WORK - Earnings call transcript Q4 2020 | Slack Technologies, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Slack Technologies Fourth Quarter Earnings Call. [Operator instructions] I would now like to hand your conference over to your speaker today, Jesse Hulsing, Head of Investor Relations. Thank you. Please go ahead.

Jesse Hulsing

Good afternoon, and thank you for joining us on today's conference call to discuss Slack's Fourth Quarter and Full Year Fiscal 2020 Financial Results.

have Shim, Co-Founder Chief we Officer; Chief call, Allen and Financial the Stewart and Butterfield, Executive On Officer.

our limited During we the and development, to statements growth not plans, strategies demand, attract may call, future regarding to, ability any make relied compete are forward-looking prospects, disclaim performance, course statements, to including, based product date current of views customers market upon we statements guidance on be not of and forward-looking today's and and and financial assumptions effectively. ability business any should but These retain update subsequent statements. to and any as and management's obligation forward-looking

today's contained release and Actual SEC differ results Investors our Information press to concerning and in filings, the these earnings posted could information results section materially website. risks, statements forward-looking the of cause may company's from from company's are statements. the on other vary supplemental uncertainties factors that

Our be measures. discussion substitute in today will measures. financial isolation as from, in for to, considered measures a or GAAP financial not non-GAAP These addition include certain non-GAAP should

non-GAAP other Our effect exclude results our items. and compensation measures of stock-based GAAP the certain of

reconciliations additional earnings website find can at measures, GAAP with Investor including regarding our these measures in You release comparable our non-GAAP on and disclosures Relations investor.slackhq.com.

like call I over Executive Stewart? Butterfield. to to conference now turn the Chief would Stewart Slack's co-Founder Officer, and

Stewart Butterfield

all you joining call. today's thank and for Jesse, Thanks,

normal don't environment of our that an of the net environment around work forecasting. behavior be business, uncertainty. is I want transformation on in pronounced from purchase impact there's than decisions. of in in remote interest way to we have clear start a we're of increased Slack and idea macro in information by acknowledging already hesitation to the that can this in uncertainty another potential an see our that which helpful more the We how saying At shifts customer presenting this for time,

in our guidance. this see reflected You'll

about we that innovation market growth. have product drive said right the no right the Having are opportunities uncertainty at with confident right further in we that, the we're to the and and time

a details We we year and for both fiscal short, the about remain Allen paid 'XX, cover of the XX% revenue in was and while fiscal QX total the bringing had XXX 'XX, up We the quarter results XX XXX the year-on-year. the quarter we our was continued the XXX,XXX. for fiscal year-over-year. strong versus year very year will guidance revenue show finally, more XXXX operating the XX% but and to close of ahead. excited leverage, million to new non-GAAP points margin million And full customers for had to X,XXX improved up in net than percentage quarter

leverage the year We expect in continued ahead. operating

expand segment. Now first Those to enterprise I want to three year. continuing this leadership important the are in for focus priorities on our

Second, communication boundaries. which teams and accelerating successful increasing cases use third, growth set and are new in channels our self-serve to new on SMB by the expanding drive feature across rate And shared our organizational at Slack.

we in with or quarter XX nearly That's enterprise growth from XX% and we the our 'XX. of high-end million plus customers exceptional fiscal $X with we the quarter last from Starting the from annual end million business, increase whom at XX% at more saw $XX have ending an the of customers spend. had

annually the segment traction $XXX,XXX in 'XX. plus $XXX,XXX of XXX $X million of the with the year the Both ended customers to more our end up at from also fiscal market. XXX enterprise spending continued We than a speaks momentum and

just to continue win, also We the status teams. but quo, against head-to-head not Microsoft against

They the HP, and penetration quarter, quarter global NTT breadth SiriusXM, joined deals Government. United industries. U.S. KPMG, Technologies, and across the and include TD Vodafone, against for were Air Four GlaxoSmithKline, expansion new NEC, of Canada, five They enterprise all Data Sainsbury's. UK of in Uber, Nationwide, deals fourth largest the our demonstrate Federal Ameritrade, the teams, Rakuten, our Kyocera,

also customers and Our of of customers are the of largest members largest Fortune also the Seven world. either XXX. largest are customers. be XX XX customers XX or the Microsoft of our the top some XXX Fortune They are our tend of to companies members Global in

which As numbers Office invest starting to Behind are quarter, also they now. be are understood and to the good $X them million appreciated use a the anyway. We'll and the be year ahead. noted last lot majority Slack in more these choice customers our of in of XXX made stories telling of just

because the largest win that to and email platforms, offering as world only messaging is truly the channel-based continue We to grade. companies the alone organizations Slack in in as enterprise continue to move from stands

significant depth features, We scalability, transformation compliance and that security undertaking our platform usability value have and and customers initiatives. advantages integrations, digital when

momentum The including regulated our federal best evidence across industries, is for this in government. the

to Slack who as quarter XX,XXX dozen the their Slack transformation They This continued employees more growing the within momentum broader of are a of agencies more Veteran joined than Department a usage. that government part federal other Affairs effort. departments than [indiscernible] or with

They this and defense Teams multi-year relying part strength there'll on Also United because States Slack XX,XXX a our of compliant. to contractors remain to management quarter, we multimillion security, in signed over ability than usage be their dollar Microsoft and knowledge more expend our enterprise and feature agreement scale largest had to chose the key Slack in workers. our to our

it begin Customers our which customers tend usage differences once That's it's their began to differences. work. between expand Slack particularly products, competitive to in-depth overwhelmingly the they fundamental to its understand Slack these to results do the competitors, why fundamental interesting understand we to come see and and best conclusions. their Slack Teams, help doesn't evaluations always While ago, years of of Microsoft

Fortune from teams half many evaluate XX,XXX with so to end about having for lack plagued One year deficiencies, XXX ended a go teams, evaluation to The users caused a near quarter a other Microsoft that complete and the agreement on their deploy, to retailer architectural employees signed us attempt administrators service. was our make XX,XXX ago, an of our at which expansion they around and to who paused was both displacements Slack process this users a result challenges to went overwhelming on wall-to-wall frustrating their engagement from last Teams and Slack. complexity. quarter administrative of The an was in

The real elegantly Slack superior platform for Slack capabilities scales experience reasons engagement. result end-users were simple. and and administrators, both in user

We If year customer basis software, XXXX, you a want customers $XXX,XXX across use have When nineties. In the way to to people our happens, it. to for entire extremely through in on low that the high fiscal work work percentage the together churn with retention software base. people people see customer stick plus actually together. change was

customers Looking story. in spending $XXXX at a smaller year percentage was rate between The similar low customers for and $XXX,XXX to mid the tells a nineties.

and In side to new we of a there and Finally, the RingCentral Box, Chime, large such first partners video deals go-to-market integrations. Teams, integrations a to Amazon We Jabber, quarter plan on enterprise we Zoom. Okta number note fourth with alongside with also as launch half, see the on Cisco Microsoft Fun. the and closed ecosystem, unlock in the tighter and Atlassian, Zoom offerings value voice including more

our which succeed second the on, rate to Teams Slack. converting this in is at strategic Moving year priority increasing for

by of to XX,XXX added fiscal our large most 'XX, self-service SMBs. primarily us our strategy. impact SMB are we paid expect distribution That's We segment, number in have whom accelerate of customers, In in net growth for there software business. on customers opportunities new which of in millions addressed segment a are we and our but there think believe to the us enterprise company, are side addressable SMB the this of customers we is

We created. have of raw material tens new a and a week website visit are to work about prospects with. our of teams million thousands of lot Every

surveys our more get volume and of started do variety for Slack use still non-early making make is the users Slack Slack focus businesses are major non-technical, our of at more tenured who interest, quickly. indicate two more of of A already have adopters. accessible this thirds work we to to Given successful while wide teams

first improved user of overhaul, this launched since This plan very launch the fundamental first of Slack dramatically the testing. In half and a interface. results interface, the by we is year, user encouraged the early to we're we

helping users, the of you addressable Slack on We'll size high investment and experience of out the they'll it. update feel works and given progress generate here, what the investing new market, get understand We friction for ongoing are to heavily how continue returns of also the time. part in reducing we this over business them but into will

rate The across channels paid allow creation of channels last of which this the channels among created Our communication a seamless of Despite customers even boundaries during impressive. over week for communicate success, last using of was for ended to XX,XXX third up about shared over the last organizations. of shared the from most big priority we've our in number January The plus quarter the using from customers, channels we their a is of October. organizational up almost the with our hundred week biggest biggest seen holidays, the break shared our Slack. more is dollars quarter. thousand customers XX% year XX,XXX using share for customers And are week per XX% outside boundaries of

now expand to shared massively sharing. cases more collaboration the to or will an the release to one shared shared been partners. have the this shared year. These more vendors across one highlight here roadmap We'll channels the use three channels have for ahead. for and in unlocking complex ability will between more organizations The the limited ambitious to important for customers, multi-owned up companies shared channels, We roadmap be most channel, and quarters of channels

you channels, customer I correlation more Early This strong update shared we obviously have adoption network quarters to growth we data on how that the caveat the but in to is is how also expansion. business. and model more is exciting, a retention evolving impact. and how the disclose and will We'll it work want our do and can over coming indicates revenue business network how time. drive understand the I'll think to impact it evolving about between

easier. over comes company. of I Allen, having of to not to from tens hundreds some the getting to conclude the I of few optimism overall to hundreds want from last thousands from certain order feel thousands of Before each things the with employees to years. It handing about meet of of with risen to or challenges but that it customers, is begin renewed or simple state a comments go magnitude, the easy

true last years today are in the to leadership and new off. foundational over and technology this meantime, improvements taking and channel innovation been impossible accelerate shape. for a is we us a messaging in In extend based year were position category the lead. doing now The of pace investments few ago is in organizational we're have Our would pay structure. The infrastructure the work investments same of our starting and to our platform

differences. Slack Customers are the is have only their customers enterprise lead. quality option the others following for starting to realized appreciate and that most The are and scale demanding enterprise

Our strategy clear. is

transforming business to work. helping and customers We best define on platform for are their by efforts, building the we communication own are future of transformation the execute

all are both grow and becoming growth can innovation. to that looking bottom-line while time. of top the year We the a doing stronger I'm strong same business this forward and at another at

with that, Allen. And I'll to hand over it

Allen Shim

thanks us. everyone and again Stewart, you, Thank joining for to

will through fiscal to full before results in on fourth I the fiscal go first for quarter XXXX. guidance our quarter and moving detail year

quarter were year-over-year. fourth growing $XXX the in revenues XX% million Total

of $XXX the million negatively year-over-year. half quarter-over-quarter million were Remaining second fiscal grew approximately million and were calculated $X or in obligations of issued quarter. $XXX XX% Fiscal billings up XX% year-over-year. by year-over-year. $XXX and calculated credits XX% billings million performance were impacted XXXX XX% 'XX year Billings the QX in Our second growing

primarily be growth on As a last by to driven license on tend agreements. our reflect customers deals by to mentioned standardize enterprise and multi-year Slack. These call, growth often the in multi-year is decision RPO larger

from our came of last In in which is the U.S. year. outside of with XX% breakdown, line terms geographic QX total revenue

