I started a position in Zendesk in January, have been adding to it, and after the last earning report I added again.
Zendesk, provides customers with a customer service and engagement platform. The leader in small to medium size businesses, adding tools and services, moving upstream.
4Q18
rev. $172 M (+41%) (164-166 guidance)
g.m. 74.3%(74.2%)
o.m. 2.8% (-0.7%)
net expansion rate 119 (vs 119)
Full year 2018
rev 599 (+39%)
g. m. 73.3% (73.8%) * transitioning to cloud servers
oper. Inc. $3.5 (-$9.1)
oper. margin 0.6% (-2.1%)
cffo $79 M ($42 M) (+86%)
FCF $36 M (18) (+98%)
Rev. growth of 41%, best since 2016 (between 36-40% the last 7 quarters)
FCF improving nicely
gross margin down slightly from cloud server transition to AWS, will improve this year
oper. margin improving
CEO glassdoor rating of 96%
main competitor is CRM
in magic quadrant leader with CRM
just released a bunch of new products, Zendesk suite, sell, sunshine
Added a former CFO of Amazon to its board
Other stocks I was considering but passed on (for now), liked ZEN better
Sail- next quarter is going to show slowdown in growth, timing of government contracts this year and last
SMAR - love the 60% growth, not sure of TAM, don’t like 7% customer growth from churn
Invitae (NVTA) - low gross margins, not sure of competitive advantage
Eventbrite (EB) - love this idea, could be Shopify for events, been growing from acquisitions, not sure of organic growth, company says TAM is only $3 B
TDOC - growing from acquisitions, no more companies to buy, growth will slow, what is organic growth?
TWOU - cash flow and margins going the wrong way