Atlassian Keeps Moving Forward with M&A

Atlassian (NASDAQ:TEAM) is a London-based firm that began in Australia. Initially, TEAM was interested in developing software for developers so they could communicate in real time with one another as they were creating code.

When that started to bear fruit, they began to see the potential for building these types of platforms for project management and content management. Atlassian’s two most popular platforms are Jira — an issue-tracking product — and collaboration program Confluence.

The most unique aspect of TEAM’s success is the fact that it has grown by acquisition since 2011. In that time, it has spent $1 billion on 20 acquisitions, which is pretty good for a company that started in Sydney with $10,000 in credit card debt in 2002.

TEAM continues to see acquisition as its strategy moving forward. As a matter of fact, it recently began to streamline its acquisition strategy so that Atlassian doesn’t have to waste time with the deal and can focus on the integration.

Earlier this month, Atlassian published a term sheet document for acquisitions to lay out fundamentals like how much will be placed in escrow, and for how long.

It wasn’t that there was a problem getting deals done, it was the fact that most of the time and energy was spent negotiating terms rather than integration. TEAM leadership thought that they could improve this process by streamlining the front end so that they could integrate the new company faster, which is what makes acquisitions succeed.

By lowering the friction of acquisition and opening up the process, TEAM stock can compete for companies with big players like Microsoft (NASDAQ:MSFT) and Salesforce (NYSE:CRM).

TEAM Stock Takes Strategic Approach

This productivity software space is very hot these days, and Atlassian one of the leaders. As a result it does things a bit differently than the average budding enterprise software giant.

For example, TEAM launched Stride as a competitor to Slack’s (NYSE:WORK) eponymous productivity platform. But after competing in a space that wasn’t a core market for TEAM to begin with, it did something rarely done.

TEAM stock cut a deal to sell its Stride platform to WORK for a small equity stake. Both companies agreed to work to integrate the Stride platform into Slack.That way, Slack would get rid of what could have been significant competition and get a channel partner out of the deal.

And instead of Altassian pumping time and energy into a space it wasn’t growing in, the company quickly admitted defeat and built a strategic position from it. Now, WORK has gone public and has a market cap around $31 billion. The value of TEAM’s equity stake has quadrupled in value.

TEAM stock is up 49% year to date and 114% in the past 12 months. It can be a bouncy ride, but this unique company continues to fire on all cylinders.

My Portfolio Grader gives TEAM stock an overall A rating.

Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth InvestorBreakthrough StocksAccelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.

Article printed from InvestorPlace Media,

©2021 InvestorPlace Media, LLC