Slack (work) Q121

Slack (Work) Ipo’d on June 19th, 2019
Price $30.86 6/14/2020
Market Cap $17,193 billion
P/S of 24.66
P/E N/A

Current:

EPS of $-0.02 beats by $0.04 Revenue of $201.65M (49.57% Y/Y) beats by $13.53M

June 4th, 2020 1Q:2021 earnings’ highlights:
** Revenue was $201,650 million up 49.57% From $134,821 million
** TTM Revenue was $697,248 million or $1.25 per share
** Earnings per share loss ($.13) up from Loss ($.26)
** TTM earnings (loss) ($1.43)
** Diluted share count 557,141 million
** Cash $1,524,969 Million; debt 620,073 million
** Cash flow for the quarter was $3,683 million up from ($34,203) million yoy
** TTM cash flow was ($26,499) million
** Stock based compensation for the quarter was $53,711 million up from $3639 million
** TTM stock based compensation was $476,596 Million
** Gross profits were $176,048 million up 51% from $116,247 million
** Total operating expenses were $252,199 million up 63% from $154,685 million
** Net Income loss ( $75,211) Million down 126% from loss ($33,332) Million
** Trading range between March 13th, 2020 and June 5th, 2020 was $15.10 to $40.07 : PE ratio range NA: PS ratio range was 12.07 to 32.02
** The day of the report the stock closed at $37.94 the next day it went to $30.52 and closed at $32.56 down 14.2 %.

First Quarter Fiscal 2021 Financial Highlights:

**Total revenue was $201.7 million, an increase of 50% year-over-year.
**Calculated Billings was $206.0 million, an increase of 38% year-over-year.
**GAAP gross profit was $176.0 million, or 87.3% gross margin, compared to $116.2 million, or 86.2% gross margin, in the first quarter of fiscal year 2020. Non-GAAP gross profit was $179.2 million, or 88.9% gross margin, compared to $116.9 million, or 86.7% gross margin, in the first quarter of fiscal year 2020.
**GAAP operating loss was $76.2 million, or 37.8% of total revenue, compared to a $38.4 million loss in the first quarter of fiscal year 2020, or 28.5% of total revenue. Non-GAAP operating loss was $16.6 million, or 8.3% of total revenue, compared to a $33.8 million loss in the first quarter of fiscal year 2020, or 25.0% of total revenue.
**GAAP net loss per basic and diluted share was $0.13. Non-GAAP net loss per share was $0.02.
**Net cash provided by operations was $8.7 million, or 4% of total revenue, compared to cash used in operations of $14.1 million, or 10% of total revenue, for the first quarter of fiscal year 2020. Free Cash Flow was $3.7 million, or 2% of total revenue, compared to $(34.2) million, or (25)% of total revenue for the first quarter of fiscal year 2020.

Recent Business Highlights:

First Quarter Highlights:

**Over 122,000 Paid Customers, up 28% year-over-year.
**132% net dollar retention rate.
**963 Paid Customers with greater than $100,000 in annual recurring revenue, up 49% year-over-year.
**Over 41,000 Paid Customers using shared channels, up from over 32,000 at the end of last quarter.
**Over 750,000 organizations on either a free or paid subscription plan, up from over 660,000 organizations at the end of last quarter.

All Numbers in Gaap:

Income Statement:

Revenue was $201,650 million up 49.6% from $134,821 million YoY. Their Cost of Revenue was down 1.1 % YoY. Gross Margins were 87.3% up from 86.2%. Operating Margins were loss (38%) down from loss (29%) due to increasing R&D expenses by 7.10% and Sales and Marketing expenses up 4.8%, while General and Administrative expense was down 2.2%. According to Allen Shim (CFO) They expect R&D expenses to grow in line with Revenue Growth for the fiscal 2021 year. They upped the Sales and Marketing Spend due to the work from home surge. They plan to continue to invest in what they see as a Secular trend. S&M should stay at this level for the fiscal 21 year but G&A should continue to come down. Net Income was loss -$75.2 Million up from a loss -$33,332. EPS was loss ($.13) down from ($.26).

