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Billion Dollar Unicorns: Atlassian Now Prepping for a US Listing

Posted on Tuesday, Nov 17th 2015

According to a Gartner report, the Application Development market is projected to be worth $8.7 billion this year. An IDC report estimates the Collaborative Applications market to be worth $13.5 billion and the Project and Portfolio Management market to be worth $3.8 billion in 2015. Australian entry to the Billion Dollar Unicorn club Atlassian has established a strong presence in these markets and is now looking to list on the US Stock exchange.

Atlassian’s Offerings

Sydney-based Atlassian Corporation was set up in 2002 by Scott Farquhar and Mike Cannon-Brooks to help software teams work better together. Its products have been designed to help developers collaborate with non-developer teams involved in software innovation. Unlike several other companies that rely on heavy marketing spend, Atlassian relies on word-of-mouth marketing and online ads and invests in research and development efforts. The strategy has helped it develop a strong product lineup.

Its most popular product is Jira, a service-desk ticket creating and tracking system. Other tools include Confluence, a tool for team collaboration and document-sharing, Stash, an application for sharing code, and HipChat, a chat program the company acquired in 2012. They also have a marketplace of over 1,800 add-on tools developed by third party developers on their platform.

The company has been expanding through acquisitions as well. In April this year, it acquired French video conferencing firm Blue Jimp for an undisclosed amount. It is using Blue Jimp’s open-source chat and video conferencing platform Jitsi to expand its HipChat offering. It also acquired chat and messaging app Hall for an undisclosed amount to help build the HipChat platform support capabilities.

Today its products form an integrated system for organizing, discussing, and completing shared work within an organization and have been used for ground-breaking projects, for example by NASA to design the Mars Rover, by Cochlear to develop aural implants, and by Runkeeper to create GPS fitness tracking applications. Its products are being used by over 5 million monthly active users and by more than 48,000 customers spread across 160 countries. Its customer list includes organizations like Citigroup, Coca-Cola, eBay, NASA, and Netflix.

Atlassian’s Financials

Atlassian earns revenues through subscriptions, maintenance, and license-based models. Due to its low sales overheads, it has been profitable since inception. Revenues have grown from $148.5 million in 2013 to $215.1 million in 2014 to $319.5 million in 2015. Net income grew from $10.8 million in 2013 to $19.0 million in 2014 and fell to $6.8 million this year.

By segment, subscription revenues grew 68% over the year to $85.9 million this year. Maintenance revenues grew 43% to $160.4 million and sales of perpetual licenses grew 30% to $57.4 million. Other revenues more than doubled to $15.9 million.

The company has been mostly bootstrapped and has not relied on venture funding. It has sold employee stock to Accel Partners, T. Rowe Price Group, and Dragoneer Investment Capital to raise $210 million overall. The last such sale took place in April 2014 when T. Rowe invested in it at a valuation of $3.3 billion. In September 2015, Atlassian filed its F-1 to go public on the Nasdaq under the ticker TEAM.

Atlassian’s competitors include Rally Software and GitHub. Rally Software, though is much smaller and was generating $24.5 million a quarter before being acquired earlier this year by CA Technologies at a valuation of $480 million. GitHub, meanwhile, operates on an open-source model and has been valued at $2 billion.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

This segment is a part in the series : Billion Dollar Unicorns


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