GAAP operating margin increased 26
percentage points year-over-year Non-GAAP operating margin
increased 14 percentage points year-over-year Subscription
revenue grew 13% year-over-year Total revenue grew 9%
year-over-year
Zuora, Inc. (NYSE: ZUO), a leading monetization suite for modern
businesses, today announced financial results for its fiscal third
quarter ended October 31, 2023.
“We continued to execute on our strategy in the third quarter,
exceeding guidance on subscription revenue, total revenue and
operating income,” said Tien Tzuo, Founder and CEO of Zuora. “Three
quarters in, it’s clear we’re building a durable recurring business
capable of delivering strong margins and free cash flow, made
possible by a growing customer base that’s committed to our
differentiated technology.”
Third Quarter Fiscal 2024 Financial Results:
- Revenue: Subscription revenue was $98.0 million, an
increase of 13% year-over-year and 14% on a constant currency
basis. Total revenue was $109.8 million, an increase of 9%
year-over-year and 9% on a constant currency basis.
- GAAP Loss from Operations: GAAP loss from operations was
$8.8 million, compared to a loss from operations of $33.9 million
in the third quarter of fiscal 2023.
- Non-GAAP Income from Operations: Non-GAAP income from
operations was $16.0 million, compared to a non-GAAP income from
operations of $0.6 million in the third quarter of fiscal
2023.
- GAAP Net Loss: GAAP net loss was $5.5 million, or 5% of
revenue, compared to a net loss of $37.0 million, or 37% of
revenue, in the third quarter of fiscal 2023. GAAP net loss per
share was $0.04 based on 141.5 million weighted-average shares
outstanding, compared to a net loss per share of $0.28 based on
132.6 million weighted-average shares outstanding in the third
quarter of fiscal 2023.
- Non-GAAP Net Income (Loss): Non-GAAP net income was
$12.3 million, compared to a non-GAAP net loss of $2.9 million in
the third quarter of fiscal 2023. Non-GAAP net income per share was
$0.09 based on 141.5 million weighted-average shares outstanding,
compared to a non-GAAP net loss per share of $0.02 based on 132.6
million weighted-average shares outstanding in the third quarter of
fiscal 2023.
- Cash Flow: Net cash used in operating activities was
$55.7 million, compared to net cash used in operating activities of
$4.9 million in the third quarter of fiscal 2023. Net cash used in
operating activities for the third quarter fiscal 2024 included a
payment of $68.3 million to settle shareholder litigation.
- Adjusted Free Cash Flow: Adjusted free cash flow was
$12.7 million compared to negative $7.2 million in the third
quarter of fiscal 2023.
- Cash and Investments: Cash and cash equivalents and
short-term investments were $493.7 million as of October 31,
2023.
Descriptions of our non-GAAP financial measures are contained in
the section titled "Explanation of Non-GAAP Financial Measures"
below and reconciliations of GAAP and non-GAAP financial measures
are contained in the tables below.
Key Metrics and Business Highlights:
- Customers with annual contract value (ACV) equal to or greater
than $250,000 were 453, up from 420 as of October 31, 2022. Seven
of the deals that closed in the quarter ended October 31, 2023 had
ACV equal to or greater than $500,000, two of which had ACV greater
than $1.0 million.
- Dollar-based retention rate (DBRR) was 108%, compared to 109%
as of October 31, 2022.
- Annual Recurring Revenue (ARR) was $396.0 million compared to
$350.7 million as of October 31, 2022, representing ARR growth of
13%.
- Hosted an international series of Subscribed Connect events in
London, Paris, Munich, Stockholm and Tokyo, announcing multiple
product enhancements including:
- A new native Mediation Engine within Zuora for Consumption,
which helps companies create flexible meters and consolidate usage
data, unlocking new customer insights to rapidly experiment with
pricing and better align with customer value.
- Subscriber IQ, a new Zephr capability, which helps product and
growth teams glean valuable subscriber insights through a connected
view of subscribers combined with industry benchmarks.
- Zuora Integration Hub, one place for drag-and-drop integration
that makes it even faster for technical teams to configure and
maintain Zuora’s 60+ pre-built connectors to CRM, CPQ, ERP, payment
gateways and more.
- Zuora Extension Studio, which empowers admins to extend Zuora
for changing business requirements, configure unique use cases and
change monetization processes quickly.
