Atlassian shares jump 16% in after-hours trading after revealing new partnership deal with Slack

SuppliedAtlasssian co-founders Scott Farquhar and Mike Cannon-Brookes with the original Atlassian logo.
  • Atlassian has sold the IP to Stride and HipChat, its popular work chat tools, to $US5 billion startup Slack.
  • Atlassian has also made a small strategic investment in Slack. The two companies are now positioning themselves as partners, with more technical integrations to come.
  • The work chat space is under pressure from Microsoft, which is investing heavily in its competing Microsoft Teams.
  • Atlassian stock jumped almost 16% after the deal was announced.

Atlassian, the $US15 billion Aussie software giant, has announced that it’s selling the IP for Stride and HipChat – its popular messaging services – to $US5 billion startup Slack, which has been a major rival.

The move means that after 6 years, Atlassian is getting out of the messaging market, which is under intense competitive pressure from major players like Microsoft Teams and fast-rising upstarts like Slack. HipChat and Stride will be discontinued early next year, says Atlassian.

As part of the deal, Atlassian will make a “small but symbolically important investment in Slack,” said Slack CEO Stewart Butterfield on Twitter. Indeed, the two companies are positioning this as a partnership – Atlassian’s other flagship products, including its flagship Jira bug-tracking software, already integrate with Slack.

Most recently, Atlassian partnered on the launch of Slack’s Actions in May.

An Atlassian spokesperson told BI the new arrangement would help “co-develop tighter native integrations between our products”. She said the equity investment in Slack was “representative of our intention to partner long-term”.

“This deeper partnership exemplifies our shared belief that the world of enterprise software is moving to a model in which people are building their own technology stack with the highly specialised, interoperable tools that best suit their needs,” said Slack Chief Product Officer April Underwood in a statement.

Microsoft Teams has been growing fast, putting its smaller competitors under the gun. Microsoft includes Teams as part of the Office 365 subscription service for businesses, and recently released a free version designed to get users hooked on the product. Now, the question is whether the combined forces of Slack and Atlassian can stunt its growth.

On a blog post, Atlassian VP of Product Joff Redfern seemed to lament to loss of Stride, the team communication solution which Atlassian rolled out less than a year ago.

Redfern said since Stride’s launch, “the market in real-time communications has changed pretty dramatically. And throughout that change, one product has continued to stand out from the others: Slack.”

He added that “hard choices help us reflect on what’s most important to us”, but the new partnership “reinforces our commitment to interoperability and a customer-first philosophy”.

“We believe this partnership is the best way to advance our mission to unleash the potential of every team. And it’ll allow us to improve our focus in other areas, including expanding our offerings for technical and IT teams.”

Atlassian said it would provide a migration program to help Hipchat users easily move to Slack as the service winds down.

The announcement was made as part of Atlassian’s quarterly earnings statement. Atlassian stock is jumping as high as almost 16% in after-hours trading at the time of writing.

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