Zendesk Inc
ZEN Details
Zendesk Inc (NASDAQ: ZEN) is a service-first CRM company that is engaged in developing software which is designed to improve customer relationships.
Q2FY21 Results Performance (For the Quarter Ended 30 June 2021)
Healthy Growth in Revenue: The company has posted revenue growth of 29% YoY to $318.2 million in Q2FY21 driven by its success with customers. It witnessed sustained strength in sales to its enterprise customers and both net bookings and RPO dollars reached record levels. Its overall RPO rose 58% YoY as well as its net expansion rate rose to 120%.
Increase in Losses: Its GAAP operating loss widened to $42.4 million from $31.5 million in the pcp with GAAP operating margin down by 50 bps YoY to -13.3% owing to the impact of higher personnel costs due to sustained investment in its business. Further, its GAAP net loss increased to $58.4 million in Q2FY21.
Key Data (Source: Company Reports)
Key Executive Appointments
The company has undertaken various strategic appointments to its leadership team and Board of Directors as it positions itself for sustained growth. ZEN has appointed Alex Constantinople as Chief Marketing Officer. Besides, it inducted new board members Brandon Gayle and Steve Johnson to its Board of Directors, effective March 31, 2021.
Outlook
The company, on 29 July 2021, provided guidance for Q3FY21 as well as for FY21. It expects to achieve revenue between $332 - $337 million in Q3FY21 with GAAP operating loss to remain in the range of $(43) - $(39) million including the share-based compensation and related expenses of around $63 million and amortization of purchased intangibles of around $2 million.
For FY21, the company expects revenue to stay between $1.310 - $1.318 billion. Further, it forecasts GAAP operating loss to remain in the range of $(164) - $(159) million, taking into consideration the share-based compensation and related expenses of approximately $249 million as well as amortization of purchased intangibles of around $7 million, acquisition-related expenses of approximately $3 million, and real estate impairments of around $1 million.
Key Risks
The company’s performance is exposed to various risks like a failure in its ability to adapt its products to changing market dynamics. Further, its significant dependency on its customers renewing their subscriptions, purchasing additional subscriptions and the intensely competitive market in which Zendesk operates, also remains a concern.
Valuation Methodology: Price/Sales Multiple Based Relative Valuation (Illustrative)
Technical Overview:
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