by Scott Denne
An unusual route to the public markets didn’t stop Slack from capitalizing on soaring prices for new offerings. In its direct listing on the NYSE, Slack, like recent enterprise IPOs, commanded a scorching valuation, catapulting it well past what it fetched as a private company.
The workplace communications vendor’s stock quickly ran up to $41 per share, more than 3x the price of its series H round less than a year ago. The company currently trades above 50x trailing revenue, with a market cap that’s just north of $20bn. Still, that valuation falls a bit shy of fellow workplace tech provider Zoom Video, which fetches over 70x trailing revenue. Although both valuations are exorbitant, Zoom doubled revenue last quarter, while Slack rose 86%. Both are roughly the same size, but only Zoom is profitable. Slack still puts half its revenue toward sales and marketing.
Slack’s multiple matches what infosec vendor CrowdStrike garnered in its IPO last week. And PagerDuty, a firm that’s one-quarter of Slack’s size, with a topline that’s expanding at less than 50% annually, boasts a 35x multiple following its April IPO. The premium valuations for enterprise companies come as confidence in the stock market is leveling out after a turbulent end to 2018. In each of the last four months of 451 Research’s VoCUL: Consumer Spending survey, 20% or more of all respondents have claimed to be more confident in the stock market than they were 90 days ago, the highest level since last summer.