December 7, 2019 Finance and Tech Publication

Slack’s stock rises on quarterly results but outlook points to higher-than-expected losses

Slack Technologies Inc. CEO Stewart Butterfield stands on the trading floor during the company’s IPO at the New York Stock Exchange (NYSE) in New York, U.S. June 20, 2019.

Brendan McDermid | Reuters

Slack shares rose about 2% in extended trading on Wednesday after the developer of the popular work messaging app reported better-than-expected quarterly results. The stock bounced around, dropping as much as 6% at one point, on concern about future losses.

Here are the key numbers for the fiscal third quarter:

  • Earnings: Loss of 2 cents a share, compared with an average estimated loss of 8 cents, according to Refinitiv.
  • Revenue: $168.7 million, compared with an average estimate of $156 million, according to Refinitiv.

Sales in the quarter, which ended Oct. 31, climbed 60% from $105.6 million a year earlier. Slack continues to grow at a rapid clip by selling its messaging service to businesses of all sizes, particularly to large companies. The company said it now has 821 customers paying more than $100,000 in annual recurring revenue, up from 720 in the second quarter.

CEO Stewart Butterfield said on the call with analysts that Slack now has more than 50 customers spending more than $1 million a year, up from 30 a year ago.

For the fourth quarter, Slack forecast revenue of $172 million to $174 million, compared to the $172.9 million average analyst estimate, according to analysts surveyed by Refinitiv. But the company provided guidance for its bottom line that suggested costs may be higher than expected. Slack said its loss, excluding some items, will be between 6 cents and 7 cents a share, while analysts were projecting a 6-cent loss.

Slack also said early investor Chamath Palihapitiya is leaving the board and is being replaced by Michael McNamara. Palihapitiya landed in hot water in May, just ahead of the company’s stock market debut, when he told CNBC that Slack “will be one of the most important tech companies in the world.” Slack said in a filing after the TV appearance that the company did not endorse the comments.

Despite its expansion, Slack has hit a snag on the public markets since its direct listing in June, primarily on concern that Microsoft is taking some of its business. The stock fell 4% on Wednesday to close at $21.66, down more than 40% from its first-day close on June 20.

Microsoft said last month that its Teams product now has 20 million daily active users, significantly more than the 12 million users Slack reported in October. With a stock market value of over $1.1 trillion and a ubiquitous presence in the workplace, Microsoft can package Teams with its Office 365 suite and make it really easy to use.

While Slack defenders claimed that Microsoft is juicing its numbers, analysts at MKM Partners, who have a buy rating on the stock, noted on Nov. 29, that “investor sentiment remains quite negative after Slack’s soft earnings result in September followed by heightened competitive pressure from Microsoft.”

On Wednesday’s call, Butterfield said that 70% its biggest customers — those spending over $1 million — are also Office 365 customers that use Microsoft for other parts of the package.

WATCH: Cloud software stocks falling, here’s what investors should expect

in News
Related Posts

Elon Musk found not liable in ‘pedo guy’ defamation trial

December 6, 2019

December 6, 2019

A jury decided that Elon Musk had not defamed British caver Vernon Unsworth in a Los Angeles federal court on...

NYSE’s proposal to allow for fundraising in direct listings rejected by SEC

December 6, 2019

December 6, 2019

The Securities and Exchange Commission has rejected the New York Stock Exchange’s proposal to allow for companies going public through...

Amazon blames holiday delivery delays on winter storms and high demand

December 6, 2019

December 6, 2019

A United Parcel Service delivery driver carries Amazon.com packages in Brooklyn, N.Y. Victor J. Blue | Bloomberg | Getty Images...

Facebook has a theory that hiding ‘likes’ will increase post volume, and Instagram is testing it

December 6, 2019

December 6, 2019

Adam Mosseri, Facebook Beck Diefenbach | Reuters Once the primary currency of social media posts, “likes” on Instagram may soon...

TikTok chief to meet with lawmakers next week as suspicions about the app’s ties to China grow

December 6, 2019

December 6, 2019

Alex Zhu, CEO of TikTok John Phillips | Getty Images TikTok chief Alex Zhu will meet with lawmakers in Washington,...

It’s not just Peloton — here are some of the biggest advertising whiffs from major brands

December 6, 2019

December 6, 2019

Though Peloton‘s marketing department may be feeling the heat this week thanks to a controversial holiday ad, it’s far from...

Ulta Beauty profit beats on demand for high-margin cosmetics; shares rise 11%

December 6, 2019

December 6, 2019

Ulta Beauty beat quarterly profit estimates on Thursday, driven by sales of higher-margin cosmetics products, sending the retailer’s shares up...

How Uber is addressing its sexual assault problem after more than 3,000 incidents last year

December 6, 2019

December 6, 2019

A driver uses an Uber Technologies car service app on a mobile device while driving in Washington, D.C. Bloomberg |...

Uber reveals extent of sexual assault problem: thousands of abuse reports a year

December 5, 2019

December 5, 2019

Uber received 235 reports of a rape occurring during a ride in the United States last year — an average...

Uber reveals widespread sexual assault problem, including hundreds of reports of rape

December 5, 2019

December 5, 2019

Uber received 235 reports of a rape occurring during a ride in the United States last year — an average...

CrowdStrike rises after beating in its third quarter results

December 5, 2019

December 5, 2019

George Kurtz, co-founder and chief executive officer of Crowdstrike Inc., speaks during the Montgomery Summit in Santa Monica, California. Patrick...

Zoom shares slide as growth slows

December 5, 2019

December 5, 2019

Zoom CEO Eric Yuan speaks at the Dropbox Work In Progress Conference in San Francisco on September 25, 2019. Matt...

Facebook could someday pay an Apple-like dividend, says co-founder of social network forerunner

December 5, 2019

December 5, 2019

Facebook will probably institute a dividend in the future, Divya Narendra, who co-founded Harvard Connection, a predecessor to Facebook, told...

SoftBank’s Vision Fund 2 has held talks to invest $150 million in home health-care start-up Honor

December 5, 2019

December 5, 2019

SoftBank Group Corp. Chairman and CEO Masayoshi Son speaks during a press conference on May 9, 2018 in Tokyo, Japan....

How to see the songs and artists you listened to most on Spotify in 2019

December 5, 2019

December 5, 2019

Jerry Garcia of the Grateful Dead performs at Shoreline Amphitheatre on May 24, 1992 in Mountain View, California. (Photo by...