Freshdesk's global competitor Zendesk files for IPO to raise up to $150M on NYSE
California-headquartered Zendesk Inc, a provider of SaaS-based customer support platform to enterprises, has filed for an initial public offering (IPO) where it is looking to raise up to $150 million.
It intends to use the net proceeds to be raised from the offering for working capital or general corporate purposes, including the expansion of its sales organisation, international expansion, further development of customer service platform and live chat software, and general and administrative matters. It may also use it to tax obligations, pay back debt and acquire complementary businesses, products, services or technologies.
Goldman Sachs & Co, Morgan Stanley and Credit Suisse are the lead underwriters for the IPO.
Founded in 2007 by three Danish entrepreneurs Mikkel Svane, Morten Primdahl and Alexander Aghassipour, Zendesk offers a cloud-based customer service platform, which it claims to be easy to use, customise and scale.
The firm says that more than 40,000 companies are using its platform to provide services to more than 200 million people worldwide. With offices in eight countries, Zendesk has raised more than $80 million in funding from Charles River Ventures, Benchmark Capital, Goldman Sachs, GGV Capital, Index Ventures, Matrix Partners and Redpoint Ventures.
Last month it completed the acquisition of Zopim, a software development company that provides a SaaS live chat service.
For the years ended December 31, 2012 and 2013, its total revenue was $38.2 million and $72.0 million, respectively, representing approximately 88 per cent growth. Around 41 per cent of its revenues are derived from clients outside the US. In the same period its net losses were pegged at $24.4 million and $22.6 million, respectively.
It faces competition from in-house software systems, large integrated systems vendors and smaller companies offering alternative SaaS applications. Zendesk faces substantial competition from salesforce.com, Inc., Oracle Corporation and Microsoft Corporation, each of which can bundle competing products and services with other software offerings or offer them at a low price as part of a larger sale.
In addition, it competes with a number of other SaaS providers with focused customer support applications, including at least two Indian competitors—Chennai and US-based Freshdesk and Bangalore-based SupportBee. Others players in the space include desk.com (a salesforce.com service), Kayako Helpdesk Pvt. Ltd., Brightwurks, Inc. (Help Scout), and Tenmiles Technologies Pvt. Ltd. (Happy Fox), many of which offer free or significantly discounted prices for their services.
Freshdesk, had last November secured $7 million in Series C round of funding from existing investors Accel Partners and Tiger Global, which valued the firm at more than $50 million.
Freshdesk was set up in 2010 by Girish Mathrubootham (CEO) and Shan Krishnasamy (CTO). The company was started to provide email and website integration customer support and later it launched phone-based Twitter and Facebook support as well. In a chat with Techcircle.in October last year, Mathrubootham had said that the firm had a customer base of 11,000 from over 18 countries. It counts firms like MakeMyTrip, Pearson, Stanford School of Medicine and Toshiba amongst its clientele. The firm recently launched an integrated telephony feature called Freshfone, a virtual cloud-based contact centre software that allows staff to handle telephone-based queries through its unified service.
(Edited by Joby Puthuparampil Johnson)