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Edited Transcript of ZUO.N earnings conference call or presentation 5-Dec-19 10:00pm GMT

Q3 2019 Zuora Inc Earnings Call

FOSTER CITY Dec 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Zuora Inc earnings conference call or presentation Thursday, December 5, 2019 at 10:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Joon Huh

Zuora, Inc. - VP of IR

* Tien Tzuo

Zuora, Inc. - Co-Founder, Chairman & CEO

* Tyler R. Sloat

Zuora, Inc. - CFO

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Conference Call Participants

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* Christopher David Merwin

Goldman Sachs Group Inc., Research Division - Research Analyst

* Luv Bimal Sodha

Jefferies LLC, Research Division - Equity Associate

* Richard Hugh Davis

Canaccord Genuity Corp., Research Division - MD & Analyst

* Sarah Marie Quander

Morgan Stanley, Research Division - Research Associate

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the Zuora Third Quarter Fiscal 2020 Earnings Conference Call.

(Operator Instructions)

I would now like to hand the conference over to your speaker today, Joon Huh, Vice President of Investor Relations. Please go ahead.

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Joon Huh, Zuora, Inc. - VP of IR [2]

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Thanks, Josh. Good afternoon, and welcome to Zuora's Third Quarter Fiscal 2020 Earnings Conference Call.

Joining me today are Tien Tzuo, Zuora's Chief Executive Officer; and Tyler Sloat, Zuora's Chief Financial Officer.

The purpose of today's call is for us to provide some color on our third quarter results as well as provide our financial outlook for our fourth quarter and the remainder of the year. Some of our discussion and responses today will include forward-looking statements. So as a reminder, our actual results could differ materially as a result of a variety factors. You can find information regarding those factors in the earnings release we issued today in our most recent 10-Q filed with SEC.

Finally, we'll be referring to several non-GAAP financial measures today, and reconciliations to the related GAAP measures are included in our earnings release. For a copy of our earnings release, links to our SEC filings, a replay of today's call or to learn more about Zuora, please visit our Investor Relations website at investor.zuora.com.

And with that, let me turn it over to Tien.

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Tien Tzuo, Zuora, Inc. - Co-Founder, Chairman & CEO [3]

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Thanks, Joon, and welcome. Welcome to our third quarter earnings call for fiscal 2020.

I'm pleased to say that we had another solid quarter. In Q3, we continued to add key customers. We were recognized for our technology leadership by one of the top industry analysts, and we continued to see strong interest in subscription businesses from the best companies in the world, across multiple industries. This resulted in subscription revenues of $54 million, representing 25% growth year-over-year as we improved our non-GAAP operating income quarter-over-quarter and ahead of expectations. Tyler will cover some of the specific financial details later on the call, but overall, it was a solid quarter as we continued to lay the foundation for sustained long-term growth. For today's call, I plan to provide updates on a few key areas that we've previously talked about. First, our sales leadership transition, specifically, the hiring of our new Chief Revenue Officer; second, progress on the integration between our flagship products, Billing and RevPro; and third, the adoption we are seeing with our emerging platform.

So first, let me talk about what we saw this quarter in terms of overall market trends. In Q3, we continued to see signs supporting our central thesis that there continues to be an early but broad shift to subscription business models that is playing out across multiple industries. And unlike traditional ERP systems that are proving to be too inflexible, our solutions are uniquely positioned to enable companies to succeed in this new economy. In our core technology vertical, hardware, software, we continue to have market leadership for any company at scale. For example, this quarter, we kicked off a deployment at Asana, the work management software company. Asana started off years ago with a simple billing system, but the more successful they became, the more complex their needs became -- and they switched over to Zuora to better scale their business. But of course, what's exciting about the subscription economy is it isn't just a technology story. As I've noted on prior calls, approximately half of our customers are now outside of the high-tech vertical.

In manufacturing, we continue to see strong growth coming from the Internet of Things or connected devices. Our Zuora Central Platform offers manufacturers not only a SaaS path to launching new connected services, but more importantly, it also gives them a platform to quickly iterate and innovate as they learn from the marketplace. In Q3, we had go-lives with Johnson Controls and Stanley Black & Decker. Now these launches feel similar to CAT's initial go-live from a couple of years ago that began with simple data services to a handful of U.S.-based dealers. Today, CAT has onboarded over 180 dealers globally, launching new bundled services that includes GPS location, machine utilization, fuel burn analysis, engine monitoring and overall maintenance management per machine. CAT is a shining example of how companies use Zuora as a mission-critical solution to iterate and expand their subscription offerings, unlock growth and increase customer value.

