Home Business Wire Zendesk Announces Second Quarter 2021 Results

Zendesk Announces Second Quarter 2021 Results

Highlights:

  • Second quarter revenue increased 29% year over year to $318.2 million
  • Second quarter GAAP operating loss of $42.4 million and non-GAAP operating income of $22.6 million
  • Shelagh Glaser joins as Chief Financial Officer
  • Alex Constantinople joins as Chief Marketing Officer

SAN FRANCISCO–(BUSINESS WIRE)–Zendesk, Inc. (NYSE: ZEN) today reported financial results for the second quarter ended June 30, 2021, and released a Shareholder Letter on its investor relations website at https://investor.zendesk.com.

Results for the Second Quarter 2021

Revenue was $318.2 million for the quarter ended June 30, 2021, an increase of 29% over the prior year period. GAAP net loss for the quarter ended June 30, 2021 was $58.4 million, and GAAP net loss per share (basic and diluted) was $0.49. Non-GAAP net income was $17.1 million, and non-GAAP net income per share was $0.14 (basic) and $0.13 (diluted). Non-GAAP net income excludes approximately $61.0 million in share-based compensation and related expenses (including $3.9 million of employer tax related to employee stock transactions and $0.4 million of amortization of share-based compensation capitalized in internal-use software), $12.7 million of amortization of debt discount and issuance costs, $1.8 million of amortization of purchased intangibles, $1.2 million of real estate impairments, $1.1 million of acquisition-related expenses, and non-GAAP income tax effects and adjustments of $2.2 million. GAAP net loss per share for the quarter ended June 30, 2021 was based on 119.1 million weighted average shares outstanding (basic and diluted), and non-GAAP net income per share for the quarter ended June 30, 2021 was based on 119.1 million weighted average shares outstanding (basic) and 127.5 million weighted average shares outstanding (diluted).

Outlook

As of July 29, 2021, Zendesk provided guidance for the quarter ending September 30, 2021 and the full year ending December 31, 2021.

For the quarter ending September 30, 2021, Zendesk expects to report:

  • Revenue in the range of $332 – 337 million
  • GAAP operating income (loss) in the range of $(43) – (39) million, which includes share-based compensation and related expenses of approximately $63 million and amortization of purchased intangibles of approximately $2 million
  • Non-GAAP operating income (loss) in the range of $22 – 26 million, which excludes share-based compensation and related expenses of approximately $63 million and amortization of purchased intangibles of approximately $2 million
  • Approximately 120 million weighted average shares outstanding (basic)
  • Approximately 128 million weighted average shares outstanding (diluted)

For the full year ending December 31, 2021, Zendesk expects to report:

  • Revenue in the range of $1.310 – 1.318 billion
  • GAAP operating income (loss) in the range of $(164) – (159) million, which includes share-based compensation and related expenses of approximately $249 million, amortization of purchased intangibles of approximately $7 million, acquisition-related expenses of approximately $3 million, and real estate impairments of approximately $1 million
  • Non-GAAP operating income (loss) in the range of $96 – 101 million, which excludes share-based compensation and related expenses of approximately $249 million, amortization of purchased intangibles of approximately $7 million, acquisition-related expenses of approximately $3 million, and real estate impairments of approximately $1 million
  • Approximately 120 million weighted average shares outstanding (basic)
  • Approximately 129 million weighted average shares outstanding (diluted)
  • Free cash flow in the range of $120 – 130 million, which includes the impact of a lease termination payment of approximately $7 million paid in the second quarter of 2021 related to our real estate changes in San Francisco

We have not reconciled free cash flow guidance to net cash from operating activities for the full year 2021 because we do not provide guidance on the reconciling items between net cash from operating activities and free cash flow, as a result of the uncertainty regarding, and the potential variability of, these items. The actual amount of such reconciling items will have a significant impact on our free cash flow and, accordingly, a reconciliation of net cash from operating activities to free cash flow for the full year 2021 is not available without unreasonable effort.

Zendesk’s estimates of share-based compensation and related expenses, amortization of purchased intangibles, acquisition-related expenses, real estate impairments, weighted average shares outstanding, and free cash flow 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.

Shareholder Letter and Conference Call Information

The detailed Shareholder Letter is available at https://investor.zendesk.com and Zendesk will host a live video webcast at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on Thursday, July 29, 2021 to discuss the results. The live video webcast can be accessed through Zendesk’s investor relations website at https://investor.zendesk.com. A replay of the webcast will be available for 12 months.

