It's been an unpredictable year for initial public offerings, particularly for tech companies with lofty valuations. But Atlassian has definitely bucked that trend, ending the year not only with a big bang, but with some potentially important business lessons for other entrepreneurs.

On Thursday, collaboration software maker Atlassian had one of the biggest IPOs of 2015, raising $460 million and valuing the company at about $4.4 billion. Simply put, investors pay attention when you have a unique business model, strong revenue growth and--oh, yeah--profits.

Atlassian, bootstrapped by its founders and co-chief executives Scott Farquhar and Mike Cannon-Brookes, using a $10,000 credit card advance, is one of a handful of young companies that operate in the cloud and online marketplace for workplace collaboration tools. Unlike many competitors, however, the Sydney, Australia-based business has always been profitable, mostly because it keeps expenses low. In particular, its marketing costs are about 19 percent of its revenue, which is a fraction of what some comparable companies spend. (Cloud storage provider Box, in its IPO filing from late last year, reported spending more than its full-year revenue for 2014 on sales and marketing.) This is largely because it relies on word-of-mouth sales for its products, rather than an expensive, dedicated sales channel.

The strong IPO is also a testament to the company's unique business model, which provides enterprises with access to low-cost work process software via the Web, its founders say. In addition, the investor excitement might also have a little something to do with Atlassian's strong sales.

For its fiscal year 2015, ended June 30, it had $319 million in total revenue, and $6.7 million in profit, according to its IPO filing with the Securities and Exchange Commission. Revenues increased roughly 50 percent compared to the same time period in 2014, while profits have dropped by about two thirds. Cannon-Brooks attributes the profit decline to investment in company growth, for things like additional office space and hiring more employees.

"It is a validation of what we have built, which is a very disciplined and patient business over the last 13 years," says Cannon-Brookes, the co-founder and co-chief executive of the company, who spoke to Inc. after the company's debut on the NASDAQ Thursday. "I'm super excited for our crew that the world is noticing what a special thing they've built, it's a different model and we have a huge opportunity."

Out of the gate, the company's share price jumped 33 percent from its initial price of $21, trading at about $28 by 4 p.m. eastern.

By most Silicon Valley standards, the company's trajectory has been unique--particularly when multi-billion dollar fund-raises have become increasingly common. It has raised very little money, for instance. In 2010, Atlassian raised $60 million from Accel Partners. And in 2014, three executives, including the company's president Jay Simons, agreed to sell $150 million worth of stock to T. Rowe Price and Dragoneer Investment Group.

"None of that cash hit the company balance sheet," Cannon-Brookes says.

In fact, Farquhar and Cannon-Brookes still own 74 percent of the company, according to its SEC filing. That's an outsize amount for most entrepreneurs, considering that many company founders wind up owning far less when they go public. (Square founder Jack Dorsey, for example, owns 24 percent of that company, which went public in November.)

Meanwhile, Atlassian has also avoided the valuation hit that many other tech IPOs have experienced this year--some unicorns, so named for their unusual valuations of over $1 billion, have gotten dinged in the public markets. When Square went public, for example, its shares priced at the low end of the spectrum, at $9, which reduced its valuation by half to about $3 billion. Early in 2015, cloud storage and Inc. 5000 company Box took a $700 million haircut to its valuation, going public at $1.7 billion.

None of that concerns Cannon-Brookes.

"We are trying to build a different kind of company with a disruptive business model that could go public in any market," he says. "We have been profitable for our entire existence...and the different model we have is attractive to investors in any environment."

Published on: Dec 10, 2015