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Zendesk Inc ZEN

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Morningstar’s Analysis

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2022 Outlook Better on Revenue, Light on Margins at Zendesk’s Investor Day; FVE Still $153

Dan Romanoff, CPA Senior Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

We are maintaining our fair value estimate of $153 per share for narrow-moat Zendesk following its investor day. While management did not shy away from skepticism surrounding the company’s recently announced deal to acquire Momentive, the most immediately impactful news was the initial outlook for 2022, which relative to Factset consensus, was ahead on revenue and light on operating margin. Adjusting our model for higher growth versus lower margins results in no change to our fair value estimate. We see possible revenue upside and additional margin pressure resulting from the Momentive acquisition over the next several years having a tug of war with our model assumptions and see our very high uncertainty rating as particularly relevant right now.

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Company Profile

Business Description

Founded in 2007, Zendesk provides a portfolio of customer engagement software solutions via single applications or the Sunshine suite. Its software unifies customer communication and data across various channels and business units, and simplifies customer service and engagement across self service, phone, chat, messaging, and email.

989 Market Street
San Francisco, CA, 94103
T +1 415 418-7506
Sector Technology
Industry Software - Application
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Speculative Growth
Employees 5,450