Slack’s Business Slows Amid Indifference From the Market

Slack Screen

Salesforce’s Slack messaging unit, acquired some two years ago for $27.7 billion, hasn’t been burning up the landscape, says The Wall Street Journal.

At the time of the acquisition, Salesforce expected that together, the two companies would “transform the way everyone works in the all-digital, work-from-anywhere world.” Some HR departments began using Slack to deliver information and tools “in the flow of work,” meaning users could access a system’s capabilities without having to leave the environment of another.

But, overall, corporate technology buyers don’t seem to be impressed by the acquisition, analysts told the Journal. Specifically, organizations looking to buy customer-relationship management software —  Salesforce’s flagship product – “don’t appear to be swayed one way or another by incorporating messaging and collaboration features,” said Liz Herbert, vice president and principal analyst at research firm Forrester Research.

Not For Us

Katrina Agusti, CIO of apparel-maker Carhartt, said Slack hasn’t made Salesforce more useful to the company’s users. Slack’s functionality is much like Microsoft Teams, she said, which Carhartt had already invested in and continues to use even now. 

Slack’s revenue growth has slowed since the acquisition, the Journal said. In the quarter ending Oct. 31, 2022, Salesforce reported Slack-related revenue growth of $402 million. While that demonstrates 6.9% growth quarter-over-quarter, the Journal said, it reflects a decline from 9.3% growth in the second quarter and 11.7% in the first.

In January, Slack said it would conduct layoffs as a part of Salesforce’s reduction in force. Earlier that week, Salesforce said it would lay off 10% of its workforce and cut back on office space. According to the Journal, the cutbacks came as a number of the company’s customers took a more cautious approach to spending. The Journal noted that an increasing number of software companies are facing similar conditions.

Image: Slack

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