5 Interesting Learnings From Slack at $700m+ in ARR

Although most of us aren’t quite approaching $1b in ARR, we can still learn from the leaders.  We last checked in on Slack as it was IPO’ing.  Now with some time as a public company under its belt, what can we learn from them?

Slack crossed $168 million in the past quarter revenue alone, growing 60%.  That puts them at a $700m+ ARR run rate, with $1b ARR coming up in calendar 2020.

5 things I learned from their latest report:

  1. Growth is all fueled by going upmarket.  We saw this in the IPO, and like Shopify and others, the trend is continuing.  Slack actually only increased its customer count 30% year-over-year to 105,000 total paying customers.  But its customers > $100k in ARR increased by 67%.  Blend them together and you get net 60% revenue growth on “just” a 30% growth in customer count.
  2. 50+ paid customers with $1m+ ACV.  That may sound like a lot to you for Slack, but Slack has grown a lot in the enterprise.  Most of the Fortune 500 / Global 2000 can pay $1m+ a year for applications every employee uses.  Many pay 20x-100x that for Salesforce.
  3. Accelerating growth.  We tend to think of all public companies slowing down.  But Slack isn’t, nor is Anaplan and other recent top Cloud IPOs.  Slack’s growth (again, fueled by going upmarket) accelerated to 60% year-over-year from a predicted 51%.  Don’t settle for declining growth.  The Cloud is bigger than ever.  Carpe diem!!
  4. Going global.  More than 1/3 of Slack’s $100k+ customers are outside the U.S.  That’s still fairly concentrated in the U.S. at this stage, but expanding outside of it.  As we’ve seen before, public SaaS companies “globalize” at very different paces.
  5. Free and cheaper competition isn’t killing them.  You know this, but Microsoft Teams, while well received in the enterprise, isn’t killing Slack.  70% of Slack’s customers also pay for Office 365.  That means they are paying a lot more for Slack vs. just using Teams for much less or free. But the competition is forcing them to evolve faster, with workflow features and shared channels as big pushes for the company.

A final bonus note is that Slack says they have 700,000 active developers on their platform now.  Slack has gone very enterprise.  But it is the developers’ hearts, and work, and 2,000+ apps on their platform, that has gotten them there.

5 Interesting Learnings From Slack. As It IPOs (er, Direct Lists).

Published on December 5, 2019

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