Contact: Scott Denne
Atlassian debuts on Wall Street with a first-day pop and strong valuation. A 30% jump from its IPO price makes the SaaS vendor one of the few venture-backed companies to go public this year at a premium to its private-market valuation. Atlassian boasts a market cap of $5.6bn in current trading, compared with a $3.5bn valuation in a private round last year.
The offering feeds Wall Street’s nearly insatiable appetite for growth, with Atlassian boosting revenue 50% to $353m in the year leading up to its IPO. More importantly, the Australia-based collaboration software provider appeals to investors with more discriminating tastes. Atlassian has been in business since 2002 and spent the vast majority of that time as a bootstrapped company. Accordingly, it’s posted a profit in each of the past 10 years as it spends less than 20% of revenue on sales and marketing. Altogether, Atlassian is certainly not the typical fare that’s served up by venture capitalists.
While Atlassian’s profitable growth was a factor in today’s valuation, the lesson isn’t that Wall Street demands black ink from companies before they will buy. (Unprofitable SaaS vendors Workday and ServiceNow both trade at similar multiples to Atlassian.) Instead, when it comes to IPOs, public market investors are seeking the ‘next big thing’ rather than a speculative roll of the dice. Atlassian has more than doubled revenue over the past two years to a level where it is generating more quarterly revenue ($101m in the quarter ended in September) than some other recent IPO candidates post in an entire year.
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