Zuora ( ZUO Quick Quote 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 Quick Quote 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 Quick Quote A - Free Report) and Airbnb ( ABNB Quick Quote 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.