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What to Expect from Slack (WORK) Stock Heading into Q4 Earnings?

Slack Technologies WORK stock has struggled since going public in June 2019, down roughly 35%. The last few weeks, however, have been far better, with shares of the work-based communications firm up 25% heading into the release of its Q4 fiscal 2020 financial results on Thursday, March 12.

Slack is a cloud-based work communications platform that aims to bolster productivity in the digital and work-remotely age. The firm allows users to send messages, images, documents, and more to groups or individuals. WORK’s tagline is “one platform for your team and your work” and it competes against Microsoft MSFT, Google GOOGL, and other giants in the digital communication space.

Despite its recent climb, Wall Street is still worried that Slack won’t be able to grow long-term and grab paid enterprise clients. But they have attracted the likes of Intuit INTU, Lyft LYFT, Shopify SHOP, and others.

Plus, Slack and Microsoft are now working together to integrate Office 365 apps into Slack’s offerings, and its revenue climbed last quarter. “Revenue growth was 60% year-over-year, driven by strong growth upmarket,” CFO Allen Shim said in prepares remarks.

“We ended the quarter with 821 Paid Customers greater than $100,000 in annual recurring revenue, which is up 67% year-over-year. We also exceeded 50 Paid Customers with greater than $1 million in annual recurring revenue for the first time, an indication that large enterprises are increasingly standardizing on Slack as their primary collaboration platform.”

Looking ahead, our Zacks estimates call for Slack’s Q4 revenue to climb roughly 42% to $173.06 million and for it to post an adjusted loss of -$0.06 a share. Slack is currently a Zacks Rank #3 (Hold) and is part of an industry that rests in the top 30% of our more than 250 Zacks industries.

Investors should pay close attention to Slack’s guidance when it releases its Q4 results after the closing bell on Thursday. Slack stock closed regular trading Tuesday at $25.02 a share, which is still well off its all-time highs of over $40 a share.

And don’t forget to see what management says about the coronavirus and if it has spurred faster adoption amid the work-from-home push.

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Microsoft Corporation (MSFT): Free Stock Analysis Report
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