What happened

Shares of Slack Technologies (WORK) tumbled 13.9% on Wednesday, following the release of its second-quarter financial results.

So what

Slack's revenue soared 49% year over year to $215.9 million, fueled by a 30% surge in paid customers to over 130,000. Slack is enjoying rising demand for its messaging platform during the coronavirus pandemic, as businesses seek out new ways to enable employees to work from home.

"One of the drivers of this acceleration was Slack Connect, which offers seamless, secure inter-company collaboration that we believe is light years ahead of email," CEO Stewart Butterfield said in a press release.

A person is pointing to a digital stock chart that rises sharply then falls.

Despite posting solid increases in revenue and customers, Slack's stock price fell sharply on Wednesday. Image source: Getty Images.

However, investors appeared to focus more on Slack's billings, a key measure of future sales growth. The company's calculated billings of $218.2 million represented growth of 25%, a deceleration from the 38% growth Slack delivered in the first quarter. They were also below Wall Street's forecast of $232.9 million. 

Now what

During a conference call with analysts, CFO Allen Shim said Slack offered credits and installment-payment plans to help customers who were negatively impacted by the COVID-19 crisis. Still, Slack's weaker-than-expected billings heightened investors' concerns that intensifying competition is beginning to take a toll on Slack's expansion. 

Microsoft (MSFT 0.84%) is a particularly worrisome threat. The tech titan's Teams communication platform is gaining users at a rapid clip. Slack filed a complaint against Microsoft with the European Commission in July, arguing that its larger rival was acting in an anti-competitive manner by "illegally" tying Teams into its massively popular Office productivity suite. Butterfield said during the call he believes the commission will agree with Slack's claims. 

Should regulators force Microsoft to unbundle Teams from its Office software suite, it could make for a fairer fight -- and perhaps one that Slack could ultimately win.