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Slack CEO Stewart Butterfield. (Slack Photo)

Slack CEO Stewart Butterfield is bracing for fast-growing rival Microsoft Teams to hit 100 million users as soon as a year from now, five times what it has today. But he’s says he’s not worried because more big Office 365 customers are choosing to pay for Slack rather than use Teams for free.

Slack reported its latest earnings results yesterday, and on the call with analysts, Butterfield brought up Microsoft several times. He noted the company now has 50 organizations spending more than $1 million annually on Slack, up for 30 a year ago. Roughly 70 percent of those, are also Office 365 customers that have free, bundled access to Microsoft Teams.

“They choose Slack despite having a bundled alternative that is marketed as free,” Butterfield said. “They choose Slack, because it scales to the complexity and breadth of their enterprise, because it is open, integrated with all the software they use across their business and because of the careful attention we pay to user experience, which creates a deeply loyal and committed fans.”

Last month, Microsoft said Teams had grown to 20 million daily users, a 50 percent bump in just four months. At first blush, the news looked bad for Slack, which hit 12 million daily users a few weeks prior, as its stock tumbled 8 percent that day.

Slack then went on the offensive, attacking Microsoft’s own engagement figures and positioning its product as the one people spend their days using. Butterfield again pointed to “weak engagement” for Teams on the call with analysts.

Already growing fast, Teams is poised to get a major bump in users as Microsoft prepares to sunset Skype for Business, making Teams its primary option for meetings and calls. Unless “they hit a snag,” Butterfield said Teams could grow to 50 million users in six months and 100 million within a year.

However, Butterfield doesn’t see this as big threat to Slack, as it continues to land customers that are deep in the Microsoft ecosystem. Butterfield claimed the two products are “different tools, used for different purposes,” despite Microsoft’s attempts to market Teams as a Slack competitor.

“Slack represents a new category of software, and regardless of which app opens when you click on a calendar reminder for a video call, if you need to work closely with colleagues in an environment that can integrate deeply with all the software you use, there is a clear choice, and our customers know it,” Butterfield said.

Slack reported $168.7 million in revenue for the quarter, up 60 percent year-over-year. It also finished the quarter with narrower than expected losses of $0.02 per share.

Butterfield pointed to Shared Channels, which launched earlier this year and creates a place for employees of different organizations (with separate Slack groups) to work together, as a big driver of its growing popularity among enterprises. In addition to having 50 customers spending more than $1 million on Slack, the number of 100,000 customers rose to 821, up 67 percent over the prior year.

Slack stock is up slightly in early trading Thursday.

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