Sundry Photography The sentiment in the market right now is undoubtedly cautious. Amid the backdrop of higher interest rates and an uncertain macro recovery, the best strategy is to lean in more on "growth at a reasonable price" stocks, allocating more of your portfolio toward value-oriented tech. And while these names are far from exciting, companies like Zuora (NYSE:ZUO) are a perfect long-term hold that will have little correlation to how the broader markets do. After years of lagging behind its tech pee ...

Financial Data and Key Metrics Changes - In Q1, subscription revenue was $99 million, up 10% year-over-year, at the high end of the guidance range [11] - Non-GAAP operating income was $18.6 million, representing a 17% operating margin, a quarterly record [11][31] - Adjusted free cash flow reached an all-time high of $31.4 million, significantly up from $13 million in Q1 of the previous year [11][34] - Dollar-based retention rate (DBRR) ended at 104%, down 2 percentage points quarter-over-quarter and 4 percentage points year-over-year [32] Business Line Data and Key Metrics Changes - Professional services revenue was $10.8 million, a decrease of 19% year-over-year, representing 10% of total revenue [21] - Non-GAAP subscription gross margin improved to 81%, up nearly 100 basis points year-over-year [21] - Non-GAAP professional services gross margin was negative 14%, declining from negative 3% in Q1 of last year [22] Market Data and Key Metrics Changes - Total remaining performance obligations (RPO) ended at $581 million, growing 15% year-over-year [33] - Non-current RPO was up 23% year-over-year to $256 million [33] - The company closed two deals with annual contract values (ACV) of $500,000 or more, down from four in Q1 of last year [34] Company Strategy and Development Direction - The company is focused on a strategy of total monetization, integrating multiple business models to maximize value [14][17] - The acquisition of Togai is seen as a key step in enhancing capabilities for usage-based models, driven by trends in GenAI and IoT [17][72] - The company aims to maintain a modular approach to its product offerings, allowing customers to start with specific services and expand over time [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the enterprise customer base and the potential for expansion despite macroeconomic headwinds [6][19] - The company anticipates growth to accelerate in the second half of the year, maintaining guidance for annual recurring revenue (ARR) growth between 8% and 10% [23][40] - Management noted that the current macro environment has led to longer sales cycles and fewer transformational deals, but they remain optimistic about pipeline development [19][66] Other Important Information - The company ended the quarter with $547 million in cash and cash equivalents, a sequential increase of $33 million [35] - Guidance for Q2 includes subscription revenue of $101 million to $102 million and total revenue of $111.5 million to $113.5 million [36] - The company expects to maintain free cash flow guidance of $80 million or greater for the full year [37] Q&A Session Summary Question: Can you help us understand the level of visibility you have right now into demand? - Management indicated that there is still good visibility in the pipeline, but companies are cautious about large deals, particularly those in the seven-digit range [25][62] Question: What gives you confidence in maintaining DBRR and retention metrics? - Management highlighted the stickiness of their product and the strong performance of their installed base, which provides visibility into future performance [49][50] Question: How ready is the Togai solution for market integration? - Management expressed confidence in Togai's technology and its readiness to be integrated into cross-sell efforts, noting positive responses from customers [75][79] Question: What are the capital allocation plans moving forward? - Management confirmed a commitment to maintaining free cash flow guidance while absorbing costs from the Togai acquisition, with a focus on driving profitability [98][100]

Exhibit 99.1 Zuora Reports First Quarter Fiscal 2025 Results Operating cash flow grew to $32.9 million compared to $14.6 million last year Adjusted free cash flow grew to $31.4 million compared to $13.0 million last year GAAP operating margin increased 16 percentage points year-over-year Non-GAAP operating margin increased 11 percentage points year-over-year Subscription revenue grew 10% year-over-year Redwood City, Calif. – May 22, 2024 – Zuora, Inc. (NYSE: ZUO), a leading monetization suite for modern bus ...

Zuora (ZUO) closed the most recent trading day at $9.95, moving +0.91% from the previous trading session. The stock trailed the S&P 500, which registered a daily gain of 1.02%. At the same time, the Dow added 0.4%, and the tech-heavy Nasdaq gained 2.03%.The enterprise software company's shares have seen an increase of 8.11% over the last month, surpassing the Computer and Technology sector's loss of 5.32% and the S&P 500's loss of 3.15%.Analysts and investors alike will be keeping a close eye on the perform ...

In the latest market close, Zuora (ZUO) reached $9.75, with a +1.25% movement compared to the previous day. This change outpaced the S&P 500's 1.2% gain on the day. Meanwhile, the Dow experienced a rise of 0.69%, and the technology-dominated Nasdaq saw an increase of 1.59%.The enterprise software company's shares have seen an increase of 8.81% over the last month, surpassing the Computer and Technology sector's loss of 6.83% and the S&P 500's loss of 4.16%.The investment community will be closely monitoring ...

