Zuora (ZUO - Free Report) reported second-quarter fiscal 2023 non-GAAP loss of 3 cents per share, which beat the Zacks Consensus Estimate by 40% and was narrower than the loss of 4 cents reported in the year-ago quarter.
Revenues of $98.8 million beat the consensus mark by 1.52% and increased 14.2% year over year.
This solid outperformance was led by the robust adoption of Zuora solutions. Transaction volumes through Zuora’s billing platform were $21 billion, up 16% year over year.
The company’s expansion benefited top-line growth with the launch of Zuora Secure Data Share for Snowflake (SNOW - Free Report) .
Zuora Secure Data Share for Snowflake analyzes data from multiple sources into meaningful metrics, helping to accelerate recurring revenues. Notable new logo wins and go-lives in the reported quarter were BNP Paribas, Santander, Olo, Pipedrive and Sodexo.
Zuora also announced that it has entered into a share purchase agreement to acquire Zephr, a leading subscription experience platform used by global digital publishing and media companies.
Zuora shares declined 5.04% in pre-market trading. The company’s shares have dropped 52.1% compared with the Zacks Computer & Technology sector’s decline of 24.5% year to date.
Quarter Details
Zuora’s subscription revenues accounted for 84.9% of total revenues. The figure was $83.8 million, up 17.2% year over year.
Professional Services revenues accounted for 15.7% of total revenues. The figure was $15 million, down 0.2% year over year.
In the fiscal second quarter, the number of customers with an annual contract value equal to or greater than $100K was 745, up from the 694 reported in the year-ago quarter.
The dollar-based retention rate was 111% compared with 108% as of Jul 31, 2021.
In the reported quarter, ARR growth came in at 20%, up from 18% in the year-ago quarter.
The non-GAAP gross margin was 67.3% compared with 80% in the year-ago quarter.
Research & development expenses, as a percentage of revenues, increased 110 bps on a year-over-year basis to 19.1%. Sales & marketing expenses increased 20 bps to 35.6%.
General & administrative expenses, as a percentage of revenues, were 12.7%, down 220 bps year over year.
Total operating expenses, as a percentage of revenues, were 67.4%, down 90 bps on a year-over-year basis.
The loss from operations was $4.4 million in the reported quarter compared with $4.6 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jul 31, 2022, Zuora had cash, cash equivalents and short-term investments of $448.6 million compared with $452.6 million as of Apr 30, 2022.
The free cash outflow was $7.6 million in the reported quarter compared with the free cash flow of $3.7 million reported in the year-ago quarter.
Guidance
For the third quarter of fiscal 2023, Zuora expects subscription revenues in the range of $85.5-$86.5 million. Professional services revenues are expected between $14 million and $15 million.
Total revenues are expected between $99.5 million and $101.5 million.
The non-GAAP loss from operations is expected between $2.5 million and $1.5 million. The non-GAAP loss is expected between 6 cents and 5 cents per share.
For fiscal 2023, Zuora expects subscription revenues in the range of $337-$341 million. Total revenues are expected between $394 million and $400 million.
The non-GAAP loss from operations is expected between $2 million and break-even. The non-GAAP loss is expected between 18 cents and 14 cents per share.
For fiscal 2023, ARR growth is expected at 21% or higher. The dollar-based retention rate is expected at 112% or higher.
Free cash outflow is expected between $16 million and $13 million.
Zacks Rank & Stocks to Consider
Zuora currently has a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the Computer & Technology sector are Agilent (A - Free Report) and Airbnb (ABNB - Free Report) . Both the stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Agilent and Airbnb are down 16.3% and 12%, respectively, on a year-to-date basis.
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Zuora (ZUO - Free Report) reported second-quarter fiscal 2023 non-GAAP loss of 3 cents per share, which beat the Zacks Consensus Estimate by 40% and was narrower than the loss of 4 cents reported in the year-ago quarter.
Revenues of $98.8 million beat the consensus mark by 1.52% and increased 14.2% year over year.
This solid outperformance was led by the robust adoption of Zuora solutions. Transaction volumes through Zuora’s billing platform were $21 billion, up 16% year over year.
The company’s expansion benefited top-line growth with the launch of Zuora Secure Data Share for Snowflake (SNOW - Free Report) .
Zuora Secure Data Share for Snowflake analyzes data from multiple sources into meaningful metrics, helping to accelerate recurring revenues. Notable new logo wins and go-lives in the reported quarter were BNP Paribas, Santander, Olo, Pipedrive and Sodexo.
Zuora also announced that it has entered into a share purchase agreement to acquire Zephr, a leading subscription experience platform used by global digital publishing and media companies.
Zuora shares declined 5.04% in pre-market trading. The company’s shares have dropped 52.1% compared with the Zacks Computer & Technology sector’s decline of 24.5% year to date.
Quarter Details
Zuora’s subscription revenues accounted for 84.9% of total revenues. The figure was $83.8 million, up 17.2% year over year.
Professional Services revenues accounted for 15.7% of total revenues. The figure was $15 million, down 0.2% year over year.
In the fiscal second quarter, the number of customers with an annual contract value equal to or greater than $100K was 745, up from the 694 reported in the year-ago quarter.
The dollar-based retention rate was 111% compared with 108% as of Jul 31, 2021.
In the reported quarter, ARR growth came in at 20%, up from 18% in the year-ago quarter.
The non-GAAP gross margin was 67.3% compared with 80% in the year-ago quarter.
Research & development expenses, as a percentage of revenues, increased 110 bps on a year-over-year basis to 19.1%. Sales & marketing expenses increased 20 bps to 35.6%.
General & administrative expenses, as a percentage of revenues, were 12.7%, down 220 bps year over year.
Total operating expenses, as a percentage of revenues, were 67.4%, down 90 bps on a year-over-year basis.
The loss from operations was $4.4 million in the reported quarter compared with $4.6 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jul 31, 2022, Zuora had cash, cash equivalents and short-term investments of $448.6 million compared with $452.6 million as of Apr 30, 2022.
The free cash outflow was $7.6 million in the reported quarter compared with the free cash flow of $3.7 million reported in the year-ago quarter.
Guidance
For the third quarter of fiscal 2023, Zuora expects subscription revenues in the range of $85.5-$86.5 million. Professional services revenues are expected between $14 million and $15 million.
Total revenues are expected between $99.5 million and $101.5 million.
The non-GAAP loss from operations is expected between $2.5 million and $1.5 million. The non-GAAP loss is expected between 6 cents and 5 cents per share.
For fiscal 2023, Zuora expects subscription revenues in the range of $337-$341 million. Total revenues are expected between $394 million and $400 million.
The non-GAAP loss from operations is expected between $2 million and break-even. The non-GAAP loss is expected between 18 cents and 14 cents per share.
For fiscal 2023, ARR growth is expected at 21% or higher. The dollar-based retention rate is expected at 112% or higher.
Free cash outflow is expected between $16 million and $13 million.
Zacks Rank & Stocks to Consider
Zuora currently has a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the Computer & Technology sector are Agilent (A - Free Report) and Airbnb (ABNB - Free Report) . Both the stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Agilent and Airbnb are down 16.3% and 12%, respectively, on a year-to-date basis.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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