Delaware (State or other jurisdiction of incorporation or organization) | 001-38926 (Commission File Number) | 26-4400325 (I.R.S. Employer Identification Number) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Class A Common Stock, par value $0.0001 per share | WORK | New York Stock Exchange |
Exhibit Number | Description | |
10.1* | ||
10.2** | ||
99.1 | ||
99.2 |
Date: December 4, 2019 | Slack Technologies, Inc. | |
By: | /s/ Allen Shim | |
Name: | Allen Shim | |
Title: | Chief Financial Officer |
• | Total revenue was $168.7 million, an increase of 60% year-over-year. |
• | Calculated Billings was $186.1 million, an increase of 47% year-over-year. |
• | GAAP gross profit was $145.6 million, or 86.3% gross margin, compared to $92.1 million, or 87.2% gross margin, in the third quarter of fiscal year 2019. Non-GAAP gross profit was $148.9 million, or 88.3% gross margin, compared to $92.5 million, or 87.5% gross margin, in the third quarter of fiscal year 2019. |
• | GAAP operating loss was $95.0 million, or 56% of total revenue, compared to a $50.8 million loss in the third quarter of fiscal year 2019, or 48% of total revenue. Non-GAAP operating loss was $18.1 million, or 11% of total revenue, compared to a $39.6 million loss in the third quarter of fiscal year 2019, or 37% of total revenue. |
• | GAAP net loss per basic and diluted share was $0.16. Non-GAAP net loss per share was $0.02. |
• | Net cash used in operations was $9.1 million, or 5% of total revenue, compared to cash used in operations of $28.4 million, or 27% of total revenue, for the third quarter of fiscal year 2019. Free Cash Flow was $(19.1) million, or 11% of total revenue, compared to $(43.5) million, or 41% of total revenue for the third quarter of fiscal year 2019. |
• | Third Quarter Highlights: |
◦ | Ended the quarter with over 105,000 Paid Customers, up 30% year-over-year. |
◦ | Net dollar retention rate was 134%. |
◦ | The number of Paid Customers with greater than $100,000 in annual recurring revenue was 821, up 67% year-over-year. |
◦ | The number of Paid Customers with greater than $1 million in annual recurring revenue exceeded 50 for the first time. |
◦ | Announced general availability of shared channels and Workflow Builder. |
◦ | Ended the quarter with over 26,000 Paid Customers using shared channels, up from over 20,000 at the end of last quarter. |
• | Total revenue of $172 million to $174 million, representing year-over-year growth of 41% to 43%. |
• | Non-GAAP operating loss of $36 million to $34 million. |
• | Non-GAAP net loss per share of $0.07 to $0.06, assuming weighted average shares outstanding of 550 million. |
• | Total revenue of $621 million to $623 million, representing year-over-year growth of 55% to 56%. |
• | Non-GAAP operating loss of $144 million to $142 million, including approximately $30 million of one-time direct listing related expenses. |
• | Non-GAAP net loss per share of $0.32 to $0.31, assuming weighted average shares outstanding of 399 million. |
• | Calculated Billings of $745 million to $760 million, representing year-over-year growth of 44% to 47%. |
• | Free Cash Flow net burn of $85 million to $80 million, including approximately $30 million of one-time direct listing-related expenses and $21 million of one-time direct listing related cash taxes related to RSU vesting. |
Jesse Hulsing | Karesha McGee |
Investor Relations | Media Relations |
ir@slack.com | pr@slack.com |
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenue | $ | 168,725 | $ | 105,648 | $ | 448,519 | $ | 278,585 | ||||||||
Cost of revenue | 23,140 | 13,540 | 72,820 | 35,002 | ||||||||||||
