Losses at the Irish arm of recently sold tech company Zendesk widened to €5.4 million last year, an increase of nearly 29 per cent from 2020 despite a sharp jump in turnover driven by the Covid-19 pandemic.
The customer support software company – which last month announced plans to shed 5 per cent of its global workforce including a number of roles at its European headquarters in Dublin – has filed accounts that show a more than 20 per cent increase in its Irish headcount amid a jobs boom in the tech sector last year.
The filings also reveal that Zendesk is vacating two floors at its €10 million European headquarters in Dublin 2 and subletting the space to a tenant.
In a report attached to the accounts, the directors of the Irish entity noted that Zendesk began decommissioning two floors at its headquarters at 55 Charlemont Place, built by developers Paddy McKillen jnr and Matt Ryan through their Oakmount vehicle. They said the company has made the two floors available for sublease so the reduction in space “will have no impact on our lease commitments”.
Zendesk International, which employed 648 people in 2021, most of them in sales and marketing, paid out more than €72.3 million in wages and salaries, up from €57.3 million in 2020. Included in the total is an expense for share-based payments of €12.5 million, the company’s auditors, EY, noted in the accounts.
Revenues at the software-as-a-service company jumped by around 24 per cent to €90.7 million in 2021 from almost €73 million in 2020. The firm said the turnover represents expenses re-charged to its US parent company on a “cost plus 10 per cent basis”.
Zendesk paid roughly €1 million in Irish corporation taxes last year, the filings indicate.
The directors said the group anticipates that it will continue to expand its operations and headcount in the near term.
“The expected expenditures that the group anticipate will be necessary to manage the anticipated growth, including personnel costs, expenditures relating to hosting capabilities, leasehold improvements and related fixed assets, will make it more difficult for the group to achieve profitability in the near term,” they said. “Many of these investments will occur in advance of us experiencing any direct benefit and will make it difficult to determine if we are allocating our resources efficiently.”
The directors said that the “ongoing global shift to a digital-first world” against the backdrop of the pandemic has seen some of Zendesk’s customers grow while others have seen a decrease in activity. “As the group adjusts to the new normal, [it] will continue to evaluate conditions in each region we operate,” they said.
The directors noted that in May, Zendesk began decommissioning the two floors at its headquarters at 55 Charlemont Place.
The San Francisco-headquartered company, which was founded by Mikkel Svane, Morten Primdahl, and Alexander Aghassipour in Copenhagen, Denmark in 2007, was acquired and taken private recently by US private equity firms Hellman & Friedman and Permira in a deal valuing the company at more than $10 billion (€9.5 billion).
The completion of the deal, originally announced in June, followed the announcement in November that Zendesk plans to cut 5 per cent of its global headcount, amounting to roughly 300 jobs, a number of them in Dublin.
Zendesk is one of several Irish-headquartered multinational tech firms, including Facebook parent Meta and Irish-American payments company Stripe, that have announced job cuts amid a slowdown in the sector this year.