Subscription revenue grew 14%
year-over-year; total revenue grew 9% year-over-year
Zuora, Inc. (NYSE: ZUO), the leading cloud-based subscription
management platform provider, today announced financial results for
its fiscal first quarter ended April 30, 2021.
“The first quarter was a solid start to the year, as we executed
on the strategy we laid out at last month’s Investor Day. We
exceeded expectations across our key operating metrics, drove
significant improvement on net dollar retention, and believe that
we have built a solid foundation for Zuora's long-term growth,”
said Tien Tzuo, founder and CEO of Zuora.
First Quarter Fiscal 2022 Financial Results:
- Revenue: Total revenue was $80.3 million, an increase of
9% year-over-year. Subscription revenue was $65.1 million, an
increase of 14% year-over-year.
- GAAP Loss from Operations: GAAP loss from operations was
$17.4 million, compared to a loss of $17.7 million in the first
quarter of fiscal 2021.
- Non-GAAP Loss from Operations: Non-GAAP loss from
operations was $2.5 million, compared to a non-GAAP loss from
operations of $7.7 million in the first quarter of fiscal
2021.
- GAAP Net Loss: GAAP net loss was $17.7 million, or 22%
of revenue, compared to a net loss of $17.5 million, or 24% of
revenue, in the first quarter of fiscal 2021. GAAP net loss per
share was $0.15 based on 121.4 million weighted-average shares
outstanding, compared to a net loss per share of $0.15 based on
115.1 million weighted-average shares outstanding in the first
quarter of fiscal 2021.
- Non-GAAP Net Loss: Non-GAAP net loss was $2.8 million,
compared to a non-GAAP net loss of $7.5 million in the first
quarter of fiscal 2021. Non-GAAP net loss per share was $0.02 based
on 121.4 million weighted-average shares outstanding, compared to a
non-GAAP net loss per share of $0.06 based on 115.1 million
weighted-average shares outstanding in the first quarter of fiscal
2021.
- Net Cash Provided by Operating Activities: Net cash
provided by operating activities was $10.3 million, compared to net
cash provided by operating activities of $3.0 million in the first
quarter of fiscal 2021.
- Free Cash Flow: Free cash flow was $8.6 million compared
to negative $2.2 million in the first quarter of fiscal 2021.
- Cash and Cash Equivalents and Short-term Investments:
Cash and cash equivalents and short-term investments were $197.4
million as of April 30, 2021.
A description of non-GAAP financial measures is contained in the
section titled "Explanation of Non-GAAP Financial Measures" below
and a reconciliation of GAAP and non-GAAP financial measures is
contained in the tables below.
Key Metrics and Business Highlights:
- Customers with ACV equal to or greater than $100,000 were 677,
which represents 5% year-over-year growth.
- Dollar-based retention rate was 103%, an increase of 3 basis
points compared to January 31, 2021.
- Customer usage of Zuora solutions grew, with $17.0 billion in
transaction volume through Zuora’s billing platform during our
first quarter, an increase of 38% year-over-year.
- Notable recent go-lives included Algolia, Chegg, and
Seagate.
- Highlighted customers from multiple industries and geographies
in announcements including F5, GoPro and The Mainichi
Newspapers.
- Launched Zuora Collect AI -- the newest addition to the
subscription management suite of applications, powered by the Zuora
Central Platform -- which leverages machine learning from billions
of dollars in transactions and Zuora’s decade of Subscription
Economy® expertise to automate smart payment retries.
- Zuora concluded its first virtual Subscription Experience
event, holding events in three time zones, with record attendance
and speakers from Zuora customers including Deltare, Deloitte,
EnelX, Haier, PagerDuty, Philips, The Telegraph, Xerox and
more.
- Announced a research partnership with Boston Consulting Group
and Zuora's think tank, The Subscribed Institute.
- On May 25th, we acquired the intellectual property assets of
Live Objects, a business process platform that uses AI to help
companies understand, visualize and optimize complex business
processes spanning across systems.
Financial Outlook:
As of May 26, 2021, we are providing guidance for the second
quarter and full year fiscal 2022 based on current market
conditions and expectations. We emphasize that the guidance is
subject to various important cautionary factors referenced in the
section entitled “Forward-Looking Statements” below, including
risks and uncertainties associated with the ongoing COVID-19
pandemic.
