Slack Technologies (NYSE:WORK) earnings release for the 1st quarter of their 2021 fiscal year
Category: Stock Market and Slack (WORK)
Date: 23 June 2019 Stock Price: $34.21 We take a look at the 1st quarter earnings report for their 2021 fiscal year of Slack Technologies, the collaboration hub group that connects working teams and businesses. Has the group benefited or suffered as a result of the Covid-19 pandemic?
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- Q1 was a phenomenal quarter for Slack, with the addition of 12,000 net new Paid Customers and 50% revenue growth year-over-year, said Stewart Butterfield, Chief Executive Officer and Co-Founder at Slack"
About Slack Technologies
Slack is the collaboration hub that brings the right people, information, and tools together to get work done. From Fortune 100 companies to corner markets, millions of people around the world use Slack to connect their teams, unify their systems, and drive their business forward. The image below shows a few key numbers in terms of Slack usage numbers.
Overview of Slack Technologies' 1st quarter 2021 earnings report
The numbers below refers to the latest quarter unless specified otherwise:
- Revenue: $201.650 million (up from $134.821 for the same quarter of the previous year)
- Revenue increased by 49.5% over the last 12 months
- Revenue increased by 49.5% over the last 12 months
- Cost of Revenue: $25.602 million (up from $18.574 million for the same quarter of the previous year)
- Cost of Revenue increased by 37.8% over the last 12 months
- Cost of Revenue increased by 37.8% over the last 12 months
- Net loss: -$75.211 million (up from -$33.332 million)
- Net loss per share: $0.13
- Number of shares in issue: 557.414 million (up from 125.890 million for the same quarter of the previous year)
- Cash and cash equivalents: $1.288 billion
- Cash and cash equivalents per share: $2.31
- Cash and cash equivalents makes up 6.8% of Slack's current market capital
- Cash and cash equivalents makes up 56.9% of Slack's total assets
- Accounts receivable: $105.825 million
- Accountants receivable makes up 4.9% of the group's total assets
- Total Stockholders equity: $840.704 million
- Stockholders equity per share: $1.51
- So Slack is trading at times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at
- For some perspective firms in the S&P 500 has an average price to book value of 3.7
Slack Technologies' management commentary on their 1st quarter 2021 earnings report
SAN FRANCISCO--(BUSINESS WIRE)-- Slack Technologies, Inc., (NYSE: WORK) today reported financial results for its fiscal quarter ended April 30, 2020.
Management Commentary:
“Q1 was a phenomenal quarter for Slack, with the addition of 12,000 net new Paid Customers and 50% revenue growth year-over-year,” said Stewart Butterfield, Chief Executive Officer and Co-Founder at Slack. “We believe the long-term impact the three months and counting of working from home will have on the way we work is of generational magnitude. This will continue to catalyze adoption for the new category of channel-based messaging platforms we created and for which we are still the only enterprise-grade offering.”
“Now more than ever our customers depend on Slack to continue to push the envelope of innovation,” said Allen Shim, Chief Financial Officer at Slack. “We plan to continue to invest, as we see the current crisis accelerating digital transformation and the transition from email to channel-based messaging platforms over the medium term to long term. At the same time, we will manage the business prudently and with a goal of showing consistent operating leverage and progression toward being free cash flow positive.”
Management Commentary:
“Q1 was a phenomenal quarter for Slack, with the addition of 12,000 net new Paid Customers and 50% revenue growth year-over-year,” said Stewart Butterfield, Chief Executive Officer and Co-Founder at Slack. “We believe the long-term impact the three months and counting of working from home will have on the way we work is of generational magnitude. This will continue to catalyze adoption for the new category of channel-based messaging platforms we created and for which we are still the only enterprise-grade offering.”
“Now more than ever our customers depend on Slack to continue to push the envelope of innovation,” said Allen Shim, Chief Financial Officer at Slack. “We plan to continue to invest, as we see the current crisis accelerating digital transformation and the transition from email to channel-based messaging platforms over the medium term to long term. At the same time, we will manage the business prudently and with a goal of showing consistent operating leverage and progression toward being free cash flow positive.”
Financial Outlook of Slack (WORK):
Slack is initiating guidance for the second quarter ending July 31, 2020 and providing updated guidance for the fiscal year ending January 31, 2021. With the ongoing uncertainties surrounding the COVID-19 pandemic, Slack is withdrawing guidance for the full fiscal year 2021 Calculated Billings.
For the second quarter of fiscal year 2021, Slack currently expects:
For the full fiscal year 2021, Slack currently expects:
Slack is initiating guidance for the second quarter ending July 31, 2020 and providing updated guidance for the fiscal year ending January 31, 2021. With the ongoing uncertainties surrounding the COVID-19 pandemic, Slack is withdrawing guidance for the full fiscal year 2021 Calculated Billings.
