6 ms·

Even with 49% up sales and a 46% drop in expenses Slack still cant turn a profit

83 points by LinuxBender 6y ago

ivraatiems 6y ago
This headline (as in the original on the site) seems unnecessarily editorial. From the article: > CFO Shim said Slack expects "to be free cash flow breakeven for the year" and raised revenue guidance to a range of $870m to $876m, a jump of 38 per cent at the midpoint. The next quarter is expected to grow 32 per cent at the midpoint of a range of $222m to $225m. It's true, they can't turn a profit, but this still sounds like a development in that direction. I'd say check back next year and see.
tiffanyh 6y ago
The stock market is so odd. We have 2 cloud communication companies with radically different stock results (Slack vs Twilio). Slack, who has ~50% revenue growth and haven't turned a profit and their stock is ~0% flat YTD [1]. Then you have Twilio, they too are having 50%+ growth and have never turned a profit, yet their stock is up ~130% YTD. [2] The stock market is a funny beast. [1] https://finance.yahoo.com/quote/WORK?.tsrc=applewf https://finance.yahoo.com/quote/WORK?.tsrc=applewf [2] https://finance.yahoo.com/quote/TWLO?p=TWLO&.tsrc=fin-srch https://finance.yahoo.com/quote/TWLO?p=TWLO&.tsrc=fin-srch
- missedthecue 6y ago
  Twilio is in a league of their own while Teams is looming over Slack.
  - rdtwo 6y ago
    I think Microsoft is basically giving teams away because it’s such a piece of Shiite. Our school district is using it and everyone hates it. Hard to compete with free though
    - gamblor956 6y ago
      In contrast, most of the medical workers I know use Teams for telehealth...and they love it. It's a better app than Google Whatever (Hangouts? Meet? Duo???) and Cisco WebEx, though Zoom is much easier to use for larger meetings.
      - prepend 6y ago
        I think Teams is my favorite video app, but I find it lacking in persistent chat. My org uses Teams and I’m now a member of probably 30 teams with lots of channels each. I ignore them all as there’s too many. Slack is different because I just join specific communities. Also text search is bad right now in Teams, but is handy in Slack.
    - addicted 6y ago
      I find Teams far more effective than Slack. School districts will almost certainly hate everything they were forced to start using over the last few months because their entire workflow has changed dramatically. From top to bottom and they’re having to invent new things on the fly. They will almost certainly get stuff wrong. Normally, such a radical change would have involved months if not years of planning, followed by months of trials, before even being deployed in 1 class for 1 subject.
  - kyawzazaw 6y ago
    Why are Twilio's competitors not doing so well?
    - missedthecue 6y ago
      It's less about that and more that Slack has to compete with free. Twilio does not.
      - pokerhobo 6y ago
        Slack was free before Teams was free. They thought they had won the war before the first battle took place. Slack could have been Zoom, but instead it was just a pretty web client to IRC
- bdcravens 6y ago
  Twilio is a suite of infrastructure services. Slack is a chat app.
- SheddingPattern 6y ago
  Slack is a though sell for a enterprise organisation with a large suite of Microsoft tools. Of course Slack is better than Teams the person making the decision doesn't care. Also Teams is good enough.
  - rdtwo 6y ago
    This is really the key here. Teams and bing search come free as part of the package so big corporations use it dispite not being very good
    - addicted 6y ago
      The idea that Teams is not very good is BS. Is it not as good as Slsck. I disagree. I find it better than slack for my usage. However, there are enough people I know who use both that have said it’s not as good as Slack. But that does not mean Teams itself is not excellent software. It just means Slack is slightly more excellent. And once you throw in how rapidly Teams has been improving, I think it’s a matter of months before Teams surpasses slack in almost every way.
