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Cloud Stocks: Atlassian Acquires From its PaaS Marketplace

Posted on Tuesday, Apr 23rd 2019

Enterprise collaboration software provider Atlassian (Nasdaq: TEAM) has been steadily building up its portfolio through acquisitions. This last quarter was no different as the company continued to add other relatively smaller players to its portfolio. Its latest quarterly results also impressed the market, but the outlook failed to deliver and the stock fell 8% in the after-hours session.

Atlassian’s Financials

Atlassian’s third quarter revenues grew 38% over the year to $309.3 million, ahead of the market’s forecast of $305 million. Net loss came in at $202.8 million, compared with net loss of $15.8 million reported a year ago. The significant increase in losses was due to a non-cash charge of $172.6 million for marking to fair value the exchange feature of Atlassian’s exchangeable senior notes and the related capped calls. On an adjusted basis, Atlassian recorded adjusted earnings of $0.21 per share compared with the Street’s forecast of an EPS of $0.18.

By segment, Subscription revenues grew 57% to $166.5 million and maintenance revenues grew 20% to $98.9 million. Perpetual license revenue grew 13% to $23.2 million and other revenues increased 36% to $20.8 million.

The company ended the quarter with 144,038 customers on an active subscription or maintenance agreement, adding more than 5,800 net new customers during the quarter.

For the current quarter, Atlassian expects revenues of $329-$331 million with an adjusted EPS of $0.16. The Street was looking for revenues of $327.6 million and an EPS of $0.19 for the quarter.

Atlassian’s Acquisitions

Atlassian remains focused on acquisitions that pair well with its most popular products and could help expand its reach beyond IT departments in an organization. Earlier this month, it announced the acquisition of Sydney-based startup Good Software for an undisclosed amount. Good Software was founded in 2016 as a “side hustle” to provide Atlassian Marketplace apps for Atlassian’s collaboration platform Confluence. Within a year, it had won the Atlassian Marketplace Best New Vendor Award. It now has more than 500 customers for its Atlassian Marketplace apps that provide analytics tools for Confluence users and admins.

Owler estimates that Good Software was generating annual revenues of $1.5 million. The acquisition will help Atlassian deliver embed these analytics capabilities within Confluence. Good Software was bootstrapped.

In March this year, Atlassian also announced the $166 million acquisition of enterprise agile planning software provider AgileCraft. AgileCraft helps organizations build and manage strategic projects and workstreams. Organizations use AgileCraft to map strategic projects, gain visibility into project status, identify risks and dependencies, and gain more accuracy around capacity planning and return on investment. Texas-based AgileCraft was founded to come up with a better way to manage large portfolios of work using lean principles. Its founding team developed an agile management platform that would integrate engineering, product management, and portfolio management. It wanted to maximize value delivery by linking strategy to execution in real time. AgileCraft had raised $10.1 million in funding. Atlassian expects the acquisition to add $1-$2 million to its fiscal 2019 revenues.

Atlassian believes that the addition of AgileCraft to its existing family of agile products will increase the breadth and depth of agile teams it can support. Together, the combined entity will provide a unified solution for team-level and enterprise-level Agile, with tools that can scale to meet the diverse needs of enterprise organizations. AgileCraft complements Atlassian’s tools by extending visibility at a portfolio or program level.

Atlassian’s platform strategy is clearly delivering strong results. It has a thriving marketplace that offers more than 1,500 Jira apps and nearly 850 Confluence apps. The third party developed apps help organizations with services ranging from IT Service Management, Project Management, Customer Support to providing Visualization Capabilities.

The recent acquisition of Good Software is an illustration of how Atlassian is leveraging its PaaS strategy to drive growth. As I wrote earlier, launching a PaaS is the best way to ensure that adjacent products built on compatible stacks grow in the SaaS player’s eco-systems, without taxing their P&Ls. I would like to know from Atlassian what other apps does it think are driving traction? What other developers are out there, ready to be acquired?

Atlassian’s stock is trading at $103.75 with a market capitalization of $24.85 billion. It touched a 52-week high of $117.06 last month. It has grown from the 52-week low of $54.57 that it had fallen to nearly a year ago.

