Slack Technologies Inc (NYSE: WORK) stock fell over 12.5% in the pre-market session of September 5th, 2019 (Source: Google finance) due to mixed results for the second quarter of FY 20. The operating loss in the quarter was $56 million, representing an operating margin of negative 38%. Free cash flow was negative $8 million. Free cash flow includes $8 million of capital expenditures related to the build-out of office space.
Slack debuted on the New York Stock Exchange in June through a direct listing, following the path taken by Spotify last year. WORK has exceeded 100,000 paid customers in the quarter, and now has 720 customers with more than $100,000 of annual recurring revenue, a figure, which was up 75% since last year. Q2 calculated billings were $174.8 million, growing 52% year-over-year. Trailing 12-month calculated billings were $625 million, increased 65% year-over-year. Further, free cash flow was negatively impacted by the $28 million of direct listing expenses as well as $90 million of direct listing-related employer cash taxes related to RSU vesting. Free cash flow was positively impacted by $21 million of payroll taxes that were collected in Q2 but will be paid in Q3.
WORK in the second quarter of FY 20 has reported the adjusted loss per share of 14 cents, missing the analysts’ estimates for the adjusted earnings per share of 18 cents, according to Refinitiv. The company had reported the adjusted revenue growth of 58 percent to $145 million in the second quarter of FY 20, beating the analysts’ estimates for revenue of $140.7 billion. In terms of geographic breakdown, 37% of the total revenue came from outside the U.S, which is up from 36% in Q2 of fiscal 2019.
For the fiscal third quarter, Slack is calling for a loss of 8 cents to 9 cents per share, excluding certain items, and $154 million to $156 million in revenue, reflecting 46% to 48% revenue growth. Analysts polled by Refinitiv had expected Slack to forecast a fiscal third-quarter loss of 7 cents per share, excluding certain items, on $153.2 million in revenue.
Slack is looking for a loss of 40 cents to 42 cents for the full year, excluding certain items, and $603 million to $610 million in revenue, or 51% to 52% growth. Analysts were expecting a full-year loss of 40 cents for the full year, excluding certain items, on revenue of $601 million