Slack fails to capitalise on Work from Home push with widening losses

Not all plunging share prices are due to the coronavirus. In fact, some companies were expected to benefit from the pandemic, especially those which let workers collaborate remotely.

Slack’s share price dropping 22% in after-hours trading after the company released their FYQ4 2020 results, therefore, comes as somewhat of a surprise, but the numbers contained in the earnings release explains a lot.

Slack reported a loss of $89.1 million in the quarter, more than double the $34.6 million loss from the same quarter a year earlier. This is despite announcing the acquisition of a number of high profile clients such as IBM in the same quarter, with Slack saying they now had 70 customers paying more than $1 million each, up 31 customers YoY

The company also missed analyst expectations, who were only expecting a $61 million loss.

Slack only generated  $181.9 million in revenue, up 49% YoY, while new competitor Zoom offered revenue guidance of $199 million and $201 million, reflecting the preference to video conferencing for #WFH employees.

Despite the increase in remote users expected due to the viral outbreak, Slack forecast a loss of in a range of 6 cents to 7 cents a share for the current quarter and expected revenue to be flat quarter on quarter.

Slack’s after-hours share price is now at an all-time low and less than half of its IPO share price of around $40.

via Marketwatch