Total revenue of $201.7 million up 50%
year-over-year
Added a record 12,000 net new Paid
Customers
Added a record of over 90,000 net new
organizations on either a free or paid subscription plan
Slack Technologies, Inc., (NYSE: WORK) today reported financial
results for its fiscal quarter ended April 30, 2020.
Management Commentary:
“Q1 was a phenomenal quarter for Slack, with the addition of
12,000 net new Paid Customers and 50% revenue growth
year-over-year,” said Stewart Butterfield, Chief Executive Officer
and Co-Founder at Slack. “We believe the long-term impact the three
months and counting of working from home will have on the way we
work is of generational magnitude. This will continue to catalyze
adoption for the new category of channel-based messaging platforms
we created and for which we are still the only enterprise-grade
offering.”
“Now more than ever our customers depend on Slack to continue to
push the envelope of innovation,” said Allen Shim, Chief Financial
Officer at Slack. “We plan to continue to invest, as we see the
current crisis accelerating digital transformation and the
transition from email to channel-based messaging platforms over the
medium term to long term. At the same time, we will manage the
business prudently and with a goal of showing consistent operating
leverage and progression toward being free cash flow positive.”
First Quarter Fiscal 2021 Financial
Highlights:
- Total revenue was $201.7 million, an increase of 50%
year-over-year.
- Calculated Billings was $206.0 million, an increase of 38%
year-over-year.
- GAAP gross profit was $176.0 million, or 87.3% gross margin,
compared to $116.2 million, or 86.2% gross margin, in the first
quarter of fiscal year 2020. Non-GAAP gross profit was $179.2
million, or 88.9% gross margin, compared to $116.9 million, or
86.7% gross margin, in the first quarter of fiscal year 2020.
- GAAP operating loss was $76.2 million, or 37.8% of total
revenue, compared to a $38.4 million loss in the first quarter of
fiscal year 2020, or 28.5% of total revenue. Non-GAAP operating
loss was $16.6 million, or 8.3% of total revenue, compared to a
$33.8 million loss in the first quarter of fiscal year 2020, or
25.0% of total revenue.
- GAAP net loss per basic and diluted share was $0.13. Non-GAAP
net loss per share was $0.02.
- Net cash provided by operations was $8.7 million, or 4% of
total revenue, compared to cash used in operations of $14.1
million, or 10% of total revenue, for the first quarter of fiscal
year 2020. Free Cash Flow was $3.7 million, or 2% of total revenue,
compared to $(34.2) million, or (25)% of total revenue for the
first quarter of fiscal year 2020.
Recent Business
Highlights:
- First Quarter Highlights:
- Over 122,000 Paid Customers, up 28% year-over-year.
- 132% net dollar retention rate.
- 963 Paid Customers with greater than $100,000 in annual
recurring revenue, up 49% year-over-year.
- Over 41,000 Paid Customers using shared channels, up from over
32,000 at the end of last quarter.
- Over 750,000 organizations on either a free or paid
subscription plan, up from over 660,000 organizations at the end of
last quarter.
Financial Outlook:
Slack is initiating guidance for the second quarter ending July
31, 2020 and providing updated guidance for the fiscal year ending
January 31, 2021. With the ongoing uncertainties surrounding the
COVID-19 pandemic, Slack is withdrawing guidance for the full
fiscal year 2021 Calculated Billings.
For the second quarter of fiscal year 2021, Slack currently
expects:
- Total revenue of $206 million to $209 million, representing
year-over-year growth of 42% to 44%.
- Non-GAAP operating loss of $22 million to $18 million.
- Non-GAAP net loss per share of $0.04 to $0.03, assuming
weighted average shares outstanding of 564 million.
For the full fiscal year 2021, Slack currently expects:
- Total revenue of $855 million to $870 million, representing
year-over-year growth of 36% to 38%.
- Non-GAAP operating loss of $110 million to $100 million.
- Non-GAAP net loss per share of $0.19 to $0.17, assuming
weighted average shares outstanding of 567 million.
