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Zendesk (ZEN)

Zendesk is a customer service software company with support and sales products designed to improve customer relationships. The company believes that every great customer relationship stems from a conversation, so the company built a company that designs solutions to foster better customer relationships. Powerful, innovative customer experiences should be within reach for every company, no matter the size, industry or ambition. Zendesk serves more than 170,000 customers across a multitude of industries in over 30 languages.

Company profile

Ticker
ZEN
Exchange
Website
CEO
Mikkel Svane
Employees
Incorporated
Location
Fiscal year end
SEC CIK
Subsidiaries
We Are Cloud SAS • FutureSimple Inc. • Smooch Technologies ULC • Smooch Technologies US Inc. • Zendesk Pty Ltd • Zendesk Brasil Software Corporativo LTDA. • Zendesk, S. de R.L. de C.V. • Zendesk ApS • Zendesk GmbH • Zendesk Technologies Private Limited ...

ZEN stock data

Analyst ratings and price targets

Last 3 months
Current price
Average target
$77.50
Low target
$77.50
High target
$77.50
Stifel
Downgraded
Hold
$77.50
26 Jul 22
Piper Sandler
Maintains
Neutral
$77.50
18 Jul 22

Investment data

Data from SEC filings
Securities sold
Number of investors

Calendar

29 Jul 22
1 Oct 22
31 Dec 22
Quarter (USD) Jun 22 Mar 22 Dec 21 Sep 21
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Annual (USD) Dec 21 Dec 20 Dec 19 Dec 18
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Cash burn rate (est.) Burn method: Change in cash Burn method: Operating income Burn method: FCF (opex + capex)
Last Q Avg 4Q Last Q Avg 4Q Last Q Avg 4Q
Cash on hand (at last report) 569.69M 569.69M 569.69M 569.69M 569.69M 569.69M
Cash burn (monthly) (no burn) (no burn) 31.17M 22.54M (no burn) (no burn)
Cash used (since last report) n/a n/a 95.38M 68.98M n/a n/a
Cash remaining n/a n/a 474.32M 500.72M n/a n/a
Runway (months of cash) n/a n/a 15.2 22.2 n/a n/a

Beta Read what these cash burn values mean

Date Owner Security Transaction Code Indirect 10b5-1 $Price #Shares $Value #Remaining
15 Sep 22 McDermott Adrian Common Stock Payment of exercise Dispose F No No 76.7 203 15.57K 95,197
15 Sep 22 McDermott Adrian Common Stock Option exercise Acquire M No No 0 408 0 95,400
15 Sep 22 McDermott Adrian Common Stock Payment of exercise Dispose F No No 76.7 147 11.27K 94,992
15 Sep 22 McDermott Adrian Common Stock Option exercise Acquire M No No 0 295 0 95,139
15 Sep 22 McDermott Adrian Common Stock Payment of exercise Dispose F No No 76.7 203 15.57K 94,844
15 Sep 22 McDermott Adrian Common Stock Option exercise Acquire M No No 0 408 0 95,047
15 Sep 22 McDermott Adrian Common Stock Payment of exercise Dispose F No No 76.7 250 19.18K 94,639
15 Sep 22 McDermott Adrian Common Stock Option exercise Acquire M No No 0 504 0 94,889
15 Sep 22 McDermott Adrian RSU Common Stock Option exercise Dispose M No No 0 408 0 16,751
15 Sep 22 McDermott Adrian RSU Common Stock Option exercise Dispose M No No 0 295 0 8,560
94.7% owned by funds/institutions
13F holders Current Prev Q Change
Total holders 440 495 -11.1%
Opened positions 85 93 -8.6%
Closed positions 140 58 +141.4%
Increased positions 157 170 -7.6%
Reduced positions 138 164 -15.9%
13F shares Current Prev Q Change
Total value 33.7B 16.4B +105.4%
Total shares 116.88M 118.08M -1.0%
Total puts 4.31M 4.26M +1.1%
Total calls 17.23M 13.55M +27.1%
Total put/call ratio 0.3 0.3 -20.5%
Largest owners Shares Value Change
Vanguard 11.4M $844.49M -0.2%
BLK Blackrock 7.16M $530.65M +6.4%
JHG Janus Henderson 6.71M $496.72M -10.3%
Capital World Investors 6.61M $489.9M -41.3%
FIL 4.82M $356.75M +516.0%
MTH Meritage 3.77M $279.37M +26.7%
Light Street Capital Management 2.73M $201.92M +98.8%
Pictet Asset Management 2.7M $199.79M -5.5%
FMR 2.49M $184.19M -1.9%
STT State Street 2.43M $180.14M -2.8%
Largest transactions Shares Bought/sold Change
Capital World Investors 6.61M -4.65M -41.3%
FIL 4.82M +4.03M +516.0%
Jana Partners 0 -3.1M EXIT
Third Point 0 -1.9M EXIT
Soma Equity Partners 0 -1.9M EXIT
Light Street Capital Management 2.73M +1.36M +98.8%
BAC Bank Of America 772.71K -1.35M -63.7%
Pentwater Capital Management 1.19M +1.19M NEW
Balyasny Asset Management 1.94M +1.19M +157.6%
Cadian Capital Management 0 -1.04M EXIT

