Slack fees10/3/2023 (1.) The costs Slack incurs to obtain a paying customer (CAC = customer acquisition cost). In order for Slack to have a path towards profitability, investors must evaluate several key SaaS business metrics: In fact, this may boost margins, as it requires less resources to serve a few large customers than many small customers. But others think that this is natural for large SaaS companies serving the enterprise market. Some investors argue that the high concentration of paying customers in such a small consumer base could pose a risk to the business. The ability of Slack to continue this growth will be crucial to its success.įigure 3: Slack’s growing paying customer base.įrom the breakdown of paying customers above, we can estimate that 40% of Slack’s revenue comes from fewer than 0.1% of its user base. Meanwhile, the paying enterprise customers have grown by 326%. From 2017 to 2019, the number of paying customers more than doubled (from 37,000 to 88,000). Figure 3 shows the growth of paying customers and customers who pay > US $100,000 over the last three years. These are essentially their enterprise customers. 575 of these customers pay more than US $100,000. They also have 88,000 paying customers (or about 15% of customer base). Where is the revenue coming from?Īs of January 2019, the company has more than 500,000 organizations on their free subscription plan. These are strong gross margins that are about double that of Uber’s, and rival another strong recent SaaS IPO, Zoom, which had a gross margin of 81% (for fiscal year ending in January 2019).įigure 2: Slack’s Gross Profit is growing at the same pace as its Operating Expenses. It has done so by maintaining a relatively flat gross margin (between 85 – 87% for the past three years). The company has maintained relatively flat Net Loss levels as it continues to invest in revenue growth. Figure 2 shows the trend of Slack’s Gross Profit (Revenue – Cost of Revenue), its Operating Expenses (R&D, G&A and Sales and Marketing), and its Net Loss. It grew from US $105 million for fiscal year ending January 2017 to US $400 million for fiscal year ending January 2019. Slack’s revenue has been growing rapidly. It is also important for Slack to show that the customers will stick around long enough for them to recoup their initial investment. Therefore it is important that the company shows continued growth in revenue and number of users. It is heavily investing in growing its user base with the hope of earning revenues in the future through recurring subscription. Similar to many other software as a service (SaaS) companies, Slack is currently not profitable. In addition, you can have direct (private) messages with others, share files, and perform video/audio calls. Each Workspace has different channels (threads) where you can have a running conversation thread for different subjects. You join a Workspace (shown above) for different companies/organizations that you are a part of. The first was Flickr, a photo sharing app that was bought by Yahoo!).įigure 1: What Slack looks like. After failing to gain traction with the game, the company pivoted and found success in selling Slack (oddly – this is the second time Stewart has tried to create a gaming company, failed, and pivoted into success. Slack was actually an internal communication tool that was used by his gaming company. Stewart Butterfield, the founder of slack, initially founded a social gaming company that went defunct. We won’t go into too much detail on how it works, but essentially its goal is to replace email as a communication tool. Slack is a multi-device collaboration tool. Is the company’s valuation justified? Let’s look at its numbers (note that financial data is sourced from Slack’s S-1). Some of these insiders have been selling their shares in the secondary market at US $28 per share, this values the company around US $17 billion. Slack plans to IPO via the direct listing method (similar to Spotify), which allows insiders (current investors and employees) to sell their existing shares instead of issuing new shares. The company has filed with the SEC and is expected to IPO on June 20th, 2019. The software enables you to adapt the audience for each channel in your workspace and to send direct messages or have voice or video conversations with other Slack users.Slack S-1 filing. You can create a Slack workspace for a group of people and participate in conversation 'channels' for different topics. Slack provides multiple communication channels so you and your team know where to go to ask questions, share updates and stay in the loop.
0 Comments
Leave a Reply.AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |