Highlights
- First quarter revenue increased 40% year over year to $181.5 million
-
First quarter GAAP operating loss of $43.9 million and non-GAAP
operating income of $0.6 million -
Michael Curtis, former Airbnb, Inc. vice president of engineering,
joins board of directors
SAN FRANCISCO–(BUSINESS WIRE)–Zendesk, Inc. (NYSE: ZEN) today reported financial results for the
fiscal quarter ended March 31, 2019, and released a Shareholder Letter
on its investor relations website at https://investor.zendesk.com.
Results for the First Quarter 2019
Revenue was $181.5 million for the quarter ended March 31, 2019, an
increase of 40% over the prior year period. GAAP net loss for the
quarter ended March 31, 2019 was $44.7 million, and GAAP net loss per
share (basic and diluted) was $0.41. Non-GAAP net income was $5.1
million, and non-GAAP net income per share (basic) was $0.05, and
non-GAAP net income per share (diluted) was $0.04. Non-GAAP net income
excludes approximately $40.6 million in share-based compensation and
related expenses (including $3.5 million of employer tax related to
employee stock transactions and $0.4 million of amortization of
share-based compensation capitalized in internal-use software), $6.2
million of amortization of debt discount and issuance costs, $2.2
million of amortization of purchased intangibles, $1.7 million of
acquisition-related expenses, and non-GAAP income tax effects of $0.9
million. GAAP net loss per share for the quarter ended March 31, 2019
was based on 108.6 million weighted average shares outstanding (basic
and diluted), and non-GAAP net income per share for the quarter ended
March 31, 2019 was based on 108.6 million weighted average shares
outstanding (basic) and 117.0 million weighted average shares
outstanding (diluted).
Appointment of Michael Curtis to Board of Directors
Zendesk appointed Michael Curtis to its board of directors, effective
April 24, 2019. Mike has more than 15 years of experience in leading
engineering organizations and product innovation. He most recently
served as the vice president of engineering of Airbnb, Inc., an online
marketplace and hospitality company, from February 2013 to March 2019.
Prior to that, he was a director of engineering at Facebook, Inc. from
August 2011 to February 2013 and a vice president of engineering at
Yahoo! from January 2004 to August 2011. Mike currently serves as a
trustee on the board of Harvey Mudd College.
“Mike has driven product innovation and scaled technology at some of the
world’s fastest growing companies,” said Mikkel Svane, Zendesk chief
executive officer, chairman and founder. “His history of pushing
boundaries and advancing bold ideas will help us continue to build our
product innovation and scaled technology.”
“Zendesk has reached a level of scale and ubiquity that is rare in
enterprise software,” Curtis said. “I’m excited to join the board at
such a pivotal time in the company’s growth and support its fast pace of
innovation and its moves into new markets.”
Outlook
As of April 30, 2019, Zendesk provided guidance for the quarter ending
June 30, 2019 and updated its guidance for the year ending December 31,
2019.
For the quarter ending June 30, 2019, Zendesk expects to report:
- Revenue in the range of $191 – 193 million
-
GAAP operating income (loss) in the range of $(44) – (42) million,
which includes share-based compensation and related expenses of
approximately $41 million, amortization of purchased intangibles of
approximately $2 million, and acquisition-related expenses of
approximately $1 million -
Non-GAAP operating income (loss) in the range of $0 – 2 million, which
excludes share-based compensation and related expenses of
approximately $41 million, amortization of purchased intangibles of
approximately $2 million, and acquisition-related expenses of
approximately $1 million - Approximately 110 million weighted average shares outstanding (basic)
- Approximately 120 million weighted average shares outstanding (diluted)
For the full year ending December 31, 2019, Zendesk expects to report:
- Revenue in the range of $802 – 810 million
-
GAAP operating income (loss) in the range of $(164) – (160) million,
which includes share-based compensation and related expenses of
approximately $165 million, amortization of purchased intangibles of
approximately $9 million, and acquisition-related expenses of
approximately $4 million -
Non-GAAP operating income (loss) in the range of $14 – 18 million,
which excludes share-based compensation and related expenses of
approximately $165 million, amortization of purchased intangibles of
approximately $9 million, and acquisition-related expenses of
approximately $4 million - Approximately 111 million weighted average shares outstanding (basic)
- Approximately 121 million weighted average shares outstanding (diluted)
- Free cash flow in the range of $55 – 65 million
We have not reconciled free cash flow guidance to net cash from
operating activities for the full year 2019 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 2019 is not available without
unreasonable effort.
Zendesk’s estimates of share-based compensation and related expenses,
amortization of purchased intangibles, acquisition-related expenses,
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.
Revised Non-GAAP Net Income Calculation
In our presentations of non-GAAP net income (which is a non-GAAP
financial measure) in our earnings release and shareholder letter for
each of the quarters ending June 30, 2018, September 30, 2018, and
December 31, 2018, and the year ended December 31, 2018, we inaccurately
determined our hypothetical income tax effect, which was one of the
adjustments in the calculation of non-GAAP net income and its
reconciliation to GAAP net loss. We have now revised our non-GAAP net
income calculations (and our reconciliations to GAAP net loss) and
non-GAAP net income per share for each of such quarters and the year
ended December 31, 2018 and such revised information is provided
below. No revisions have been made to any other adjustments in the
calculation of each of non-GAAP net income or non-GAAP net income per
share for such periods, and our consolidated financial results as
calculated under GAAP are not affected.
Shareholder Letter and Conference Call Information
The detailed Shareholder Letter is available at https://investor.zendesk.com
and Zendesk will host a conference call to answer questions today, April
30, 2019, at 2:00 p.m. Pacific Time, 5:00 p.m. Eastern Time. A live
webcast of the conference call will be available at https://investor.zendesk.com.
The conference call can also be accessed by dialing 833-287-0801, or +1
647-689-4460 (outside the U.S. and Canada). The conference ID is
9699254. A replay of the call via webcast will be available at https://investor.zendesk.com
or by dialing 800-585-8367 or +1 416-621-4642 (outside the U.S. and
Canada) and entering passcode 9699254. The dial-in replay will be
available until the end of day May 2, 2019. The webcast replay will be
available for 12 months.
About Zendesk
The best customer experiences are built with Zendesk. Zendesk’s powerful
and flexible customer service and engagement platform scales to meet the
needs of any business, from startups and small businesses to growth
companies and enterprises. Zendesk serves businesses across a multitude
of industries, with more than 125,000 paid customer accounts offering
service and support in more than 30 languages. Headquartered in San
Francisco, Zendesk operates worldwide with 16 offices in North America,
Europe, Asia, Australia, and South America. Learn more at www.zendesk.com.
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) adverse changes in general economic or
market conditions; (ii) Zendesk’s ability to adapt its products to
changing market dynamics and customer preferences or achieve increased
market acceptance of its products; (iii) Zendesk’s ability to
effectively expand its sales capabilities; (iv) Zendesk’s ability to
effectively market and sell its products to larger enterprises; (v)
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; (vi)
the intensely competitive market in which Zendesk operates and the
difficulty that Zendesk may have in competing effectively; (vii)
Zendesk’s ability to introduce and market new products and to support
its products on a shared services platform; (viii) Zendesk’s ability to
integrate acquired businesses and technologies successfully or achieve
the expected benefits of such acquisitions; (ix) Zendesk’s ability to
effectively manage its growth and organizational change, including its
international expansion strategy; (x) potential breaches in Zendesk’s
security measures or unauthorized access to its customers’ data; (xi)
Zendesk’s ability to comply with privacy and data security regulations;
(xii) the development of the market for software as a service business
software applications; (xiii) potential service interruptions or
performance problems associated with Zendesk’s technology and
infrastructure; (xiv) real or perceived errors, failures, or bugs in its
products; (xv) Zendesk’s substantial reliance on its customers renewing
their subscriptions and purchasing additional subscriptions; and (xvi)
Zendesk’s ability to accurately forecast expenditures on third-party
managed hosting services.