Gross profit | 145,585 | 92,108 | 375,699 | 243,583 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 94,853 | 40,990 | 363,725 | 111,582 | ||||||||||||
Sales and marketing | 96,210 | 67,687 | 299,440 | 163,408 | ||||||||||||
General and administrative | 49,524 | 34,185 | 209,624 | 79,361 | ||||||||||||
Total operating expenses | 240,587 | 142,862 | 872,789 | 354,351 | ||||||||||||
Loss from operations | (95,002 | ) | (50,754 | ) | (497,090 | ) | (110,768 | ) | ||||||||
Other income (expense), net | 7,135 | 3,376 | 17,323 | 7,263 | ||||||||||||
Loss before income taxes | (87,867 | ) | (47,378 | ) | (479,767 | ) | (103,505 | ) | ||||||||
Provision (benefit) for income taxes | (101 | ) | 318 | (504 | ) | 753 | ||||||||||
Net loss | (87,766 | ) | (47,696 | ) | (479,263 | ) | (104,258 | ) | ||||||||
Net income (loss) attributable to noncontrolling interest | 1,395 | (24 | ) | 2,792 | 156 | |||||||||||
Net loss attributable to Slack common stockholders | $ | (89,161 | ) | $ | (47,672 | ) | $ | (482,055 | ) | $ | (104,414 | ) | ||||
Basic and diluted net loss per share: | ||||||||||||||||
Net loss per share attributable to Slack common stockholders, basic and diluted | $ | (0.16 | ) | $ | (0.39 | ) | $ | (1.38 | ) | $ | (0.86 | ) | ||||
Weighted-average shares used in computing net loss per share attributable to Slack common stockholders, basic and diluted | 544,057 | 122,880 | 348,580 | 120,924 |
October 31, 2019 | January 31, 2019 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 476,474 | $ | 180,770 | ||||
Marketable securities | 297,632 | 660,301 | ||||||
Accounts receivable, net | 84,977 | 87,438 | ||||||
Prepaid expenses and other current assets | 58,811 | 54,213 | ||||||
Total current assets | 917,894 | 982,722 | ||||||
Restricted cash | 38,490 | 20,490 | ||||||
Strategic investments | 24,215 | 12,334 | ||||||
Property and equipment, net | 109,806 | 88,359 | ||||||
Intangible assets, net | 12,104 | 15,203 | ||||||
Goodwill | 48,598 | 48,598 | ||||||
Other assets | 33,745 | 31,250 | ||||||
Total assets | $ | 1,184,852 | $ | 1,198,956 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 11,159 | $ | 16,613 | ||||
Accrued compensation and benefits | 47,029 | 46,151 | ||||||
Accrued expenses and other current liabilities | 44,641 | 29,809 | ||||||
Deferred revenue | 302,690 | 239,825 | ||||||
Total current liabilities | 405,519 | 332,398 | ||||||
Deferred revenue, noncurrent | 1,234 | 2,048 | ||||||
Other liabilities | 30,868 | 22,904 | ||||||
Total liabilities | 437,621 | 357,350 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Convertible preferred stock | — | 1,392,101 | ||||||
Common stock | 55 | 13 | ||||||
Additional paid-in-capital | 1,879,601 | 105,633 | ||||||
Accumulated other comprehensive income (loss) | 13 | (498 | ) | |||||
Accumulated deficit | (1,147,618 | ) | (665,563 | ) | ||||
Total Slack Technologies, Inc. stockholders’ equity | 732,051 | 831,686 | ||||||
Noncontrolling interest | 15,180 | 9,920 | ||||||
Total stockholders’ equity | 747,231 | 841,606 | ||||||
Total liabilities and stockholders’ equity | $ | 1,184,852 | $ | 1,198,956 |
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net loss | $ | (87,766 | ) | $ | (47,696 | ) | $ | (479,263 | ) | $ | (104,258 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
Depreciation and amortization | 7,762 | 4,564 | 20,419 | 11,227 | ||||||||||||
Loss on disposal of property and equipment | — | — | — | 2,165 | ||||||||||||
Stock-based compensation | 73,861 | 10,515 | 363,287 | 18,271 | ||||||||||||
Amortization of deferred contract acquisition costs | 2,232 | 875 | 5,522 | 1,965 | ||||||||||||
