Slack Technologies Inc. submitted its plans to U.S. regulators to go public through an unusual direct listing.

The workplace-messaging company’s filing Friday confirms its plans to avoid a traditional public offering and instead list its shares directly on the New York Stock Exchange under the symbol SK.

The filing gives potential investors their first look at key financial information, revealing stable net losses against a backdrop of rapid revenue growth. Slack had a net loss for the year ending Jan. 31 of $139 million on revenue of $401 million, compared to a net loss of $140 million on revenue of $221 million in the same period a year earlier. Previously, it has occasionally shared annual recurring revenue and a few other metrics.

The filing also reveals that Slack’s Class B shares have been changing hands in private transactions for as much as $23.41 in the year through January. The lowest price at which they traded during that period was $8.37.

In private deals in the last two months, shareholders have sold stock at prices as high as $25 or $26 a share, which implies a company valuation of about $16 billion, people with knowledge of the matter have said.

Slack’s filing highlights what it considers to be a key metric — net dollar retention rate — which measures the annual rate of revenue growth from existing customers. That rate was 143 percent for the year ending Jan. 31, compared with 152 percent the previous year.


No dilution

The direct listing will allow the San Francisco-based company’s investors to sell their shares without their holdings being diluted by Slack issuing new stock or waiting for a lockup period to expire. Such listings are rare. Most companies, including so-called unicorns such as Lyft Inc. and Pinterest Inc. this year, go public to raise cash. But in the past few years, private capital has been easy to come by for technology startups.

Slack’s biggest stockholder is the venture capital firm Accel, which holds 24 percent of the outstanding shares, followed by the venture firm Andreessen Horowitz with about 13 percent, according to the filing.

Co-founder and Chief Executive Officer Stewart Butterfield holds an 8.6 percent stake, which would be worth about $1.4 billion at a $16 billion valuation. Co-founder and Chief Technology Officer Cal Henderson holds a 3.4 percent stake.

Dual-class structure

Like many of its tech peers, Slack will retain a dual-class stock structure, giving owners of its Class B stock 10 votes per share. Those shares will convert to Class A shares with only one vote when they are sold. All Class B shares will convert to Class A by a date that remains unspecified in the filing.

Slack is choosing a direct listing because it doesn’t need the cash or publicity of an IPO, a person familiar with the matter has said. The company was valued at $7.1 billion in a $427 million funding round in August.

The company had more than 10 million daily active users as of the end of January, including more than 600,000 organizations with three or more users. Some 88,000 of them are paying customers, the filing shows.


Key metric

The filing highlights what Slack considers to be a key metric, net dollar retention rate, which measures the annual rate of revenue growth from existing customers. That rate was 143 percent for the year ending Jan. 31, compared with 152 percent the previous year.

Slack cautions that it remains vulnerable to competition if it fails to keep pace technologically or fails to develop and expand its sales. It lists Microsoft Corp. as its primary rival, but also notes that companies including Alphabet Inc., Cisco Systems Inc. and Facebook Inc. are developing related products.

In a direct listing, a company transfers its shares to an exchange and lets them trade publicly without an underwriter — and without typical underwriter fees. Companies still rely on banks to advise them, though. Slack is working with Morgan Stanley, Goldman Sachs Group Inc. and Allen & Co. on the share sale, according to its filing.

–With assistance from Tom Metcalf.


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