Slack Will Become a Public Company on June 20th

Widely-known as one of the most popular workplace-communication platforms, Slack is considered to be a valuable company by those who constantly feel exasperated with their work email. Valued at more than $7 billion, the company will go public on June 20th through a direct listing process.

Key information about Slack

Slack Technologies Inc., is a provider of cloud-based tools and services that facilitate workplace collaboration. In the fiscal year ending January 31st, 2019, the company had revenue of $400.6 million, up by 82% from the prior fiscal year. Despite the increase in revenue, Slack lost $140.7 million in its last fiscal year, meaning it will be another unprofitable tech company, like Uber and Spotify, that decides to go public, as it had been reported by Clicktrades news and analysis.

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In terms of usage statistics, the numbers are impressive for the company founded in 2009. Daily active users exceed 10 million, while collective weekly usage exceeds 1 billion messages and 50 million hours. The services are being used by over 600,000 organizations with three or more employees, out of which only 88,000 are paid customers.

Slack’s Direct Listing

Unlike most of the other companies that go public, Slack will use a Direct Public Offering (DPO), an operation in which a company offers its securities directly to the public to raise capital. The advantage of a DPO is that it eliminates the middleman – investment banks, brokers, dealers, underwriters, etc.- typical in a traditional Initial Public Offering.

By getting the middleman out of the process, the company will substantially lower the cost of capital of a DPO. Most of the time, this type of offering is used by small companies or companies with an established client base.

As Slack tries to turn its workplace chat app into a digital ecosystem where all its customers can integrate other software they use, it will be interesting to watch how the company will perform on the stock market. That’s will be important, given that the company released financial information showing a slowdown in revenue growth in the last quarter.

However, as The Wall Street Journal reported, Slack has significant cash on its balance, which is another reason why the company did not choose to raise capital through an IPO. Most likely, Slack is confident there’s enough demand for its shares to support the stock price, a similar strategy being adopted by Spotify a year ago.

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