sales Paris, We continue Osaka. we Munich, our particularly In Sydney in offices organization. expansion, international to fiscal within opened in invest and XXXX, direct year

of surpassed XXX,XXX paid QX, end up the year-over-year. of As customers we XX%

growth contributed XXXX, customers year net which year approximately in acquisition benefited a paid XXXX. half half of Atlassian fiscal XXXX customer the the reminder, new second second fiscal from As in the of

customer enterprise paid remain We recurring the which in is our and with XX% with quarter expansion XXX on revenue, within than customers ended year-over-year. annual $XXX,XXX up large focused existing and growing customers greater base

up customers disclosure year with dollar we with in ago. than the This As will Stewart to greater milestone is recurring ended XX a million continue mentioned, year moving $X annual XX forward. customers be revenue. from a Million

year fourth represented customers than Paid in in annual with ago from of the the revenue XX% in recurring quarter. greater quarter $XXX,XXX revenue up XX%

For the full year, of year XX% up revenue XXXX. in customers represented $XXX,XXX plus XX% from fiscal

continue contribution to We plus $XXX,XXX forward. to customers increase moving expect from revenue

existing resulted was the to in and net with strong high our a customers an Our retention consistently XXX% quarter. which retention expand ability of at customer fourth rate, dollar have end

$XXX,XXX As years. nineties retention customer our consistent fairly the been high the plus Stewart mentioned, customers in has over for percent last it is three and

retention business. for the onetime years. has that to is for represent also economics our we customer between in that recurring Our helpful annual our think This and $X,XXX percent the of of is collectively low three is understanding and mid nineties XX% customers over last These one unit $XXX,XXX spend and been consistent customers a the disclosure but revenue.

$XX were gross or Moving was non-GAAP forward, ago. I'll be fiscal XX% of XXXX discussing XX% margin XX% measures. year revenue. a expenses QX versus R&D million of financial

Slack's as with into platform expect grow in to year fiscal in and revenue user scalability, R&D channels invest to features continue shared experience, and line 'XX. such new roughly We

Sales XX% $XX and million revenue. expenses of were marketing or

leverage to sales despite G&A of XX% sales or We expenses million continue revenue. and growth see year-over-year greater XX% year-over-year. $XX headcount in marketing, were than

to to moving revenue of decline continue expect a expenses percentage We as G&A forward.

recognition employer million, space. going $XX Our vesting the out accelerated million a negative of an Stock-based office $X stock-based capital quarter related due the margin based million year operating taxes quarter build compensation free the of related performance XX%. $XX Free expenditures the was after and flow of in the million to $XX in our operating first to in loss includes cash of RSUs, public. cash was flow representing reminder, compensation condition as payroll were is negative

to guidance. turn I'll Now

quarter, midpoint. at to first the XX% range growth For in million we of expect a $XXX revenue million of the $XXX representing

operating a in range non-GAAP $XX expect We million $XX of negative million. negative loss to

of to non-GAAP negative in a range $X.XX. expect negative EPS We $X.XX

QX modeling approximately outstanding million. are $XXX We shares of basic

million guidance $XXX to revenue fiscal million initiating For 'XX, XX% we of at midpoint. are growth $XXX or the

billion. billings million $XXX of $X to initiating We guidance are

of currently the billings. XX% expect to terms half In about represent billing first year seasonality, of full we

have become the particularly to As renewals. enterprise expect growth weighted our more we of our this business and discussed backend year, before, timing to the we of business due

billings billings guidance in year focus best example, our billings occurred renewed latter our QX full million expect the on $XX trailing the business. we be of fiscal fiscal of of investors about in that For in three underlying year in XXXX. of to quarters measures to XXXX encourage the XX-month and growth We of as

Additionally, from consideration as potential we are prospects. guess our taking and non-essential best and all from of work our have to into travel encouraged the of impact COVID-XX. We've home some employees paused customers have

the and customer see the risk enterprise in disruption, we remains to healthy, due currently uncertainty particularly While travel increased pipeline segment.

believe first is prudent Given versus slower QX the the we in it to in of aforementioned bake the risk, year. particularly half, rest somewhat the growth

growth was XXXX. from and Our than to fiscal sequential guidance QX faster billings be to expect it this color, reflects QX provide in additional we to

remotely customers manage are we front, to looking seeing help positive this. and begin are the On Slack many to to work

week a creative which significant in observed teams we out have start typically as Over the free. spike last

non-GAAP a range negative $XXX We're to loss million. $XXX negative operating guidance initiating of in million

negative full full year year We're as and of stock-based than We be compensation the taxes employer $X.XX. expect XX% in be revenue half. payroll second of revenue lower to initiating the in percentage $X.XX half range expense negative first to fiscal guidance in related than 'XX a a of and less EPS to

of full $XXX average shares We million. basic year are modeling weighted outstanding approximately

$XX even. full million flow We a year free break of in negative cash expect range to

related expect For expenditures office approximately million we of build 'XX fiscal $XX year outs. CapEx, to space capital

large points process, development. public product fiscal international we view continue channel platform continuing 'XX, company market marketing, substantial the making drive and plan year in as messaging of we investments business. fiscal XXXX the over what XXXX expansion the while drove very leverage sales, and in we close, to into to to In leverage in To based while invest opportunity a

with communications channels many to coordination. started investor and create for analysts we Finally, shared and funds relations,

analyst, you a future introduce let will shared Slack are know Please to an like the us or we to would with investor team. BXB you communication. I of the create and If channel IR

questions. to that, operator turn for I'll it With over the

Operator

[Operator Instructions] question with from Alex Markets. Zukin comes first Your RBC Capital

open. is line Your

Alex Zukin

as you Stewart, from and customers adoption with then respect from a much cycles home about, are rates? existing sales the I you've great? seeing be and their the way clarity result of, as to filter the how from of impact then, And would at usage their look by you've maybe they we applied work first, terms So customers Slack follow-up of if further COVID terms the and what conservatism patterns there of extending accelerate in any think used just guidance kind to situation. in there what's conversion Is a on any on any guess

