Zendesk files for $150M IPO, buys Zopim for $30M

Steven Loeb · April 10, 2014 · Short URL: https://vator.tv/n/3639

Zendesk is the latest tech co to file for IPO, behind King, GrubHub, TrueCar, TubeMogul and Box

Two very big pieces of news from on-demand helpdesk Zendesk on Thursday: not only has the company made its first ever acquisition, but it also filed its S-1 with the Securities and Exchange Commission to go public this year.

Zendesk revealed that it is looking to raise up to $150 million in its public offering, and that it intends to apply to list its common stock on the New York Stock Exchange under the symbol “ZEN."

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. 

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 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.


In conjunction with the news of its impending IPO, Zendesk also announced that it has made its first ever acquisition in live chat software company Zopim.

"We acquired Zopim to accelerate our chat functionality and to bring our users a beautifully simple product they can use to engage their customers in real-time," Zendesk wrote in a blog post

"Zopim has a great track record of providing tools for proactive customer experiences to customers worldwide. They offer both free and paid plans for customers, and have focused on making their product intuitive, transparent, and fun."

The entire Zopim team in Singapore has joined Zendesk.

While the terms of the deal were not disclosed in the announcing post, they were revealed in the company's S-1 filing.

The purchase price of Zopim was approximately $15.9 million, which included $5.0 million of cash and $10.9 million of its common stock. Of that payout, $1.1 million in cash, and $2.4 million in stock, is being held back between 12 to 18 months "as partial security for standard indemnification obligations and which is payable in the future under terms specified in the stock purchase agreement."

There is also an additional $13.9 million in cash and equity that Zendesk will pay out “over two and three years, respectively, to Zopim employees in connection with their continued employment.”

That means that the price for Zopim could be as high as $29.8.

So what happens to Zopim now? Zendesk says that it is "busy working on a new Zopim app that embeds the chat agent experience in Zendesk." The app is expected to be available in May. 

Founded in 2008, Zopim had raised just under $400,000 in seed funding.

2014 IPO landscape

Zendesk is just the latest tech company to file to go public this year in that is looking more and more like a rebound year for the IPO landscape

Companies that have already gone public this year include Care.com, Coupons.com, King Digital and Grubhub. 

Numerous others have filed, including Box, which is looking to raise $250 million; TrueCar, which wants to raise $125 million; and TubeMogul, which filed for a $75 million IPO.

In addition, Chinese Internet giant Alibaba has declared its intentions to go public in the U.S. market after it ran into trouble with regulators in Hong Kong. 

There are plenty more companies rumored to getting ready for an IPO, including: Wayfair, which raised $157 million at a $2 billion valutation; DocuSign, which raised $85 million in the last couple weeks; Square, which is reportedly raising $200 million at a $5 billion valuation; and Dropbox, which raised $350 million of a $450 million round at a $10 billion valuation. 

Other potential candidates whose names are frequently mentioned include Airbnb, Zendesk, Uber, Lending ClubZooskEvernote,, Gilt, Jawbone and Pinterest.

(Image source: zendesk.com)

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