Bootstrapped Tech Firm Atlassian Hits $6B Valuation After NASDAQ Listing

From L to R: Atlassian co-founders and co-CEOs Scott Farquhar and Mike Cannon-Brooks; president Jay Simons. Image Source

From L to R: Atlassian co-founders and co-CEOs Scott Farquhar and Mike Cannon-Brooks, and President Jay Simons. Image Source

As the global technology industry is eyeing the moves of the tech ‘unicorns’ which continue to raise private capital with growing valuations, there are a few firms who like to lay low as they get big, Australia based technology firm Atlassian is among the same.

Atlassian was founded in 2002, and since then it has been operating majorly in a bootstrapped mode on the revenues it generates through its enterprise level products. On Friday, it closed its first day ever of trading at $27.78, a 32% increase from its IPO price of $21. That values the company at $5.78 billion, that is a 75% rise over its reported $3.3 billion private valuation before going public.

The company came in media limelight just last week when its IPO came closer. It has a suite of products for businesses like an issue tracking software JIRA, Slack’s competitor Hipchat among others. Relying majorly on word of mouth marketing (it claims to have no sales staff), the firm has expanded itself globally in the last 13 years, having over 20,000 customers in over 134 countries. Its sales are growing over 30% year-over-year and it continues pushing most of its funds on research and development. Its total revenue in 2015 was $319.5 million, with a compound annual growth rate of 46.7% since 2013.

It has to be noted that Atlassian received some funds from Accel Partners (In 2010), Dragoneer Investment Group and T. Rowe Price (Both in 2014). All of this funding was secondary, i.e. the money didn’t go to the bank but instead these deals saw the purchase of stocks from the Founders and the team. According to a report by Techcrunch, according to company’s filing on Wednesday, Accel owned 20%, the two co-founders and co-CEOs, Michael Cannon-Brookes and Scott Farquhar, owned 37.7% each.

At the time of Dragoneer and T.Rowe Price deal, co-Founder & co-CEO, Mike Cannon-Brookes told the Fortune “It’s not for us [the founding team]. We’ve got people who have been here a long time. It’s similar to the Accel deal in structure just at a different phase of the company’s life. Back then we needed to bring on a partner to learn about scale and growth. The next phase is bringing on a partner that knows about public markets for us to learn about that and make sure we do that phase properly when we get there. Our employees worked really hard, and it’s good timing for both of those things to come together.”

The company’s IPO stands slightly in contrast to the existing mature technology firms which are continually raising VC money and not going public. At the same time a difference in private market valuation and IPO valuation has been seen for the companies which indeed go public. In November, Square’s valuation closed at $4.2 billion on its first day of trading, as against its pre-IPO valuation of $6 billion. In January 2015, when cloud storage firm Box went public, it valued its IPO at $1.7 billion as against its private valuation of $2.4 billion. It did close its first day with a $2.7 billion market cap, however as of yesterday its market cap had fallen to $1.6 billion.

Nonetheless, Atlassian’s IPO performance should come as an encouragement to the tech companies delaying to go public. When asked why go public despite of the modest profitability and growth, Cannon-Brookes told Wired “We wanted to be a great company, and the best companies are public companies, they can invest in growth”.  On the same lines with 2015 almost over now, let’s hope 2016 would be more IPO friendly for technology firms.


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