- Announced a partnership with Sovos to help global businesses
meet e-invoicing mandates.
- Zuora expanded its services with Google Fiber, Alphabet’s
high-speed broadband internet service that spans 15 states and
counting. Now, Zuora will power GFiber’s full order-to-revenue
process as they continue to grow.
- New customers and go-lives included LinkedIn, FreshBooks and
Dark Matter Technologies.
Financial Outlook:
As of November 29, 2023, we are providing guidance for the
fourth quarter and full fiscal year 2024 based on current market
conditions and expectations. We emphasize that the guidance is
subject to various important cautionary factors referenced in the
section entitled “Forward-Looking Statements” below.
For the fourth quarter and full fiscal year 2024, Zuora
currently expects the following results:
Fourth Quarter
Fiscal 2024
Subscription revenue
$99.3M - $100.3M
$382.5M - $383.5M
Professional services revenue
$10.5M - $11.5M
$48.3M - $49.3M
Total revenue
$109.8M - $111.8M
$430.8M - $432.8M
Non-GAAP income from operations1
$12.0M - $13.0M
$43.6M - $44.6M
Non-GAAP net income per share1,2
$0.04 - $0.05
$0.25 - $0.26
ARR growth3
~12%
Dollar-based Retention Rate3
107%-108%
Adjusted Free Cash Flow1
$37M+
(1) For information on how we derive our
non-GAAP financial measures, see the section titled "Explanation of
Non-GAAP Financial Measures" below. Zuora has not reconciled its
guidance for non-GAAP income from operations to GAAP loss from
operations or non-GAAP net income per share to GAAP net loss per
share because stock-based compensation expense cannot be reasonably
calculated or predicted at this time. Additionally, adjusted free
cash flow has not been reconciled to operating cash flows as it
cannot be reasonably calculated or predicted at this time.
Accordingly, a reconciliation of these non-GAAP measures is not
available without unreasonable effort.
(2) Non-GAAP net income per share was
computed assuming 144.2 million and 140.1 million weighted-average
shares outstanding for the fourth quarter and full fiscal year
2024, respectively.
(3) Refer to the "Explanation of Key
Operational and Financial Metrics" section below for how these
metrics are calculated.
These statements are forward-looking and actual results may
differ materially. Refer to the “Forward-Looking Statements” safe
harbor section below for information on the factors that could
cause our actual results to differ materially from these
forward-looking statements.
Explanation of Key Operational and Financial Metrics:
Customers with annual contract value (ACV) equal to or greater
than $250,000. We define ACV as the subscription revenue we would
contractually expect to recognize from a customer over the next
twelve months, assuming no increases or reductions in their
subscriptions. We define the number of customers at the end of any
particular period as the number of parties or organizations that
have entered into a distinct subscription contract with us and for
which the term has not ended. Each party with whom we have entered
into a distinct subscription contract is considered a unique
customer, and in some cases, there may be more than one customer
within a single organization.
Dollar-based Retention Rate (DBRR). We calculate DBRR as of a
period end by starting with the sum of the ACV from all customers
as of twelve months prior to such period end, or prior period ACV.
We then calculate the sum of the ACV from these same customers as
of the current period end, or current period ACV. Current period
ACV includes any upsells and also reflects contraction or attrition
over the trailing twelve months but excludes revenue from new
customers added in the current period. We then divide the current
period ACV by the prior period ACV to arrive at our dollar-based
retention rate.
Annual Recurring Revenue (ARR). ARR represents the annualized
recurring value at the time of initial booking or contract
modification for all active subscription contracts at the end of a
reporting period. ARR excludes the value of non-recurring revenue
such as professional services revenue as well as contracts with new
customers with a term of less than one year. ARR should be viewed
independently of revenue and deferred revenue, and is not intended
to be a substitute for, or combined with, any of these items. ARR
growth is calculated by dividing the ARR as of a period end by the
ARR for the corresponding period end of the prior fiscal year.
Webcast and Conference Call Information:
Zuora will host a conference call for investors on November 29,
2023 at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss
the company’s financial results and business highlights. Investors
are invited to listen to a live webcast of the conference call by
visiting https://investor.zuora.com. A replay of the webcast will
be available through November 29, 2024. The call can also be
accessed live via phone by the toll-free dial-in number:
1-888-440-5655 or toll dial-in number: 1-646-960-0338 with
conference ID 8022374. An audio replay will be available shortly
after the call and can be accessed by dialing 1-800-770-2030 or
1-647-362-9199 with conference ID 8022374 available from November
29, 2023 at 4:00 p.m. PT to December 6, 2023 at 11:59 p.m. PT.
