Why Zendesk Stock Popped Wednesday

What happened

Shares of customer-service platform Zendesk (NYSE: ZEN) jumped on Wednesday, rising as much as 14.9%. As of 12:52 p.m. EST, the stock was up about 6%.

The stock’s gain was fueled by the company’s fourth-quarter update, which featured accelerating revenue growth and a better-than-expected non- GAAP profit.

Zendesk support dashboard metrics

Zendesk platform. Image source: Zendesk.

So what

Revenue in Zendesk’s fourth quarter rose 41% year over year, to $172.2 million. This is an acceleration from the company’s 38% year-over-year revenue growth rate in Q3. This revenue growth easily surpassed management’s guidance for revenue between $164 million and $166 million.

The company’s non-GAAP earnings per share for the period was $0.10, up from $0.01 in the year-ago quarter. Analysts, on average, were expecting non-GAAP earnings per share of $0.03.

“We continue to deliver strong revenue growth from small and midsized businesses and large enterprises,” management said in Zendesk’s fourth-quarter shareholder letter. “Our upmarket momentum continued as we partner with enterprises to serve increasingly complex use cases.”

Now what

For the company’s first quarter, management said it expects revenue between $178 million and $180 million, translating to 38% year-over-year revenue growth based on the midpoint of this guidance range.

For the full year, management expects revenue to be between $795 million and $805 million, up from $599 million in 2018.

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Daniel Sparks 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 .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Referenced Symbols: ZEN

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