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Cloud Stocks: Atlassian Continues to Acquire from PaaS Ecosystem

Posted on Wednesday, Aug 5th 2020

Last week, Atlassian (NASDAQ: TEAM) reported its fourth quarter results that continued to surpass estimates. The company has been on an acquisition spree as it looks to invest in collaboration tools during the current conditions where most companies are allowing employees to work remotely.

Atlassian’s Financials

For the fourth quarter, revenue grew 29% to $430.5 million, ahead of the market’s forecast of $409 million. Net loss was $385.2 million, compared with net loss of $237.5 million a year ago. Adjusted EPS was $0.25, better than the market’s forecast of $0.20.

By segment, Subscription revenues grew 5.45% to $257.5 million and maintenance revenues grew 2.7% to $122.8 million. License revenue declined 3% to $20.4 million and other revenues increased 11% to $29.8 million.

Atlassian ended the year with revenues of $1.61 billion compared with $1.21 billion a year ago. Adjusted EPS improved 5.5% to $1.15 for the year.

For the first quarter, Atlassian expects revenues of $430-$445 million against the market’s estimated $435.8 million. It expects to end the year with an adjusted EPS of $0.26-$0.27 compared with the market’s forecast of an EPS of $0.27.

Atlassian’s Acquisitions

Last week, Atlassian announced the acquisition of Sweden-based Mindville for an undisclosed sum. Mindville is a Jira-centric enterprise asset management firm with over 1,700 customers including names like NASA, Spotify, and Samsung. Mindville’s Insight provides organizations with visibility into their assets and services that are essential to deliver improved customer and employee service experiences. It provides organizations with a place to store and share information about all their assets and infrastructure across IT, HR, Sales, facilities, and other functions. It helps discover and track assets and infrastructure by scanning the network so that teams do not have to enter every asset manually.

Given the current scenario where companies are accelerating their digital transformation, Atlassian is finding that more companies are adopting agile DevOps practices to keep pace with change. However, with their existing systems, these companies find it difficult to react to changes and attend to incidents across different teams. With Mindville, Atlassian will be able to improve its ITSM capabilities by integrating contextual information from disparate development tools with infrastructure-related information from Mindville. IT teams will be able to leverage Jira Service Desk to anticipate the impact of changes to critical business services and will be able to respond to unexpected issues at a faster pace. Prior to the acquisition, Mindville was privately owned and did not raise any funding

In May this year, Atlassian also announced the acquisition of Denver-based Halp for an undisclosed sum. With real-time messaging becoming more prevalent in the workplace, companies need solutions that are embedded within their team messaging tools. Halp uses messaging to convert Slack into an internal help desk solution for teams such as marketing, security, legal, finance, support, and IT. It extends Jira Service Desk into Slack, and offers a two-way integration with Confluence and Zendesk. Prior to the acquisition, Halp was privately held and had raised $2.7 million in funding from investors including NEXT Frontier Capital, Access Ventures, FirstMile Ventures, Slack, Techstars Ventures, Matchstick Ventures, eonCapital, and Techstars Boulder Accelerator.

Atlassian’s stock is trading at $177.47 with a market capitalization of $43.56 billion. It touched a 52-week high of $198.41 in July this year. It hit a 52-week low of $107 in October last year.

This segment is a part in the series : Cloud Stocks


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