Categories Earnings, Technology

Earnings: Slack Q2 loss narrows as revenue rises 58%; stock drops on weak outlook

Workplace messaging platform Slack Technologies Inc. (NYSE: WORK) reported better than expected results for the second quarter of 2020. However, the company’s stock lost sharply during Wednesday’s after-hours session as its guidance fell short of expectations.

Earnings: Slack (WORK) Q2 loss narrows as revenue rises 58%

On an adjusted basis, the company reported a loss of $0.14 per share, marking an improvement from the $0.25 per share loss reported last year. Unadjusted net loss widened to $359.56 million or $0.98 per share from $31.86 million or $0.26 per share in the second quarter of 2019. Analysts were looking for a wider net loss.

37% Subscription Growth

Revenues advanced to $144.97 million from $92 million last year and came in above the market’s estimates. At the end of the quarter, the company had more than 100,000 paid customers, which is up 37% from last year. Net dollar retention rate was 136%.

Also see: Safe Bulkers slips to Q2 loss

“This is an entirely new category of software enabling a once-in-a-generation shift in the way people work together. We believe channel-based collaboration is so superior to email-based communication for work, that this shift is inevitable,” said Stewart Butterfield, Chief Executive Officer of Slack.

Outlook

The management expects revenues to grow 46-48% year-over-year in the third quarter to the range of $154 million to $156 million. The estimate for adjusted operating loss is $49-$47 million. Slack is expected to record an adjusted net loss per share of $0.09 to $0.08 in the third quarter, which is wider than the estimated loss of $0.07 per share.

Also read: Palo Alto Networks Q4 results beat estimates

In the whole of 2020, revenues are forecast to grow between 51% and 52% to $603-$610 million. The company is looking for a full-year operating loss in the range of $180 million to $176 million and adjusted net loss between $0.42 per share and $0.40 per share. The market predicted a slightly narrower loss.

Wall Street Debut

Over the years, Slack achieved stable revenue growth by expanding its customer base. In June, it went public through a direct listing and the stock opened at $38.50. Since then, the shares have fallen about 5%. The stock lost about 12% soon after the earnings report during Wednesday’s extended trading, after closing the regular session higher.

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