The workplace messaging app Slack forecast a sharp revenue slowdown in the current quarter from the loss of customers due to the economic downturn, highlighting the bumpier ride it has had during this year’s work-from-home boom than some other software collaboration and communication tools.
However, the company also said strong gains among new customers and the launch of a key feature to its service had laid the foundation for stronger growth in the long term. Its results for the three months to the end of July were slightly ahead of Wall Street expectations.
Slack said it expected revenue of $222m to $225m in the current quarter, in line with analysts’ forecasts, representing growth of 32-33 per cent compared to the 49 per cent of the latest quarter.
The expected slowdown — coming the week after the video conferencing app Zoom reported a huge jump in growth — pushed Slack’s shares down by more than 15 per cent in after-market trading.
Stewart Butterfield, chief executive, said the company lost revenue immediately when existing customers left, while it took years for new customers to reach their peak revenue. But he said that paid customer growth accelerated 30 per cent in the quarter, lifting the total to more than 130,000.
“It’s the fundamental metric that drives the whole business,” he said.
Slack’s shares have missed the strong stock market rally seen by other collaboration software companies this year, led by Zoom. Investors have also worried that it is suffering from a concerted attack from Microsoft’s rival Teams service.
Slack recently lodged an antitrust complaint against Microsoft with the European Commission. However, Allen Shim, chief financial officer, said its success rate when competing for new business against Microsoft was unchanged from a year ago.
In the latest quarter, Slack reported revenue of $215.9m, about $7m higher than expected, and said that it had broken even on a pro forma basis, compared to expectations of a 3 cents a share loss. Based on formal accounting principles, the company’s net loss shrank to $73m, from $360m the year before.