This segment is a part in the series : Cloud Stocks

. Smartsheet Acquiring Bootstrapped Startups to Drive Growth
. Bootstrapped Unicorn Atlassian is Acquiring Capital Efficient Startups
. Netflix Price Hike Ruffles Competition
. How Will Carbon Black Differentiate?
. ServiceNow Grows Through Addition of Capital-Efficient Startups
. Zendesk and Freshworks Follow Different Acquisition Strategies
. Tableau Grows Through Small Acquisitions
. Open Platform Strategy Stands Intuit in Good Stead
. Will GoDaddy Follow the PaaS Route?
. Adobe Delivers Via PaaS
. A Look at Oracle’s 2018 M&A Activity
. What Apps Will Drive More Traction for Cloudera?
. Slack's App Focus Will Be Key to Post-IPO Success
. IBM Counts on its Cloud and Platform for the Turnaround
. Atlassian Acquires From its PaaS Marketplace
. What Should SAP Acquire to Triple its Value by 2023?
. Expect ServiceNow to Acquire From App Marketplace
. Should Follow a PaaS Strategy?
. How Upwork Can Leverage the Virtual Company Trend
. Qualys Scouting For Acquisitions
. Should SAP Acquire Zendesk or Freshworks?
. HubSpot Counts on its API Strategy
. SurveyMonkey Eyes Acquisitions for Growth
. Workday Wants to Disrupt Cloud Computing Using Machine Learning
. Einstein and Open-Source Platform Lead the Charge for Salesforce
. DocuSign Prepares to Beat Rival Adobe
. Veeva Soars, But Dassault Acquires Medidata for $5.8 Billion
. Tableau Acquisition Signals Massive Analytics Push for Salesforce
. Oracle Joins Hands with Microsoft to Take on Amazon
. GoDaddy is Making Strategic Acquisitions for the Next Level of Growth
. Alteryx Sees Strong Momentum
. Adobe Leveraging Magento and Marketo to Deliver Blockbuster Performance
. Is Slack Overvalued?
. How Will Cloudera Address the Competition?
. Zoom is Not Bothered by Cisco or Microsoft
. Domo Counts on Enterprise Revenue for Growth
. Netflix Plays with Pricing and Games to Attract Subscribers
. CrowdStrike Has a Successful IPO
. Atlassian Crosses the Billion Dollar Revenue Milestone
. ServiceNow Believes Strength Lies in Tie-ups
. Partnerships are the Mantra for BlackLine
. SurveyMonkey Counts on Enterprise Segment for Growth
. HubSpot Soars to a New High
. Intuit Pushes AI to Simplify Tax Filing
. Splunk Sees Strong Cloud Momentum
. Forescout Partners with Big Names
. Smartsheet Tapping into the Government Sector
. Salesforce Continues its Shopping Spree
. Palo Alto Networks Targets the IoT Security Market
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. Anaplan Makes its First Acquisition Post IPO
. Activist Investor Drives Market Interest in Box
. MongoDB's Formula for Success
. Coupa Aims for $1B Revenue
. Dropbox on a Rocky Road
. Medallia Banks on Acquisitions
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. Time For Skepticism with Netflix
. SAP Riding High on the Cloud
. Amazon's Faster Shipping Hurting its Earnings
. ServiceNow CEO Change Signals Focus on Acquisitions
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. HubSpot Focuses on Its Platform
. BlackLine Partners with Google Cloud
. Rapid7’s Focus on Cloud SIEM Pays Off
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. Palo Alto Targets $5B Revenue by 2022
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. Okta Targets Enterprise Customers
. MongoDB Eyeing China With Alibaba Partnership
. Twilio Counts on API Upgrades for Growth
. Adobe Revs up its Experience Platform
. Top 20 for 2020
. Anaplan Sees Expanding Use Cases
. Dropbox Gears Up to Regain Lost Valuation
. Forescout Fails to Deliver
. Enterprise Bet Pays Off for SurveyMonkey
. SAP Bets Big on Experience Management
. Twilio Steps up Investment in 2020 to Preserve Growth Momentum
. Zendesk, Freshworks Focus on Marketplaces and Integrations
. Proofpoint Targets Insider Threats Through Acquisition
. RingCentral's Powerful Partner Strategy Would Augment with PaaS
. Qualys Counts on Google and Microsoft for Growth
. Shopify Soars on Improved Merchant Offerings
. HubSpot Believes in the Importance of PaaS
. BlackLine Remains Focused on SAP Integration
