Dec 3, 2020 - Economy

Zoom's success makes Slack's stagnation even more puzzling

Illustration of a large Zoom app icon next to a small Slack app icon

Illustration: Sarah Grillo/Axios

Zoom and Slack are very similar companies. One of them is riding high, however, while the other, beset by losses and a sluggish share price, has ended up selling itself to a strategic acquirer.

Details: Zoom and Slack are both high-profile and highly successful examples of the new breed of enterprise software. The sales technique is to create a super-popular free version that gets adopted by so many people in a company that eventually the CTO agrees to make it official and buy it.

  • Because they make software that facilitates remote work, the companies have been helped rather than harmed by the pandemic.
  • Both companies also face intense competition. Zoom entered a crowded videoconferencing market when it was born, which has only become more competitive as Google and Microsoft build video capabilities into their own workplace suites. Slack faced less competition in early days but was eventually overtaken by Microsoft's Teams product.

The two companies went public in the second quarter of 2019. They had roughly equal revenues that quarter ($122 million for Zoom, $135 million for Slack), but while Zoom managed to eke out a tiny profit of $200,000, Slack lost more than $30 million.

  • Since then, Zoom has made $428 million in profits, while Slack has racked up $753 million in losses.

The bottom line: One chart tells the whole story. The $25 billion market cap for Slack incorporates the takeover premium being paid by Salesforce, which would almost certainly love to own Zoom as well. Right now, however, Zoom is well out of Salesforce's league.

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals
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