What we think about Atlassian
Atlassian in Three Words: Collaborative, Cloud, Productivity
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Background
Atlassian’s collaborative software is meant to unleash the potential of every team, with cloud-based products to improve global workforce productivity. As examples, Jira helps developers build programs together, Trello delegates tasks, and OpsGenie responds to customer incidents.
The company’s products are transparently priced and normally cost less than $20 per user per month. Atlassian doesn’t employ a direct sales force; they are instead typically approached by small teams (including 7investing) who employ agile practices and want to use them for particular projects. From there, their obsessive customer focus tends to scale up quickly. Atlassian now serves more than 265,000 customers globally and has a goal of eventually reaching 100 million monthly active users and capturing a 40% share of its $24 billion addressable market.
While many software developers lost their jobs in the tough macro of 2023, Atlassian has stayed the course and introduced innovative new products like Jira Product Discovery (to prioritize projects), Compass (to improve software health), and its recent acquisition of Loom (for real-time video sharing). Atlassian still spends only 22% of its top-line on sales & marketing, allowing it to afford to spend 53% of revenue on R&D. This has allowed it to incorporate AI into several of its product lines and then deliver the new capabilities directly to customers.
Revenue grew 26% to $3.5 billion in 2023 and it churned out an impressive 24% free cash flow margin. Developers continue to trade in their button-downs and slacks at the office for t-shirts and boxer shorts at home, leading Atlassian’s productivity software to be in high demand for the foreseeable future.
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