- jtsiskin 6y ago
  The moat is very different. Picture 10 years down the line. Which do you feel more confident generating returns?
mywittyname 6y ago
I struggle to see where Slack is spending all of that money. It's a chat application with a few million active users at any given time. Even with absurd AWS bills, they should still be raking in profits.
- foxyv 6y ago
  I'm betting it's mostly recurring development costs. As far as I can tell Slack is constantly adding features and integrating new Apps.
  - toomuchtodo 6y ago
    They should buy a company that has already built integrations with most of the services users would rely on.
- goldenchrome 6y ago
  They’re probably staffed like a company that’s 10x larger than they seem because they want to be 10x larger ASAP.
  - mywittyname 6y ago
    I just checked, and in 2019, they had $401MM in revenue with 1664 employees. That's ~$240,000 in revenue per employee. Pinterest looks to have earned about $1.1 billion in revenue during the same time with roughly the same number of employees. Fastly is at $250MM in revenue with just 630 employees. So it looks like Slack is at least twice as large as it should be for its given revenue. But why? Are they supporting too many platforms/devices? Or are chat applications just not that valuable to companies?
    - athms 6y ago
      >1664 employees What do they do? I am curious on the breakdown of engineering versus everybody else. I am always reminded of Craigslist, which operates with a skeleton crew. In 2017, it was reported they had 50 people on revenue of almost $700 million.
kfk 6y ago
In big companies I just don’t see the point of Slack over MS Teams as they are quite similar and Teams is very low friction as it integrates with the rest of Office 365. Slack has better API and that’s great but what would be other serious competitive advantages? It almost seems to me that if you want to target big companies you need a competitor for the Office 365 platform and not “only” a competitor to one of its apps.
- shyn3 6y ago
  This is what Slack really screwed up. We use 12 different meeting tools, it's absurd I know, and if Slack worked it would be great. You start a chat and you can't add someone to the chat once it's started. So you create a new chat and add a member to it. Now you decide to hop on a call and you need to invite someone else, and that wasn't an option. But today, you can add another team member to the call. You figure out it's a vendor issue but you can't get your vendor on the call because they don't have a Slack account, and there isn't a link to share for just that one screenshare/conference. So you are left with inviting your vendor into your Slack space which you don't want to do or move to another solution.
  - specialist 6y ago
    "You start a chat and you can't add someone to the chat once it's started. ..." Yup. Those deficiencies are unforgivable. I wonder what chat program the employees of Slack use.
    - ludamad 6y ago
      Probably writing their own /s
      - jjeaff 6y ago
        That would be a hillarious discovery.
    - Andys 6y ago
      No need for chat when you have an office to collaborate in!
mrtweetyhack 6y ago
Give your services for free and not turn a profit? Weird
cblconfederate 6y ago
Well at least IRC isn't losing money
klmadfejno 6y ago
I didn't watch the show in depth but I recall a character on Silicon Valley confessing that she chose not to invest in Slack as proof that she wasn't a perfect VC (or something to that effect). Maybe she was.
maxharris 6y ago
I stopped using Slack because they use Electron, and I want native apps because they don't drain my battery the way Slack does.