Stewart Butterfield

speak guidance. I'll Allen to the Sure. let

massive the I over it's headline the and outpouring think there's the place. of on just interest a customer side really all

accelerating So hours little world who and I that. it customers their of before The hours look of and changing. hours mean, A plans. is XX XX there's ago, before this XX different lot looked different existing a that some are

So great webinars. of is in this We've inside of activated, There's it's to lot lot been running unfolding the people help. are a a a and of company real-time. lot a opportunity there's really energy

success activated. teams customer are Our

industries, countries the we such just the creation, the it's correlated large seeing dramatically. headlines. top and And team gotten terms of large in customer And above pretty our the huge inbound the strongly are that's there's customers. getting of in at enterprise being the proactive understanding very that of with number we an customers sites because all little kind new are all funnel, of a of number are of generalize. to a hard outreach to We've because so So they're response. bit many It's of

takes a of pretty that, to had a unlimited get filter, after take while and successful idea It to have That a before takes for what's a and We've up running product. that. while we people continuing. always had to causing we've free they'd good always be trials. while a So,

very to So forecast. difficult

I'm to tell We using the conservatism hand Allen been word and inside, going word a over more. using improvements, to but haven't little you the it to Shim

Allen Shim

Alex. was But Stewart self of plan, surge to and definitely in the always in serve going up some a we've usage. interest think in mentioned, a free had to out. terms that's in seeing you're so more primarily where seeing play We're I overall. show results, that's that as area take definitely Yes, But a lot going time to the

Enterprise you think right. trying where more bit are [indiscernible] was describing. called it I be is to definitely we as a Stewart

predict also complex We we're and large and and healthy the deals. close lot the of deals, a pretty have the lack in hard and but new people these customers is it's sales pipeline rates working coordination have some and close the will the deals of the we -- for quarter. with to The when travel capacity, challenges really the

trying seeing And the bit I reflect in that to so environment. think more macro we're we're just a uncertainty

Stewart Butterfield

give a last I to of closed. the from this in. just doors one in signing Hey kind I'm the there, of with deal email last the asset biggest managers, PO look, signed, the the QX, color just closed week, the last FYI, CTO, but not day I was one, we signs he got before last And an so world's bit one of

that important that is people into is hard still news impact of that the investment it's great, second visibility we and going us enough the good little to Slack customer, part mean have is is it I considered how are to forward. going which story won but that a So there of making

Operator

Bracelin Sandler. comes from with next question Piper Your Brent

Your line is open.

Brent Bracelin

question basic it's follow question, Stewart what's context I could. important guess of I Allen, happening the for if for given to I an up but here. think Stewart, one

it conferencing. is video intuitive outpouring the remote with workers? Intuitively You as this you in quick of you important? channel-based why just concept. Thanks. video for interest talked resonating value this get as then if Why is follow-up you for of us quite the about could. and one massive conferencing It's video workers. can I role But it not And remote Allen, messaging, remind about as work for think conferencing real

Steward Butterfield

It's I and question work great team it's isn't work for -- for because because remote sure. of great a it's foundation do Yes, for there Right. great a communication communication really a is it's everything together. is -- because think the tries that Slack to great

We a to than last prior person calls. -- being is it video on have lot spent Zoom that the weeks I So for happening in are us. meetings in by replaced days in see that. more I time of couple

is scientific acts workers of estimate. we really communication feel not basic knowledge on of But is spent This XX% and time coordination. like a

of the just the that that all road reviews, updating stand of slide decks status quarterly the -- daily -- So they business meetings, for the up the all sessions, reports, are people. mapping are meetings

it that If you investment a disproportionate time, any huge can impact. get leverage on in has

how So that's dynamic doing ultimately I that a hopefully in see what they achieving more operate, we increasingly pretty as here going agility helping what's to is think more be ourselves environment. transform from and organizations and alignment important

if that the -- the of GetLab, say have Slack you are kind companies though of WordPress, been look leading beginning companies that at Envision like customers. happy remote from all all would all some distributed I

story of required -- amount home. of a thing that's locations attention, of if you every I on from people U.S., thousands think hundreds individual in there But the -- massive is working population IBM the spectrum everyone under and distributed. not the XXX,XXX locations that that across at each look as the world, got coordination though, some a obviously same around

I for work, So real important work. for being it it's think see we because important ultimately

Allen Shim

of of organization separated relevant be element the itself. how or collaborate for people think as Slack just businesses they that, coordination organizational grade communicate, before but of the in now at separation you the especially because Slack, going enterprise have be how Stewart home that's that grade working to enterprise is super And about think valuable they at I And with follow-up, large to size terms that you're was still mentioning can Yes. whether physically to add companies, is regardless as for particularly Brent, is they relevant, home.

Brent Bracelin

at it. if just some we travel Got the you're be. quick follow-up XX about of below of look a then, what kind here it thought conservatism XX And guidance, might million, million around as it's of I kind Allen, restrictions, taking kind clearly

business, components that of You there obviously view that risk, mix. XX% then be have the well. that XX% enterprise could impacted it at the business the I two international one of as and It's

Have you of right baked way assumptions that risks kind both Is baked new both the could impacted areas into be two on that front? you've guide? those billings potentially of to think about the the

Allen Shim

Brent, definitely towards two those lean I more would the enterprise. Between

I the having the in obviously of some think being that's field service is model. in I is of international part of the something but self our big mean where, field, coverage our that reps a movements, of based that's larger the international, off part

So the I highlighting enterprise of enterprise I I towards a But think international on of area little us dynamics things. an the side you was lean remains But earlier. for investment would both. bit seeing are

Operator

Richard from with comes Canaccord. question next Your Davis

is line Your open.

