Why invest $1B in developer productivity software?

Atlassian has agreed to acquire DX, a developer productivity insight platform, for $1 billion in cash and restricted stock. The deal, announced Thursday, marks Atlassian’s largest acquisition to date and its second this month following the purchase of The Browser Company.

DX, founded five years ago by Abi Noda and Greyson Junggren, provides analytics that help enterprises understand how productive their engineering teams are and identify bottlenecks in software development. The company works with more than 350 enterprise customers, including ADP, Adyen, Dropbox, and BNY Mellon, and has tripled its customer base annually since emerging from stealth in 2022. DX raised less than $5 million in venture funding before agreeing to the transaction.

Noda, who previously worked as a product manager at GitHub, said the motivation to start DX came from frustration with the tools available to measure productivity. “The assumptions we had about what we needed to help ship products faster were quite different than what the teams and developers were saying was getting in their way,” he told TechCrunch in 2022. “Even teams didn’t always have awareness about their own issues and leadership.”

That premise has guided DX’s approach: blending quantitative metrics with qualitative input from developers. The company’s goal has been to provide visibility into engineering performance without reducing productivity measurement to surveillance.

Why Atlassian Chose DX

For Atlassian, which has spent three years trying to build its own developer productivity tool, DX represented both a cultural and product fit. “DX has done an amazing job [of] understanding the qualitative and quantitative aspects of developer productivity and turning that into actions that can improve those companies and give them insights and comparisons to others in their industry, others at their size, etc.,” Atlassian co-founder and CEO Mike Cannon-Brookes told TechCrunch.

Cannon-Brookes said the acquisition comes at a time when enterprises are facing increased pressure to account for spending on AI. “You suddenly have these budgets that are going up. Is that a good thing? Is that not a good thing? Am I spending the money in the right ways? It’s really, really important and critical,” he said.

He added that DX was a natural choice, noting that about 90% of DX’s customers were already using Atlassian’s project management and collaboration tools. He also emphasized cultural alignment, pointing to DX’s Salt Lake City base and its ability to scale without heavy outside funding traits he said resonated with Atlassian’s own history.

How DX Fits Into Atlassian’s System

DX will be integrated into Atlassian’s broader product suite, which already includes Jira, Confluence, Bitbucket, and Compass. The company positions this suite as a “System of Work” designed to connect teams across software development and business functions.

For DX, the combination allows its insights to be paired with Atlassian’s widely used collaboration and workflow tools. “We are able to provide customers with that full flywheel to get the data and understand where we are unhealthy,” Noda said. “They can plug in Atlassian’s tools and solutions to go address those bottlenecks.”

Analysts note that the acquisition highlights a growing demand for better measurement of developer productivity at a time when AI tools are reshaping workflows. “What a lot of leaders are saying is, the time for experimenting has passed,” Thomas Randall, research director at Info-Tech Research Group, told Computerworld. “It’s time to now actually put together the solid business case, and greater observability helps.”

Randall said DX’s approach allows teams to see not only where work slows down such as in code reviews or testing delays but also whether new AI assistants and automation tools are producing tangible results. He added that the ability to benchmark developer satisfaction and identify friction points could help organizations reduce technical debt, shorten cycle times, and lower risk.

Recent Moves at Atlassian

The DX deal comes shortly after Atlassian’s acquisition of The Browser Company, a New York-based AI browser developer, and the announcement that Jason Warner, co-founder and co-CEO of AI lab Poolside, will join Atlassian’s board on October 1. Warner previously served as CTO of GitHub and brings experience at the intersection of AI, product design, and enterprise adoption.

Atlassian has also been expanding its developer-facing tools with new offerings in Bitbucket Pipelines and Rovo Dev. With more than 300,000 customers globally, the company is at a central platform for managing software development in a period of heightened scrutiny over the value of AI investments.