83 points by LinuxBender 6y ago

This headline (as in the original on the site) seems unnecessarily editorial. From the article: > CFO Shim said Slack expects "to be free cash flow breakeven for the year" and raised revenue guidance to a range of $870m to $876m, a jump of 38 per cent at the midpoint. The next quarter is expected to grow 32 per cent at the midpoint of a range of $222m to $225m. It's true, they can't turn a profit, but this still sounds like a development in that direction. I'd say check back next year and see.

tiffanyh 6y ago

The stock market is so odd. We have 2 cloud communication companies with radically different stock results (Slack vs Twilio). Slack, who has ~50% revenue growth and haven't turned a profit and their stock is ~0% flat YTD [1]. Then you have Twilio, they too are having 50%+ growth and have never turned a profit, yet their stock is up ~130% YTD. [2] The stock market is a funny beast. [1] https://finance.yahoo.com/quote/WORK?.tsrc=applewf https://finance.yahoo.com/quote/WORK?.tsrc=applewf [2] https://finance.yahoo.com/quote/TWLO?p=TWLO&.tsrc=fin-srch https://finance.yahoo.com/quote/TWLO?p=TWLO&.tsrc=fin-srch

missedthecue 6y ago
Twilio is in a league of their own while Teams is looming over Slack.
- rdtwo 6y ago
  I think Microsoft is basically giving teams away because it’s such a piece of Shiite. Our school district is using it and everyone hates it. Hard to compete with free though
  - gamblor956 6y ago
    In contrast, most of the medical workers I know use Teams for telehealth...and they love it. It's a better app than Google Whatever (Hangouts? Meet? Duo???) and Cisco WebEx, though Zoom is much easier to use for larger meetings.
    - prepend 6y ago
      I think Teams is my favorite video app, but I find it lacking in persistent chat. My org uses Teams and I’m now a member of probably 30 teams with lots of channels each. I ignore them all as there’s too many. Slack is different because I just join specific communities. Also text search is bad right now in Teams, but is handy in Slack.
  - addicted 6y ago
    I find Teams far more effective than Slack. School districts will almost certainly hate everything they were forced to start using over the last few months because their entire workflow has changed dramatically. From top to bottom and they’re having to invent new things on the fly. They will almost certainly get stuff wrong. Normally, such a radical change would have involved months if not years of planning, followed by months of trials, before even being deployed in 1 class for 1 subject.
- kyawzazaw 6y ago
  Why are Twilio's competitors not doing so well?
  - missedthecue 6y ago
    It's less about that and more that Slack has to compete with free. Twilio does not.
    - pokerhobo 6y ago
      Slack was free before Teams was free. They thought they had won the war before the first battle took place. Slack could have been Zoom, but instead it was just a pretty web client to IRC
bdcravens 6y ago
Twilio is a suite of infrastructure services. Slack is a chat app.
SheddingPattern 6y ago
Slack is a though sell for a enterprise organisation with a large suite of Microsoft tools. Of course Slack is better than Teams the person making the decision doesn't care. Also Teams is good enough.
- rdtwo 6y ago
  This is really the key here. Teams and bing search come free as part of the package so big corporations use it dispite not being very good
  - addicted 6y ago
    The idea that Teams is not very good is BS. Is it not as good as Slsck. I disagree. I find it better than slack for my usage. However, there are enough people I know who use both that have said it’s not as good as Slack. But that does not mean Teams itself is not excellent software. It just means Slack is slightly more excellent. And once you throw in how rapidly Teams has been improving, I think it’s a matter of months before Teams surpasses slack in almost every way.
jtsiskin 6y ago
The moat is very different. Picture 10 years down the line. Which do you feel more confident generating returns?

mywittyname 6y ago

I struggle to see where Slack is spending all of that money. It's a chat application with a few million active users at any given time. Even with absurd AWS bills, they should still be raking in profits.

foxyv 6y ago
I'm betting it's mostly recurring development costs. As far as I can tell Slack is constantly adding features and integrating new Apps.
- toomuchtodo 6y ago
  They should buy a company that has already built integrations with most of the services users would rely on.
goldenchrome 6y ago
They’re probably staffed like a company that’s 10x larger than they seem because they want to be 10x larger ASAP.
- mywittyname 6y ago
  I just checked, and in 2019, they had $401MM in revenue with 1664 employees. That's ~$240,000 in revenue per employee. Pinterest looks to have earned about $1.1 billion in revenue during the same time with roughly the same number of employees. Fastly is at $250MM in revenue with just 630 employees. So it looks like Slack is at least twice as large as it should be for its given revenue. But why? Are they supporting too many platforms/devices? Or are chat applications just not that valuable to companies?
  - athms 6y ago
    >1664 employees What do they do? I am curious on the breakdown of engineering versus everybody else. I am always reminded of Craigslist, which operates with a skeleton crew. In 2017, it was reported they had 50 people on revenue of almost $700 million.

kfk 6y ago

In big companies I just don’t see the point of Slack over MS Teams as they are quite similar and Teams is very low friction as it integrates with the rest of Office 365. Slack has better API and that’s great but what would be other serious competitive advantages? It almost seems to me that if you want to target big companies you need a competitor for the Office 365 platform and not “only” a competitor to one of its apps.

shyn3 6y ago
This is what Slack really screwed up. We use 12 different meeting tools, it's absurd I know, and if Slack worked it would be great. You start a chat and you can't add someone to the chat once it's started. So you create a new chat and add a member to it. Now you decide to hop on a call and you need to invite someone else, and that wasn't an option. But today, you can add another team member to the call. You figure out it's a vendor issue but you can't get your vendor on the call because they don't have a Slack account, and there isn't a link to share for just that one screenshare/conference. So you are left with inviting your vendor into your Slack space which you don't want to do or move to another solution.
- specialist 6y ago
  "You start a chat and you can't add someone to the chat once it's started. ..." Yup. Those deficiencies are unforgivable. I wonder what chat program the employees of Slack use.
  - ludamad 6y ago
    Probably writing their own /s
    - jjeaff 6y ago
      That would be a hillarious discovery.
  - Andys 6y ago
    No need for chat when you have an office to collaborate in!

mrtweetyhack 6y ago

Give your services for free and not turn a profit? Weird

cblconfederate 6y ago

Well at least IRC isn't losing money

klmadfejno 6y ago

I didn't watch the show in depth but I recall a character on Silicon Valley confessing that she chose not to invest in Slack as proof that she wasn't a perfect VC (or something to that effect). Maybe she was.

maxharris 6y ago

I stopped using Slack because they use Electron, and I want native apps because they don't drain my battery the way Slack does.