Zuora Reports Second Quarter Fiscal 2025 Results

Zuora, Inc., a leading monetization suite for modern business, has released its financial results for the fiscal second quarter ended July 31, 2024. The company reported notable growth in subscription revenue and significant improvements in operating margins and cash flow.

Financial Highlights

Zuora's financial performance for the second quarter of fiscal 2025 showed positive trends across several key metrics:

• Revenue: Subscription revenue increased by 9% year-over-year to $104.1 million, while total revenue grew by 7% to $115.4 million.
• GAAP Loss from Operations: The GAAP loss from operations was reduced to $9.7 million, compared to $18.2 million in the same quarter last year.
• Non-GAAP Income from Operations: Non-GAAP income from operations rose to $25.6 million, up from $9.6 million in the prior year.
• GAAP Net Loss: GAAP net loss improved to $7.2 million, or 6% of revenue, compared to a net loss of $22.6 million, or 21% of revenue, in the second quarter of fiscal 2024.
• Non-GAAP Net Income: Non-GAAP net income was $29.1 million, compared to $10.0 million in the previous year.
• Cash Flow: Net cash provided by operating activities increased to $11.4 million, compared to $5.4 million last year.
• Adjusted Free Cash Flow: Adjusted free cash flow rose to $12.2 million from $4.0 million in the second quarter of fiscal 2024.
• Cash and Investments: Cash and cash equivalents and short-term investments totaled $543.5 million as of July 31, 2024.

Business and Operational Highlights

Zuora's operational performance also showed positive developments:

• Customer Base: Customers with annual contract value (ACV) equal to or greater than $250,000 were 445, up from 444 as of July 31, 2023.
• Dollar-Based Retention Rate (DBRR): DBRR was 104%, compared to 107% as of July 31, 2023.
• Annual Recurring Revenue (ARR): ARR grew by 7% to $412.3 million, up from $384.2 million in the previous year.
• Industry Recognition: Zuora was recognized as a Leader in the Gartner Magic Quadrant for Recurring Billing Applications and received the highest rating in all four of ISG Software Research's Subscription Management Buyers Guides.
• New Customers and Go-Lives: Notable new customers and go-lives included Canva, The Economist, and Dark Matter Technologies.

Strategic Initiatives and Corporate Developments

Zuora announced several strategic initiatives and corporate developments:

• Acquisition: Zuora announced the planned acquisition of Sub(x), an AI solution for digital publishing and media companies, which closed in August.
• Global Impact Report: Zuora released its latest Global Impact Report, reaffirming its commitment to being a carbon-neutral company and setting both near-term and long-term greenhouse gas reduction goals.

Management's Perspective

CEO Tien Tzuo expressed pride in the company's performance, highlighting Zuora's recognition for market leadership and its role in helping enterprise organizations with Total Monetization strategies. CFO Todd McElhatton emphasized the company's commitment to margin expansion and profitability, noting that Zuora reached its goal to operate at a Rule of 30 two quarters ahead of plan.

Future Outlook

Zuora provided guidance for the third quarter and full fiscal year 2025, raising its revenue outlook and non-GAAP operating income ranges. The company expects:

• Third Quarter: Subscription revenue of $104.5M - $105.5M, total revenue of $115.0M - $117.0M, and non-GAAP income from operations of $20.5M - $21.5M.
• Full Fiscal Year 2025: Subscription revenue of $414.5M - $416.5M, total revenue of $455.5M - $461.5M, and non-GAAP income from operations of $90.0M - $93.0M.

SEC Filing: ZUORA INC [ ZUO ] - 8-K - Aug. 21, 2024