Slack CEO says Microsoft Groups has ‘weak engagement’ and he expects extra customers emigrate over

Slack CEO Stewart Butterfield mentioned on Wednesday that most of Slack’s high prospects use components of Microsoft‘s Workplace 365 suite, however are selecting Slack for messaging anyway, as a substitute of the competing Microsoft Groups app.

Following Slack’s third-quarter earnings report, Butterfield informed analysts that the corporate now has greater than 50 prospects paying a minimum of $1 million a 12 months, up from 30 in the identical quarter a 12 months earlier. He mentioned nearly 70% of these prospects additionally use Workplace 365, which incorporates widespread merchandise like Phrase, Excel, PowerPoint and SharePoint.

“In general we continue to see tremendous adoption across customers of the Office suite,” Butterfield mentioned. “They choose Slack despite having a bundle alternative” that wraps in Groups, he mentioned.

The battle with Microsoft is a important one for Slack, as a result of its a lot bigger rival has a market cap in extra of $1 trillion and has been promoting its enterprise software program suite to the world’s greatest corporations for many years. Slack shares have dropped greater than 40% since their first-day shut in June and plunged 8.4% on Nov. 19, after Microsoft said publicly that Groups had greater than 20 million each day energetic customers, forward of the 12 million customers Slack reported in October.

Slack has tried to get the market to deal with Slack’s engagement metrics, noting that Microsoft could depend individuals as customers even when they’re probably not utilizing Groups, however merely have it open whereas utilizing different Workplace 365 apps and companies. Butterfield mentioned, “just look at the weak engagement numbers that Microsoft themselves reported about Teams.”

Slack’s newest outcomes counsel that it is holding up in opposition to Microsoft’s challenges. The corporate reported income development of 60% within the quarter to $168.7 million, topping analysts’ estimates by greater than $10 million, whereas additionally recording a narrower-than-expected loss. The inventory rose about 3% in prolonged buying and selling.

Butterfield acknowledged within the Q&Part of the analyst name that there is confusion available in the market, which is “deliberately created.” He mentioned that Groups has customers who had been just lately pulled over from Skype for Business. Now, once they use that service to make a telephone name, they seem to be a Groups consumer.

“It has nothing to do with what people do use Slack for, why people are switching to Slack, the strength of the platform or any of that,” he mentioned. “I want to just be candid and say we haven’t figured out the right way to message that.”

Butterfield mentioned the explanation so many Workplace 365 customers select Slack for messaging is as a result of it integrates with Microsoft companies like calendar and numerous collaboration instruments.

A Microsoft consultant did not instantly reply to a request for remark.

WATCH: Where this analyst stands on the Slack-Microsoft debate

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