Atlassian Seeks Domicile Move to Pave Way for U.S. Initial Offer | Hacker News Reader

Atlassian Seeks Domicile Move to Pave Way for U.S. Initial Offer

bloomberg.com

62 pointsig142 comments

As an Aussie, sad to see a homegrown company head overseas. Can understand why though. 30% corporate tax, lower EBITDA: Market Cap and I'm sure plenty of red tape. Tis a shame.

The best investment an Australian developer can make is a passport.

Same with a Canadian. Resource industry based economies crowd out the other industries, they have a higher profit : risk ratio.

Aussies resent business, they don't seem to realize that the money that pays their high wages has to come from somewhere.

As a fellow Ausssie, I'm also sad about this. By the sounds of it, they've given this move a lot of careful consideration.

But, rather than just be sad about it...

Might be a good opportunity to discuss what can be done to improve on the situation for future Australian companies? In what ways can navigating through the red tape be made simpler?

I know there's a lot of small startups springing up across at least Melbourne and Sydney. So it's natural to assume Atlassian aren't the only ones faced with this dilemma of moving overseas to further their business.

It's probably not about red tape. It's that companies listed on US exchanges have higher valuations than companies listed on the ASX.

There's just not that much red tape in Australia. Starting and running a company costs a few hundred bucks per year. If you keep up your books, reporting takes a few minutes per quarter.

Bam, you've successfully navigated all the red tape needed to run a software business.

You don't have to be in the US to be listed in the US, Atlassian are actually moving to the UK but listing in the US.

Exactly. This is all about corporate tax rates, capital gains, transfer pricing, etc.

Could you elaborate? It'd be interesting to know more.

I don't know about Australia's system, but the U.K. has been a popular target for reincorporation of American companies, along with Ireland and Switzerland: http://online.wsj.com/news/articles/SB1000087239639044423050.... Bermuda, a popular domicile in the past, apparently made certain changes to its tax code that caused companies to move to European countries.

For corporations, tax rates lead to domicile-shopping because finance analysts use Earnings per Share (EPS), which is computed after taxes, as a key measure of company performance. Relocating from somewhere in the U.S. to the U.K. might substantially increase the total taxes paid by employees and executives (almost every developed country has a higher individual tax burden than the U.S.), but it can goose that all-important EPS number.

Well part of the confusion is that one reason for our headline rate, as I understand it, is because we have franking for company/income tax.

So Australian companies tend to pay dividends much more freely than US companies, but the headline corporate tax rate is higher.

That's actually an interesting illustration of the dynamic. The management at publicly-listed companies are very preoccupied with what finance analysts have to say about the stock. When someone at Morgan Stanley compares two companies on an EPS basis, what's relevant is the rate paid by the company. It comes down to $0.28 per share versus $0.35 per share, even if other features of the tax code mitigate that difference when a dividend is actually paid out.

Right. I'm going on the article's assertion that relocating to the UK will make it easier to launch an IPO in a US market.

Tax would be a big part of that. I expect that American familiarity and comfort with UK companies would be another.

I also suspect the relative ease of relocating a large number Australian's to the UK would have a big impact (ease of getting visa's etc).

I think it's easier to get Australians into the USA on the E3 visa.

E3s are temporary and must be renewed every 2 years. Can't be transferred to another employer. Can't be used to qualify for permanent residency. They are quite useful if your married (straight) partner wants to join you (and somewhat useful if you have a defacto non-US citizen gay partner due to a bizarre quirk in the law. Tough luck if you have a defacto straight partner though.)

Lots of Australians would qualify for permanent residency in the UK under an Ancestory Visa, or an equivalent in another EU country. Emigrating AU<->UK is a very well worn path that's easy to naviagte. The US isn't quite so welcoming.

(Source: i'm an Australian who live in the UK for 10 years, the US for 2 and now Canada for 5.)

How would you compare the 4 countries, and why did you choose Canada as your current place?

I don't see any of those drawbacks as drawbacks, though. For me the key to the E3 is that I don't have to play H1B lotto.

You could make it easier to buy shares from abroad.

I tried to buy NZ stock exchange shares in the UK, and my broker didn't cover it.

Not sure what the situation with Australian ones is. But basically, the more brokers abroad that can get them, the less the advantage of being on NASDAQ.

I don't think that's to do with our regulations; it's just that Australia's share market is miniscule compared to those in the global capitals of capital. NZ even more so. There's not enough retail investor interest to cover the costs.

After growing organically - and very successfully too - they accepted $60m from Acccel Partners, a private equity firm, in 2010.

This move abroad has probably been driven by the money-men seeking their return, rather than any business imperative.

I imagine a big part would the higher trading multiples and thus potentially higher valuation.

Hopefully they will bring plenty of Aussie staff with them.

Who then have children eligible to play for England in the Ashes. I think we have need of them.

You know that its a bad situation when a company decides moving to the UK will be cheaper.

I really hope this doesn't fuck up the company offering. We are deeply embedded with Atlassian products / services. JIRA is an ingrained part of our daily business processes.

All of our developers actually like it - a first when it comes to bug / issue / story management tools. It has its quirks, but we haven't found anything that matches it to date.

Shameless plug: we @Countersoft actually compete with Jira all day long.

But I hear you - there's not many enterprise grade issue trackers (that don't suck).

Nothing shameless! So how does one get a start selling software to enterprise? Granted your product is SAAS so I suppose that reduces the barrier.