Financial report summary

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Competition
MicrosoftOracleServiceNowHubSpotFreshworksSprinklrAtlassianZenvia
Risks
  • Risks Related to our Product and Platform Solutions
  • The announcement and pendency of our proposed acquisition by a consortium of private equity firms could adversely impact our business, financial condition and results of operations.
  • Failure to consummate the Merger within the expected timeframe or at all could adversely impact our business, financial condition and results of operations.
  • Litigation relating to the Merger has been filed against us and our board of directors, and additional litigation may be filed against us and our board of directors in the future, which could prevent or delay the completion of the Merger or result in the payment of damages.
  • Unfavorable conditions in our industry or the global economy or reductions in information technology spending could limit our ability to grow our business and negatively affect our operating results.
  • The Company’s operations and performance depend significantly on global and regional economic conditions.
  • The current economic downturn may lead to decreased demand for our products and services and otherwise harm our business and results of operations.
  • Rising inflation rates could negatively impact our revenues and profitability if increases in the prices of our goods and services or a decrease in consumer spending results in lower sales. In addition, if our costs increase and we are not able to pass along these price increases to our customers, our net income would be adversely affected, and the adverse impact may be material.
  • The COVID-19 pandemic has and may continue to cause harm to our business, results of operations, and financial condition.
  • Catastrophic events may disrupt, and have disrupted, our business.
  • We derive, and expect to continue to derive, substantially all of our revenue and cash flows from Support or offerings such as Suite that include Support. If we fail to adapt this product to changing market dynamics and customer preferences or to maintain or achieve increased market acceptance of Support, our business, results of operations, financial condition, and growth prospects would be harmed.
  • If we are not able to develop enhancements to our product and platform solutions, provide a unified and reliable experience between our solutions, or introduce new solutions and services that achieve market acceptance and that keep pace with technological developments, our business would be harmed.
  • We may not be able to integrate new product and platform solutions into our infrastructure, which could negatively impact our future sales and results of operations.
  • If we fail to integrate our product and platform solutions with a variety of operating systems, software applications, and hardware that are developed by others, our solutions may become less marketable, less competitive, or obsolete, and our operating results would be harmed.
  • The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed.
  • If the market for SaaS business software applications develops more slowly than we expect or declines, our business would be adversely affected.
  • We recognize revenue over the term of our customer contracts. Consequently, downturns or upturns in new sales may not be immediately reflected in our operating results and may be difficult to discern.
  • Certain of our operating results and financial metrics may be difficult to predict as a result of seasonality and usage-based factors.
  • Our business depends substantially on our customers renewing their subscriptions, expanding the use of their subscriptions, and purchasing subscriptions for additional product and platform solutions from us. Any decline in our customer retention or expansion, or any failure by us to sell subscriptions to additional solutions to existing customers, would harm our future operating results.
  • We face a number of risks in targeting larger organizations for sales of our solutions and, if we do not manage these efforts effectively, our business and results of operations could be adversely affected.
  • Our business and growth depend substantially on the success of our strategic relationships with third parties, including technology partners, channel partners, and professional services partners.
  • We employ a pricing model that subjects us to various challenges that could make it difficult for us to derive sufficient value from our customers particularly because we do not have the history with our subscription or pricing models that we need to accurately predict optimal pricing necessary to attract and retain customers.
  • We are highly dependent upon free trials of our solutions and other inbound lead generation strategies to drive our sales and revenue. If these strategies fail to continue to generate sales opportunities or do not convert into paying customers, our business and results of operations would be harmed.
  • Any failure to offer high-quality product support or customer success initiatives may adversely affect our relationships with our customers and our financial results.
  • If we are unable to develop and maintain successful relationships with channel partners, our business, operating results, and financial condition could be adversely affected.
  • If we are not able to maintain and enhance our brand, our business, operating results, and financial condition may be adversely affected.
  • Our quarterly results may fluctuate significantly from period to period, and if we fail to meet the expectations of analysts or investors, our stock price and the value of an investment in our common stock could decline substantially.
  • Failure to effectively maintain and scale our sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our product and platform solutions.
  • We depend on our executive officers and other key employees and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could adversely affect our business.