Work has brought down their Cost of Revenue this quarter but their R&D expenses and Sales and Marketing expenses are going up. They came up with channels recently which is growing well and I am sure that they will come up with many more options to bolt onto their platform. I think they are upping their spend on R&D and S&M due to the competition with Microsoft. This is only my thoughts, if someone has other thoughts about this please state them.

In millions except for earnings and percentages
          Q119     Q219     Q319    Q419     Q120     Q220     Q320     Q420      Q121
Revenue   $80.9    $92      $105.6  $122     $134.8   $145     $168.7   $181.9    $201.7
Growth%   89.4%    79.3%     82%     78%      66.6%    57.6%    59.7%    49.1%     49.6%
GM                 87.7%     87.2%   86.6%    86.2%    79%      86%      86%       87.3%   
OM                -37%      -56%    -36%     -29%     -251%    -56%     -58%      -38%   
Net Inc   -$24.9  -$31.9    -$47.7  -$34.6   -$33.3   -$359.6  -$89.2   -$89.1    -$75.2       
EPS       -$.21   -$.26     -$.39   -$.29    -$.26    -$.98    -$.16    -$.16     -$.13                   
Non-Gaap EPS                                 -$.23    -$.14    -$.02    -$.02     -$.02

Operating Expense as a percentage of Revenue


            Q119     Q219     Q319     Q419     Q120     Q220     Q320     Q420     Q121
Cost of Rev 12.5%    12.3%    12.8%    13.3%    13.8%    21.5%    13.7%    13.4%    12.7%
R&D         43.7%    38.2%    38.8%    38%      37.9%    150%     56%      51%      45%                      
S&M         52%      58.2%    64.1%    57%      49.6%    94%      57%      57%      54.7%                          
G&A         24%      27.8%    32.4%    27%      27.3%    85%      29.4%    28%      25.1%        

Balance Sheet:

They increased the Cash on their books from $768.6 million to $1.525 billion. They had a $750 million convertible senior not offering that has a interest rate of .50% paid semi annually due on or after April 20th, 2023. They needed the extra cash to strengthen their balance sheet due to the covid crisis. They now have $620.07 million dollars of debt on the Balance sheet.

 In Thousands
           Q220       Q320      Q420         Q121
Cash       $785,347   $774,106  $768,592    $1,524,969
Debt       $0         $0        $0          $620,073 

Cashflow Statement:

This was the first year the company was Free Cash Flow positive since they went public. They had $3.683 million in FCF.

 in thousands
      Q119      Q219     Q319      Q419      Q120      Q220      Q320      Q420   Q121
FCF  ($14,969) ($8,622) ($43,882) ($31,506) ($34,203) ($10,241) ($19,106) ($835) $3683            

They are FCF positive but their Stock Compensation is really high still. This quarter it was at $53.7 million down from $63.2 million sequentially and up from $3.6 million YoY. Their account receivables went from $15.6 million to $39.5 million this quarter, up 153% YoY.

 In thousands
            Q219    Q319      Q419     Q120     Q220    Q320     Q420     Q121
Stock comp  $1.6    $10.5     $4.9     $3.6     $285.8  $73.9    $63.2    $53.7     

Their stock compensation is worrisome. It is 1/4 of sales which is really high. Although it is coming down, it is still to high. Especially for their results.

Conclusion:

Slack is still growing revenue at almost 50% this quarter. I thought with the work from home it would have been larger. It seems that they are helping their customer by working with them on the billings. I think they must be seeing some headwinds due to competition also. I think you can see this in their Revenue Growth, their high R&D and also S&M. They had 90,000 new customers this quarter and were able to convert 12,000 of those into paying members. That is the most they brought in and even more than all of last fiscal year. They hope to convert a majority of them into customers.

There were some headwinds this quarter due to Covid. They claim that less than 20% of their customers are derived from the most directly affected Covid industries. IE travel, hospitality, commercial real estate etc. They also offered credit and changes to billing length for some customers.

Here are some more numbers that need to be watched.


