Slack tops Q1 revenue estimates, withdraws guidance for FY21 calculated billing

Slack Technologies released its first quarter earnings report after hours on Thursday, beating on its top line. The company saw an added 12,000 net new paid customers and 90,000 net new organizations, but withdrew its guidance for the fiscal year of 2021 for calculated billing. Yahoo Finance’s Myles Udland breaks down the company’s results.

Video transcript

SEANA SMITH: Welcome back to "The Final Round" here on Yahoo Finance. We have some breaking news here after hours. Slack out with earnings. Myles Udland going through the numbers for us. Myles.

MYLES UDLAND: Yeah, let's take a look at this release, Seana. The stock struggling lower here in the after hours, and I wonder how much is the impact of what we saw from Zoom last night.

So let's get to the numbers here. A $0.13 per share loss. It's a little bit wider than what the Street was looking for at a $0.06 per share loss during the first quarter. Revenues coming in better than expected, $201.7 million against [? 187 ?] expected.

In the second quarter, the company did raise its guidance. $206 to $209 million in revenue is the new forecast. The Street had been looking for right around $199 million.

For the full year, Slack sees revenues coming in $855 to $870 million. The Street was looking for [? 842 ?] to [? 862. ?]

So they beat on the top line here. They raised their outlook for the second quarter and the full year. But I think in this environment when Zoom came out and doubled their revenue guidance-- which, as we talked about yesterday on the show, it cut the company's valuation in half overnight. You know, Slack is supposed to be part of this stay-at-home trade.

And I think Slack, you know, they mentioned they added a record number of users. They have 122,000 paid customers right now. They added 12,000 net new paid customers. This is a good quarter, a very good quarter for this company. But in this environment, clearly the Street was wanting for a bit more out of Slack.

ANDY SERWER: Yeah, Myles, and you mentioned the competitive set here. And it's full, OK? And it's got some entrenched juggernauts. I mean, you've got Skype, which is Teams. You've got Google Meet. You've got Webex with Cisco. And so, you know, you wonder how much growth there really is in this business. I think it's a question.

SEANA SMITH: Yeah, it certainly is a question. But when you take a look at [INAUDIBLE] the paid numbers were-- paid customers were what the Street was really focused on. Those numbers actually look pretty strong, Myles. They added a record 12,000 net new paid customers during the quarter, a record of over 90,000 net new organizations. These are either on a free or a paid subscription plan, but still no building up that very important part of their business.

MYLES UDLAND: And just quickly as Jared Blikre flagged for us here, the company withdrew its guidance for calculated billings. So they are still saying, even though they're giving revenue guidance for the second quarter and the full year, they're still saying they don't have a ton of visibility into what Slack looks like over the balance of this year. And again, I think for a company that, you know, fits into the environment where they do, it's certainly disappointing to the Street.