And that allows us to do very unique data sets to make decisions across the entire organization. And lastly, that also includes third-party products. We’ve talked about our open tool chain for a long time. And if you’re a single vendor that just does one thing, you can provide information about that one thing. But because our open tool chain spans everything across an organization, we can provide experiences and AI insights that span your entire organization. And so I think those are all really interesting. And then while the vendors work on a little bit about their AI features. We’re out there delivering them on our platform, and we’re super excited about what we deliver on a regular basis. And we just got a cadence of those things coming out to our customers on a regular basis.
And so we’re head down delivering the value to our customers.
Operator: Your next question comes from Gregg Moskowitz from Mizuho. Please go ahead.
Gregg Moskowitz: Hey, thank you for taking the question. I had a follow-up on cloud migrations. You mentioned in the shareholder letter that the number of user migrations over the past year has risen by nearly 50%. And certainly, it’s a high growth rate, but I think the increase was more like 2 times a couple of quarters ago. So I’m wondering, is this change in growth just a function of law of larger numbers and tougher compares? Or is it also reflective of a much smaller opportunity set or even a slowdown in the appetite of customers to migrate to the cloud?
Cameron Deatsch: Yes. This is Cameron. I’ll take the first-half of this and Joe add anything if he seems fit. The reality is that we’ve had ever since we have announced the server end of life, which was a little a little more than three years ago. now we have increasingly quarter-on-quarter, raised our number of migrated seats that come across the board. But of course, we saw some huge jumps depending on different times along that journey we’ve had based off of either our loyalty discount programs or price changes along the way. As you remember, over the last few years, we’ve built in these compelling events. We have customers reasons to migrate throughout the years and the customers that migrated earlier, we’re financially incentivized to do so.
Faster the numbers that we are dealing with now are quite large and they continue to grow significantly quarter-on-quarter. And I believe as we go into the next few months with server end of life, many of the customers who’ve waited until the last moment will be making these decisions to get the data center cloud, and there will be a lot of energy around that. The good part is all of our customer-facing teams, our partners, our migration experts, you name it are more than capable of handling any influx we get in the next few months as customers wait for the last minute to make their choice on whether to go to data center or cloud. And as I’ve already mentioned, post February, we will continue to have migrations continue to be a large part of our business as we move data center customers to cloud in the coming years.
Joe?
Joe Binz: Yes, Cam. The only other thing I’d add, Greg, is we do expect FY ’24 to be a very big year for cloud migrations. We’ve guided to 10 points of cloud revenue growth coming from migrations for the full-year. Just to reiterate what Cam said, that’s really driven by two factors. We do continue to invest and make terrific progress in enabling and unblocking more and more customers to the cloud. Our tooling, our support, our cloud capabilities get better every day. And then the second point to reiterate what Cam said, is we do have the server end of support moment in February 2024, and that will also contribute to migrations growth.
Gregg Moskowitz: Great, thank you.
Operator: Your next question comes from Michael Turrin from Wells Fargo. Please go ahead.
Michael Turrin: Hey, great. Thanks, good afternoon. Appreciate you taking the question. Joe, maybe one on margin. You raised the margin outlook fairly meaningfully. The 20% implied is now close to where you ended last year. Can you just help level set where you are from an investment perspective, how much opportunity do you see on the cost management side. And if there are priority areas for us to be focused on as the server migration end approaches, and maybe some resources free up as a result. That’s also useful. Thank you.
Joe Binz: Thanks, Michael. You’re right. The stronger-than-expected operating margin performance in Q1 and our guide in Q2 was driven by greater operating leverage. And so we are seeing that primarily on the operating expense side. In terms of operating expenses, I would say it’s been a team-wide effort focused on a few core principles. We’re focused on maximizing the return on every dollar we spend, making disciplined prioritization and resource allocation calls and driving operational efficiencies as we gain scale. As a result, the savings are really broad-based across all groups from developer productivity and cloud COGS optimization to G&A and everything in between. So it’s happening across all teams, and we’ve made good progress to-date.
And I do think it’s important to note while we do this, we continue to make the disciplined strategic investments in areas like cloud migrations and enterprise and AI in our core markets to drive durable long-term growth and serve customers. In terms of the long-term trends, you’re absolutely right. We’ve made significant multiyear investments in building out our cloud platform and building out our enterprise-grade capabilities. We do expect that those growth rates and those investments to moderate as we make tremendous progress against that over the next year or two. So that’s definitely an additional area of leverage that we should see in the model over the coming two years.
Operator: Your next question comes from Peter Weed from Bernstein. Please go ahead.
Peter Weed: Thank you. Note, I think you did a great job of mentioning the strength in premium and enterprise edition upsells. But I didn’t notice any conversation about cross-sells, new functionality for things like JSM that had been such a powerful growth engine recently. How has cross-sells been progressing? Any change in propensity to adopt new product, or hear I think from some other companies, we’re hearing some end-of-year strength with strong pipeline. Do you see some increasing interest here and optimism for strength at the end of the calendar year? Or how are things going with kind of cross-sell, particularly JSM, I would say.
Joe Binz: Yes, thanks. I’ll take the first part of that question, and then Scott will chime in. Cross-sell is absolutely a key driver in our cloud revenue growth rate model. We see a lot of opportunity to sell, to cross-sell additional products into existing customers. That continues to be very healthy. I talked earlier about the fact that that’s been one of the areas of our cloud business that has held up really well and been resilient through the macroeconomic environment that we’ve experienced. In terms of pipeline, I would just say, in general, our Q2 pipeline is very strong, and that’s a function of everything that we’ve talked about that’s held up well to date. It’s the migrations, it’s the cross-sell. It’s the ability to upsell our customers to premium and enterprise additions of our products. So we’re excited about that, and we’re looking forward to a great Q2. Scott?
Cameron Deatsch: I’ll take that for you, Scott. This is Cameron. Yes, the well I reiterate the pipeline, the strength we see in enterprise today on our healthy pipeline is not just migrations, but it also includes Jira Service Management. We continue to see Jira Service Management’s expansion within our customer base. Nearly 50,000 customers are on Jira Service Management today across all sizes, whether that’s small customers, as well as we’re increasingly seen some large wins in larger enterprise customers with competitive replacements of legacy tooling. I believe this is only going to continue to be strong as we continue to deliver new innovations like we spoke about earlier today with the virtual agents. And our merchant acquisitions to continue to innovate in the ITSM space.