About Zendesk

Zendesk started the customer experience revolution in 2007 by enabling any business around the world to take their customer service online. Today, Zendesk is the champion of great service everywhere for everyone, and powers billions of conversations, connecting more than 100,000 brands with hundreds of millions of customers over telephony, chat, email, messaging, social channels, communities, review sites and help centers. Zendesk products are built with love to be loved. The company was conceived in Copenhagen, Denmark, built and grown in California, taken public in New York City, and today employs more than 5,000 people across the world. Learn more at www.zendesk.com.

References to Zendesk, the “Company,” “our,” or “we” in this press release refer to Zendesk, Inc. and its subsidiaries on a consolidated basis.

Forward-Looking Statements

This press release contains forward-looking statements, including, among other things, statements regarding Zendesk’s future financial performance, its continued investment to grow its business, and progress toward its long-term financial objectives. Words such as “may,” “should,” “will,” “believe,” “expect,” “anticipate,” “target,” “project,” and similar phrases that denote future expectation or intent regarding Zendesk’s financial results, operations, and other matters are intended to identify forward-looking statements. You should not rely upon forward-looking statements as predictions of future events.

The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties, and other factors that may cause Zendesk’s actual results, performance, or achievements to differ materially, including (i) Zendesk’s ability to adapt its products to changing market dynamics and customer preferences or achieve increased market acceptance of its products; (ii) Zendesk’s ability to effectively expand its sales capabilities; (iii) the intensely competitive market in which Zendesk operates and the difficulty that Zendesk may have in competing effectively; (iv) the development of the market for software as a service business software applications; (v) Zendesk’s substantial reliance on its customers renewing their subscriptions and purchasing additional subscriptions; (vi) our ability to optimize the pricing for our solutions; (vii) Zendesk’s ability to effectively market and sell its products to larger enterprises; (viii) Zendesk’s ability to introduce and market new products and to support its products on a unified, reliable shared services platform; (ix) Zendesk’s ability to maintain and develop its strategic relationships with third parties; (x) real or perceived errors, failures, or bugs in its products; (xi) Zendesk’s reliance on third party services, including services for hosting, email, and messaging; (xii) Zendesk’s ability to accurately forecast expenditures on third-party managed hosting services; (xiii) Zendesk’s expectation that the future growth rate of its revenues will decline, and that, as its costs increase, Zendesk may not be able to generate sufficient revenues to achieve or sustain profitability; (xiv) Zendesk’s ability to effectively manage its growth and organizational change, including its international expansion strategy; (xv) Zendesk’s ability to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions; (xvi) Zendesk’s ability to securely maintain customer data and prevent, mitigate, and respond effectively to both historical and future data breaches; (xvii) potential service interruptions or performance problems associated with Zendesk’s technology and infrastructure; (xviii) Zendesk’s ability to comply with privacy and data security regulations; (xix) the effect of uncertainties related to the COVID-19 pandemic on U.S. and global markets, Zendesk’s business, operations, revenue results, cash flow, operating expenses, hiring, demand for its solutions, sales cycles, customer retention, and its customers’ businesses and industries; and (xx) other adverse changes in general economic or market conditions.

The forward-looking statements contained in this press release are also subject to additional risks, uncertainties, and factors, including those more fully described in Zendesk’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2020. Further information on potential risks that could affect actual results will be included in the subsequent periodic and current reports and other filings that Zendesk makes with the Securities and Exchange Commission from time to time, including its Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.

Forward-looking statements represent Zendesk’s management’s beliefs and assumptions only as of the date such statements are made. Zendesk undertakes no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

Condensed Consolidated Statements of Operations

 

(In thousands, except per share data; unaudited)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Revenue

$

318,216

 

 

$

246,664

 

 

$

616,264

 

 

$

484,140

 

Cost of revenue

66,743

 

 

61,515

 

 

127,637

 

 

121,217

 

Gross profit

251,473

 

 

185,149

 

 

488,627

 

 

362,923

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

82,826

 

 

59,003

 

 

156,609

 

 

119,424

 

Sales and marketing

165,250

 

 

121,397

 

 

322,768

 

 

245,707

 

General and administrative

45,818

 

 

36,247

 

 

88,951

 

 

70,573

 

Total operating expenses

293,894

 

 

216,647

 

 