For the second quarter and full fiscal year 2022, Zuora
currently expects the following results:
Second Quarter
Fiscal 2022
Subscription revenue
$67.5M - $69.5M
$274.0M - $278.0M
Total revenue
$82.5M - $84.5M
$337.0M - $339.0M
Non-GAAP loss from operations
($5.0M) - ($4.5M)
($12.0M) - ($8.0M)
Non-GAAP net loss per share¹
($0.04) - ($0.03)
($0.10) - ($0.06)
(1) Non-GAAP net loss per share was computed assuming 123.1
million and 124.1 million weighted-average shares outstanding for
the second quarter and full year fiscal 2022, respectively.
These statements are forward-looking and actual results may
differ materially. Refer to the “Forward-Looking Statements” safe
harbor section below for information on the factors that could
cause our actual results to differ materially from these
forward-looking statements.
Zuora has not reconciled its guidance for non-GAAP loss from
operations to GAAP loss from operations or non-GAAP net loss per
share to GAAP net loss per share because stock-based compensation
expense cannot be reasonably calculated or predicted at this time.
Accordingly, a reconciliation is not available without unreasonable
effort.
Webcast and Conference Call Information:
Zuora will host a conference call for investors on May 26, 2021
at 5:00 p.m. Eastern Time to discuss the company’s financial
results and business highlights. Investors are invited to listen to
a live webcast of the conference call by visiting
https://investor.zuora.com. A replay of the webcast will be
available for one year. The call can also be accessed live via
phone by dialing (844) 484-8185 or, for international callers,
(647) 689-5143 with conference ID 4746257. An audio replay will be
available shortly after the call and can be accessed by dialing
(800) 585-8367 or, for international callers, (416) 621-4642. The
passcode for the replay is 4746257. The replay will be available
through June 2, 2021.
Explanation of Non-GAAP Financial Measures:
In addition to financial measures prepared in accordance with
U.S. generally accepted accounting principles (GAAP), this press
release and the accompanying tables contain non-GAAP financial
measures, including non-GAAP cost of subscription revenue, non-GAAP
cost of professional services revenue, non-GAAP gross profit,
non-GAAP subscription gross margin, non-GAAP total gross margin,
non-GAAP sales and marketing expense, non-GAAP research and
development expense, non-GAAP general and administrative expense,
non-GAAP loss from operations, non-GAAP net loss, non-GAAP net loss
per share, and free cash flow. The presentation of these financial
measures is not intended to be considered in isolation or as a
substitute for, or superior to, financial information prepared and
presented in accordance with GAAP.
We use these non-GAAP measures in conjunction with GAAP measures
as part of our overall assessment of our performance, including the
preparation of our annual operating budget and quarterly forecasts,
to evaluate the effectiveness of our business strategies and to
communicate with our Board of Directors concerning our financial
performance. We believe these non-GAAP measures provide investors
consistency and comparability with our past financial performance
and facilitate period-to-period comparisons of our operating
results. We also believe these non-GAAP measures are useful in
evaluating our operating performance compared to that of other
companies in our industry, as they generally eliminate the effects
of certain items that may vary for different companies for reasons
unrelated to overall operating performance.
We exclude the following items from one or more of our non-GAAP
financial measures:
- Stock-based compensation expense. We exclude stock-based
compensation expense, which is a non-cash expense, from certain of
our non-GAAP financial measures because we believe that excluding
this item provides meaningful supplemental information regarding
operational performance. In particular, stock-based compensation
expense is not comparable across companies given it is calculated
using a variety of valuation methodologies and subjective
assumptions.
- Amortization of acquired intangible assets. We exclude
amortization of acquired intangible assets, which is a non-cash
expense, from certain of our non-GAAP financial measures. We
exclude these amortization expenses because we do not believe these
expenses have a direct correlation to the operation of our
business.
- Internal-use software. We exclude non-cash adjustments for
capitalization and the subsequent amortization of internal-use
software, including any impairment charges, from certain of our
non-GAAP financial measures. We capitalize certain costs incurred
for the development of computer software for internal use and then
amortize those costs over the estimated useful life. Capitalization
and amortization of software development costs can vary
significantly depending on the timing of products reaching
technological feasibility and being made generally available.
Moreover, because of the variety of approaches taken and the
subjective assumptions made by other companies in this area, we
believe that excluding the effects of capitalized software costs
allows investors to make more meaningful comparisons between our
operating results and those of other companies.
- Certain litigation. We exclude non-recurring charges and
benefits, net of currently expected insurance recoveries, including
litigation expenses and settlements, related to litigation matters
that are outside of the ordinary course of our business or that are
not representative of those that we historically have incurred. We
believe these charges and benefits do not have a direct correlation
to the operations of our business and may vary in size depending on
the timing and results of such litigation and related settlements.
