Slack’s shares recovered some lost ground late on Wednesday after the workplace messaging app reported stronger revenue growth in its latest quarter and issued a positive forecast for the rest of its fiscal year.
The threat from a full-on competitive assault by Microsoft has hung over the company since it went public in a direct listing six months ago, leaving its shares down more than 40 per cent from their original listing price.
Speaking in an interview with the FT after the earnings were released, Stewart Butterfield, chief executive officer, said Microsoft’s apparent headway in the workplace messaging market was the result of “deliberately induced confusion”. Rather than winning new customers for its rival collaboration app, Teams, it was really only prompting users of its existing Skype for Business service to switch, he said.
However, Mr Butterfield acknowledged that Slack needed to be “crisper” in getting its own message across to reverse worries that its prospects were being squeezed by its larger rival.
Slack’s shares picked up 3 per cent in after-market trading, after it reported that revenue growth had picked up again, reaching 60 per cent in the period to the end of October, after slipping in the preceding three months. At nearly $169m, revenue was $13m ahead of Wall Street expectations.
Despite that, billings growth — an indicator of the strength of future revenues — dropped to 47 per cent, from 52 per cent in the preceding quarter.
Allen Shim, chief financial officer, said the figure was partly a reflection of the company’s growing reliance on selling to larger companies, making it a “double-edged sword” as it moves upmarket.
Mr Butterfield pointed to recent headway in winning large accounts as the strongest sign of Slack’s progress over the past year. The number of customers generating more than $100,000 in annual recurring revenue had grown by 101 in the latest quarter, to 821, and was up 70 per cent from a year before, he said.
Get alerts on Slack Technologies Inc when a new story is published