Stewart Butterfield, co-founder and chief executive officer of Slack Technologies Inc., speaks during an event in San Francisco, California.
David Paul Morris | Bloomberg | Getty Images
Slack shares fell as much as 18% in extended trading on Tuesday after the team communications software company reported fiscal second-quarter results and full-year guidance that exceeded analysts’ expectations. Although it beat on full-year guidance, revenue growth in the quarter, which ended on July 31, came in below 50% on an annualized basis, in line with the two previous quarters. That’s a disappointment compared with video-calling software company Zoom, which showed 355% growth during the coronavirus pandemic.
Here’s how the company did:
- Earnings: 0 cents per share (break-even), adjusted, vs. loss of 3 cents per share as expected by analysts, according to Refinitiv.
- Revenue: $215.9 million, vs. $209.1 million as expected by analysts, according to Refinitiv.
The company reported a net loss of $73 million, significant progress from the year-ago quarter, when it lost $360 million. Slack’s entire quarter saw an impact from the pandemic, as people became more reliant on online tools such as Slack and Zoom because of restrictions on gathering in offices and schools. Revenue grew 50% in the previous quarter, when shelter in place applied for about half of the period, and 49% before that.
Slack did not disclose a new number of daily active users; the company last said it had 12 million in October. In a conference call with reporters CEO Stewart Butterfield said what matters is paying customers. The company said it had over 130,000 paying customers in the quarter, up 30% year over year and above the FactSet consensus estimate of 128,000.
In the quarter Slack announced the acquisition of Rimeto, a start-up with software that companies can use to show profiles of their workers. Slack also said it had filed a complaint against Microsoft with the European Commission, claiming Microsoft, which provides the Teams communication app in its Office 365 productivity-software bundle, engaged in anticompetitive behavior. The European Commission has previously fined Microsoft for not complying with an agreement related to giving people the ability to choose a web browser and ordered the company to license certain Windows technology to competitors.
“We view the complaint as a real one, but also believe it is unlikely to result in Microsoft being forced to only sell Teams as a standalone product,” Rishi Jaluria and Philip Rigby of DA Davidson, which has the equivalent of a hold rating on Slack stock, wrote in a note distributed to clients on July 22. “That said, it could result in fines and Microsoft selling a version of Office without Teams, based on precedent set by the EU’s fines and actions against Microsoft.”
Slack did not see a year-over-year change in its win rate against Microsoft Teams in the quarter, Allen Shim, Slack’s chief financial officer, said on the call with reporters. A majority of customers spending over $1 million in annual recurring revenue also use Office 365, Shim said.
With respect to guidance, Slack predicted a fiscal third-quarter adjusted loss of 6 cents to 5 cents per share on $222 million to $225 million in revenue. Analysts surveyed by Refinitiv had been looking for an adjusted loss of 5 cents per share and $223.7 million in revenue.
For the 2021 fiscal year Slack said it expects an adjusted loss of 14 cents to 13 cents per share and revenue of $870 million to $876 million. Analysts polled by Refinitiv had expected an adjusted loss of 16 cents per share, along with $872.3 million in revenue.
Shares of Slack are up about 31% since the start of the year, while the S&P 500 is up 3%.
Executives will discuss the results with analysts on a conference call at 5 p.m. Eastern time.
This is breaking news. Please check back for updates.
Take a look at some of the biggest movers in the premarket:
Zoom Video (ZM) – Zoom reported quarterly profit of 92 cents per share, more than doubling the 45 cents a share consensus estimate. Revenue came in well above Street forecasts. Zoom also raised its annual revenue forecast by more than 30%, with the use of its video conferencing technology soaring as more workers and students operate remotely.
Walmart (WMT) – Walmart will launch its membership program Walmart+ on Sept. 15. The service – which will compete with Amazon’s (AMZN) popular Prime program – will cost $98 per year, compared to $119 for Prime. The new program will also offer discounted gasoline. Walmart+ members will need to meet a $35 minimum online order size to receive free shipping.
American Airlines (AAL), Delta Air Lines (DAL), United Airlines (UAL) – These and other airline stocks remain on watch, after falling yesterday on United’s announcement that it was eliminating ticket change fees. Delta and American followed later in the day with similar announcements, and analysts say most competitors will be forced to follow the move amid the slump in travel demand.
