Collaboration and project management software provider (NASDAQ: TEAM) is in the middle of transitioning its customer base to the cloud. The company's traditional business of selling software licenses for its products, which include issue tracking tool Jira, collaboration tool Confluence, and a handful of others, is being phased out in favor of cloud subscriptions.

The cloud business has been growing swiftly over the past few years, more than offsetting any declines from legacy software license sales. Part of that growth is driven by migrations of existing customers – the company plans for about 10 percentage points of cloud growth to come from migrations. The rest is driven by new customers jumping on the Atlassian bandwagon, as well as existing cloud customers growing their spending.

In the third quarter of Atlassian's fiscal 2022, which ended on March 31 of that year , cloud revenue grew by 60% year over year. In the third quarter of fiscal 2023, results for which Atlassian reported on May 4, the cloud business suffered a meaningful slowdown. Cloud revenue rose by just 34%, and with a portion of that coming from customer migrations, growth in cloud revenue from new customers and existing cloud customers was likely a mid-20s percentage.

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Source Fool.com