Richard Davis

giant your we will that really that that of to sometimes like say, companies to monitor. kind sprawl of product. the threads hard probably happen there. going customers I sell this get it's we you mean more we some makes I The of sometimes, wish stuff and and get, so of one the other kind you, to only would to they is we've think talked list to chance get the thing customers, and sometimes existing to the things, fit But try channel that to have

let add whether that a to list engine that make I of this recommendation only is either you Thanks. docket, issue, it's or but that you that technical a business that's kind hear product know like that's and not because on can the you software so, guys on is there and other summary the rush process can we this something it. clients not thing thing that, after how help literally like to your know search just wish grow or And that a the Kudzu it initial things or as

Stewart Butterfield

really a It's question. Richard. Thanks interesting

onboarding yet most big the how energy companies great all a an communicator. of at in people about specifically, of how you and answer kind think also under are to because one to or effectively this that's I they're how trainings. communication start around Like above -- invest day a spending Slack but is companies, So a about not discipline and like use be And there's email customers their company, most time. not customers

support a So and issues change this have help there status email there's ingrained quo. can but customer against kind I around experience we is compete different who increasingly you management programs when of people with we've run, XX the and think education you years environment. and been pretty It's of can successful, is

Having said that, I it's don't mean to suggest user error.

and hard don't of in there's archived to user people Slack, an kind and we am me user Slack, essentially. more an think individually up that hard I is mentioned prepared product I and the of behaviors. task And miss doing of responses. a on other tend been we're left manage that up a with is effective highest coming get really at for keep with UI deleted extreme can have the kind soon, And inside list because to some happy and lot excited of a work do remarks guide overhaul really I we that. volume, enterprise customers pre-testing dramatic very I who the side to what to that from I've company email We've the done have a of little after over within and I is administrators it end quick that, of bit, at extreme personally, Whatever a to population. of the pretty that's difference. the Slack grounds about

another So we're that that's thing building.

messages likely most And have the of response which signal up unread essentially had base most applications reminders you the of three all of of kind surface to had or reactions in called of mentioned ones deliver messages, and bunch including for better to tracking these all is from threads incredible read. bookmarks be we and to area put that. yet, channel, easier that learning or messages contents the When can have looking it's the a the We towards a terms an have you're of machine just grounds feature we that highlights, who and haven't you I that on, there, degree read important increased the the appear kind the that of people, see and overlap, to you'll of UI that.

really inside expanding And for We who successful area them be come together those want of investments We deeply want enterprises. will want there. We Slack. big being those customers thrilled, to recommending to and of be us. committed to we're

Allen Shim

that's, lot mentioned, are That's hearing of the us as mean where think in I big to to. our to functionality we that functions of this features date from experience terms payoff the Stewart originally, investment allow is a a is year. accelerate service self that for the speaking of Yes, I bet I Making and going feedback. some and really the you're meet think to going made investments same

Stewart Butterfield

of in I I ones will year at the ultimately there the trade-off got of add And to four information have And And couple and or search between or big a a quality. that quick literally more orders that keep three ago that's scale are improved in a the just large from across to people side end, think exponentially a that's the I even there of has up. going on going organizations is, other lot. the access company. two magnitude, to investments

someone to but as the the agile. interacts great become there's And for organizations roadmap have important innovation And degree increasingly manage to a this shift I'm be which more that's transparency. about, year how I going be with of build think product more we'll sure in people of broadly, whole really terms a help talking we better try we'll tools to fundamental to So organization, that.

Operator

Your Fargo. with Michael Wells next Turrin question comes from

Your open. line is

Michael Turrin

I to to the comments. Hey want afternoon. enterprise Good there. self some Thanks. of back go serve just

just I'd to back the I that more think you're be of self think balance in made enterprise, is two? mix hear strike of go allow continuous these seeing curious two? right the more conversions do on how and and it's kind of forth good balance. the right here to the some to I between growth it or enterprise two. between serve grid And to the between think back sort about you a the of strike just you've hard in how investments you the continuation you but Is

Stewart Butterfield

than one I we've look of that that have, here's and technology mature made last population, to in over we more year. year in brought experience terms we company mean, in in we at a yes, ago. the And the terms the leaders of investments We're the terms of bigger the it. way in of were a terms

invest we there lot a last results. build had So of frankly, say product we a kind to even of that would in attention been a enterprise, two the up enterprise. I repeating And the see set where for we to ended that of disciplines how copy and my And whole for us on brand this think we being no like and categories this that up has the new executives, was call, sold phrase blueprint lot years. a into last I

from take of our This if decades opened the to back arrange meta-bolted having self of side stock, businesses. in just top current them or definitely even scale, market the world businesses some to my on we're the is serve enabled because rate, more is look, from U.S. million get more achieved individually having attention have sales pieces the and more and you those five it's going least enormous an more that around to accelerate. more done of quartile there's of kind offices force, and employees, and beginning X.X a and Having at most to the just

So the the is, place. of going And that we're a to love what around experience product comprehension the isn't, lot know capable on we're in side I initial what that user you. acceleration to attention of. of I that over would for it's is just what self-serve all the that -- investing see And do

in but marketing to So people in our principally also help efforts the product, understand.

