Slack S-1 breakdown

First of all, congratulations Slack on the IPO!

Experimenting with a new type of article: breakdown of S-1s.

Here are my biggest takeaways from Slack’s recently filed S-1.

• The initially filed an S-1 in Feband then amended it filing again during the week of May 20th. Changes included an amendment to their maximum aggregate offering price ($196M amended one), their ticker symbol (WORK).
• Total number of registered developers = 500k+, total number of organizations is around 600k+. It’s interesting that the number of organizations is greater than the number of developers. Of this around 88000 are paid customers.
• Engagement on the platform looks really good, paid customers on an average logged in for more than 9 hours and actively using the app for more than 90 mins daily.
• In fiscal year ending Jan 2019, Slack grew 81.6% to $400 million in revenue. Of the total revenue, large enterprise customers (>$100,000 ARR) are about 575 in number and account for about 40% of the total revenue. Net Dollar Retention Rate was about 143%. Net loss stood at ~$140 million. Major source of operating costs were Sales and marketing which shot up from $104 million in 2017 to $233 million in 2019. However, Slack’s gross margins are good: 85.2 percent, 88.0 percent, and 87.2 percent in these three fiscal years.
• Currently has around more than 450,000 developer created apps on the Slack platform.
• GTM (Go-to-market) strategy has largely been the self-serve model, capitalizing on strong word-of-mouth adoption.
• An interesting tidbit to compare this with the Zoom IPO, the reason why Zoom had a positive net GAAP income at IPO while Slack does not despite higher overall revenues is because of development expenses and sales efficiency. Slack spends around 39% on R&D while Zoom spends only 10% because most of their engineering is in China. Zoom’s sales efficiency is about 180% while that of Slack is around 111%. This is mostly because Zoom is externally viral (sending invites to people of other companies) while Slack is internally viral.