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Slack Idea Proposal (WORK)

Slack Idea Proposal (WORK)
 

Can Slack expand its appeal to a broader audience and stave off Microsoft Teams?

Report Available: July 25, 2019

 

Blueshift’s initial research found WORK’s valuation soaring to lofty heights in its debut on the public markets. The company has been growing rapidly but is still piling up operating losses. Its efforts to expand to a broader audience will face stiff competition from MSFT and others.

 

Observations

  1. WORK went public in June with a direct listing that valued the company at almost $20 billion in early trading. The developer of workplace communication software, aimed at replacing email, is only about five years old but is growing rapidly. The company reported $400 million in revenue for its fiscal year ending Jan. 31, an 81% year-over-year jump. WORK claims more than 10 million active daily users across more than 600,000 organizations.
  2. WORK is far from profitable, however, as the vast majority of users are on its free plan. The company had 95,000 paid customers as of the end of April. It reported a whopping net loss of $138.9 million for its last fiscal year, and company executives have cautioned that it may never be profitable. The company’s revenue growth is slowing – from 110% in fiscal 2018 to 81% in fiscal 2019 and down to a projected 47%-50% for the current year. WORK is spending heavily to grow – its sales and marketing expenses were almost 57% of its trailing 12-month revenue.
  3. WORK’s growth strategy involves trying to expand its footprint beyond the smaller teams – often IT-oriented – that were early adopters. The company is adding more enterprise tools as well as functions like video conferencing to broaden its appeal. WORK is bolstered by a thriving ecosystem of developers to help connect its communication channels to other software – it boasts more than 1,500 third-party apps in the Slack App Directory. International markets also represent a growth opportunity.
  4. In a sign of WORK’s momentum and growing dominance, would-be challenger TEAM abandoned its competing HipChat communication tool last year, selling the IP to WORK and even making a small investment in WORK itself. However, WORK still faces competition on a number of fronts from messaging tools from FB, GOOG/GOOGL and others, with MSFT shaping up to be WORK’s biggest threat. MSFT has invested heavily to build out its Teams communication tool, which is free to users of its Office 365 software. With the advantage of that large installed user base of more than 155 million paying customers, MSFT has already hit 500,000 organizations that are using Teams, just two years after launching.

 

Can WORK expand the appeal of its paid service to a broader audience? How? What tools and features does it need to add to win more enterprise accounts? What advantages does WORK have over MSFT? Where does it lag MSFT? Which other competitors should it be worried about? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Slack users, MSFT Teams users, and Industry specialists.  

 

Companies: Slack Technologies Inc. (WORK), Alphabet Inc. (GOOG/GOOGL), Facebook Inc. (FB), Microsoft Corp. (MSFT)

 

Research Begins: July 8, 2019

 

To see other ideas Blueshift Research is currently working on, please click here.

 

Blueshift Research’s sister company, Intro-act, is launching its Intro-act Scorecard, the C-suite’s standard, ongoing measure of corporate investor engagement.

 

The Scorecard optimizes the ROI on corporate access by measuring: Concentration, Directionality, Breadth, Impact, Depth, and Duration