(Bloomberg) — Atlassian Corp. agreed to acquire video-messaging startup Loom for $975 million, its largest deal ever, in a bet that more professional collaboration and instruction will be done remotely.
Loom lets users record videos from their computer screens and share them with co-workers. The product is used by companies for tasks like on-boarding new employees, reviewing code, sharing feedback, explaining documents and all-hands meetings.
The startup's ambition for video "aligns very much with our views about the future of work," Atlassian Co-Chief Executive Officer Mike Cannon-Brookes said in an interview. Work among employees on different schedules or in separate time zones "is a bigger and bigger deal all the time."
Loom will continue as a standalone product and be integrated into other Atlassian collaboration tools such as Jira and Confluence, Cannon-Brookes said.
The deal is roughly the size of Atlassian's previous 20 acquisitions combined. Cash will be used for $880 million of the transaction, with the remainder in stock awards, the company said Thursday in a statement. The purchase is expected to be completed in the quarter ending in March 2024, and be "slightly dilutive" to operating margins through the fiscal year ending in June 2025, Atlassian said.
Atlassian, a maker of workplace productivity software, has experienced a slowdown in revenue growth over the last year, but delivered an optimistic view on future sales from cloud applications during its most recent earnings report. In February, it announced its first stock buyback of as much as $1 billion — a plan that won't be affected by the acquisition, the company said.
San Francisco-based Loom was founded in 2016 and has more than 200,000 customers, according to the statement. Its business was accelerated by the pandemic, when interactions that would have happened in the office were no longer possible. The startup was valued at $1.53 billion during a funding round in May 2021, according to research firm CB Insights. The company cut 14% of its workforce last year, citing "increased economic uncertainty," according to TechCrunch. It has 160 employees and didn't release revenue figures.
Many firms that thrived in the pandemic such as Zoom Video Communications Inc. have struggled to continue growing as workers returned to offices. But Loom Chief Executive Officer Joe Thomas said the video service has plenty of room to expand. "Our core engagement metrics continue to grow like 50 to 60% per year," Thomas said. "That really hasn't slowed down at all in the last couple years, even with return to office."
As most big tech employees require employees to come back to the office, Atlassian has remained a cheerleader for remote work, swearing-off office mandates. Though even for companies with a primarily in-office culture, Loom is still useful, Cannon-Brookes added. "You don't have to be a five-day-a-week, fully-distributed, fully-remote company to take advantage of this."