Slack

  • Slack shares plunged more than 20% to $17.03 after the workplace messaging software-maker gave disappointing first quarter guidance, blaming the uncertainty caused by Covid-19.

  • Revenue in the fourth quarter rose 49% to $181.9 million (expected: $174.1 million). It made an operating loss of $91.2 million, and negative net income of $89.1 million, or an adjusted loss of $0.04 a share (expected: $0.05). Slack also reported gross margins of 86.6% in the period.

  • Slack has benefited from transitions to cloud computing as more employees in offices and across time zones use its services for communication, instead of email.

  • It was a popular stock for investors hoping to cash in on the work-from-home trend. But that trend is benefiting video conferencing company Zoom more-so than Slack.

  • Chief executive Stewart Butterfield said the company’s application was being used more actively by remote workers, but warned of "potential hesitation" from new customers about paying for the service. Slack said it has seen an increase in users of the free version of its service as the pandemic disrupts regular forms of work. But Butterfield says it is difficult to predict how much of the rise in traffic would be converted into revenue for the company.

  • It lowered revenue guidance for the quarter ending in April to between $185 million and $188 million, trailing the average analyst estimate of $188.4 million. Cue the fall in the share price given its lofty valuations.  

  • Slack faces tough competition from Microsoft, which is investing heavily in its rival product named ‘Teams’. Microsoft Teams was launched after Slack but can be packed-together with popular software programmes like Microsoft Word, Excel and PowerPoint. A survey conducted by CNBC suggests 58% of respondents use Microsoft teams, while only 30% use Slack.

  • Slack debuted on Wall Street at the end of April last year at $26 a share, and has fallen 34.6% since then – whilst Zoom has risen 60% just this year, and has almost doubled in price since listing. In this type of market it may be some time before investors decide to pickup the slack.

Slack