Q4FY20 total revenue of $181.9 million up 49%
year-over-year
FY20 total revenue of $630.4 million up 57%
year-over-year
70 paid customers with annual recurring revenue
over $1 million, up from 39 year-over-year
Slack Technologies, Inc., (NYSE: WORK) today reported financial
results for its fourth quarter and fiscal year ended January 31,
2020.
Management Commentary:
“We continue to see significant momentum in our enterprise
business and finished the year with 70 customers spending more than
$1 million annually on Slack, up 79% year-over-year,” said Stewart
Butterfield, Chief Executive Officer and Co-Founder at Slack. “As
the shift from email to channel-based messaging platforms
continues, the largest companies around the world are choosing to
standardize on Slack because of our enterprise-grade scalability,
security, open platform, ease-of-use and innovative roadmap.”
"We finished the year with 110,000 paid customers and 893
customers spending more than $100,000 annually with Slack," said
Allen Shim, Chief Financial Officer at Slack. "Slack has created a
new category of enterprise software and companies large and small
are choosing us to enable a better way of working, with
unique-to-Slack features including shared channels and Workflow
Builder. While we invest in innovation and delivering more value to
our customers, we also are showing significant leverage and remain
on track to hit our growth phase target of free cash flow
positive.”
Fourth Quarter Fiscal 2020 Financial
Highlights:
- Total revenue was $181.9 million, an increase of 49%
year-over-year.
- Calculated Billings was $254.7 million, an increase of 47%
year-over-year.
- GAAP gross profit was $157.5 million, or 86.6% gross margin,
compared to $105.7 million, or 86.6% gross margin, in the fourth
quarter of fiscal year 2019. Non-GAAP gross profit was $160.6
million, or 88.3% gross margin, compared to $106.3 million, or
87.1% gross margin, in the fourth quarter of fiscal year 2019.
- GAAP operating loss was $91.2 million, or 50.1% of total
revenue, compared to a $43.4 million loss in the fourth quarter of
fiscal year 2019, or 35.6% of total revenue. Non-GAAP operating
loss was $23.1 million, or 12.7% of total revenue, compared to a
$37.5 million loss in the fourth quarter of fiscal year 2019, or
30.8% of total revenue.
- GAAP net loss per basic and diluted share was $0.16. Non-GAAP
net loss per share was $0.04.
- Net cash provided by operations was $10.5 million, or 6% of
total revenue, compared to cash used in operations of $17.6
million, or 14% of total revenue, for the fourth quarter of fiscal
year 2019. Free Cash Flow was $(0.8) million, or 0% of total
revenue, compared to $(31.1) million, or 25% of total revenue for
the fourth quarter of fiscal year 2019.
Fiscal Year 2020 Financial
Highlights:
- Total revenue was $630.4 million, an increase of 57%
year-over-year.
- Calculated Billings was $765.3 million, an increase of 48%
year-over-year.
- GAAP gross profit was $533.2 million, or 84.6% gross margin,
compared to $349.3 million, or 87.2% gross margin, in fiscal year
2019. Non-GAAP gross profit was $552.6 million, or 87.7% gross
margin, compared to $350.9 million, or 87.6% gross margin, in
fiscal year 2019.
- GAAP operating loss was $588.3 million, or 93.3% of total
revenue, compared to a $154.2 million loss in fiscal year 2019, or
38.5% of total revenue. Non-GAAP operating loss was $130.6 million,
or 20.7% of total revenue, compared to a $129.3 million loss in
fiscal year 2019, or 32.3% of total revenue.
- GAAP net loss per basic and diluted share was $(1.43). Non-GAAP
net loss per share was $(0.28).
- Net cash used in operations was $12.4 million, or 2% of total
revenue, compared to cash used in operations of $41.1 million, or
10% of total revenue, for fiscal year 2019. Free Cash Flow was
$(62.0) million, or 10% of total revenue, compared to $(97.2)
million, or 24% of total revenue for fiscal year 2019.
Recent Business
Highlights:
- Fiscal Year Highlights:
- Over 110,000 Paid Customers, up 25% year-over-year.
- 132% net dollar retention rate.
- 893 Paid Customers with greater than $100,000 in annual
recurring revenue, up 55% year-over-year.
- 70 Paid Customers with greater than $1 million in annual
recurring revenue, up 79% year-over-year.
- Over 32,000 Paid Customers using shared channels, up from over
26,000 at the end of last quarter.