                 Q119   Q219   Q319   Q419   Q120   Q220   Q320   Q420    Q121

Calc Billings    102.1M 114.8M 126.5M 173.7M 149.6M 174.8M 186.1M 255.7M  206M
Paid Cust        67000  73000  81000  88000  95000  100000 105000 110000  122000                                                                                      
P.C.Shared Chan                                     20000  26000  32000   41000                                                    
Cust Ovr 100,000 351    412    491    575    645    720    821    893     963
Net Dollar Ret   149%   146%   144%   143%   138%   136%   134%   132%    132%
Shares           118.9M 120.9M 122.9M 124.1M 125.9M 368.5M 544.1M 550.4M  557.1M  
                                

September 4th, 2019 2Q:2020 earnings’ highlights:
** Revenue was $144,973 million up 57.6% From $92,018 million
** TTM Revenue was $507,409 million or $1.38 per share
** Earnings per share loss ($.98) down from Loss ($.26)
** TTM earnings (loss) ($1.92)
** Diluted share count 368,533 million
** Cash $785,347 Million; debt 0
** Free Cash flow for the quarter was ($10,241) million.
** Stock based compensation for the quarter was $285,787 million
** Gross profits were $113,867 million up 41% from $80,657 million
** Total operating expenses were $477,517 million up 318% from $114,343 million
** Net Income loss ( $359,562) Million down from loss ($31,860) Million
** Trading range between June 20th, 2019 and September 5th, 2019 was $26 to $42 : PE ratio range NA: PS ratio range was 18.88 to 30.50
** The day of the report the stock closed at $30.01 the next day it closed at $27.38 down 8.8%

Second Quarter Fiscal 2020 Financial Highlights:

**Total revenue was $145.0 million, an increase of 58% year-over-year. Revenue was negatively impacted by $8.2 million of credits related to service level disruption in the quarter.
**GAAP gross profit was $113.9 million, or 78.5% gross margin, compared to $80.7 million, or 87.7% gross margin, in the second quarter of fiscal year 2019. Non-GAAP gross profit was $126.3 million, or 87.1% gross margin, compared to $80.7 million, or 87.7% gross margin, in the second quarter of fiscal year 2019.
**Calculated Billings was $174.8 million an increase of 52% year-over-year.
**GAAP operating loss was $363.7 million, or 251% of total revenue, compared to a $33.7 million loss in the second quarter of fiscal year 2019, or 37% of total revenue. GAAP operating loss includes $307.0 million of stock-based compensation and related employer payroll taxes, primarily related to the satisfaction of the performance vesting condition on outstanding RSUs in connection with Slack’s direct listing on June 20, 2019. Non-GAAP operating loss was $55.6 million, or 38% of total revenue, compared to a $32.0 million loss in the second quarter of fiscal year 2019, or 35% of total revenue.
**GAAP net loss per basic and diluted share was $0.98. Non-GAAP net loss per share was $0.14.
**Net cash provided by operations was $0.3 million, or 0% of total revenue, compared to cash provided by operations of $1.5 million, or 2% of total revenue, for the second quarter of fiscal year 2019. Free Cash Flow was $(7.9) million, or 5% of total revenue, compared to $(7.7) million, or 8% of total revenue for the second quarter of fiscal year 2019.

Recent Business Highlights:

Second Quarter Highlights:

**Net dollar retention rate was 136%.
**Ended the quarter with over 100,000 Paid Customers, up 37% year-over-year.
**The number of Paid Customers greater than $100,000 in annual recurring revenue was 720, up 75% year-over-year.
**“Revenue growth was 58% year-over-year, despite a one-time revenue headwind from credits issued in the quarter related to service level disruption,” said Allen Shim, Chief Financial Officer at Slack. “We remain focused on expansion within existing customers and growing our large enterprise customer base, and ended the quarter with 720 Paid Customers greater than $100,000 in annual recurring revenue, which is up 75% year-over-year.”

