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Tech Stocks Last Week: Zendesk Rises and Twitter Falls

Daniel Sparks, The Motley Fool

As earnings season continues, a number of stocks in tech managed to surprise last week. Two companies that saw their stocks make particularly big moves are Zendesk (NYSE: ZEN) and Twitter (NYSE: TWTR).

While both of these stocks saw double-digit percentage changes in their stock prices following their earnings releases last week, they moved in opposite directions. Twitter stock fell about 10% during the week, while Zendesk rose about 11%.

Here's a look at some of the key figures from each company's results.

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Image source: Getty Images.

Zendesk

Customer-service platform Zendesk (NYSE: ZEN) impressed investors with better-than-expected top- and bottom-line results and strong guidance for 2019.

The company's revenue rose 41% year over year to $172 million. Zendesk's fourth-quarter non-GAAP earnings per share was $0.10, easily beating a consensus analyst estimate for $0.03.

Highlighting one factor that was key to the company's momentum during the quarter, the number of contracts Zendesk signed with an annual value of $50,000 or more was up 6% compared with the same quarter in 2017. Furthermore, the average value of these contracts was 60% higher.

The company also said the percentage of its monthly recurring revenue coming from customers with 100 or more support agents was 40%, up from 38% in the year-ago quarter.

For the full year of 2019, management guided for revenue to rise about 34% year over year. While this would mark a deceleration compared with the company's 39% year-over-year revenue growth in 2018, it still represents a strong growth rate.

Twitter

Social network Twitter also reported better-than-expected revenue and earnings per share. But shares fell despite this upside surprise. Investors were probably concerned with the company's weaker-than-expected revenue guidance for its first quarter.

Twitter's fourth-quarter revenue jumped 26% year over year in constant currency to $909 million. This helped non-GAAP earnings per share rise to $0.31, up from $0.19 in the year-ago quarter.

Importantly, Twitter's monetizable daily active users (mDAU) increased 9% year over year during the quarter. That was in line with growth in the key metric in Twitter's third quarter, despite the company's efforts to remove millions of spammy and suspicious accounts during the quarter as management prioritizes the health of its platform. In the U.S., mDAU increased 5% year over year to 27 million. Internationally, mDAU rose 11% year over year to 99 million.

Highlighting how well the company's ad products are performing, total ad engagements during the quarter were up 33% year over year. This increase, management explained in Twitter's fourth-quarter shareholder letter, was driven by higher demand and improved click-through rates.

The midpoint of Twitter's first-quarter revenue guidance for $715 million to $775 million was notably below analysts' consensus forecast for first-quarter revenue of $763 million.

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Twitter and Zendesk. The Motley Fool has a disclosure policy.