Condensed consolidated Three Months Ended Year Ended statements of cash flows December 31, December 31, 2017 2016 2017 2016 (In thousands; unaudited) Cash flows from operating activities Net loss $(26,649) $(24,548) $(110,638) $(103,799) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 7,668 7,506 31,931 27,506 Share-based compensation 22,244 17,444 85,049 73,779 Excess tax benefit from share-based award acvitity — (204) — (337) Other 222 1,884 603 3,106 Changes in operating assets and liabilities: Accounts receivable (6,162) (26) (21,201) (11,808) Prepaid expenses and other current assets 54 1,115 (5,055) (6,286) Other assets and liabilities (442) (2,058) (5,955) (3,887) Accounts payable (5,398) (1,266) 1,839 (3,486) Accrued liabilities 76 2,616 6,919 5,261 Accrued compensation and related benefits 5,896 5,243 7,399 6,055 Deferred revenue 19,847 12,822 51,204 38,418 Net cash provided by operating activities 17,356 20,528 42,095 24,522 Cash flows from investing activities Purchases of property and equipment (3,062) (8,153) (16,396) (20,647) Internal-use software development costs (2,284) (1,997) (7,521) (6,310) Purchases of marketable securities (42,030) (32,408) (177,309) (249,048) Proceeds from maturities of marketable securities 27,775 15,719 116,735 39,690 Proceeds from sale of marketable securities 2,946 14,707 31,090 53,951 Cash paid for acquisition of Outbound, net of cash acquired — — (16,470) — Net cash used in investing activities (16,655) (12,132) (69,871) (182,364) Cash flows from financing activities Proceeds from exercise of employee stock options 13,332 5,526 31,882 25,412 Proceeds from employee stock purchase plan 3,268 2,300 14,248 11,004 Taxes paid related to net share settlement of share-based awards (574) (177) (2,989) (803) Excess tax benefit from share-based award acvitity — 204 — 337 Principal payments on debt — — — (323) Net cash provided by financing activities 16,026 7,853 43,141 35,627 Effect of exchange rate changes on cash 40 (161) 328 (334) and cash equivalents Net increase (decrease) in cash and cash equivalents 16,767 16,088 15,693 (122,549) Cash and cash equivalents at beginning of period 92,603 77,589 93,677 216,226 Cash and cash equivalents at end of period $109,370 $93,677 $109,370 $93,677 Zendesk Shareholder Letter Q4 2017 - 17