Slack saw solid growth in its enterprise business ending the
quarter with 70 customers with whom it has $1 million or more in annual spend,
reflecting an increase of around 80% from the prior-year period. The company
sees the potential for more value in this area going forward.
During fiscal-year 2020, Slack added 22,000 net new paid
customers, most of which are small and medium businesses. The company sees
opportunities to drive further growth in this side of the business.
In the first half of fiscal year 2021, Slack plans to roll out an improved user interface. The company continues to invest significantly in enhancing the user experience on its platform and believes these investments will generate high returns over time.
However, the market does not seem to share Slack’s optimism.
One of the reasons being that the company provided a slightly bleak outlook for
the first quarter of 2021. Slack expects Q1 revenue to be in the range of $185
million to $188 million. This is lower than the $188.3 million that some
analysts had estimated.
Slack also faces tough competition from bigger rivals such as Microsoft (NYSE: MSFT) and Google (NYSE: GOOGL) in the workplace communications space. Some experts also believe Slack still faces challenges in converting its users to paid users.
Slack also faces a high level of uncertainty in the current situation amid the coronavirus outbreak. On one side, there is opportunity as more people choose to work from home but on the other side, the company sees chances of delays in purchase decisions.