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Why Slack Stock Jumped on Thursday

By Daniel Sparks - Mar 26, 2020 at 12:48PM

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The channel-based messaging platform for businesses has seen a surge in usage amid the coronavirus pandemic.

What happened

Shares of Slack Technologies (WORK), which provides a virtual collaboration platform, shot higher on Thursday. The stock soared as much as 15.5% and was up 12.7% as of 11:48 a.m. EDT.

The stock's rise comes as Slack CEO Stewart Butterfield took to Twitter to share a timely business update, highlighting the impact of the coronavirus pandemic on the company's business. Of course, he also expressed his concern for the jobs and health of millions of people around the world.

Slack executives at the New York Stock exchange on the day of the company's direct listing.

Image source: Slack Technologies.

So what

Some important tidbits the CEO shared on Thursday include:

  • Record simultaneously connected users of 12.5 million on March 25 -- up from 10.5 million just over a week earlier.
  • A substantial increase in new work teams between March 12 and March 25.
  • 9,000 new paid customers added already in fiscal Q1.

The addition of 9,000 new paid customers so far in fiscal Q1 is particularly noteworthy, especially considering the company still has more than a month left in the quarter. These net new paid customer additions compare to adding about 5,000 paid customers every quarter recently.

Now what

When Slack announced its fourth-quarter results on March 12, the company said it expected fiscal first-quarter revenue to rise 37% to 39% year over year to between $185 million and $188 million. Management also estimated fiscal full-year revenue to grow 34% to 37% compared to the prior year.

However, the momentum Slack has seen since March 12 likely didn't fully anticipate such a great acceleration in key business metrics. It wouldn't be surprising to see Slack easily beat its fiscal first-quarter guidance and lift its outlook for the full year.

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