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Zuora (ZUO) Q4 Earnings Beat, Subscription Revenues Up Y/Y

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Zuora ZUO reported fourth-quarter fiscal 2021 loss of 2 cents per share that beat the Zacks Consensus Estimate by 60%. The company had reported a loss of 9 cents in the year-ago quarter.

Moreover, revenues of $79.3 million beat the consensus mark by 4.3% and also increased 12.6% year over year.

This solid outperformance was led by the robust adoption of Zuora solutions. Transaction volumes through Zuora’s billing platform were $17 billion, up 30% year over year.

Moreover, this Zacks Rank #3 (Hold) company benefited from a resilient subscription-based business model similar to its Zacks Internet Software industry peers —Anaplan PLAN, Cloudera CLDR and Workday WDAY. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zuora, Inc. Price, Consensus and EPS Surprise

Zuora, Inc. Price, Consensus and EPS Surprise
Zuora, Inc. Price, Consensus and EPS Surprise

Zuora, Inc. price-consensus-eps-surprise-chart | Zuora, Inc. Quote

Notably, Anaplan’s fourth-quarter fiscal 2021 subscription revenues (91.9% of total revenues) rallied 25.7% year over year to $112.6 million. Cloudera’s fourth-quarter fiscal 2021 subscription revenues (91.3% of revenues) rose 13.7% year over year to $206.8 million. Workday reported fourth-quarter fiscal 2021 subscription revenues (88.9% of total revenues) of $1.01 billion, up 19.8% year over year.

Markedly, Zuora’s subscription revenues accounted for 82.1% of total revenues. The figure was $65.1 million, up 19.3% year over year.

QuarterDetails

Professional Services Revenues (17.9% of total revenues) declined 10.5% year over year to $14.2 million.

In the fiscal fourth quarter, the number of customers with annual contract value— equal to or greater than $100K — was 676, increasing 8% year over year.

The dollar-based retention rate improved 100 basis points (bps) sequentially at 100%.

Zuora helped Acer, Bridgestone, Cambium Networks, Gitlab, Grundfos, Radio Canada and Riverbed to go live in the quarter. Siemens, Schibsted, and NVIDIA were notable customers. Zuora also announced a strategic partnership agreement with Stripe.

Meanwhile, non-GAAP gross margin expanded 840 bps year over year to 66%, driven by a shift from services work to a higher-margin, subscription-based model.

Non-GAAP subscription gross margin was 81% compared with 77% in the year-ago quarter.

Research & development expenses, as a percentage of revenues, decreased 220 bps on a year-over-year basis to 20.6%. Moreover, general & administrative (G&A) expenses, as a percentage of revenues, were 12.8%, down 230 bps year over year.

However, sales & marketing expenses increased 30 bps to 34.9%.

Total operating expenses, as a percentage of revenues, were 68.2%, down 420 bps from the year-ago quarter.

Balance Sheet & Cash Flow

As of Jan 31, 2021, Zuora had cash, cash equivalents and short-term investments of $186.6 million compared with $178.8 million as of Oct 31, 2020.

Free cash outflow was $0.03 million compared with $5.1 million in the year-ago quarter.

Guidance

For the first quarter of fiscal 2022, Zuora expects subscription revenues in the range of $63-$65 million. Revenues are expected between $78 million and $80 million. The Zacks Consensus Estimate for revenues is currently pegged at $76 million.

Non-GAAP loss from operations is expected between $4.5 million and $5 million.

Non-GAAP loss is expected between 3 cents and 4 cents per share. The consensus mark for the same is pegged at 5 cents per share.

For fiscal 2022, Zuora expects subscription revenues in the range of $272-$276 million. Revenues are expected between $335 million and $337 million. The Zacks Consensus Estimate for revenues is currently pegged at $333 million.

Non-GAAP loss from operations is expected between $8 million and $12 million.

Non-GAAP loss is expected between 6 cents and 10 cents per share. The consensus mark for the same is pegged at 9 cents per share.

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