Tech

Slack shares close down more than 14% after earnings show far slower growth than Zoom

Key Points
  • Slack reported Q1 2020 earnings on Thursday and the stock continued to slide on Friday.
  • Shares dropped after the company announced steady revenue growth, since investors were looking for blowout numbers. 
  • Slack reported that it grew revenue 50% during the quarter, compared with 49% last quarter, on an annualized basis.  
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Slack CEO Stewart Butterfield sees 'really strong signals' for year ahead'

Shares of Slack continued to drop double digits Friday, as investors remained disappointed that the company reported steady revenue growth rather than blowout numbers. Earnings also showed that Slack doesn't have the massive revenue growth that Zoom does.

The company's stock was down more than 17% in morning trading, before closing down 14.12%. Shares initially fell as much as 17% in extended trading Thursday evening, following the company's Q1 2020 earnings release. Slack reported that it grew revenue 50% during the quarter, compared with 49% last quarter, on an annualized basis.  

Slack maintained steady revenue growth during the quarter, but analysts were looking for it to release higher numbers, since the pandemic has caused many offices to shift to remote work. 

Zoom Video, for example, reported 169% revenue growth on Tuesday, exceeding what analysts had expected. 

Slack CEO Stewart Butterfield, appearing on CNBC on Friday, didn't comment on revenue, but said the company is focusing on acquiring new customers. He said the benefits from that will emerge in the next year. 

"We'll realize the benefits of that over the next year and probably the year following," Butterfield said in a "Squawk Box" interview. 

Slack added a record 12,000 paid customers in the quarter. In the two prior quarters it added about 5,000 new customers.

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Slack plummets after reporting earnings