Zuora ( ZUO Quick Quote ZUO - Free Report) reported third-quarter fiscal 2022 non-GAAP loss of 2 cents per share, which was narrower than the the Zacks Consensus Estimate by 33.33%, but wider than a loss of 1 cent reported in the year-ago quarter. Revenues of $89.2 million beat the consensus mark by 3.16% and increased 15.5% year over year. This solid outperformance can be attributed to the robust adoption of Zuora solutions. Transaction volumes through Zuora’s billing platform were $18.8 billion, up 28% year over year. Quarter Details
Zuora’s subscription revenues contributed 82.7% to total revenues. The figure was $73.8 million, up 19% year over year.
Professional Services revenues accounted for 17.3% of total revenues. The figure was $15.5 million, up 1.5% year over year.
In the fiscal third quarter, the number of customers with annual contract value equal to or greater than $100K was 720, increasing 10% year over year. The dollar-based retention rate was 110% compared with 99% as of Oct 31, 2020. Zuora launched a new Unified Monetization solution during the reported quarter. The service will help customers monetize subscription and non-subscription offers. Non-GAAP gross margin expanded 310 basis points (bps) year over year to 60%, driven by a shift from services work to a higher-margin, subscription-based model. Non-GAAP subscription gross margin was 79% compared with 77% in the year-ago quarter. Research & development expenses, as a percentage of revenues, declined 10 bps on a year-over-year basis to 15%. General & administrative expenses, as a percentage of revenues, were 25.7%, up 150 bps year over year. Sales & marketing expenses increased 370 bps to 31.4%. Total operating expenses, as a percentage of revenues, were 84.2%, up 650 bps from the year-ago quarter’s levels. Loss from operations was $7.6 million in the reported quarter compared with $6.8 million in the year-ago quarter. Balance Sheet & Cash Flow
As of Oct 31, 2021, Zuora had cash, cash equivalents and short-term investments of $203.3 million compared with $200 million as of Jul 31, 2021.
Free cash outflow was $1.7 million in the reported quarter. Guidance
For fourth-quarter fiscal 2022, Zuora expects subscription revenues in the range of $75-$76 million. Total revenues are expected between $90 million and $91 million.
Non-GAAP loss from operations is expected to be between $2.5 million and $1.5 million. Non-GAAP loss is expected to be between 3 cents and 2 cents per share. For fiscal 2023, Zuora expects subscription revenues in the range of $337-$339 million. Total revenues are expected between $401 million and $405 million. Zacks Rank & Stocks to Consider
Zuora currently has a Zacks Rank #3 (Hold).
Zuora shares are up 32.4% against the Zacks Internet Software industry’s decline of 17.8% and Computer & Technology sector’s return of 22.7% year to date. Some of the better-ranked stocks in the Computer & Technology sector are Nova Measuring Instruments ( NVMI Quick Quote NVMI - Free Report) , Advanced Micro Devices ( AMD Quick Quote AMD - Free Report) and Pinterest ( PINS Quick Quote PINS - Free Report) Nova Measuring sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The long-term earnings growth rate stands at 32.2%. Nova Measuring’s shares have returned 83% year to date compared with the Zacks Electronics-Semiconductors industry’s growth of 36.7% and the Computer & Technology sector’s return of 22.7%. The long-term earnings growth rate for AMD, a Zacks Rank #2 (Buy) stock, is currently pegged at 46.2%. The AMD stock has returned 62.6% year to date compared with the Electronics-Semiconductors industry’s growth of 36.7% and the Computer & Technology sector’s return of 22.7%. Pinterest, holding a Zacks Rank #2, has a long-term earnings growth rate of 52.7%. PINS shares are down 43.4% compared with the Zacks Internet Software industry’s decline of 17.8% and Computer & Technology sector’s return of 22.7% year to date.