568,328

 

 

435,704

 

Operating loss

(42,421

)

 

(31,498

)

 

(79,701

)

 

(72,781

)

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense

(14,591

)

 

(8,086

)

 

(29,006

)

 

(14,973

)

Loss on early extinguishment of debt

 

 

(25,950

)

 

 

 

(25,950

)

Interest and other income (expense), net

960

 

 

2,166

 

 

6,044

 

 

9,068

 

Total other income (expense), net

(13,631

)

 

(31,870

)

 

(22,962

)

 

(31,855

)

Loss before provision for income taxes

(56,052

)

 

(63,368

)

 

(102,663

)

 

(104,636

)

Provision for income taxes

2,355

 

 

1,288

 

 

4,709

 

 

2,804

 

Net loss

$

(58,407

)

 

$

(64,656

)

 

$

(107,372

)

 

$

(107,440

)

Net loss per share, basic and diluted

$

(0.49

)

 

$

(0.56

)

 

$

(0.91

)

 

$

(0.94

)

Weighted-average shares used to compute net loss per share, basic and diluted

119,050

 

 

114,600

 

 

118,484

 

 

114,069

 

Condensed Consolidated Balance Sheets

 

(In thousands, except par value; unaudited)

 

 

June 30,
2021

 

December 31,
2020

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

422,810

 

 

$

405,430

 

Marketable securities

515,562

 

 

565,593

 

Accounts receivable, net of allowance for credit losses of $6,015 and $5,787 as of June 30, 2021 and December 31, 2020, respectively

205,784

 

 

199,243

 

Deferred costs

62,642

 

 

51,878

 

Prepaid expenses and other current assets

49,096

 

 

53,829

 

Total current assets

1,255,894

 

 

1,275,973

 

Marketable securities, noncurrent

540,294

 

 

428,678

 

Property and equipment, net

93,640

 

 

94,208

 

Deferred costs, noncurrent

65,605

 

 

52,731

 

Lease right-of-use assets

75,791

 

 

84,013

 

Goodwill and intangible assets, net

192,579

 

 

196,218

 

Other assets

25,259

 

 

25,458

 

Total assets

$

2,249,062

 

 

$

2,157,279

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

21,007

 

 

$

15,428

 

Accrued liabilities

36,264

 

 

38,921

 

Accrued compensation and related benefits

95,965

 

 

103,437

 

Deferred revenue

438,779

 

 

378,935

 

Lease liabilities

20,302

 

 

23,533

 

Current portion of convertible senior notes, net

136,011

 

 

132,388

 

Total current liabilities

748,328

 

 

692,642

 

Convertible senior notes, net

957,172

 

 

935,576

 

Deferred revenue, noncurrent

3,684

 

 

4,423

 

Lease liabilities, noncurrent

70,120

 

 

85,275

 

Other liabilities

5,631

 

 

7,532

 

Total liabilities

1,784,935

 

 

1,725,448

 

 

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock, par value $0.01 per share

 

 

 

Common stock, par value $0.01 per share

1,197

 

 

1,174

 

Additional paid-in capital

1,492,117

 

 

1,344,337

 

Accumulated other comprehensive (loss) income

(5,216

)

 

3,203

 

Accumulated deficit

(1,023,971

)

 

(916,883

)

Total stockholders’ equity

464,127

 

 

431,831

 

Total liabilities and stockholders’ equity

$

2,249,062

 

 

$

2,157,279

 

Condensed Consolidated Statements of Cash Flows

 

(In thousands; unaudited)

 

 

Three Months Ended June 30,

 

2021

 

2020

Cash flows from operating activities

 

 

 

Net loss

$

(58,407

)

 

$

(64,656

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

9,108

 

 

10,749

 

Share-based compensation

56,694

 

 

43,712

 

Amortization of deferred costs

16,185

 

 

10,765

 

Amortization of debt discount and issuance costs

12,694

 

 

7,487

 

Loss on early extinguishment of debt

 

 

25,950

 

Repayment of convertible senior notes attributable to debt discount

 

 

(38,637

)

Allowance for credit losses on accounts receivable

1,327

 

 

3,349

 

Other, net

1,088

 

 

(259

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(27,868

)

 

(46,666

)

Prepaid expenses and other current assets

(1,272

)

 

(4,959

)

Deferred costs

(32,267

)

 

(14,867

)

Lease right-of-use assets

4,354

 

