TechCrunch today reported that Slack has filed to go public via a direct listing.
Rather than a traditional IPO, a direct listing allows existing shareholders to sell their stock to investors. In this case, Slack’s S-1 filing shows that it plans to make $100 million worth of shares available. However, no one will know how much stock Slack will truly make available until the day the listing happens.
The S-1 form also shows data about the company’s financial performance. Slack reported a net loss of $138.9 million and revenue of $400.6 million in the fiscal year that ended January 31, 2019. Last year, the company reported losses of $140.1 million on revenue of $220.5 million, so clearly Slack’s financial position has improved since 2018.
Slack says the losses were due to a decision “to invest in growing our business to capitalize on our market opportunity” and notes that the losses, as a percentage of revenue, have been decreasing. It also said that in the three months ending January 31, 2019, it had more than 10 million daily active users across more than 600,000 organizations. Of those, 88,000 are on the paid plan and 550,000 are on the free plan.
“We created Slack initially as an internal tool to help our own team stay on the same page, to be able to easily access conversations, decisions, data, and content that had been shared, and to tap into a variety of software applications from one place,” the S-1 form reads. “We were frustrated with email. It created fragmented silos of inaccessible information, hidden in individual inboxes. When new members joined the team, they were cut off from the rich history of communication that occurred before they arrived. Transparency was difficult to achieve and routine communication had to be supplemented with status reports and stand-up meetings in order to keep the team coordinated.”
However, they quickly learned that their team wasn’t the only one frustrated with email as a team organizing tool.
“Since our public launch in 2014, it has become apparent that organizations worldwide have similar needs, and are now finding the solution with Slack,” the company stated. “Our growth is largely due to word-of-mouth recommendations. Slack usage inside organizations of all kinds is typically initially driven bottoms-up, by end users. Despite this, we (and the rest of the world) still have a hard time explaining Slack. It’s been called an operating system for teams, a hub for collaboration, a connective tissue across the organization, and much else. Fundamentally, it is a new layer of the business technology stack in a category that is still being defined.”
The company suggests that the total market opportunity for workplace collaboration software is $28 billion. Slack plans to grow its share of that market by expanding its footprint within companies already using Slack, as well as investing in more enterprise features, expanding internationally, and “growing the developer ecosystem.”
Slack is one of the fortunate tech “unicorns.” It previously raised $1.2 billion in funding from investors including Accel, Andreessen Horowitz, Social Capital, SoftBank, Google Ventures, and Kleiner Perkins.
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