Slack Technologies Reports First Quarter Earnings

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Slack Technologies Reports First Quarter Earnings

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Slack Technologies (NYSE: WORK) on 4th June 2020 announced its first quarter earnings result which ended on April 30, 2020, for the fiscal year 2021.The Co- founder and Chief Executive Officer, Stewart Butterfield, has commented that the first quarter was incredible for the company, as the company has gained an additional new net twelve thousand paid customers. The Work from home condition for its employees will have a long term impact on the working for the company and this will help to adopt and accelerate the channel based messaging platforms that the company has created which is still in enterprise phase for now.

Earnings Highlights

  1. Revenue: The revenue of the Q1 ended April 30, 2020, was $201.65 million which has increased by 49.56% compared to $134.82 million in Q1 ended April 30, 2019 (Y-o-Y), but the revenue has increased by 10.85% compared to $181.19 million in Q4 ended January 31, 2020 (Q-o-Q).
  2. Gross Profit: The Gross Profit for Q1 ended April 30, 2020, was $176.04 million which has increased by 51.44% compared to $116.24 million in Q1 ended April 30, 2019 (Y-o-Y), but the gross profit has increased by 11.75 % compared to $157.53 million in Q4 ended January 31, 2020 (Q-o-Q).
  3. Gross Margin: The Gross margin for Q1 ended April 30, 2020, was 87.30% which has increased by a few basis points compared to gross margin of 86.22% in Q1 ended April 30, 2019, the gross margin was 86.60% for Q4 ended January 31, 2020.
  4. Operating Income / Expenses: The operating expenses for Q1 ended April 30, 2020, was $252.19 million which has increased by 63.04% compared to $154.68 million in Q1 ended April 30, 2019 (Y-o-Y), but the operating expenses for current quarter has increased by 1.39% compared to $248.7 million in Q4 ended January 31, 2020 (Q-o-Q).
  5. EBIT: The company suffered losses from its operations which for Q1 ended April 30, 2020, was $76.15 million which has increased compared to $38.43 million in Q1 ended April 30, 2019 (Y-o-Y). This operating loss was a result of increase in the operating expenses which includes sales and marketing expenses, generating and administrative expenses and Research & Development expenses.
  6. Net Income / Loss: The net loss for Q1 ended April 30, 2020, was $74.42 million which has increased compared to a net loss $31.36 in Q1 ended April 30, 2019 (Y-o-Y), but the net loss has decreased by 16% compared to a net loss of $89.09 million in Q4 ended January 31, 2020 (Q-o-Q).
  7. Earnings / Loss per share: The loss per share for basic and diluted Q1 ended April 30, 2020, was $0.13 which is less compared to a loss per share of $0.26 in Q1 ended April 30, 2019 (Y-o-Y).

Balance – Sheet Highlights:

The Company has Cash and Cash equivalents of $1.22 billion in Q1 ended April 30, 2020, which has increased compared to $498.99 million in Q4 ended January 31, 2020 (Q-o-Q). The company has short term investments of $296.74 million in Q1 ended April 30, 2020, which has increased by $27.15 million as additional investments compared to $269.59 million in Q4 ended January 31, 2020 (Q-o-Q). The Company has Long term investments of $34.47 million in Q1 ended April 30, 2020, which has increased by $5.65 as additional investments compared to $28.81 in Q4 ended January 31, 2020 (Q-o-Q).

The Company has Short term debt of $30.51 million in Q1 ended April 30, 2020, which has increased by $50,000 (additional debt taken) compared to $30.46 million in Q4 ended January 31, 2020 (Q-o-Q). The Company has a Long term debt of $189.65 million which has reduced by $6.7 million compared to $196.37 million in Q4 ended January 31, 2020 (Q-o-Q). The Shareholder’s equity for Q1 ended April 30, 2020, was $840.70 million which has increased by $116.85 million compared to $ 723.89 million in Q4 ended January 31, 2020 (Q-o-Q). The shareholder’s equity includes additional paid in capital which has increased which means the company has issued new share worth $190.30 million in Q1 ended April 30, 2020.

Cash Flow Highlights

The Net Cash flow from operating activities for Q1 ended April 30, 2020, was $8.72 million which is considerably good compared to negative cash flow of $ 14.12 million in Q4 ended January 31, 2020. The company’s business has generated a negative cash flow of $35.46 million in Q1 ended April 30, 2020. The company has a positive cash flow of $755.96 million from financing activities which includes proceeds from net convertible senior notes which also led to an increase in its cash and cash equivalents. The company has also generated free cash flow of $3.68 million in Q1 ended April 30, 2020.

Other Highlights

The Deferred revenue (includes current and non-current) for Q1 ended April 30, 2020, was $381.07 million which has increased by 1.15% compared to $376.71 in Q1 ended April 30, 2020 (Q-o-Q). The Calculated billings for Q1 ended April 30, 2020, was $206 million which has increased by 37.67% compared to $149.63 million in Q1 ended April 30, 2020 (Q-o-Q).The company has a paid customer base of over 122,000 in Q1 ended April 30, 2020, which has increased by 28% (Y-o-Y). The Company has reported that it has 963 paid customers with more than $1,00,000 in Annual recurring revenue (ARR).

The company has provided the final outlook for full fiscal 2021 it expects, that the total revenue will be between $855 million to $870 million and an Y-o-Y growth between 42% to 44%, a Non-GAAP operating loss between $110 million to $100 million.           

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