 

5,272

 

Other assets and liabilities

(2,166

)

 

(308

)

Accounts payable

(420

)

 

(12,692

)

Accrued liabilities

(483

)

 

1,638

 

Accrued compensation and related benefits

14,152

 

 

13,329

 

Deferred revenue

45,720

 

 

13,616

 

Lease liabilities

(11,561

)

 

(3,534

)

Net cash provided by (used in) operating activities

26,878

 

 

(50,711

)

Cash flows from investing activities

 

 

 

Purchases of property and equipment

(2,896

)

 

(5,622

)

Internal-use software development costs

(3,070

)

 

(3,225

)

Purchases of marketable securities

(199,540

)

 

(111,906

)

Proceeds from maturities of marketable securities

182,044

 

 

117,752

 

Proceeds from sales of marketable securities

20,462

 

 

39,814

 

Net cash (used in) provided by investing activities

(3,000

)

 

36,813

 

Cash flows from financing activities

 

 

 

Proceeds from issuance of convertible senior notes, net of issuance costs paid of $20,400

 

 

1,129,600

 

Purchase of capped calls related to 2025 convertible senior notes

 

 

(129,950

)

Payments for 2023 convertible senior notes partial repurchase

 

 

(578,973

)

Proceeds from capped calls related to 2023 convertible senior notes

 

 

83,040

 

Proceeds from exercises of employee stock options

11,204

 

 

5,101

 

Proceeds from employee stock purchase plan

11,594

 

 

8,802

 

Taxes paid related to net share settlement of share-based awards

(3,502

)

 

(2,241

)

Net cash provided by financing activities

19,296

 

 

515,379

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(11

)

 

15

 

Net increase in cash, cash equivalents and restricted cash

43,163

 

 

501,496

 

Cash, cash equivalents and restricted cash at beginning of period

380,085

 

 

202,620

 

Cash, cash equivalents and restricted cash at end of period

$

423,248

 

 

$

704,116

 

Non-GAAP Results

(In thousands, except per share data)

The following table shows Zendesk’s GAAP results reconciled to non-GAAP results included in this release.

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Reconciliation of gross profit and gross margin

 

 

 

 

 

 

 

GAAP gross profit

$

251,473

 

 

$

185,149

 

 

$

488,627

 

 

$

362,923

 

Plus: Share-based compensation

 

5,218

 

 

 

5,187

 

 

 

9,704

 

 

 

10,246

 

Plus: Employer tax related to employee stock transactions

 

327

 

 

 

292

 

 

 

780

 

 

 

717

 

Plus: Amortization of purchased intangibles

 

1,136

 

 

 

1,617

 

 

 

2,355

 

 

 

3,724

 

Plus: Acquisition-related expenses

 

55

 

 

 

66

 

 

 

124

 

 

 

207

 

Plus: Amortization of share-based compensation capitalized in internal-use software

 

387

 

 

 

464

 

 

 

771

 

 

 

914

 

Non-GAAP gross profit

$

258,596

 

 

$

192,775

 

 

$

502,361

 

 

$

378,731

 

GAAP gross margin

 

79

%

 

 

75

%

 

 

79

%

 

 

75

%

Non-GAAP adjustments

 

2

%

 

 

3

%

 

 

3

%

 

 

3

%

Non-GAAP gross margin

 

81

%

 

 

78

%

 

 

82

%

 

 

78

%

 

 

 

 

 

 

 

 

Reconciliation of operating expenses

 

 

 

 

 

 

 

GAAP research and development

$

82,826

 

 

$

59,003

 

 

$

156,609

 

 

$

119,424

 

Less: Share-based compensation

 

(17,024

)

 

 

(12,529

)

 

 

(32,697

)

 

 

(25,155

)

Less: Employer tax related to employee stock transactions

 

(1,082

)

 

 

(700

)

 

 

(2,509

)

 

 

(1,587

)

Less: Acquisition-related expenses

 

(811

)

 

 

(1,167

)

 

 

(1,779

)

 

 

(2,178

)

Less: Amortization of share-based compensation capitalized in internal-use software

 

(17

)

 

 

 

 

 

(34

)

 

 

 

Non-GAAP research and development

$

63,892

 

 

$

44,607

 

 

$

119,590

 

 

$

90,504

 

GAAP research and development as percentage of revenue

 

26

%

 

 

24

%

 

 

25

%

 

 

