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Zendesk Sees A Modest 24% Pop On Its First Day Of Trading After Raising $100M In IPO

TechCrunch TechCrunch 15/05/2014 Ingrid Lunden
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Riding what has been a wave for  technology stocks, today the cloud-based help desk business Zendesk debuted on the New York Stock Exchange. Setting its pricing at $9 per share , the stock popped 23.56% to $11.40 on its first trade — modest but by no means a bust. At the time of writing, it’s also  and is now at 30% above its opening price.

At $9 per share for the 11,111,111 shares Zendesk was offering, this was squarely in the middle of the $8 to $10 range the company . Zendesk raised just short of $100 million – although that was some $50 million short of the amount originally planned for when it around a month ago. The $9/share price values Zendesk at around $632 million.

Zendesk is tapping into a couple of bigger trends at the moment. The first is the  over the last year or so, in the wake of several years of focus on consumer plays. And the second is the , tapping into the growth of better data networks and mobile devices with less storage, as a way to deliver them more efficiently.

Zendesk says it has some 42,000 customer accounts from 140 countries at the moment and has been growing quickly. Revenues in 2013 were $72 million, up 88% on a year before. The first quarter of 2014 to March 31 saw sales of $25.1 million, up 80% on the same quarter a year ago.

But while cloud-based businesses have been one of the biggest growth engines in enterprise technology, they have been doing so on a much thinner margin base than their larger, legacy competitors.

Zendesk had a net loss in 2013 of $22.6 million, down by some $2 million from the year before, while its net loss for Q1 2014 nearly doubled to $10.3 million. It looks like, for now, Zendesk will be taking a similar approach to growth by not focusing on positive net income. “We intend to invest aggressively to drive continued growth and market leadership,” the company noted in its S-1. That has included making its first acquisition, of Singapore-based live chat help provider .

Worth noting that Zendesk is not alone here, and in some ways is in healthier position if you are tracking revenues versus losses. Box, which has filed for a $250 million  , says that its 2013 revenues were $124 million but with net losses of $168 million. Some have floated the idea that Box will delay its IPO although the company has not confirmed those reports.

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