What happened

Shares of Slack (WORK) have dropped today, down by 4.3% as of 2:04 p.m. EDT, after primary rival Microsoft (MSFT 0.43%) reported a surge in engagement on its competing Teams platform. The broader market is also tanking on macroeconomic fears as COVID-19 cases continue to soar in the U.S.

So what

Microsoft reported fiscal first-quarter results yesterday evening that topped expectations, as the shift to remote work has boosted demand for many of the enterprise software giant's productivity and collaboration offerings. In a single day during the quarter, Microsoft 365 users collectively spent 30 billion minutes collaborating with colleagues, CEO Satya Nadella noted on the conference call with analysts.

Microsoft Teams interface

Microsoft Teams. Image source: Microsoft.

"Teams now has more than 115 million daily active users," Nadella added. "We are seeing increased usage intensity as people communicate, collaborate, and coauthor content across work, life, and learning." That's up from 75 million daily active users (DAUs) two quarters ago.

Now what

Slack refers to Microsoft as its "primary competitor" in regulatory filings, but CEO Stewart Butterfield at times attempts to downplay the competitive concerns. Slack does not regularly disclose DAUs since doing so would invite comparisons that the company believes are not relevant, as Slack prefers to focus on other engagement metrics. The last update that Slack provided was when it hit 12 million DAUs in September 2019.

Butterfield fully expected Teams to hit 100 million DAUs due to the sheer scale of Microsoft's user base, but he continues to prioritize customer engagement on Slack's platform.