25

%

Non-GAAP research and development as percentage of revenue

 

20

%

 

 

18

%

 

 

19

%

 

 

19

%

 

 

 

 

 

 

 

 

GAAP sales and marketing

$

165,250

 

 

$

121,397

 

 

$

322,768

 

 

$

245,707

 

Less: Share-based compensation

 

(24,501

)

 

 

(17,573

)

 

 

(47,733

)

 

 

(34,132

)

Less: Employer tax related to employee stock transactions

 

(1,385

)

 

 

(890

)

 

 

(3,454

)

 

 

(2,064

)

Less: Amortization of purchased intangibles

 

(642

)

 

 

(671

)

 

 

(1,284

)

 

 

(1,370

)

Less: Acquisition-related expenses

 

(64

)

 

 

(470

)

 

 

(112

)

 

 

(1,091

)

Non-GAAP sales and marketing

$

138,658

 

 

$

101,793

 

 

$

270,185

 

 

$

207,050

 

GAAP sales and marketing as percentage of revenue

 

52

%

 

 

49

%

 

 

52

%

 

 

51

%

Non-GAAP sales and marketing as percentage of revenue

 

44

%

 

 

41

%

 

 

44

%

 

 

43

%

 

 

 

 

 

 

 

 

GAAP general and administrative

$

45,818

 

 

$

36,247

 

 

$

88,951

 

 

$

70,573

 

Less: Share-based compensation

 

(9,951

)

 

 

(8,423

)

 

 

(18,934

)

 

 

(16,261

)

Less: Employer tax related to employee stock transactions

 

(1,124

)

 

 

(462

)

 

 

(2,288

)

 

 

(1,225

)

Less: Acquisition-related expenses

 

(141

)

 

 

(134

)

 

 

(463

)

 

 

(238

)

Less: Real estate impairments

 

(1,176

)

 

 

 

 

 

(1,176

)

 

 

 

Non-GAAP general and administrative

$

33,426

 

 

$

27,228

 

 

$

66,090

 

 

$

52,849

 

GAAP general and administrative as percentage of revenue

 

14

%

 

 

15

%

 

 

14

%

 

 

15

%

Non-GAAP general and administrative as percentage of revenue

 

11

%

 

 

11

%

 

 

11

%

 

 

11

%

 

 

 

 

 

 

 

 

Reconciliation of operating income (loss) and operating margin

 

 

 

 

 

 

 

GAAP operating loss

$

(42,421

)

 

$

(31,498

)

 

$

(79,701

)

 

$

(72,781

)

Plus: Share-based compensation

 

56,694

 

 

 

43,712

 

 

 

109,068

 

 

 

85,794

 

Plus: Employer tax related to employee stock transactions

 

3,918

 

 

 

2,344

 

 

 

9,031

 

 

 

5,593

 

Plus: Amortization of purchased intangibles

 

1,778

 

 

 

2,288

 

 

 

3,639

 

 

 

5,094

 

Plus: Acquisition-related expenses

 

1,071

 

 

 

1,837

 

 

 

2,478

 

 

 

3,714

 

Plus: Amortization of share-based compensation capitalized in internal-use software

 

404

 

 

 

464

 

 

 

805

 

 

 

914

 

Plus: Real estate impairments

 

1,176

 

 

 

 

 

 

1,176

 

 

 

 

Non-GAAP operating income

$

22,620

 

 

$

19,147

 

 

$

46,496

 

 

$

28,328

 

GAAP operating margin

 

(13

)%

 

 

(13

)%

 

 

(13

)%

 

 

(15

)%

Non-GAAP adjustments

 

20

%

 

 

21

%

 

 

21

%

 

 

21

%

Non-GAAP operating margin

 

7

%

 

 

8

%

 

 

8

%

 

 

6

%

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Reconciliation of net income (loss)

 

 

 

 

 

 

 

GAAP net loss

$

(58,407

)

 

$

(64,656

)

 

$

(107,372

)

 

$

(107,440

)

Plus: Share-based compensation

 

56,694

 

 

 

43,712

 

 

 

109,068

 

 

 

85,794

 

Plus: Employer tax related to employee stock transactions

 

3,918

 

 

 

2,344

 

 

 

9,031

 

 

 

5,593

 

Plus: Amortization of purchased intangibles

 

1,778

 

 

 

2,288

 

 

 

3,639

 

 

 

5,094

 

