Slack Technologies Annual Report 2021
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Slack Technologies Annual Report 2021 Form 10-K (NYSE:WORK) Published: March 19th, 2021 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-38926 Slack Technologies, Inc. (Exact name of registrant as specified in its charter) Delaware 26-4400325 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 500 Howard Street San Francisco, California 94105 (Address of principle executive offices including zip code) (415) 630-7943 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Class A Common Stock, $0.0001 par value per share WORK The New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes or ☐ No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes or ☒ No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes or ☐ No. Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes or ☐ No. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company.” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes or ☒ No The aggregate market value of the registrant’s Class A common stock, $0.0001 par value, held by non-affiliates of the registrant (based on $29.55, which was the closing price of a share of the registrant’s Class A common stock on July 31, 2020, as reported by the New York Stock Exchange) was approximately $14.1 billion. Shares of common stock held by each executive officer, director and holder of 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status does not reflect a determination that such persons are affiliates of the registrant for any other purpose. There were 502,550,914 shares of the registrant’s Class A common stock outstanding and 79,095,890 shares of the registrant’s Class B common stock outstanding as of February 28, 2021. TABLE OF CONTENTS Page Part I Item 1. Business 3 Item 1A. Risk Factors 14 Item 1B. Unresolved Staff Comments 66 Item 2. Properties 66 Item 3. Legal Proceedings 66 Item 4. Mine Safety Disclosures 67 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 68 Item 6. Selected Consolidated Financial Data 70 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 72 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 93 Item 8. Financial Statements and Supplementary Data 94 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 135 Item 9A. Controls and Procedures 135 Item 9B. Other Information 136 Part III Item 10. Directors, Executive Officers and Corporate Governance 137 Item 11. Executive Compensation 146 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 166 Item 13. Certain Relationships and Related Transactions, and Director Independence 170 Item 14. Principal Accountant Fees and Services 174 Part IV Item 15. Exhibits, Financial Statement Schedules 175 Item 16. Form 10-K Summary 178 NOTE ABOUT FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws, which are statements that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. The forward-looking statements in this report, other than the statements regarding the proposed transaction with salesforce.com, inc., or Salesforce, do not assume the consummation of the proposed transaction unless specifically stated otherwise. Forward-looking statements contained in this Annual Report on Form 10-K include, but are not limited to, statements about: • the occurrence of any event, change, or other circumstances that could delay or prevent closing of the proposed transaction, or the Mergers, or give rise to the termination of that certain Agreement and Plan of Merger, or the Merger Agreement, dated December 1, 2020 by and among us, Salesforce, Skyline Strategies I Inc., a Delaware corporation and a wholly owned subsidiary of Salesforce, or Merger Sub I, and Skyline Strategies II LLC, a Delaware limited liability company and a wholly owned subsidiary of Salesforce, or Merger Sub II; • the effect of uncertainties related to the global COVID-19 pandemic on U.S. and global economies, our business, results of operations, financial condition, demand for Slack, sales cycles, customer retention, and the health of our customers’ businesses; • our future financial performance, including our revenue, cost of revenue, and operating expenses; • our ability to maintain the security and availability of Slack; • our ability to increase the number of organizations on Slack and paid customers; • our ability to grow or maintain our Net Dollar Retention Rate; • our ability to achieve widespread adoption; • our ability to optimize the pricing for Slack; • our ability to effectively manage our growth and future expenses; • our ability to maintain our network of partners; • our ability to enhance Slack to respond to new technologies and requirements of organizations on Slack; • our estimated market opportunity; • the future benefits to be derived from new third-party applications and integrations; • our ability to maintain, protect, and enhance our intellectual property; • our ability to comply with modified or new laws and regulations applying to our business; • the attraction and retention of qualified employees and key personnel; • our anticipated investments in sales and marketing and research and development; • the sufficiency of our cash, cash equivalents, and investments to meet our liquidity needs; • our ability to service the interest on our convertible notes and repay such notes, to the extent required; • our ability to successfully defend litigation brought against us; and • the increased expenses associated with being a public company. We caution you that the foregoing list may not contain all of the forward-looking statements made in this Annual Report on Form 10-K. You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Annual Report on Form 10-K primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Annual Report on Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10-K. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements. The forward-looking statements do not assume the consummation of the proposed transaction with Salesforce unless specifically stated otherwise. The forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which the statements are made.