Slack gearing up for its public market debut
Slack Technologies Inc. is expected to be valued by investors at US$16 billion to US$17 billion 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 US$7.1 billion 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 the company a valuation of about $16 billion.
A spokeswoman for Slack declined to comment.
Slack 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 math: Slack said Monday that it expects at least $590 million in revenue in its 2020 fiscal year, which ends January. That’s a growth rate of as much as 50 per cent compared with the previous year.
That suggests the company could bring in almost US$900 million 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 110 per cent and 82 per cent in the 2018 and 2019 fiscal years, respectively, according to a regulatory filing.
Slack said in its filings with the U.S. 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.
Unlike a surge of tech companies that have gone public this year in traditional initial public offerings, Slack is going public through an unusual direct listing. The company won’t issue new shares to raise funds for itself. Rather, its investors will be allowed to begin selling existing shares immediately.
Goldman Sachs Group Inc., Morgan Stanley and Allen & Co. are advising Slack on the listing.
--With assistance from Sarah McBride.