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Zendesk (ZEN) to Report Q2 Earnings: What's in the Cards?

Zacks Equity Research

Zendesk ZEN is set to release second-quarter 2019 results on Jul 30.

Notably, the company has surpassed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 141.7%.

In the last reported quarter, Zendesk reported earnings of 5 cents per share that beat the Zacks Consensus Estimate by couple of cents. Revenues of $181 million also surpassed the consensus mark of $180 million.

At the end of first-quarter 2019, paid customer accounts surpassed 145,000. The company’s dollar-based net expansion rate was healthy at 118%.

For second-quarter 2019, revenues are anticipated between $191 million and $193 million. The Zacks Consensus Estimate for revenues currently stands at $192.8 million, indicating growth of 35.9% from the year-ago quarter’s reported figure.

Zendesk, Inc. Price and EPS Surprise


Zendesk, Inc. Price and EPS Surprise
Zendesk, Inc. Price and EPS Surprise

Zendesk, Inc. price-eps-surprise | Zendesk, Inc. Quote

Moreover, the consensus mark for earnings has remained steady at 5 cents over the past 30 days, implying growth of 66.7% from the figure reported in the year-ago quarter.

Let’s see how things are shaping up for this announcement.

Factors to Watch

Zendesk is gaining from strong adoption of its customer relationship management (CRM) solutions.

Solid demand for Zendesk Suite, an omni-channel, bundled, subscription-based product, is a key catalyst. The solution has been gaining traction not only among small and medium businesses (SMBs) but also enterprises. At the end of the first quarter, the suite had more than 3,500 paid customers.

Additionally, the company’s CRM platform, Zendesk Sunshine, has gained solid traction within a short span of its release, owing to its flexibility and developer friendliness. Notably, the solution is built on Amazon Web Services (AWS) and supports open standards. 

Further, Zendesk, based on its innovative solutions, is strengthening footprint among small and midsized businesses (SMBs). The company also focuses on foraying into large enterprises by enhancing its product features as well as go-to-market capabilities.

These factors are expected to drive the top line in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Zendesk has a Zacks Rank #2 and an Earnings ESP of +7.84%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Other Stocks With Favorable Combination

Here are some stocks you may want to consider, as our model shows these have the right combination of elements to post an earnings beat.

Asure Software ASUR has an Earnings ESP of +8.11% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

CACI International CACI has an Earnings ESP of +4.02% and a Zacks Rank #2.

CGI Group GIB has an Earnings ESP of +1.27% and a Zacks Rank #2.

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