When Zendesk declined made a $17 billion takeover offer earlier this month, in part on the basis that the proposed transaction had undervalued the company, especially in light of the then-pending $4.13 billion bid to buy Momentive/Survey Monkey.
But after investors rejected that deal on Friday, questions remained about how the company will proceed from here.
On Feb. 10, Zendesk turned down a major offer from a consortium of private equity firms, in part because it predicted it would reach $5 billion in revenue by 2025. With the Momentive deal off the table, the company now expects revenue of $3.4 billion in the same year, a significant difference of $1.6 billion.
Were Momentive’s potential revenues enough to justify the price tag Zendesk was willing to pay, its plunge into the customer experience market, and the fact that it would have diverted the acquirer away from its core customer service orientation?
Brent Leary, founder and principal analyst at CRM Essentials, says SurveyMonkey is unlikely to become a major player in the customer experience market. “From a CX perspective, I didn’t really see this as an acquisition that would have a really significant impact on the industry’s competitive landscape,” he said.
A product change at Zendesk appears to have helped the company reach more, larger customers and accelerate growth while improving margins.
But you could argue that customer experience is still a logical area for Zendesk to get into, as company CEO and founder Mikkel Svane pointed out in a blog post announcing the end of the Momentive deal.
“We believe true understanding comes from taking billions of customer interactions and turning it all into actionable insights for our customers. We remain as committed as ever to creating value for customers by providing them with rich, multidimensional capabilities and insights in customer intelligence,” he wrote.
Leary disagrees, but says he sees research technology becoming a smaller part of it as more automated signal collection takes hold. “While surveys are an important tool for understanding current customer mindsets, the acceleration of signals generated automatically by digital interactions originating from human exchanges and from device usage will continue to grow exponentially,” he said.