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Slack Announces First Quarter Fiscal Year 2022 Results

Jun 03, 2021

Total revenue of $273.4 million, up 36% year-over-year
Added over 13,000 net new Paid Customers, for a total of 169,000
Over 950,000 connected endpoints on Slack Connect, up 265% year-over-year

SAN FRANCISCO--(BUSINESS WIRE)-- Slack Technologies, Inc., (NYSE: WORK) today reported financial results for its fiscal quarter ended April 30, 2021.

Management Commentary:

“Companies globally are racing toward a digital-first way of working to attract talent and to win,” said Stewart Butterfield, Chief Executive Officer and Co-Founder at Slack. “Slack is not just embracing this trend, we are enabling it. In Q1 we saw a near-record number of Paid Customer additions, a record number of Paid Customers adopting Slack Connect, and approached 1 million active developers on our platform.”

“We saw rapid growth across segments in the first quarter, adding 13,000 net new Paid Customers and 102 net new Paid Customers spending greater than $100,000 annually,” said Allen Shim, Chief Financial Officer at Slack. “We also continue to drive substantial leverage. In Q1, we generated a record amount of free cash flow and expanded non-GAAP operating margins 1200bps year-over-year.”

First Quarter Fiscal 2022 Financial Highlights:

  • Total revenue was $273.4 million, an increase of 36% year-over-year.
  • Calculated Billings was $278.5 million, an increase of 35% year-over-year.
  • GAAP gross profit was $234.1 million, or 85.6% gross margin, compared to $176.0 million, or 87.3% gross margin, in the first quarter of fiscal year 2021. Non-GAAP gross profit was $238.0 million, or 87.1% gross margin, compared to $179.2 million, or 88.9% gross margin, in the first quarter of fiscal year 2021.
  • GAAP operating loss was $55.3 million, or (20.2)% of total revenue, compared to a $76.2 million loss in the first quarter of fiscal year 2021, or (37.8)% of total revenue. Non-GAAP operating income was $10.8 million, or 4.0% of total revenue, compared to a $16.6 million loss in the first quarter of fiscal year 2021, or (8.3)%of total revenue.
  • GAAP net loss per basic and diluted share was $0.05. Non-GAAP net income per diluted share was $0.08.
  • Net cash provided by operations was $62.8 million, or 23% of total revenue, compared to cash provided by operations of $8.7 million, or 4% of total revenue, for the first quarter of fiscal year 2021. Free Cash Flow was $62.7 million, or 23% of total revenue, compared to $3.7 million, or 2% of total revenue for the first quarter of fiscal year 2021.

Recent Business Highlights:

  • First Quarter Highlights:
    • Over 169,000 Paid Customers, up 39% year-over-year.
    • 122% net dollar retention rate.
    • 1,285 Paid Customers with greater than $100,000 in annual recurring revenue, up 33% year-over-year.
    • 113 Paid Customers with greater than $1 million in annual recurring revenue, up 45% year-over-year.
    • Over 91,000 Paid Customers using Slack Connect, up from over 74,000 at the end of last quarter.
    • Over 950,000 connected endpoints on Slack Connect, up over 265% year-over-year.

Non-GAAP Financial Measures:

This press release and the accompanying tables contain the following non-GAAP financial measures: Calculated Billings, Free Cash Flow, non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net income (loss), and non-GAAP net income (loss) per share. Certain of these non-GAAP financial measures exclude stock-based compensation and related employer payroll taxes, amortization of debt discount and issuance costs, and amortization of intangible assets.

Slack believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Slack’s financial condition and results of operations. Slack’s management uses these non-GAAP measures to compare Slack’s performance to that of prior periods for trend analysis, and for budgeting and planning purposes. Slack believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing Slack’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors. The non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies.

Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in Slack’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Slack urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate Slack’s business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

Forward-Looking Statements:

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our product development, business strategy and plans, market trends, and positioning. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Slack’s control. Slack’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Slack’s Annual Report on Form 10-K for the fiscal year ended January 31, 2021. Further information on potential risks that could affect actual results will be included in the subsequent periodic and current reports and other filings that Slack makes with the Securities and Exchange Commission from time to time. The forward-looking statements included in this press release represent Slack’s views as of the date of this press release. Slack undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Presentation:

An investor presentation providing additional information and analysis can be found at investor.slackhq.com.

About Slack:

Slack has transformed business communication. It’s the leading channel-based messaging platform, used by millions to align their teams, unify their systems, and drive their businesses forward. Only Slack offers a secure, enterprise-grade environment that can scale with the largest companies in the world. It is a new layer of the business technology stack where people can work together more effectively, connect all their other software tools and services, and find the information they need to do their best work. Slack is where work happens.

Slack and the Slack logo are trademarks of Slack Technologies, Inc. or its subsidiaries in the U.S. and/or other countries. Other names and brands may be claimed as the property of others.

SLACK TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended April 30,

 

2021

 

 

2020

 

Revenue

$

273,357

 

 

 

$

201,650

 

 

Cost of revenue

39,237

 

 

 

25,602

 

 

Gross profit

234,120

 

 

 

176,048

 

 

Operating expenses:

 

 

 

Research and development

103,602

 

 

 

91,225

 

 

Sales and marketing

123,947

 

 

 

110,320

 

 

General and administrative

61,848

 

 

 

50,654

 

 

Total operating expenses

289,397

 

 

 

252,199

 

 

Loss from operations

(55,277

)

 

 

(76,151

)

 

Interest expense

(12,029

)

 

 

(2,842

)

 

Interest income and other income, net

40,426

 

 

 

4,708

 

 

Loss before income taxes

(26,880

)

 

 

(74,285

)

 

Provision for income taxes

1,065

 

 

 

142

 

 

Net loss

(27,945

)

 

 

(74,427

)

 

Net income attributable to noncontrolling interest

 

 

 

784

 

 

Net loss attributable to Slack common stockholders

$

(27,945

)

 

 

$

(75,211

)

 

Basic and diluted net loss per share:

 

 

 

Net loss per share attributable to Slack common stockholders, basic and diluted

$

(0.05

)

 

 

$

(0.13

)

 

Weighted-average shares used in computing net loss per share attributable to Slack common stockholders, basic and diluted

581,550

 

 

 

557,414

 

 

SLACK TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

April 30,
2021

 

January 31,
2021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,332,649

 

 

 

$

1,081,357

 

 

Marketable securities

308,464

 

 

 

505,895

 

 

Accounts receivable, net

141,543

 

 

 

237,439

 

 

Prepaid expenses and other current assets

58,446

 

 

 

59,702

 

 

Total current assets

1,841,102

 

 

 

1,884,393

 

 

Restricted cash

38,490

 

 

 

38,490

 

 

Strategic investments

114,026

 

 

 

68,161

 

 

Property and equipment, net

82,136

 

 

 

87,908

 

 

Operating lease right-of-use assets

212,479

 

 

 

219,195

 

 

Intangible assets, net

16,173

 

 

 

17,885

 

 

Goodwill

76,204

 

 

 

76,204

 

 

Other assets

41,720

 

 

 

41,464

 

 

Total assets

$

2,422,330

 

 

 

$

2,433,700

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

15,149

 

 

 

$

13,145

 

 

Accrued compensation and benefits

57,261

 

 

 

108,868

 

 

Accrued expenses and other current liabilities

25,401

 

 

 

29,864

 

 

Operating lease liability

36,023

 

 

 

34,930

 

 

Deferred revenue

515,573

 

 

 

510,311

 

 

Total current liabilities

649,407

 

 

 

697,118

 

 

Convertible senior notes, net

662,224

 

 

 

651,398

 

 

Operating lease liability, noncurrent

219,486

 

 

 

225,266

 

 

Deferred revenue, noncurrent

198

 

 

 

294

 

 

Other liabilities

2,145

 

 

 

