Atlassian, the Australian software giant recently announced its plans to acquire video messaging platform Loom for nearly $975 million. 

In the official press release, the duo announced their joint investments in AI would enhance asynchronous video capabilities. Their users will be able to move between recorded clips, transcripts, summaries documents and workflows. The goal is to facilitate collaboration among individuals, irrespective of their geographical locations and time zone differences.

“Async video is the next evolution of team collaboration, and teaming up with Loom helps distributed teams communicate in deeply human ways,” Mike Cannon-Brookes, co-founder and co-CEO of Atlassian, stated while announcing the deal.

The acquisition news has not been well received as post-pandemic Loom’s valuation has dropped but Atlassian still sees its 25 million customers, and more than 5 million video conversations per month, as a valuable asset.

Back in 2016, Loom emerged as a pioneering web-based tool designed to capture both a user’s facial expressions and on-screen activities simultaneously. Over time, it was widely adopted, particularly among companies with dispersed workforces. Loom’s primary innovation lay in facilitating asynchronous video communication, enabling individuals to message their peers, who could then respond at their own convenience, thereby offering an alternative to real-time meetings and conferences.

Loom-ing Over

Loom’s tools let users record their screens, camera and microphone to make and share videos. The San Francisco-based company boasts Sequoia, Kleiner Perkins and a16z among its investors but has not had a good tiding monetarily in the recent past. 

The startup had raised nearly $204 million since 2016 but as times changed, so did the company’s value. Loom’s co-founder Vinay Hiremath said on X that Atlassian has been a long and true believer of Loom. 

“To put the longevity and growth of the relationship into perspective, Atlassian was all-in on Loom when we were doing just under 1 million looms per month in 2019. We are now doing over 7 million looms recorded per month,” he said on X. 

He said that this “acquisition has come at a time when Loom’s financials and growth are very strong”. But last June, the company had let go 14% of its employees a year after it joined the unicorn club. 

Loom’s customer list reads like a who’s who of corporations across a variety of verticals, including Ford, Tesla, Disney, Walmart, Goldman Sachs and Amazon, to name but a few.

But with a free tier to push the business, perhaps too many users were free and not enough were in the paying category. It seems that the writing might have been on the wall last June when the company announced the layoff.

The latest deal with Atlassian is expected to be completed in the fiscal years ending June 2024 and 2025 but is unlikely to wake up the sleepy M&A market.

Atlassian has a record of failed acquisitions including Bitbucket, HipChat, and OpsGenie. While Loom has been an industry favourite, almost a billion being spent seems more for the company’s existing user base than the tech behind the tool. 

On a brighter note

The partnership suggests a promising outlook for both companies, despite their individual struggles to establish a presence. Hiremath, one of Loom’s co-founders, affirmed that the company will continue to ship new product value to the platform besides integrating across Atlassian’s products. 

“The distribution Atlassian can provide Loom and vice versa is going to create a lot of customer value that would take much longer to create solo,” he said on X. He further stated that Loom’s goal is to make this one of the best software acquisitions in history.

Hiremath is optimistic about the deal since he wants people to look back on this moment and say “Atlassian got a steal” and continue to say “Loom just keeps getting better” and “How could I go back to Confluence/JIRA/etc. without video embedded into it?”.

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