Atlassian Corporation Plc (TEAM): Business Model Canvas [10-2024 Updated]

Atlassian Corporation Plc (TEAM) has revolutionized the way teams collaborate and manage projects with its innovative software solutions. This blog post delves into the Business Model Canvas of Atlassian, highlighting the key elements that drive its success in the competitive landscape of cloud-based software. From strategic partnerships to unique value propositions, discover how Atlassian maintains its edge and continues to empower teams worldwide.

Atlassian Corporation Plc (TEAM) - Business Model: Key Partnerships

Collaboration with software solution partners and resellers

Atlassian collaborates with numerous software solution partners and resellers to enhance its market reach and customer service capabilities. As of September 30, 2024, Atlassian reported over 300,000 customers, with a significant portion acquired through these partnerships. The company emphasizes its strategy to leverage these relationships to drive sales and facilitate customer onboarding. The partner ecosystem includes companies that resell Atlassian products and provide complementary services, enhancing the overall value proposition for customers.

Partnerships with third-party app developers for the Atlassian Marketplace

The Atlassian Marketplace is a critical component of Atlassian's business model, featuring thousands of third-party apps that extend the functionality of its products. As of September 30, 2024, revenue from the Marketplace accounted for approximately $59.9 million, reflecting a growth in the number of apps available and their adoption by existing customers. This partnership approach not only enriches the user experience but also creates a revenue-sharing model that benefits both Atlassian and the third-party developers.

Partnership Type	Number of Apps	Revenue from Marketplace (Q1 2025)
Third-party Apps	Over 5,000	$59.9 million

Strategic alliances with cloud service providers

Atlassian has formed strategic alliances with major cloud service providers, including Amazon Web Services (AWS) and Microsoft Azure. These partnerships support Atlassian's cloud offerings, which generated $792.3 million in revenue for the three months ended September 30, 2024, up from $604.6 million in the same period the previous year. These alliances enable Atlassian to provide scalable and reliable cloud-based solutions, enhancing its competitive edge in the market.

Integration partnerships with enterprise software vendors

Atlassian maintains integration partnerships with several enterprise software vendors, facilitating seamless connections between its products and other widely used enterprise applications. These integrations are crucial for enhancing user productivity and ensuring that Atlassian products fit within existing enterprise ecosystems. The company continues to invest in these partnerships, recognizing the importance of interoperability in attracting large enterprise customers.

Atlassian Corporation Plc (TEAM) - Business Model: Key Activities

Continuous development of cloud-based software products

Atlassian has focused heavily on its cloud-based software offerings, with subscription revenues reaching $1,131,948,000 for the three months ended September 30, 2024, a 33% increase from $851,982,000 in the same period of 2023. The cloud segment alone accounted for approximately 67% of total revenues during this period.

Marketing efforts focused on self-service and word-of-mouth strategies

Marketing and sales expenses increased to $252,393,000 in Q1 2025, up 30% from $193,567,000 in Q1 2024. This increase was largely driven by enhanced advertising and marketing event expenditures, which rose by $17.9 million. Atlassian emphasizes self-service and word-of-mouth marketing, leveraging its existing user base to promote its products organically.

Customer support and engagement initiatives

Customer engagement remains a critical aspect of Atlassian's operations. The company reported a decrease in maintenance revenues due to the transition from Server to cloud offerings, which necessitates enhanced customer support frameworks to assist with migrations. Atlassian's investments in customer support are reflected in its operating expenses, with general and administrative costs totaling $146,641,000, a 2% increase from the previous year.

Research and development for innovative features and integrations

Research and development (R&D) expenses reached $603,101,000, marking a 25% increase compared to $481,738,000 in the prior year. This significant investment underscores Atlassian's commitment to innovation and integrating new features into its software suite, which is crucial for maintaining competitiveness in the cloud software market.

Key Activity	Q1 2025 Financial Data	Q1 2024 Financial Data	Percentage Change
Subscription Revenues	$1,131,948,000	$851,982,000	33%
Marketing and Sales Expenses	$252,393,000	$193,567,000	30%
Research and Development Expenses	$603,101,000	$481,738,000	25%
General and Administrative Expenses	$146,641,000	$143,310,000	2%

Atlassian Corporation Plc (TEAM) - Business Model: Key Resources

Proprietary software platforms (e.g., Jira, Confluence)

Atlassian's primary proprietary software platforms include Jira and Confluence, which are integral to its business model. As of September 30, 2024, Atlassian reported total subscription revenues of $1,131,948,000, a 33% increase compared to $851,982,000 for the same period in 2023. This growth is largely driven by the expansion of paid seats and increased demand for cloud-based services.

