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Zuora's (ZUO) Q2 Earnings Meet Estimates, Revenues Up Y/Y

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Zuora (ZUO - Free Report) reported second-quarter fiscal 2022 loss of 4 cents per share that was in line with the Zacks Consensus Estimate. The company had reported earnings of 1 cent in the year-ago quarter.

Revenues of $86.5 million beat the consensus mark by 3.6% and increased 15.3% year over year.

This solid outperformance was led by the robust adoption of Zuora solutions. Transaction volumes through Zuora’s billing platform were $18 billion, up 42% year over year.

Quarter Details   

Zuora’s subscription revenues accounted for 82.7% of total revenues. The figure was $71.5 million, up 22.6% year over year.

Professional Services revenues accounted for 17.3% of total revenues. The figure was $15 million, down 10.1% year over year.
 

Zuora, Inc. Price, Consensus and EPS Surprise

Zuora, Inc. Price, Consensus and EPS Surprise

Zuora, Inc. price-consensus-eps-surprise-chart | Zuora, Inc. Quote

 

In the fiscal second quarter, the number of customers with annual contract value equal to or greater than $100K was 694, increasing 8% year over year.

The dollar-based retention rate was 108% compared with 99% as of Jul 31, 2020.

Zuora’s relationship with customers, including HERE, Monster Worldwide, Xerox (XRX - Free Report) , GoPro (GPRO - Free Report) , Daihatsu, Rev.com and Thales drove top-line growth.

Non-GAAP gross margin expanded 130 basis points (bps) year over year to 63.8%, driven by a shift from services work to a higher-margin, subscription-based model.

Non-GAAP subscription gross margin was 81% compared with 77% in the year-ago quarter.

Research & development expenses, as a percentage of revenues, increased 10 bps on a year-over-year basis to 18.1%. General & administrative expenses, as a percentage of revenues, were 14.9%, up 120 bps year over year. Sales & marketing expenses increased 370 bps to 35.4%.

Total operating expenses, as a percentage of revenues, were 68.4%, up 500 bps from the year-ago quarter.

Loss from operations was $3.9 million in the reported quarter compared with $0.6 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Jul 31, 2021, Zuora had cash, cash equivalents and short-term investments of $200 million compared with $197.4 million as of April 30, 2021.

Free cash outflow was $4.4 million in the reported quarter.

Guidance

For the second quarter of fiscal 2022, Zuora expects subscription revenues in the range of $71-$72 million. Total revenues are expected between $86 million and $87 million.

Non-GAAP loss from operations is expected to be between $2.5 million and $3.5 million. Non-GAAP loss is expected to be between 2 cents and 3 cents per share.

For fiscal 2022, Zuora expects subscription revenues in the range of $280-$282 million. Total revenues are expected between $340 million and $342 million.

Non-GAAP loss from operations is expected between $11 million and $13 million. Non-GAAP loss is expected between 11 cents and 13 cents per share.

Zacks Rank & A Key Stock to Consider

Zuora currently has a Zacks Rank #3 (Hold).

Science Applications International (SAIC - Free Report) is a better-ranked stock in the broader computer sector. Science Applications has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Science Applications is set to report its earnings results on Sep 2.