We began excluding litigation that is outside of the ordinary
course of our business from our non-GAAP financial measures in the
second quarter of fiscal 2021 as these expenses significantly
increased, specifically expenses relating to our ongoing securities
class actions and derivative litigation.
Additionally, Zuora’s management believes that the free cash
flow non-GAAP measure is meaningful to investors because management
reviews cash flows generated from operations after taking into
consideration capital expenditures, net of insurance recoveries, as
these net expenditures are considered to be a necessary component
of ongoing operations. Insurance recoveries include amounts paid to
us for property and equipment that were damaged in January 2020 at
our corporate headquarters.
Investors are cautioned that there are material limitations
associated with the use of non-GAAP financial measures as an
analytical tool. The non-GAAP measures we use may be different from
non-GAAP financial measures used by other companies, limiting their
usefulness for comparison purposes. We compensate for these
limitations by providing specific information regarding the GAAP
items excluded from these non-GAAP financial measures.
Operating Metrics:
Annual Contract Value (ACV). We define ACV as the subscription
revenue we would contractually expect to recognize from a customer
over the next twelve months, assuming no increases or reductions in
their subscriptions.
Dollar-based Retention Rate. We calculate our dollar-based
retention rate as of a period end by starting with the sum of the
ACV from all customers as of twelve months prior to such period
end, or prior period ACV. We then calculate the sum of the ACV from
these same customers as of the current period end, or current
period ACV. Current period ACV includes any upsells and also
reflects contraction or attrition over the trailing twelve months
but excludes revenue from new customers added in the current
period. We then divide the current period ACV by the prior period
ACV to arrive at our dollar-based retention rate.
Forward-Looking Statements:
This press release contains “forward-looking statements” that
involve a number of risks and uncertainties, including but not
limited to, statements regarding our GAAP and non-GAAP guidance for
the second fiscal quarter and full fiscal 2022 and financial
outlook and market positioning. Words such as “believes,” “may,”
“will,” “estimates,” “potential,” “continues,” “anticipates,”
“intends,” “expects,” “could,” “would,” “projects,” “plans,”
“targets,” and variations of such words and similar expressions are
intended to identify forward-looking statements. Forward-looking
statements are based on management's expectations as of the date of
this filing and are subject to a number of risks, uncertainties and
assumptions, many of which involve factors or circumstances that
are beyond our control. Our actual results could differ materially
from those stated or implied in forward-looking statements due to a
number of factors, including but not limited to, risks detailed in
our Form 10-K filed with the Securities and Exchange Commission on
March 31, 2021 as well as other documents that may be filed by us
from time to time with the Securities and Exchange Commission. In
particular, the following factors, among others, could cause
results to differ materially from those expressed or implied by
such forward-looking statements: the impact to the economy, our
customers and our business due to the ongoing COVID-19 pandemic; we
may be unable to attract new customers and expand sales to existing
customers; we may not be able to manage our future growth
effectively; the shift by companies to subscription business models
may develop slower than we expect; we have a history of net losses
and may not achieve or sustain profitability; we face intense
competition in our markets and may not be able to compete
effectively; our products may fail to gain market acceptance or our
product development efforts may be unsuccessful; customers may fail
to successfully deploy our solution after entering into a
subscription agreement with us; we may not be able to develop and
release new products and services, or successful enhancements, new
features and modifications to our existing products and services;
the risk of loss of key employees; our sales and product
initiatives may not be successful or the expected benefits of such
initiatives may not be achieved in a timely manner; challenges
related to growing our relationships with strategic partners such
as systems integrators and their effectiveness in selling our
products; our security measures may be breached or our products may
be perceived as not being secure; our products may fail to gain, or
lose, market acceptance; we may experience interruptions or
performance problems, including a service outage, associated with
our technology; we may be unable to adequately protect our
intellectual property; current and future litigation including our
current shareholder litigation could have a material adverse impact
on our financial condition; general political or destabilizing
events, including war, conflict or acts of terrorism; other
business effects, including those related to industry, market,
economic, political, regulatory and global health conditions,
changes in foreign exchange rates; weakened global economic
conditions may adversely affect our industry; and other risks and
uncertainties. The forward-looking statements included in this
press release represent our views as of the date of this press
release. We anticipate that subsequent events and developments will
cause our views to change. We undertake no intention or obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. These
forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date of
this press release. Additionally, these forward-looking statements,
particularly our guidance, involve risk, uncertainties and
assumptions, including those related to the impact of COVID-19 on
our business and global economic conditions. Uncertainties that we
may face include, but are not limited to, our ability to achieve
our long-term plans and key initiatives, requests for extended
billing and payment terms from customers affected by COVID-19, the
timeframes for and severity of the impact of COVID-19 on our
customers’ purchasing and renewal decisions, and the length of our
sales cycles, particularly for customers in certain industries
highly affected by the COVID-19 pandemic.