Schlumberger (SLB) – The oilfield services company will merge its North American fracking business with Liberty Oilfield Services (LBRT), and will hold a 37% stake in the newly combined company. The deal comes amid a significant drop in oilfield services activity amid the pandemic and slumping energy consumption.
Sanofi (SNY) – The French drugmaker said its rheumatoid arthritis drug Kevzara did not prove effective against Covid-19, with the treatment failing to significantly shorten hospital stays for patients in a 420-person study.
Ford Motor (F) – The automaker is planning to cut 1,000 salaried jobs in North America, according to a Bloomberg report. People familiar with the matter said the announcement could come this week, as Ford tries to improve its efficiency.
Eastman Kodak (KODK) – Hedge fund D.E. Shaw now has a 5.2 percent stake in Kodak, according to a Securities and Exchange Commission filing. Eastman Kodak shares have been extremely volatile in recent weeks, after the company was granted a government loan to produce drug ingredients. The loan was later put on hold amid a probe involving disclosure of the loan.
Apple (AAPL) – The company is asking suppliers to build at least 75 million 5G iPhones for a planned launch later this year, according to sources who spoke to Bloomberg.
Hawaiian Holdings (HA) – The parent of Hawaiian Airlines notified 400 pilots and flight attendants of upcoming job cuts. The workers will be furloughed on Oct. 1, following the expiration of government assistance for the airline industry.
Gogo (GOGO) – The provider of inflight broadband and entertainment announced a deal to sell its commercial aviation business to satellite operator Intelsat for $400 million in cash.
Eric Yuan, founder and chief executive officer of Zoom Video Communications Inc., center, celebrates during the company’s initial public offering at the Nasdaq MarketSite in New York on April 18, 2019.
Victor J. Blue | Bloomberg | Getty Images
Zoom Video Communications shares rose as much as 7% in extended trading on Monday after the company reported fiscal second-quarter earnings that were better than analysts had expected and raised its full-year guidance significantly.
Here’s how the company did:
- Earnings: 92 cents per share, adjusted, vs. 45 cents per share as expected by analysts, according to Refinitiv.
- Revenue: $663.5 million, vs. $500.5 million as expected by analysts, according to Refinitiv.
Revenue grew 355% on an annualized basis in the fiscal second quarter, which ended on July 31, and income neared $186 million, according to a statement. In the prior quarter Zoom’s revenue grew 169%.
People became more dependent on Zoom’s video-calling software for business, educational and personal use during the quarter, after the coronavirus pandemic led officials to direct people to stay home around the world, meaning that people could no longer meet in person as before. The company hired information security and diversity leaders, added Lt. Gen. Herbert Raymond “H.R.” McMaster to its board, announced plans for research and development centers in Phoenix and Pittsburgh, and said it acquired secure messaging start-up Keybase.
Zoom averaged 148.4 million monthly active users in the quarter, up 4,700% year over year, RBC analysts led by Alex Zukin wrote in a note distributed to clients on Aug. 17, citing data from app analytics start-up SensorTower. The analysts have the equivalent of a buy rating on Zoom stock.
Excluding the after-hours move, Zoom shares are up 369% since the beginning of the year, while the S&P 500 index is up about 9%. During Monday’s trading session Zoom stock increased almost 9%, while the Dow Jones Industrial Average and S&P 500 ended the day lower.
With respect to guidance, Zoom sees fiscal third-quarter earnings of 73 cents to 74 cents per share on an adjusted basis and $685 million to $690 million in revenue. Analysts polled by Refinitiv had been expecting adjusted earnings of 35 cents per share on $492.9 million in revenue.
Zoom raised its guidance for the full 2021 fiscal year. It called for $2.40 to $2.47 in adjusted earnings per share and $2.37 billion to $2.39 billion in revenue, implying 282% annualized revenue growth at the middle of the range. Consensus among analysts polled by Refinitiv was $1.30 in adjusted earnings per share and $1.81 billion in revenue. Zoom’s prior full-year guidance was $1.21 to $1.29 in adjusted earnings per share on $1.78 billion to $1.80 billion in revenue.
Executives will discuss the results with analysts on a conference call starting at 5:30 p.m. Eastern time.
This is breaking news. Please check back for updates.