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, 2018. 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 March 31, 2019.
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 March 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenue | $ | 181,484 | $ | 129,791 | ||||
| Cost of revenue | 55,654 | 39,056 | ||||||
| Gross profit | 125,830 | 90,735 | ||||||
| Operating expenses: | ||||||||
| Research and development | 46,791 | 37,085 | ||||||
| Sales and marketing | 91,700 | 65,058 | ||||||
| General and administrative | 31,253 | 22,207 | ||||||
| Total operating expenses | 169,744 | 124,350 | ||||||
| Operating loss | (43,914 | ) | (33,615 | ) | ||||
| Other income (expense), net | ||||||||
| Interest income | 5,472 | 1,519 | ||||||
| Interest expense | (6,544 | ) | (764 | ) | ||||
| Other income, net | 700 | 245 | ||||||
| Total other income (expense), net | (372 | ) | 1,000 | |||||
| Loss before provision for (benefit from) income taxes | (44,286 | ) | (32,615 | ) | ||||
| Provision for (benefit from) income taxes | 434 | (3,290 | ) | |||||
| Net loss | $ | (44,720 | ) | $ | (29,325 | ) | ||
| Net loss per share, basic and diluted | $ | (0.41 | ) | $ | (0.28 | ) | ||
|
Weighted-average shares used to compute net loss per share, basic and diluted |
108,630 | 103,692 | ||||||
|
Condensed Consolidated Balance Sheets |
||||||||
|
(In thousands, except par value; unaudited) |
||||||||
|
March 31, 2019 |
December 31, 2018 |
|||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 142,418 | $ | 126,518 | ||||
| Marketable securities | 301,941 | 300,213 | ||||||
|
Accounts receivable, net of allowance for doubtful accounts of $3,060 and $2,571 as of March 31, 2019 and December 31, 2018, respectively |
90,465 | 85,280 | ||||||
| Deferred costs | 26,882 | 24,712 | ||||||
| Prepaid expenses and other current assets | 38,629 | 35,873 | ||||||
| Total current assets | 600,335 | 572,596 | ||||||
| Marketable securities, noncurrent | 401,079 | 393,671 | ||||||
| Property and equipment, net | 75,619 | 75,654 | ||||||
| Deferred costs, noncurrent | 28,312 | 26,914 | ||||||
| Lease right-of-use assets | 99,435 | — | ||||||
| Goodwill and intangible assets, net | 144,069 | 146,327 | ||||||
| Other assets | 23,829 | 22,717 | ||||||
| Total assets | $ | 1,372,678 | $ | 1,237,879 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 29,458 | $ | 16,820 | ||||
| Accrued liabilities | 32,722 | 34,097 | ||||||
| Accrued compensation and related benefits | 50,389 | 46,603 | ||||||
| Deferred revenue | 257,731 | 245,243 | ||||||
| Lease liabilities | 19,402 | — | ||||||
| Total current liabilities | 389,702 | 342,763 | ||||||
| Convertible senior notes, net | 464,364 | 458,176 | ||||||
| Deferred revenue, noncurrent | 1,865 | 2,719 | ||||||
| Lease liabilities, noncurrent | 94,943 | — | ||||||
| Other liabilities | 2,859 | 17,300 | ||||||
| Total liabilities | 953,733 | 820,958 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value $0.01 per share | — | — | ||||||
| Common stock, par value $0.01 per share | 1,092 | 1,080 | ||||||
| Additional paid-in capital | 994,031 | 950,693 | ||||||
| Accumulated other comprehensive loss | (2,330 | ) | (5,724 | ) | ||||
| Accumulated deficit | (573,848 | ) | (529,128 | ) | ||||
| Total stockholders’ equity | 418,945 | 416,921 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,372,678 | $ | 1,237,879 | ||||
|
Condensed Consolidated Statements of Cash Flows |
||||||||
|