In transportation, including auto manufacturers, we continue to see a shift towards access, not ownership. This quarter, we're excited to have go-lives with amazing brands like Kia and Fiat Chrysler, as well as Harley-Davidson in motorcycles. The biggest vehicle manufacturers in the world are turning to Zuora to launch digital services, connect with their drivers and unlock new revenue opportunities. And while we are not ready to call it a full-blown vertical for us yet, we continue to see utility companies move away from static product offerings towards flexible "energy as a service" models. In Q3, you saw us issue press releases with Saint-Gobain, one of the world's largest manufacturers of building materials, as we help them move into the business of smart buildings and launch consumption-based services such as subscription heating and water solutions; as well as amaysim, an Australian utility company which we are helping grow through new offerings and flexible energy plans. This is still very much an emerging industry for us, but we've already [meet and rolled] with other major utility players around the world such as Origin Energy, [Sanan], A2A and Centrica.

In November, we wrapped up our 2019 Subscribed World Tour, with over 5,000 people registered for all these events in 16 cities worldwide, and we have speakers and highlighted case studies from Siemens, Ricoh, Schneider Electric, SoftBank, Ubisoft and many others. Why are these companies turning to us? Simply put, it's because of our technology. And this quarter, I'm pleased to say that, for the third time in a row, we were named a leader in The Forrester Wave report.

Now if you look at the report, titled SaaS Billing Technology: A Sleeper Agent For Business Agility, you will see Forrester recognizes us for having both the best technology offering and the largest presence in the marketplace. This is why our customers around the world are coming to us. And I couldn't agree more with the report's core thesis. Your ability to keep up with market changes and the quality of your customer experience will depend on agile billing technology. Everything from customer trust to the account -- to the company's accounting is on the line. Forrester goes on to note that our product strategy is aggressive and is a good fit for firms that are looking for a new system of record for their recurring customer relationships, where CRM and ERP play supporting roles. They also called out our new platform functionality, mentioning that -- customer references we spoke with, especially developers, those empowered by these new platform capabilities. This is a validation for Zuora, but it's also a validation for the yet untapped potential of our market. Today, the analyst community recognizes that customer-focused subscription models are absolutely fundamental in digital transformation, but they require a completely different set of tools and solutions and [state-of-the-art ERP-based] systems. Our central thesis continues to play out.

Switching gears. On previous earning calls, I talked about the changes we're making to strengthen our underlying business to capture this opportunity, so let me spend a few minutes providing updates there.

First, let's talk about sales leadership. As you all know, we spent a considerable amount of time searching for the right Chief Revenue Officer to elevate our field organization, and I could not be happier with the results of our search. We're excited to have our new CRO, Robbie Traube, onboard. He's a recognized leader within the enterprise software industry. He's worked with some of the biggest companies in the world on digital transformation, and he understands scale and how to build it. Robbie brings a proven track record from Adobe of building world-class enterprise sales teams for subscription businesses. We've also previously talked about the importance of system integrators to our future growth. And I'm incredibly pleased that we hired a new head of global alliances, James Huang, to lead these efforts. At previous SaaS companies, James successfully changed their implementation model from internal deployments to a significant part handled by partners. And now as part of Robbie's team, James is working with a few chosen partners to deepen our go-to-market relationships. Of course, Robbie and James are joining an outstanding group of tenured sales and sales leaders at Zuora, including Richard Terry-Lloyd, who has been the bedrock of our North American sales group for almost a decade; Kevin Niblock, our SVP of Sales Operations and go-to-market expert; and John Phillips, who continues to provide amazing leadership in Europe. We are laying the groundwork in building the infrastructure to capture the broad demand we continue to see in the marketplace for subscription solutions.

Of course, given a number of new folks on the team, it will take us some time for the people and groups to gel and really become effective. But what we have now is, in my biased opinion, the best sales leadership team in the industry ready to meet our customers wherever they are in their subscription journey, launching a new service, modernizing a billing system, driving large-sale -- -scale digital transformation automating the recognition of revenue.

