Slacks fiscal year 2020 is off to a good start. For its first fiscal quarter of 2020 for the period ended April 30, 2019, global collaboration hub Slack reported total revenue of $134.8 million, a 67% increase year-over-year. The company ended the quarter with more than 95,000 paying subscribers, including 645 who generate more than $100,000 in annual recurring revenue, an 84% increase year-over-year. Launched publicly in 2014, the Slack collaboration tool has more than 10 million daily active users, in over 600,000 organizations in over 150 countries. Slacks net dollar retention rate was 138%.

If you arent a Slack user, Stewart Butterfield, co-founder and CEO of Slack, explained it on the June 10 earnings call.

This is a brand-new category of software. One thing we hear from customers all the time is this: Slack is the kind of thing you dont know you need but once you have it, you cant live without it, Butterfield says. Maybe the simplest way to understand it is that Slack replaces email inside your company. It turns email to messages and organizes them into team, project and topic-based channels instead of individual inboxes. Its a team-first approach to communication, in contract to emails individual-first approach. It creates a rich, searchable, permanent body of information thats widely available across an organization, even for people who just joined the team, Butterfield said.

Slack is a transformative new layer of technology with a profound impact on how people work all around the world. We believe the shift to this new way of working is inevitable and over time, hundreds of millions of knowledge workers will use Slack or something like it, added Butterfield.

Slack uses a freemium model with a Free version for small teams, a Standard version for teams and companies wanting to use Slack for projects and communications ($6.67 per active user per month, billed annually or $8 per month billed monthly), and a Plus version for businesses with more robust needs including SSO and Compliance Exports ($12.50 per active user per month billed annually or $15 per month billed monthly).

Additional highlights for the quarter include:

• Calculated billings were $149.6 million, a 47% increase year-over-year.
• The company spent $66.1 million, or 49% of revenue, in sales and marketing expenses.
• R&D expenses for Q1 were $49.3 million, or 37% of revenue.
• GAAP gross profit was $116.2 million, or 86.2% gross margin, compared to $70.8 million, or 87.5% gross margin, for Q1 FY2019.
• Non-GAAP gross profit was $116.9 million, or 86.7% gross margin, compared to $71.4 million, or 88.3% gross margin, for Q1 FY2019.
• GAAP operating loss was $38.4 million, or 28% of total revenue, compared to a loss of $26.3 million loss in Q1 FY2019, or 33% of total revenue.
• Non-GAAP operating loss was $33.8 million, or 25% of total revenue, compared to a loss of $20.2 million in Q1 FY2019, or 25% of total revenue.
• GAAP net loss per basic and diluted share was $0.26. Non-GAAP net loss per share was $0.23.

The company provided the following guidance for the second quarter of fiscal year 2020:

• Total revenue between $139 million to $141 million, representing year-over-year growth of 51% to 53%
• Non-GAAP operating loss of $75 million to $77 million, including about $32 million of one-time direct listing-related expenses for the companys IPO
• Non-GAAP net loss per share of $0.19 to $0.20, assuming weighted average shares outstanding of 367.7 million
• Approximately $280 million in performance-based vesting of outstanding, time-vested employee restricted stock units once the company is listed on the New York Stock Exchange

The company expects the following for the full fiscal year 2020:

• Total revenue between $590 million to $600 million, representing year-over-year growth of 47% to 50%
• Non-GAAP operating loss of $182 million to $192 million, including about $34 million of one-time direct listing related expenses
• Non-GAAP net loss per share of $0.41 to $0.44, assuming weighted average shares outstanding of 399.9 million

In closing, Q1 was an exciting quarter for us. We delivered top line growth of 67% year-over-year and we feel very good about the momentum in our business and the strong demand that we are seeing from new and existing customers, said Allen Shim, CFO. We believe that we are uniquely positioned to continue our leadership in the new category we have created, and I speak on behalf of our whole team in saying we are eager to aggressively pursue the significant opportunity ahead of us.

Next week, Slack will be listed on the New York Stock Exchange under the symbol WORK as a direct listing, according to a filing with the U.S. Securities and Exchange Commission. Because this is a direct listing, Slack is not looking to raise money with its IPO but, instead, provide an opportunity for existing shareholders to sell their shares to the public. According to the SEC filing, the company is registered more than 118 million shares of stock.

Insider Take:

Slack is in growth mode, so it is spending money on R&D, sales and marketing and losing money. At the same time, its revenue growth is strong, and it has more than 10 million daily active users around the world, including half outside the United States. While investors may not be impressed with the current balance sheet, Slack is meeting a strong market demand for a collaboration tool that is easy to use. [Full disclosure: At Subscription Insider, weve used Slack for several years, and we are among those businesses who cant imagine life without it. It allows us to avoid email inboxes, group conversations by topic, share files and communicate directly or as a group.]