Most of you know Salesforce is buying Slack for $27B
You might now know Salesforce is taking on $10B of debt to do so...
Why would they do that as it goes against the free investment advice you get on the internet?
"Salesforce said it expects to fund the cash portion of the transaction with a combination of new debt and cash on its balance sheet. Salesforce said it has obtained a commitment from Citigroup, Bank of America, and JPMorgan Chase for a $10 billion senior unsecured 364-day bridge loan facility, subject to customary conditions."
Also adding 50M shares to Salesforce share count
"Through a combination of cash and stock, Salesforce is purchasing Slack for $26.79 a share and .0776 shares of Salesforce"
Did you know Slack also did a private placement in April for $862.5 million?
Why would both companies issue more stock and need more money?
What do you call it?
Debt and dilution
Some pretty, pretty big companies doing exactly the opposite advice from free investment advisors/non-shareholders
"We have experienced volatility in customer demand and buying habits due to the COVID-19 pandemic. At the beginning of the COVID-19 pandemic, we experienced a significant increase in demand and usage of Slack, including an increase in our number of Paid Customers. While we do not expect the significant increase in the number of net new Paid Customers associated with the initial shelter-in-place orders related to the COVID-19 pandemic to recur, we have experienced an acceleration in our Paid Customer growth during the nine months ended October 31, 2020. However, the rate of growth of total organizations on Slack has reverted to a level more in-line with trends we experienced prior to the COVID-19 pandemic. In addition, we have experienced an increase in paid customer churn and a decrease in expansion within existing paid customers during the nine months ended October 31, 2020. We expect these paid customer churn and expansion trends to continue due to the effects of the COVID-19 pandemic. We define paid customer churn as paid customers reducing the number of users within their organizations or electing not to renew their paid subscriptions."
"The COVID-19 pandemic has resulted in, and any prolonged economic slowdowns may continue to result in, paid customers on Slack requesting to renegotiate existing contracts on less advantageous terms to us than those currently in place, defaulting on payments due on existing contracts, not renewing at the end of the contract term, or choosing to renew with a smaller commitment than previous contracts."
Slack losing customers and customers renegotiating contracts
That is not good according to the free investment advisors
Q2
Total revenue was $215.9 million,
GAAP operating loss was $68.6 million,
Q3:
Total revenue was $234.5 million
GAAP operating loss was $95.0 million
Net cash provided by operations was $33.5 million
More revenue but at a bigger loss?
Here's what they said in Q2:
"The company reported a net loss of $73 million, significant progress from the year-ago quarter, when it lost $360 million."
Seems like some good news, bad news message
"Slack did not disclose a new number of daily active users; the company last said it had 12 million in October. In a conference call with reporters CEO Stewart Butterfield said what matters is paying customers. The company said it had over 130,000 paying customers in the quarter, up 30% year over year and above the FactSet consensus estimate of 128,000."
"As of October 31, 2020 and 2019, we had approximately 142,000 and 105,000 Paid Customers, respectively."
"Once an organization has three or more users on a paid subscription plan, we count them as a Paid Customer, and when disclosing the number of Paid Customers, we round down to the nearest thousand."
So Slack has at least 426K users
"Analysts worry that in CEO Marc Benioff’s enthusiasm to expand his suite of cloud-based services to include Slack, Salesforce may be overpaying by a considerable margin for a money-losing business facing fierce competition from Microsoft Teams—and which has yet to reach a $1 billion..."
These are real analyst BTW
In summary:
Salesforce borrowing and diluting to buy a company
Said company is losing a lot of money
Not clear exactly how many users said company has
Salesforce paying 30 times revenues
Let's say Verb ends up with...
Pick a round number $10M of revenues
30 x $10M is $300M
Market Cap today is $82M
So about 4 times todays price
But and a big butt
Verb doesn't have the same competition that Slack does
Microsoft eating their lunch
Verb is also earlier on than Slack
The older the company the less the multiples will be
But do you own DD and don't get it off a message board
Anyone can post on a message board
Any non-investor can give 'free' investment advice
Anyone can learn to ride a bike too
It's what you can do with your talent that count
Especially if you only going in circles and spinning round
You might now know Salesforce is taking on $10B of debt to do so...