Strong brand recognition and customer loyalty

Atlassian has established a strong brand reputation in the software industry, particularly in project management and collaboration tools. Over 90% of the total revenues recognized in the three months ended September 30, 2024, were attributable to sales from existing customer accounts that had been active prior to June 30, 2024. This loyalty is reflected in the substantial growth of their cloud offerings, which generated $792,306,000 in revenue for the same period.

Skilled workforce with expertise in software development

Atlassian's workforce is a critical resource, with significant investments in research and development. The company allocated $603,101,000 to research and development in the three months ended September 30, 2024, which represents a 25% increase from $481,738,000 in the same quarter of the previous year. This investment underscores the importance of maintaining a skilled workforce capable of driving innovation and product development.

Comprehensive cloud infrastructure for hosting services

Atlassian has developed a robust cloud infrastructure to support its services. The company reported a gross margin of 82% for the three months ended September 30, 2024, maintaining the same margin as the previous year. The cost of revenues for this period was $217,624,000, indicating efficient management of operational costs while expanding their cloud services.

Key Resource	Details	Financial Impact
Proprietary Software Platforms	Jira, Confluence	Subscription revenues: $1,131,948,000 (33% increase YoY)
Brand Recognition	Strong customer loyalty	90% of revenues from existing customers
Skilled Workforce	Expertise in software development	R&D expenses: $603,101,000 (25% increase YoY)
Cloud Infrastructure	Robust hosting services	Gross margin: 82%, Cost of revenues: $217,624,000

Atlassian Corporation Plc (TEAM) - Business Model: Value Propositions

Affordable pricing with free trials for new users

Atlassian adopts a competitive pricing strategy that includes free trials for its software products, allowing potential customers to experience the solutions without financial commitment. This strategy is aimed at small to medium-sized businesses, where the entry-level pricing for products is significantly lower than that of traditional enterprise software solutions. For example, Atlassian's entry-level products are priced at approximately $10 per user per month, making them accessible to teams with limited budgets.

High-quality, user-friendly software solutions

Atlassian's software offerings, including Jira and Confluence, are designed with a strong emphasis on user experience. The company has received high customer satisfaction ratings, with a Net Promoter Score (NPS) of around 60, indicating a strong likelihood of customers recommending their products. In the most recent quarter, Atlassian reported a revenue increase of 21% year-over-year, reaching $1.18 billion for the three months ended September 30, 2024.

Seamless integration with third-party applications

Atlassian's products are known for their ability to integrate seamlessly with a wide range of third-party applications. This capability enhances functionality and usability, allowing teams to customize their workflows. As of September 30, 2024, Atlassian's Marketplace featured over 1,000 apps that integrate with their products, significantly expanding the utility of their core offerings.

Focus on collaboration and productivity for teams of all sizes

Atlassian's solutions are specifically designed to enhance collaboration and productivity across teams, regardless of their size. The company reports having more than 300,000 customers using its products as of September 30, 2024. Among these, a significant portion consists of teams that leverage Atlassian's cloud-based solutions, which accounted for $792 million in revenue for the quarter.

Value Proposition	Details	Metrics
Affordable Pricing	Entry-level pricing at $10 per user per month	Free trials available
User-Friendly Solutions	High customer satisfaction and user experience	NPS of 60; Revenue of $1.18 billion (Q3 2024)
Third-Party Integration	Over 1,000 apps available in the Atlassian Marketplace	Significant enhancement of product functionality
Collaboration Focus	Designed to enhance productivity for teams of all sizes	300,000+ customers; $792 million in Cloud revenue (Q3 2024)

Atlassian Corporation Plc (TEAM) - Business Model: Customer Relationships

Emphasis on self-service and low-touch sales model

Atlassian employs a self-service model that allows customers to access and utilize their products with minimal direct interaction with sales staff. As of September 30, 2024, Atlassian had over 300,000 customers, with a significant portion of customer acquisition occurring through their online platform where users can sign up for free trials or purchase subscriptions directly. This model facilitates scalability and reduces customer acquisition costs, as over 90% of total revenues in Q3 2024 were generated from existing customer accounts.

Dedicated sales team for enterprise customer engagement

For larger enterprises, Atlassian maintains a dedicated sales team to foster deeper relationships and cater to specific needs. As of September 30, 2024, Atlassian reported a noteworthy increase in customers with greater than $10,000 in Cloud Annual Recurring Revenue (ARR), which rose to 46,844 from 40,103 a year prior. This enterprise focus has enabled Atlassian to expand its product usage within large organizations, significantly contributing to its subscription revenue, which increased by 33% year-over-year in Q3 2024.

Ongoing support and training for product users

Atlassian provides extensive ongoing support and training to ensure customers maximize their use of products. This includes access to a rich library of documentation, tutorials, and community forums. In Q3 2024, the company reported an increase in customer engagement metrics, indicating that users actively sought resources to enhance their product knowledge. The company also invests in customer success programs to provide tailored training and support, which contributes to customer retention and satisfaction.

