Slack Set to Continue Growth After Pandemic

Last week, I wrote about Slack’s product-market fit, and why it’s set to continue thriving in the work-from-home trend.

The company’s user growth has been parabolic during the pandemic. According to a series of tweets from the CEO, Slack was at 1 million “simultaneously connected” users in 2015 and grew to 10 million by March 10th, 2020. From there, the company grew to 11 million one week later and 12.5 million the following week. 

Where the market gets uncomfortable with Slack is their current lack of profitability. The company recently released its fiscal year fourth quarter 2020 results on March 12, 2020. 

Slack’s revenue grew 49% year-over-year to $181.9 million and calculated billings grew 47% year-over-year to $254.7 million. The company’s GAAP operating loss was $91.2 million compared to $43.4 million loss in the fiscal fourth quarter. Their non-GAAP operating loss was at $23.1 million compared to a $37.5 million loss in the previous quarter. 

Slack has been steadily increasing its paid users. In the fiscal third quarter and fourth quarter ending in January, Slack added 5,000 paid customers per quarter for a total of 110,000.

From Feb 1st to March 18th, Slack accelerated this and added 7,000 new paid customers. The company also reported they have 70 customers spending more than $1 million annually. This is up 79% year-over-year with a net dollar retention rate of 132%. 

One of the main arguments against Slack is its competition with Microsoft Teams.

To say that Microsoft launched Teams in 2017 and has quickly caught up to Slack is not exactly accurate. Microsoft has owned business communications for nearly 30 years and has spent $35 billion in acquisitions to own the messaging space preemptively with the acquisition of Skype for $8.5 billion and LinkedIN for $26.2 billion. Those acquisitions occurred around the same time Microsoft considered acquiring Slack for $8 billion. 

What makes Slack different is its capacity for customization. There are over 1,500 standard integrations with Slack, such as with Zoom video-conferencing and Google Drive. However, there are over 450,000 applications developed internally by Slack customers, according to the CEO. Those applications come from developers who want a more advanced alternative to the closed ecosystem that Microsoft provides.

Read the full article on Forbes here.