Zuora Reports Subscription Revenue Growth of 39 Percent in Q1
A strong first quarter following an April IPO
In its first financial report since completing its initial public offering on April 12, Zuora, Inc. (NYSE: ZUO), a cloud-based subscription billing and management platform provider, reported impressive growth for the period ended April 30, 2018. Total revenue for the first fiscal quarter 2019 was $51.7 million, a 60 percent increase year-over-year. Subscription revenue was $36.1 million, a 39 percent increase year-over-year. Subscription revenue represents 69.8 percent of total revenue. The balance of revenue comes from professional services, totaling $15.6 million.
‘We are the only public company 100 percent focused on the expanding Subscription Economy,’ said Tien Tzuo, founder and CEO of Zuora, in a news release. ‘Our strong results in our first quarter as a public company reflect the continuing adoption of the subscription business model by companies across all industries, around the world.’
In spite of the strong growth, not all of Zuora’s first quarter results were positive. For example, Zuora reported a GAAP loss from operations was $18.6 million, compared to a loss of $8.0 million in the first quarter of fiscal 2018, and a GAAP net loss was $19.4 million, or $0.43 per share, compared to a loss of $8.1 million in the first quarter of fiscal 2018.
Other highlights from the first quarter report include the following:
- At the end of Q1, Zuora had 441 customers with annual contract value equal to or greater than $100,000, a net addition of 26 customers in that ACV category.
- The company’s dollar-based retention rate increased by 112 percent, driven by upsells.
- Customer usage of Zuora solutions grew with $7.2 billion in transaction volume through the company’s billing platform, a 46 percent increase year-over-year.
- In its IPO, Zuora raised $162.2 million in net proceeds.
- The company completed the quarter with assets of $306.8 million, compared to $155.4 million for the same period last year.
Zuora offered the following financial outlook for the second fiscal quarter of 2019:
- Total revenue between $53.5 million and $54.5 million, slightly higher than Q1
- Subscription revenue between $38.0 million and $38.5 million, slightly higher than Q1
- Non-GAAP loss from operations between $16.0 million and $15.0 million
- Non-GAAP loss per share between $0.16 and $0.15 assuming weighted average shares outstanding of approximately 105 million
For the full fiscal year 2019, Zuora offered this guidance:
- Total revenue between $220.0 million and $223.0 million, slightly higher than Q1
- Subscription revenue between $158.0 million and $159.5 million, slightly higher than Q1
- Non-GAAP loss from operations between $55.0 million and $52.0 million
- Non-GAAP loss per share between $0.62 and $0.59, assuming weighted average shares outstanding of approximately 92 million
Though Zuora is new on the New York Stock Exchange, this first financial report was enough to boost Zuora stock from $22.18 per share on May 31 to $26.40 per share on June 1, close to a 20 percent bump per share. As of 7:52 p.m. EDT yesterday, Zuora had jumped even further to $28.54 per share.
Zuora is one of a handful of subscription and SaaS-based companies that have taken their companies public in the last year including Spotify, Snap and Blue Apron. Despite the initial net losses, Zuora is off to a strong start, and if the boost in stock price is any indication, investors clearly think the company is doing something right. This may end up being one of the more successful IPOs and one of the top subscription companies to watch this year.