December 4th, 2019 3Q:2020 earnings’ highlights:
** Revenue was $168,725 million up 59.7% From $105,648 million
** TTM Revenue was $570,486 million or $1.05 per share
** Earnings per share loss ($.16) down from Loss ($.39)
** TTM earnings (loss) ($1.69)
** Diluted share count 544,057 million
** Cash $774,106 Million; debt 0
** Free Cash flow for the quarter was ($19,106) million.
** Stock based compensation for the quarter was $73,861
** TTM stock based compensation was $368,148 Million
** Gross profits were $145,585 million up 58% from $92,108 million
** Total operating expenses were $240,587 million up 68% from $142,862 million
** Net Income loss ( $89,161) Million down 87% from loss ($47,672) Million
** Trading range between September 5th, 2019 and December 5th,2019 was $19.53 to $31.21 : PE ratio range NA: PS ratio range was 18.62 to 29.76
** The day of the report the stock closed at $21.66 the next day it closed at $22.78 up 5%.

Third Quarter Fiscal 2020 Financial Highlights:

**Total revenue was $168.7 million, an increase of 60% year-over-year.
**Calculated Billings was $186.1 million, an increase of 47% year-over-year.
**GAAP gross profit was $145.6 million, or 86.3% gross margin, compared to $92.1 million, or 87.2% gross margin, in the third quarter of fiscal year 2019. Non-GAAP gross profit was $148.9 million, or 88.3% gross margin, compared to $92.5 million, or 87.5% gross margin, in the third quarter of fiscal year 2019.
**GAAP operating loss was $95.0 million, or 56% of total revenue, compared to a $50.8 million loss in the third quarter of fiscal year 2019, or 48% of total revenue. Non-GAAP operating loss was $18.1 million, or 11% of total revenue, compared to a $39.6 million loss in the third quarter of fiscal year 2019, or 37% of total revenue.
**Net cash used in operations was $9.1 million, or 5% of total revenue, compared to cash used in operations of $28.4 million, or 27% of total revenue, for the third quarter of fiscal year 2019. Free Cash Flow was $(19.1) million, or 11% of total revenue, compared to $(43.5) million, or 41% of total revenue for the third quarter of fiscal year 2019.
**GAAP net loss per basic and diluted share was $0.16. Non-GAAP net loss per share was $0.02.

Recent Business Highlights:

**Third Quarter Highlights:
**Ended the quarter with over 105,000 Paid Customers, up 30% year-over-year.
**Net dollar retention rate was 134%.
**The number of Paid Customers with greater than $100,000 in annual recurring revenue was 821, up 67% year-over-year.
**The number of Paid Customers with greater than $1 million in annual recurring revenue exceeded 50 for the first time.
**Announced general availability of shared channels and Workflow Builder.
**Ended the quarter with over 26,000 Paid Customers using shared channels, up from over 20,000 at the end of last quarter.

March 12th, 2020 4Q:2020 earnings’ highlights:
** Revenue was $181,900 million up 49.14% From $121,967 million
** TTM Revenue was $630,419 million or $1.15 per share
** Earnings per share loss ($.16) down from Loss ($.29)
** TTM earnings (loss) ($1.56)
** Diluted share count 550,444 million
** Cash $768,592 Million; debt 0
** Cash flow for the quarter was ($.835) million up from ($31.506) million yoy
** TTM cash flow was ($64,385) million
** Stock based compensation for the quarter was $63,237 million up from $4861 million
** TTM stock based compensation was $426,524 Million
** Gross profits were $157,532 million up 49% from $105,668 million
** Total operating expenses were $248,720 million up 67% from $149,108 million
** Net Income loss ( $89,003) Million down 145% from loss ($36,269) Million
** Trading range between December 5th, 2019 and March 13th, 2020 was $15.90 to $30.47 : PE ratio range NA: PS ratio range was 13.88 to 26.60
** The day of the report the stock closed at $21.35 the next day it closed at $19.59 down 8 %.

