According to an Allied Market Research report, the global complaint management software market is expected to grow at 11% CAGR to reach $8.3 billion by 2026 from $1.93 billion in 2018. Zendesk (NYSE: ZEN), and India-based Freshworks are key players in the market. Zendesk recently announced its fourth quarter results that surpassed market expectations.
Zendesk’s Q4 revenues grew 33% to $229.9 million, ahead of the market’s forecast of $227.6 million. GAAP net loss was $36.2 million. Adjusted EPS of $0.10 was in line with the Street’s estimates.
For the full fiscal year 2019, revenue grew 36% to $816.4 million. GAAP operating loss was $163 million and non-GAAP operating income was $26.6 million.
For the first quarter, Zendesk expects revenues of $237-$242 million, compared with the market’s forecast of $237.8 million. It expects to end the year with revenues of $1.05-$1.07 billion, which was in line with the market’s forecast.
Zendesk’s Marketplaces Focus
In 2018, Zendesk had acquired Mountain View-based Base, which was known for its sales platform. Bose offered a single stop solution called Apollo, which focused on improving rep adoption rates and data capture across devices. Apollo could analyze big data trends in real-time and deliver actionable, quantifiable insights to drive performance.
Prior to the acquisition, Base had raised $52.9 million funding from Index Ventures, RRE Ventures, OCA Ventures, Jumpstart Ventures, I2A Fund, Hyde Park Venture Partners, and Tenaya Capital. Terms of the acquisition were not disclosed. Zendesk plans to leverage Base’s product to build deeper integrations with its own products so sales and service could collaborate more easily. Following the acquisition, Base was rebranded as Sell.
Recently, Zendesk announced plans to launch a new product called Marketplace for Sell. Similar to Salesforce’s AppExchange, Marketplace for Sell will grant sales teams with access to a central place where they could access critical customer information from various tools directly within the Zendesk Sell interface to create a single, comprehensive profile of the prospective customer.
It will also enable customers to build private apps with a new application development framework. They would have the ability to connect their apps to an internal system or build functionality customized to their needs. Zendesk’s platform has been open to ISVs for development of custom apps on the customer support side, but the new marketplace will now allow ISVs to build these apps on the Sell platform as well. Zendesk will also allow industry partners to add connections to their software so that users can access their other applications while remaining on Sell. On its launch, the marketplace was already providing offerings from companies like HubSpot, MailChimp, and QuickBooks.
Zendesk’s stock is currently trading at $86.95 with a market capitalization of $9.8 billion. It touched a 52-week high of $94.89 in July last year and a 52-week low of $62.38 in October last year.
Rival Freshworks is also expanding its platform’s integration. Recently, it announced an integration with Splashtop SOS service. Splashtop is a leading remote support solution provider. An integration with Freshworks will help bring Splashtop’s fast and secure remote support solution to Freshworks users. Users will be able to start a quick remote support session from within Freshservice with a simple click without the need for installing any service or application on the client device. The customer support executive will be able to remotely access and control an unlimited number of Windows and Mac computers and conduct activities such as file transfer, remote reboot, and chat. The solution will also automatically log details of the remote access session into the ticket to support future support and any audit requirements.
Earlier this month, Freshworks also announced the general availability of Freshsuccess, which can natively integrate customer success software into its portfolio. Freshsuccess allows organizations to improve customer results as they can quickly understand the health of customer accounts and determine effective actions. It includes the Freshworks Master Account Record , which is an integrated view of customer data that incorporates all key touchpoints across sales, finance, support, product, and marketing to provide an up-to-date and complete picture of the customer relationship. The record helps the companies understand the products that the customers are using and the amount of time they are spending on the platform so that they can serve the customer most effectively.
Freshworks IPO Plans
Freshworks remains privately funded having raised $399 million from investors including Sequoia Capital India, Accel, Google, Tiger Global Management, and CapitalG. Its last round of funding was held in November last year when it raised $150 million in a round led by Google at a valuation of $3.5 billion. It does not disclose its financials. Freshworks has also remained quiet about its IPO plans. Reports suggest that the company may be targeting an IPO next year.