What's going on?

Investors in Slack Technologies were left slack-jawed by its first quarterly results as a public company � sending shares in every tech startup�s favorite messaging service down 5% on Thursday.

What does this mean?

Slack�s second-quarter loss of $360 million wasn�t as big as analysts feared, and revenue also exceeded forecasts. But as with many shiny new tech stocks, profitability is still a long way off � and its projected loss for the year was even larger than expected.

Slack is having to spend more to attract new customers as sales growth slows. While the company predicts revenue will increase by over 50% this year, it grew 82% in 2018. And as more big companies come to rely on Slack�s messaging software, it�ll need to avoid any further expensive outages. Ultimately, Slack is a utility � just one with a valuation 30 times its revenue.

Why should I care?

For markets: The lure of the new.�
While Slack shares had a rough day, they�re still above the $26 price at which it sold stock in June (via an unusual direct listing). And despite some high-profile flops, US initial public offering (IPO) stocks overall have climbed roughly twice as much as the broader market in 2019. There�s more to come: online orthodontist SmileDirectClub and UFC owner Endeavor both unveiled further details of their IPOs this week. Office space provider WeWork, meanwhile, will reportedly cut its IPO valuation to just $20 billion � less than half the $47 billion it was worth in its last private funding round.

Zooming out: Networking beats working.�
Longer term, Slack is hoping that network effects will pull it to profitability, with �Shared Channels� designed to reel in organizations� partners. Slack ended the quarter with more than 100,000 paying customers, up 37% on a year ago. A sticky ecosystem is something it has in common with Zoom, the video conferencing company that reported its second earnings late Thursday. Investors are hoping that once you go Slack, you never go back.