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Press Release: Zendesk Announces Fourth Quarter -3-

· 02/04/2021 16:15
equity $ 2,157,279 $ 1,514,589 ========= ========= Condensed Consolidated Statements of Cash Flows (In thousands; unaudited) Three Months Ended Year Ended December 31, December 31, -------------------- ------------------------ 2020 2019 2020 2019 --------- --------- ---------- ------------ Cash flows from operating activities Net loss $(70,036) $(36,168) $(218,178) $(169,653) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 9,645 10,810 42,247 38,602 Share-based compensation 50,147 37,672 182,204 156,730 Amortization of deferred costs 13,036 9,133 45,426 32,116 Amortization of debt discount and issuance costs 12,358 6,457 38,588 25,288 Loss on early extinguishment of debt -- -- 25,950 -- Real estate impairment 14,975 -- 14,975 -- Allowance for credit losses on accounts receivable 1,686 1,262 10,136 5,061 Repayment of convertible senior notes attributable to debt discount -- -- (38,637) -- Other, net 7,909 (1,480) 5,602 (4,321) Changes in operating assets and liabilities: Accounts receivable (47,910) (30,229) (80,945) (50,061) Prepaid expenses and other current assets 1,207 2,648 (1,909) (8,349) Deferred costs (30,088) (14,665) (77,380) (49,922) Lease right-of-use assets 4,900 4,918 20,372 18,940 Other assets and liabilities 1,821 3,060 799 (1,081) Accounts payable 5,404 (463) (20,804) 22,128 Accrued liabilities 3,231 2,739 4,800 3,259 Accrued compensation and related benefits 20,206 7,933 38,458 11,282 Deferred revenue 55,028 32,427 59,397 78,110 Lease liabilities (7,170) (3,843) (24,673) (18,868) -------- -------- --------- --------- Net cash provided by operating activities 46,349 32,211 26,428 89,261 Cash flows from investing activities Purchases of property and equipment (3,388) (13,512) (22,877) (39,140) Internal-use software development costs (4,745) (2,834) (15,646) (7,841) Purchases of marketable securities (148,289) (79,943) (849,656) (454,649) Proceeds from maturities of marketable securities 94,210 31,205 375,686 177,376 Proceeds from sales of marketable securities 24,581 28,289 130,087 328,921 Business combinations, net of cash acquired -- (125) -- (70,919) Purchases of strategic investments -- -- (1,500) (500) Proceeds from sales of strategic investments -- -- 1,577 -- -------- -------- --------- --------- Net cash used in investing activities (37,631) (36,920) (382,329) (66,752) Cash flows from financing activities Proceeds from issuance of 2025 convertible senior notes, net of issuance costs paid of $21,030 (20) -- 1,128,970 -- Purchase of capped calls related to 2025 convertible senior notes -- -- (129,950) -- Payments for 2023 convertible senior notes partial repurchase -- -- (578,973) -- Proceeds from capped calls related to 2023 convertible senior notes -- -- 83,040 -- Proceeds from exercises of employee stock options 4,532 4,518 29,123 26,495 Proceeds from employee stock purchase plan 11,541 8,433 40,454 31,490 Taxes paid related to net share settlement of share-based awards (2,720) (2,172) (8,847) (9,574) -------- -------- --------- --------- Net cash provided by financing activities 13,333 10,779 563,817 48,411 -------- -------- --------- --------- Effect of exchange rate changes on cash, cash equivalents and restricted cash (191) 16 46 101 -------- -------- --------- --------- Net increase in cash, cash equivalents and restricted cash 21,860 6,086 207,962 71,021 Cash, cash equivalents and restricted cash at beginning of period 385,999 193,811 199,897 128,876 -------- -------- --------- --------- Cash, cash equivalents and restricted cash at end of period $407,859 $199,897 $ 407,859 $ 199,897 ======= ======= ======== ======== Non-GAAP Results (In thousands, except per share data) The following table shows Zendesk's GAAP results reconciled to non-GAAP results included in this release. Three Months Ended Year Ended December 31, December 31, -------------------------- ---------------------------- 2020 2019 2020 2019 -------- -------- --------- --------- Reconciliation of gross profit and gross margin GAAP gross profit $216,279 $168,122 $ 778,309 $ 582,134 Plus: Share-based compensation 4,990 5,278 20,068 20,858 Plus: Employer tax related to employee stock transactions 279 225 1,242 1,374 Plus: Amortization of purchased intangibles 2,737 2,106 7,987 7,732 Plus: Amortization of share-based compensation capitalized in internal-use software 700 440 2,075 1,711 Plus: Acquisition-related expenses 54 138 346 597 -------- -------- --------- --------- Non-GAAP gross profit $225,039 $176,309 $ 810,027 $ 614,406 ======= ======= ======== ======== GAAP gross margin 76 % 73 % 76 % 71 % Non-GAAP adjustments 3 % 4 % 3 % 4 % -------- -------- --------- --------- Non-GAAP gross margin 79 % 77 % 79 % 75 % ======== ======== ========= ========= Reconciliation of operating expenses GAAP research and development $ 71,134 $ 55,719 $ 255,400 $ 207,548 Less: Share-based compensation (14,892 ) (11,248 ) (53,967 ) (46,965 ) Less: Employer tax related to employee stock transactions (606 ) (435 ) (2,687 ) (3,292 ) Less: Acquisition-related expenses (947 ) (754 ) (4,329 ) (3,159 ) -------- -------- --------- --------- Non-GAAP research and development $ 54,689 $ 43,282 $ 194,417 $ 154,132 ======= ======= ======== ======== GAAP research and development as percentage of revenue 25% 24% 25% 25% Non-GAAP research and development as percentage of revenue 19% 19% 19% 19% GAAP sales and marketing $142,897 $110,764 $ 512,339 $ 396,514 Less: Share-based compensation (21,329 ) (14,151 ) (74,796 ) (53,964 ) Less: Employer tax related to employee stock transactions (764 ) (437 ) (3,687 ) (2,788 ) Less: Amortization of purchased intangibles (652 ) (699 ) (2,692 ) (2,633 ) Less: Acquisition-related expenses (87 ) (683 ) (1,233 ) (1,844 ) -------- -------- --------- --------- Non-GAAP sales and marketing $120,065 $ 94,794 $ 429,931 $ 335,285 ======= ======= ======== ======== GAAP sales and marketing as percentage of revenue 50 % 48 % 50 % 49 % Non-GAAP sales and marketing as percentage of revenue 42 % 41 % 42 % 41 % GAAP general and administrative $ 57,041 $ 33,941 $ 166,469 $ 141,076 Less: Share-based compensation (8,936 ) (6,995 ) (33,373 ) (34,943 ) Less: Employer tax related to employee stock transactions (440 ) (326 ) (2,354 ) (2,113 ) Less: Acquisition-related

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February 04, 2021 16:15 ET (21:15 GMT)