William Blair’s Bhavan Suri mentioned that industry conversations suggest Zendesk Inc (NYSE: ZEN) will beat the top and bottom line expectations when it reports its Q4 results after the close on February 8.
Suri maintained an Outperform rating on the company.
Growth Expectations
“We believe the demand environment remains strong for easy-to-use, omnichannel customer service software for small and midsize companies,” the analyst stated.
Despite Zendesk’s sales reorganization over the last six months, Suri believes the company continued to gain traction with larger firms, given its “compelling” offering that is usually less expensive as well as quicker to implement than other enterprise solutions.
“We suspect there may have been some disruption to enterprise deal execution during the quarter that resulted from the salesforce changes completed in the second and third quarters, but we expect billings growth to come in roughly in line with expectations given typical enterprise seasonality,” the analyst went on to say.
Beat Results Expected
In addition, Suri believes that Zendesk’s enterprise pipeline continues to be robust and would continue to materialize in 2017.
The analyst also expects the company to continue to expand with existing customers, while capturing divisions of larger firms that would be able to extend Zendesk solutions across the entire enterprise over time.
Suri pointed out that the company was likely to beat the consensus revenue expectations of $87.3 million by about $0.5-$1.0 million, while beating the consensus forecast of $0.06 loss per share, driven by continued gross margin improvement and top line beat.
Latest Ratings for ZEN
| Jan 2017 | Wells Fargo | Initiates Coverage On | Outperform | |
| Aug 2016 | UBS | Maintains | Buy | |
| Jul 2016 | Stifel Nicolaus | Initiates Coverage on | Hold |
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