Slack Confirms $120M Fundraise Led By Google Ventures And KPCB At $1.12B Valuation.

According to Slack, more than 30,000 active teams send over 200 million messages each month. It has more than 73,000 paying customers, and it’s adding $1 million in annual recurring revenue (ARR) every month. At that pace, Slack would surpass $10 million in ARR this year, and become the fastest-ever software-as-a-service (SaaS) company to do so.

For comparison, Butterfield mentioned Workday, a publicly traded enterprise SaaS company that’s now worth $17.8 billion. Butterfield said it’s not an entirely fair comparison, since Slack and Workday are in different businesses, but it took Workday about three years and roughly $30 million in sales and marketing — while losing about $75 million in total — to get to $10 million in ARR.

“We’ve established that people would pay for us. Slack is being valued based on its ability to make money rather than something more speculative,” Butterfield said.

ARR is a commonly used metric among SaaS companies, who charge on a subscription basis. It’s a projection of its annual revenue, based on its total recurring monthly subscription contracts. That means ARR is not the annual revenue you actually recorded, but what you expect to get in the next 12 months, assuming the customer returns to use your service.

Source: http://businessinsider.com/slack-ceo-explains-11-billion-valuation-2014-10