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Atlassian Enters ServiceNow's ITSM Turf With OpsGenie Buyout

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Atlassian Corporation Plc (TEAM - Free Report) recently announced that it is acquiring OpsGenie for $295 million to strategically enter the IT operations software market, which is currently dominated by ServiceNow Inc. (NOW - Free Report) .

OpsGenie has already been integrated into the company’s end-to-end incident management platform, Jira Ops, which incidentally was introduced on the day of the acquisition announcement. Jira Ops aims to enable customers to deal with service disruptions in a simpler way.

The acquisition comes weeks after Atlassian sold its corporate chat assets to rival, Slack Technologies Inc. The withdrawal from the communications market as well as the OpsGenie buyout highlights the company’s business strategy to focus on high-growth areas.

Driven by such initiatives, shares of Atlassian have outperformed the industry on a year-to-date basis with an average return of 101.9% compared with the industry’s rally of 28.7%.


Focus on Capturing Market Share

Per Gartner, the market for IT operations software is expected to grow to $38 billion by 2022 — a major reason for the company’s decision to capture this high-potential market.

ServiceNow, which is a dominant name in the IT service market, continues to win market share by replacing legacy on-premise systems with cloud-based processes. However, with Atlassian as a new entrant, it is set to face stiff competition.

Atlassian plans to reach out to small teams of developers within big companies and let them decide whether to purchase its solutions, which will be cheaper than ServiceNow’s.

With the combined capabilities of OpsGenie, Atlassian aims to enable IT workers to track outages and minimize downtime. OpsGenie’s 3,000 customers including 7-Eleven and Expedia Group Inc. will become part of Atlassian’s portfolio as a result of the acquisition.

Zacks Rank & Stocks to Consider

Atlassian currently has a Zacks Rank #3 (Hold).

A few top-ranked stocks in the broader Computer and Technology sector are Fortinet, Inc. (FTNT - Free Report) and Five9, Inc. (FIVN - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Fortinet and Five9 is projected to be 16.8% and 20%, respectively.

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