What's going on?

Slack reported a stronger-than-expected quarter late last week, sure, but the workplace chat company hasn�t exactly responded to the pandemic like investors hoped it would � and its stock initially fell 15% on Friday.

What does this mean?

Slack�s higher-than-expected revenue helped the firm deliver a smaller-than-expected quarterly loss, as well as boost its revenue guidance for the year. No massive surprises there: Slack was poised to benefit as our new work-from-home lifestyles transformed from a luxury to a necessity. That�ll be why the company said it added 12,000 new paying customers last quarter � Amazon chief among them.


But coronavirus is no friend of Slack�s: the firm abandoned its billings guidance, which reflects its projected renewals, sales to new customers, and upselling of existing customers. Clearly Slack�s customers have been shaken by the pandemic, and so has the company�s confidence they�ll increase their technology spending this year.

Why should I care?

For markets: All work and no play makes Slack a dull boy.

If investors� hopes for Slack were raised by Zoom�s strong performance last week, they were promptly dashed by the marginal increase to the messenger app�s revenue forecast. Zoom had doubled its own expectations � a very different outlook that might be explained by two very different customer bases. Where Zoom’s clients use its video conferencing for everything from corporate meetings to quiz nights, Slack�s will promptly turn to WhatsApp and Telegram when they want a friendly chitchat.

The bigger picture: Slow and steady.

Stock markets are a short-term voting machine: investors cast their daily ballots for or against companies based on how they stack up to their prior expectations � which likely explains the drop in Slack�s share price. But in the longer term, a company�s fundamentals � that is, its capacity for consistent earnings growth � tend to shine through, rewarding patient investors with more capital and, quite often, income via dividends and share buybacks.