Zendesk Outlines Superior Value Provided by Proposed Transaction with Consortium Led by Hellman & Friedman and Permira

Consortium Acquisition Provides Immediate and Certain Value to All Zendesk Stockholders and Zendesk Board Continues to Believe It Represents Best Path Forward

Recent Business Deceleration Creates Significant Risk for Zendesk Stockholders in Pursuing a Standalone Alternative as a Public Company

Special Meeting of Zendesk Stockholders to be Held on September 19, 2022, and Zendesk Board Encourages Stockholders to Vote for the Proposed Transaction

Zendesk, Inc. (NYSE: ZEN) (“Zendesk” or the “Company”) today released an investor presentation that provides significant additional information to stockholders in connection with the proposed transaction with the consortium led by Hellman & Friedman and Permira (the “Consortium”).

The Company stated: “Our Board believes that the acquisition by the Consortium is the best path forward for Zendesk and our stockholders. It is important for stockholders to understand the challenges facing the Zendesk business, including the significant deceleration of key leading indicators and measures of Zendesk’s business performance. To ensure full transparency and help investors make an informed decision, we disclosed certain recent monthly performance metrics so that Zendesk stockholders are able to understand that the standalone alternative, under any structure, carries material risk for Zendesk stockholders given Zendesk-specific performance challenges, as well as a challenging market and macroeconomic environment. The Board conducted a thorough and extensive strategic review process before determining to enter into the Consortium transaction, which the Board believes offers immediate and certain value that is superior to the standalone alternatives, including the recapitalization proposal from Light Street Capital.”

The presentation notes the following:

• Zendesk’s business momentum continues to deteriorate, both operationally and financially, with preliminary net bookings having sequentially declined for six months and having declined 63% year-over-year since the announcement of the Consortium transaction (June through August), resulting in ARR growth of only $2 million between June and the end of August 2022.
• The Board engaged in an extensive strategic review process that included several months of engagement with 26 prospective acquirors (including 16 strategics and 10 financial sponsors). Process participants were heavily focused on the net bookings trends described above. The Consortium proposal represented the only final, fully-financed proposal received as a result of the process.
• The Board considered feedback from stockholders, including JANA Partners, which indicated support for pursuing a transaction that resulted from a robust strategic review process. JANA, when provided information about the process and Consortium transaction under a confidentiality agreement, indicated that it would not oppose the transaction.
• During the process, Zendesk’s business performance resulted in a much sharper reduction in near-and long-term outlook relative to the rest of the market, with the Company’s June 2022 projections implying a 9% decrease in growth relative to the March 2022 projections. Notably, software companies that have recently provided guidance between 0% to 5% below Street expectations have seen reductions in value of between 17% and 42%.
• The Company has underperformed its projections, generating $65MM less ARR than the assumptions underlying the revised June 2022 projections to-date. This shortfall creates downside risk for the June 2022 revenue projections and associated revenue growth rates for FY22 and FY23. Moreover, it validates the reasonableness of the Board utilizing the revised June 2022 projections, which were lower than the prior March 2022 projections, to compare the Consortium transaction to the standalone alternative.
• The Company believes the performance of comparable cloud software indices and companies implies a current hypothetical unaffected stock price for Zendesk well below the value of the Consortium transaction, with significant potential downside relative to peers given Zendesk’s slowing momentum and the trading multiples of software companies that have experienced similar decelerations in growth.

The Company is continuing to advance toward completing the transaction with the Consortium, subject to customary closing conditions. A special meeting of Zendesk stockholders to vote on the transaction will be held on September 19, 2022 (the “Special Meeting”).

The Board unanimously recommends that stockholders vote “FOR” the Consortium transaction.

Stockholders’ votes are very important, regardless of the number of shares owned. To complete the Consortium transaction, the merger agreement must be adopted by the affirmative vote of the holders of at least a majority of the outstanding shares of Zendesk common stock entitled to vote at the Special Meeting.

If stockholders have any questions or need assistance voting their shares, please contact Zendesk’s proxy solicitor:

MACKENZIE PARTNERS, INC.

1407 Broadway, 27th Floor

New York, NY 10018

Toll-Free: +1 (800) 322-2885

Email: proxy@mackenziepartners.com

Advisors

Qatalyst Partners and Goldman Sachs & Co. LLC are serving as financial advisors to Zendesk. Wachtell, Lipton, Rosen & Katz is serving as Zendesk’s legal advisor.

