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Why Zendesk Stock Popped Today

By Chris Neiger – Oct 30, 2020 at 12:49PM

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Investors jumped on the stock after the company reported strong third-quarter results.

What happened

Shares of Zendesk (ZEN) jumped today after the company beat Wall Street's earnings and revenue estimates in the third quarter. 

The tech stock popped by as much as 10.6% today and was up by 3.8% as of 12:20 p.m. EDT. 

So what 

Zendesk reported adjusted diluted earnings of $0.17 per share in the quarter, which far outpaced analysts' consensus estimate of $0.11 per share. Additionally, the company's third-quarter revenue of $261.9 million beat Wall Street's estimate of $253.7 million.

Multi-colored arrows pointing up.

Image source: Getty Images.

The company's management was optimistic about the third-quarter result and Zendesk's future. 

"We saw signs that the initial shock of the COVID-19 pandemic is behind us as demand for our solutions demonstrated strong growth and as churn and contraction rates improved significantly, moving closer to historical levels," the company said in a statement.

Zendesk also achieved an important milestone in the quarter by "crossing a billion-dollar annual revenue run rate" and said it's "on a clear trajectory to reach our billion dollar annual revenue goal in 2020."

Now what 

Today's share price jump puts Zendesk's stock up 43.4% since the beginning of this year and investors likely have more to look forward to. Zendesk's revenue guidance for the fourth quarter is in the range of $274 million to $279 million, which would be a year-over-year increase of 20% at the midpoint. Additionally, the company guided for full-year sales in the range of $1.02 billion to $1.025 billion, up from $816.4 million in 2019.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zendesk. The Motley Fool has a disclosure policy.

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