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Cut us some Slack: $27bn+ later, collab tool officially belongs to Salesforce

Cloud apps giant sets off to invent the future of work and beat Microsoft Teams

Salesforce has completed its long-awaited mega-slurp of Slack Technologies, Inc for an eye-watering $27.7bn.

The intention to buy was made public back in December 2020, when the business run by Marc Benioff said: "Slack will be deeply integrated into every Salesforce Cloud."

The CRM firm said Slack, which at the time had listed just 18 months before on the NYSE with a valuation of $16bn+, would also become the interface to Salesforce's CRM platform.

But in February 2021, the US Department of Justice wrote to Salesforce and Slack to investigate the merger further.

After all, the hipster chat app was no slouch in terms of users (12 million according to the latest public figures), nor of top lines (though like others in the sector, it has been keen as beans that no one looks too closely at the bottom ones). For its fiscal year 2021 ended 31 January, for example, revenue was $902.6m, up from $630.4m and $400.6m in 2020 and 2019, respectively. It also reported a loss for fy2021 of $300.4m, albeit better than the net loss of $571m in its 2020 financial year. The company also spent significantly less on R&D and clipped general and admin overheads.

The app runs on a freemium model, with free tier users outnumbering those on the paid version. As of 31 January, 2021, it had 156,000 orgs coughing up to have three or more users on a paid subscription plan, up from 110,000 in 2020 and 88,000 in 2019 (rounded down to the nearest thousand). Over 1000 of those customers – including IBM, which The Reg understands has been using a fair amount of the chat app lately – paid over $100,000. In its latest annual report, the firm said that as well as attracting new users, the company had been hoping to "convert users of and organizations on our free version into paid customers".

Slack has said it has 12 million+ daily active users, and chomps through tens of billions of daily database queries. The firm has not recently provided data on the breakdown of free and paid users – although during its 2019 listing, it filed an S-1 with the SEC showing 600,000 orgs had accounts with more than three users, and 88,000 of those were paid customers (14.6 per cent of the total). In its last filing, for Q1 ended April 30, 2021 [PDF], Slack noted "a $5.6m increase in third-party hosting costs for users on a Free subscription plan of Slack, primarily due to continuing growth in our user base, and a $0.7 million increase in facility- and IT-related overhead costs to support our headcount growth."

Regulators were eventually satisfied the deal would not unduly distort markets, leading to last night's announcement that the last of the lawyering has been done – and so, formally, has the deal.

A promo video described what to expect at a very high level, alluding to collaboration and e-commerce enablement while inserting a cameo from Slack co-founder Stewart Butterfield with exactly zero subtlety.

Youtube Video

Overall, the new Franken-work tool is supposed to help employees and teams as they march into a post-pandemic work-from-anywhere-and-at-all-hours world.

"We've learned over the past year that the workplace isn't snapping back to the way it was," said Salesforce president and COO Bret Taylor in a canned statement.

The statement continued:

Headquarters are no longer on Madison Avenue or Main Street – they are in the cloud. Every business – in every industry – has to optimize for a digital-first customer, employee, and partner experience.

This is a once-in-a-generation opportunity to rethink and reshape everything about how and where we work.

Slack is expected to continue seeking and serving customers that have nothing to do with Salesforce. The Slack brand will persist and remain free to expand beyond Salesforce, and will continue to operate under the Slack brand led by Butterfield.

Microsoft has, over the years, pointedly remarked that its Teams collaboration environment has many more users than Slack. The subtext to those jibes is that Redmond is the outfit really driving the future of work and Slack is an upstart afterthought.

That argument is far harder to sustain now that Slack will be delivered to Salesforce's 150,000 customers and their many millions of individual users. ®

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