Cannon-Brookes said their shared philosophies around growth over the short and long term would not change, and Atlassian had “the most experienced executive team we’ve ever had”; indeed, many of the key questions on Friday’s call were handled by chief financial officer Joe Binz.

Farquhar says he’s looking forward to spending more time on his philanthropic interests and his tech investments, but he’ll remain on the board of Atlassian and will take a vaguely defined special adviser role.

Profit worries

While the move appears to have been carefully managed and well thought through, Farquhar is leaving at an interesting time for Atlassian.

Friday’s March-quarter numbers showed good growth across the company’s divisions, and Cannon-Brookes and Farquhar declared it a “a milestone quarter for the Atlassian history books”, with more than 300,000 customers now using the company’s cloud products, record billings and, for the first time, more than $US1 billion ($1.53 billion) in subscription revenue

Total revenue grew 30 per cent in the quarter, ahead of expectations, while cloud revenue rose 31 per cent and data centre revenue surged 64 per cent.

But there’s a bit of noise in these numbers.

Three-and-a-half years ago, Atlassian announced that it would stop selling and maintaining server-based versions of its products (set up inside a customer’s own premises) and would migrate customers to services run through data centres or the cloud.

This migration process is flowing through the numbers; for example, 36 per cent of the 64 per cent growth in Atlassian’s data centre business in the March quarter was down to migration, rather than new sales.

In addition, growth in the March quarter was boosted in the data centre business by customers moving to get ahead of a coming price increase.

The good news is that customers that move cloud-based services are enjoying more productivity, buying a bigger range of Atlassian products and services, and paying more.

But the nagging worry for Atlassian investors is that this growth still isn’t translating into sustainable profitability.

Yes, Atlassian delivered a net profit for the March quarter of $US12.8 million, a sharp turnaround from the $US209 million loss for the same period last year. But the company remains on track to post a loss for the 12 months to June 30, with losses in the first nine months of the year sitting at $US103.6 million.

As Farquhar departs as co-CEO, it’s fascinating that this is the nut that Atlassian has failed to crack. Sustained losses in the tech world are not unusual, of course – Amazon might be the best example – but after 23 years, is this weighing on investors?

Atlassian shares are up 31 per cent in the last 12 months, but they have been gently sliding recently and fell 6 per cent in after-hours trade after the announcement of Farquhar’s departure.

Perhaps more tellingly, Atlassian shares remain 55 per cent below the record levels reached in 2021, while the broader Nasdaq market composite has bounced back to sit just below its 2021 peak.

Atlassian’s growth rates remain good and Cannon-Brookes sees more gains ahead as the migration to data centres and the cloud rolls on, and Atlassian joins the artificial intelligence bandwagon in a more meaningful way.

But the profit puzzle is one Cannon-Brookes will now need to solve on his own.