About Zendesk

Zendesk started the customer experience revolution in 2007 by enabling any business around the world to take their customer service online. Today, Zendesk is the champion of great service everywhere for everyone, and powers billions of conversations, connecting more than 100,000 brands with hundreds of millions of customers over telephony, chat, email, messaging, social channels, communities, review sites and help centers. Zendesk products are built with love to be loved. The company was conceived in Copenhagen, Denmark, built and grown in California, taken public in New York City, and today employs more than 6,000 people across the world. Learn more at www.zendesk.com.

Additional Information and Where to Find It

This communication relates to the proposed transaction involving Zendesk, Inc. (“Zendesk”). In connection with the proposed transaction, Zendesk has filed with the U.S. Securities and Exchange Commission (the “SEC”) a definitive proxy statement on Schedule 14A (the “Proxy Statement”). The Proxy Statement was first mailed to Zendesk’s stockholders on or about August 8, 2022. This communication is not a substitute for the Proxy Statement or for any other document that Zendesk may file with the SEC and send to its stockholders in connection with the proposed transaction. The proposed transaction will be submitted to Zendesk’s stockholders for their consideration. Before making any voting decision, Zendesk’s stockholders are urged to read all relevant documents filed or to be filed with the SEC, including the Proxy Statement, as well as any amendments or supplements to those documents, when they become available because they will contain important information about the proposed transaction.

Zendesk’s stockholders will be able to obtain a free copy of the Proxy Statement, as well as other filings containing information about Zendesk, without charge, at the SEC’s website (www.sec.gov). Copies of the Proxy Statement and the filings with the SEC that will be incorporated by reference therein can also be obtained, without charge, by directing a request to Zendesk, Inc., 989 Market Street, San Francisco, CA 94103, Attention: Investor Relations, email: ir@zendesk.com, or from Zendesk’s website www.zendesk.com.

Participants in the Solicitation

Zendesk and certain of its directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Zendesk’s directors and executive officers is available in Zendesk’s proxy statement on Schedule 14A for the 2022 annual meeting of stockholders, which was filed with the SEC on July 11, 2022. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement and other relevant materials to be filed with the SEC in connection with the proposed transaction when they become available. Free copies of the Proxy Statement and such other materials may be obtained as described in the preceding paragraph.

Forward-Looking Statements

This communication includes information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements include those set forth above relating to the proposed transaction as well as those that may be identified by words such as “will,” “intend,” “expect,” “anticipate,” “should,” “could” and similar expressions. These statements are subject to risks and uncertainties, and actual results and events could differ materially from what presently is expected, including regarding the proposed transaction. Factors leading thereto may include, without limitation, the risks related to the Ukraine conflict or the COVID-19 pandemic on the global economy and financial markets; the uncertainties relating to the impact of the Ukraine conflict or the COVID-19 pandemic on Zendesk’s business; economic or other conditions in the markets Zendesk is engaged in; impacts of actions and behaviors of customers, suppliers and competitors; technological developments, as well as legal and regulatory rules and processes affecting Zendesk’s business; the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the proposed transaction that could reduce anticipated benefits or cause the parties to abandon the proposed transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement entered into pursuant to the proposed transaction; the possibility that Zendesk stockholders may not approve the proposed transaction; the risk that the parties to the merger agreement may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all; risks related to disruption of management time from ongoing business operations due to the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of Zendesk’s common stock; the risk of any unexpected costs or expenses resulting from the proposed transaction; the risk of any litigation relating to the proposed transaction; the risk that the proposed transaction and its announcement could have an adverse effect on the ability of Zendesk to retain customers and retain and hire key personnel and maintain relationships with customers, suppliers, employees, stockholders and other business relationships and on its operating results and business generally; the risk the pending proposed transaction could distract management of Zendesk; and other specific risk factors that are outlined in Zendesk’s disclosure filings and materials, which you can find on www.zendesk.com, such as its 10-K, 10-Q and 8-K reports that have been filed with the SEC. Please consult these documents for a more complete understanding of these risks and uncertainties. This list of factors is not intended to be exhaustive. Such forward-looking statements only speak as of the date of these materials, and Zendesk assumes no obligation to update any written or oral forward-looking statement made by Zendesk or on its behalf as a result of new information, future events or other factors, except as required by law.

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