(In thousands; unaudited) |
||||||||
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (44,720 | ) | $ | (29,325 | ) | ||
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Depreciation and amortization | 8,732 | 9,865 | ||||||
| Share-based compensation | 36,657 | 26,988 | ||||||
| Amortization of deferred costs | 6,918 | 4,510 | ||||||
| Amortization of debt discount and issuance costs | 6,188 | 720 | ||||||
| Other | 394 | 250 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (6,966 | ) | 3,691 | |||||
| Prepaid expenses and other current assets | (3,774 | ) | (3,364 | ) | ||||
| Deferred costs | (10,190 | ) | (7,043 | ) | ||||
| Lease right-of-use assets | 4,373 | — | ||||||
| Other assets and liabilities | (498 | ) | (12,027 | ) | ||||
| Accounts payable | 15,655 | 1,052 | ||||||
| Accrued liabilities | 2,512 | 10,986 | ||||||
| Accrued compensation and related benefits | (4,629 | ) | (971 | ) | ||||
| Deferred revenue | 12,149 | 10,910 | ||||||
| Lease liabilities | (3,832 | ) | — | |||||
| Net cash provided by operating activities | 18,969 | 16,242 | ||||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (9,258 | ) | (6,808 | ) | ||||
| Internal-use software development costs | (1,213 | ) | (2,344 | ) | ||||
| Purchases of marketable securities | (145,142 | ) | (78,321 | ) | ||||
| Proceeds from maturities of marketable securities | 47,265 | 55,263 | ||||||
| Proceeds from sales of marketable securities | 91,562 | 6,982 | ||||||
| Purchase of strategic investment | (500 | ) | — | |||||
| Net cash used in investing activities | (17,286 | ) | (25,228 | ) | ||||
| Cash flows from financing activities | ||||||||
|
Proceeds from issuance of convertible notes, net of issuance costs paid of $12,937 |
— | 562,063 | ||||||
| Purchase of capped call related to convertible senior notes | — | (63,940 | ) | |||||
| Proceeds from exercise of employee stock options | 8,437 | 6,193 | ||||||
| Proceeds from employee stock purchase plan | 8,415 | 5,096 | ||||||
| Taxes paid related to net share settlement of equity awards | (2,416 | ) | (734 | ) | ||||
| Net cash provided by financing activities | 14,436 | 508,678 | ||||||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
33 | (35 | ) | |||||
| Net increase in cash, cash equivalents and restricted cash | 16,152 | 499,657 | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | 128,876 | 110,888 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 145,028 | $ | 610,545 | ||||
|
Non-GAAP Results |
||||||||
|
(In thousands, except per share data) |
||||||||
|
The following table shows Zendesk’s GAAP results reconciled to |
||||||||
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Reconciliation of gross profit and gross margin | ||||||||
| GAAP gross profit | $ | 125,830 | $ | 90,735 | ||||
| Plus: Share-based compensation | 4,937 | 3,098 | ||||||
| Plus: Employer tax related to employee stock transactions | 450 | 260 | ||||||
| Plus: Amortization of purchased intangibles | 1,618 | 612 | ||||||
|
Plus: Amortization of share-based compensation capitalized in internal-use software |
420 | 362 | ||||||
| Plus: Acquisition-related expenses | 114 | — | ||||||
| Non-GAAP gross profit | $ | 133,369 | $ | 95,067 | ||||
| GAAP gross margin | 69 | % | 70 | % | ||||
| Non-GAAP adjustments | 4 | % | 3 | % | ||||
| Non-GAAP gross margin | 73 | % | 73 | % | ||||
| Reconciliation of operating expenses | ||||||||
| GAAP research and development | $ | 46,791 | $ | 37,085 | ||||
