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Zendesk (ZEN) to Report Q3 Earnings: What's in the Cards?

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Zendesk ZEN is set to release third-quarter 2019 results on Oct 29.

For the quarter, revenues are anticipated between $206 million and $208 million. The Zacks Consensus Estimate for revenues currently stands at $207.4 million, indicating growth of almost 40% from the year-ago quarter’s reported figure.

Moreover, the consensus mark for earnings stayed at 6 cents over the past 30 days, implying a decline of 33.3% from the figure reported in the year-ago quarter.

Notably, the company’s earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 106.3%.

In the last reported quarter, Zendesk reported earnings of 5 cents per share in line with the Zacks Consensus Estimate. Revenues of $195 million surpassed the consensus mark of $192 million.

Zendesk, Inc. Price and EPS Surprise


Zendesk, Inc. Price and EPS Surprise

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

At the end of second-quarter 2019, paid customer accounts were roughly 149,000. The company’s dollar-based net expansion rate was healthy at 117%.

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

Factors to Watch

Zendesk’s third-quarter results are expected to have benefited from the strong adoption of Zendesk Sunshine and Zendesk Suite solutions.

Zendesk Sunshine has gained solid traction within a few days of release, owing to its flexibility and developer friendliness. Notably, the solution is built on Amazon Web Services (AWS) and supports open standards.  

Moreover, Zendesk Suite, an omnichannel, bundled, subscription-based product, 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.

Notably, these factors were primarily responsible for driving the top line by 37% in the second quarter, a trend that most likely continued in the third quarter.

Additionally, Zendesk’s footprint is expected to have expanded among SMBs. The company’s endeavors to foray into large enterprises by enhancing its product features and go-to-market capabilities are likely to have contributed to the top line.

However, higher investments related to packages, bundles and go-to-market efforts are expected to have negatively impacted profitability 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.

Although Zendesk has a Zacks Rank #3, its Earnings ESP of +0.00% makes surprise prediction difficult. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Stocks With Favorable Combination

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

Advanced Energy Industries AEIS has an Earnings ESP of +4.17% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Micro Devices (AMD - Free Report) has an Earnings ESP of +6.54% and a Zacks Rank #2.

Apple AAPL has an Earnings ESP of +0.04% and a Zacks Rank #3.

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