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The Slack IPO Is Coming. What to Know About the Direct Listing – Barron’s


Courtesy of Slack

If you’re an office worker, you’re increasingly likely to have heard of Slack Technologies—or to use its tools yourself. Starting next week, you’ll be able to invest in it, too.

The Slack public listing, expected next week, will add another name to the growing list of high-profile companies to start trading in 2019.

Its listing will surely attract scrutiny, primarily because of its unusual method of going public—the “direct listing” means no new shares are being offered—but also because of the attention, both positive and negative, to recent tech IPOs. (Not to mention, we should note, those that sell fake meat.)

Have questions about Slack’s offering? Barron’s has answers. Read on.

What is Slack?

“I’ll Slack you” has, for many, become a modern ”I’ll Xerox it,” and an explanatory video the company posted on YouTube is titled “You’ve Probably Heard of Slack.” (Perhaps remarkably, its lead character works at a newspaper.)

Slack makes and sells what’s known as workforce collaboration software, which in effect means digital tools for workplace chatter, group conversations, presentations, file sharing, and other activities. Think
iMessage, combined with email and some elements of


The company says it has more than 10 million users across hundreds of thousands of organizations, large and small, in over 150 countries.

Is Slack having an IPO?

Not exactly. Slack plans a “direct public listing,” which you may have heard of when streaming music company
Spotify Technology

(SPOT) did it last year.

The principal difference between public listings and IPOs: A direct public listing lets investors trade in a company’s stock but the company doesn’t issue new shares, so it doesn’t raise any money for itself. Anyone who currently owns shares can sell, though they don’t have to.

When is Slack going public?

Slack has said it expects to start trading on June 20.

What is Slack’s stock symbol?

Slack plans to trade on the New York Stock Exchange using the symbol “WORK.” (It had previously said it would use “SK.”)

How much will Slack stock cost?

We don’t know, yet.

Last year, Slack announced a round of private financing valuing the company at $7.1 billion, or just under $12 per share.

Meanwhile, the company has said in SEC fillings that its class B shares traded hands in private transactions at prices between $8.37 and $23.41 in the fiscal year ended Jan. 31. News reports have suggested that some investors have paid even higher prices for its stock recently.

In any case, in direct listings there’s no “IPO price” set by bankers—and no rules limiting the initial supply of shares. The NYSE will issue a “reference price” before trading starts, which so-called market makers will use to compare with buy and sell orders to determine an opening price.

Because there’s no official price set by IPO bankers, Slack shares could be volatile in their early hours, days and even weeks of trading.

Is now a good time for Slack to go public?

Companies with more of a consumer focus have seen their offerings come under pressure. Both

(LYFT) and
Uber Technologies

(UBER) are currently trading below their opening prices.

Investors have been more upbeat about companies that serve corporate clients. Zoom Video Communications (ZM), a videoconferencing services company, started strong and has kept rising.

And digital operations management software company

(PD) has generally risen since it started trading.

Read more: The IPO Market Is Heating Up

While Slack’s product is reasonably well-known, Slack would probably prefer to be seen mainly as an enterprise software businesses.

Who are Slack’s customers and competitors?

At the end of its latest fiscal year, ended Jan. 31, the company said it had more than 10 million daily active users. More than 600,000 organizations had at least three users, according to Slack. (More than 1 billion messages were sent in the last seven days of January, according to Slack.)

In the quarter ended April 30, the company reported more than 95,000 paid customers, including 645 who accounted for more than $100,000 in recurring annual revenue.

In a filing, Slack said its customers include companies ranging from

(ADSK) to Liberty Mutual, as well as NASA.

No one paid customer represented more than 3% of revenue through the last three full fiscal years, the company said. (The Barron’s newsroom uses Slack all day long.)

Read more: Why the IPO Market Has Been So Bizarre This Year

Slack says its “primary” competitor is
which owns Skype and sells its Office suite to businesses. But Slack also lists

Cisco Systems

(CSCO), and

(FB) as competitors, albeit in different ways.

A number of companies with which it partners, meanwhile, could eventually add competing services, according to a company filing, which named


Workday (WDAY)
and the aforementioned Zoom among them.

Does Slack make money?

Slack is not yet profitable. This week, the company forecast a full-year adjusted loss of $182 million to $192 million, including $34 million in one-time expenses related to its direct listing.

“We expect to continue to incur net losses for the foreseeable future,” the company previously said in a filing.

Is Slack growing?

It is. First-quarter revenue rose 67% year-over-year to $134.8 million, the company said.

Some potential investors, however, may worry about slowing growth. Slack says to expect full-year revenue growth of 47% to 50%, which would put it somewhere near $600 million.

Last year, Slack reported revenue of around $400 million, up more than 80% year-over-year.

Email David Marino-Nachison at Follow him at @marinonachison and follow Barron’s Next at @barronsnext.


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