Atlassian’s buys video messaging platform Loom in $1.5bn bet on remote working

The software giant has made its most expensive acquisition to date, buying a video messaging platform Loom for $1.5bn as it bets that remote working is here to stay.

Atlassian co-founders and co-chief executives Mike Cannon-Brookes and Scott Farquhar say the company’s acquisition of Loom represents the “next evolution of team collaboration”.

Atlassian is doubling down on remote working being here to stay, buying video messaging platform Loom for $1.5bn - its biggest acquisition in dollar terms to date.

The $US47.98bn ($76bn) software company says the acquisition will “supercharge team collaboration”, with Loom already having more than 25 million users who are recording almost five million videos a month.

Atlassian -an Australian company listed on Nasdaq focused on agile and collaborative work - will fund the deal with mainly cash. Remote and hybrid working was catapulted into the mainstream during the pandemic but in the past year, bosses have been ordering more employees back to the office.

Companies such as NAB launching five-day-a-week mandates for senior leaders, while Mineral Resources managing director Chris Ellison has said: ‘If you want to work from home, you don’t work here.’

But other companies such as Telstra, CSL and Medibank have adopted flexible working models permanently - a move that Atlassian is betting on.

Co-founders and co-chief executives Mike Cannon-Brookes and Scott Farquhar branded the acquisition of Loom - which was founded in 2016, developing an asynchronous video messaging tool - as the “next evolution of team collaboration”.

Asynchronous means videos or even meetings do not need to be viewed or attended in real time, allowing employees to view content when it best suits their workflow.

“There are over 1 billion knowledge workers looking for better ways to plan, track and execute work each day. The rise of distributed work has meant a greater reliance on tools to help teams work asynchronously, across different geographies and timezones,” Mr Cannon-Brookes and Mr Farquhar said in a joint statement.

“This is where async video comes in, a tool increasingly sitting side-by-side other modes of communication like text, presentations, and spreadsheets. Loom’s leadership in async video combined with Atlassian’s deep understanding of team collaboration means we can bring innovation to the market and empower our customers to collaborate in richer, more human ways.”

Loom - which costs businesses $US12.50 per creator a month - will build on Atlassian’s existing collaboration and IT service management applications, including Jira, Confluence and Trello, which have more than 260,000 customers globally.

“As Atlassian consolidates Loom into its platform, engineers will soon be able to visually log issues in Jira, leaders will use videos to connect with employees at scale, sales teams will send tailored video updates to clients, and HR teams will onboard new employees with personalised welcome videos,” Mr Cannon-Brookes and Mr Farquhar said.

“By integrating Atlassian’s and Loom’s investments in AI, customers will be able to seamlessly transition between video, transcripts, summaries, documents, and the workflows derived from them.”

Mr Cannon-Brookes and Mr Farquhar said Loom will remain available as a standalone product. “Once the acquisition is complete, we’ll be integrating it across our suite of tools so customers will be able to add context to the work they are doing everywhere”.

Joe Thomas, co-founder and chief executive of Loom said the company’s “vision is to empower everyone at work to communicate more effectively wherever they are”.

“By joining Atlassian, we can accelerate their mission to unleash the potential of every team. We’re excited to weave video into collaboration in a way that only Loom and Atlassian can,” he said.

“We started getting to know Scott and Mike over four years ago, and they have been incredible mentors ever since. From our shared product-led growth roots, to our closely aligned missions to empower teams anywhere and everywhere, we couldn’t think of a better home for Loom. We’ve been working hard for the last few months to pave the way for this transaction and we couldn’t be more excited to finally share the news with the world.”

Under the terms of the definitive agreement, Atlassian will acquire Loom for approximately $US975m, inclusive of Loom’s cash balance, subject to customary adjustments. Total consideration will comprise about $US880m in cash, with the remainder in Atlassian equity awards, subject to continued vesting provisions.

The transaction is expected to close in the third quarter of the 2024 financial year, subject to customary closing conditions and required regulatory approval.

It is Atlassian’s biggest acquisition in dollar terms, but second largest relative to its market capitalisation. It bought Trello for $US425m in 2017 but Atlassian was a smaller company then with its shares trading at $US26.91. Since then, Atlassian’s shares have soared more than 592 per cent.

On Friday morning, its shares were trading 6.5 per cent lower at $US186.40. This compared with a 0.7 per cent slump on the Nasdaq.