Slack Shares Jump on Quarterly Results Despite Weak Outlook

Shares of American software company Slack technologies were on the rise on Wednesday after the company reported quarterly results that thrilled Wall Street.

This is despite the stock being a disappointment since its IPO in June and releasing a dismal outlook.

The stock saw a gain of about 2% in after-hours trading after reporting third quarter results.

The company, which is the developer of the popular work messaging app, reported a loss of 2 cents a share in earnings. This is compared to the 8 cent loss that analysts were expecting according to Refinitiv.

Revenue at $168.7 million was also better than the $156 million that analysts expected, per Refinitiv.

Sales in the quarter, which ended Oct. 31, saw a growth of 60% from $105.6 million a year earlier. Slack said it now has 821 customers paying more than $100,000 in annual recurring revenue, up from 720 in the second quarter.

CEO Stewart Butterfield said on the earnings call that the company has more than 50 customers spending more than $1 million a year, up from 30 a year ago.

Butterfield said on the earnings call, “In this quarter, we set a new record by adding 101 of those customers for a total of 821 $100,000 customers. That’s a 67% increase over Q3 of last year and included strong growth in the largest enterprises, another 11 of the Fortune 500, and in our international business, more than a third of the new $100,000 customers were outside of the U.S. We also saw great growth at the high end of this range, ending with more than 50 paid customers with over $1 million in annual recurring revenue. Last year, this time, we had just over 30, and we’re happy to see this number tracking to the growth in the broader base of $100,000 customers.”

Looking ahead, the company projected for the fourth quarter revenue in the range of $172 million to $174 million. This is compared to the $172.9 million average analyst estimate, according to analysts surveyed by Refinitiv.
Slack said its loss, excluding some items, will be between 6 cents and 7 cents a share, while analysts were projecting a 6-cent loss.

The company also revealed that its early investor Chamath Palihapitiya is leaving the board and is being replaced by Michael McNamara.

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