About Zuora, Inc.
Zuora provides the leading cloud-based subscription management
platform that functions as a system of record for subscription
businesses across all industries. Powering the Subscription
Economy®, the Zuora® platform was architected specifically for
dynamic, recurring subscription business models, and acts as an
intelligent subscription management hub that automates and
orchestrates the entire subscription order-to-revenue process
seamlessly across billing and revenue recognition. Zuora serves
more than 1,000 companies around the world, including Box, Ford,
Penske Media Corporation, Schneider Electric, Siemens, Xplornet,
and Zoom. Headquartered in Silicon Valley, Zuora also operates
offices around the world in the U.S., EMEA and APAC. To learn more
about the Zuora platform, please visit www.zuora.com.
© 2021 Zuora, Inc. All Rights Reserved. Zuora, Subscribed,
Subscription Economy, Powering the Subscription Economy, and
Subscription Economy Index are trademarks or registered trademarks
of Zuora, Inc. Third party trademarks mentioned above are owned by
their respective companies. Nothing in this press release should be
construed to the contrary, or as an approval, endorsement or
sponsorship by any third parties of Zuora, Inc. or any aspect of
this press release.
SOURCE: Zuora Financial
ZUORA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except per
share data)
(unaudited)
Three Months Ended
April 30,
2021
2020
Revenue:
Subscription
$
65,142
$
56,896
Professional services
15,187
17,002
Total revenue
80,329
73,898
Cost of revenue:
Subscription
15,643
13,615
Professional services
17,078
18,682
Total cost of revenue
32,721
32,297
Gross profit
47,608
41,601
Operating expenses:
Research and development
18,967
17,543
Sales and marketing
31,865
28,496
General and administrative
14,185
13,265
Total operating expenses
65,017
59,304
Loss from operations
(17,409)
(17,703)
Interest and other income, net
121
378
Loss before income taxes
(17,288)
(17,325)
Income tax provision
373
163
Net loss
(17,661)
(17,488)
Comprehensive loss:
Foreign currency translation
adjustment
(85)
(427)
Unrealized (loss) gain on
available-for-sale securities
(34)
157
Comprehensive loss
$
(17,780)
$
(17,758)
Net loss per share, basic and diluted
$
(0.15)
$
(0.15)
Weighted-average shares outstanding used
in calculating net loss per share, basic and diluted
121,354
115,139
ZUORA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
(unaudited)
April 30, 2021
January 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
101,116
$
94,110
Short-term investments
96,282
92,484
Accounts receivable, net
59,484
78,860
Deferred commissions, current portion
13,160
12,712
Prepaid expenses and other current
assets
16,590
15,574
Total current assets
286,632
293,740
Property and equipment, net
32,393
33,369
Operating lease right-of-use assets
48,666
47,085
Purchased intangibles, net
3,505
3,928
Deferred commissions, net of current
portion
21,681
21,905
Goodwill
17,632
17,632
Other assets
3,618
3,848
Total assets
$
414,127
$
421,507
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
842
$
2,249
Accrued expenses and other current
liabilities
12,961
14,550
Accrued employee liabilities
26,414
29,470
Debt, current portion
4,397
4,397
Deferred revenue, current portion
126,880
127,701
Operating lease liabilities, current
portion
10,946
9,630
Total current liabilities
182,440
187,997
Debt, net of current portion
574
1,666
Deferred revenue, net of current
portion
1,241
1,529
Operating lease liabilities, net of
current portion
53,540
53,590
Deferred tax liabilities
1,920
1,929
Other long-term liabilities
2,905
2,883
Total liabilities
242,620
249,594
Stockholders’ equity:
Class A common stock
11
11
Class B common stock
1
1
Additional paid-in capital
652,501
635,127
Accumulated other comprehensive income
677
796
Accumulated deficit
(481,683)
(464,022)
Total stockholders’ equity
171,507
171,913
Total liabilities and stockholders’
equity
$
414,127
$
421,507
ZUORA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended April
30,
2021
2020
Cash flows from operating
