Slack posts $141 million annual loss as it files to go public

By Bharath ManjeshR and Aparajita Saxena (Reuters) - The owner of popular workplace instant messaging app Slack made public strong year-on-year growth numbers on Friday, and an annual loss of $140.7 million, as it filed formally for its long-awaited market debut. The San Francisco-based company, Slack Technologies, seeking to go public via a direct listing similar to that of music browser Spotify last year, published numbers showing it had more than 10 million daily active users as of the end of January.

Reuters April 27, 2019 01:05:16 IST
Slack posts $141 million annual loss as it files to go public

Slack posts 141 million annual loss as it files to go public

By Bharath ManjeshR and Aparajita Saxena

(Reuters) - The owner of popular workplace instant messaging app Slack made public strong year-on-year growth numbers on Friday, and an annual loss of $140.7 million, as it filed formally for its long-awaited market debut.

The San Francisco-based company, Slack Technologies, seeking to go public via a direct listing similar to that of music browser Spotify last year, published numbers showing it had more than 10 million daily active users as of the end of January.

Only 88,000 of those were paying subscribers, but that was up almost 50 percent from a year earlier and more than double the 37,000 it had in 2017, the company's regulatory filing http://bit.ly/2vp05DG showed.

The company said it had more than 500,000 organizations on its free subscription plan and that revenue jumped 82 percent from last year to $400.6 million and up from $105 million in 2017.

Reuters had previously reported that the company was hoping for a valuation of more than $10 billion in the listing, which should now happen within weeks.

Some early investors and employees have been selling the stock at around $28, valuing the company close to $17 billion, Kelly Rodriques, Chief Executive Officer of Forge, a brokerage company, told CNBC on Thursday.

The company's big issue, like many startups, is costs. Total operating expenses rose 49 percent to $503.5 million in fiscal 2019, the company said, largely due to higher sales and marketing costs.

"The company is a classic tech company with scalability," said Jay Ritter, an IPO expert and professor at the University of Florida. "There is the potential for profitability in the next few years, with rapidly growing profits after that."

"Many tech companies, such as Dropbox and Spotify, offer free use to people or organizations, with the idea that a certain fraction of them will become heavy users and paying customers. As long as the churn rate is not too high, this can be a successful business strategy."

The company, which expects to trade on the New York Stock Exchange under the symbol "SK", reported a loss of $181 million a year earlier.

Slack's biggest shareholders include Accel Partners, an investor in Facebook and Dropbox, which holds 24 percent, followed by Andreessen Horowitz, with 13.3 percent. Japanese conglomerate SoftBank owns 7.3 percent.

The company, whose competitors include Microsoft Teams, a free chat add-on for Microsoft's Office365 users, said it expects to incur losses for the foreseeable future and may not achieve or maintain profitability in the future.

The company, which was launched in 2013, counts Trivago, BBC, Lyft, 21st Century Fox, Shopify, and Survey Monkey as its customers.

This year has already seen a run of technology sector IPOs, with Lyft Inc, Pinterest and Zoom Video Communications launching to various degrees of success.

Uber Technologies Inc unveiled the terms of its IPO on Friday, seeking a $91.5 billion valuation in what could prove the year's biggest launch.

(Reporting by Aparajita Saxena and Bharath Manjesh in Bengaluru and Joshua Franklin in New York; Editing by Leslie Adler, Anil D'Silva and Arun Koyyur)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.