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

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zendesk $312.00 million 11.01 -$103.79 million ($1.11) -30.50
Twilio $277.33 million 8.16 -$41.32 million ($0.73) -33.33

Twilio has lower revenue, but higher earnings 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 and Insider Ownership

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

Profitability

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

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

Analyst Ratings

This is a breakdown of current ratings for Zendesk and Twilio, as provided by MarketBeat.

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

Zendesk presently has a consensus price target of $33.54, suggesting a potential downside of 0.92%. Twilio has a consensus price target of $37.14, suggesting a potential upside of 52.66%. Given Twilio’s higher possible upside, analysts plainly believe Twilio is more favorable than Zendesk.

Summary

Twilio beats Zendesk on 8 of the 12 factors compared between the two stocks.

Zendesk Company Profile

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.

Twilio Company Profile

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.

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