Shares of Slack Drop 20% on Disappointing Guidance for Q1

Shares of instant messaging platform Slack Technologies saw its shares plummeting 20% on Thursday in extended trading after the company released a weak forecast for the fiscal first quarter and cited coronavirus concerns in its guidance.

For the latest quarter, the company reported an earnings loss of 4 cents, excluding items. Analysts per Refinitiv had been expecting a loss of 5 cents. Revenue at $181.9 million was also ahead of the $174.1 million as expected by analysts according to Refinitiv.

Slack forecast revenue for the quarter ending in April to be in the range $185 million to $188 million. This is below the $188.4 million average analyst estimate, according to a survey by Refinitiv.

“As the shift from email to channel-based messaging platforms continues, the largest companies around the world are choosing to standardize on Slack because of our enterprise-grade scalability, security, open platform, ease-of-use and innovative roadmap,” CEO Stewart Butterfield stated.

The company’s Chief Financial Officer Allen Shim told analysts on the conference call that Slack is seeing an increase in demand from companies that are moving to a distributed workforce, but that it’s offering conservative guidance because of concern surrounding the potential economic impact.

“While the pipeline currently remains healthy we see risk due to increased customer uncertainty and travel disruption particularly in the enterprise segment,” Butterfield said. “On the positive front we are seeing customers begin to work remotely and many are looking to Slack to help manage this.”

“Organizations who previously had been really resistant to distributed workforces will probably open up a little bit, and I would include ourselves in that,” Butterfield said.

Disclaimer: We have no position in Slack Technologies Inc. (NYSE: WORK) and have not been compensated for this article.