| Less: Share-based compensation | (11,636 | ) | (10,231 | ) | ||||
| Less: Employer tax related to employee stock transactions | (1,292 | ) | (742 | ) | ||||
| Less: Acquisition-related expenses | (568 | ) | (384 | ) | ||||
| Non-GAAP research and development | $ | 33,295 | $ | 25,728 | ||||
| GAAP research and development as percentage of revenue | 26 | % | 29 | % | ||||
| Non-GAAP research and development as percentage of revenue | 18 | % | 20 | % | ||||
| GAAP sales and marketing | $ | 91,700 | $ | 65,058 | ||||
| Less: Share-based compensation | (12,399 | ) | (8,007 | ) | ||||
| Less: Employer tax related to employee stock transactions | (1,028 | ) | (575 | ) | ||||
| Less: Amortization of purchased intangibles | (577 | ) | (110 | ) | ||||
| Less: Acquisition-related expenses | (392 | ) | (281 | ) | ||||
| Non-GAAP sales and marketing | $ | 77,304 | $ | 56,085 | ||||
| GAAP sales and marketing as percentage of revenue | 51 | % | 50 | % | ||||
| Non-GAAP sales and marketing as percentage of revenue | 43 | % | 43 | % | ||||
| GAAP general and administrative | $ | 31,253 | $ | 22,207 | ||||
| Less: Share-based compensation | (7,685 | ) | (5,652 | ) | ||||
| Less: Employer tax related to employee stock transactions | (750 | ) | (307 | ) | ||||
| Less: Acquisition-related expenses | (631 | ) | — | |||||
| Non-GAAP general and administrative | $ | 22,187 | $ | 16,248 | ||||
| GAAP general and administrative as percentage of revenue | 17 | % | 17 | % | ||||
| Non-GAAP general and administrative as percentage of revenue | 12 | % | 13 | % | ||||
| Reconciliation of operating income (loss) and operating margin | ||||||||
| GAAP operating loss | $ | (43,914 | ) | $ | (33,615 | ) | ||
| Plus: Share-based compensation | 36,657 | 26,988 | ||||||
| Plus: Employer tax related to employee stock transactions | 3,520 | 1,884 | ||||||
| Plus: Amortization of purchased intangibles | 2,195 | 722 | ||||||
| Plus: Acquisition-related expenses | 1,705 | 665 | ||||||
|
Plus: Amortization of share-based compensation capitalized in internal-use software |
420 | 362 | ||||||
| Non-GAAP operating income (loss) | $ | 583 | $ | (2,994 | ) | |||
| GAAP operating margin | (24 | )% | (26 |
)% |
||||
| Non-GAAP adjustments | 24 | % | 24 | % | ||||
| Non-GAAP operating margin | — | % | (2 | )% | ||||
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Reconciliation of net income (loss) | ||||||||
| GAAP net loss | $ | (44,720 | ) | $ | (29,325 | ) | ||
| Plus: Share-based compensation | 36,657 | 26,988 | ||||||
| Plus: Employer tax related to employee stock transactions | 3,520 | 1,884 | ||||||
| Plus: Amortization of purchased intangibles | 2,195 | 722 | ||||||
| Plus: Acquisition-related expenses | 1,705 | 665 | ||||||
|
Plus: Amortization of share-based compensation capitalized in internal-use software |
420 | 362 | ||||||
| Plus: Amortization of debt discount and issuance costs | 6,188 | 720 | ||||||
| Less: Income tax effects and adjustments | (911 | ) | — | |||||
| Non-GAAP net income | $ | 5,054 | $ | 2,016 | ||||
| Reconciliation of net income (loss) per share, basic | ||||||||
| GAAP net loss per share, basic | $ | (0.41 | ) | $ | (0.28 | ) | ||
| Non-GAAP adjustments to net loss | 0.46 | 0.30 | ||||||
| Non-GAAP net income per share, basic | $ | 0.05 | $ | 0.02 | ||||
| Reconciliation of net income (loss) per share, diluted | ||||||||
| GAAP net loss per share, diluted | $ | (0.41 | ) | $ | (0.28 | ) | ||
| Non-GAAP adjustments to net loss | 0.45 | 0.30 | ||||||
