Slack Technologies Inc [NYSE: WORK] was a big loser in yesterday’s session. This followed the company’s release of weak Q2 results that pointed to a slowdown in customer billing. Specifically, the company reported that in Q2, calculated billings stood at $218.23 million representing growth of 25%.This is a sharp drop compared to the growth of 38% that it recorded in Q1. This is pointing to an increase in competition that is eating into the company’s market.
One of the biggest threats that the company faces is Microsoft. The company has a similar product to Slack and it is gaining momentum at an exponential rate. Clear pointers to the intensity of the competition from slack is the fact that Slack recently complained to the European Commission about Microsoft. The company stated Microsoft was going against competition rules by tying its Teams platform to its Ms. Office productivity suite.
What next for Slack
Despite the slump in value following the release of Q2 results. The company is still well-positioned to record a healthy growth rate in the near-term. One of the reasons why it has grown to where it is today is the secure nature of its platform. The company’ Slack Connect platform gives users seamless, and highly secure connectivity for intercompany communication. Not only is this platform more efficient than using email, it is also much better than what most competitors have to offer. This means that Slack still has a good opportunity to grow despite the increasingly competitive landscape.
Then there is the fact that the market for its products is growing. All through the COVI D-19 period, Slack and other platforms that make working from home achievable have gained lots of users, and have seen value grow exponentially. This dynamic is unlikely to change, as working from home could now be the new normal. That’s because many companies have discovered that it is possible to achieve the same level of efficiency while, while also cutting down on the costs that come with leasing office spaces. The result is that companies like Slack will keep growing their customer numbers despite the growing competition.
It is also important to note that the company has a case against Microsoft’s anticompetitive practices. As such, if market regulators force Microsoft to decouple Teams from Office, it would create a much fairer playing field and give slack the edge to grow market share.
About Slack Technologies Inc
Slack is a business software platform. It is based in San Francisco, California.