Microsoft Teams is making Slack investors nervous with its growth
Investors in Slack Technologies Inc., reeling from news Tuesday that Microsoft Corp.’s Slack killer is growing faster than expected, may need to get used to it.
Microsoft Teams, which grew 54% since July to more than 20 million daily active users, is on a trajectory to double Slack’s customer base by early next year as more corporations adopt group chat. Last month, Slack said its daily active users improved 20% to 12 million from 10 million in late January.
Shares of Slack slumped 8% to $21.18 on Tuesday. They are down nearly half from a 52-week high of $42.
The speed with which Teams is being adopted among corporations – Microsoft says Teams is its fastest-growing business app, and it has 350 customers with at least 10,000 people using the app – makes it the “biggest risk” yet for Slack, Wedbush Securities analyst Daniel Ives told MarketWatch in a phone interview.
“The Street had estimated 16 million daily active users for Teams, and Microsoft beat that number by 25%,” said Ives, who gives Slack shares an Underperform rating with a price target of $14 a share. “The 20 million announcements [on Tuesday], on the heels of the Salesforce-Microsoft accord, has Slack investors nervous.”
Last week, Salesforce.com Inc. said it planned to integrate its Sales Cloud and Service Cloud product with Teams in a move to benefit customers of both companies, ratcheting up even more pressure on Slack, which is largely championed by end-users at companies.
“Slack has a great business model that has worked so far to date,” Ives said. “But as they go further upstream into Microsoft turf, it will have problems.”
Indeed, a survey of 901 organizations by IT network Spiceworks last year already found 21% use Teams compared with 15% for Slack. Skype for Business is the most popular chat app, at 44%.
Teams continue to benefit from Microsoft bundling it with some of its most popular offerings through Microsoft 365. Among the latest corporations to adopt Teams are Alcoa Corp., Telefonica S.A., L’Oreal S.A., and Trek Bicycle Corp., Microsoft said in a blog post-Tuesday. What is more, the software giant claims 500,000 organizations use Teams -- including 91 of the Fortune 100.
Slack characterized Teams’ growth as misleading, with a large slice of its customer base only using Teams occasionally.
“As we’ve said before, you can’t transform a workplace if people aren’t actually using your product. Slack continues to see unmatched engagement on our platform with 5+ billion weekly actions, including 1+ billion mobile actions,” a Slack spokesman told MarketWatch in an email. “Among our paid customers, users spend more than 9 hours per workday connected to our service, including spending about 90 minutes per workday actively using Slack.”
Slack pointed to a blog post last month, in which it claimed 70% of Slack’s top 50 customers are on Office 365.
In a reply to Slack’s statement late Tuesday, Microsoft said it defines DAU as “the maximum daily users performing an intentional action in the last 28-day period across the desktop client, mobile client and web client.” It said Teams customers last month “participated in more than 27 million voice or video meetings and performed over 220 million open, edit, or download actions on files stored in Teams.”
Gartner analyst Larry Cannell cautioned that Teams is increasingly taking on Skype for Business’ meetings workload, making comparisons between Teams and Slack users isn’t entirely fair.
source marketwatch
Industry: Unified Communications
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