- Free Cash Flow of negative $20 million to $0.
Non-GAAP Financial
Measures:
This press release and the accompanying tables contain the
following non-GAAP financial measures: Calculated Billings, Free
Cash Flow, non-GAAP gross profit, non-GAAP gross margin, non-GAAP
research and development expenses, non-GAAP sales and marketing
expenses, non-GAAP general and administrative expenses, non-GAAP
operating loss, non-GAAP operating margin, non-GAAP net loss, and
non-GAAP net loss per share. Certain of these non-GAAP financial
measures exclude stock-based compensation and related employer
payroll taxes, amortization of debt discount and issuance costs,
and amortization of intangible assets.
Slack believes that these non-GAAP measures of financial results
provide useful information to management and investors regarding
certain financial and business trends relating to Slack’s financial
condition and results of operations. Slack’s management uses these
non-GAAP measures to compare Slack’s performance to that of prior
periods for trend analysis, and for budgeting and planning
purposes. Slack believes that the use of these non-GAAP financial
measures provides an additional tool for investors to use in
evaluating ongoing operating results and trends and in comparing
Slack’s financial measures with other software companies, many of
which present similar non-GAAP financial measures to investors. The
non-GAAP financial information is presented for supplemental
informational purposes only, should not be considered a substitute
for financial information presented in accordance with GAAP, and
may be different from similarly titled non-GAAP measures used by
other companies.
Management does not consider these non-GAAP measures in
isolation or as an alternative to financial measures determined in
accordance with GAAP. The principal limitation of these non-GAAP
financial measures is that they exclude significant expenses and
income that are required by GAAP to be recorded in Slack’s
financial statements. In addition, they are subject to inherent
limitations as they reflect the exercise of judgment by management
about which expenses and income are excluded or included in
determining these non-GAAP financial measures. Slack urges
investors to review the reconciliation of its non-GAAP financial
measures to the comparable GAAP financial measures, which it
includes in press releases announcing quarterly financial results,
including this press release, and not to rely on any single
financial measure to evaluate Slack’s business.
Reconciliation tables of the most comparable GAAP financial
measures to the non-GAAP financial measures used in this press
release are included with the financial tables at the end of this
release. Slack has not reconciled its outlook as to non-GAAP
operating loss, non-GAAP net loss per share, and Free Cash Flow to
their most directly comparable GAAP measure because certain items
are out of Slack’s control or cannot be reasonably predicted.
Accordingly, a reconciliation for forward-looking non-GAAP
operating loss, non-GAAP net loss per share, and Free Cash Flow is
not available without unreasonable effort.
Forward-Looking
Statements:
This press release contains “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, including but not limited
to, statements regarding our financial outlook, product
development, business strategy and plans, market trends and market
size, opportunities, and positioning. These forward-looking
statements are made as of the date they were first issued and were
based on current expectations, estimates, forecasts, and
projections as well as the beliefs and assumptions of management.
Words such as “guidance,” “expect,” “anticipate,” “should,”
“believe,” “hope,” “target,” “project,” “plan,” “goals,”
“estimate,” “potential,” “predict,” “may,” “will,” “might,”
“could,” “intend,” “shall,” and variations of these terms or the
negative of these terms and similar expressions are intended to
identify these forward-looking statements. Forward-looking
statements are subject to a number of risks and uncertainties, many
of which involve factors or circumstances that are beyond Slack’s
control. Slack’s actual results could differ materially from those
stated or implied in forward-looking statements due to a number of
factors, including but not limited to, risks detailed in Slack’s
Annual Report on Form 10-K for the year ended January 31, 2020.
