A world working from their kitchens and living rooms at home during the coronavirus continues to be a major tailwind for communications service Slack (WORK).
“Pretty incredible. It’s not like anything seen in the past,” Slack co-founder and CEO Stewart Butterfield said on Yahoo Finance’s The First Trade on Thursday when asked about the business’ current growth. “It’s really cutting across all segments. so existing customers expanding their usage. It’s end users increasing their daily uses of us. More messages, more time spent online. A lot of brand new customers and new teams and organizations around the world are signing up.”
Slack shares popped 6% by early afternoon trading on Thursday. The gain extend’s the run in Slack’s stock to 34% over the past three months, according to Yahoo Finance data.
The market appears to be betting on Slack’s solid fourth quarter — where it started to benefit from people working at home due to the coronavirus pandemic — only strengthening in the first half of 2020. In late March, Slack said it added 7,000 paid subscribers from Feb. 1 to the time of that press release.
Recall that Slack had good momentum in key areas of its business to end 2019. The company gained 5,000 new customers in the quarter. Customers that spend more than $1 million in annual revenue on the platform rose 32% from the prior year to 70. Slack ended the year with 894 customers spending more than $100,000 annually versus 575 at the end the prior year.
“It [coronavirus situation] has been really great for the company because there is a feeling like this is what we were born for. This is our moment. Everyone is energized. I think in times of crisis like this people often look for opportunities to help. It’s a privilege to be helpful,” Butterfield says.
Wall Street agrees that this is Slack’s moment, right along with other work-from-home tech plays such as Zoom Video Communications (ZM) and Dropbox (DBX). Twelve out of the 22 sell-side analysts that cover Slack have reiterated Buy or Outperform ratings on Slack’s stock since early March, per Bloomberg data.
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