Financial Outlook:
For the first quarter of fiscal year 2021, Slack currently
expects:
- Total revenue of $185 million to $188 million, representing
year-over-year growth of 37% to 39%.
- Non-GAAP operating loss of $42 million to $38 million.
- Non-GAAP net loss per share of $0.07 to $0.06, assuming
weighted average shares outstanding of 557 million.
For the full fiscal year 2021, Slack currently expects:
- Total revenue of $842 million to $862 million, representing
year-over-year growth of 34% to 37%.
- Non-GAAP operating loss of $130 million to $120 million.
- Non-GAAP net loss per share of $0.21 to $0.19, assuming
weighted average shares outstanding of 566 million.
- Calculated Billings of $970 million to $1 billion, representing
year-over-year growth of 27% to 31%.
- Free Cash Flow of negative $20 million to break even.
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 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, and 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, Calculated Billings,
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, Calculated Billings, 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 Quarterly Report on
Form 10-Q for the quarter ended October 31, 2019. 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. In particular, the following factors,
among others, could cause results to differ materially from those
expressed or implied by such forward-looking statements: 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 epidemics; 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 fourth quarter and fiscal year 2020 and
financial outlook. The live public call can be accessed by dialing
(866) 211-3197 within the U.S., and (647) 689-6597 internationally.
The conference ID is 8038544. 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
channels-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.
CONSOLIDATED STATEMENT OF
OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended January
31,
Year Ended January 31,
2020
2019
2020
2019
Revenue
$
181,903
$
121,967
$
630,422
$
400,552
Cost of revenue
24,371
16,299
97,191
51,301
Gross profit
157,532
105,668
533,231
349,251
Operating expenses:
Research and development
93,639
45,956
457,364
157,538
Sales and marketing
103,340
69,783
402,780
233,191
General and administrative
51,741
33,369
261,365
112,730
Total operating expenses
248,720
149,108
1,121,509
503,459
Loss from operations
(91,188
)
(43,440
)
(588,278
)
(154,208
)
Other income (expense), net
3,187
8,883
20,510
16,146
Loss before income taxes
(88,001
)
(34,557
)
(567,768
)
(138,062
)
Provision for income taxes
1,093
87
589
840
Net loss
(89,094
)
(34,644
)
(568,357
)
(138,902
)
Net income (loss) attributable to
noncontrolling interest
(91
)
1,625
2,701
1,781
Net loss attributable to Slack common
stockholders
$
(89,003
)
$
(36,269
)
$
(571,058
)
$
(140,683
)
Basic and diluted net loss per share:
Net loss per share attributable to Slack
common stockholders, basic and diluted
$
(0.16
)
$
(0.29
)
$
(1.43
)
$
(1.16
)
Weighted-average shares used in computing
net loss per share attributable to Slack common stockholders, basic
and diluted
550,444
124,128
399,461
121,732
SLACK TECHNOLOGIES,
INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
January 31, 2020
January 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
498,999
$
180,770
Marketable securities
269,593
660,301
Accounts receivable, net
145,844
87,438
Prepaid expenses and other current
assets
55,967
54,213
Total current assets
970,403
982,722
Restricted cash
38,490
20,490
Strategic investments
28,814
12,334
Property and equipment, net
102,340
88,359
Operating lease right-of-use assets
197,830
—
Intangible assets, net
13,530
15,203
Goodwill
48,598
48,598
Other assets
41,701
31,250
Total assets
$
1,441,706
$
1,198,956
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
16,893
$
16,613
Operating lease liability
30,465
—
Accrued compensation and benefits
65,196
46,151
Accrued expenses and other current
liabilities
32,123
29,809
Deferred revenue
375,263
239,825
Total current liabilities
519,940
332,398
Operating lease liability, noncurrent
196,378
—
Deferred revenue, noncurrent
1,451
2,048
Other liabilities
38
22,904
Total liabilities
717,807
357,350
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock
—
1,392,101
Common stock
56
13
Additional paid-in-capital
1,945,446
105,633
Accumulated other comprehensive loss
(71
)
(498
)
Accumulated deficit
(1,236,621
)
(665,563
)
Total Slack Technologies, Inc.
stockholders’ equity
708,810
831,686
Noncontrolling interest
15,089
9,920
Total stockholders’ equity
723,899
841,606
Total liabilities and stockholders’
equity
$
1,441,706
$
1,198,956
SLACK TECHNOLOGIES,
INC.
