Slack shares are sliding almost 20% during this morning pre-market stock trading activity on Wall Street after the software company failed to surprise investors with its growth during its second fiscal quarter of 2021, which covered the peak of the pandemic.
Revenues for the San Francisco-based company grew almost 50% compared to a year ago at $216 million, beating the Street’s estimate of $209 million for the quarter.
However, the firm’s paid customer base grew only 30% compared to a year before, a number that disappointed investors as other work-from-home software makers such as Zoom Video Communications (ZM) showed a 355% jump in their user base during the same period.
According to the report, Slack also managed to increase the number of paid customers producing annual recurring revenues higher than $100,000 by as much as 37%, providing the business with further long-term stability, while also increasing the number of customers with more than $1 million in annual recurring revenue to 87 – representing a 78% year-on-year growth.
GAAP operating losses per share landed at $0.13 which represents an improvement from the $0.98 per share the company lost a year before, while the company achieved break-even on their non-GAAP profitability metrics – which adjust for the impact of non-recurring expenses including stock-based compensation for employees.
This is perhaps the most important breakthrough for Slack, although it is still difficult to say if the company will be profitable from now on, as the reduction in net losses came from lower operating expenses – which the company managed to trim by 46% compared to the same quarter the year before.
The company expects to deliver an adjusted loss of $0.14 on revenue of around $870 million by the end of its 2021 fiscal year in line with analysts’ expectations for the year.