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Slack calls out Microsoft as its ‘primary competitor’ in IPO filing in nod to rival’s collaboration tools

Now we know why Slack made such a ruckus when Microsoft entered its territory two years ago with the introduction of Teams, even going as far as placing a full-page ad in The New York Times warning the tech giant that “all this is harder than it looks.”

Slack listed Microsoft as its “primary competitor” in a filing with the U.S. Securities and Exchange Commission Friday morning ahead of its initial public offering. The two companies both offer chat-based collaboration apps where people can work on documents and tasks together.

Slack’s range of competitors is growing all the time, the company said in the filing, and it called out Facebook, Google and Cisco as less direct rivals. The company is also worried about more traditional means of communications such as email, as well as the possibility that current allies that it has integrated deeply with like Salesforce, Oracle and the newly public Zoom could quickly evolve into competitors.

“New competitors or alliances among competitors may emerge and rapidly acquire significant market share due to factors such as greater brand name recognition, a larger existing user and/or customer base, superior product offerings, a larger or more effective sales organization, and significantly greater financial, technical, marketing, and other resources and experience,” according to the filing.

It’s an active market for mergers and acquisitions right now, according to the filing, especially related to cloud tech. It’s a very real possibility, Slack says, that a tech giant could rapidly become a significant threat through buying up other companies in the market.

Slack’s biggest concerns are all laid out in the IPO filing. The company is taking a less traditional route, opting for a direct initial public offering where it won’t sell any new shares to raise money. It is a cheaper way to go, as it doesn’t involve as many bankers or fees, and it gives early investors a chance to sell stock directly and cash out.

Slack’s revenue is rising at a rapid clip, according to the filing, though like many of the other companies in the IPO process right now, it is not profitable. Slack’s revenue has quadrupled in the last three years to $400 million in 2019, up 82 percent over the prior year.

Slack lost a staggering $138.9 million in its 2019 fiscal year. However, the company’s losses are declining year-over-year and as a percentage of revenue.

The rivalry between Slack and Microsoft is a two-way street. Last summer, Microsoft officially added Slack to its list of competitors in its annual 10-K report.

Teams hit its two-year anniversary in March, reporting at the time it had eclipsed 500,000 organizations using the app.

Slack had more than 10 million daily active users and 500,000 organizations on its free version as of January. Slack has more than 88,000 paid customers, according to the filing.

Slack CEO Stewart Butterfield has acknowledged the challenge it faces going up against Microsoft. It’s one of the largest and most valuable companies in the world and “if they start channeling all their resources against you, that’s a lot to compete with,” Butterfield told Business Insider in 2017.

Slack has integrated offerings from competitors before, and earlier this month it brought a variety of popular Office 365 apps into its ecosystem. In an interview with GeekWire at the time, Andy Pflaum, Slack’s director of product management, said competition isn’t a factor when working on new integrations.

“We want to break down walls that might otherwise exist between apps that should work together,” said Pflaum.

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