Second, let me provide an update on the integration of RevPro and Billing. I mentioned on the last call that the integration technology is complete, and today, we're making steady progress with our customer implementations. We've restarted all the paused implementations and are targeting to deliver on our customers' time lines. In fact, we've completed the technical integration phase with a number of customers, and 3 of them, Siemens, LivePerson and Modernizing Medicine's, are expected to be operationally live using RevPro and Billing in the next couple of months. This is exciting as our customers now have an end-to-end automated solution to handle all their subscription needs from quote to cash, to billing, to revenue automation. We're working hard to get these customers operationally live on an integrated product by early next year. And this will take some time. But once these customers are operationally live and using the integrated solution, we can start cross-selling our RevPro product into our Zuora Billing customer base.

Third and finally, let me provide an update on the momentum of our central platform offering. We talked a lot about the importance of our platform strategy on the last call. We have an incredibly diverse group of customers spread across a number of different industries, and the number of industries shifting to subscriptions keeps growing. That's what makes the opportunity so exciting. And as a result of this diversity, it's really important that we provide the right tools to allow our customers to customize and extend the Zuora solutions into their businesses, whether they are a digital media company or an industrial manufacturer or a software provider. Every minute of developer time that we can save our customers on custom coding can go towards building new features for their end customers.

Since our platform launched 6 months ago, we've seen nearly 100 customers adopt the platform capabilities. These companies are using our tools to orchestrate events in automated manual processes, and they're seeing immediate quantifiable results in terms of operational efficiencies. For example, Schibsted Media, they're one of the largest media groups in Scandinavia. They're using our workflow tools to automate reconciliation to a custom payment gateway, saving them both time and money. Hudl, a sports analysis software company that serves hundreds and thousands of teams around the world, is using the Zuora Central Platform to save over 100 hours a month by automating their upsell processes. And Motor Trend Group is using Zuora central to move credit card refi logic out of expensive middleware and giving them a single source of truth for their collections processes. In short, the Zuora platform is helping our customers work smarter by extending and integrating our system and data model into the core of their business.

In closing, I remain incredibly excited about what we're building here and where we are headed. We made an early bet that the subscription business models pioneered by SaaS, media and technology companies would eventually spread to every industry; and we see validation of this every day in the business headlines, in the analyst reports and, most importantly, in our customer base. Today, we're making Zuora the system of record for all customer-centric businesses, and we're innovating on a platform strategy that allows any company to customize and extend our solutions to meet their unique business demands, whether they're a motorcycle manufacturer or an energy utility. We now have the right team. We have the right technology. And we're going after a huge market that is in the early stages of a transformational shift from products to services.

Now let me turn it over to Tyler to take you through the financial details.

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Tyler R. Sloat, Zuora, Inc. - CFO [4]

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Thanks, Tien.

As you can see, we're continuing to deliver on our financial goals and improve our operational execution. As I typically do, I'll start my comments today by reviewing our key operating metrics of customers over $100,000 ACV, dollar-based retention and processed transaction volume. Then I'll move to our financial results and finish with our outlook for the fourth quarter and remainder of the fiscal year.

Starting with customers

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they still represent 88% of our annual recurring revenue. As you heard from Tien, we recently brought on our Chief Revenue Officer, Robbie, and we're all working hard to improve our sales execution. We're really excited about Robbie and the sales team that's coming together, but we also know that it will take some time for the team to become operationally effective and consistently landing new customers and closing deals.

Looking at how we expand with our customers. Our dollar-based retention ended at 106%, slightly down from the prior quarter. This is partially due to stronger compares from the prior periods and also a result of the [post] cross-sell activity until we work through the RevPro migration deployments and get our customers' operations [live]. We believe that this metric will increase in the long run as we strengthen our customer success efforts and develop additional platform features. But this metric will see near-term pressure as we work to improve our upsell and cross-sell execution.

Lastly, our systems processed $11.2 billion of transaction volume in the quarter, which represents 29% growth year-over-year. This continued to be the biggest driver of our upsell efforts with our customers, as transaction volume naturally grows as their businesses grow. As a reminder, our revenue does not track linearly with transaction volume growth because our customers typically realize pricing efficiencies as they scale. But this allows us to participate in the growth of our customers over time. It's also important to point out that there can be quarterly fluctuations we've seen and seasonality that impacts this metric caused by different billing policies or large customer go-lives in any given quarter. Because of this dynamic, it's often helpful to look at transaction volume on a trailing 12-month basis, which results in 38% growth.

Now let's talk about how these operating metrics flowed through to our Q3 financial results.