I spent 6 years doing Enterprise consulting but as a workerbee I don't believe that gives me much of a leg up, compared to say someone who was an exec.

I don't want to start cold calling/emailing former clients and coworkers :)

Actually, we are not really 100% SaaS.

Over half our sales are still On-Premise: download and install. Shock. Horror.

From a tech standpoint that's tough because the same web app has to run under Windows IIS and then scale to handle SaaS customers in our own cloud setup.

Barrier? You should see the crap you have to handle in order to just install .NET web app onto say a financial company's hardware. SaaS guys have it easy!

In terms of Enterprise Sales we have lead generation activities with inside sales folks who provide product demos. Took a while to get it right. Trade shows, banners, magazines - none of this stuff works for us in enterprise sales, where customers hand over tens of thousands of dollars for a software license.

Haha..No surprise On-Premise is big, though going by marketing buzz one would think the opposite.

It is good to know it "Took a while to get it right", helps set expectations :)

I love JIRA. The plugin ecosystem, on the other hand, reminds me of Wordpress in a mildly negative way.

Vanilla JIRA and Bitbucket are both really solid offerings. JIRA is so ubiquitous I've used it on and off at various companies almost since it was first released. They've done so well there.

As someone who has attempted to fix a broken plugin... I completely agree.

So much this! My only gripe is the almost exclusively pay-for plugin ecosystem surrounding their apps.

The number of decent free (or even low cost!) plugins is few and far between unlike, say, Mediawiki vs Confluence.

Worse is that those same plugins follow the same user-based pricing that the main app does, regardless of what the plugin actually does.. so if I want, say, a table markup plugin to patch some of the holes in the Confluence's WYSIWYG editor, I can expect to pay the same amount as the Confluence license if not more!

And the developers of said plugins get snippy with you if you dare ask "WTF?"

Yeah, I'll just try to get approved to spend $1,200 to render HTML tables in Confluence. That'll go over really well with the accounting guys.

meh.

It jumped the shark when they got rid of wikitext. The agile tools (Greenhopper or whatever) feel really bolted on. And it's sloooooow

I'm a bit late to the party, but the article is misleading.

Atlassian is considering changing its corporate structure so that its parent company is in the UK. Reasons include tax advantages and making the company more attractive to investors in light of a possible future IPO. Supposedly there are very few international companies listed on a US exchange which have their parent company in Australia, which means Atlassian would be a riskier investment.

That may involve having a few people in an office in the UK, but engineering (and company) headquarters would remain in Sydney, Australia.

Nobody would be losing any jobs over this, and Atlassian would still be trying to hire a boatload of developers in Australia.

Source: Scott Farquhar (co-CEO) at the December All Hands meeting (I work at Atlassian).

Edit: should probably point out that this is all "may"s and "would"s because it's up for a company-wide vote in the next few weeks - I have a ~500 page information booklet sitting on my desk.

As a tax practitioner working with software companies and their owners I have come to the conclusion that the Australian tax system is very hit and miss. The base rates for corporate tax and capital gains tax are high. There are some real tax traps laying around such as Division 7A which can inadvertently cause major issues.

However for startups, the tax system can work very well for you if you make full use of it. The recent changes to the R&D Tax Incentive have made it very popular with startups as it can fund up to 45% of the development costs. Every year I see many five and six figure tax refund cheques go to software startups that don't have significantly large revenue.

Once you get larger, the tax & other benefits of offshoring are undeniable. I would expect that Atlassian will keep their development teams in Silicon Valley and Australia, who can still benefit from the better access to capital and valuations from outside of Australia.

> Sales jumped 34 percent from the previous 12 months to $149 million.

Atlassian has a really good growth, I've heard of a ~30% yearly figure:

> Atlassian's 2011 Revenues were $102 millions [1]

> 2009 revenue was $US58 million [2]

Which sounds like an exponential 30%. Any financial expert to confirm we're comparing the right figures here?

> Scott Farquhar, who owns about 88 percent of the company with co-founder Mike Cannon-Brookes

> Accel Partners [...] now owns 10 percent of the company

Anyone knows how the structure of the capital works and who owns the rest?

[1] http://techcrunch.com/2012/01/16/atlassian-2011-revenues-102... [2] http://www.smh.com.au/technology/enterprise/from-uni-dropout...

What is most likely the reason why Atlassian prefers moving to UK instead of US?

Especially as the investors and NYSE&NASDAQ are in the US.

I hope the move helps them and doesnt cause their products to suffer. We use Jira in my organization and I hope that we can eventually get off SVN and move to Stash or Bitbucket. Although thats probably a pipe dream but I still favor Git over SVN.

I doubt the redomicile will have an impact on their product quality. I'm a customer of OnDemand for better or worse, but their products have been in a death spiral for at least the past 3 years. Poor performance with their cloud based solutions and a clumsiness and complexity fast eclipsing the ibm/clearcase rubbish...

Start with git-svn bridge locally and convert interested teammates one at a time.

Just remember that until everyone is on board, you need strict discipline as SVN has a much small feature set the Git does. Thereby, you should read the git-svn documentation closely and not use any incompatible Git features. Good luck!

Are other AU companies feeling the same way?

A bit of an aside but half relevant now that they could be moving overseas.

I tried to apply for an internship at Atlassian but was rejected because they only take interns from UNSW. I was not pleased.

EDIT: I suppose it makes sense since the founders attended UNSW.

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