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Slack CFO: Our path to profitability will be a 'multiyear period'

Melody Hahm
Senior Writer

Slack (WORK) went public Thursday on the New York Stock Exchange, with shares of the workplace messaging platform opening at $38.50 per share.

The NYSE initially set the reference price at $26 per share on Wednesday. By 12:19 p.m. EST, shares were trading at $41.68.

While Slack has yet to report a profit, it has $841 million in cash or cash equivalents in its most recent fiscal year. That would be enough to keep the company afloat for another 8.6 years, based on its current pace of free cash outflow. Slack CFO Allen Shim told Yahoo Finance in a phone interview that the company won’t see a profit for several years.

“Our number one focus is investing in growth. But 1b is about going toward cash flow profitability. We have high gross margins, strong customer retention dynamics, and are investing aggressively into the company. We’ll update our progress as we issue next year’s guidance, but it will be a multiyear period.”

Slack Technologies Inc. CEO Stewart Butterfield (R) stands with CFO Allen Shim on the trading floor during the company's IPO at the New York Stock Exchange (NYSE) in New York, U.S. June 20, 2019. REUTERS/Brendan McDermid

While investors are eagerly monitoring the stock’s fluctuations throughout Thursday’s trading session, Shim said he doesn’t “tie his success metric to a price point. Internally, we care about having a healthy market where buyers and sellers can freely trade Slack and it’s effectively determined by market forces.”

Slack eschewed a traditional IPO process and instead went public via direct listing for a simple reason: because it didn’t need to raise additional money.

“We didn’t need new capital. We benefited from healthy private markets. We have a very strong balance sheet and we didn’t need to dilute existing shares,” Shim said.

Slack raised $1.36 billion across 13 venture capital rounds, most recently a $427 million round in August 2018 that valued the company at $7.1 billion. The largest investors include Accel, Andreessen Horowitz, Social Capital, and SoftBank’s Vision Fund.

Credit: David Foster/Yahoo Finance

By all measures, Spotify’s (SPOT) direct listing last year went more smoothly than expected. Shim tapped into the C-suite at the music streaming giant to prepare for the IPO.

“We took advantage of Spotify [coming before us]. They were generous with their time. I spoke with the CFO Barry McCarthy — after doing our due diligence and homework, and after speaking with them, it was clear this was the best option.”

Regarding what he would consider success at the end of the first day, Shim, who has been with the company for over five years, said, “We have talked about being a public company, being ready to be one for years. It’s a long-term vision — to have that discipline and rigor.”

Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm. She hostsBreakouts, a monthly interview series for Yahoo Finance featuring up-close and intimate conversations with today’s most innovative business leaders.

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