Slack, the messaging app seemingly used by every startup* in existence, raised another $250m from investors in September 2017 in a funding round led by SoftBank, sparking the question of when it might IPO. The company has been valued at $5.1bn in this latest raise and Chief Executive Stewart Butterfield all but confirmed that it will IPO at some stage.
Slack has recently launched versions in French, German and Spanish in its bid to take over the world aim to reach an increasing number of markets, and Chief Executive Stewart Butterfield took time out of his ‘European tour’ to discuss the funding round with Bloomberg in an intriguing interview (yes, I am talking about the gentleman with the bow tie). He admitted that it will be ‘quite a while’ before Slack goes public and many in the industry believe that an IPO is unlikely before the end of 2018.
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The $5.1bn valuation has surprised some, but according to Butterfield, Slack boasts a 50,000+ user base, 100% year-on-year growth and posted $200m annual recurring revenue – all this while being English language only.
Butterfield predicts that the user base will only increase in Europe with the addition of new languages and has targeted Asia too, with plans to launch a Japanese-language version of the app next year. As with the vast majority of SaaS businesses, there is a recurring revenue from subscription-based users, all but guaranteeing a strong revenue stream. The company also has a low churn rate and is one of the best-financed software startups, having raised a total of $841m over all its funding rounds.
Why wait to go public?
According to the FT (behind paywall), concerns around performance of such a young company – Slack has only been on the market for four years – is one reason for avoiding an IPO at this stage. Given the volatility of public markets, not meeting its targets would ‘make it a rocky ride’ for the company, says Butterfield.
Rivals have been slacking (insert wahey emoji), but Microsoft is set to become one of the major competitors in the coming years. Microsoft introduced Teams in November 2016, but still lags behind Slack, which recently introduced shared channels, allowing collaboration between different companies. As long as Slack remains innovative and ahead of the market, interest in any float is unlikely to wane.
*Yes, we use it here at SyndicateRoom.
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