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TechBusiness Collaboration

Atlassian Co-CEO Stresses ‘Predictability’

By
Heather Clancy
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By
Heather Clancy
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February 4, 2016, 9:02 PM ET
Courtesy of Atlassian

Business software company Atlassian (TEAM) is obsessively transparent about certain financial metrics. Just don’t ask executives to disclose details about how many people are using individual products.

During the company’s first earnings report on Thursday following its initial public offering in mid-December, they deflected questions about specific numbers that would give the outside world more perspective about Atlassian’s traction beyond its core customer base of software developers. The most they would reveal is that each product line is growing in excess of 30%, a number parroted from the company’s IPO prospectus.

“We consider that great growth across our entire portfolio,” co-founder and co-CEO Mike Cannon-Brookes told Fortune during an interview after the call. In its IPO filing, Atlassian said it had a total of 5 million monthly active users.

Atlassian’s flagship product is JIRA, which began as a bug-reporting tool and project manager for software programmers. That product was used to create two additional ones during the second quarter, as the company attempts to win over new non-technical customers.

The target audience for the original JIRA software remains development teams. Its siblings are JIRA Service Desk (services IT departments), and JIRA Core (meant for non-technical teams in human resources, financial, legal, and marketing roles). Atlassian’s other applications include Hipchat, a private messaging service akin to Slack, and Confluence, a project management and collaboration application.

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Aside from that mystery, Atlassian’s other numbers were almost boringly predictable. During the quarter, for example, it added 2,600 net new customers across all of its products, for a total of 54,262. That gain is in line with previous quarters.

The company’s big 45% growth in revenue seems less impressive when you consider that number is partly influenced by pricing changes adopted by the company during the past two years—a point Cannon-Brookes and other Atlassian executives took pains to discuss several times during the call. In the near term, the company’s growth rate will stabilize around average past percentage rates of around 35%, they said.

Unlike many business software companies that rely on spectacular, down-to-the wire sales to make their quarters, Atlassian’s sales are relatively stable. That’s not exactly a bad thing.

“We sell as much in the first week of the quarter as we do in the last week of the quarter. … We’re not going to have 10% to 20% beats,” Cannon-Brookes said, referring to the likelihood of his company beating its guidance by a big margin. He added: “A great quarter is a 2% to 3% beat.”

The reason for that is Atlassian’s sales model, which relies heavily on world-of-mouth sales rather than on a big sales team like traditional business software companies. There’s less overhead and fewer end-of-quarter blitzes to make a sales quota.

With that in mind, Atlassian forecast per-share income of 5 cents to 6 cents on revenue of $113 million to $115 million for its current current, which ends March 31. Its full year projection calls for revenue of $443 million to $447 million, and per-share earnings of 30 cent to 31 cents.

Attaining unicorn status may be a distraction.

Atlassian’s stock closed Thursday at $23.92. Its shares gave up nearly 4% of their value in after hours trading following the reported results. The company held a successful IPO in mid-December. On its first day of trading, the company’s stock closed at $27.78, a 32% increase over its IPO price of $21. Atlassian’s shares closed at a high of $31.10 on Dec. 29 but have trended down with the rest of the tech market for most of 2016.

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By Heather Clancy
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