Zendesk Announces Third Quarter 2016 Results

Zendesk, Inc. (NYSE: ZEN) today reported financial results for the fiscal quarter ended September 30, 2016, and released a Shareholder Letter on its Investor Relations website at https://investor.zendesk.com.

Results for the Third Quarter 2016

Revenue was $80.7 million for the quarter ended September 30, 2016, an increase of 45% over the prior year period. GAAP net loss for the quarter ended September 30, 2016 was $25.8 million, and GAAP net loss per share was $0.27. Non-GAAP net loss was $3.9 million, and non-GAAP net loss per share was $0.04. Non-GAAP net loss excludes approximately $21.0 million in share-based compensation related expenses (including $0.6 million of employer tax related to employee stock transactions and $0.4 million of amortized share-based compensation capitalized in internal-use software) and $1.0 million of amortization of purchased intangibles. GAAP and non-GAAP net loss per share for the quarter ended September 30, 2016 were based on 94.1 million weighted average shares outstanding.

Outlook

As of November 1, 2016, Zendesk provided guidance for its expected revenue, GAAP operating loss and non-GAAP operating loss for the quarter ending December 31, 2016 and updated its guidance for the year ending December 31, 2016.

For the quarter ending December 31, 2016, Zendesk expects to report:
  • Revenue in the range of $86.0 - 88.0 million
  • GAAP operating loss of $29.0 - 30.0 million, which includes share-based compensation and related expenses of approximately $23.0 million and amortization of purchased intangibles of approximately $1.0 million
  • Non-GAAP operating loss of $5.0 - 6.0 million, which excludes share-based compensation and related expenses of approximately $23.0 million and amortization of purchased intangibles of approximately $1.0 million
  • Approximately 95.6 million weighted average shares outstanding

For the full year 2016, Zendesk expects to report:
  • Revenue in the range of $309.0 - 311.0 million
  • GAAP operating loss of $108.5 - 109.5 million, which includes share-based compensation and related expenses of approximately $82.7 million and amortization of purchased intangibles of approximately $3.8 million
  • Non-GAAP operating loss of $22.0 - 23.0 million, which excludes share-based compensation and related expenses of approximately $82.7 million and amortization of purchased intangibles of approximately $3.8 million
  • Approximately 93.1 million weighted average shares outstanding

Zendesk's estimates of share-based compensation and acquisition related expenses in future periods assume, among other things, the occurrence of no additional acquisitions, investments or restructurings and no further revisions to share-based compensation and related expenses.

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