IPOs + SPACs of Interest

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>>> The Slack IPO Is Coming. Here’s What You Need to Know


By David Marino-Nachison

April 26, 2019


https://www.barrons.com/articles/slack-ipo-direct-listing-what-you-need-to-know-51556297281?siteid=yhoof2&yptr=yahoo


Slack filed for a direct public listing Friday, which would make the maker of workplace productivity software publicly traded without raising money for it to use.

Slack’s intent to undergo a “direct listing,” echoes a decision made by streaming-music company Spotify Technology (SPOT). The shares will be traded on the New York Stock Exchange with the symbol “SK.”

When it happens, it will add to the list of high-profile public offerings this year. Lyft (LYFT) and Pinterest (PINS) are already trading and deals by Uber Technologies and Beyond Meat are on the way.

It’s unclear what Slack’s market value might be as a public company. Last year, it announced a round of financing valuing it at $7.1 billion. Its filing, meanwhile, said that its class B shares traded hands in private transactions at prices between $8.37 and $23.41 in the fiscal year ended Jan. 31.

The company had about $181 million in cash and equivalents on hand at the end of January, up from $120 million a year before. Here are some more key facts.

• Slack reported revenue of around $400 million in the fiscal year ended Jan. 31, up more than 80% from $220 million the prior year. Gross profits, which came in at $349 million, rose at roughly the same rate.

• But operating losses increased from $144 million in 2018 to $154 million last year, as operating expenses exceeded $500 million. “We expect to continue to incur net losses for the foreseeable future,” the company said in its filing.

As Slack has grown, it has increased its workforce to about 1,500 employees at the end of January from less than half that two years earlier.

• The company reported more than 10 million daily active users last year, with more than 600,000 organizations having at least three users of its software. It had 88,000 paying customers, and 575 of those each represent more than $100,000 in annual recurring revenue.

The 575 customers accounted for about 40% of revenue last year. Adding more, larger, organizations is a key component of Slack’s sales strategy.

• Without details about pricing and the likely timing of the listing, it’s hard to made a well-informed decision about whether you’d like to buy the shares when they begin trading. Generally, it pays to be cautious around high-profile IPOs, as Barron’s explained this month.

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