It's been a big week for Sydney, Australia-based Atlassian. The software productivity tool-maker quietly filed its initial US public offering, giving would-be investors a bigger glimpse at its plans and recent financials.
For both retail and institutional investors that are considering backing the company, the filing must have been a relief. While Atlassian was founded with the mission of building products to help developer teams collaborate with non-developer teams to build better software, the company tends to emphasize the developer part of that equation.
Open the Curtain, Please
Yes, the company has blogs and steadily tweets, but — and this is said with love — the Tweets aren't exactly always illuminating from a financial-only perspective. Here are a few samples from the day after and the day of its public filing.
5 tips for CI-friendly #Git repositories https://t.co/P4lfnk1eYg #ContinuousDelivery pic.twitter.com/NVUJeQMzeb— Atlassian (@Atlassian) November 9, 2015
Looking forward to this one. So. Much. Code. https://t.co/SQC2ovSeva— Atlassian (@Atlassian) November 10, 2015
So! As I was saying, a financial filing is a crucial tool for investors, but hardly the only disclosure they need to make a decision. Unfortunately the F-1 form — a form the US Securities and Exchange Commission (SEC) requires foreign issuers to file to register securities — leaves a lot of wiggle room for a company that doesn’t want to disclose too much initially. But this is what we have for now, so let's proceed with interpreting Atlassian's filing.
It will list on Nasdaq under the ticker symbol TEAM. That's pretty straightforward and kudos for getting a ticker symbol that refers to the mission and not the name.
It expects it can raise as much as $250 million in the offering. Whatever. Why not make it $100 million or $500 million? Typically companies put in any figure as a placeholder at this stage in the IPO cycle. For the same reason we will bypass the lack of information, such as price range and number of shares sold.
It is profitable. We figured. When it first filed in September the company had been valued at $3.3 billion. Independently audited figures, though, are always nice. According to this new filing, Atlassian posted $6.8 million in net income for fiscal year 2015. This was down compared to fiscal years 2013 and 2014 when the company generated net income of $10.8 million and $19 million, respectively. The offsetting factor for 2015 was an increase in R&D spending although even this is only a partial explanation. In fiscal 2014 and 2015, its research and development expenses were 37 percent and 44 percent of revenue, respectively.
It thinks traditional tools in this space are poorly designed, costly, complex and difficult to integrate. No argument here.Teams who use its tools go on to do wonderful things. In case you didn't realize, its platform was used by NASA as it designed Mars Rover, by Cochlear's team as it developed aural implants and by Runkeeper when it created GPS fitness tracking applications.
It has a surprisingly large customer base. It counts 5 million monthly active users and more than 48,000 organizations in more than 160 countries. This includes 78 of the Fortune 100 and 261 of the Fortune 500. What's really interesting about these customers, though, is that much of its growth has come from organic word-of-mouth.
Its big growth opportunity is the non-development users. So we gathered when it overhauled its portfolio last month, dividing it into three stand-alone products, including one for the growing number of users who are not programmers.
It has been breached in the past and is still vulnerable. Join the club.
It may need to grow a direct sales force. So far it hasn't which is part of the company's charm, or perhaps legend. But the type of scale Atlassian is gunning for with this IPO will require a more rigorous approach to market. And when it is public it will be answerable to people who know how such things are done — even if they don't quite grasp the software itself.