Atlassian is a darling in tech. Everyone dreams of building a company that can grow to, literally, just 7.5% the size of them. Or 1 Billion $. They are a huge company in SaaS. They bring in the 20th most revenue via the SaaS model and that includes the likes of Amazon, Google, Adobe, and Microsoft who recently moved many of their offerings to the cloud.
They started their company in a basement and didn’t take funding until 8 years after they started. No other company founded in the last 40 years can say that. Not even Gates or Jobs. To pile on, they only took two rounds of funding. Amazing when you consider almost all tech companies take two rounds before they even get going. Enough history. How will they do in the future?
Atlassian gives tools to allow developers to be as effective as possible. They have millions of users using their most popular product, Jira, to improve the product development process. These developers rely on this thing. Do you think they are going to okay with moving away from the platform they use to manage all day-to-day and long-term projects? No fucking Chance.
The most impressive part of Atlassian is their customer base. They have 95,000+ paying companies using their products. Those 95K+ companies bring them into the tens of millions for users. A strong user base is one of my key metrics in predicting revenue growth for a B2B tech company.
Why They Will Win
Plan and Simple. Expand revenue.
They have millions of licenses that are relatively low priced and provide way more value to their customers than they pay. Atlassian can and will raise prices for these 2 reasons:
- Raising the prices of all products licenses: They have 11 individual products and they don’t have a license that cost more than 10 bucks. WOW. Let’s say they increase each seat by 50% – that will lead to at least 20% revenue growth. That is if you account for massive, unprecedented, churn. I don’t expect abuse of their power but I do expect them to get their fair share of the value they provide.
- New Products/Decreasing Costs: So much of their revenue goes right back into R&D & acquisitions. They have a new product, Trello, that has massive traction. What it does isn’t important. What is important is that it is seeing massive growth in new users and eventually will lead to massive revenue with low-cost support.
- User Type: The users of all of Atlassian apps are developers & their managers. Software development teams are the fasting growing departments in the corporate world today. Atlassian products are expected from Dev’s and the complexity of the departments are only going up.
I struggle trying to decide what of my picks is more of a sure thing. After writing this TEAM is my most obvious winner in the long term. BOX may beat them in short-term gains but over the next 5-10 years TEAM will be a consistent winner