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Wheelings & Dealings: Atlassian IPO Surges Company Value

December 10, 2015

We don’t really see that many technology companies filing for IPOs, at least not like a few years ago. Atlassian, an Australian company that develops products for software developers and project managers, is bucking that trend, and as of this morning began trading on the public markets under the ticker symbol TEAM.

Atlassian develops cloud-based workplace collaboration software such as the bug tracking tool JIRA, the instant message app HipChat, and the code collaboration and hosting site BitBucket. The company’s goal is to sell 22 million shares at $21 per share, which would give the company a valuation of $4.4 billion.

Atlassian has decided to offer free product trials and a Web-based sales process, meaning the company has no strict sales team. Its early success has reassured and stimulated investor interest in the IPO.

Another strong trait for the company is its early and continuous profit, which is a rarity in the tech world. Atlassian has generated positive revenue for the past 10 years running. It does not rely on venture capital funding, and in this past June it netted $6.8 million. Although the company did have two funding rounds from Accel and T.Rowe Price, the reason given was to let employees sell some of their shares.

It is expected that Atlassian will be the last tech IPO for this year. It is only the fourth unicorn to go public this year. A unicorn is a tech company with valuations of over a billion dollars. Unicorns are generally venture capital-backed companies known for spending a lot more money than their earnings show. This is usually a unicorn’s continuing quest for growth, which unfortunately usually fails.

As of this writing, Atlassian has surged to a $5.8 billion valuation. This isn’t uncommon. Other tech companies, many of them unprofitable, have enjoyed enormously successful IPOs, only to fall later (see: Twitter, Facebook). However, given Atlassian’s strong history of profitability and its relative security compared to other successful tech companies, this may be a safe bet. 

Edited by Kyle Piscioniere

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