Zuora(US:ZUO)2024-12-09 21:20Revenue Performance - Subscription revenue for the fiscal third quarter was $105.3 million, an increase of $7.2 million, or 7% year-over-year[149] - Total revenue for the same period was $116.9 million, reflecting an increase of $7.1 million, or 6% year-over-year[149] - Annual Recurring Revenue (ARR) was $419.9 million, an increase of 6% from $396.0 million in the previous year[158] - Total revenue for the three months ended October 31, 2024, was $116,929 million, a 6% increase from $109,849 million in 2023[176] - Subscription revenue accounted for 90% of total revenue in Q3 2024, up from 89% in Q3 2023[178] - Subscription revenue increased by $7,205 thousand, or 7%, for the three months ended October 31, 2024, attributed to higher transaction volume and sales to new customers[203] - Subscription revenue increased by $25.0 million, or 9%, for the nine months ended October 31, 2024, driven by higher transaction volume and sales to new customers[222] - Total revenue for the nine months ended October 31, 2024, was $342.1 million, an increase of $21.1 million, or 7%, compared to the same period in 2023[221] Profitability and Loss - Gross profit was $78.6 million, representing 67% of total revenue, compared to 68% in the previous year[150] - The net loss for the three months ended October 31, 2024, was $32,206 million, compared to a net loss of $5,502 million in 2023[176] - GAAP net loss for the three months ended October 31, 2024, was $(32,206) thousand, compared to $(5,502) thousand in 2023[196] - Non-GAAP net income for the same period was $24,786 thousand, up from $12,312 thousand in 2023[196] - The company reported a loss from operations of $(11,718) million for the three months ended October 31, 2024, compared to $(8,821) million in 2023[176] - GAAP operating margin for the three months ended October 31, 2024, was (10)%, compared to (8)% in 2023, while non-GAAP operating margin improved to 21% from 15%[194] Expenses - Total operating expenses for the three months ended October 31, 2024, were $90,310 million, an increase from $83,642 million in 2023[176] - Research and development expenses for the three months ended October 31, 2024, were $26,833 million, slightly down from $27,504 million in 2023[176] - Sales and marketing expense decreased by $3.6 million, or 9%, for the three months ended October 31, 2024, primarily due to decreases in employee compensation costs and allocated overhead from a workforce reduction[211] - General and administrative expense increased by $11.0 million, or 69%, for the three months ended October 31, 2024, primarily due to $9.3 million in charges associated with the Proposed Merger[214] - Cost of subscription revenue increased by $3,576 thousand, or 18%, primarily due to higher data center costs and amortization of purchased technology[205] - The gross margin for subscription services decreased to 77% for the three months ended October 31, 2024, down from 79% in 2023, mainly due to increased data center expenses[208] Cash Flow and Investments - Net cash provided by operating activities was $66.7 million for the nine months ended October 31, 2024, an increase of $102.4 million compared to the same period last year[250] - Net cash used in investing activities was $51.9 million, which included $24.8 million for the acquisition of Togai and Sub(x)[251] - Net cash provided by financing activities was $6.3 million, a decrease of $145.3 million compared to the same period in 2023[255] - As of October 31, 2024, the company had cash and cash equivalents and short-term investments totaling $558.5 million[240] Tax and Obligations - The company recorded a tax benefit of $(2.2) million for the nine months ended October 31, 2024, compared to a tax provision of $1.4 million in the prior year[235] - Contractual obligations totaled $566.6 million as of October 31, 2024, with $46.8 million due within the next twelve months[256] - The effective tax rate for the nine months ended October 31, 2024, was 3.9%, compared to (3.0)% for the same period in 2023[237] Future Outlook and Strategic Initiatives - A proposed merger agreement was entered into on October 17, 2024, with a cash conversion of $10.00 per share expected to close in the first calendar quarter of 2025[152] - The company continues to focus on investments in its platform to support growth and adapt to the Subscription Economy[145] - The company is evaluating the impact of recent accounting standards updates on its financial statements, including ASU No. 2023-07 and ASU No. 2023-09[261][263] - The company does not currently engage in derivative or hedging transactions but may reassess this approach as international operations grow[266] Customer Metrics - The number of customers with Annual Contract Value (ACV) equal to or greater than $250,000 decreased to 451, down from 453 in the previous year[154] - The dollar-based retention rate was 103%, down from 108% year-over-year, primarily due to customer churn[157]