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Slack Q2 Earnings To Disappoint On Slowing Revenue And User Growth

By Investing.com (Jesse Cohen/Investing.com)Stock MarketsSep 06, 2020 05:18AM ET
www.investing.com/analysis/slack-q2-earnings-set-to-disappoint-amid-slowing-revenue-user-growth-200536550
Slack Q2 Earnings To Disappoint On Slowing Revenue And User Growth
By Investing.com (Jesse Cohen/Investing.com)   |  Sep 06, 2020 05:18AM ET
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Slack Technologies (NYSE:WORK) is well-known for its workplace messaging platform, which enables employees to communicate virtually while working in the office or remotely. Popular with small-sized businesses and enterprise customers alike, coronavirus has provided the ideal environment for the software-as-a-service cloud-based company to thrive.

However, Slack’s stock has significantly underperformed its work-from-home peers over the past three months. Although Slack topped earnings and revenue estimates in the first quarter earnings Jun. 4, its full-year guidance disappointed and shares have since tumbled nearly 27%.

On Friday, the stock slid more than 6% to close at $29.07, giving the workplace-collaboration software provider a market cap of roughly $19 billion.

Slack Daily Chart
Slack Daily Chart

The San Francisco, California-based company is projected to report second quarter results on Tuesday, September 8 after the closing bell. Consensus estimates call for the workplace messaging platform to post a loss of $0.03 per share, narrowing from a loss of $0.14 per share in the same period a year earlier.

Revenue, meanwhile, is forecast to rise 44.2% year-over-year to $209.08 million, amid strong demand for its workplace collaboration software which has been benefiting from the widespread shift to remote-work amid coronavirus. While this figure may seem impressive, if confirmed, it would still mark the slowest sales growth for the company as a publicly-traded firm.

Beyond EPS and revenue, market participants will scrutinize the company’s update regarding its outlook for the rest of the year and beyond. Slack guided for full-year fiscal 2021 revenue to be between $855 million and $870 million in its last quarter, representing a growth rate of 38% at the top end of the range.

In addition, Wall Street will be closely watching billings growth, an important sales metric, which climbed 38% from the year-ago period to $206 million in the preceding quarter. Analysts are expecting $232.9 million in billings for the current quarter.

Perhaps of greater interest: Slack’s update regarding its total paying customers amid concerns over slowing user growth. Wall Street is looking for the workplace messaging app to add about 6,000 new paid customers, sharply decelerating from a quarterly record of 12,000 net new adds in the first three months of the year. As of the end of the first quarter, the company had 122,000 paying customers.

Investors will also be hoping to hear further details regarding the ongoing rift with Microsoft (NASDAQ:MSFT), whose Teams platform competes directly with Slack’s chat software. In July, Slack filed a lawsuit with the European Commission accusing Microsoft of anticompetitive behavior.

Slack Q2 Earnings To Disappoint On Slowing Revenue And User Growth
 

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Slack Q2 Earnings To Disappoint On Slowing Revenue And User Growth

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Comments (5)
Kerry Drake
Kerry Drake Sep 06, 2020 1:59PM ET
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I would say 2nd quarter information is useless because of the covid19 scare.
MAP SR
MAP SR Sep 06, 2020 12:13PM ET
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You should be more concerned about the 3rd quarter at this point and stop being so pessimistic and shorting the market.
Ivan Prskalo
Ivan Prskalo Sep 06, 2020 12:12PM ET
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no earnings supplies?
Shanell Newton
Shanell Newton Sep 06, 2020 12:09PM ET
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Have you seen the report??? How can you say this? I have no horse in this race but just tired of the type of reporting I keep seeing on this site.
Paul Ruggieri
Paul Ruggieri Sep 06, 2020 12:09PM ET
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yeh, this site is horrible.
Jesse Cohen
Jesse Cohen Sep 06, 2020 12:09PM ET
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It's called doing your research....
Shreman Coffer
Shreman Coffer Sep 06, 2020 12:02PM ET
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you're wrong
Jesse Cohen
Jesse Cohen Sep 06, 2020 12:02PM ET
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$WORK -18% says otherwise lol
 
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