. Recently Public Cloudflare has New Edge
. GoDaddy is on a Shopping Spree
. Intuit Targets Online User Base Through Acquisition
. Should Palo Alto Networks Acquire ZScaler?
. Why Salesforce Buying Vlocity Proves the Growing Importance of PaaS
. Datadog Performing Well Post Recent IPO
. Workday Should Open Up About its PaaS Success
. Anaplan Focuses on API Connectors for its Platform
. Veeva
. Five9 Strengthens its PaaS Focus
. RealPage Brings AI and SaaS to Real Estate
. Splunk Should Open up About its PaaS Metrics
. Okta Benefiting from App Diversity
. Oracle Sees Growth Momentum
. Xero Focuses on a PaaS Strategy
. DocuSign Resilient to COVID-19
. Smartsheet Looking up to Enterprise Customers for Growth
. Paylocity Delivers Solid Results
. Q2 Holdings Expands TAM with Acquisitions
. New Relic Focuses on PaaS
. AppFolio Leverages AI for Product Enhancement
. Will Adobe Open Up About its PaaS Statistics?
. Change Healthcare Pushes APIs
. Dropbox Needs to Share API Metrics
. Upwork Improves Monetization
. MongoDB has Miles to go
. Nutanix Needs to Define a PaaS Strategy
. Cloudera Focuses on Hybrid Cloud
. Atlassian Gears Up for Growth, Unfazed by Covid-19
. Shopify Helps Merchants Pivot to Online Stores
. ServiceNow Steady in Turbulent Seas
. RingCentral Sees Strong Traction
. Twilio Hits 52-Week High Amidst COVID Crisis
. HubSpot Lowers Outlook Amidst Virus Concerns
. Proofpoint Acquiring Even Amidst Crisis
. BlackLine Looks Solid At The Face of Covid-19
. GoDaddy Continues to Acquire
. Qualys Expands Cloud Offerings to Soar to New Highs
. Zendesk Struggling Amidst the Downturn
. Alteryx Bounces Back Despite Low Outlook
. Palo Alto Networks Continues to Acquire
. Workday Extends its PaaS Strategy
. Splunk Rides High on Cloud Initiatives
. Salesforce Partners with Workday to Address the New Normal
. Veeva Scales New Highs
. Is Smartsheet’s Pullback a Buying Opportunity?
. MongoDB Soars Even in the Crisis
. Okta Reiterates Outlook
. Is Anaplan a Prospect for Oracle, SAP?
. Oracle Relies on Autonomous Offerings
. Adobe Shifts its Focus
. Paycom Confident Under Current Conditions
. DocuSign Soars to Record Highs
. Paylocity Acquires Amid Crisis
. Datadog's Integrations and Upgrades Help it Soar
. AppFolio Improves Offerings for Current Conditions
. SurveyMonkey Should Get Into PaaS
. Model N Soars to a Record High
. Appian Focuses on RPA for Growth
. Slack Beefs up its Portfolio
. Coupa Expands into Treasury Services
. CrowdStrike Soars to Record Highs
. Guidewire Expands Cloud Offerings
. Dropbox Should Focus on PaaS
. Talend Expands Data Offering Through Partners
. IBM Expands Cloud Partners
. One Medical Supports COVID-19 Care Digitally
. Microsoft Rides High on Teams and Gaming
. Investors Say Yes to nCino’s IPO
. Nutanix Focuses on Government and Media Verticals
. SAP Rethinks Qualtrics Acquisition
. Tenable Expands Into Industrial Cyber-Security
. ServiceNow Expands Ties with Zoom
. Cloudera Powers its Data Platform with Partnerships
. Atlassian Continues to Acquire from PaaS Ecosystem
. Shopify Soars to an All-Time High
. The PaaS Landscape
. HubSpot Focuses on the Enterprise Segment
. GoDaddy Restructures During COVID
. Akamai's Security Solutions Thriving
. Blackline Needs a PaaS Strategy
. Twilio - A Successful PaaS Story
. Zendesk Invests in the Future
. Qualys Continues to Acquire Indian Startups
. ZoomInfo Lists Despite COVID-19
. Analysis of Alteryx PaaS Strategy
. Fastly Needs to Diversify from TikTok
. Way to Go, Salesforce
. Intuit Continues to Acquire
. VMware Continues Buying Spree
. Analysis of Five9's PaaS Strategy
. Okta Expands Alliances to Attract Enterprises
. Palo Alto Continues to Acquire
. Analysis of Splunk's PaaS Strategy
. BigCommerce Goes Big with IPO
. Analysis of Workday's PaaS Strategy
. Analysis of Anaplan's PaaS Strategy
. Sees Strong Demand
. Analysis of MongoDB's PaaS Strategy
. Analysis of Wix's Platform Strategy
. New Relic Product Upgrades Deliver Growth
. What Should Proofpoint Acquire?

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