MSFT - Slack: Ignore Sell-Off Growth Actually Accelerating

• As stocks regularly do post-earnings, they react strongly on headline numbers without considering the underlying fundamentals.
• Slack sold off heavily due to billings growth slowdown. Nevertheless, management advised against billings as a useful metric during the pandemic.
• Instead, as my own early 2020 Slack thesis had called, Slack Connect has added a third funnel of (paid) customer growth via network effects.
• In combination with the introduction of free trials, Slack is converting paid customers at a record pace, and more sustainably than the short-term COVID-19 spike.
• While Zoom investors for example are faced with the question of how much growth will slow down, Slack can look forward to large new cohorts of customers expanding over time.

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