Shares of Slack Technologies (NYSE:WORK) plummeted on Friday, following the release of its first-quarter earnings results.
As of 2:55 p.m. EDT today, Slack's stock was down more than 13% after falling as much as 19.6% earlier in the day.
First-quarter revenue surged 50% year over year to $201.7 million, driven by a 28% jump in paid customers to more than 122,000. The gains were also fueled in part by higher sales to existing customers, as can be seen in Slack's impressive net dollar retention rate of 132%.
CEO Stewart Butterfield said the coronavirus pandemic is accelerating the trend toward remote work and boosting the adoption of Slack's communication platform.
"We believe the long-term impact the three months and counting of working from home will have on the way we work is of generational magnitude," Butterfield said in a press release. "This will continue to catalyze adoption for the new category of channel-based messaging platforms we created and for which we are still the only enterprise-grade offering."
Slack also improved its cash flow. Its operating and free cash flow checked in at $8.7 million and $3.7 million, respectively, versus negative $14.1 million and negative $34.2 million in the prior-year period.
However, these rather solid results apparently weren't enough for Wall Street.
Investors appear to be disappointed that Slack only raised its full-year forecast slightly after its strong first quarter. This suggests that management expects growth to moderate over the remainder of the year.
Still, CFO Allen Shim sees long runways for growth.
"We plan to continue to invest, as we see the current crisis accelerating digital transformation and the transition from email to channel-based messaging platforms over the medium term to long term," Shim said.