Back to top

Solid Subscription Revenues to Boost Zuora (ZUO) Q3 Earnings

Read MoreHide Full Article

Zuora, Inc. (ZUO - Free Report) is set to report third-quarter fiscal 2019 results on Nov 29.

The subscription-based Software-as-a-Service (SaaS) solution provider helps in automating all order-to-revenue operations of a company on a real-time basis. The company debuted on NYSE on Apr 12 this year.

In the last reported quarter, Zuora incurred non-GAAP loss of 13 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 16 cents per share.

Revenues of $57.8 million increased 47% from the year-ago quarter and beat the consensus mark of $54 million.

The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $58.8 million, while loss is estimated to be 13 cents per share.

Let’s see how things are shaping up prior to this announcement.

Zuora, Inc. Price and EPS Surprise

Zuora, Inc. Price and EPS Surprise | Zuora, Inc. Quote

Key Factors to Consider

Zuora is benefiting from the ongoing shift to subscription-based business model across several business verticals and geographies.

The company’s complete order-to-revenue management platform that addresses the needs of more than 900 companies around the globe is a key catalyst.

Zuora’s innovative portfolio is helping it to serve the majority of non-technical companies that are going through a transition phase due to digital transformation.

Moreover, the Amazon (AMZN - Free Report) partnership, inked in the to-be-reported quarter, is expected to boost Zuora’s B2C offerings. Customers can seamlessly integrate payment options like Amazon Pay with their existing Zuora platform. The integration is expected to boost subscriber base. Notably, subscription revenues (71.8% of total revenue) were $41.5 million, up 44% year over year, in second-quarter fiscal 2019.

Moreover, strong upsell and cross-sell of add-on products and improved adoption of RevPro, revenue recognition product boosted the top line in the last reported quarter. We believe that with the mandatory adoption of the new accounting standard, ASC 606, by most of the private companies by early 2019, revenue contribution from RevPro is expected to be significant in the to-be-reported quarter.

Further, increase in deferred revenue recognition of Leeyo, acquired in 2017, will positively contribute to third-quarter revenues per management.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

Zuora has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Lululemon athletica (LULU - Free Report) has an Earnings ESP of +4.89% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

AutoZone (AZO - Free Report) has a Zacks Rank #2 and an Earnings ESP of +3.02%.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.      

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.   

See the pot trades we're targeting>>




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Amazon.com, Inc. (AMZN) - free report >>

AutoZone, Inc. (AZO) - free report >>

lululemon athletica inc. (LULU) - free report >>

Zuora, Inc. (ZUO) - free report >>

More from Zacks Analyst Blog

You May Like