Zuora (ZUO) to Report Q3 Earnings: What's in the Cards?
Zuora ZUO is set to release third-quarter fiscal 2024 results on Nov 29.
For the quarter, the company expects total revenues between $107.5 million and $109.5 million. On a non-GAAP basis, earnings are expected between 5 and 6 cents per share.
The Zacks Consensus Estimate for revenues is pegged at $108.5 million, suggesting growth of 7.35% from the figure reported in the year-ago quarter.
The consensus mark for profit stayed at 6 cents per share over the past 30 days. Zuora had reported a loss of 2 cents in the year-ago quarter.
Notably, the company beat the Zacks Consensus Estimate in the last four quarters, delivering an earnings surprise of 77.8%, on average.
Zuora, Inc. Price and EPS Surprise
Zuora, Inc. price-eps-surprise | Zuora, Inc. Quote
Let’s see how things have shaped up for this announcement.
Factors to Watch
Zuora’s third-quarter results are expected to benefit from a strong subscription-based business model, a consumption-based pricing model and a consistent pace of organic and inorganic innovations.
The company’s portfolio strength is expected to have helped it win new customers in the to-be-reported quarter. Notably, Zuora helped eight customers, including DISH Network, The Atlantic, and others go live in the previous quarter.
Markedly, in the fiscal second quarter, the number of customers with annual contract value — equal to or greater than $250K — was 444, increasing 37% year over year and forming most of Zuora’s business.
The company’s product, Zephr, is a subscription experience platform for all industries that is helping the company retain customers for a longer time and is expected to have been a major growth driver in the third quarter.
The rising trends in the company’s professional service are expected to enable SI partners to take up more of the implementation work, resulting in increased revenues from the professional services segment.
Furthermore, Zuora Analytics' multiproduct portfolio and increased client acceptance of the company's new capabilities are expected to have been important growth drivers.
Further, the shift of revenue mix to high-margin subscription revenues is expected to have driven margin expansion. Subscription revenues accounted for 88.4% of total revenues in the second quarter.
Furthermore, the dollar-based retention rate fell to 107% as customer demand for volume was influenced by the macro background. However, it is expected to stay stable in the third quarter of fiscal 2023.
Key Q3 Developments
The company recently announced a collaboration with Sovos to assist worldwide businesses in meeting electronic invoicing (e-invoicing) mandates directly through Zuora. This will allow Zuora to access crucial data that is already available in their current billing system, reducing complexity and meeting e-invoicing standards with a single solution.
Zuora announced a new Zephr product, Subscriber IQ, that will assist Product and Growth teams in gaining important subscriber insights through a connected view of subscribers mixed with industry benchmarks, driving conversion and retention. Companies in areas like media, SaaS, gaming, fitness, and hospitality can use Zephr to find ways to increase client lifetime value.
Zuora added the Integration Hub to the Zuora Platform, making it even easier for technical teams to configure and maintain Zuora's 60+ pre-built connectors for CRM, CPQ, ERP, payment gateways and other systems. The Integration Hub helps minimize the time to go live with modern billing and revenue systems, allowing organizations to change with relative speed and ease.
What Our Model Indicates
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Zuora has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a couple of companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle:
Bilibili BILI has an Earnings ESP of +12.5% and currently has a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bilibili is set to announce fourth-quarter fiscal 2023 results on Nov 29. BILI’s shares are down 40.3% year to date.
Snowflake SNOW has an Earnings ESP of +67.3% and carries a Zacks Rank of 2, at present.
Snowflake is set to announce fourth-quarter fiscal 2023 results on Nov 29. SNOW’s shares are up 19.2% year to date.
Micron Technology MU has an Earnings ESP of +26.69% and carries a Zacks Rank of 3, at present.
Micron Technology is set to announce fourth-quarter fiscal 2023 results on Dec 20. MU’s shares are up 53.8% year to date.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Micron Technology, Inc. (MU) : Free Stock Analysis Report
Snowflake Inc. (SNOW) : Free Stock Analysis Report
Bilibili Inc. Sponsored ADR (BILI) : Free Stock Analysis Report
Zuora, Inc. (ZUO) : Free Stock Analysis Report