Allen Shim

of you TAM probably product I Obviously, and in terms fit. Stewart as would Yes, Michael. we a mission that this huge category market think summarize are in it leading.

with a benefit that success lack for happen to to we we on, you're over product multiyear see go-to-market had going enterprise period, So build as year fit multi to the as a well. kind product, build make and had we that market a there of to we motion early saw

so market side payoff perspective, address On us the a think longer on important recognized multi-year self-serve going product to the that, both side, adopters and for make multi-year fit dealing we're to product we that it's from investment I the similarly no that the early for with and front. on and market

Michael Turrin

Thanks.

and that you geographically ability Just tick like given platform up scale organization become up maybe gives things tick added enterprise and likely in, in given with like can the already well. share, grid distributed flex any as some you've as more uncertainty the that of features, to with own to one is more. in What we're of the your potential And up news seems invested but demand? some you're the good observations seeing organizations usage, confidence platform's this the in

Stewart Butterfield

up And are beyond for a more that's at place. those conservative where the into so processes. over goes Then compliance larger organizations, stress that Well, selling rigorous are with important lot testing end customers, all we're we our today. doing way as of largest more exceeding we those increasingly organizations,

in now instances of during millions millions with a of uptime channels automated really, I I of to scaling QX. had hundreds the And in the messages year in was of three of handle is over organizations tens nines to a largely four of point day. thousands we that would think big like, the we where users last But and particularly investment years. it sending say get despite over really last great

millions a and and of the connected definitely beginning. which millions meeting software leader So, had in competitors users, our we've from

DAU ratio of talk MAU. people the Like to about

intense. air daily what we're think is to the to there. be the staying within handle going active users is active ours And able users well easily I usage we're of so millisecond But some it's to There down. us, it's because For increase ahead there. shard was there against because cross-company channels a The no because an interesting what's for it to company the us stores communication. perspective data to kind relatively of, from has be easy to one the used a individual, called been of technical introduction shared

investment Part users replicable groundwork I other a around about Slack to be And But to could going the over reasons of I easily last and the that coming of be for in the the the lay from millions of year was millions potentially big any the engineering I channels, shared by we're mean, the excited in anyone. of enterprise not think it's that think world. that's, so context. especially one is that message

of of to customers I as hundred. a that to starts but return, close that it's be us shared mentioned not long in. largest kick that And think I network to effect XX% are for our our to channels and increasing kind get going using to already start

we'll think that supply of the chain. see and I and network customers proliferate suppliers, of the global vendors through kind

Allen Shim

use to I of Michael, to remember and important built architecture, purpose-built a think it's we Well, sort handle are really challenges were so this we cases.

the And we that they so bring and home or logging agnostic are home terms you're Great of to we're in from work. whether enterprise. from in or to user is are logging load whether experience at work, in that going at

Operator

Your question Power next Will comes Baird. from with

line open. is Your

Will Power

Yes.

the what virus just in the sir. of I just characteristics kind lot terms in to that across geography, those impacts, region, you're big I be a of Is you're same important Europe know started and know the you look that in of probably to kind obviously move market usage, interesting that something and an in example, the back of you I then there higher of usage free as and would kind circle to seeing seeing are you hear geographies? adoption, wonder saw at So as across that to Japan comments seeing are it on category. U.S.,

Stewart Butterfield

very Yes. strong and object at Certainly between there's funnel. the a the of correlation the top

mean that's successful. and created. Japan in after indication in between And really is -- kind guess. -- the the definitely us correlation spread of Korea a and that we coming Italy them where that top seeing countries headlines followed the the right a that teams now we're getting us, inviting of it pronounced there's of to in being and getting for but funnel Strong So it I then, process interest in that elevated, from. what gives usage. way that And new I South seeing an are still you're has people the point of

we of bit little how spike. a this the opinion maybe there's much open of question have interest that which is think about, I an short-term is

that to have of had then going There's shifts a who and signals I resistant lot organizations little of are ourselves it's up little of bit People elevated short this a would a much been over I to I workforces a over open how be and include lingering are kind going term previously going to And on. really all bit because going those that. really think period the behavior probably distributed think shift? time both place of longer happened a are radical to some that effects in in

questions. communicate and mind to mind But pandemic probably and should from investing to a never aligned going never the more and more home stay stay several to second. and organization importantly work their back be Every in for and coordinated, ability more agile become and

purely going going be organizations a industries, Just this maintaining and economics, have this that are to an different disruptions was supply I the hits are uneven that time think massively was shock a a disruptive to even if to chains and agility. financial surely the global to harder

be going more in So important. to even communications the is investment

Allen Shim

website ad say Yes. very, top an just let's see Will, only you'd where, different or than of is this it's tick creative up campaign traffic teams. very of about funnel, kind

starting real that's are inviting always a drive and effected in see sending we people. hallmark creating real Slack a engagement. We to People regions of that lift of messages, these been more are usage channels,

to be has or it's kind investing more so team -- successful. fit in-person And as So, earlier, well. our that in broadly product market and can and both the through mentioned those online people resources of whether really the product do that, mobilized we've we're resources also the as

Operator

Blair. Your Bhavan Suri next William question with from comes

is line open. Your

Arjun Bhatia

you competitions. questions. Stewart, Bhatia for of you're actually mentioned wins more on it's guys, our Arjun kind head-to-head that more seeing Thanks for Hey teams taking Bhavan. against

formal that, plans? a to ask want roadmap can just seeing What's talk say, to in us. platform and this on RFPs an on customers related of that the I main of both of What to are kind then evaluating maturation kind drivers is there? unpack little maybe of wanted about teams CIO And Just maybe bit? Slack you seeing you for messaging. for you little Are messaging aha are a maybe CIO the the the choice and market Are in general? investment that product, invest where they a my Slack you moment more to bit

Stewart Butterfield

Yes.