Fiscal Year 2020 Financial Highlights:

**Total revenue was $630.4 million, an increase of 57% year-over-year.
**Calculated Billings was $765.3 million, an increase of 48% year-over-year.
**GAAP gross profit was $533.2 million, or 84.6% gross margin, compared to $349.3 million, or 87.2% gross margin, in fiscal year 2019. Non-GAAP gross profit was $552.6 million, or 87.7% gross margin, compared to $350.9 million, or 87.6% gross margin, in fiscal year 2019.
**GAAP operating loss was $588.3 million, or 93.3% of total revenue, compared to a $154.2 million loss in fiscal year 2019, or 38.5% of total revenue. Non-GAAP operating loss was $130.6 million, or 20.7% of total revenue, compared to a $129.3 million loss in fiscal year 2019, or 32.3% of total revenue.
**GAAP net loss per basic and diluted share was $(1.43). Non-GAAP net loss per share was $(0.28).
**Net cash used in operations was $12.4 million, or 2% of total revenue, compared to cash used in operations of $41.1 million, or 10% of total revenue, for fiscal year 2019. Free Cash Flow was $(62.0) million, or 10% of total revenue, compared to $(97.2) million, or 24% of total revenue for fiscal year 2019.

Recent Business Highlights:

Fiscal Year Highlights:

**Over 110,000 Paid Customers, up 25% year-over-year.
**132% net dollar retention rate.
**893 Paid Customers with greater than $100,000 in annual recurring revenue, up 55% year-over-year.
**70 Paid Customers with greater than $1 million in annual recurring revenue, up 79% year-over-year.
Over 32,000 Paid Customers using shared channels, up from over 26,000 at the end of last quarter.

June 4th, 2020 1Q:2021 earnings’ highlights:
** Revenue was $201,650 million up 49.57% From $134,821 million
** TTM Revenue was $697,248 million or $1.25 per share
** Earnings per share loss ($.13) up from Loss ($.26)
** TTM earnings (loss) ($1.43)
** Diluted share count 557,141 million
** Cash $1,524,969 Million; debt 620,073 million
** Cash flow for the quarter was $3,683 million up from ($34,203) million yoy
** TTM cash flow was ($26,499) million
** Stock based compensation for the quarter was $53,711 million up from $3639 million
** TTM stock based compensation was $476,596 Million
** Gross profits were $176,048 million up 51% from $116,247 million
** Total operating expenses were $252,199 million up 63% from $154,685 million
** Net Income loss ( $75,211) Million down 126% from loss ($33,332) Million
** Trading range between March 13th, 2020 and June 5th, 2020 was $15.10 to $40.07 : PE ratio range NA: PS ratio range was 12.07 to 32.02
** The day of the report the stock closed at $37.94 the next day it went to $30.52 and closed at $32.56 down 14.2 %.

First Quarter Fiscal 2021 Financial Highlights:

**Total revenue was $201.7 million, an increase of 50% year-over-year.
**Calculated Billings was $206.0 million, an increase of 38% year-over-year.•GAAP gross profit was $176.0 million, or 87.3% gross margin, compared to $116.2 million, or 86.2% gross margin, in the first quarter of fiscal year 2020. Non-GAAP gross profit was $179.2 million, or 88.9% gross margin, compared to $116.9 million, or 86.7% gross margin, in the first quarter of fiscal year 2020.
**GAAP operating loss was $76.2 million, or 37.8% of total revenue, compared to a $38.4 million loss in the first quarter of fiscal year 2020, or 28.5% of total revenue. Non-GAAP operating loss was $16.6 million, or 8.3% of total revenue, compared to a $33.8 million loss in the first quarter of fiscal year 2020, or 25.0% of total revenue.
**GAAP net loss per basic and diluted share was $0.13. Non-GAAP net loss per share was $0.02.
**Net cash provided by operations was $8.7 million, or 4% of total revenue, compared to cash used in operations of $14.1 million, or 10% of total revenue, for the first quarter of fiscal year 2020. Free Cash Flow was $3.7 million, or 2% of total revenue, compared to $(34.2) million, or (25)% of total revenue for the first quarter of fiscal year 2020.

Recent Business Highlights:

First Quarter Highlights:

**132% net dollar retention rate.
**Over 122,000 Paid Customers, up 28% year-over-year.
**963 Paid Customers with greater than $100,000 in annual recurring revenue, up 49% year-over-year.
**Over 41,000 Paid Customers using shared channels, up from over 32,000 at the end of last quarter.
**Over 750,000 organizations on either a free or paid subscription plan, up from over 660,000 organizations at the end of last quarter.

Andy

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