I would say. It's a continued slow march of improvement for us as more companies that are already customers have more usage, more days of the week they might use our products, et cetera. That will, I think, in the long term, lead to expansion. It's not going to be a step change as they all run online and suddenly decide to buy Trello, I guess. In the broader work management for all space, look, we continue to be bullish. It's a very huge market. Obviously, we're very happy with the progress of Trello. Confluence continues to do well at helping us get wall to wall with inside customers, and we continue to work in our innovation areas on new products to target some of those trends, I suppose. One example of that is our acquisition. We acquired a company called Halp, which is a digital version of ESM, you might say, focused on messaging platforms, so Slack and Microsoft Teams, and providing service management within the messaging construct. Connecting it back sometimes to something like a Jira Service Management in the back end, and sometimes just processing all of that service within the messaging products. That, again, as you see adoption of things like Slack and Teams during this pandemic as people work from home, products like Halp will benefit from that because people are increasingly looking for ways to do work within those tools. The leading service provisioning tool within the Slack ecosystem is now in the Atlassian stable, and we continue to work on integrating that with the rest of our things. Got it. Thank you. Your next question comes from the line of Pat Walravens with JMP Securities. Your line is open. Oh, great. Thank you. I'll add my congratulations. I'll go to a little different topic here. In August, you announced that the employees could work from home permanently, even after the pandemic ends. Obviously, your whole solution set really helps with that. I don't know about you guys, but I find a full Zoom day so exhausting. Within our organization, I'm not sure it's the best thing for our employees. I'm just wondering, how has your thinking on that topic evolved over the last six months? It's Scott here. Others can join in if they want to add anything. We call it Team Anywhere, is our way we've done this, which is really that our employees can work anywhere they want, and if they choose to come and work in one of our offices, they can do that. If they choose to work from home, they can do that. That really opens up the talent pool for us. If we think one of the reasons Atlassian's been successful, I think is our heritage outside of Silicon Valley that's allowed us to tap into an amazingly diverse and very loyal talent pool, particularly in Australia. I think that's been a cause of our success, and we're really excited about able to tap into that around the world. I know myself, yeah, the days full of Zoom meetings aren't that great. What we've found is that the many employees value the lack of a commute, the ability to spend more time with friends and family, the reinvigoration of local communities around where they live. I know many of our executive team have moved from the center of cities to somewhere nearby to take advantage of those areas. So 2 hours back from a commute gives you a lot of freedom and flexibility to spend time with family or exercise or other things there. I'd remind our employees that we aren't really in a steady state there, that we are working from home in the middle of a pandemic, and that's different to what the world will look like when your kids are back at school, and you can travel into the office. We are building our policies for that world. God willing, that will happen this year. We'll see the vaccine rollout, and hopefully, we can move into a more normal state. It is something we spend a lot of time thinking about. I don't think we'll get it all right, but like everything Atlassian, we continually try and improve. That cloud sales spirit of continuing to make relentless improvement. You'll see that here as well. Great. Thanks for that perspective. Your next question comes from the line of Fred Havemeyer with Macquarie. Your line is open. Hey, thank you very much for taking my question. I'm really curious about your perspective on this. Businesses are planning for their remote work by design, this new kind of IT paradigm of hybrid or remote work. How are you seeing the evolution in your funnel, what are companies looking for in terms of software that can support more agile work cycles or team alignment within these remote work environments? Scott here. It's interesting in terms of remote work by design. There's a great quote, which is, "The future's here, it's just unevenly distributed." I think if I went back pre-pandemic, you would find that there were a large number of our customers already working in this fashion. Heavily leaning on digital tools to share information across their organization, already reaping the benefits of less synchronous communication, more work that is tracked in Confluence rather than meetings. In many cases, what we've seen with the pandemic is the sort of whole world catching up. Many people were already using Zoom on a day-to-day basis, and everyone else is now seeing it. We're seeing many customers who are using Jira and Confluence and our agile products, so Trello, already being used in many places. I don't think there's been a huge change. I guess we've always at Atlassian catered to the vanguard of people and how they're working. Obviously, there's some new things we're thinking about with this. It hasn't been a sort of step change in how products work. Thank you. Again, if you would like to ask a question, press star one on your telephone. Your next question comes from the line of Ari Terjanian with Cleveland Research. Your line is open. Hi, guys. Thanks for taking the question. Congrats on the results. At the Analyst Day a couple of months ago, you guys talked about strength in large deals. I was wondering if you could double-click on that and how recent performance is there in this quarter. Second, just any more color around what would you say is the biggest surprise you've seen in terms of customer behavior since the October announcement of the server end of sale? Thank you. In terms of large deals, we tend to update that statistically each year. I would say that we continue to execute in a way consistent with the trends that were laid out in the last stats that we laid out at Analyst Day. In terms of the second part of your question, surprises in terms of how customers have reacted post the server EOL announcement. I would really say that I think our team prepared just fabulously for that announcement. That planning, the thought that went into that announcement, has paid off, because I would say that customers are obviously thinking hard about their options and so forth, like timing for them to make a move and so forth. Really, that's very consistent with how we had analyzed and planned for this announcement. Scott or Mike, would you add anything to that? I think you said it really well, James. We're thoughtful, long-term focused, and as you've seen from Atlassian, whether it's free or migration to cloud or the product portfolio we build, we really just take a long-term focus with all of it, and there'll be volatility month to month, quarter- to- quarter. Most of the time, Mike and I don't spend really much time on pull forward or anything like that. We're spending our time thinking about the future of our company and customers in the cloud. Yeah, again, I think it's the last question. I want to say thank you to all of you for being along with the journey, and I appreciate it. I think, is that the last question? Yes. There are no further questions at this time. I'll turn the call back to Mike for closing remarks. Bye, everyone. Thank you very much for attending the call and for all of the thoughtful questions and write-ups. I hope you and your families stay safe in this challenging time around the world, and we look forward to talking to you next quarter. A reminder that Team '21, our annual conference, is on just before the next earnings call, I believe. Attend that. Thank you very much for being here. Hope you have a kickass weekend. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.