Net amortization of bond premium on debt securities available for sale | (341 | ) | (1,024 | ) | (2,077 | ) | (1,589 | ) | ||||||||
Change in fair value of strategic investments | (2,907 | ) | 62 | (5,791 | ) | (287 | ) | |||||||||
Other non-cash charges | (383 | ) | 202 | (742 | ) | 500 | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | (12,338 | ) | (6,181 | ) | 2,920 | (12,315 | ) | |||||||||
Prepaid expenses and other assets | (1,888 | ) | (27,205 | ) | (12,049 | ) | (38,053 | ) | ||||||||
Accounts payable | 2,441 | 3,710 | 1,005 | 9,251 | ||||||||||||
Accrued compensation and benefits | (18,879 | ) | 6,820 | 879 | 7,488 | |||||||||||
Deferred revenue | 17,401 | 20,809 | 62,051 | 64,719 | ||||||||||||
Other current and long-term liabilities | 11,706 | 6,174 | 20,935 | 17,462 | ||||||||||||
Net cash used in operating activities | (9,099 | ) | (28,375 | ) | (22,904 | ) | (23,454 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of marketable securities | (143,342 | ) | (366,729 | ) | (202,895 | ) | (734,778 | ) | ||||||||
Maturities of marketable securities | 133,304 | 132,100 | 402,255 | 479,291 | ||||||||||||
Sales of marketable securities | — | 4,638 | 166,074 | 11,271 | ||||||||||||
Acquisitions of businesses, net of cash acquired | — | (42,813 | ) | — | (45,313 | ) | ||||||||||
Acquisition of intangible assets | — | (1,198 | ) | — | (2,382 | ) | ||||||||||
Purchases of property and equipment | (10,007 | ) | (15,092 | ) | (38,276 | ) | (42,704 | ) | ||||||||
Sales of property and equipment | — | 242 | — | 762 | ||||||||||||
Capitalized software development costs | — | (415 | ) | — | (415 | ) | ||||||||||
Purchase of strategic investments | (3,813 | ) | (710 | ) | (9,283 | ) | (1,610 | ) | ||||||||
Proceeds from liquidation of strategic investments | — | 38 | 2,858 | 190 | ||||||||||||
Net cash provided by (used in) investing activities | (23,858 | ) | (289,939 | ) | 320,733 | (335,688 | ) | |||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from exercise of stock options | 1,337 | 775 | 11,612 | 2,637 | ||||||||||||
Payment of contingent consideration for an acquisition | — | — | (5,000 | ) | — | |||||||||||
Issuance of common stock for employee stock purchase plan | 7,351 | — | 7,351 | — | ||||||||||||
Net proceeds from issuance of convertible preferred stock | — | 426,880 | — | 426,880 | ||||||||||||
Repurchase of convertible preferred stock | — | — | — | — | ||||||||||||
Capital contributions from noncontrolling interest holders | 3,840 | — | 3,840 | — | ||||||||||||
Distributions to noncontrolling interest holders | (1,372 | ) | — | (1,372 | ) | — | ||||||||||
Issuance of common stock to third party | — | — | — | 6,084 | ||||||||||||
Other financing activities | — | (32 | ) | (556 | ) | (47 | ) | |||||||||
Net cash provided by financing activities | 11,156 | 427,623 | 15,875 | 435,554 | ||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (21,801 | ) | 109,309 | 313,704 | 76,412 | |||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 536,765 | 105,166 | 201,260 | 138,063 | ||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 514,964 | $ | 214,475 | $ | 514,964 | $ | 214,475 |
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenue | $ | 168,725 | $ | 105,648 | $ | 448,519 | $ | 278,585 | ||||||||
Add: Total deferred revenue, end of period | 303,924 | 190,172 | 303,924 | 190,172 | ||||||||||||
Less: Total deferred revenue, beginning of period | (286,523 | ) | (169,363 | ) | (241,873 | ) | (125,453 | ) | ||||||||
Calculated Billings | $ | 186,126 | $ | 126,457 | $ | 510,570 | $ | 343,304 |
