Why Slack's second quarter results did not impress investors

Slack Technologies (WORK), the US provider of cloud applications and services, announced its second-quarter earnings after the September 4th bell. Slack's second-quarter earnings recorded an adjusted net loss of $ 0.14 per share for fiscal year 2020. This loss marks an improvement over the company's net loss of $ 0.25 in the second quarter of Fiscal year 2019. Slack's adjusted net loss for the six months ended July 31st improved from $ 0.41 to $ 0.32 for the corresponding period of 2018.

The results of Slack Q2 did not impress investors

Slack's improved second quarter results, however, were not enough to impress investors. The releasing stock fell by 14.9% in Wednesday's after-sales session. Earlier in the day, investors' high expectations for the second quarter of Slack had led to a sharp rise in the stock. During the normal trading session of the day, Slack's shares gained 8.0%.

Slack's bleak outlook for the third quarter and fiscal year 2020 in general is a major factor that has hurt investor sentiment after the bell. In Slack's second quarter earnings report, management moved to a third quarter adjusted net loss of $ 0.09 to $ 0.08 per share. This range was lower than expected for a net loss per share of $ 0.07, according to consensus data from analysts compiled by Reuters.

Similarly, the company expects an adjusted net loss for the 2020 financial year of between $ 0.42 and $ 0.40 per share. This range also reflects pessimism against Wall Street consensus expectations of a net loss of $ 0.40 per share.

Second quarter revenue estimate

On the positive side, Slack managed to exceed Wall Street's revenue estimate of $ 141.2 million for the second quarter. The company said a total business turnover of $ 145 million in the second quarter, up about 58% over the previous year. In addition, WORK's total revenues increased by 7.5% on a sequential basis. By the end of July, Slack had more than 100,000 paying customers, up 37% from one year to the next.

Interestingly, Slack's revenue would have been higher last quarter if the company had not experienced an interruption in service. Slack's second quarter outage reduced Slack's revenue to approximately $ 8.2 million as the company had to issue credit to customers.

The breakdown that hurt Slack and other key factors

According to the Slack Terms of Service page, the company offers "specific commitments related to availability, with credits" for some of its services. The company calls these credits the "sole recourse of the customer for downtime and inconvenience".

On July 29, we informed our readers that Slack continued to face trouble. These issues can affect the workflow and productivity of platform-dependent businesses.

Today, in a statement, Stewart Butterfield, co-founder and CEO of Slack, said, "Channel-based collaboration is so superior to e-mail communication for work that change is inevitable." And potential long-term growth.

However, it should be noted that Calfield, CTO of Butterfield and Slack, sold some of their shares in the company. Slack Stock Rose 6.2% Even though the CEO has sold shares to find out more.

Will Slack's stock recover soon?

Although Slack's quarterly losses improved its quarterly losses in the second quarter, investors were clearly not expecting additional forecasts from the company. We can therefore expect Slack's shares to continue trading on a negative note in the near term. However, if management could find a significant positive factor to boost investor confidence on its earnings announcement later in the day, the stock could recover.