As Tien noted earlier, subscription revenue grew 25% to $54 million in the quarter. This includes a onetime benefit of $1.3 million related to a contract that we included in our previous Q3 guidance calculations which will not be recurring in future quarters. Professional services revenue decreased 3% to $17.8 million, as our go-to-market changes will take time to be realized on the services side. This resulted in total revenue of $71.8 million or 17% growth year-over-year.

Turning to margins. Total non-GAAP gross margin improved slightly to 58% compared to the prior quarter. We maintained healthy non-GAAP subscription gross margin of 78%, consistent with the last 2 quarters, while non-GAAP professional services gross margins were negative 5% and down sequentially due to lower utilization. Including a onetime one-item benefit, our non-GAAP operating margin improved 4 percentage points quarter-over-quarter to negative 10% and ahead of expectations. This improvement was due to both higher revenue and lower expenses we realized in the quarter. Most of the lower expenses were savings driven by actively managing our cost base, but we also had some marketing programs and service provider costs that were delayed into future quarters. We're investing for durable long-term growth in a scalable manner that creates operating leverage in the business.

Looking at our sales efficiency indicator GEI or growth efficiency index. It was 2.2 through Q3, a slight increase versus the prior quarter. As a reminder, this metric is calculated by dividing our trailing 12 months non-GAAP sales and marketing expense of $94.8 million by the year-over-year increase in trailing 12-month subscription revenue of $43.1 million. We want to reduce this number over the long term, as it signifies we're spending less to acquire each incremental dollar of subscription revenue. But as we work through many of the changes in the sales organization and go-to-market activities in the near term, this metric may increase until we develop our [operational limits in field].

Now let's turn to billings and free cash flow.

Calculated subscription billings for Q3 were $61.8 million, representing 22% growth year-over-year. We saw a higher rate of early renewals and increased annual mix, resulting in a tailwind of [2] percentage points. As we've talked about before, quarterly billings can fluctuate due to these factors and may create a benefit. They created a benefit for Q3 but can also result in a headwind in future quarters. These factors tend to normalize over a longer period of time. So looking at subscription billings over the past 12 months, growth was 24%. Going forward, we expect full year fiscal year '20 calculated subscription billings growth to be slightly above 20%. Longer term, we expect the subscription billings growth to be in line with subscription revenue growth.

Turning to our cash flow. Q3 free cash flow was negative $5.1 million compared to negative $10.3 million in Q3 of last year. This improvement was partially driven by increased efficiency in our operating model and favorable timing of payments. One item to call out on CapEx is the facility spending. CapEx was $8.6 million for Q3, higher than prior quarters, and this includes $6.5 million in costs related to building out our new HQ. This CapEx amount was offset by $5.2 million of reimbursements we received for [tech] improvements, which are recorded in our operating cash flow, resulting in a net impact of negative $1.3 million of free cash flow for facilities-related expenses in the quarter.

Looking on a sequential basis, free cash flow improved more than $6 million versus Q2. The improvement was primarily driven by the timing of ESPP purchases and lower expenses in the quarter. As a reminder, we have a cash flow timing benefit related to our ESPP plan in the first and third quarters of each year and a detriment in the second and fourth quarters of each year. The ESPP timing benefit contributed approximately $4.5 million to the improvement versus Q2.

For the full year, we now expect free cash flow to be negative $35 million, a $5 million improvement compared to our expectations from the Q2 earnings call. Excluding the facility spend of $7 million related to our HQ move, we expect free cash flow to be negative $28 million for the year. We ended the quarter with $170.4 million in cash and cash equivalents and remain fully funded against our current operating plan.

Lastly, our fully diluted share count as of the end of the quarter, October 31, 2019, was approximately 125 million using the treasury stock method.

As Tien mentioned earlier, we're really excited about our sales team, including the new leadership we've brought onboard. We have a lot of fiscal year '21 planning work to complete, though, so we'll hold off on providing commentary on our outlook for next year until our Q4 earnings call.

Now for our guidance numbers for Q4 and fiscal '20.

In Q4, we are currently expecting total revenue of $71 million to $72.5 million, subscription revenue of $54 million to $55 million, non-GAAP operating loss of $11 million to $10 million. This loss reflects the seasonal impact of a higher expense base that we see in the fourth quarter due to merit increases and payroll taxes. This also includes $600,000 additional rent expense associated with our HQ move. For non-GAAP net loss per share, we expect $0.11 to $0.09, assuming weighted average shares outstanding of approximately 113.5 million.

