Slack softens growth forecast as Covid-19 hits tech budgets
- 13 March, 2020 12:00
Workplace communication platform Slack Technologies Inc forecast a soft revenue outlook for the first quarter on Thursday, sending its shares down more than 20 per cent aftermarket, on a day major U.S. stock indexes went into a tailspin amid coronavirus fears.
The company warned the coronavirus outbreak could hurt demand for its products as companies might cut back on technology spending and also forecast billings for fiscal 2021 well below analysts' estimates.
"Forward guidance is a little lighter than you'd expect out of a high-multiple name," said Rishi Jaluria from research firm DA Davidson and Co.
For the first quarter, Slack expects revenue of US$185 million to US$188 million, lower than analysts' average estimate of US$188.4 million, according to IBES data from Refinitiv.
The company said it expects billings of US$970 million to US$1 billion for fiscal 2021, lower than analysts' average estimate of US$1.02 billion.
Slack, which has been called an "email killer", competes directly with Microsoft Corp's workplace messaging platform, Teams, which surpassed 20 million daily active users in November last year.
Slack said it had over 110,000 paid users at the end of the fourth quarter, up 25 per cent from last year. As a result, revenue rose 49 per cent to US$181.9 million, beating analysts' estimate of US$174.1 million.
However, growth slowed from a 60 per cent surge in revenue the company achieved in the prior quarter.
The growth numbers "might be light of what people expected," Jaluria said.
The company's total operating expenses in the quarter leaped 67 per cent to US$248.7 million.
Excluding items, the company posted a loss of 4 cents per share, beating analysts' average estimate of a loss of 5 cents per share.
The stock's slump comes on a day Wall Street tanked, slamming the book on the longest-ever U.S. bull market amid fears of the coronavirus.
(Reporting by Bharath Manjesh in Bengaluru; Editing by Krishna Chandra Eluri)