(continued...) Three Months Ended Year Ended December 31, December 31, Non-GAAP results 2017 2016 2017 2016 GAAP general and administrative $22,177 $16,222 $81,680 $64,371 (In thousands, except per Less: Share-based compensation (5,761) (3,955) (21,263) (16,608) share data) Less: Employer tax related to employee stock transactions (671) (123) (1,184) (586) The following table shows Less: Acquisition-related expenses (45) — (566) — Zendesk’s GAAP results Non-GAAP general and administrative $15,700 $12,144 $58,667 $47,177 GAAP general and administrative as percentage of revenue 18% 18% 19% 21% reconciled to non-GAAP Non-GAAP general and administrative as percentage of revenue 13% 14% 14% 15% results included in this letter. Reconciliation of operating loss and operating margin GAAP operating loss $(28,523) $(25,130) $(114,643) $(104,326) Plus: Share-based compensation 22,244 17,444 85,049 73,779 Plus: Employer tax related to employee stock transactions 1,972 1,753 4,849 3,870 Plus: Amortization of purchased intangibles 747 941 3,704 3,780 Plus: Acquistion-related expenses 732 — 2,159 — Plus: Amortization of share-based compensation capitalized in 417 598 1,774 1,821 internal-use software Non-GAAP operating loss $(2,411) $(4,394) $(17,108) $(21,076) GAAP operating margin (23)% (28)% (27)% (33)% Non-GAAP adjustment 21% 23% 23% 26% Non-GAAP operating margin (2)% (5)% (4)% (7)% Reconciliation of net loss GAAP net loss $(26,649) $(24,548) $(110,638) $(103,799) Plus: Share-based compensation 22,244 17,444 85,049 73,779 Plus: Employer tax related to employee stock transactions 1,972 1,753 4,849 3,870 Plus: Amortization of purchased intangibles 747 941 3,704 3,780 Plus: Acquistion-related expenses 732 — 2,159 — Plus: Amortization of share-based compensation capitalized in 417 598 1,774 1,821 internal-use software Non-GAAP net loss $(537) $(3,812) $(13,103) $(20,549) Zendesk Shareholder Letter Q4 2017 - 19