Further information on potential risks that could affect actual
results will be included in the subsequent periodic and current
reports and other filings that Slack makes with the Securities and
Exchange Commission from time to time, including its Quarterly
Report on Form 10-Q for the quarter ended April 30, 2020. In
particular, the following factors, among others, could cause
results to differ materially from those expressed or implied by
such forward-looking statements: the effect of uncertainties
related to the global COVID-19 pandemic on U.S. and global
economies, Slack’s business, results of operations, and financial
condition, demand for Slack, sales cycles, customer retention, and
the health of customers’ businesses; Slack’s recent growth rates
may not be indicative of its future growth; Slack may experience
quarterly fluctuations in its results of operations due to a number
of factors that make its future results difficult to predict and
could cause its results of operations to fall below analyst or
investor expectations or to fluctuate more than expected; Slack may
fail to manage its growth effectively and may be unable to execute
its business plan or maintain high levels of service and customer
satisfaction; real or perceived errors, failures, vulnerabilities,
or bugs in Slack could harm Slack’s business, results of
operations, and financial condition; a security incident may allow
unauthorized access to Slack’s systems, networks, or data or the
data of organizations on Slack, harm its reputation, create
additional liability, and harm its financial results; any actual or
perceived failure by Slack to comply with privacy, data protection,
information security, consumer privacy, data residency, or
telecommunications laws, regulations, government access requests,
and obligations in one or multiple jurisdictions could result in
proceedings, actions, or penalties against Slack and could harm its
business and reputation; the risk of interruptions or performance
problems, including a service outage, associated with Slack’s
technology or infrastructure; the market and software categories in
which Slack participates are competitive, new, and rapidly
changing, and if it does not compete effectively with established
companies as well as new market entrants its business, results of
operations, and financial condition could be harmed; a protracted
infringement claim, a claim that results in a significant damage
award, or a claim that results in an injunction could harm Slack’s
results of operations; adverse general economic and market
conditions; Slack’s ability to attract and retain qualified
employees and key personnel; changes in foreign exchange rates;
general political or destabilizing events, including war, conflict,
acts of terrorism, or pandemics; and other risks and uncertainties.
Past performance is not necessarily indicative of future results.
The forward-looking statements included in this press release
represent Slack’s views as of the date of this press release. Slack
anticipates that subsequent events and developments will cause its
views to change. Slack undertakes no intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. These
forward-looking statements should not be relied upon as
representing Slack’s views as of any date subsequent to the date of
this press release.
Additional information regarding these and other factors that
could affect Slack's results is included in Slack’s SEC filings,
which may be obtained by visiting our Investor Relations website at
investor.slackhq.com or the SEC's website at www.sec.gov.
Earnings Webcast:
Slack will hold a public webcast at 2:00 p.m. PDT today to
discuss the results for its first quarter fiscal year 2021 and
financial outlook. The live public call can be accessed by dialing
(833) 513-0556 within the U.S., and (778) 560-2600 internationally.
The conference ID and passcode is 8566284. The webcast replay and
audio download will also be available on our Investor Relations
website at investor.slackhq.com.
Investor Presentation
Details:
An investor presentation providing additional information and
analysis can be found at investor.slackhq.com.
About Slack:
Slack has transformed business communication. It’s the leading
channel-based messaging platform, used by millions to align their
teams, unify their systems, and drive their businesses forward.
Only Slack offers a secure, enterprise-grade environment that can
scale with the largest companies in the world. It is a new layer of
the business technology stack where people can work together more
effectively, connect all their other software tools and services,
and find the information they need to do their best work. Slack is
where work happens.
Slack and the Slack logo are trademarks of Slack Technologies,
Inc. or its subsidiaries in the U.S. and/or other countries. Other
names and brands may be claimed as the property of others.
SLACK TECHNOLOGIES,
INC.
