![]() Spotify's shares had a "reference point," or a targeted opening price, of $132 each. Spotify laid out a number of reasons for listing its shares via a direct offering, including providing equal access to all buyers and sellers. Instead, current shareholders were able to sell their existing shares and weren't restricted on when they could do so. In Spotify's case, the company was valued at about $3 billion after its direct listing, which Spotify said it pursued because it didn't need to raise money. A direct listing makes sense for brands with strong consumer awareness, such as Spotify and Slack, he added. "There's a fascination with the direct listing, especially after Spotify," Wong said. But in a direct listing, existing shareholders sell their stock directly to new shareholders. ![]() The underwriter raises new capital and drums up interest in the shares among investors. ![]() A direct listing skips the traditional step of hiring an underwriter - an investment bank such as Goldman Sachs. In July, Slack released a new desktop client that improved performance significantly-it now starts faster, uses far less memory and is much less CPU-intensive.Slack's unconventional approach of relying on a direct listing, which Spotify also used, could broaden its appeal among small investors. In FQ2, Slack’s R&D budget accounted for 38% of total revenue, as the company invests in the user experience, scalability and new features to try to stay ahead of the competition. Slack needs to continue to expand into more non-tech segments to better challenge Microsoft. Since Shared Channels is fairly easy to navigate, it should attract a greater number of less-technical users (from segments such as customer service and marketing), expanding the potential pool beyond the core tech vertical. Net dollar retention in FQ2 of 136% was solid, but down from 138% in FQ1 and 146% in the year-ago quarter. Given that Shared Channels will be a core feature on the platform, it should be positive for Slack’s overall retention rate. While still in the beta phase, Shared Channels managed to attract 20,000+ paid customers, giving it a 20% penetration rate. With Shared Channels, users can securely collaborate with external partners, suppliers and their own customers. Slack gets more valuable for everyone as more people use it. Shared Channels looks promising because it’s the first real network effect across customers. Enterprise Grid can accommodate Slack’s largest customers, which currently have well over 100,000 active users.Įnterprises are expected to be big users of Slack’s new Shared Channels offering, which enables inter-company collaboration. The offering connects multiple interconnected workspaces across a customer account-providing centralized administration, provisioning and control. Slack’s Enterprise Grid is aimed directly at larger organizations. There are now 720 paid customers with annualized recurring revenue (ARR) over $100,000 (up 75% year over year), a gain of 75 sequentially. In addition to 500,000+ organizations on the platform using the free version of the software, Slack ended FQ2 with more than 100,000 paid customers, up 37% from the year-ago level. Two of the company’s main goals are expansion within the existing customer base and growth in the number of enterprise accounts. ![]() Gross margin of 87.1% held fairly steady year over year. Adjusted for the negative impact of $8.2 million in credits given in FQ2 for service level disruption (hopefully a one-time thing), Slack’s revenue growth would have been 66%. In FQ2 (ended July), total revenue of $145 million rose 58% and beat the consensus estimate by 3%. In early September, Slack delivered its first quarterly earnings report as a public company.
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