CONSOLIDATED STATEMENT OF CASH
FLOWS
(In thousands)
(Unaudited)
Three Months Ended January
31,
Year Ended January 31,
2020
2019
2020
2019
Cash flows from operating activities:
Net loss
$
(89,094
)
$
(34,644
)
$
(568,357
)
$
(138,902
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
6,708
5,589
27,127
16,816
Loss on disposal of property and
equipment
39
116
39
2,281
Stock-based compensation
63,237
4,861
426,524
23,132
Non-cash operating lease expense
8,963
—
8,963
—
Amortization of deferred contract
acquisition costs
2,631
1,189
8,153
3,154
Net amortization of bond discount on debt
securities available for sale
(103
)
(1,468
)
(2,180
)
(3,057
)
Change in fair value of strategic
investments
192
(3,414
)
(5,599
)
(3,701
)
Other non-cash charges
493
46
(249
)
546
Changes in operating assets and
liabilities:
Accounts receivable
(61,122
)
(37,990
)
(58,202
)
(50,305
)
Prepaid expenses and other assets
(8,545
)
(15,019
)
(20,594
)
(53,072
)
Accounts payable
5,721
(6,405
)
6,726
2,846
Operating lease liabilities
(9,495
)
—
(9,495
)
—
Accrued compensation and benefits
18,166
15,016
19,045
22,504
Deferred revenue
72,790
51,701
134,841
116,420
Other current and long-term
liabilities
(66
)
2,817
20,869
20,279
Net cash provided by (used in) operating
activities
10,515
(17,605
)
(12,389
)
(41,059
)
Cash flows from investing activities:
Purchases of marketable securities
(87,293
)
(232,277
)
(290,188
)
(967,055
)
Maturities of marketable securities
115,328
248,325
517,583
727,616
Sales of marketable securities
—
—
166,074
11,271
Acquisitions of businesses, net of cash
acquired
—
—
—
(45,313
)
Acquisition of intangible assets
(2,500
)
—
(2,500
)
(2,382
)
Purchases of property and equipment
(11,350
)
(13,476
)
(49,626
)
(56,180
)
Sales of property and equipment
—
—
—
762
Capitalized software development costs
—
(425
)
—
(840
)
Purchase of strategic investments
(4,849
)
(666
)
(14,132
)
(2,276
)
Proceeds from liquidation of strategic
investments
59
786
2,917
976
Net cash provided by (used in) investing
activities
9,395
2,267
330,128
(333,421
)
Cash flows from financing activities:
Proceeds from exercise of stock
options
2,615
2,146
14,227
4,783
Payment of contingent consideration for an
acquisition
—
—
(5,000
)
—
Issuance of common stock for employee
stock purchase plan
—
—
7,351
—
Net proceeds from issuance of convertible
preferred stock
—
—
—
426,880
Capital contributions from noncontrolling
interest holders
—
—
3,840
—
Distributions to noncontrolling interest
holders
—
—
(1,372
)
—
Issuance of common stock to third
party
—
—
—
6,084
Other financing activities
—
(23
)
(556
)
(70
)
Net cash provided by financing
activities
2,615
2,123
18,490
437,677
Net increase (decrease) in cash, cash
equivalents and restricted cash
22,525
(13,215
)
336,229
63,197
Cash, cash equivalents and restricted cash
at beginning of period
514,964
214,475
201,260
138,063
Cash, cash equivalents and restricted cash
at end of period
$
537,489
$
201,260
$
537,489
$
201,260
SLACK TECHNOLOGIES,
INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
Calculated Billings
Three Months Ended January
31,
Year Ended January 31,
2020
2019
2020
2019
Revenue
$
181,903
$
121,967
$
630,422
$
400,552
Add: Total deferred revenue, end of
period
376,714
241,873
376,714
241,873
Less: Total deferred revenue, beginning of
period
(303,924
)
(190,172
)
(241,873
)
(125,453
)
Calculated Billings
$
254,693
$
173,668
$
765,263
$
516,972
Free Cash Flow
Three Months Ended January
31,
Year Ended January 31,
2020
2019
2020
2019
Net cash provided by (used in) operating
activities
$
10,515
$
(17,605
)
$
(12,389
)
$
(41,059
)
Purchases of property and equipment
(11,350
)
(13,476
)
(49,626
)
(56,180
)
Free Cash Flow
$
(835
)
$
(31,081
)
$
(62,015
)
$
(97,239
)
Operating cash margin
6
%
(14
)%
(2
)%
(10
)%
Purchases of property and equipment
(6
)
(11
)
(8
)
(14
)
Free Cash Flow margin
(0
)%
(25
)%
(10
)%
(24
)%
SLACK TECHNOLOGIES,
INC.
