Workplace collaboration platform provider Slack Technologies Inc. managed to recover a little impetus today after delivering strong third-quarter financial results that beat expectations on both earnings and revenue, sending its share price up 2% in after-hours trading.

The company reported a loss before certain costs such as stock compensation of 2 cents per share on revenue of $168.7 million. Wall Street had forecast a much bigger loss of 8 cents per share on revenue of just $156 million. Slack’s overall net loss for the quarter came to $87.7 million.

More good news came when Slack updated its full-year guidance, saying it now expects a loss of 31 to 32 cents on revenue of $621 million to $623 million, up from its earlier forecast of $603 million to $610 million. Wall Street analysts had previously forecast a full-year loss of 40 cents per share on revenue of $608.9 million.

Slack continues to grab more customers too. It ended the quarter with 105,000 paid customers, up 30% from the same period a year ago. Officials said 821 of those customers bring in annual recurring revenue of more than $100,000 apiece. In addition, the number of customers who bring in annual recurring revenue of more than $1 million each rose above 50 for the first time, officials said.

“Shared channels went into general availability in mid-September after an extensive beta period,” Slack’s chief executive officer Stewart Butterfield (pictured) said in a statement. “Since then the rate of adoption has accelerated. This is our most exciting product release in collaboration since we first launched Slack.”

Customers seem to be one of the most important metrics of Slack’s success, if shareholder sentiment is anything to go by. Last month its biggest rival, Microsoft Corp., said its Teams product had hit 20 million daily active users, far ahead of the 12 million DAU Slack claimed in October. That caused Slack’s stock to fall by as much as 10%.

However, claims have since emerged that Microsoft might be fudging its numbers a bit as it bundles Teams with its Office 365 suite. Hence anyone who was subscribed to that service automatically becomes a Teams “user.”

Butterfield seemed to reiterate those claims in a conference call with analysts, noting that 70% of its customers that spend more than $1 million annually are also Office 365 customers.

In any case, Slack’s ability to grow its customer base is all the more impressive considering the advantages Microsoft has, including its overwhelming presence in businesses of every size, its global reach and its massively deeper pockets, said Charles King, an analyst with Pund-IT Inc. He explained Slack was able to do this because it’s tapping into workplace and worker issues, trends and behaviors more effectively than Microsoft is doing.

“Some might call this a classic David versus Goliath battle but it rings of a classic dichotomy to me; that bigger isn’t always better,” King said. “Slack is an excellent example of how smaller companies that are better at listening to, understanding and serving their customers will continue to grow their businesses and opportunities.”

Holger Mueller of Constellation Research Inc. told SiliconANGLE he believed Slack was doing well, but needs to keep growing if it’s to ward off the threat from Microsoft.

“Slack needs to keep growing and reach the legendary $1 billion in revenue fast so it can grow its relevance for CIOs beyond its early-adoption customers,” the analyst said. “The threat of Microsoft looms for Slack and the only way forward is more innovation and growth.”

Photo: Steve Taureen/Flickr