activities:
Net loss
$
(17,661)
$
(17,488)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation, amortization and
accretion
4,147
3,495
Stock-based compensation
13,797
10,884
Provision for credit losses
1,153
992
Amortization of deferred commissions
3,874
2,623
Reduction in carrying amount of
right-of-use assets
2,342
2,286
Other
156
167
Changes in operating assets and
liabilities:
Accounts receivable
18,223
8,518
Prepaid expenses and other assets
(1,169)
1,591
Deferred commissions
(4,200)
(2,275)
Accounts payable
(1,342)
2,096
Accrued expenses and other liabilities
(1,522)
(2,469)
Accrued employee liabilities
(3,056)
(386)
Deferred revenue
(1,109)
(3,908)
Operating lease liabilities
(3,382)
(3,175)
Net cash provided by operating
activities
10,251
2,951
Cash flows from investing
activities:
Purchases of property and equipment
(1,965)
(5,120)
Insurance proceeds for damaged property
and equipment
344
—
Purchases of short-term investments
(26,687)
(10,901)
Sales of short-term investments
—
2,511
Maturities of short-term investments
22,692
38,500
Net cash (used in) provided by investing
activities
(5,616)
24,990
Cash flows from financing
activities:
Proceeds from issuance of common stock
upon exercise of stock options, net of repurchases of unvested
common stock
3,567
4,015
Principal payments on long-term debt
(1,111)
(1,110)
Net cash provided by financing
activities
2,456
2,905
Effect of exchange rates on cash and cash
equivalents
(85)
(427)
Net increase in cash and cash
equivalents
7,006
30,419
Cash and cash equivalents, beginning of
period
94,110
54,275
Cash and cash equivalents, end of
period
$
101,116
$
84,694
ZUORA, INC.
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES
(in thousands, except
percentages and per share data)
(unaudited)
Three Months Ended April 30,
2021
GAAP
Stock-based
Compensation
Amortization of Acquired
Intangibles
Internal- use Software
Certain Litigation
Non-GAAP
Cost of revenue:
Cost of subscription revenue
$
15,643
$
(1,043)
$
(423)
$
(752)
$
—
$
13,425
Cost of professional services revenue
17,078
(2,001)
—
—
—
15,077
Gross profit
47,608
3,044
423
752
—
51,827
Operating expenses:
Research and development
18,967
(4,529)
—
802
—
15,240
Sales and marketing
31,865
(4,080)
—
—
—
27,785
General and administrative
14,185
(2,144)
—
117
(809)
11,349
Loss from operations
(17,409)
13,797
423
(167)
809
(2,547)
Net loss
$
(17,661)
$
13,797
$
423
$
(167)
$
809
$
(2,799)
Net loss per share, basic and
diluted(1)
$
(0.15)
$
(0.02)
Gross margin
59
%
65
%
Subscription gross margin
76
%
79
%
Three Months Ended April 30,
2020
GAAP
Stock-based
Compensation
Amortization of Acquired
Intangibles
Internal-use Software
Non-GAAP
Cost of revenue:
Cost of subscription revenue
$
13,615
$
(852)
$
(423)
$
(149)
$
12,191
Cost of professional services revenue
18,682
(1,650)
—
—
17,032
Gross profit
41,601
2,502
423
149
44,675
Operating expenses:
Research and development
17,543
(3,542)
—
1,428
15,429
Sales and marketing
28,496
(3,005)
—
—
25,491
General and administrative
13,265
(1,835)
—
—
11,430
Loss from operations
(17,703)
10,884
423
(1,279)
(7,675)
Net loss
$
(17,488)
$
10,884
$
423
$
(1,279)
$
(7,460)
Net loss per share, basic and
diluted(1)
$
(0.15)
$
(0.06)
Gross margin
56
%
60
%
Subscription gross margin
76
%
79
%
(1) GAAP and Non-GAAP net loss per share are calculated based
upon 121,354 and 115,139 basic and diluted weighted-average shares
of common stock for the three months ended April 30, 2021 and 2020,
respectively.
ZUORA, INC.
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)
(in thousands)
(unaudited)
Free Cash Flow
Three Months Ended
April 30,
2021
2020
Net cash provided by operating
activities
$
10,251
$
2,951
Less:
Purchases of property and equipment, net
of insurance recoveries
(1,621)
(5,120)
Free cash flow
$
8,630
$
(2,169)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210526006087/en/
Investor Relations Contact: Luana Wolk
investorrelations@zuora.com 650-419-1377 Media Relations
Contact: press@zuora.com 408-348-1087
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