Slack Technologies Inc. is bypassing a traditional initial public offering and will instead offer a direct listing in either June or July, according to an unconfirmed report published Monday.

The Wall Street Journal said Slack will make the direct listing on the New York Stock Exchange, the second large tech firm to take the route. Spotify Technology SA took the same direct listing path on the NYSE in April 2018.

A direct listing is a way for companies to become publicly traded without going through a traditional bank-backed IPO. In a traditional IPO, shares are offered to investors prior to the company floating and new money is raised, whereas a direct listing sees a company simply list existing shares for sale on a given exchange.

The direct listing process can be cheaper because underwriting is not required, but it’s still a route rarely taken by tech companies.

That Slack has chosen to go with a direct listing is a sign of its maturity and financial stability. Put more simply, it’s in a position where it does not need to raise money in an IPO.

“When we think about why companies go public, they do it for liquidity, to raise their profile, for capital,” John Tuttle, head of global listings at the NYSE, told Business Insider. “But for those companies that are well-capitalized, all they really need is liquidity.”

Likewise, at 10 years of age, Slack will also be wanting to allow investors to sell their shares. Another advantage of a direct listing is that holding periods are not required, meaning shareholders, including employees, can sell their shares at will.

Coming into its listing, Slack stands on solid financial ground. As of January, the company said it had surpassed 10 million daily users, with paid users jumping to 85,000, up 50 percent over the last year.

At the same time, it was reported that Slack had $900 million cash on hand as of October along with revenue of  $221 million for the year ending January.

Slack doesn’t need to raise more money and though profit and loss figures have not been disclosed, it would appear, given that it has raised only $1.2 billion to date, that the company is profitable and covering costs.

Image: Pexels