- Slack announced this week that Symantec chief information officer Sheila Jordan and Eclipse Ventures venture partner Mike McNamara joined the board and Chamath Palihapitiya stepped down
Earlier this week, Slack announced its financial results and some changes to its board of directors. For the third quarter, Slack beat analyst expectations, but the company did not provide an update about its daily active users.
Slack also announced that it appointed Symantec chief information officer Sheila Jordan and Eclipse Ventures venture partner and former Flex (Flextronics) CEO Mike McNamara to its board of directors. And Chamath Palihapitiya is going to be stepping down from the board. Palihapitiya was a very early investor in Slack.
“And if you know him, you know he’s one of a kind. Thank you, Chamath, for your time, wisdom and invaluable contribution to the growth of Slack,” said Slack co-founder and CEO Stewart Butterfield during the earnings call.
Palihapitiya is the CEO of Social Capital who is known for partnering with billionaire Richard Branson to take space tourism company Virgin Galactic public. Virgin Galactic started trading on the NYSE as of October 28.
In terms of the numbers, Slack reported quarterly revenue of $168.7 million — which is an increase of 66% from the year before. For the quarter, Slack said that it lost 2 cents per share excluding certain items. And analysts were expecting about 8 cents per share in losses.
A couple of months ago, Slack said it was hitting 12 million daily active users. And Slack emphasized that those users are highly engaged and spend many hours on the platform.
Slack’s largest rival is the Microsoft Teams product. Microsoft bundles the Teams application with Office 365, which gives the Redmond giant a major advantage.
During the earnings call, Slack provided the updated numbers around paid users. Now Slack has 105,000 paid users — which is an increase of 30% from the year before.
“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.,” explained Butterfield on the call (transcribed by fool.com). “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.”
Almost 70% of the customers that are paying up to $1 million a year also use Office 365. During the earnings call, Butterfield also pointed out that there is confusion in the market, which was “deliberately created.” Teams has users who were migrated from Skype for Business to Microsoft Teams. So now when they use the service for making phone calls, they are a Teams user.
“It has nothing to do with what people do. You use Slack for — why people are switching to Slack? The strength of the platform or any of that… So I mean I want to just be candid and say we haven’t figured out the right way to message that. I think trying to get ahead of it and get people to understand, you are going to hear a 30 million daily active user announcement and a 50 million daily active user announcement and 100 million daily active user announcement because they had 100 million people using Lync,” commented Butterfield.
Slack is forecasting revenue of $172 million to $174 million and an adjusted net loss per share of $0.07 to $0.06 for the fourth quarter. And for the fiscal year 2020, Slack is forecasting revenue of $621 million to $623 million and adjusted net loss per share of $0.32 to $0.31.