Why would they do that as it goes against the free investment advice you get on the internet?
"Salesforce said it expects to fund the cash portion of the transaction with a combination of new debt and cash on its balance sheet. Salesforce said it has obtained a commitment from Citigroup, Bank of America, and JPMorgan Chase for a $10 billion senior unsecured 364-day bridge loan facility, subject to customary conditions."
Also adding 50M shares to Salesforce share count
"Through a combination of cash and stock, Salesforce is purchasing Slack for $26.79 a share and .0776 shares of Salesforce"
Did you know Slack also did a private placement in April for $862.5 million?
Why would both companies issue more stock and need more money?
What do you call it?
Debt and dilution
Some pretty, pretty big companies doing exactly the opposite advice from free investment advisors/non-shareholders
"We have experienced volatility in customer demand and buying habits due to the COVID-19 pandemic. At the beginning of the COVID-19 pandemic, we experienced a significant increase in demand and usage of Slack, including an increase in our number of Paid Customers. While we do not expect the significant increase in the number of net new Paid Customers associated with the initial shelter-in-place orders related to the COVID-19 pandemic to recur, we have experienced an acceleration in our Paid Customer growth during the nine months ended October 31, 2020. However, the rate of growth of total organizations on Slack has reverted to a level more in-line with trends we experienced prior to the COVID-19 pandemic. In addition, we have experienced an increase in paid customer churn and a decrease in expansion within existing paid customers during the nine months ended October 31, 2020. We expect these paid customer churn and expansion trends to continue due to the effects of the COVID-19 pandemic. We define paid customer churn as paid customers reducing the number of users within their organizations or electing not to renew their paid subscriptions."
"The COVID-19 pandemic has resulted in, and any prolonged economic slowdowns may continue to result in, paid customers on Slack requesting to renegotiate existing contracts on less advantageous terms to us than those currently in place, defaulting on payments due on existing contracts, not renewing at the end of the contract term, or choosing to renew with a smaller commitment than previous contracts."
Slack losing customers and customers renegotiating contracts
That is not good according to the free investment advisors
Q2
Total revenue was $215.9 million,
GAAP operating loss was $68.6 million,
Q3:
Total revenue was $234.5 million
GAAP operating loss was $95.0 million
Net cash provided by operations was $33.5 million
More revenue but at a bigger loss?
Here's what they said in Q2:
"The company reported a net loss of $73 million, significant progress from the year-ago quarter, when it lost $360 million."
Seems like some good news, bad news message
"Slack did not disclose a new number of daily active users; the company last said it had 12 million in October. In a conference call with reporters CEO Stewart Butterfield said what matters is paying customers. The company said it had over 130,000 paying customers in the quarter, up 30% year over year and above the FactSet consensus estimate of 128,000."
"As of October 31, 2020 and 2019, we had approximately 142,000 and 105,000 Paid Customers, respectively."
"Once an organization has three or more users on a paid subscription plan, we count them as a Paid Customer, and when disclosing the number of Paid Customers, we round down to the nearest thousand."
So Slack has at least 426K users
"Analysts worry that in CEO Marc Benioff’s enthusiasm to expand his suite of cloud-based services to include Slack, Salesforce may be overpaying by a considerable margin for a money-losing business facing fierce competition from Microsoft Teams—and which has yet to reach a $1 billion..."
These are real analyst BTW
In summary:
Salesforce borrowing and diluting to buy a company
Said company is losing a lot of money
Not clear exactly how many users said company has
Salesforce paying 30 times revenues
Let's say Verb ends up with...
Pick a round number $10M of revenues
30 x $10M is $300M
Market Cap today is $82M
So about 4 times todays price
But and a big butt
Verb doesn't have the same competition that Slack does
Microsoft eating their lunch
Verb is also earlier on than Slack
The older the company the less the multiples will be
But do you own DD and don't get it off a message board
Anyone can post on a message board
Any non-investor can give 'free' investment advice
Anyone can learn to ride a bike too
It's what you can do with your talent that count
Especially if you only going in circles and spinning round
18
