Slack posts narrower than expected losses
Slack (WORK) reported its fiscal Q3 2020 earnings after the bell on Wednesday beating expectations on both the top and bottom line. Here are the most important numbers from the report and what investors were expecting as compiled by Bloomberg's estimates.
Revenue: $168.7 million vs $156.2 million expected
Losses per share: $0.02 vs $0.08 expected
The stock was down 4% following the announcement. The company’s billings estimate for FY2020 was off midpoint expectations. Slack is calling for total billings of between $745 million and $760 million, which would have a midpoint of $752.5 million. Expectations for the midpoint were $754.3 million.
Slack's business model sees the company offer its software for free to small customers, while charging large organizations and those looking for extra functionality. In Q3, the company reported it now has 821 firms each paying more than $100,000 annually, up from 720 in the previous quarter. Slack also now has more than 50 customers each paying $1 million annually.
In total, Slack now has 105,000 paying customers.
Slack is facing pressure in the short-term as it focuses heavily on rapid growth at the expense of profits, which has been the going pattern for high-profile unicorns that launched their IPOs in 2019.
Slack also has some serious competition brewing in the form of Microsoft's (MSFT) Teams. The Windows maker announced last month that it had surpassed 20 million daily active users. In Q2, Slack announced that it had 10 million daily active users.
While Slack executives point to discrepancies in the way the two companies measure their daily active user numbers, the news still put a hurting on Slack's stock price.
Correction: A previous version of this article incorrectly stated that Slack had 645 customers paying more than $100,000 annually for the last quarter. The error has been corrected.
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