Slack is expected to report Q2 EPS of (3c) on revenue of about $209.1M
Slack Technologies (WORK) is scheduled to report results of its second fiscal quarter after the market close on Tuesday, September 8, with a conference call scheduled for 5:00 pm ET. What to watch for:
GUIDANCE: Along with its Q1 earnings report, Slack guided to Q2 adjusted net loss per share of (4c)-(3c) on a revenue of $206M-$209M. This compared to analyst estimates of a net loss per share of (6c) and revenue of $199.8M at the time. Estimates for Q1 net loss per share have now risen to (3c), while estimates for revenue increased to $209.1M. The company also raised FY21 guidance to an adjusted net loss per share of (19c)-(17c) from (21c)-(19c) and raised its revenue view to $855M-$870M from $842M-$862M. The numbers compared to analyst estimates of a loss per share of (20c) and a revenue of $860.26M at the time, which have now edged up to a loss per share of (16c) and revenue of $872.234M.
PAID CUSTOMERS: Slack reported that it ended Q1 with over 122,000 paid customers, up 28% year-over-year, with 963 paid customers with annual recurring revenue over $100,000. The company also reported its net dollar retention rate was 132%. “Q1 was a phenomenal quarter for Slack, with the addition of 12,000 net new Paid Customers and 50% revenue growth year-over-year,” said Stewart Butterfield, CEO and co-founder at Slack, at the time. “We believe the long-term impact the three months and counting of working from home will have on the way we work is of generational magnitude. This will continue to catalyze adoption for the new category of channel-based messaging platforms we created and for which we are still the only enterprise-grade offering.”
COMPETITION: Slack competes with a rival workplace chat app by Microsoft (MSFT) called Teams. In July, Slack announced it had filed a competition complaint against Microsoft before the European Commission. "The complaint details Microsoft's illegal and anti-competitive practice of abusing its market dominance to extinguish competition in breach of European Union competition law. Microsoft has illegally tied its Teams product into its market-dominant Office productivity suite, force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers," Slack said in a statement.
PARTNERSHIPS, ACQUISITIONS: Amazon Web Services (AMZN) and Slack announced in June a new multi-year agreement to deliver solutions for enhanced enterprise workforce collaboration. Slack and AWS said they will strategically partner to help distributed development teams communicate and become more efficient and agile in managing their AWS resources from inside Slack. Slack announced in July it acquired Rimeto. The company said, “Rimeto's advanced profile and directory features will be integrated into Slack directly, but we will also continue to offer Rimeto as a standalone product and support their existing enterprise customers….Rimeto offers an enterprise wide, searchable directory, automatically integrating information from across your company to deliver rich profiles of every employee, their skills, experience, and current projects. It's a natural fit with Slack.”
ANALYST VIEW: Baird analyst William Power said Wednesday the risk/reward for Slack is positive heading into Q2 results. The analyst expects strong growth from WORK, driven by ongoing digital transformation initiatives. He also expects the expansion of Shared Channels to remain a significant differentiator. Power maintained his Outperform rating and $37 price target on Slack Technologies shares.