Slack expects a larger loss in the third quarter, slowing revenue growth; shares plummet

(Reuters) – Slack Technologies Inc (TRAVAIL.N) expects a slower growth in revenue in the second half and a larger than expected loss in the third quarter of its first report as a public company on Wednesday, due to fierce competition from Microsoft Corp. (MSFT.O) and others.

The actions of the workplace messaging platform have dropped 13% in prolonged trading. By Wednesday's close, they had lost 19.3% of their first price of $ 38.50 in June.

Analysts have expressed skepticism about the company's ability to generate profits after issuing a warning earlier in the year, which has hurt leading technology stocks like Uber Technologies Inc. (UBER.N) and Lyft Inc (LYFT.O) that was made public before Slack.

The company expected a loss of 8 to 9 cents per share in the third quarter. Analysts on average expected a loss of 7 cents per share, according to Refinitiv's IBES data.

It also forecasts revenues of $ 154 million to $ 156 million, representing 46% to 48% growth, which is slower than the 58% recorded this quarter and 67% 39, increase in the first quarter.

Slack, however, exceeded the second-quarter revenue forecast and posted a smaller than expected loss for the quarter ended July 31st. The company recorded revenues of $ 145 million, exceeding the estimate of $ 141.3 million.

He said the revenue was affected by $ 8.2 million in credit for a service outage during the quarter.

"I imagine that the reaction is causing the deceleration of revenue growth from one year to the next from the first to the second quarter. In the second quarter, there was a break in Slack, which generated $ 8.2 million in loans … adjusted for this factor, growth would have been 66% over one year, which is a trend solid, "DA Davidson analyst, Rishi Jaluria, said.

EXPENSES

Slack competes with Microsoft Teams, a discussion add-on for Microsoft Office365 users. Workplace by Facebook Inc (FB.O) and Cisco Systems Inc (CSCO.O) The Webex teams.

Microsoft revealed in July that it had more than 13 million daily users, against more than 10 million for Slack.

Slack's total operating expenses during the quarter increased by 317.6% to $ 477.5 million. Sales and marketing expenses should accelerate in the second half and exceed 50% of sales.

Slack became public via direct registration on June 20, instead of the more popular initial public offering route. His shares climbed nearly 50% in their debut in public trading, valuing it at more than $ 23 billion.

He said he had more than 100,000 clients paid by the end of the quarter.

The company also said that the "shared channels" feature, which is currently in beta and will be available to all Slack customers, will be of great popularity.

Slack's adjusted 14 cents per share loss in the second quarter was lower than expected by analysts. Slack has also raised its revenue forecast for the full year and now expects a smaller loss for the year.

The net loss attributable to common shareholders soared to $ 359.6 million, or 98 cents per share, in the second quarter, from $ 31.9 million, or 26 cents per share, a year earlier, mainly because of stock-based compensation of $ 307 million.