Last week, Slack CEO Stewart Butterfield said that most of the company’s top customers use some parts of Microsoft’s Office 365 suite but choose Slack for messaging instead of the option built into Windows-based software.
This is important because nearly Slack released its third-quarter earnings report, revealing that more than 50 customers pay at least $1 million a year. That is two-thirds more than the number of million-dollar customers from the same period one year before. And of these customers, nearly 70 percent of those customers also use Office 365.
“In general,” Butterfield said, “We continue to see tremendous adoption across customers of the Office suite. They choose Slack despite having a bundle alternative.”
And that is a big deal, as Slack continues to battle with Microsoft in this regard. Of course, the Windows developer is a massive competitor in this industry, with a market cap higher than $1 trillion. More importantly, Microsoft has been dominating in the enterprise software suite sector—used by some of the world’s biggest companies—for decades.
This news comes at a somewhat crucial time as Slack shares have plummeted nearly 50 percent since going public. Their first full day was in June, with its biggest plunge dropping on November 19—at 8.4 percent—after Microsoft said, publicly, that its Teams program had more than 20 million daily active users. Slack had reported, a month before, daily active use of 12 million.
Slack has been pushing for the market to focus on their engagement metrics, arguing that Microsoft may count people as users even if they are not using the Teams program: they might just have the program open while using other Office 365 applications and programs. Indeed, Butterfield advises that the Microsoft’s own report reflects weak engagement numbers.
But this argument is not unwarranted: Slack recently reported revenue growth of 60 percent in this quarter, alone, up to $168.7 million. This is at least $10 million better than analyst estimates; and it is coupled with fewer losses than expected. With that, shares rose 3 percent.