CEO Mike Cannon-Brookes touts 'largest ever quarter for competitive displacements'
The chase is on. Atlassian reported its largest-ever quarter for taking share from a major IT service management provider, CEO Mike Cannon-Brookes said on the company's fiscal third-quarter earnings call Thursday, escalating its rivalry with ServiceNow.
“This is our largest ever quarter for competitive displacements from a major ITSM provider,” Cannon-Brookes said, without referring to ServiceNow by name. “We're taking share from rivals as customers move away from legacy systems and choose Atlassian for a more modern, AI native and much better value service platform. As I said before, I believe AI is one of the best things that has ever happened to Atlassian.”
The wins put ServiceNow under pressure from an established, though sizably smaller, competitor even as it faces a growing threat from the larger Salesforce in its fight to keep those same ITSM customers.
During Salesforce’s most recent earnings call, CEO Marc Benioff boasted of taking five ServiceNow customers as the CRM giant looks to leverage AI to also take share in the ITSM space.
Meanwhile, Atlassian’s service collection, which includes Jira Service Management, has surpassed $1 billion in annual recurring revenue, growing more than 30 percent year over year. Cannon-Brookes said that the company's strength in non-IT use cases reflects a broader blurring of boundaries between teams that the Atlassian platform is designed to exploit.
“We are starting to grow really, really strongly in the enterprise and strategic segments across service management in particular, that's not just in ITSM, although in ITSM, we are going really strongly,” he said on the call. “It is in broader employee service management. We’re seeing that 75% of the Fortune 500 use our service collection. Sixty percent of our service collection customers use us outside of IT, so in HR and marketing and other areas. This is just a fantastic example and why we're getting those competitive displacements.”
The broad adoption across business units in the enterprise was called out by Forrester in its report “Vendors Move to Dominate IT Management Software,” which highlighted how both Atlassian and ServiceNow had applications that overlapped, creating a “bipolar” market for their products.
“If you are thinking, ‘ServiceNow just sells IT help desk, and Atlassian just sells agile project management software,’ you haven’t been paying attention,” Forrester wrote in its July 2024 report. “Through organic growth and acquisition, both companies have assembled comprehensive portfolios covering broad swaths of enterprise (not just IT management) functionality.”
Atlassian’s revenue during the quarter was $1.8 billion, up 32 percent year over year. ServiceNow – which reported revenue last week – was double that at $3.6 billion, up 22 percent by comparison.
Cannon-Brookes pointed to the company's "teamwork graph" — a data layer connecting work, knowledge, people, and code across Atlassian products — as the key differentiator. He said the graph is one way Atlassian delivers higher-quality AI answers while using fewer tokens, which reduces costs for customers.
“Our ability to connect the teams in an organization is really powerful as your organization becomes increasingly service driven,” Cannon-Brookes said. “And lastly, as I mentioned, we have a huge amount of AI features that are delivering real value from AI ops in the IT area to be able to diagnose and fix problems more quickly, all the way through to how you can use Rovo as a broad platform.”
He said Rovo, the company's AI assistant, now sees credit usage growing more than 20 percent month over month, and that customers using Rovo grow their annual recurring revenue at roughly twice the rate of those who do not. ®