| Non-GAAP net income per share, diluted | $ | 0.04 | $ | 0.02 | ||||
|
Weighted-average shares used in GAAP per share calculation, basic and diluted |
108,630 | 103,692 | ||||||
| Weighted-average shares used in non-GAAP per share calculation | ||||||||
| Basic | 108,630 | 103,692 | ||||||
| Diluted | 116,985 | 108,923 | ||||||
| Computation of free cash flow | ||||||||
| Net cash provided by operating activities | $ | 18,969 | $ | 16,242 | ||||
| Less: purchases of property and equipment | (9,258 | ) | (6,808 | ) | ||||
| Less: internal-use software development costs | (1,213 | ) | (2,344 | ) | ||||
| Free cash flow | $ | 8,498 | $ | 7,090 | ||||
| Net cash provided by operating activities margin | 10 | % | 13 | % | ||||
| Non-GAAP adjustments | (5 | )% | (8 | )% | ||||
| Free cash flow margin | 5 | % | 5 | % | ||||
| Three Months Ended | Year Ended | |||||||||||||||
| June 30, 2018 | September 30, 2018 | December 31, 2018 | December 31, 2018 | |||||||||||||
| Reconciliation of net income (loss) | ||||||||||||||||
| GAAP net loss | $ | (34,366 | ) | $ | (34,144 | ) | $ | (33,250 | ) | $ | (131,084 | ) | ||||
| Plus: Share-based compensation | 28,148 | 31,446 | 32,903 | 119,484 | ||||||||||||
| Plus: Employer tax related to employee stock transactions | 1,720 | 1,755 | 3,556 | 8,915 | ||||||||||||
| Plus: Amortization of purchased intangibles | 669 | 1,155 | 2,217 | 4,764 | ||||||||||||
| Plus: Acquisition-related expenses | 685 | 3,259 | 2,210 | 6,819 | ||||||||||||
|
Plus: Amortization of share-based compensation capitalized in internal-use software |
356 | 366 | 403 | 1,487 | ||||||||||||
| Plus: Amortization of debt discount and issuance costs | 5,930 | 6,015 | 6,101 | 18,766 | ||||||||||||
| Less: Income tax effects and adjustments | (1,977 | ) | (3,913 | ) | (6,774 | ) | (12,664 | ) | ||||||||
| Non-GAAP net income(1) | $ | 1,165 | $ | 5,939 | $ | 7,366 | $ | 16,486 | ||||||||
| Non-GAAP net income per share | ||||||||||||||||
| Non-GAAP net income per share, basic | $ | 0.01 | $ | 0.06 | $ | 0.07 | $ | 0.16 | ||||||||
| Non-GAAP net income per share, diluted | $ | 0.01 | $ | 0.05 | $ | 0.06 | $ | 0.15 | ||||||||
| (1) |
We previously reported non-GAAP net income of $3.1 million, $9.9 million, $11.2 million, and $23.0 million, for the three months ended June 30, 2018, September 30, 2018, and December 31, 2018, and for the year ended December 31, 2018, respectively. |
|
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. It is principally aimed at
aligning their interests with those of its stockholders and at long-term
retention, rather than to address operational performance for any
particular period. As a result, share-based compensation expenses vary
for reasons that are generally unrelated to financial and operational
performance in any particular period.
Employer Tax Related to Employee Stock Transactions: Zendesk
views the amount of employer taxes related to its employee stock
transactions as an expense that is dependent on its stock price,
employee exercise and other award disposition activity, and other
factors that are beyond Zendesk’s control. As a result, employer taxes
related to its employee stock transactions vary for reasons that are
generally unrelated to financial and operational performance in any
particular period.
Contacts
Zendesk, Inc.
Investor Contact:
Karen Sansot, +1
415-852-3877
[email protected]
or
Media
Contact:
Tian Lee, +1 415-231-0847
[email protected]