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended April
30,
2020
2019
Revenue
$
201,650
$
134,821
Cost of revenue
25,602
18,574
Gross profit
176,048
116,247
Operating expenses:
Research and development
91,225
51,103
Sales and marketing
110,320
66,838
General and administrative
50,654
36,744
Total operating expenses
252,199
154,685
Loss from operations
(76,151
)
(38,438
)
Interest expense
(2,842
)
(113
)
Interest income and other income, net
4,708
7,190
Loss before income taxes
(74,285
)
(31,361
)
Provision for income taxes
142
520
Net loss
(74,427
)
(31,881
)
Net income attributable to noncontrolling
interest
784
1,451
Net loss attributable to Slack common
stockholders
$
(75,211
)
$
(33,332
)
Basic and diluted net loss per share:
Net loss per share attributable to Slack
common stockholders, basic and diluted
$
(0.13
)
$
(0.26
)
Weighted-average shares used in computing
net loss per share attributable to Slack common stockholders, basic
and diluted
557,414
125,890
SLACK TECHNOLOGIES,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
April 30, 2020
January 31,
2020
ASSETS
Current assets:
Cash and cash equivalents
$
1,228,225
$
498,999
Marketable securities
296,744
269,593
Accounts receivable, net
105,825
145,844
Prepaid expenses and other current
assets
54,895
55,967
Total current assets
1,685,689
970,403
Restricted cash
38,490
38,490
Strategic investments
34,470
28,814
Property and equipment, net
101,668
102,340
Operating lease right-of-use assets
191,093
197,830
Intangible assets, net
12,372
13,530
Goodwill
48,598
48,598
Other assets
46,172
41,701
Total assets
$
2,158,552
$
1,441,706
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
12,965
$
16,893
Accrued compensation and benefits
51,868
65,196
Accrued expenses and other current
liabilities
31,699
32,123
Operating lease liability
30,515
30,465
Deferred revenue
380,022
375,263
Total current liabilities
507,069
519,940
Convertible senior notes, net
620,073
—
Operating lease liability, noncurrent
189,652
196,378
Deferred revenue, noncurrent
1,051
1,451
Other liabilities
3
38
Total liabilities
1,317,848
717,807
Commitments and contingencies
Stockholders’ equity:
Common stock
56
56
Additional paid-in-capital
2,135,753
1,945,446
Accumulated other comprehensive income
(loss)
854
(71
)
Accumulated deficit
(1,311,832
)
(1,236,621
)
Total Slack Technologies, Inc.
stockholders’ equity
824,831
708,810
Noncontrolling interest
15,873
15,089
Total stockholders’ equity
840,704
723,899
Total liabilities and stockholders’
equity
$
2,158,552
$
1,441,706
SLACK TECHNOLOGIES,
INC.
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended April
30,
2020
2019
Cash flows from operating activities:
Net loss
$
(74,427
)
$
(31,881
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
6,700
5,876
Stock-based compensation
53,711
3,639
Amortization of debt discount and issuance
costs
2,366
—
Noncash operating lease expense
8,732
—
Amortization of deferred contract
acquisition costs
3,143
1,463
Net amortization of bond premium
(discount) on debt securities available for sale
171
(1,081
)
Change in fair value of strategic
investments
(1,638
)
(3,025
)
Other non-cash charges
592
37
Changes in operating assets and
liabilities:
Accounts receivable
39,470
15,620
Prepaid expenses and other assets
(6,561
)
(6,462
)
Accounts payable
(3,746
)
(1,039
)
Operating lease liabilities
(8,671
)
—
Accrued compensation and benefits
(13,328
)
(15,298
)
Deferred revenue
4,359
14,816
Other current and long-term
liabilities
(2,144
)
3,209
Net cash provided by (used in) operating
activities
8,729
(14,126
)
Cash flows from investing activities:
Purchases of marketable securities
(100,302
)
(24,907
)
Maturities of marketable securities
69,613
150,686
Sales of marketable securities
4,289
—
Purchases of property and equipment
(5,046
)
(20,077
)
Purchase of strategic investments
(4,018
)
(3,100
)
Proceeds from liquidation of strategic
investments
—
2,858
Net cash provided by (used in) investing
activities
(35,464
)
105,460
Cash flows from financing activities:
Proceeds from issuance of convertible
senior notes, net of issuance costs
842,016
—
Purchases of capped calls related to
convertible senior notes
(105,570
)
—
Proceeds from exercise of stock
options
2,905
2,385
Issuance of common stock for employee
stock purchase plan
16,610
—
Net cash provided by financing
activities
755,961
2,385
Net increase in cash, cash equivalents and
restricted cash
729,226
93,719
Cash, cash equivalents and restricted cash
at beginning of period
537,489
201,260
Cash, cash equivalents and restricted cash
at end of period
$
1,266,715
$
294,979
SLACK TECHNOLOGIES,
INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
Calculated Billings
Three Months Ended April
30,
2020
2019
Revenue
$
201,650
$
134,821
Add: Total deferred revenue, end of
period
381,073
256,689
Less: Total deferred revenue, beginning of
period
(376,714
)
(241,873
)
Calculated Billings
$
206,009
$
149,637
Free Cash Flow
Three Months Ended April
30,
2020
2019
Net cash provided by (used in) operating
activities
$
8,729
$
(14,126
)
Purchases of property and equipment
(5,046
)
(20,077
)
Free Cash Flow
$
3,683
$
(34,203
)
Operating cash margin
4
%
(10
)%
Purchases of property and equipment
(3
)%
(15
)%
Free Cash Flow margin
2
%
(25
)%
SLACK TECHNOLOGIES,
INC.
