Zendesk-Local Measure deal: US giant to buy contact centre program maker for $100m

The new solutions we introduced at Relate — Zendesk AI and Conversational Commerce — will help our customers transform the way they do business,” Eggemeier wrote. DocuSign’s 52-week high was $314.76 a share, and the low was $55.96. Today it was up over 4%, perhaps because investors were happy to see new blood in the corner office. In its most recent report earlier this month, it reported revenue of $588 million, an increase of 25% over the prior year. When you look at Zendesk’s decision to sell in spite of those positive numbers, it’s not a great sign for other public SaaS companies with plunging market caps.

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Zendesk announced its Fiscal Year 2020 earnings and revealed that it has achieved one of those milestones—$1 billion in annual revenue. As impressive as that is, the company is just getting started and it recently unveiled some changes that it hopes will continue its growth and success through 2021 and beyond. Zendesk announced it was laying off 8% of the workforce in June, which now stands at over 5,200 employees. In a letter to employees, Eggemeier attributed the layoffs to overhiring from 2020–2022, a reason many companies gave for workforce reductions this year.

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Holger Mueller, an analyst at Constellation Research, agreed with Thaker’s assertion that going private could be beneficial for the company at this point, allowing it to escape the pressure of quarterly reporting (at least to public investors). “Reading between the lines, it may be that Zendesk’s CEO, Mikkel Svane, was tired of all of this meddling and took the latest offer. The lead private equity firm, Hellman & Friedman, has a lot of strong brands under its belt, so it will be interesting to see where they go with Zendesk,” she said. But the market has shifted dramatically in the months since, and the company’s value plunged. These layoffs have continued in 2023 with more staffers being laid off than the previous year.

• Businesses need to be able to communicate on their customers’ terms.
• There is a lot going on and a too many plates spinning to invest time trying to decipher complex offerings and pricing.
• Troops also allows users to create feeds in Microsoft Teams and Slack showing deals won, deals lost, open tickets, the number of white papers downloaded, or any one of hundreds of other data categories.
• Zendesk seems to be doing something right, because they’ve managed to land more than 170,000 paid accounts across 160 countries around the world.

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In addition, the agent and copilot will provide customer service agents with the necessary context to strike a more empathetic tone, saving customers time from having to restate their cases repeatedly. Zendesk’s automation features, powered by AI, allow you to set up automated workflows and macros to handle repetitive tasks. For example, Zendesk AI agents can resolve simple customer issues by suggesting relevant articles based on keywords in customer inquiries. This drastically reduces the workload for your agents and ensures customers get quick answers, all while your team focuses on high-priority, high-complexity requests. We don’t want to pick on any particular company here, but just as an example, DocuSign has over a million paying customers, generating a run rate of $2.3 billion.

• The Help Center and knowledge base tools in Zendesk are robust, allowing you to create detailed articles, FAQs, and guides.
• We sat down with Eggemeier to find out how he steadied the ship and put the company back on track.
• In addition, the agent and copilot will provide customer service agents with the necessary context to strike a more empathetic tone, saving customers time from having to restate their cases repeatedly.
• We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article.

Zendesk saw the acquisition as an opportunity to expand the platform into customer experience, projecting much faster revenue growth, but investors didn’t see an obvious fit and were displeased by the cost. The Zendesk saga of 2021 and 2022 has been complicated, full of twists and turns. Few—if any—organizations were prepared to accelerate digital transformation at warp speed, but necessity and the reality of the pandemic changed the rules. That worked out well for Zendesk—with increased demand for the right platform and tools to enable those relationships. For businesses using human and AI agents, Zendesk has a scheduling feature to ensure optimal staffing within the call center. Administrators can use this workforce management tool to determine the number of human agents needed based on factors such as holidays and inclement weather.

“If Zendesk remained public, it could have gotten pummeled, and that would have been worse for everyone. At least these folks who acquired them paid a premium and have some experience and capital available,” he said. At $10.2 billion, Zendesk is selling for just under or just over 6x, using the top and bottom ends of its revenue guidance for the year. In Q1 2022, Zendesk generated revenues of $388 million, up 30% from the year-ago period; it anticipates $1.685 billion to $1.710 billion in total revenue this year, a forecast that it raised in its first-quarter report. Also in the first quarter, Zendesk’s gross margins were 50 basis points above the 80% mark, and while it lost around $67 million in GAAP terms in the quarter, it generated free cash flow in the same quarter, and its operating activities kicked off nearly $4 million per month. The AI Live Chat Software market size is estimated to increase by USD at a CAGR of 7.29% by 2030.

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The new tranche of layoffs, according to Eggemeier, can be attributed to continued macroeconomic uncertainty and increased competition from rivals. Nobody knows how this will all play out, or if there is a general lesson to be learned from this news, but when a company with Zendesk’s numbers ends up on the bargain shelf, it’s hard not to wonder what’s going on — and what impact it will have on other similar companies. It’s not the company’s fault that the market changed its mind about the value of companies like Zendesk. Zendesk selling for a mid-single-digit multiple with positive free cash flow, 30% revenue growth and a recent re-acceleration of top-line expansion should be downright terrifying for unicorns — those late-stage startups that have a value of $1 billion or more. There are a number of notable milestones for any company—first customer, 100th employee, etc. Some milestones can’t be achieved by every company, though—they are reserved for a select few.

With a TAM in the neighborhood of $85 billion, Eggemeier expects to reach $2 billion by next year or early 2025, but he has much bigger ambitions for Zendesk. “We’re in this situation where we’re going from almost a $1.5 billion company when Mikkel left, but we have goals to be a $5 billion or $10 billion company,” he said. We give you the inside scoop on what companies are doing with generative AI, from regulatory shifts to practical deployments, so you can share insights for maximum ROI.