Community-driven feedback for product improvements

Atlassian actively incorporates community-driven feedback into its product development cycle. The Atlassian Community, which includes forums and user groups, serves as a platform for customers to share their experiences and suggest enhancements. As of September 30, 2024, the company had implemented numerous improvements based on user feedback, which has been instrumental in maintaining its competitive edge in the software market. This community engagement not only enhances product features but also fosters a loyal customer base, further evidenced by the growth in subscription revenues driven by existing customers.

Metric	Q3 2024	Q3 2023	Change
Total Customers	300,000+	Not specified	—
Customers with >$10,000 Cloud ARR	46,844	40,103	16.4%
Subscription Revenue	$1,131,948 (in thousands)	$851,982 (in thousands)	33%
Total Revenue	$1,187,781 (in thousands)	$977,775 (in thousands)	21%

Atlassian Corporation Plc (TEAM) - Business Model: Channels

Direct sales through the Atlassian website

Atlassian's primary channel for direct sales is its official website, where customers can purchase subscriptions for various software products, including Jira and Confluence. As of September 30, 2024, the company reported total revenues of $1,187,781,000, with subscription revenues accounting for $1,131,948,000 of that total. The direct sales model allows Atlassian to maintain a close relationship with customers and streamline the purchasing process.

Atlassian Marketplace for third-party applications

The Atlassian Marketplace serves as a vital channel for both Atlassian-developed and third-party applications. In the three months ended September 30, 2024, revenue from the Marketplace and other offerings was $59,881,000, reflecting an increase from $51,433,000 in the same period of the previous year. This marketplace not only enhances the functionality of Atlassian's core products but also fosters an ecosystem where developers can monetize their applications, thus enriching the overall user experience.

Online marketing and social media outreach

Atlassian employs robust online marketing strategies, including social media outreach, to attract and engage potential customers. The marketing expenses for the three months ended September 30, 2024, totaled $252,393,000, up from $193,567,000 in the previous year, indicating a 30% increase. This investment in marketing is aimed at increasing brand visibility and driving traffic to the Atlassian website, ultimately converting leads into paying customers.

Partnerships with resellers for localized support

Atlassian has developed partnerships with various resellers to provide localized support to clients around the globe. These partnerships enable Atlassian to reach customers in regions where direct sales may be less effective. As of September 30, 2024, Atlassian reported having more than 300,000 customers. The reseller network plays a crucial role in expanding the company's footprint in diverse markets, ensuring customers receive personalized support and services tailored to their specific needs.

Channel	Description	Revenue (Q3 2024)	Change from Previous Year
Direct Sales	Sales through the Atlassian website	$1,131,948,000	Increase from prior year
Atlassian Marketplace	Sales of third-party applications	$59,881,000	Increase from $51,433,000
Online Marketing	Social media outreach and digital marketing	$252,393,000	Increase from $193,567,000
Reseller Partnerships	Localized support through reseller networks	Part of total customer base	More than 300,000 customers

Atlassian Corporation Plc (TEAM) - Business Model: Customer Segments

Small to medium-sized enterprises adopting agile practices

Atlassian's products are particularly popular among small to medium-sized enterprises (SMEs) that are adopting agile methodologies. These SMEs benefit from Atlassian's flexible pricing and scalable solutions, which allow them to implement tools such as Jira and Confluence to enhance their project management and team collaboration.

As of September 30, 2024, Atlassian had over 300,000 customers, with a significant portion being SMEs. The company’s entry-level pricing strategies enable these customers to access essential tools without significant upfront investment.

Large enterprises, including over 80% of Fortune 500 companies

Atlassian caters to large enterprises, including more than 80% of Fortune 500 companies. These organizations leverage Atlassian's robust suite of products to manage complex workflows and enhance collaboration across large teams. The company reported that customers with greater than $10,000 in annual recurring revenue (ARR) from cloud offerings reached 46,844 as of September 30, 2024.

The demand from these enterprises has contributed significantly to Atlassian's subscription revenue, which increased by 33% year-over-year, reaching $1,131,948,000 in the three months ended September 30, 2024.

Teams across various industries seeking collaboration tools

Atlassian's customer base spans various industries, including technology, finance, healthcare, and education. The company's tools are designed to facilitate collaboration and streamline processes, which is critical for teams operating in fast-paced environments. This broad applicability has resulted in Atlassian being a preferred choice for teams looking for effective collaboration solutions.

In the three months ended September 30, 2024, Atlassian generated $792,306,000 in revenue from cloud offerings, demonstrating the high demand for its collaboration tools across different sectors.

Developers and project managers in tech-focused organizations

Atlassian's products are particularly favored by developers and project managers in tech-focused organizations. These users utilize tools like Jira for issue tracking and project management, and Confluence for documentation and collaboration. The growth of software development teams adopting agile practices has bolstered Atlassian's market position.