  • If we fail to effectively manage our growth and organizational change in a manner that preserves the key aspects of our culture, our business and operating results could be harmed.
  • We have a history of losses and we expect our revenue growth rate to decline. As our costs increase, we may not be able to generate sufficient revenue to achieve and sustain our profitability.
  • Our international sales and operations subject us to additional risks that can adversely affect our business, operating results, and financial condition.
  • We may acquire or invest in companies, which may divert our management’s attention and result in additional dilution to our stockholders. We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions.
  • Our financial results may fluctuate due to increasing variability in our sales cycles.
  • We are subject to governmental sanctions restrictions and export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate the controls.
  • We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs.
  • Our network and computer systems have been breached in the past. In light of prior incidents, and in the event that we are subject to any future breaches or we learn that the extent of prior breaches are more significant than is currently known, our solutions may be perceived as insecure, we may lose existing customers or fail to attract new customers, and we may incur significant liabilities.
  • Interruptions or performance problems associated with our technology and infrastructure may adversely affect our business and operating results.
  • We rely substantially on third-party managed hosting services to support our operations and disruption or interference in such service may negatively impact our business.
  • Domestic and international privacy and data security concerns and laws could result in additional costs and liabilities to us or inhibit sales of our solutions.
  • Real or perceived errors, failures, or bugs in our solutions could adversely affect our operating results and growth prospects.
  • Incorrect or improper implementation or use of our product and platform solutions could result in customer dissatisfaction and negatively affect our business, results of operations, financial condition, and growth prospects.
  • Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.
  • Our use of “open source” software could negatively affect our ability to sell our solutions and subject us to possible litigation.
  • Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.
  • We have been, and may in the future be, sued by third parties for alleged infringement of their proprietary rights.
  • Taxing authorities may successfully assert that we should have collected, or in the future should collect, sales and use, value added, or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our results of operations.
  • Our international operations subject us to potentially adverse tax consequences.
  • If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings.
  • Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.
  • Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
  • We depend and rely upon SaaS technologies from third parties to operate our business and interruptions or performance problems with these technologies may adversely affect our business and operating results.
  • We face exposure to foreign currency exchange rate fluctuations.
  • Our stock price has been, and may continue to be, volatile or may decline regardless of our operating performance, resulting in substantial losses for our stockholders.
  • Our directors, officers, and principal stockholders beneficially own a significant percentage of our stock and will be able to exert significant influence over matters subject to stockholder approval.
  • Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our common stock.
  • The changing laws and regulations related to being a public company may strain our resources and divert management’s attention.
  • We do not intend to pay dividends on our common stock so any returns will be limited to changes in the value of our common stock.
  • If securities or industry analysts do not continue to publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
  • Servicing our debt may require a significant amount of cash. We may not have sufficient cash flow from our business to pay our indebtedness, and we may not have the ability to raise the funds necessary to settle cash conversions of the Notes or to repurchase the Notes for cash upon a fundamental change, which could adversely affect our business and results of operations.
  • The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.
  • Transactions relating to our Notes may affect the value of our common stock.
  • We are subject to counterparty risk with respect to the capped call transactions.
  • The accounting method for convertible debt securities, such as the Notes, could have a material effect on our reported financial results.
Management Discussion
  • Revenue increased $89 million, or 28%, in the three months ended June 30, 2022 compared to the same period in 2021. The total increase in revenue was primarily attributable to expansions from existing accounts as of June 30, 2021 and the remainder was attributable to revenue from new accounts acquired thereafter. Revenue increased $179 million, or 29%, in the six months ended June 30, 2022 compared to the same period in 2021. The total increase in revenue was primarily attributable to expansions from existing accounts and the remainder was attributable to revenue from new accounts. Revenue from new accounts on a year-to-date basis reflects the revenue recognized from new customers acquired in the 12 months prior for each discrete quarter within the year-to-date period.

Content analysis

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H.S. junior Good
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