Zuora is reportedly considering a sale and other options after more than one company expressed interest in acquiring it.The subscription management software provider is working with an investment bank to conduct discussions with potential buyers, Reuters reported Wednesday (April 17), citing unnamed sources.There is no certainty that a deal will be reached, according to the report.Zuora did not immediately reply to PYMNTS’ request for comment.The company’s board has formed a special committee of independent ...

Zuora (ZUO) closed the latest trading day at $8.47, indicating a +1.19% change from the previous session's end. This move outpaced the S&P 500's daily gain of 0.03%. On the other hand, the Dow registered a gain of 0.41%, and the technology-centric Nasdaq increased by 0.12%.Heading into today, shares of the enterprise software company had lost 7.72% over the past month, lagging the Computer and Technology sector's loss of 0.55% and the S&P 500's loss of 0.9% in that time.The investment community will be clos ...

Zuora (ZUO) shares ended the last trading session 5% higher at $8.80. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 7.7% loss over the past four weeks.ZUO is benefiting from an expanding clientele that's driving subscriptions growth.This enterprise software company is expected to post quarterly earnings of $0.07 per share in its upcoming report, which represents a year-over-year change of +40%. Revenues are expec ...

Investors might want to bet on Zuora (ZUO) , as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.The power of a changing e ...

