Why This Software Stock Didn't Get Crushed Like Its Competitors

In this clip from "3 Minute Stocks Updates" on Motley Fool Live, recorded on Jan. 5, Motley Fool contributors Brian Withers and Toby Bordelon discuss why Atlassian (TEAM -1.06%) has outperformed other SaaS competitors and consider whether it can continue to do so.

Brian Withers: Atlassian. TEAM is the ticker. They were just named a leader by Forrester (FORR 0.75%) for its enterprise service management tools. These tools are in the same zone as ServiceNow (NOW -2.39%). ServiceNow is in the leader zone as well. ServiceNow was actually founded and focused on this product and customer set. This is great news for Atlassian shareholders and a recognition that its move into the IT service management space is paying off. In its investor meeting over a year ago, the company laid out three pillars which was focused on, first, agile development tools for software engineers, which is where the company started. Work management and it calls it for all, for non-tech and technical, and this IT service management, which is a natural extension of its work in the software engineering teams. Today, 35,000 customers depend on Jira service management for their product support needs. A quote from the press release, "Atlassian received the highest possible scores in 18 of the 22 evaluation criteria. The report list usability ecosystem Atlassian Suite integrations as its greater strength, noting that Atlassian is a good fit for organizations looking for a comprehensively integrated service management platform to bring together development, operations, and business teams." I love that this company's products are being recognized as exceptional, especially in this new area for growth.

Toby Bordelon: Brian, I looked at the stock chart over the past year. Atlassian hasn't gotten crushed as much as some of the other SaaS companies have. Stock's down over time for sure, but it's not as much as you might think given the gloom and doom we hear about tech companies, SaaS, and general financial media. My question for you is, what makes Atlassian different and why has it held up better? Can it continue to do so?

Withers: That's a great insight, Toby. The stock actually is up if you look over the last 12 months 41%, but it's down as well with other tech companies, 25% from its high. I think it's different because of its broad range of products. For instance, it competes with Asana (ASAN -1.02%) for work management. It competes with ServiceNow on IT service management, and it competes with tools like JFrog (FROG -2.11%) for code release. Why have three different companies with three different focuses when you can consolidate, as a customer, all of these street functions with Atlassian tools? In fact, Forrester recognized this in their report and said, Atlassian's strategy centers around a comprehensive digital product pipeline coupled with an effective land and expand customer acquisition model. This strategy receives the strongest score in this evaluation. That's what I really like about it, its umbrella of services and products.