User metrics are undeniably important for tech platforms, but Slack (NYSE:WORK) investors have arguably been focusing too much on those figures in recent months. Slack shares tanked in November when key rival Microsoft (NASDAQ:MSFT) said its competing Teams app had garnered 20 million daily active users (DAUs), ahead of the 12 million DAUs that Slack had in September. In the conference call with analysts to discuss fiscal third-quarter results this week, Slack CEO Stewart Butterfield went as far as to predict that Teams will soon hit 100 million users.
Here's why Butterfield doesn't really care.
Teams should hit 100 million users within a year
Slack has been arguing that its users are far more engaged than Teams users, many of which are being force-migrated from legacy platforms as Microsoft continues transitioning its users to Office 365. "I want to acknowledge the escalation and competitive narratives," Butterfield said. "Microsoft has announced that there are now 20 million people using Teams, around 10% of their Office 365 user base."
Microsoft has been shuffling users through various product transitions. The ancient Office Communicator from 2007 was replaced with Lync in 2011, which was subsequently displaced by Skype for Business in 2015, and Microsoft is now in the process of migrating all of those users over to Teams. Butterfield noted that Microsoft disclosed in 2015 that Lync had 100 million active users that would be moving over to Skype for Business.
"Now that the Skype for Business users are being forced to migrate into Teams, it's reasonable to expect more of the same," Butterfield added. "Unless they hit a snag, we'd expect them to announce 50 million in the next six months and then 100 million within the next year."
But engagement is what really matters to Butterfield, not headline user metrics. The chief executive quipped, "Just look at the weak engagement numbers that Microsoft themselves reported about Teams and the much deeper level of engagement you see among Slack users."
Reclaiming control of the narrative
Recognizing the attention that user metrics are receiving, Butterfield is cleverly reclaiming control of the narrative. Microsoft already had 100 million users on its predecessor collaboration platforms, so it naturally follows that Teams will inevitably reach that level.
"I think trying to get ahead of it and get people to understand, you are going to hear a 30 million daily active user announcement and a 50 million daily active user announcement and 100 million daily active user announcement because they had 100 million people using Lync," Butterfield noted. "So of course, they're going to get there."
Instead of being distracted by those announcements, Slack will keep focusing on serving its customers. Butterfield acknowledged that Teams comes up during sales conversations, particularly as Teams is often included for free with Office 365, but maintained that most customers agree that Slack is "the superior product."