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Atlassian Acquires Popular Team Productivity App Trello For $425 Million

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Australian software maker Atlassian has taken one of the leading independent players in collaboration software off the board as it looks to keep pace with some of the biggest players in tech.

Atlassian announced on Monday that it had acquired popular team collaboration software maker Trello for $425 million. It's the largest acquisition to date for the company that went public in 2015 and its 18th in 14 years. Atlassian is paying about $360 million in cash and the remainder in stock, the company said.

Trello had been one of the breakout hits of a fast-growing enterprise software market focused on teamwork and productivity, passing 1 million daily active users last year while reaching 19 million total registered users. At its core a form of digital whiteboard or easily grouped series of virtual sticky notes for a team to track a project, Trello fit into the landscape in what CEO Michael Pryor told FORBES in May was the equivalent of a team's GPS, alongside pure communication tools like Slack functioning as its radio.

Atlassian offers its own communication product, Hipchat, as well as a collaborative document creator called Confluence and a growing suite of CRM tools roughly equivalent to some of the features offered by Microsoft and Salesforce. President Jay Simons says Trello shared Atlassian's mission of wanting to reach 100 million monthly active users in offices worldwide.

"We are a perfect home for them, because we are a company that stands for the same thing that they also care about, which is teams," Simons said. "From our perspective, what's exciting about them is it's a breakout product that's been incredibly successful."

Adding Trello continues Atlassian's ambition to expand into an office workforce beyond a company's developer teams. With them, it leads the market through its Jira software product. But as it moves toward design and product management, Atlassian looks more of a challenger amid crowded competition. Hipchat competes most notably with Slack but also a range of communication tools offered internally by Microsoft, Salesforce, Google and even Facebook. Confluence competes with Google's G Suite and Microsoft as well, alongside ex-Facebook CTO Bret Taylor's company Quip, which Salesforce acquired in 2016 for at least $582 million. According to Simons, Trello would slot in between those products as a home for "free form ideas."

Trello reached 1.1 million users in May 2016. (Credit: Trello)

Trello joins Atlassian as it posted $457 million in revenue for 2016, growth of 43% year over year. The company had free cash flow of $95 million, meaning this was a significant investment for the company with a market capitalization of more than $5 billion. But Simons argues that Atlassian has always spent aggressively on research and development to grow faster. Atlassian spent 38% of revenue for the full year 2016 on R&D, the company reported. "We are over-indexed on R&D because we think around workplace technology you always have to be reinventing," says Simons.

The acquisition also comes less than two months after project management software challenger Asana announced a Trello rival called Boards. Led by Facebook cofounder Dustin Moskovitz and early employee Justin Rosenstein, Asana had raised $50 million at a $600 million valuation last March.

Offering a more focused product than a full suite, Trello cost less than that at its price tag of about $425 million, but the sum still would seem a lofty one for a company that was only on pace to make, and not actually banking, $10 million six months before. Trello had been slow to prioritize making money as part of a deliberate plan to build growth organically much like Slack, CEO Pryor told FORBES last year.

Trello hadn't raised any outside funding since a $10 million round in July 2014 which had valued the company at $50 million, according to data from PitchBook. In May, Pryor said the company was cash-flow break even and with enough money in the bank not to need to raise a new round. If he'd pursued that route, Trello would have undoubtedly fetched a much higher price tag, but likely not what Atlassian was willing to pay.

Trello will remain a standalone property for the foreseeable future, according to Simons at Atlassian, eventually connecting and integrating into Atlassian's other products. Pryor is expected to remain in charge after the deal closes later this quarter.

On the heels of Quip's sale, the acquisition adds another standout example to the argument that the enterprise software market is consolidating, and fast, as the public companies look to counter each other at each point in a customer's workflow. But Simons argues that Trello selling to Atlassian is as much about their vision as it is market trends. "The business model is very similar: we're both chasing the high volume, high velocity, land inside a team and expand through the business, going deeply technical and deeply non-technical," he says. "You look at a company and see a reflection of yourself there."

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