Slack’s earnings lead to tumble

Avatar By Karen Saltos | 1 year ago

The popular app Slack is facing a backlash from investors, with the stock getting hammered on Wednesday.

“Slack Technologies Inc. shares plunged in extended trading after projecting slower sales growth for the second half of the year, a signal that strong competition may dent the software maker’s rapid rise. Revenue will be $154 million to $156 million in the fiscal third quarter, reflecting a year-over-year increase of 46% to 48%, the San Francisco-based company said Wednesday in a statement. Analysts, on average, estimated $154.2 million, according to data compiled by Bloomberg. In the period ended July 31, sales jumped 58% to $145 million,” reported Bloomberg. “Slack reported an adjusted loss of 14 cents a share for the quarter, compared with analysts’ estimates of 19 cents.”

The slide comes as the app continues to face mounting pressure from competitors. The earnings report was the first for the company since going public two months ago.

Investors cited concerns with increasing debt loads. Chief financial officer Allen Shim said on a call with analysts Wednesday that the yearly loss will be due in part to an increase in sales and marketing expenses. The company plans to spend more than 50 percent of its revenue on sales and marketing in the coming quarters as it works to win over more large, paying business customers, which it relies on for revenue.