For the second quarter of fiscal year 2021, Slack currently expects:
- Total revenue of $206 million to $209 million, representing year-over-year growth of 42% to 44%.
- Non-GAAP operating loss of $22 million to $18 million.
- Non-GAAP net loss per share of $0.04 to $0.03, assuming weighted average shares outstanding of 564 million.
For the full fiscal year 2021, Slack currently expects:
- Total revenue of $855 million to $870 million, representing year-over-year growth of 36% to 38%.
- Non-GAAP operating loss of $110 million to $100 million.
- Non-GAAP net loss per share of $0.19 to $0.17, assuming weighted average shares outstanding of 567 million.
- Free Cash Flow of negative $20 million to $0.
Slack Technologies (NYSE: WORK) stock price history
The image below shows the stock price history of Slack Technologies (NYSE:WORK) for the last 12 months. And its been a very up and down old time for WORK stockholders over the last year. A year ago the stock of Slack was trading at $35.70 and its currently trading at $34.21. Thats a modest decline of -4.2% suffered by Slack stockholders
The stock of Slack (WORK) is trading at a lot closer to its 52 week high of $40.25 than it is to its 52 week low of $15.10, which to us is a clear indication that the short term sentiment and momentum of Slack's stock is positive.
The stock of Slack (WORK) is trading at a lot closer to its 52 week high of $40.25 than it is to its 52 week low of $15.10, which to us is a clear indication that the short term sentiment and momentum of Slack's stock is positive.
Recent coverage of Slack (WORK)
The extract below covers Slack's strong stock price performance during May 2020 as obtained from Fool.com
What happened
Shares of Slack Technologies (NYSE:WORK) rose 31.3% in May, according to data from S&P Global Market Intelligence. The business messaging software-as-a-service (SaaS) company continued to capitalize on investor optimism for next-gen tools that enable working from home.
While quarantines are now being lifted across the country, many think the work-from-home trend is here to stay, fueling Slack's rise since the March market meltdown. The stock price had actually tumbled since its direct public offering (DPO) approximately one year ago, but this month's surge led it right back to where it was trading when the hot growth stock started trading.
So what
Slack didn't actually release any new financial data during the month, though many other cloud software stocks did, and generally with strong results. As such, Slack mostly rose in sympathy with the cloud SaaS bull market that began in April. Slack had also guided very conservatively on its last earnings call back in March, sending shares plummeting, leading to a nice setup for a rise in April and then May.
Additionally, third-party research platform Thinknum reported an acceleration in Google Play store ratings, LinkedIn head count, and new job postings, giving more proof points to the Slack growth story.
Read the full article here
What happened
Shares of Slack Technologies (NYSE:WORK) rose 31.3% in May, according to data from S&P Global Market Intelligence. The business messaging software-as-a-service (SaaS) company continued to capitalize on investor optimism for next-gen tools that enable working from home.
While quarantines are now being lifted across the country, many think the work-from-home trend is here to stay, fueling Slack's rise since the March market meltdown. The stock price had actually tumbled since its direct public offering (DPO) approximately one year ago, but this month's surge led it right back to where it was trading when the hot growth stock started trading.
So what
Slack didn't actually release any new financial data during the month, though many other cloud software stocks did, and generally with strong results. As such, Slack mostly rose in sympathy with the cloud SaaS bull market that began in April. Slack had also guided very conservatively on its last earnings call back in March, sending shares plummeting, leading to a nice setup for a rise in April and then May.
Additionally, third-party research platform Thinknum reported an acceleration in Google Play store ratings, LinkedIn head count, and new job postings, giving more proof points to the Slack growth story.
Read the full article here
Slack Technologies (NYSE: WORK) latest stock valuation
So based on Slack Technologies 1st quarter 2020 earnings report what do we value the stock of Slack Technologies (WORK) at? Well it hard to value a company that is making a loss and that has negative cash flows. While revenue growth is strong and the growth in gross profit is encouraging its time top line growth starts feeding into bottom line numbers. We derived a potential earnings estimate for the group based on their gross profit and their revenue growth This was then used in our valuation models.
Our valuation model sets a target price on Slack Technologies of $14.30 a stock. So we believe the group is completely overvalued and expect the negative sentiment around Slack Technologies stock price to remain. Unless the group starts turning strong operating profits into net income we cannot see why the stock trades at above anything more than $15.
Our valuation model sets a target price on Slack Technologies of $14.30 a stock. So we believe the group is completely overvalued and expect the negative sentiment around Slack Technologies stock price to remain. Unless the group starts turning strong operating profits into net income we cannot see why the stock trades at above anything more than $15.
Next earnings release of Slack Technologies (WORK)
It is expected that Slack Technologies (WORK) will release their 2nd quarter 2020 earnings report in late July 2020