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Slack plunges after posting first earnings report since going public
Shares of Slack, maker of the popular workplace chat app, plunged as much as 16% on Wednesday after the company issued its first earnings report as a public company, briefly dropping below the reference price from its direct listing.
Here are the key numbers:
- Earnings: Loss of 14 cents per share, excluding certain items, vs. 18 cents per share as expected by analysts, according to Refinitiv.
- Revenue: $145 million, vs. $140.7 million as expected by analysts, according to Refinitiv.
Slack said in a statement that its revenue grew 58% year over year in the second quarter of the 2020 fiscal year, which ended on July 31.
Slack debuted on the New York Stock Exchange in June through a direct listing, following the path taken by Spotify last year. A few days before its listing, Slack forecast second-quarter revenue of $139 million to $141 million, representing growth of about 52%.
The company's main competitor is Microsoft, which includes the Teams work chat app in Office 365 business subscriptions. In July, Microsoft released statistics suggesting that Teams is more widely used than Slack. On Wednesday Slack did not provide updated user statistics
"We see an equal opportunity for both Slack and Microsoft Teams to grow as alternatives to traditional e-mail and argue a duopoly-like market structure could form around the two most popular messaging-centric in platforms at maturity," KeyBanc Capital Markets analysts led by Brent Bracelin wrote in a note to clients on Aug. 25.
Slack's uptime — a measure of how frequently the service is operating normally — slipped below 99.9% in June and July, wrote the KeyBanc analysts, who recommend buying the stock. Slack provides customers with credits for future use when uptime is below 99.99%. Those credits can impact revenue. Slack said its revenue for the quarter was negatively impacted by $8.2 million of credits.
(Score: 2) by Hyperturtle on Thursday September 05 2019, @03:28PM
Subscription-as-a-service. The more ignorant "IT Leaders" they can get to believe in their "hold company data for ransom and make them pay for access to it" business model, the more likely they are to survive.
I mean, once you become dependent on them, just try to cut the subscription and keep functional without fulfilling the needs of that dependency. You'd need someone local that knows how to set up something similar and migrate your staff to it, and that guy was outsourced to the cloud a while ago.
They keep historcal data at slack, but don't let you have the logs or anything unless you keep paying. I am not sure what they do with the data... I haven't read the EULA closely. But they seem to provide a service that can be easily replaced with a little effort. Some companies, like Microsoft, are promoting their own subscriptive services that provide integration into the rest of their hard-to-cancel services.
Even if the master is different and the subscriptions are more of the same, there are other companies doing what slack does and doing it better. Slack seems to have a fan base made of ignorant IT experts that say to focus on what you do best, but sometimes you need to cut costs during an economic downturn, and when you cancel subscriptions you depend on to function at work and essentially create revenue via using those tools... you hasten your businesses demise. Sometimes it is best to plant some seeds and grow a little garden even if it doesn't feed everyone with the results, but really, you don't have to do it all. It can make a tough time experience a little less belt-tightening if there are fewer recurring mandatory expenses.
Slack is particularly galling to me, because they've replaced one of the oldest useful and social functions--an instant message client and file sharing service pretty much -- and locked it behind a subscription per user per month, if you want to access the data you generate over time--ie chat logs.
The fact that chat logs are not even saved locally--heck every chat client (for the most part) up until recently at least saved something you could read later if you wanted to remember what you talked about or promises made or whatever reasons you have, but now, with popular services like Slack getting away with it, basic functionality now costs money to access, and its part of a recurring fee.