For the full year fiscal '20, we are currently expecting total revenue of $276.7 million to $278.2 million; subscription revenue of $206 million to $207 million; non-GAAP operating loss of $40.8 million to $39.8 million; and non-GAAP net loss per share of $0.37 to $0.35, assuming weighted share -- average shares outstanding of approximately 111.2 million.

With that, we're happy to take your questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Richard Davis with Canaccord.

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Richard Hugh Davis, Canaccord Genuity Corp., Research Division - MD & Analyst [2]

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So once RevPro is kind of integrated into the platform and you have all the CRO lined in and stuff like that, you and I have talked about this before, is there a thought in terms of will there be a change in the pricing, like, will I have to pay more? I mean, obviously, if I get the module, that counts, but how much should I think about your pricing model? Will that change at all? Or do you have any thoughts on go to market in that regard?

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Tien Tzuo, Zuora, Inc. - Co-Founder, Chairman & CEO [3]

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Yes. Right now, we have no current plans of changing our pricing. And so the way we sell our products is the way we sell products. You obviously know, given what we do, that we do believe in the power of pricing to build long-term sustainable models, so it's something we're always looking at. But at this point, we intend to keep pricing the way it is.

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Tyler R. Sloat, Zuora, Inc. - CFO [4]

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Yes. This is Tyler. We always look at price, right? We iterate and try to learn from our customer base. With RevPro, right, that is an add-on, and it is one of our flagship products. So it is meaningful. And so not having it is also meaningful. But we constantly look at price and we're constantly iterating off of it based on what we think the customers are going to perceive from the value of what we give them.

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Operator [5]

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Your next question comes from Stan Zlotsky with Morgan Stanley.

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Sarah Marie Quander, Morgan Stanley, Research Division - Research Associate [6]

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Apologies. Sorry. This is Sarah of -- on for Stan Zlotsky. Regarding the downtick in net retention this quarter. Last quarter, you called out a higher number than usual of customers rightsizing and kind of resizing their commitments after signing too large of transaction volumes in the year ago period. Did you see a similar dynamic this quarter? And did that play into net retention?

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Tyler R. Sloat, Zuora, Inc. - CFO [7]

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This is Tyler. I'll take that. So it's -- we did call out a couple of down-sells last quarter. We also said that, going forward -- we kind of gave a heads-up that we could see some pressure on this number through this quarter, and we kind of said the same thing just now. So there wasn't anything dramatic that we called out this quarter, just some year-over-year comparisons that are tough and then kind of just normal course of business.

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Operator [8]

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Your next question comes from Brent Thill with Jefferies.

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Luv Bimal Sodha, Jefferies LLC, Research Division - Equity Associate [9]

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This is Luv Sodha on for Brent Thill. Just a couple questions. One was on I know in the previous calls, you guys outlined some of these initiatives on the sales side. Now that you hired Robbie, is he sort of implementing those same initiatives? Or is he giving -- is he being given more leeway in terms of what he can and cannot implement? And then the second one was for Tyler or Tien as well. Now that you've recruited James Huang, and he's building out the SI pipeline, will that lead to faster deployment times, if you will? And over the longer term, will that help ease out the deployment process?

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Tien Tzuo, Zuora, Inc. - Co-Founder, Chairman & CEO [10]

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Yes, absolutely. I'll go ahead and field the first one. I mean, as you can imagine, I am incredibly pleased to be able to hand over the reins on some of the projects that we've been doing and hand it off to a true professional like Robbie. I will say that, as part of the process of coming together, of interviewing, we certainly found that we were very aligned in our thinking. But I would also say that Robbie comes from an environment at Adobe where he is selling to the largest companies in the world on digital transformation projects, right? And this is a big, big part of our growth. And he is seeing success on how to scale a sales process that is more about that type of complex sale. And so I think he's taken what we've done, and I certainly expect him to bring it to an entirely new level and, I think, certainly drive the growth of our company. And so I wouldn't say that we should expect he's going to undo everything we did, but I would say that I certainly expect him to add to it and make it much stronger.