Plus: Acquisition-related expenses

 

1,071

 

 

 

1,837

 

 

 

2,478

 

 

 

3,714

 

Plus: Amortization of share-based compensation capitalized in internal-use software

 

404

 

 

 

464

 

 

 

805

 

 

 

914

 

Plus: Real estate impairments

 

1,176

 

 

 

 

 

 

1,176

 

 

 

 

Plus: Amortization of debt discount and issuance costs

 

12,695

 

 

 

7,487

 

 

 

25,220

 

 

 

14,036

 

Plus: Loss on early extinguishment of debt

 

 

 

 

25,950

 

 

 

 

 

 

25,950

 

Less: Income tax effects and adjustments

 

(2,198

)

 

 

(3,063

)

 

 

(5,529

)

 

 

(4,854

)

Non-GAAP net income

$

17,131

 

 

$

16,363

 

 

$

38,516

 

 

$

28,801

 

 

 

 

 

 

 

 

 

Reconciliation of net income (loss) per share, basic

 

 

 

 

 

 

 

GAAP net loss per share, basic

$

(0.49

)

 

$

(0.56

)

 

$

(0.91

)

 

$

(0.94

)

Non-GAAP adjustments to net loss

 

0.63

 

 

 

0.70

 

 

 

1.24

 

 

 

1.19

 

Non-GAAP net income per share, basic

$

0.14

 

 

$

0.14

 

 

$

0.33

 

 

$

0.25

 

 

 

 

 

 

 

 

 

Reconciliation of net income (loss) per share, diluted

 

 

 

 

 

 

 

GAAP net loss per share, diluted

$

(0.49

)

 

$

(0.56

)

 

$

(0.91

)

 

$

(0.94

)

Non-GAAP adjustments to net loss

 

0.62

 

 

 

0.70

 

 

 

1.21

 

 

 

1.18

 

Non-GAAP net income per share, diluted

$

0.13

 

 

$

0.14

 

 

$

0.30

 

 

$

0.24

 

 

 

 

 

 

 

 

 

Weighted-average shares used in GAAP per share calculation, basic and diluted

 

119,050

 

 

 

114,600

 

 

 

118,484

 

 

 

114,069

 

 

 

 

 

 

 

 

 

Weighted-average shares used in non-GAAP per share calculation

 

 

 

 

 

 

 

Basic

 

119,050

 

 

 

114,600

 

 

 

118,484

 

 

 

114,069

 

Diluted

 

127,515

 

 

 

120,397

 

 

 

127,384

 

 

 

120,309

 

 

 

 

 

 

 

 

 

Computation of free cash flow

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

$

26,878

 

 

$

(50,711

)

 

$

60,473

 

 

$

(53,320

)

Plus: Repayment of convertible senior notes attributable to debt discount

 

 

 

 

38,637

 

 

 

 

 

 

38,637

 

Less: Purchases of property and equipment

 

(2,896

)

 

 

(5,622

)

 

 

(5,957

)

 

 

(15,560

)

Less: Internal-use software development costs

 

(3,070

)

 

 

(3,225

)

 

 

(7,538

)

 

 

(6,283

)

Free cash flow

$

20,912

 

 

$

(20,921

)

 

$

46,978

 

 

$

(36,526

)

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities margin

 

8

%

 

 

(21

)%

 

 

10

%

 

 

(11

)%

Non-GAAP adjustments

 

(1

)%

 

 

13

%

 

 

(2

)%

 

 

3

%

Free cash flow margin

 

7

%

 

 

(8

)%

 

 

8

%

 

 

(8

)%

About Non-GAAP Financial Measures

To provide investors and others with additional information regarding Zendesk’s results, the following non-GAAP financial measures were disclosed: non-GAAP gross profit and gross margin, non-GAAP operating expenses, non-GAAP operating income (loss) and operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, basic and diluted, free cash flow, and free cash flow margin.

Specifically, Zendesk excludes the following from its historical and prospective non-GAAP financial measures, as applicable:

Share-Based Compensation and Amortization of Share-Based Compensation Capitalized in Internal-Use Software: Zendesk utilizes share-based compensation to attract and retain employees.

Contacts

Zendesk, Inc.

Investor Contact:
Jason Tsai, +1 415-997-8882

ir@zendesk.com

or

Media Contact:
Stephanie Barnes, +1 415-722-0883

press@zendesk.com

Read full story here

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