Customer Base and Revenue - As of January 31, 2024, the company had 461 customers with ACV equal to or greater than $250,000, representing over 80% of total ACV, compared to 431 and 369 customers in 2023 and 2022, respectively[56] - No single customer accounted for more than 10% of Zuora's revenue or accounts receivable balance in any of the periods presented[427] - Subscription revenue recognized ratably over contract terms, typically between one and five years, making immediate impact of renewals or new agreements difficult to discern[192] - Service level commitments in customer contracts could lead to credits, refunds, or contract terminations if not met, potentially harming revenue and reputation[194] - Revenue from the United States for fiscal year 2024 was $275,711 thousand, representing 64% of total revenue, while revenue from other countries was $155,950 thousand, representing 36%[494] - Total remaining non-cancellable performance obligations under subscription contracts as of January 31, 2024, were approximately $593.9 million, with 54% expected to be recognized as revenue over the next 12 months[493] - Deferred revenue recognized during the fiscal year ended January 31, 2024, was $164,694 thousand, compared to $147,036 thousand in 2023 and $126,245 thousand in 2022[493] Employee and Management Composition - The company had 1,618 employees as of January 31, 2024, with 56% (910 employees) located outside the United States, primarily in Asia, Europe, and Australia[65] - The company's executive management team was comprised of 30% women and 40% self-identified as coming from certain other underrepresented groups as of January 31, 2024[70] - The company's Board of Directors was comprised of 33% women and 33% members of certain other underrepresented groups as of January 31, 2024[70] - The company's employee resource groups (ZRGs) had nine groups covering a wide variety of interests as of January 31, 2024[68] Financial Performance and Metrics - Net loss for the year ended January 31, 2024 was $68.2 million[396] - Total stockholders' equity as of January 31, 2024 was $133.7 million[396] - Stock-based compensation expense for the year ended January 31, 2024 was $101.1 million[396] - The company had cash and cash equivalents and short-term investments of $514.2 million as of January 31, 2024[369] - Contract assets totaled $1.4 million as of January 31, 2024, compared to $1.3 million as of January 31, 2023[421] - Advertising expense was not material for the periods presented[425] - The company has recorded a full valuation allowance against its deferred tax assets due to uncertainty of realization[443] - Net loss for fiscal year 2024 was $68.193 million, with a basic and diluted net loss per share of $0.49[538] - Sales and marketing expenses represented approximately 39% of total revenue for the fiscal year ended January 31, 2024[98] Intellectual Property and Patents - The company had 55 issued patents expiring between 2032 and 2041, and 32 patent applications pending in the U.S. and foreign jurisdictions as of January 31, 2024[77] Corporate Social Responsibility and Donations - The company's ZEOs volunteered over 3,500 hours in fiscal 2024 to mission-aligned nonprofits[74] - The company made a $0.5 million cash donation in fiscal 2024 to the Zuora Impact Fund[75] Sales and Marketing Strategy - The company's sales teams are organized by geographic territories, new and install base, and industry verticals, with plans to continue investing in the direct sales force[59] Investments and Financial Instruments - Short-term investments as of January 31, 2024, had a total fair value of $258.12 million, with U.S. government securities at $98.249 million, corporate bonds at $129.885 million, and commercial paper at $29.986 million[465] - The company's cash equivalents as of January 31, 2024, totaled $211.129 million, primarily consisting of money market funds at $207.632 million and corporate bonds at $3.497 million[468] - Warrant liability and debt conversion liability as of January 31, 2024, were $11.992 million and $6.848 million, respectively, classified as Level 3 liabilities[468] - The company's cash, cash equivalents, and short-term investments are primarily deposited with one financial institution, regularly exceeding federally insured limits[426] - The company issued $400.0 million in 2029 Notes to support growth and business challenges[197] - The net carrying amount of the 2029 Notes as of January 31, 2024, was $359.5 million, with an estimated fair value of $300.2 million, classified as a Level 3 measurement[471] - The company issued convertible senior notes (2029 Notes) with an aggregate principal amount of $400 million, bearing an interest rate of 3.95% per annum[482] - Total interest expense related to the 2029 Notes for fiscal year 2024 was $21,320 thousand, including $11,999 thousand in contractual interest expense and $9,321 thousand in amortization of deferred loan costs[489] - The company has a $30.0 million revolving credit facility with Silicon Valley Bank, maturing in October 2025, with no amounts drawn as of January 31, 2024[492] - The company issued 7.5 million warrants to Silver Lake, exercisable at $20.00, $22.00, and $24.00 per share, all of which were outstanding as of January 31, 2024[532] Accounting and Financial Reporting - Revenue recognition for subscription services occurs ratably over the contract term, with contract assets resulting when revenue recognition precedes billing[421] - The company's accounts receivable are reported at the principal amount outstanding, net of the allowance for credit losses, which is based on historical loss patterns and collection risk evaluation[432] - The company applies a two-step model under ASC 805 to assess acquisitions, determining whether a transaction represents an asset acquisition or a business combination[435] - Business combinations are accounted for using the acquisition method, with assets and liabilities recorded at fair value, and any excess consideration recorded as goodwill[436] - Internal-use software is amortized over an estimated useful life of generally three years[439] - Property and equipment are depreciated over estimated useful lives of generally three to five years[434] - The company recognized impairment charges totaling $3.8 million in fiscal 2024 related to excess office space, capitalized internal-use software, and purchased assets[440] - Impairment charges for fiscal years ended January 31, 2024, 2023, and 2022 were $2.2 million, $4.5 million, and $12.8 million respectively, related to ROU assets, leasehold improvements, and furniture and fixtures[472] - Prepaid expenses and other current assets totaled $23.261 million as of January 31, 2024, compared to $24.285 million in 2023[473] - Capitalized internal-use software costs for fiscal year ended January 31, 2024, were $7.620 million, with total capitalized internal-use software net of accumulated amortization at $15.483 million[475] - Goodwill balance increased from $53.991 million in 2023 to $56.657 million in 2024, with additions from acquisitions and foreign currency translation