one And and product question. sell go direction. in Slack choice great Teams no So, got we've we're therefore the think superior going ever and and is -- between is a what I that said, Teams boy, to

adequate of on the feel give our it the customers It's out. and interests if already employees not that of We support more is be a it see and is it's from think We platform consideration distributed. going should sense and users for employees a going be this to not It's maybe or are to outside mistaken should belief valuable. to already I that the kind as technical machines. or And free. important it's technical is getting roles. more important

based, it's you've years, evaluations it's It's feature not of over and essentially So seen these happy last the checklists. Slack. we're RFP great. super couple think if not We with

over the place see it We're that's to alternative the if and have work. more of installed evaluate can already free employees. thousands all going We tens

end I up servicing as users the And process. the in very Both that highlight call, frustrated very, ended with kind of have for the and responsible a three the think themselves. people think people the user much we're advantage enormous widen but experience, aiming it's we and where so I mean, gap. areas an there's a not it's have fundamentally that different to administering I

The first scalability. is just

this user a limit on but XXX importantly channels. before, X,XXX TAM probably limit, So more of

of to delete history a you the XXXst want whole had a you a add channel. If hard

a can't as platform. just You use based channel it

that the use it can't the same in use just way people Teams, that in Slack. -- same You

no no is hundreds grid. thousands There to the support is of support massive channels for or people. There millions equivalent no is for archives. of of There

x, more set area, now, third-party of richer number five framework of available active Second don't we're what but developers, and richer that making six platform just to is I the or much one order from but capabilities much a, an surface also at magnitude, interest right apps, developers. more of a we're developers, know

side And coming. the I have, what mean several the for anyone And I shared channels. replicate multi-org possible then, there is early we I just, one the I very mentioned roadmap. that are on in we've done we're it's technical do next in the third a to years. not channels believe

don't and had harder we're the already HR Y, switching want be them. how know it's Like from an invisible CRM fish already people not, we to of already or And those have be you CRM largely that if ocean. So you I we with and quo a with see from component already behaviors swimming I why have to another ERP can differences say, set realize right? already switch to mine that one. would you for X, because or would want has I and feature can status We're you we tell and if people that, the have are a evaluating you in it this IS, that all we're category, a the of valuable oh, email Z, can

kinds For products bit more are from same the we're of this, customers are a lot told little a these free. distant that and of one's who

part the was. second going the it And I question check of forgotten out. we're what So to completely

Allen Shim

change add, enables a that tell in not required think modern ROI, customers about digital what just want terms is really platform They're and have behavior you really about about messaging. organizational to transformation. work. that They in terms of in thinking they're that me chat is of our agility for and when measure just Let of thinking Slack us, or a to type

core part as think what's so an engagement. a I And

they a a side. comparing by different side completely tools they just when XXX saw customer, we mentioned the fortune So, were engagement

Whereas appreciate right? when you I topper Teams that of really browser. for kind is is And kind more crux engagement generating degree, some think is you what the a start you a transformation. of like the to for digital almost of when think I that -- And glorified for, on just see get really ROI, customers SharePoint that, Slack real so pay

Stewart Butterfield

software allow together understand the a multiplier of there. is all happening. up can the happened does like, is lightweight even capabilities easier. is should the mean just It That's just product And relying like systems end more these Slack pulls Salesforce time, of value that versus where as where a Troupes, the updates the of that But things not and communication that workflows platform people I comparison. our integration user's them. have the bullets said, integrations, I And and a using the just awhile have. you one something direct the clear, has the much no is same on valuable those make real fabric different There since just it people made to had installed it does you're Slack at lives Salesforce customers and if of of be going integration be to-date inbuilt takes before. if I on is or to to how you're the be And your because to invaluable. it be

the ultimately actually But have the to use the you change underscore software. one an engagement. continue And going use I get last to we thing have want to the software just where experience if and point, user people we're people to to way invest in that's ensure advantage Allen's enormous to that we to work, think

Allen Shim

yet is stage in and marketplace. at so of of not Yes. everything this early lot is it's the to kind well early defined a this investing point. This your the second very I it still days category mean, category, is still or educate RFP we're energy very

Arjun Bhatia

maybe follow-up a talked I your impact is going travel that about have to uncertainty monitoring you you. business coronavirus lot. your change still of Allen, you impact in of still here? terms on or a know really the That's restrictions, for coronavirus but mentioned any and the we've that Thanks. quick investment kind I heightened investment the planned if can know might as plans? just And international it I helpful. on of Are

Allen Shim

Yes.

for the to out think growth that look our set there. me say I speak Probably model. to would generally guidelines that have specifically, been following we're the hardest at I phase

some pretty growth We the are in phase. conditions I'll with different now. macro still be

we're being but also where I just us intentional to guide highlight, cash thoughtful invest. and to end. high and points the disciplined getting break are want to here, flow at still growth So to very prioritizing even And the we

to said the with do macro real environment, breakeven. past, steady more we to make even we're growth, that's And the prudent midst to also progress but what have going in to going casual invest So, of so. even in we're this consistent in think

Operator

Keith Your Stanley. Weiss next question comes Morgan with from

Your open. line is

A - Baer Josh

that year down versus in is the the This on leverage on and little sales about that of Keith. Thanks. the Part Josh seeing a of by timing Questions million previously spend. XX talked of Baer looking we've bit ad year. the we're last for this some And filings, spend advertising marketing. it, at is

to So and marketing seeing was up quarter, like that advertising the pushed any that the would just expect of how -- spend occurred you QX and wondering out given here? in like kind the we're pick in opportunity

Allen Shim

Josh. Yes,

started largely market out I that to the back year, and full of for half, think were we first of just pick step taking QX QX. back, a end the into up our we in

half to continue run And ways programs, of both of plan well first overall we're is year as the brand going invest the on the well. to to side enterprise of So ad the then, as as marketing in programs continue the through the other support to throughout year. remainder things

high somewhere look just is steady state the terms of back forties ranges percentage our would at the I for us and right in investment. targets, marketing growth in So phase sales

