Zendesk And Freshworks Follow Different Acquisition Strategies

Photo by DMP Alarms/Flickr.com

According to a recent Market Research report, the global Helpdesk Automation Market is expected to grow to more than $10 billion by 2022, recording an annualized growth rate of 32% over the next few years. Earlier this week, Billion Dollar Unicorn Zendesk (NYSE: ZEN) reported its fourth-quarter results that surpassed all market expectations and sent the stock soaring to year-high levels.

Zendesk’s Financials

Zendesk’s revenues grew 41% over the year to $172.2 million, ahead of the market’s forecast of $165.5 million. It ended the quarter with a net loss of $33.25 million, compared with a net loss of $24.98 million reported a year ago. On an adjusted basis, EPS came in at $0.10 per compared with the market’s estimated $0.03 for the quarter.

Among key metrics, Zendesk’s paid customer accounts grew to 136,600 at the end of the fourth quarter, compared with 133,700 a quarter ago and 118,900 a year ago. Zendesk Support added 1,500 new customers to end the quarter with 73,600 paid customer accounts. Other Zendesk products saw paid customer accounts grow by 2,100 to 16,900.

Nearly 40% of Zendesk’s Support monthly recurring revenue in the quarter came from customers with 100 or more Support agents. This number was flat over the previous quarter but recorded an impressive 38% growth over the previous year. The number of contracts with annual values of $50,000 grew 6% over the year and the average contract value increased 60%.

Zendesk ended the year with revenues growing 39% to $598.7 million. It reported an operating loss of $137.9 million and a non-GAAP operating income of $3.5 million for the year.

For the current quarter, Zendesk expects revenues of $178-$180 million with a GAAP operating loss of $42-$44 million. It expects to end the current year with revenues of $795-$805 million with a GAAP operating loss of $149-$154 million. The market was looking for revenues of $172.8 million for the quarter and $779.3 million for the year.

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