Slack Technologies Inc (NYSE:WORK) Q3 2020 Earnings Conference Call - Final Transcript

Dec 04, 2019 • 05:00 pm ET

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Slack Technologies Inc (NYSE:WORK) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by and welcome to the Slack Technologies Third Quarter Earnings Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jesse Hulsing, Head of Investor Relations. Thank you. Please go ahead, sir.

Executive
Jesse Hulsing

Good afternoon and thank you for joining us on today's conference call to discuss Slack's Third quarter fiscal 2020 financial results. On the call, we have Stewart Butterfield, Co-Founder and Chief Executive Officer; and Allen Shim, Chief Financial Officer.

During the course of today's call, we may make forward-looking statements, including but not limited to, statements regarding our guidance and future financial performance, market demand, product development, growth prospects, business strategies and plans, ability to attract and retain customers, and ability to compete effectively. These forward-looking statements are based on management's current views and assumptions and should not be relied upon as of any subsequent date. And we disclaim any obligation to update any forward-looking statements. Actual results may vary materially from today's statements. Information concerning our risks, uncertainties and other factors that could cause results to differ from these forward-looking statements are contained in the Company's SEC filings, earnings press release and supplemental information posted on the Investor section of the Company's website.

Our discussion today will include certain non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from GAAP measures. Our non-GAAP measures exclude the effect of our GAAP results of stock-based compensation and certain other items. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP measures in our earnings release and on our Investor Relations website at investor.slackhq.com.

I would now like to turn the conference call over to Slack's Co-Founder and Chief Executive Officer, Stewart Butterfield. Stewart?

Executive
Stewart Butterfield

Thank you everyone for joining today's call. We had a great quarter. Revenue was $169 million, up 60% year-over-year. We added more than 5,000 net new paid customers in the quarter, bringing the total above 105,000 and we continue to show leverage. Non-GAAP operating margin improved 26 percentage points year-over-year.

Today, I want to hit on three points. First, our continued outstanding momentum in the enterprise segment where we surpassed 50 paid customers with over $1 million in annual recurring revenue for the first time. Second, our accelerating pace of innovation on the product side with some exciting new launches. Finally, I'll spend some time in what we're seeing with shared channels, which launched halfway through the quarter. For me personally, this is the most exciting thing to happen for collaboration, since we first launched Slack.

So starting with enterprise. We used paid customers with over $100,000 in annual recurring revenue as a proxy for our large enterprise customers. In this quarter, we set a new record by adding 101 of those customers for a total of 821 $100,000 customers. That's a 67% increase over Q3 of last year, including strong growth in the largest enterprises, another 11