2,183

 

 

Total liabilities

1,533,460

 

 

 

1,576,259

 

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Common stock

59

 

 

 

58

 

 

Additional paid-in-capital

2,453,908

 

 

 

2,371,676

 

 

Accumulated other comprehensive income (loss)

(109

)

 

 

102

 

 

Accumulated deficit

(1,564,988

)

 

 

(1,537,043

)

 

Total Slack Technologies, Inc. stockholders’ equity

888,870

 

 

 

834,793

 

 

Noncontrolling interest

 

 

 

22,648

 

 

Total stockholders’ equity

888,870

 

 

 

857,441

 

 

Total liabilities and stockholders’ equity

$

2,422,330

 

 

 

$

2,433,700

 

 

SLACK TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended April 30,

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

Net loss

$

(27,945

)

 

 

$

(74,427

)

 

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

7,480

 

 

 

6,700

 

 

Stock-based compensation

59,017

 

 

 

53,711

 

 

Amortization of debt discount and issuance costs

10,825

 

 

 

2,366

 

 

Non-cash operating lease expense

10,339

 

 

 

8,732

 

 

Amortization of deferred contract acquisition costs

5,060

 

 

 

3,143

 

 

Net amortization of bond premium on debt securities available for sale

1,001

 

 

 

171

 

 

Change in fair value of strategic investments

(39,893

)

 

 

(1,638

)

 

Other non-cash adjustments

676

 

 

 

592

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

95,627

 

 

 

39,470

 

 

Prepaid expenses and other assets

(4,069

)

 

 

(6,561

)

 

Accounts payable

2,004

 

 

 

(3,746

)

 

Operating lease liabilities

(8,310

)

 

 

(8,671

)

 

Accrued compensation and benefits

(51,607

)

 

 

(13,328

)

 

Deferred revenue

5,167

 

 

 

4,359

 

 

Other current and long-term liabilities

(2,617

)

 

 

(2,144

)

 

Net cash provided by operating activities

62,755

 

 

 

8,729

 

 

Cash flows from investing activities:

 

 

 

Purchases of marketable securities

 

 

 

(100,302

)

 

Maturities of marketable securities

196,220

 

 

 

69,613

 

 

Sales of marketable securities

 

 

 

4,289

 

 

Purchases of property and equipment

(50

)

 

 

(5,046

)

 

Purchase of strategic investments

(5,972

)

 

 

(4,018

)

 

Net cash provided by (used in) investing activities

190,198

 

 

 

(35,464

)

 

Cash flows from financing activities:

 

 

 

Proceeds from issuance of convertible senior notes, net of issuance costs

 

 

 

842,016

 

 

Purchases of capped calls related to convertible senior notes

 

 

 

(105,570

)

 

Purchase of noncontrolling interest

(22,648

)

 

 

 

 

Proceeds from exercise of stock options

1,328

 

 

 

2,905

 

 

Payments of contingent consideration for acquisitions

(800

)

 

 

 

 

Issuance of common stock for employee stock purchase plan

20,459

 

 

 

16,610

 

 

Net cash provided by (used in) financing activities

(1,661

)

 

 

755,961

 

 

Net increase in cash, cash equivalents and restricted cash

251,292

 

 

 

729,226

 

 

Cash, cash equivalents and restricted cash at beginning of period

1,119,847

 

 

 

537,489

 

 

Cash, cash equivalents and restricted cash at end of period

$

1,371,139

 

 

 

$

1,266,715

 

 

SLACK TECHNOLOGIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands)

(Unaudited)

 

Calculated Billings

 

Three Months Ended April 30,

 

2021

 

2020

Revenue

$

273,357

 

 

$

201,650

 

Add: Total deferred revenue, end of period

515,771

 

 

381,073

 

Less: Total deferred revenue, beginning of period

(510,605)

 

 

(376,714)

 

Calculated Billings

$

278,523

 

 

$

206,009

 

Free Cash Flow

 

Three Months Ended April 30,

 

