Software maker Atlassian will exit its chat-platform business by selling Stride and Hipchat Cloud to privately owned Slack Technologies for an undisclosed amount.
The Australian-born provider has made an equity investment in San Francisco-based Slack and will also partner with the company for marketing and sales.
Shares of Atlassian rose about 16.7 per cent to US$78 in after-hours trading.
Slack, a start-up providing communication tools for corporate users, will be discontinuing the acquired team-chat tools as it looks to compete against much larger rival Microsoft that has launched a free version of Teams, its own workplace collaboration software, earlier this month.
Atlassian has also reported a bigger net loss of US$25.9 million, or 11 cents per share, in the fourth quarter ended June 30, from a loss of US$20.7 million, or 9 cents, a year earlier.
Revenue rose 40 per cent to US$243.8 million.
As reported by ARN in May, Slack added another one million paid users amid increased competition in the workplace collaboration software market.
Slack, which competes directly with Microsoft, said it now has more than 70,000 paying organisations, more than eight million daily active users and three million paid users.
The announcement was the first update on Slack's business since September 2017, when the company said it had 50,000 paying organisations, six million active users and two million paid users.
The start-up is competing against the likes of Microsoft Teams, Alphabet’s Google Hangouts Chat, Cisco’s Webex Teams, Workplace by Facebook, Atlassian’s Stride and others in the workplace collaboration market, which research firm IDC projects will be worth US$3.2 billion by 2021.
Furthermore, the deal represents another sign of how heated the collaboration software market is getting, with Microsoft recently launching a free version of Teams, offering access to the group messaging and collaboration app without requiring an Office 365 subscription.
As reported by Reseller News, Teams was launched as a rival to Slack – which already offers a free version – at the start of last year; Microsoft bundled it with other Office 365 apps such as Yammer, One Drive and other Office tools.
As of March, some 200,000 organisations were using the chat app – up from 125,000 in September – though Microsoft doesn’t break out monthly active user figures.
(Reporting by Shariq Khan in Bengaluru; Editing by Shounak Dasgupta)