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Tyler R. Sloat, Zuora, Inc. - CFO [11]

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Yes. Look, I can talk to the last -- the second part of the question, which was around the addition of our new head of alliances, James, and kind of what we expect to happen there. I think you specifically asked do we expect deployment times to get shorter. The first thing is that he is relatively new with Robbie, as part of Robbie's organization, and we're really excited to have them onboard. We are seeing, as we've mentioned in the past, a lot of great traction with GSIs. But then these kind of partnerships take time to build. It might sound counterintuitive, but in some cases, the deployments might actually get bigger because -- but the GSIs will be taking them over. So that may not necessarily be on our P&L. The reason is these are just some large digital transformations that Zuora could just be a piece of an entire stack that we're now seeing GSIs wanting to build into our architecture. And so we look at this and we're going to say how can we be expert services and always maybe be involved but get as many GSIs trained up as possible. On the flip side, we're also working on customers who are just launching and, in that case, trying to reduce the time to deployment to get them live as fast as possible utilizing our technologies. And so we're actively working on that as well.

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Operator [12]

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Your next question comes from Chris Merwin with Goldman Sachs.

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Christopher David Merwin, Goldman Sachs Group Inc., Research Division - Research Analyst [13]

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I wanted to ask about the Zuora platform. I know we got to see that [at these group meeting] a few months back but just curious. Like any use cases you can highlight so far, any potential customers using the products, how we should think about adoption trending there?

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Tien Tzuo, Zuora, Inc. - Co-Founder, Chairman & CEO [14]

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Yes. Thanks for asking about the platform. This is obviously an area that we're excited about, I'm really excited about. We tried to highlight a few examples from the call. And so there's one about a media company that really looked to move a lot of collections processes, if you will, into the system. We highlighted a -- Hudl, a sports media software company that was really -- automated a whole bunch of different upsell processes, and then we highlighted Motor Trend Group in a similar capacity. We're up to about 100 customers, I would say, that are using the platform actively, and this is really up from 0 when we launched this in June or a handful of beta customers, if you will. And so really pleased with the progress. And as you can expect, the whole purpose of the platform is to allow customers to do the last-mile customization. And so the diversity but -- we're starting to see is exploding. I mean we're seeing companies track utility metering. We're seeing companies track big numbers of cars, right, in the system through [customizing] capability and so really pleased with what we're seeing. And to kind of tie it to the question before, we also do believe that this is a big part of being able to work with SIs, right? That there's actually more customization that has to be done in terms of last-mile customizations, and that's where the SIs can really step in and help us do a lot of that work.

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Tyler R. Sloat, Zuora, Inc. - CFO [15]

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And Chris, just a follow-up. We are super excited with what we're seeing with the customers using it. Actually we're learning as well from the customers, but we are early into the modernization strategy and journey on the platform. We're charging for it, but we're -- I don't want to say we're not looking to optimize that yet because we are learning about how our customers are using it, and that will evolve over time. And so we've been pretty open about that in the last couple of calls. That's still constant.

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Christopher David Merwin, Goldman Sachs Group Inc., Research Division - Research Analyst [16]

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Okay. That's great. And maybe just one more follow-up on verticals, and I apologize if this was addressed before. We're just [dropping] between a couple calls. Any new industries or certain projects or new businesses within new industries where you're starting to see more traction that you're getting more optimistic about that you'd call out?

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Tien Tzuo, Zuora, Inc. - Co-Founder, Chairman & CEO [17]

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Yes. So we see a lot of [pipes in] a lot of industries. And so you'll see some financial services industries. You'll see some health care industries, right? But I would say those are more isolated one-offs, but right now, we're certainly monitoring it. The one that we're seeing more tractions of any quarter, [we seem to] announce a couple of more customers is utilities. I mean there's something about utilities that are moving away from pricing models that have been fixed for 10, 20, 30 years into more of these dynamic "energy as a service" models. And so we announced 2 -- we had 2 press releases this quarter, right, with 2 utility companies and -- 1 in France and 1 in Australia, and that really joins a bunch of other companies like Origin, Centrica, A2A. And so we're keeping our eye on utilities and seeing if that does become an emerging vertical for us.

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Operator [18]

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(Operator Instructions) We currently have no further telephonic questions at this time. I'll turn the call back to management for closing remarks.

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Joon Huh, Zuora, Inc. - VP of IR [19]

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Great. Thank you so much for joining us today, and we look forward to hearing from you. Please let us know if you have any questions, and we'll talk to you next quarter.

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Operator [20]

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This concludes today's conference call. Thank you for joining us. You may now disconnect.