Analyzing Twilio (TWLO) and Zendesk (ZEN)

Twilio (NYSE: TWLO) and Zendesk (NYSE:ZEN) are both mid-cap technology companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, institutional ownership, analyst recommendations and profitability.

Earnings & Valuation

This table compares Twilio and Zendesk’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Twilio $277.33 million 8.32 -$41.32 million ($0.73) -33.99
Zendesk $312.00 million 10.95 -$103.79 million ($1.10) -30.61

Twilio has higher earnings, but lower revenue than Zendesk. Twilio is trading at a lower price-to-earnings ratio than Zendesk, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

59.8% of Twilio shares are owned by institutional investors. Comparatively, 95.7% of Zendesk shares are owned by institutional investors. 25.0% of Twilio shares are owned by company insiders. Comparatively, 5.3% of Zendesk shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Twilio and Zendesk’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Twilio -15.69% -17.55% -14.06%
Zendesk -27.43% -32.50% -19.75%

Analyst Ratings

This is a summary of recent ratings and target prices for Twilio and Zendesk, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Twilio 1 2 13 0 2.75
Zendesk 1 1 12 0 2.79

Twilio presently has a consensus price target of $37.14, indicating a potential upside of 49.71%. Zendesk has a consensus price target of $33.54, indicating a potential downside of 0.39%. Given Twilio’s higher probable upside, analysts clearly believe Twilio is more favorable than Zendesk.

Summary

Twilio beats Zendesk on 8 of the 13 factors compared between the two stocks.

About Twilio

Twilio Inc. offers Cloud Communications Platform, which enables developers to build, scale and operate real-time communications within software applications. The Company’s platform consists of Programmable Communications Cloud, Super Network and Business Model for Innovators. Its Programmable Communications Cloud software enables developers to embed voice, messaging, video and authentication capabilities into their applications through its Application Programming Interfaces (APIs). Its Programmable Communications Cloud offers building blocks that enable its customers to build what they need. Its Programmable Communications Cloud includes Programmable Voice, Programmable Messaging, Programmable Video and Use Case APIs. The Super Network is its software layer that allows its customers’ software to communicate with connected devices globally. It interconnects with communications networks around the world.

About Zendesk

Zendesk, Inc. (Zendesk) is a software development company. The Zendesk family of products is built to work together to help organizations understand and manage customer relationships. All Zendesk products share a common interface and are being developed to support a shared services infrastructure and common customer data platform. Zendesk’s products are developed using agile software techniques, and are designed to incorporate and innovate on customer feedback obtained through beta and Early Access Programs (EAPs). Its family of products includes Zendesk Support, Zendesk Chat, Zendesk Talk, Zendesk Help Center, Zendesk Message, Zendesk Explore and Zendesk Connect. Zendesk’s developer platform allows organizations to extend the functionality of its family of products and customize the experience for their employees and customers. Key components of Zendesk’s developer platform include Zendesk Embeddables, Zendesk application program interfaces (APIs) and Zendesk Applications.

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