Zendesk-Local Measure deal: US giant to buy contact centre program maker for $100m

According to data compiled by Layoffs.fyi, the online tracker keeping tabs on job losses in the technology sector, 726 tech companies have laid off about 200,846 staff so far this year, compared to 164,709 layoffs last year. Zendesk’s 52-week high is $153.43 per share; it’s selling for around half that. I had a chance earlier this week to chat with Adrian McDermott, president of products at Zendesk, about the auspicious revenue milestone. We also talked about the impact of the COVID-19 pandemic and changes that Zendesk has recently introduced to improve the features and capabilities they can deliver for customers. Ron was formerly corporate blogger for Intronis where he wrote once weekly on IT issues. He has contributed to various corporate blogs in the past including Ness, Novell and the IBM Mid-market Blogger Program.

Local Measure was last valued at $50 million in 2023 and sells a platform called Engage, which is used to run call centres. Zendesk sells a bigger cloud-based customer service platform and will integrate Local Measure into this. “Looking ahead, I believe we have an incredible opportunity to lead the new era of intelligent CX.

Streamlined Plans and Pricing

Zendesk’s customer experience platform is getting a fresh injection of artificial intelligence. The company is expanding its Zendesk AI solution by launching what it describes as “highly sophisticated” AI agents, an agent copilot and new capabilities that ensure proper support staffing and the quality of AI responses and case resolution. All these features constitute the end-to-end solution Zendesk believes brands want to manage the quantity and quality of customer interactions. For those who are not familiar with Zendesk, it is a customer relationship management (CRM) company—providing a platform and tools to enable businesses to establish and maintain relationships and manage and provide customer service. It is an essential function, because doing it right creates loyal customers and advocates, while doing it wrong leads to going out of business. Zendesk seems to be doing something right, because they’ve managed to land more than 170,000 paid accounts across 160 countries around the world.

Troops Brings Hubspot, Zendesk, Jira, and Intercom Data to Slack and Microsoft Teams

“If Zendesk remained public, it could have gotten pummeled, and that would have been worse for everyone. At least these folks who acquired them paid a premium and have some experience and capital available,” he said. At $10.2 billion, Zendesk is selling for just under or just over 6x, using the top and bottom ends of its revenue guidance for the year. In Q1 2022, Zendesk generated revenues of $388 million, up 30% from the year-ago period; it anticipates $1.685 billion to $1.710 billion in total revenue this year, a forecast that it raised in its first-quarter report. Also in the first quarter, Zendesk’s gross margins were 50 basis points above the 80% mark, and while it lost around $67 million in GAAP terms in the quarter, it generated free cash flow in the same quarter, and its operating activities kicked off nearly $4 million per month. The AI Live Chat Software market size is estimated to increase by USD at a CAGR of 7.29% by 2030.

Increased confidence amongst project profession for the UK achieving its 2050 Net Zero targets

After all that turbulence, it would be easy to think that overall financial performance had suffered as a result, but as you shall see, that really wasn’t the case. We sat down with Eggemeier to find out how he steadied the ship and put the company back on track. Eggemeier teases that more back-end system integrations will be revealed in the coming months to leverage the Zendesk AI better. Troops also allows users to create feeds in Microsoft Teams and Slack showing deals won, deals lost, open tickets, the number of white papers downloaded, or any one of hundreds of other data categories. Also let everyone involved know that your new Zendesk platform is up and running. Monitor the platform closely, gather feedback from your team, and fine-tune your processes.

• Local Measure was last valued at $50 million in 2023 and sells a platform called Engage, which is used to run call centres.
• Zendesk sells a bigger cloud-based customer service platform and will integrate Local Measure into this.
• For starters, the company turned down a $17 billion offer in February, which you will note is substantially higher than the final selling price, and Jana was not happy with that outcome.

He won the 2024 Silver Azbee Award for Best News Article in the Technology category. He has a post-graduate diploma in journalism from the Indian Institute of Journalism and New Media. Eggemeier also pointed out that Zendesk’s enterprise customers were considering adopting newer technologies such as generative AI and said Zendesk would tune its employee structure to help customers meet their desired goals. In November, Zendesk laid off around 300 staffers from its global workforce of 5,450 employees to reduce operating expenses because the company hired more employees than were commensurate with its growth projections.

If you’re contemplating a switch from Intercom to Zendesk, you’re probably already aware of the reasons. But let’s dive into the nitty-gritty of why Zendesk might just be the customer service solution your team has been craving. If that weren’t enough, the company was also trying to expand its offerings by buying Survey Monkey parent Momentive in a $4.1 billion deal.

• Also let everyone involved know that your new Zendesk platform is up and running.
• Using its predictive algorithm, Zendesk can determine which agent—human or AI—will provide the best resolution and reroute the call accordingly.
• He won the 2024 Silver Azbee Award for Best News Article in the Technology category.
• At $10.2 billion, Zendesk is selling for just under or just over 6x, using the top and bottom ends of its revenue guidance for the year.

While Jana fumed, Zendesk continued to operate based on its own sense of its value — one, by the way, that TechCrunch agreed with in our analysis of that spurned deal. “People today want to connect with businesses the same way they chat with their friends and family — with personal messaging to get questions answered and receive support quickly and conveniently. Longtime CEO and co-founder Mikkel Svane stepped down in November, and customer service software industry veteran Tom Eggemeier was brought in to replace him, first as interim chief executive and eventually permanently. Last year was a tough one for Zendesk, with several months of uncertainty. But the company appears to have emerged from that instability, none the worse for wear, with a new private equity owner and a fresh CEO to lead it into its next phase. Or change customer records without leaving Microsoft Teams or Slack.

The new tranche of layoffs, according to Eggemeier, can be attributed to continued macroeconomic uncertainty and increased competition from rivals. Nobody knows how this will all play out, or if there is a general lesson to be learned from this news, but when a company with Zendesk’s numbers ends up on the bargain shelf, it’s hard not to wonder what’s going on — and what impact it will have on other similar companies. It’s not the company’s fault that the market changed its mind about the value of companies like Zendesk. Zendesk selling for a mid-single-digit multiple with positive free cash flow, 30% revenue growth and a recent re-acceleration of top-line expansion should be downright terrifying for unicorns — those late-stage startups that have a value of $1 billion or more. There are a number of notable milestones for any company—first customer, 100th employee, etc. Some milestones can’t be achieved by every company, though—they are reserved for a select few.

The last component introduced today is powered by Klaus, a startup Zendesk acquired in January. The customer service platform will now evaluate 100 percent of all AI Agent interactions and use AI to identify those interactions that require human intervention to minimize churn risk, repair incorrect workflows, and provide knowledge center updates. Using its predictive algorithm, Zendesk can determine which agent—human or AI—will provide the best resolution and reroute the call accordingly.

Does the price make sense?

In addition, the agent and copilot will provide customer service agents with the necessary context to strike a more empathetic tone, saving customers time from having to restate their cases repeatedly. Zendesk’s automation features, powered by AI, allow you to set up automated workflows and macros to handle repetitive tasks. For example, Zendesk AI agents can resolve simple customer issues by suggesting relevant articles based on keywords in customer inquiries. This drastically reduces the workload for your agents and ensures customers get quick answers, all while your team focuses on high-priority, high-complexity requests. We don’t want to pick on any particular company here, but just as an example, DocuSign has over a million paying customers, generating a run rate of $2.3 billion.