What Makes Atlassian’s IPO Case Sexy

Heather Clancy

<p>In <a href="http://www.sec.gov/Archives/edgar/data/1650372/000155837015001685/filename1.htm#SELECTEDCONSOLIDATEDFINANCIALDATA_788272">filing for an initial public offering</a> earlier this week, collaboration software company <a href="https://fortune.com/company/atlassian/" target="_blank">Atlassian</a> finally offered proof to back up years of claims by its executives that it was profitable.</p><div class="paywall-selector"></div><div class="paywall">
<p>For its latest fiscal year, the company said it earned $6.8 million on $320 million in revenue. It was the third consecutive year of profits.</p>
<p>The paperwork also showed why: Compared with other hot startups, Atlassian spends far less on sales and marketing. Instead, it relies on word-of-mouth to help win accounts.</p>
<p>The company had 51,000 paying customers representing five million active users, at the end of its latest quarter. More than 850 of those accounts are worth more than $50,000 annually, according to its IPO prospectus.</p>
<p>In the fiscal year ending in June, Atlassian spent nearly $68 million on marketing to raise visibility about the company and win larger accounts. That’s about 21% of its overall revenue for that year.</p>
<p>Most other cloud software companies spend far more. At Salesforce, for example, sales and marketing expenses account for about 51% of total revenue. Cloud file-sharing company Box, meanwhile, <a href="http://www.boxinvestorrelations.com/press-release/financial-releases/box-announces-strong-second-quarter-fiscal-2016-results">spent more than 82% on these activities </a>for the six-month period ended July 31.</p>
<p>Atlassian’s number is even more stunning when you consider that it spent far more money on sales and marketing than usual during its 2015 fiscal year—twice the amount from the previous year—in prelude to its public offering. It plans to reduce that in the near future and then maintain marketing spending in line with growth, Atlassian said in its IPO filing.</p>
<p>For years, <a href="https://fortune.com/2015/04/27/atlassian-redefines-collaboration/">Atlassian has touted its “viral” approach to sales as a big differentiator</a> from other cloud software companies, which are notorious for taking years to become profitable. (For perspective, consider that <a href="https://fortune.com/company/salesforce-com/" target="_blank">Salesforce</a> still loses money.) You can expect to hear that theme more often from other collaboration software companies like <a href="https://fortune.com/2015/10/13/work-email-slack/">Slack</a>, <a href="fortune.com%20asana">Asana</a>, and <a href="fortune.com%20trello">Trello</a> as they mature as businesses.</p>
<p>Collaboration software applications, such as Atlassian’s tool for programmers that tracks project bugs, and its HipChat corporate messaging service, are really only useful if entire teams use them. That’s why the company encourages people to try its products for free. Users start 6,500 free trials daily.</p>
<p>Other collaboration software companies, such as the popular Slack message service, are also fans of the viral adoption model. Last month, the company said it had 1.7 million active daily users, more than twice the number it reported just six months ago. Slack is actually ramping up for a big advertising push, even though the company is growing its user base by about 10% each month.</p>
<p>&#8220;We are switching from trying to keep up with growth to trying to generate growth,&#8221; said founder and CEO Stewart Butterfield <a href="http://www.reuters.com/article/2015/11/10/us-websummit-slack-idUSKCN0SZ16I20151110#f4joQPtgZe3ZufMx.97">during a conference in Europe last week</a>. This could signal a turning point in the collaboration software company&#8217;s maturation. Meanwhile, Atlassian will set the pace in the public markets.</p>
<p class="p1"><div class="vodvideocontainer" style="position: relative; padding-bottom: 56.25%;"><iframe src="//fortune.com/videos/embed/0f963bee-be53-476d-944b-30beb9cda705" style="position: absolute; top: 0; left: 0; width: 100%; height: 100%; overflow: hidden;" scrolling="no" frameborder="0" allowfullscreen></iframe></div></p>
<p><em>Follow Heather Clancy on <a href="https://fortune.com/company/twitter/" target="_blank">Twitter</a> at</em> <em><a href="https://twitter.com/GreenTechLady">@greentechlady</a>or via her</em> <em><a href="https://fortune.com/author/heather-clancy/feed/">RSS feed</a>. And please</em> <em><a href="https://fortune.com/getdatasheet/">subscribe to Data Sheet</a>, Fortune’s daily newsletter on the business of technology.</em></p></div>

Atlassian, which has a huge following among software developers, has been profitable for a decade.

