Slack boosts outlook as pandemic fuels boom in remote work tools

Tech company says it has 87 customers spending $1 million plus on its services

Slack Technologies Inc. posted record sales and raised its full-year outlook as the workplace-collaboration app provider benefited from the shift to remote working that has lifted the fortunes of many business software companies.

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Slack on Tuesday said it had sales of $215.9 million, up 49% from the year-ago period, and narrowed its operating loss to $68.6 million in the most recent quarter. Wall Street expected sales of $209.1 million and a $80.5 million operating loss, according to analysts surveyed by FactSet.

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The San Francisco-based company had a net loss of $74.8 million compared with $359.6 million in the same quarter a year ago.

The pandemic that has caused millions of Americans to work from home has been a boon to companies that enable remote cooperation. Zoom Video Communications Inc. last week lifted its full-year outlook for the second time during the pandemic and business-software provider Salesforce.com Inc. late last month also raised its forecast.

TickerSecurityLastChangeChange %
WORKSLACK TECHNOLOGIES INC.42.65+0.23+0.54%

Slack said it now has 87 customers that spent more than $1 million on its services, up 78% from a year-earlier. Total paying customers grew 30% to more than 130,000, and Slack Chief Executive Stewart Butterfield said the acceleration was driven by an increase in remote working.

Slack's shares fell more than 15% in after-hours trading. The stock was up slightly during regular trading, closing at $29.32, even as other tech companies continued to see the effects of a multiday selloff. Shares in Slack have risen more than 30% this year.

As businesses broadly are rushing to embrace the kind of digital tools that allow them to navigate the pandemic, competition among the vendors providing that software, already fierce before Covid-19, has intensified. Microsoft Corp. has been aggressively pushing Teams, its workplace-collaboration tool that competes with both Zoom and Slack.

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Slack in July filed an antitrust complaint against Microsoft in the European Union, accusing the software giant of abusing its dominance. Microsoft has said that it is committed to providing its customers with a variety of choices and that it looks forward to providing additional information to the European Commission.

Microsoft and Slack have been sparring verbally for over a year, since before the startup instant messaging software company went public in 2019.

Slack said it now expects sales for the financial year of $870 million to $876 million, almost 40% year-over-year growth, and above its previous projection of $855 million to $870 million in sales. It also improved its forecast for an adjusted operating loss, now projecting a loss of $70 million to $75 million.

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In the current quarter. Slack said it expects to generate $222 million to $225 million in sales and post an adjusted operating loss of $23 million to $27 million. Wall Street expects $223.9 million in quarterly revenue and a loss of $29.2 million.

Although many companies have embraced Slack for its ease of use and the breezy interoffice communication the platform enables, the product has also caused problems in the workplace when interactions become too lax or even hostile. Slack has said it is working on tools to help companies curb such behavior.

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