Tuesday 25 June 2019

Slack listing value tipped to hit up to $17bn


Slack CEO Stewart Butterfield
Slack CEO Stewart Butterfield

Sonali Basak, Crystal Tse and Ellen Huet

Slack Technologies is expected to be valued by investors at $16-$17bn (€14-15bn) when it lists its shares publicly next week, according to people familiar with the matter.

That valuation is roughly based on the workplace chat and collaboration software company's projected revenue and current growth rate, said the people, who asked not to be identified discussing private talks.

The expected value is up from the $7.1bn in its last private funding round in August. It's similar to the company's share sales on the private market, where in April investors were snapping up stock at prices that would give it a valuation of about $16bn.

A spokeswoman for Slack declined to comment.

Slack, headed up by CEO Stewart Butterfield, is planning to have its shares start trading June 20 on the New York Stock Exchange under the ticker WORK.

Investors' valuation expectations are based on some back-of-the-envelope maths: Slack said on Monday that it expects at least $590m in revenue in its 2020 fiscal year, which ends January. That's a growth rate of as much as 50pc compared with the previous year.

That suggests the company could bring in almost $900m in fiscal year 2021, and investors are looking to value the company at roughly 20 times that projected revenue, the people said.

That's even as the annual revenue growth rate has slowed from 110pc and 82pc in the 2018 and 2019 fiscal years, respectively, according to a regulatory filing.

Slack said in its filings with the US Securities and Exchange Commission that it can't guarantee that its plans to increase revenue and cut operating losses will ever allow it to become profitable.


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