Analyst Note| Dan Romanoff, CPA |
No-moat Slack released results for its fiscal first quarter that we characterize as solid. Because the company is being acquired by Salesforce in a deal expected to close in July, the company did not host a call to review results. Slack did not provide guidance last quarter, so meaningful comparisons to consensus are fuzzy. The company took the same approach this quarter and offered no outlook in the release, which is not a surprise in what we expect to be the company’s last quarterly earnings report. We see both revenue growth and various metrics as on a positive trajectory for when Salesforce takes over by the end of July. Based on the available deal terms, we are maintaining our fair value estimate of $46 per share, which is equivalent to $26.79 per share in cash plus the 0.0776 shares of Salesforce. We continue to see the value proposition in Salesforce integrating Slack’s collaboration platform amidst a global movement to enable remote work environments. We are confident that the deal closing as expected is a near-certainty at this point and expect Slack shares to move towards our fair value estimate as the closing date approaches.