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Slack misses expectations on quarterly billings, stock sinks more than 15%

Workplace collaboration app Slack posted fiscal second-quarter earnings after the bell on Tuesday, and although it reported better-than-expected revenue, the company missed on quarterly billings, posting $218.2 million vs. the expected $232.9 million. Myles Udland breaks down the company's report on The Final Round.

Video Transcript

SEANA SMITH: Welcome back to "The Final Round." Slack earnings hitting the wires right now. Myles has more on this for us. Myles?

MYLES UDLAND: Yeah, Seana, stock under a lot of pressure here as the company's billings for the second quarter widely missed estimates. Elsewhere, things look pretty solid, but let's get through the numbers here for Slack quickly. The company reporting revenues for the second quarter, 215.9 million. That's better than the 209.2 million that was expected. The company reporting an adjusted per share break-even quarter. TheStreet was looking for a loss per share of $0.3 on an adjusted basis.

But that billings number, again, the real sore spot for Slack here. 232.9 million was expected. The company reporting billings of $218.2 million during the quarter. That's up 25% from last year. And considering where the stock has gone over this pandemic period, given the valuation, the multiple being applied to Slack right now, to see billings growing 25% clearly not going to cut it here for investors.

They did have more paid customers than expected, 130,000 as of the end of the second quarter. 127,950 is the number TheStreet was looking for. They have 985 customers with over 100 grand per year recurring revenue, 87 customers with over a million dollars per year in recurring revenue. Looking out to the third quarter, they're expecting an adjusted loss per share of $0.05 to $0.06. TheStreet's looking for $0.05.

For the full year, Slack expects it will lose $0.13 to $0.14 per share on an adjusted basis, slightly better than the $0.16 per share that TheStreet is looking for. And the company thinks it will be break-even on a free cash flow basis by the end of fiscal year 2021. But again, the stock here under quite a bit of pressure after hours as that billings number, calculated billings, coming in well below expectations. Shares here off about 15%, Seana.

SEANA SMITH: Yeah, and the 25% year-over-year growth not living up to what TheStreet was looking for. All right, that's certainly a stock to keep in mind as we look ahead to tomorrow's opening bell.