SurveyMonkey / Momentive Sold to Zendesk

Online customer service and CX firm Zendesk is to acquire Momentive, parent of SurveyMonkey, in an all-share deal which values the DIY survey brand and its associated companies at around $4bn.

Zendesk says the combination will create 'a customer intelligence company that connects what customers say and do, with how they think and feel'. Zendesk was founded in Copenhagen in 2007 as an online customer service solutions provider and today - with headquarters in the US and more than 5,000 employees worldwide - connects more than 100,000 brands with hundreds of millions of customers via 'phone, chat, email, messaging, social media, communities, review sites and help centers. Momentive is the parent of GetFeedback and SurveyMonkey, helping clients with market insights, and employee, customer and product experience. SurveyMonkey was founded in 1999 by brothers Ryan and Chris Finley, and hit valuations of $1bn ten years ago and $2bn seven years ago: it was renamed Momentive this summer.

The implied share price of $28 for Momentive stock is just above its all-time high and around 12% up on last night's close. Momentive stockholders will receive 0.225 Zendesk shares for each of their existing shares, and on completion will own around 22% of the combined company. Zendesk says it expects the combination to be growth accretive in its first full operating year, and that the firms' sizeable customer bases and complementary capabilities will provide 'significant opportunity for joint product adoption and increasing Momentive's enterprise traction'. Momentive CEO Zander Lurie will continue to lead the team.

The boards of directors of Zendesk and Momentive have approved the transaction, but stockholders must also do so and regulatory approvals and other closing conditions are yet to be satisfied: the transaction is expected to close in the first half of 2022.

Mikkel Svane, CEO & founder of Zendesk said of the deal: 'The SurveyMonkey brand is iconic and we've admired their business from afar since the inception of Zendesk. They truly democratized an industry - almost everyone in the world has responded to one of their surveys at some point. We're very excited to have them join the Zendesk mission along with Momentive's market research and insights products and together create a powerful new Customer Intelligence company. We will deliver a rich, colorful picture of every customer so businesses really understand their customers and can build more authentic relationships'.

Lurie (pictured) says the combination will advance Momentive's mission and accelerate its long-term growth strategy, and adds: 'This is a testament to the strength of our agile products and talented team. Zendesk and Momentive share a culture centered around our people, our communities and the customers we serve. The synergies between our companies are proximate and compelling'.

The two companies also released details of their third quarter results today - Zendesk's are official and Momentive's preliminary. Zendesk's revenue rose 32% to $347m; GAAP net loss for the quarter was $54.4m, while non-GAAP net income was $21.7m. For Momentive, total revenue was $114.8m, up 20% and just above the top end of guidance issued - of this, Enterprise sales made up $37.6m (up 37%) or around one third; while self-serve revenue was up 13% to $77.1m. Profit / EBITDA figures are not provided as yet but GAAP operating margin improved slightly from negative 24% to negative 17%, while non-GAAP operating margin roughly tripled to positive 6.5%.

Web sites: www.momentive.ai and www.zendesk.com .