Cloud Stocks: Zendesk Adds Products, While Freshdesk Keeps Acquiring

Recently, CRM service player Zendesk (NYSE: ZEN) announced its fourth-quarter results that surpassed the market’s expectations. Rival Freshworks also released a peek into its financials that reveals stellar growth. Many believe that Freshworks may be eyeing a listing this year.

Zendesk’s Financials

Zendesk’s fourth-quarter revenues grew 23% to $283.5 million, ahead of the market’s estimate of $277.93 million. GAAP net loss came in at $54.8million. Adjusted EPS of $0.11 missed the Street’s estimates of $0.15.

Among key metrics, the percentage of Support monthly recurring revenue (MRR) from customers with 100 or more Support agents was 44% compared with 43% a year ago. The percentage of total annualized recurring revenues (ARR) from customers with ARR of $100,000 or more was 49% at the end of the quarter. Total remaining performance obligations (RPO) increased 44% to $925 million. The number of paid customer accounts grew to 173,600. Its dollar-based net expansion rate was 112%.

For the full year, revenues grew 26% to $1.03 billion. It ended the year with an operating loss of $155.9 million and an adjusted operating income of $71.8 million.

For the first quarter, Zendesk forecast revenues of $291-$296 million, compared with the market’s forecast of $289.47 million. For the full year, it expects revenues of $1.28-$1.31 billion compared with the market’s forecast of $1.27 billion.

Zendesk’s Product Expansion

Recently, Zendesk announced the general availability of its messaging solution as part of the Zendesk Suite. The new solution combines all of Zendesk’s service capabilities into a single offering. It provides businesses with the ability to have continuous conversations, regardless of the customer’s method of messaging. Companies are able to provide connected conversational experiences through web, mobile, and social channels that all work with built-in automation. It offers capabilities such as proactive notifications, the ability to enable third-party bots, and the ability to transact right in the conversation when looking through products, reserving seats, or making payments.

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Disclosure: All investors should make their own assessments based on their own research, informed interpretations and risk appetite. This article expresses my own opinions based on my own ...

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