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Atlassian: A Cool Australian IPO-Ready Software Company

Posted on Thursday, Jul 26th 2012

In the recent spurt of IPOs, where social media and consumer-focused Internet stocks have generally not fared very well, analysts believe that enterprise technology providers have a better chance, especially those operating in the SaaS model. Recently listed Proofpoint, Infoblox, and Splunk are cases in point. Another enterprise services provider, Atlassian, is expected to hit the IPO market soon.

Atlassian’s Financials
Australia-based Atlassian is a provider of collaborative tools for enterprises. The company was founded in 2002 in Sydney, Australia by Scott Farquhar and Mike Cannon-Brookes. Today it is present in more than 130 countries with 22,000 customers, including Facebook, Hulu, eBay, and Adobe, to name a few.

Atlassian is best known for its proprietary products, Jira and Confluence. Jira is a project and issue tracking tool that helps product teams track issues, bugs, tasks, and deadlines to help complete their tasks on time. Confluence is their content collaboration tool that helps their teams create, share, and discuss documents and media content. Other offerings include BitBucket, a web-based source code hosting service; Bamboo, a continuous integration server; and the newly-released Stash, a Git repository management product for enterprise teams. To promote use among smaller businesses, Atlassian’s products are available for a fee of as low as $10 per month for 10 seats.

Last year, the company earned revenues of $103 million. In 2007, its revenues were an estimated $17 million, translating to a compounded annual growth rate of more than 47% over the past five years. What is even more interesting about its business model is that it has earned all these revenues without a dedicated sales employee. Atlassian does all its sales and marketing through its blogs and word-of-mouth. Although the details of its profitability are not known, reports suggest that the company has been profitable for a long time.

To date, Atlassian has received $60 million in venture funding from Accel Partners. Analysts believe that the company is now gearing up for an IPO. The company recently added three new board members to prepare for this move: Doug Burgum, former board chair at SuccessFactors and CEO of Great Plains Software; Murray Demo, former CFO of Adobe Systems, Dolby Laboratories and LiveOps; and  Kirk Bowman, venture partner at Accel Partners and former executive vice president at EqualLogic and VMWare.

Atlassian’s Product Expansion
Recently Atlassian launched Marketplace, a site where customers can buy and manage more than 1,000 free and commercial add-ons and third-party integrations that work with Atlassian products. The apps available on the site complement and extend the functionality of Atlassian’s suite of software products. Third-party partners can now sell their software solutions directly to Atlassian’s products to streamline product development. According to the company’s statistics, more than 4,000 add-ons are downloaded each day from the Atlassian Marketplace.

Besides launching new products, the company is adding features to its existing offerings. It recently released the newest version of Confluence, which now comes with new social user engagement and content discovery features. The upgraded version boasts of Quick Comments and Likes that help users start conversations and share feedback. The tool also generates personalized weekly and daily summary emails and recommends popular content.

Atlassian’s Acquisitions
Earlier last quarter, Atlassian acquired San Francisco–based HipChat. HipChat is a hosted private chat service for companies and teams with more than 1,200 customers.  Atlassian plans to leverage HipChat’s chat platform to strengthen its file sharing and group collaboration.

In 2011, Atlassian acquired SourceTree, a Mac client for Git and Mercurial (Hg) distributed version control systems (DVCS) as well as Subversion source control. SourceTree is available on the Mac App Store and also as a direct download from the SourceTree website. Their software helps manage multiple repositories so that developers can manage and interface with multiple Git and Hg repositories visually through a client instead of the command line.

Atlassian looks like a very cool company with great revenue traction, as well as a good business model. Presumably, they will do more than $150 million in revenue in 2012, and a $750 million-$1 billion valuation is reasonable to estimate.

I am generally thrilled to see the crop of pre-IPO and IPO companies we’ve been covering lately. It looks as though the industry has been productive over the past decade and has built real companies, not just foo-foo stuff.

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