Even with a 49% uplift in sales and a 46% drop in expenses, Slack still can't turn a profit
- Reference: 1599659109
- News link: https://www.theregister.co.uk/2020/09/09/slack_q2fy2021/
- Source link:
The problem for Slack, even as it crept closer to actually breaking even, is that other companies, such as [1]Zoom, have made hay during the pandemic. Slack should therefore have been in prime position to take advantage of the rapid move to homeworking, but growth, while steady, has not been as stellar.
Revenue for the [2]quarter ended 31 July stood at $215.9m, up from $144.9 in last year's Q2. CEO Stewart Butterfield noted the growth in paid customers, as well as Slack Connect, before mentioning "macro-related headwinds in the installed base" thanks to the company's per-seat pricing.
"When our customers downsize, freeze hiring or hire more slowly," he [3]told analysts , "net dollar retention is negatively impacted."
The company's CFO Allen Shim added there was also a higher degree of "budget scrutiny [from customers] particularly for incremental investments, and we have seen sales cycles lengthen with some customers accordingly."
Butterfield went on to say the pandemic had had "both positive and negative effects" on the business. He also remarked that the [4]sueball lobbed by the company at messaging rival Microsoft "is a tactic" rather than a strategy. "We are doing it for us," he said, adding "and we are doing it for the innovation, for competition and for the broader ecosystem and ultimately for customers."
"We've won over and over again in Office 365-using customers," he told analysts. It is worth noting that Teams appears to have done its fair share of "winning" as well.
Slack now lays claim to 130,000 paid customers (an increase of 30 per cent year on year) of which 985 spend more than $100,000 on the company's services per year, and 87 account for over $1m in annually recurring revenue. 52,000 of those paid customers are also using [5]Slack Connect , up from 41,000 in the previous quarter.
Profits still eluded Slack, though it dramatically cut losses by slashing total operating expenses from $477.5m a year ago to $256.11m this time round. That's a fall of more than 46 per cent. Within those overheads, R&D fell almost 58 per cent to $94m; sales and marketing was down to $109.1m from $136.4m; and general and admin dropped to $52.78m from $123.35m
All this meant that Slack reduced pre-tax losses to $68.6m versus a loss of $363.65m in Q2 of the company's fiscal '19. Net loss was $73.1m compared to $359.6m.
More solid top and bottom line figures, but the markets were unimpressed as the stock price for the company tumbled in after-hours, going as low as $23.27 after the dizzying heights of $30.52 earlier in the day.
CFO Shim said Slack expects "to be free cash flow breakeven for the year" and raised revenue guidance to a range of $870m to $876m, a jump of 38 per cent at the midpoint. The next quarter is expected to grow 32 per cent at the midpoint of a range of $222m to $225m. ®
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[1] https://www.theregister.com/2020/09/01/zoom_q2_2021/
[2] https://investor.slackhq.com/news/news-details/2020/Slack-Announces-Second-Quarter-Fiscal-Year-2021-Results/default.aspx
[3] https://seekingalpha.com/article/4373171-slack-technologies-inc-work-ceo-stewart-butterfield-on-q2-2021-results-earnings-call
[4] https://www.theregister.com/2020/07/22/slack_versus_teams/
[5] https://www.theregister.com/2020/06/25/slack_connect/
[6] https://whitepapers.theregister.com/
Re: No need for Slack
The one thing that slack had over ms teams for a while, was the fact I could "join different organisations" slack workspaces in the same UI instance;
That wasn't great in teams, possibly still isn't, but I haven't needed to use it in anger recently.
Anecdotal evidence shows me that slack really suffers in the context of "it doesn't behave well with other applications; my other half is always complaining that slack sucks her CPU (5-10 different workspaces) and bandwidth.
Re: No need for Slack
One has to wonder why one would name a work tool with a synonym for "lazy".
Maybe, just maybe if Slack was actually a decent piece of software it would do better.
But it isn't, probably never will be, and so won't.
Slack is mediocre at messaging, and absolutely shit at video conferencing. I think the only reason people in larger companies use it is because it's marginally better at messaging than Teams (but light years behind in video).
The feature I love the most about the Slack app is when it tells you a message is too long and if you want to view the whole thing you have to open it in a web browser. Pure class.
Hiding replies behind a link that "expands the conversation" is also a really useful trick. It's not like I want to be able to quickly see if my team mates had a relevant comment on my post.
Have the removed the debug schema from the Windows client yet?
Slack has been a pretty decent solution for our team
We've used a slew of different messaging products over the years, but so far Slack has been a much better platform than the others.
The feature set is quite extensive and the UI is relatively well-suited to collaboration. We also have hooks going and coming from various other tools like PagerDuty and Service Now. The extensibility is not bad either. The options for formatting code as well as the thread-feature are essential options for me that are missing in some of the competing products.
There certainly are some shortcomings. Just to name a few:
- images are not optimized / reduced
- it's not possible to add people to an existing ad-hoc group chat
- search is counter-intuitive
My company uses both Hangouts and Slack at the moment, but the latter is by far my favorite.
Slack by name....
You know the rest.
This market is too crowded and too easy for a company like this to leave a lasting mark.
No need for Slack
MS Teams comes bundled in with Office 365 and deeply integrates with Outlook and other vital business tools.
It provides various video chat features, file storage (backed by SharePoint) and so on.
Slack does what, precisely? Act like a more bloated version of IRC?