What Makes Atlassian’s IPO Case Unique

legacy

Future of Work

Tech

The Australian collaboration technology company has been profitable for a decade.

What Makes Atlassian’s IPO Case Unique | Fortune

Stuart Dyos

Intel’s new CEO invested at least $200 million in Chinese businesses, some with links to the country’s military, report says

/2025/04/12/intel-ceo-chief-executive-lip-bu-tan-china-walden-international-sakarya-seine-department-defense/

The Associated Press

Elon Musk’s X is under investigation by Ireland’s privacy watchdog over its use of personal data to train Grok AI

/2025/04/11/elon-musk-gronk-ai-x-investigation-ireland-privacy-watchdog-personal-data/

Sharon Goldman

12 former OpenAI employees asked to be heard in Elon Musk’s lawsuit against the company; one calls Sam Altman a ‘person of low integrity’

/2025/04/11/12-ex-openai-employees-elon-musk-lawsuit-amicus-filing-lessig/

Krysta Fauria

Katy Perry is ‘psychologically’ preparing for her Blue Origin spaceflight with Lauren Sanchez by repeating affirmations and studying string theory

/2025/04/11/katy-perry-psychologically-preparing-for-blue-origin-spaceflight-with-lauren-sanchez/

Christiaan Hetzner

President Donald Trump and White House Senior Advisor, Tesla and SpaceX CEO Elon Musk shake hands while attending the NCAA Division I Wrestling Championship on March 22.

Trump tariffs backfire on Elon Musk, as Tesla pulls U.S.-built models from China

/2025/04/11/trump-tariffs-backfire-on-elon-musk-as-tesla-pulls-models-from-china/

Preston Fore

Amazon CEO Andy Jassy says after nearly 30 years at the company, one trait separates those who see their career thrive: a high ‘WhyQ’

/2025/04/11/amazon-ceo-andy-jassy-one-trait-guides-success-whyq-ability-to-ask-questions/

Jason Ma

Stocks jump at end of roller-coaster week while de-dollarization trade continues to slam the greenback and U.S. bonds

https://fortune.com/2025/04/11/stock-market-today-dow-sp500-nasdaq-dedollarization-usd-treasury-yield-gold/?itm_source=parsely-api

Marco Quiroz-Gutierrez

Apple airlifted 600 tons of iPhones to the U.S. to try to beat Trump’s tariffs as customers scramble to secure devices before possible price increases

https://fortune.com/2025/04/10/apple-airlifts-600-tons-iphones-india-china-tariffs/?itm_source=parsely-api

Beatrice Nolan

Elon Musk drastically drops DOGE’s savings goal from $2 trillion to $150 billion for the year

https://fortune.com/2025/04/11/elon-musk-drastically-drops-doge-savings-goal-2-trillion-150-billion-year/?itm_source=parsely-api

Ben Weiss

Sam Bankman-Fried sent to ‘notoriously hard’ prison in California, then low-security facility in LA

https://fortune.com/crypto/2025/04/10/sam-bankman-fried-sbf-ftx-victorville-california-oklahoma-brooklyn/?itm_source=parsely-api

Alena Botros

Ray Dalio says a recession is likely—but not a normal one: 'We are changing the monetary order'

https://fortune.com/2025/04/11/ray-dalio-recession-changing-monetary-order/?itm_source=parsely-api

Jack Dura

The Keystone oil pipeline spilled over 147,000 gallons of Canadian oil destined for U.S. refineries

https://fortune.com/2025/04/10/keystone-oil-pipeline-spill-crude-refineries-canada-south-bow/?itm_source=parsely-api