Operator

with Heather Sachs. comes Goldman Bellini next from question Your

Your line open. is

Heather Bellini

A wanted some you the mine been timeframe, you. a in on just Thank guys answered, to the of Great. Back conversion of had bunch hit having things. in about middle the but funnel. September I funnel issues talked couple of

obviously is more you've share of, could then you've you some ago. -- and sounds if did, pivots. sound you you've made what Microsoft months four versus this us of, wondering kind seen since you or front Just three with And than maybe footed what from kind it learned quarter like

maybe just but is you So, do just what up, wondering, I mean, that that back? think I'm driving it's mindshare picking me

their that or gotten four like guys it was terms I'm was kind driven your about talking there, three of of less marketing it an of lot back just months wasn't having where driven, Thank to for of that what's how were in I -- -- seems seems seemed an like be comments that now time. a issue better had though Microsoft but you than Because it wondering period of impact. changed kind even you. short ago, remember, And product that's maybe

Stewart Butterfield

Thanks Heather.

same only of question, last mean, customers they're it's consideration the the thing to I time. the saying just So are in so passage it's honestly, it's same by buy minds thing. a the can not just, when you much these of

So customers will [indiscernible] Teams, and oh, whatever teams discover, try they'll I for you use, it can't that used use for.

it their I in and massive there's Now, a on and point. just some get the the And after increased that got side move awareness, expires they on. consideration awareness. They got investment

since less point, enterprise. at think slowing we've an this this not hope We're earnings. So with And down have has more enterprise been had competing the them. we I been business, or demonstrated, I third we've

to going accelerating the personally is back side. my self-serve And attention

question, think bunch the stuff. to I of So your going what back learned first a part we've of

a workspace, replace it's it's because of already with overcome really what's choose detailed you're to rip determines that just you've questions, category got of coming it's have familiar not use process comprehension name they're do. of going a do people the I this? the degree otherwise going successful little because I be. a have one it's your of thing, how but the if some I form, that something out hear, to a again like that to that really workspace, the a to put That's challenge to not the too fill we some And how Because could into and

process. we've We Welcome just to customers. think team on landing in XXX% that Place. I rolled a as pages, called out made a test discover So new in for were come while, changes we the the of changes creation We a made feature we've to

a So on set finish a up. lot guidance to give creating you it you we when team, more do new how

is to users mentioned positive overhaul And is clearer, to I more me Slack UI and to make them more very sense simpler, going of the become lot very, the strong better time the at new the give most grounds features of be experience much on help going a whole when going because a it's unveil kind people, which kind they a lot and already up impact have for users. a to for able successful

Allen Shim

self-serve more of projects, investments on to side Heather, we've gone the not things. some rapidly and infrastructure We're we've made innovate through. able in the larger

they're the then, to the remains on out in seeing fact for going I very the that and that So I And over factor been course the just think hasn't enterprise a it retention highlight turn you're really our play of would just year. us. point, strong

about retention churn low midst dynamic and very in high a think competitive consider more you to able when there, the of the So, maintain we've the been competitive very environment.

Operator

from Lenschow with comes question Your Barclays. Raimo next

Your open. line is

Unidentified Analyst

ended at year XXX% guidance Hi. XX% This talking and for again, Raimo is Thanks expansion just to the at to wanted the [indiscernible] rate. you me billings I for fitting midpoint Lenschow. in. go the back

your got to? to are rates than or number, wondering it's little landing If basically a just existing you're if I'm how you're down expansion you that base. what if So bit used client higher just coming

Allen Shim

I both those of it's dynamics. think

As has of a business saying enterprise the growing base revenue in grown, usually been we've much over you're the have past, off bigger of that there.

customers and we're investing So new. as in And accelerating our new down, has retention the in also enterprise, well expectations. that that's so and making sure in investment rate our natural line we're with really trend on coming been our but

any very the markets even overanalyze current seeing a environment. But having macro it's of predict given today. in conditions these uncertain hard we're the that, said very expectations I to in all to set, wouldn't try things

macro balancing and with things a this prudent chancing just we're operation of on approach the can very side we so volatility. And what control

Unidentified Analyst

down I'm like came Great. And of on if Total bookings, sequentially out a wondering looks bit. a there's terms so you duration quarter-to-quarter? bookings, it anything in call

Allen Shim

in nothing No, particular.

-- we and continue grow enterprise we our just within to think I customer base. invest in

specific So I there's don't now. think anything right call to

Operator

call the our Butterfield for turn session. closing over question-and-answer Stewart I'll the concludes to remarks. time for back This

Stewart Butterfield

you questions. you the Thank right. so for All thank much and everyone

it's I of that things couple mixed the came too of I seen and reiterate impact over soon up we've call. course around if Probably of of coronavirus can and questions a a the the little the think think the I headlines where the bulk to tell.

self-serve. defense we established prudent kind state we're what feel guys that it the to customers. comes like attention approach kind are when we're back The -- to contractors We of trying about And you hands start But to customers, a I of of think of at. scale the and in the a think in accelerating guidance. on our enterprise really you the just hope wins, about confident deck I are VA and where take all to when turning to response seeing enterprise from I

of know I that customers. existing you are And many

right are now. know your there's Some Slack help of any way be can organizations of call us. you, we I If evaluating

I think phone you have numbers. all Jesse's cell

So him just much. customer free anytime Thank organization. so in night to to you text the our or connect success people feel you right day and will he

Operator

today's concludes call. conference This

disconnect. now may You

Slack (WORK) 12 Mar 202020 Q4 Earnings call transcript