As evidence of this trend, the company reported a 31% increase in cloud revenue from $604,647,000 in the prior year to $792,306,000 in the three months ended September 30, 2024.

Customer Segment	Key Statistics	Revenue Contribution (Q1 2025)
Small to Medium-Sized Enterprises	Over 300,000 customers	Significant portion of $1,131,948,000 subscription revenue
Large Enterprises	80% of Fortune 500	46,844 customers with >$10,000 Cloud ARR
Various Industries	Applicable across technology, finance, healthcare, education	$792,306,000 from cloud offerings
Developers and Project Managers	Utilize Jira and Confluence extensively	31% increase in cloud revenue

Atlassian Corporation Plc (TEAM) - Business Model: Cost Structure

Research and Development Expenses for Product Enhancements

For the three months ended September 30, 2024, Atlassian reported research and development expenses of $603.1 million, an increase of $121.4 million or 25% compared to the same period in 2023, which had $481.7 million in expenses. This increase was primarily due to a rise in employee compensation expenses, including an increase of $43 million in stock-based compensation.

Marketing and Sales Expenditures for Customer Acquisition

Marketing and sales expenses for the same period amounted to $252.4 million, reflecting a 30% increase from $193.6 million in the prior year. This rise included $34.9 million in employee compensation, which encompasses $3.7 million in stock-based compensation, alongside an increase of $17.9 million in advertising and marketing event expenses.

Operational Costs Related to Cloud Infrastructure

The cost of revenues for Atlassian, which includes operational costs associated with cloud infrastructure, totaled $217.6 million for the three months ended September 30, 2024, up from $178.0 million in 2023. This increase of $39.6 million or 22% was largely driven by an increase of $22.5 million in hosting fees paid to third-party providers, along with a $6.2 million increase in employee compensation costs.

Employee Compensation and Benefits

Employee compensation and benefits have been a significant component of Atlassian's cost structure. For the three months ended September 30, 2024, total compensation expenses included in research and development were $193.4 million, in marketing and sales were $36.0 million, and in general and administrative expenses were $38.5 million.

Cost Category	Q3 2024 (in millions)	Q3 2023 (in millions)	Change (in millions)	Percentage Change
Research and Development	$603.1	$481.7	$121.4	25%
Marketing and Sales	$252.4	$193.6	$58.8	30%
Cost of Revenues	$217.6	$178.0	$39.6	22%
Total Employee Compensation (R&D, M&S, G&A)	$268.9	$258.2	$10.7	4.1%

Atlassian Corporation Plc (TEAM) - Business Model: Revenue Streams

Subscription fees from cloud and data center offerings

As of the three months ended September 30, 2024, Atlassian reported subscription revenues of $1,131,948,000, representing a 33% increase from $851,982,000 in the same period of 2023. This growth is largely driven by paid seat expansion from existing customers, migrations to cloud services, and price increases. Subscription revenues accounted for approximately 95% of total revenues during this period.

Revenue Source	Q3 2024 (in thousands)	Q3 2023 (in thousands)	% Change
Cloud Revenue	$792,306	$604,647	31%
Data Center Revenue	$335,594	$242,943	38%
Server Revenue	$0	$78,752	(100%)

Sales from third-party apps on the Atlassian Marketplace

Revenue from the Atlassian Marketplace, which includes sales of third-party apps, generated $59,881,000 in Q3 2024, an increase of 16% from $51,433,000 in Q3 2023. The marketplace revenue reflects the growing ecosystem of applications that enhance the core Atlassian products.

Revenue from consulting and training services

Consulting and training services also contribute to Atlassian's revenue. While specific figures for consulting services are not always detailed, they are included in the Other Revenues category, which reported $55,833,000 in Q3 2024, down from $125,793,000 in Q3 2023, primarily due to a significant reduction in maintenance revenue from legacy server products.

Maintenance fees from legacy server products

Maintenance fees from legacy server products have seen a substantial decline. The revenues from server offerings were $0 in Q3 2024, down from $78,752,000 in Q3 2023, due to the end of support for these products. The shift towards cloud and data center offerings has led to this decline, with maintenance fees now classified under Other Revenues.

Revenue Type	Q3 2024 (in thousands)	Q3 2023 (in thousands)	% Change
Marketplace and Other	$59,881	$51,433	16%
Maintenance (Server)	$0	$78,752	(100%)

In summary, Atlassian's revenue streams are heavily reliant on subscription fees from its cloud and data center offerings, with additional contributions from the Atlassian Marketplace and consulting services. The transition away from legacy server products has impacted maintenance revenues significantly, leading to a strategic focus on cloud-based solutions.

Article updated on 8 Nov 2024

Resources:

1. Atlassian Corporation Plc (TEAM) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Atlassian Corporation Plc (TEAM)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Atlassian Corporation Plc (TEAM)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.