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Zendesk Misses Q2 Earnings Expectations; Shares Plunge 6.3%

Shares of the customer service software company Zendesk, Inc. (ZEN) sank 6.3% in Thursday’s extended trading session after the company delivered weaker-than-expected Q2 results.

Adjusted earnings of $0.13 per share fell short of analysts’ expectations of $0.16 per share. The company reported earnings of $0.14 per share in the prior-year period.

However, revenues jumped 29% year-over-year to $318.2 million but lagged consensus estimates of $319.79 million. The increase in revenues reflected record booking seen during the quarter and strong growth in sales to enterprise customers. (See ZEN stock charts on TipRanks)

Zendesk CEO Mikkel Svane commented, “We are well-positioned for sustainable, durable growth as companies rapidly adapt to a digital-first economy. The pandemic has made operating online an imperative for businesses across every industry.”

Looking forward, the company updated its full-year revenues guidance. Revenues are now forecast to be in the range of $1.31 – $1.318 billion, versus the consensus estimate of $1.31 billion.

For the third quarter, revenues are projected to be in the range of $332 – $337 million, versus analysts’ expectations of $335.5 million.

Jefferies analyst Samad Samana recently reiterated a Buy rating on Zendesk with the price target of $185 (22.9% upside potential) on the stock.

Overall, the stock has a Strong Buy consensus rating based on 4 unanimous Buys. The average Zendesk price target is $185. Shares of ZEN have jumped 50% over the past year.

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