RECONCILIATION OF GAAP TO
NON-GAAP DATA
(In thousands, except per
share data)
(Unaudited)
Three Months Ended January
31,
Year Ended January 31,
2020
2019
2020
2019
Reconciliation of gross profit:
GAAP gross profit
$
157,532
$
105,668
$
533,231
$
349,251
Add: Stock-based compensation and related
employer payroll taxes
2,523
31
17,179
732
Add: Amortization of acquired intangible
assets
558
559
2,233
915
Non-GAAP gross profit
$
160,613
$
106,258
$
552,643
$
350,898
GAAP gross margin
86.6
%
86.6
%
84.6
%
87.2
%
Non-GAAP adjustments
1.7
0.5
3.1
0.4
Non-GAAP gross margin
88.3
%
87.1
%
87.7
%
87.6
%
Reconciliation of operating
expenses:
GAAP research and development
$
93,639
$
45,956
$
457,364
$
157,538
Less: Stock-based compensation and related
employer payroll taxes
(35,212
)
(2,077
)
(241,071
)
(9,948
)
Less: Amortization of acquired intangible
assets
(150
)
(150
)
(599
)
(175
)
Non-GAAP research and development
$
58,277
$
43,729
$
215,694
$
147,415
GAAP sales and marketing
$
103,340
$
69,783
$
402,780
$
233,191
Less: Stock-based compensation and related
employer payroll taxes
(16,715
)
(998
)
(104,503
)
(2,677
)
Less: Amortization of acquired intangible
assets
(325
)
(325
)
(1,300
)
(704
)
Non-GAAP sales and marketing
$
86,300
$
68,460
$
296,977
$
229,810
GAAP general and administrative
$
51,741
$
33,369
$
261,365
$
112,730
Less: Stock-based compensation and related
employer payroll taxes
(12,544
)
(1,755
)
(90,711
)
(9,775
)
Less: Amortization of acquired intangible
assets
(42
)
—
(42
)
—
Non-GAAP general and administrative
$
39,155
$
31,614
$
170,612
$
102,955
Reconciliation of loss from
operations:
GAAP operating loss
$
(91,188
)
$
(43,440
)
$
(588,278
)
$
(154,208
)
Add: Stock-based compensation and related
employer payroll taxes
66,994
4,861
453,464
23,132
Add: Amortization of acquired intangible
assets
1,075
1,034
4,174
1,794
Non-GAAP operating loss
$
(23,119
)
$
(37,545
)
$
(130,640
)
$
(129,282
)
GAAP operating margin
(50.1
)%
(35.6
)%
(93.3
)%
(38.5
)%
Non-GAAP adjustments
37.4
4.8
72.6
6.2
Non-GAAP operating margin
(12.7
)%
(30.8
)%
(20.7
)%
(32.3
)%
Three Months Ended January
31,
Year Ended January 31,
2020
2019
2020
2019
Reconciliation of net loss and net loss
per share:
Net loss attributable to Slack common
stockholders
$
(89,003
)
$
(36,269
)
$
(571,058
)
$
(140,683
)
Add: Stock-based compensation and related
employer payroll taxes
66,994
4,861
453,464
23,132
Add: Amortization of acquired intangible
assets
1,075
1,034
4,174
1,794
Non-GAAP net loss
$
(20,934
)
$
(30,374
)
$
(113,420
)
$
(115,757
)
GAAP net loss per share
$
(0.16
)
$
(0.29
)
$
(1.43
)
$
(1.16
)
Add: Stock-based compensation and related
employer payroll taxes
0.12
0.04
1.14
0.19
Add: Amortization of acquired intangible
assets
—
0.01
0.01
0.02
Non-GAAP net loss per share
$
(0.04
)
$
(0.24
)
$
(0.28
)
$
(0.95
)
Weighted-average common shares
outstanding, basic and diluted
550,444
124,128
399,461
121,732
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200312005793/en/
Jesse Hulsing Investor Relations ir@slack.com
Karesha McGee Media Relations pr@slack.com
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