2021

 

2020

Net cash provided by operating activities

$

62,755

 

$

8,729

Purchases of property and equipment

(50)

 

(5,046)

Free Cash Flow

$

62,705

 

$

3,683

Operating cash margin

23%

 

4%

Purchases of property and equipment

(0)%

 

(3)%

Free Cash Flow margin

23%

 

2%

 

SLACK TECHNOLOGIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP DATA

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended April 30,

 

2021

 

2020

Reconciliation of gross profit:

 

 

 

GAAP gross profit

$

234,120

 

$

176,048

Add: Stock-based compensation and related employer payroll taxes

2,879

 

2,572

Add: Amortization of acquired intangible assets

967

 

558

Non-GAAP gross profit

$

237,966

 

$

179,178

GAAP gross margin

85.6%

 

87.3%

Non-GAAP adjustments

1.5%

 

1.6%

Non-GAAP gross margin

87.1%

 

88.9%

 

 

 

 

Reconciliation of operating expenses:

 

 

 

GAAP research and development

$

103,602

 

$

91,225

Less: Stock-based compensation and related employer payroll taxes

(31,220)

 

(29,720)

Less: Amortization of acquired intangible assets

 

(150)

Non-GAAP research and development

$

72,382

 

$

61,355

 

 

 

 

GAAP sales and marketing

$

123,947

 

$

110,320

Less: Stock-based compensation and related employer payroll taxes

(15,489)

 

(15,264)

Less: Amortization of acquired intangible assets

(500)

 

(325)

Non-GAAP sales and marketing

$

107,958

 

$

94,731

 

 

 

 

GAAP general and administrative

$

61,848

 

$

50,654

Less: Stock-based compensation and related employer payroll taxes

(14,806)

 

(10,795)

Less: Amortization of acquired intangible assets

(245)

 

(125)

Non-GAAP general and administrative

$

46,797

 

$

39,734

 

 

 

 

Reconciliation of loss from operations:

 

 

 

GAAP operating loss

$

(55,277)

 

$

(76,151)

Add: Stock-based compensation and related employer payroll taxes

64,394

 

58,351

Add: Amortization of acquired intangible assets

1,712

 

1,158

Non-GAAP operating income (loss)

$

10,829

 

$

(16,642)

GAAP operating margin

(20.2)%

 

(37.8)%

Non-GAAP adjustments

24.2%

 

29.5%

Non-GAAP operating margin

4.0%

 

(8.3)%

 

 

Three Months Ended April 30,

 

2021

 

2020

Reconciliation of net income (loss) and net income (loss) per share:

 

 

 

Net loss attributable to Slack common stockholders

$

(27,945

)

 

 

$

(75,211

)

 

Add: Stock-based compensation and related employer payroll taxes

64,394

 

 

 

58,351

 

 

Add: Amortization of acquired intangible assets

1,712

 

 

 

1,158

 

 

Add: Amortization of debt discount and issuance costs

10,825

 

 

 

2,366

 

 

Non-GAAP net income (loss)

$

48,986

 

 

 

$

(13,336

)

 

 

 

 

 

GAAP net loss per share, basic and diluted

$

(0.05

)

 

 

$

(0.13

)

 

Add: Stock-based compensation and related employer payroll taxes

0.10

 

 

 

0.11

 

 

Add: Amortization of debt discount and issuance costs

0.02

 

 

 

 

 

Add: Dilutive securities

0.01

 

 

 

 

 

Non-GAAP net income (loss) per share, diluted

$

0.08

 

 

 

$

(0.02

)

 

 

 

 

 

Weighted-average common shares outstanding, basic

581,550

 

 

 

557,414

 

 

Effect of dilutive securities

34,003

 

 

 

 

 

Weighted-average common shares outstanding, diluted

615,553

 

 

 

557,414

 

 

 

Jesse Hulsing
Investor Relations
ir@slack.com

Steve Sharpe
Media Relations
pr@slack.com

Source: Slack Technologies, Inc.

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