Shares in Zendesk Inc. plunged in after-hours trading today after it announced that it has entered a deal to acquire Momentive Global Inc. alongside delivering its third-quarter earnings report.

Under the deal, Zendesk has agreed to purchase Momentive, the parent company of SurveyMonkey, in an all-stock deal. Momentive shareholders will receive 0.225 shares of Zendesk stock for each Momentive stock they own, with an implied value of about $28 per share.

Founded in 1999 as SurveyMonkey, Momentive pitches itself as an agile experience management company that delivers solutions to help leaders make crucial decisions. The company offers an artificial intelligence-powered platform powered by data derived from billions of actual questions and answers.

Zendesk said it expects the acquisition to be accretive in the first full year and accelerate its plans to hit revenue of $3.5 billion in 2024. Zendesk added that the companies’ respective sizable customer bases and complementary capabilities are expected to provide significant opportunities for joint product adoption and increase Momentive’s enterprise traction.

“The SurveyMonkey brand is iconic and we’ve admired their business from afar since the inception of Zendesk,” Mikkel Svane, founder and chief executive of Zendesk, said in a statement. “They truly democratized an industry — almost everyone in the world has responded to one of their surveys at some point.”

On the earnings side, Zendesk reported revenue of $347 million for the quarter ended Sept. 30, up 32% year-over-year. Profit before costs such as stock compensation came in at $21.7 million of 17 cents per share. Analysts had been predicting an adjusted profit of 16 cents per share.

Looking ahead, Zendesk said that it expects an adjusted profit in the quarter ending Dec. 31 of $22 million to $28 million on revenue of $366 million to $372 million. For the full year ending Dec. 31, Zendesk says it expects adjusted earnings of $96 million to $102 million.

“Zendesk’s latest earnings report shows continued growth and successful results — a reflection of the strong market for enterprise technology as remote and hybrid work become the norm,” Matt Fairhurst, CEO of deskless productivity platform Skedulo Holdings Inc., told SiliconANGLE. “Automation is everywhere and essential in today’s successful productivity and digital transformation efforts.”

Despite reasonable numbers in its quarterly earnings, the announcement of the Momentive acquisition gained the attention of investors and they were not pleased. Shares in Zendesk dropped 16% after the bell.

Photo: Scott Beale/Flickr