effects[479] - Accrued expenses and other current liabilities totaled $32.157 million as of January 31, 2024, down from $103.678 million in 2023, primarily due to a decrease in litigation settlement liabilities[481] - Total depreciation and amortization expense for fiscal year 2024 was $9,229 thousand, compared to $9,668 thousand in 2023 and $11,430 thousand in 2022[476] - Purchased intangible assets amortization expense for fiscal year 2024 was $2,690 thousand, compared to $2,251 thousand in 2023 and $2,050 thousand in 2022[477] - The company's lease contracts often include lease and non-lease components, with short-term leases (12 months or less) not recognizing ROU assets and lease liabilities[458] - Lease liabilities recognized at the present value of lease payments, with ROU assets adjusted for lease payments, incentives, and direct costs[456] - Amortization expense of deferred loan costs for 2029 Notes was $9.3 million in fiscal 2024 and $6.6 million in fiscal 2023[461] - Warrant liability balance increased from $2,829 thousand in January 2023 to $11,992 thousand in January 2024 due to reclassification and fair value changes[469] - Debt conversion liability balance increased from $0 in January 2023 to $6,848 thousand in January 2024 due to initial measurement and fair value changes[470] - Property and equipment, net decreased from $27,159 thousand in January 2023 to $25,961 thousand in January 2024, with impairments recorded on leasehold improvements and furniture[474] - The debt conversion liability's fair value was measured using a binomial lattice model, with key inputs including a fair value of common stock at $9.14 and an expected volatility of 47.5%[491] - The total lease payments for long-term operating lease liabilities amount to $50,990 thousand, with a present value of $43,860 thousand after deducting imputed interest of $7,130 thousand[498] - The weighted-average remaining operating lease term decreased from 6.7 years in 2023 to 5.9 years in 2024, with a weighted-average discount rate increasing from 4.8% to 5.1%[498] - Cash paid for operating leases in 2024 was $13,559 thousand, slightly higher than $12,802 thousand in 2023 and $13,701 thousand in 2022[498] - The company recognized impairment charges of $2,219 thousand in 2024, $4,537 thousand in 2023, and $12,783 thousand in 2022 for excess office spaces[499] - Total operating lease liabilities as of January 31, 2024, were $43,860 thousand, compared to $47,164 thousand in 2023[497] - Operating lease cost for fiscal year 2024 was $8,599 thousand, compared to $9,933 thousand in 2023 and $12,681 thousand in 2022[497] Legal and Compliance - Compliance with anti-corruption and anti-money laundering laws, including FCPA, is critical to avoid penalties and adverse consequences[201] - The company settled Federal and State Class Actions in 2023, paying an aggregate of $75.5 million, with $7.2 million funded by insurance proceeds[504] - The company settled derivative litigation in 2023, agreeing to pay $2.0 million for plaintiffs' attorney fees, which was covered by insurance carriers[506] Tax and Valuation Allowances - As of January 31, 2024, the company has U.S. federal and state net operating loss carryforwards of approximately $552.3 million and $376.4 million, respectively, available to offset future taxable income[510] - The total gross unrecognized tax benefits increased from $18.4 million in 2023 to $25.8 million in 2024, with $7.3 million potentially reducing the effective tax rate if recognized[514] - The valuation allowance for deferred tax assets increased by $10.2 million in 2024 and $58.4 million in 2023, reflecting the likelihood that these assets will not be utilized[509] - Federal and state R&D tax credits available to offset future taxes as of January 31, 2024 are $24.9 million and $22.8 million, respectively[511] Stock and Equity Compensation - The company's stock-based compensation awards are measured using the Black-Scholes option-pricing model, with fair value determined based on the company's common stock price[447] - Stock-based compensation expense for fiscal year 2024 was $101.052 million, with the largest allocation to Sales and Marketing at $32.116 million[531] - Unrecognized compensation costs related to unvested equity awards as of January 31, 2024, totaled $126.245 million, with RSUs accounting for $102.404 million[531] - As of January 31, 2024, the company had 137.8 million shares of Class A common stock and 8.2 million shares of Class B common stock issued and outstanding[519] - 25.0 million shares of Class A common stock are reserved and available for issuance under the 2018 Equity Incentive Plan as of January 31, 2024[522] - RSUs outstanding as of January 31, 2024 are 11,686 thousand with a weighted-average grant date fair value of $10.24[526] - The fair value of ESPP purchase rights for fiscal year 2024 ranges from $8.69 to $11.55 with expected volatility between 34.6% and 45.7%[530] - The liability-classified warrants' fair value as of January 31, 2024 is $9.14 with an expected volatility of 41.8% and a risk-free interest rate of 3.9%[534] - Stock options outstanding as of January 31, 2024 are 6,083 thousand with a weighted-average exercise price of $9.21 and an aggregate intrinsic value of $15.984 million[523] - PSUs outstanding as of January 31, 2024 are 2,310 thousand with a weighted-average grant date fair value of $14.31[528] - Potentially dilutive securities not included in diluted per share calculations totaled 47.889 million shares as of January 31, 2024, including 20.000 million shares from 2029 Notes conversion[539] Acquisitions and Contingent Considerations - The Zephr acquisition purchase consideration is $47.9 million, including $43.1 million in cash payments and $4.8 million in contingent consideration[541] - Transaction costs for the Zephr acquisition are $0.2 million and $3.2 million for fiscal years 2024 and 2023, respectively[548] - The company paid $4.5 million to settle contingent consideration in fiscal 2024, following a revaluation to $4.4 million in fiscal 2023[543] - The Zephr acquisition resulted in recorded goodwill due to expected synergies and value creation for shareholders, though the goodwill is not deductible for income tax purposes[544] Risks and Market Challenges - Future volatility in stock price may reduce access to equity capital, impacting ability to fund business growth and respond to challenges[200] - The company faces risks related to attracting new customers and retaining existing ones, particularly in markets with significant prior investments in custom-built solutions[98] - The company's growth depends on market adoption of monetization platform software and related solutions, which may develop slower than expected[105] Other Financial Obligations - The company has a contractual obligation to make $10.1 million in purchases of cloud computing services by September 2024[507] - Accumulated other comprehensive loss as of January 31, 2024 is $859 thousand, with a foreign currency translation adjustment of $672 thousand and an unrealized gain on available-for-sale securities of $732 thousand[521]