Slack Has Mixed Pandemic Picture, Says CEO; Stock Falls
Work-from-home helped spark Slack new paid customer additions at a “faster rate” in June and July than in April and May, said CEO Stewart Butterfield on a quarterly call Tuesday. “That trend continued in August, even after the typical vacation-related…
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slowdown for the month, indicating that paid customer additions are potentially finding a new baseline rate.” The quarter ended July 31. Slack experienced “some macro-related headwinds in the installed base," Butterfield said. Since it prices the service on a “per-seat basis,” when customers downsize, freeze hiring or hire more slowly, “net dollar retention is negatively impacted,” he said. Due to the “substantial number of smaller customers on monthly plans, it shows up much more quickly than it would for others in our industry,” he said. The stock closed 13.9% lower Wednesday at $25.24. There’s more “budget scrutiny” during COVID-19, “especially for new categories with longer adoption curves,” like videoconferencing, said Butterfield. Chief information officers “have a lot on their plates right now,” he said. The COVID-19 pandemic is having “positive and negative effects on our business,” he said. “The positive changes will have greater impact and will persist as part of this permanent structural shift in the way we work.” And “negative effects will dissipate as we emerge from the pandemic,” he said. Chief Financial Officer Allen Shim said less than 20% of its business is from industries “most directly impacted" and “while these represent a minority of our business, these higher-risk industries grew significantly slower in the first half versus non-impacted industries.”