Slack Technologies, Inc. (NYSE:WORK) Q1 2020 Earnings Conference Call Highlights Summary
CEO Stewart Butterfield
Q1 was a phenomenal quarter, by most metrics, one of the strongest ever for Slack. Revenue for the quarter was $202 million, up 50% year-on-year. We added a record of over 90,000 net new free and paid organizations using Slack in the quarter, bringing the total to more than 750,000.
We also added record 12,000 net new paid customers in the quarter, bringing the total to more than 122,000. And finally, we continue to show leverage. Non-GAAP operating margin improved 17 percentage points year-over-year.
Q1 was historic in its impact, both for Slack and for the world. We believe very strongly the impacts that the COVID crisis will have on the way we work are of generational magnitude and are just beginning to be felt. It’s too soon to understand the impact with any precision, but it reinforces our conviction around this business and our long-term trajectory.
Today I want to cover three topics. First, I’ll start the call by providing more detail on the work-from-home surge and our plans to lead our customers through what we see as a permanent shift to a more fluid work environment.
Second, I’ll give an update on our three priorities for the rest of fiscal 2021, maintaining leadership in the enterprise , accelerating growth in small and medium business and self-serve, and growing the usage of Slack for communication across organizational boundaries. I’ll finish by walking through how we plan to balance investing for growth versus profitability in what remains a very volatile macroeconomic backdrop.
Beginning with the work from home surge. Q1 was simultaneously intense, productive, overwhelming and exciting for Slack. We went fully remote in early March and much of the working world followed over the next month. The all at once shift to work from home concentrated multiple quarters of Slack adoption into a few weeks. Tens of thousands of new organizations and millions of new users adopted Slack, most of them trying Slack for the first time on our free plan. Existing users also began to rely on Slack more.
For our paid users, average time spent actively using Slack each day increased from just under 90 minutes at the end of Q4 to over 120 minutes per day at the end of Q1. Time spent connected to Slack also increased from about nine hours to well over 10 hours per day. We saw similar increases across all related metrics.
Slack is not specifically a tool for remote work. As a channel-based messaging platform, we improved communication to help organizations create alignment, become more productive, and ultimately become more agile, wherever their employees are. And unlike the many video conferencing solutions in the market such as Zoom, RingCentral, Google Meet, Microsoft Teams, Amazon Chime and BlueJeans, we aren’t a digital substitute for physical in person meetings. Instead, Slack acts more like a digital office, a persistent place for users to connect and find information.
Slack is a multiplier on the productivity of users and the value of their software wherever work is happening. During this crisis, the work being done on Slack is diverse, and in many cases, inspiring. A great example of organizational agility is Frontline Foods, a grassroots organization that provides food from local restaurants to frontline workers and impacted communities. They have a network of hundreds of volunteers who are organizing and communicating on Slack. They’ve delivered over 450,000 meals and partnered with more than 1,100 restaurants across dozens of cities in the United States.
One of their founding organizers, Frank Barbieri, said what they’ve accomplished and the speed with which they’ve done it would not have been possible without Slack. He also said it’s impossible to imagine a fully distributed team who had never worked together before and never even been a person tackling critical real-time communications on any other platform.
As I talk to other CEOs, talk to our customers, review survey data and just follow the news, it’s clear to me that remote work will be a much bigger part of the working world moving forward. Business leaders everywhere are beginning to realize the potential, financial, talent and employee well-being benefits of offering a more fluid work environment, lending offices and remote work.
They are also beginning to realize that in order to make this transition, they need the right enabling technology. E-mail and legacy collaboration tools won’t cut it. This reality will continue to catalyze adoption for the channel-based messaging platform category we created and for which we are the only enterprise-grade offering.
Turning to the Enterprise business, the first of our fiscal 2021 priorities. Q1 was another exceptional quarter.