Zendesk Reports Q2 Losses – How Will It Bounce Back?

Charlie Mitchell

After a tumultuous 2022 so far, can Zendesk turn the tide?

Zendesk Analysis
Zendesk Reports Q2 Losses – How Will It Bounce Back?

Zendesk has reported a loss of $95.1 million for Q2.

While the results may seem underwhelming, the vendor did outperform analyst estimates, with quarterly revenues reaching $407.2 million.

Also, the company is not alone in its unfortunate position, with the drop in valuation of enterprise technology vendors an almost universal trend. Yet, not to such an extent.

Indeed, 2022 has proven a challenging year for Zendesk.

Perhaps the best example is that it rejected a $17BN acquisition bid in February because it “undervalued” the company. However, five months later, it accepted a $10.2BN bid.

In the months between, Zendesk leaders battled with shareholders to push an acquisition of Momentive – the parent company of SurveyMonkey – over the line.

However, they failed to convince them, leading to this not-so-subtle tweet from Zendesk Founder, Chairman, and CEO Mikkel Svane:

Indeed, Svanne’s plans for a “noble enterprise” seemed to pivot Zendesk more towards the data & analytics space.

When the deal fell apart, few growth opportunities lay on the table. As such, the acquisition route likely became much more attractive.

Yet, Zeus Kerravala, Founder and Principal Analyst at ZK Research, believes that Svane also aimed to position Zendesk as a platform rather than a product company.

Speaking to CX Today, Kerrevala stated:

 If you look at every software company that became really big – such as a Salesforce, Oracle, or Microsoft – they all have one thing in common: they made that shift to platform. They allowed others to build products on top of theirs. They found a way to be more than just one product. Zendesk was working on that, but they couldn’t execute.

Yet, now the takeover is complete, is the plan back on the table? It seems some version of it is likely, with Zendesk striking a deal with Momentive for a new voice of the customer (VoC) integration.

When announcing the takeover, Svane also said: “We’ll continue to execute on our long-term strategy with our customers as our top priority.”

As such, more integrations, innovations, and maybe acquisitions are likely – especially as competitive differentiation is becoming more about what CX vendors do with data.

The good news for Zendesk is that they have lots of data. So, the question becomes; what analytics will they build around that, and what data will they bring in to complement it?

Also, following a platform-orientated strategy could see Zendesk venture into the CCaaS space, as analysts have long predicted.

Building its own calling platform will likely prove difficult, but it could keep encroaching on the contact center space and become more customer service-orientated.

Yet, as Kerravala said:

There are lots of paths that they could go down. The question is which they will go down… My guess is that all bets are open, and which one the PE (private equity) firm think they can get a good deal on to bring them into the fold.

Indeed, big news seems to be on the horizon for Zendesk – as they look to steady the ship, voyage into the open waters, and set a course to explore more of the CX stack.




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