RECONCILIATION OF GAAP TO
NON-GAAP DATA
(In thousands, except per
share data)
(Unaudited)
Three Months Ended April
30,
2020
2019
Reconciliation of gross profit:
GAAP gross profit
$
176,048
$
116,247
Add: Stock-based compensation and related
employer payroll taxes
2,572
46
Add: Amortization of acquired intangible
assets
558
558
Non-GAAP gross profit
$
179,178
$
116,851
GAAP gross margin
87.3
%
86.2
%
Non-GAAP adjustments
1.6
%
0.5
%
Non-GAAP gross margin
88.9
%
86.7
%
Reconciliation of operating
expenses:
GAAP research and development
$
91,225
$
51,103
Less: Stock-based compensation and related
employer payroll taxes
(29,720
)
(1,635
)
Less: Amortization of acquired intangible
assets
(150
)
(150
)
Non-GAAP research and development
$
61,355
$
49,318
GAAP sales and marketing
$
110,320
$
66,838
Less: Stock-based compensation and related
employer payroll taxes
(15,264
)
(382
)
Less: Amortization of acquired intangible
assets
(325
)
(325
)
Non-GAAP sales and marketing
$
94,731
$
66,131
GAAP general and administrative
$
50,654
$
36,744
Less: Stock-based compensation and related
employer payroll taxes
(10,795
)
(1,576
)
Less: Amortization of acquired intangible
assets
(125
)
—
Non-GAAP general and administrative
$
39,734
$
35,168
Reconciliation of loss from
operations:
GAAP operating loss
$
(76,151
)
$
(38,438
)
Add: Stock-based compensation and related
employer payroll taxes
58,351
3,639
Add: Amortization of acquired intangible
assets
1,158
1,033
Non-GAAP operating loss
$
(16,642
)
$
(33,766
)
GAAP operating margin
(37.8
)%
(28.5
)%
Non-GAAP adjustments
29.5
%
3.5
%
Non-GAAP operating margin
(8.3
)%
(25.0
)%
Three Months Ended April
30,
2020
2019
Reconciliation of net loss and net loss
per share:
Net loss attributable to Slack common
stockholders
$
(75,211
)
$
(33,332
)
Add: Stock-based compensation and related
employer payroll taxes
58,351
3,639
Add: Amortization of acquired intangible
assets
1,158
1,033
Add: Amortization of debt discount and
issuance costs
2,366
—
Non-GAAP net loss
$
(13,336
)
$
(28,660
)
GAAP net loss per share
$
(0.13
)
$
(0.26
)
Add: Stock-based compensation and related
employer payroll taxes
0.11
0.03
Add: Amortization of acquired intangible
assets
—
—
Add: Amortization of debt discount and
issuance costs
—
—
Non-GAAP net loss
$
(0.02
)
$
(0.23
)
Weighted-average common shares
outstanding, basic and diluted
557,141
125,890
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200604005741/en/
Jesse Hulsing Investor Relations ir@slack.com
Karesha McGee Media Relations pr@slack.com
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