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Zendesk sets IPO price range between $8 and $10 a share

Zendesk does not seem to be spooked by the same market conditions that caused Box to delay

Financial trends and news by Steven Loeb
May 5, 2014 | Comments
Short URL: http://vator.tv/n/36c5

The market has not been too kind fo cloud companies in the last few months. Just ask Box about that. Yet, cloud-based customer service software provider Zendesk doesn't seem to be afraid at all.

The company, which filed to go public in early April, has now set its IPO price at between $8 and $10 a share, according to a filing with the Securities and Exchange Commission on Monday.

Zendesk  is selling 11 million shares, which would net the company between $88 and $111 million. At the high end of the range, it would value the company at $700 million.

The company also revealed that is has been approved to list its common stock on the New York Stock Exchange under the symbol “ZEN."

Founded in 2007, Zendesk provides cloud-based customer service software that is meant to help its clients foster long-term customer loyalty and satisfaction. It does this by allowing organizations to better answer customers’ questions, and to solve their problems through the channels such as email, chat, voice, social media, and websites.

The company took in $72 million in revenue last year, up 88% from $38.2 million in 2012. The company also cut its operating loss from $24.1 million to $21.8 million year to year.

The vast majority of its expenses come from sales and marketing, which account for $37.6 million. The company also spent $16 million on general administrative costs, and another $15 million on research and development. 

Zendesk raised a total of $85 million, including $6 million in Series B funding from Benchmark Capital and Charles River Ventures in 2009.

As of February 2014, Zendesk had over 40,000 customer accounts on its platform.

Recent cloud company stock performance

As I mentioned earlier, the market has not been too kind to cloud-based companies as of late, including Workday, Veeva Systems and Xero.

Workday's stock is down 25%, while Veeva has fallen by 36%. 

According to Bessemer Venture Partners, which happens to be an investor in Box, the stocks of the 37 cloud companies it indexes fell 26% in just six weeks, giving up all their gains for the year. 

With those kind of market conditions, it has been rumored that cloud-storage company Box is going to hold off until at least June before going public.

The company, though, is not revealing if that is the reason.

"Our IPO has never had a set date. Since filing, we've planned on going when it makes the most sense for the market. That plan hasn't changed," a Box spokesperson told VatorNews at the time.

So who is making the wiser move here: Box or Zendesk? We will probably find out very soon.

(Image source: blog.crowdspring.com)


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