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net cash used in operating activities | $ | (9,099 | ) | $ | (28,375 | ) | $ | (22,904 | ) | $ | (23,454 | ) | ||||
Purchases of property and equipment | (10,007 | ) | (15,092 | ) | (38,276 | ) | (42,704 | ) | ||||||||
Free Cash Flow | $ | (19,106 | ) | $ | (43,467 | ) | $ | (61,180 | ) | $ | (66,158 | ) |
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Reconciliation of gross profit: | ||||||||||||||||
GAAP gross profit | $ | 145,585 | $ | 92,108 | $ | 375,699 | $ | 243,583 | ||||||||
Add: Stock-based compensation and related employer payroll taxes | 2,765 | 40 | 14,656 | 701 | ||||||||||||
Add: Amortization of acquired intangible assets | 558 | 337 | 1,675 | 356 | ||||||||||||
Non-GAAP gross profit | $ | 148,908 | $ | 92,485 | $ | 392,030 | $ | 244,640 | ||||||||
Reconciliation of operating expenses: | ||||||||||||||||
GAAP research and development | $ | 94,853 | $ | 40,990 | $ | 363,725 | $ | 111,582 | ||||||||
Less: Stock-based compensation and related employer payroll taxes | (41,189 | ) | (3,532 | ) | (205,859 | ) | (7,871 | ) | ||||||||
Less: Amortization of acquired intangible assets | (150 | ) | (25 | ) | (449 | ) | (25 | ) | ||||||||
Non-GAAP research and development | $ | 53,514 | $ | 37,433 | $ | 157,417 | $ | 103,686 | ||||||||
GAAP sales and marketing | $ | 96,210 | $ | 67,687 | $ | 299,440 | $ | 163,408 | ||||||||
Less: Stock-based compensation and related employer payroll taxes | (18,085 | ) | (227 | ) | (87,788 | ) | (1,679 | ) | ||||||||
Less: Amortization of acquired intangible assets | (325 | ) | (325 | ) | (975 | ) | (379 | ) | ||||||||
Non-GAAP sales and marketing | $ | 77,800 | $ | 67,135 | $ | 210,677 | $ | 161,350 | ||||||||
GAAP general and administrative | $ | 49,524 | $ | 34,185 | $ | 209,624 | $ | 79,361 | ||||||||
Less: Stock-based compensation and related employer payroll taxes | (13,794 | ) | (6,716 | ) | (78,167 | ) | (8,020 | ) | ||||||||
Non-GAAP general and administrative | $ | 35,730 | $ | 27,469 | $ | 131,457 | $ | 71,341 | ||||||||
Reconciliation of loss from operations: | ||||||||||||||||
GAAP operating loss | $ | (95,002 | ) | $ | (50,754 | ) | $ | (497,090 | ) | $ | (110,768 | ) | ||||
Add: Stock-based compensation and related employer payroll taxes | 75,833 | 10,515 | 386,470 | 18,271 | ||||||||||||
Add: Amortization of acquired intangible assets | 1,033 | 687 | 3,099 | 760 | ||||||||||||
Non-GAAP operating loss | $ | (18,136 | ) | $ | (39,552 | ) | $ | (107,521 | ) | $ | (91,737 | ) | ||||
Reconciliation of net loss and net loss per share: | ||||||||||||||||
Net loss attributable to Slack common stockholders | $ | (89,161 | ) | $ | (47,672 | ) | $ | (482,055 | ) | $ | (104,414 | ) | ||||
Add: Stock-based compensation and related employer payroll taxes | 75,833 | 10,515 | 386,470 | 18,271 | ||||||||||||
Add: Amortization of acquired intangible assets | 1,033 | 687 | 3,099 | 760 | ||||||||||||
Non-GAAP net loss | $ | (12,295 | ) | $ | (36,470 | ) | $ | (92,486 | ) | $ | (85,383 | ) | ||||
GAAP net loss per share | $ | (0.16 | ) | $ | (0.39 | ) | $ | (1.38 | ) | $ | (0.86 | ) | ||||
Add: Stock-based compensation and related employer payroll taxes | 0.14 | 0.09 | 1.10 | 0.15 | ||||||||||||
Add: Amortization of acquired intangible assets | — | — | 0.01 | — | ||||||||||||
Non-GAAP net loss per share | $ | (0.02 | ) | $ | (0.30 | ) | $ | (0.27 | ) | $ | (0.71 | ) | ||||
Weighted-average common shares outstanding, basic and diluted | 544,057 | 122,880 | 348,580 | 120,924 |
Jesse Hulsing | Karesha McGee |
Investor Relations | Media Relations |
ir@slack.com | pr@slack.com |