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Atlassian Under Public Scrutiny

Posted on Monday, Nov 28th 2016

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It is close to a year since collaboration software maker Atlassian made a successful debut on the NASDAQ exchange under the ticket TEAM. Let us see how this legitimate Billion Dollar Unicorn is faring under public scrutiny.

Atlassian’s Financials

In its most recent first quarter results, Atlassian reported revenue of $136.8 million, up 34%. Net loss was $2.6 million or $0.01 per share, compared with net income of $5.1 million or $0.03 per share a year ago. Non IFRS net income was $22.7 million or $0.10 per share compared with $18.4 million or $0.11 per share last year. It ended the quarter with cash and short-term investments of $754.3 million.

By segment, revenues from subscription rose 64% to $49.9 million, maintenance grew 23% to $61.7 million, perpetual license 13% increased to $17.5 million, and other revenues 34% grew to $7.6 million.

For the second quarter, Atlassian expects revenue to be in the range of $142.5 million to $144.5 million. Net loss per diluted share is expected to be approximately ($0.03) on an IFRS basis, and net income per diluted share is expected to be approximately of $0.08 on a non-IFRS basis.

For fiscal year 2017, total revenue is expected to be in the range of $597 million to $603 million. Net loss per diluted share is expected to be in the range of ($0.18) to ($0.17) on an IFRS basis, and net income per diluted share is expected to be in the range of $0.33 to $0.34 on a non-IFRS basis.

Over 90% of its business comes from existing customers. Atlassian ended the first quarter of fiscal 2017 with a total customer count of 65,673, up 27%.

For the fiscal year 2016, Atlassian reported annual revenues of $457 million, as increase of $137.5 million or 43%. Net income was $4.3 million. Atlassian had built strong fundamentals with a lean sales team. It continues to follow that even now. Although marketing and sales expenses increased 37% to $93.4 million, they continue to remain at about 21% of its revenues.

Atlassian’s Innovations

In July 2016, Atlassian acquired Dogwood Labs, Inc. , also known as StatusPage, a leader in the status and incident communication space. StatusPage lets customers communicate the status of their services including incidents, performance data, and scheduled maintenance. End users can subscribe to real-time SMS and email updates, keeping them informed while lowering support costs for providers.

Atlassian plans to accelerate StatusPage’s offering with future integrations across its collaboration portfolio. HipChat and BitBucket were products that were developed with the help of acquisitions. So, it is good to see that it has a healthy acquisition strategy in place to help it innovate in the collaboration space.

Atlassian expanded the reach of JIRA Service Desk beyond internal service organizations by introducing features designed to support external customers. These include features such as increased support for customer organizations, enabling end users within the same company to share and collaborate on each other’s support tickets, and enhanced branding and customization of emails to support customers’ communications with their customers.

Other innovations include real-time collaborative editing for Confluence, the introduction of AWS support for JIRA Software Data Center and Bitbucket Data Center, and the beta launch of HipChat Data Center.

Atlassian recently announced a new integration with Amazon Echo that allows Alexa to initiate conversations. The integration allows a user to connect Alexa to their HipCat room and teach Alexa to perform simple tasks. It also allows Alexa to proactively give notifications from HipChat rooms. HipChat has also launched a group videoconferencing feature that can connect up to 20 teammates.

Foremost among its competitors are Microsoft and Slack for its workplace chat platform HipChat. In early November, Microsoft unveiled a new work chat app called Teams that is expected to launch in early 2017. Microsoft already has 85 million monthly active users on Office 365, all of whom get access to Teams when it enters into general availability next year. Another of its competitors Slack has 5.8 million weekly active users. Earlier in April, Slack lost Uber to Atlassian’s HipChat for company-wide collaboration as Slack was unable to keep up.

The reach of Microsoft is quite intimidating, but if Atlassian continues to innovate and focus on the fundamentals, it should do just fine. And who knows, Microsoft may even acquire them.

Its stock is currently trading at $27.34 with a market cap of $6 billion. Its 52-week range is $16.92 – $35.16.

Photo Credit: Dmitry Baranovskiy/Flickr.com

 

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