Explanation of Non-GAAP Financial Measures:
In addition to financial measures prepared in accordance with
U.S. generally accepted accounting principles (GAAP), this press
release and the accompanying tables contain non-GAAP financial
measures including: non-GAAP cost of subscription revenue; non-GAAP
subscription gross margin; non-GAAP cost of professional services
revenue; non-GAAP professional services gross margin; non-GAAP
gross profit; non-GAAP gross margin; non-GAAP income from
operations; non-GAAP operating margin; non-GAAP net income (loss);
non-GAAP net income (loss) per share; adjusted free cash flow; and
subscription revenue and total revenue that exclude the impact of
foreign currency exchange rate fluctuations (constant currency
basis). The presentation of these financial measures is not
intended to be considered in isolation or as a substitute for, or
superior to, financial information prepared and presented in
accordance with GAAP.
We use non-GAAP financial measures in conjunction with GAAP
measures as part of our overall assessment of our performance,
including the preparation of our annual operating budget and
quarterly forecasts, to evaluate the effectiveness of our business
strategies and to communicate with our Board of Directors
concerning our financial performance. We believe these non-GAAP
measures provide investors consistency and comparability with our
past financial performance and facilitate period-to-period
comparisons of our operating results. We also believe these
non-GAAP measures are useful in evaluating our operating
performance compared to that of other companies in our industry, as
they generally eliminate the effects of certain items that may vary
for different companies for reasons unrelated to overall operating
performance.
We exclude the following items from one or more of our non-GAAP
financial measures:
- Stock-based compensation expense. We exclude stock-based
compensation expense, which is a non-cash expense, because we
believe that excluding this item provides meaningful supplemental
information regarding operational performance. In particular,
stock-based compensation expense is not comparable across companies
given it is calculated using a variety of valuation methodologies
and subjective assumptions.
- Amortization of acquired intangible assets. We exclude
amortization of acquired intangible assets, which is a non-cash
expense, because we do not believe it has a direct correlation to
the operation of our business.
- Charitable contributions. We exclude expenses associated with
charitable donations of our common stock. We believe that excluding
these non-cash expenses allows investors to make more meaningful
comparisons between our operating results and those of other
companies.
- Shareholder litigation. We exclude non-recurring charges and
benefits, net of insurance recoveries, including litigation
expenses and settlements, related to shareholder litigation matters
that are outside of the ordinary course of our business. We believe
these charges and benefits do not have a direct correlation to the
operations of our business and may vary in size depending on the
timing and results of such litigation and related settlements.
- Asset impairment. We exclude non-cash charges for impairment of
assets, including impairments related to internal-use software,
office leases, and acquired intangible assets. Impairment charges
can vary significantly in terms of amount and timing and we do not
consider these charges indicative of our current or past operating
performance. Moreover, we believe that excluding the effects of
these charges allows investors to make more meaningful comparisons
between our operating results and those of other companies.
- Change in fair value of warrant liability and debt conversion
liability. We exclude the change in fair value of warrant
liabilities and debt conversion liabilities, which are non-cash
gains or losses, as they can fluctuate significantly with changes
in Zuora's stock price and market volatility, and do not reflect
the underlying cash flows or operational results of the
business.
- Acquisition-related transactions. We exclude
acquisition-related transactions (including integration-related
charges) that are not related to our ongoing operations, including
expenses we incurred and gains or losses recognized on contingent
consideration related to our acquisition of Zephr. We do not
consider these transactions reflective of our core business or
ongoing operating performance.
- Workforce reduction. We exclude charges related to the
workforce reduction plan we approved in November 2022, including
severance, health care and related expenses. We believe these
charges are not indicative of our continuing operations.
Additionally, we disclose "adjusted free cash flow", which is a
non-GAAP measure that excludes acquisition-related costs (including
integration-related charges) and expenses related to non-ordinary
course litigation (including settlement charges) from GAAP
operating cash flows, and includes capital expenditures. We believe
this measure is meaningful to investors because management reviews
cash flows generated from operations excluding such expenditures
that are not related to our ongoing operations.
Zuora also provides subscription revenue and total revenue,
including year-over-year growth rates, adjusted to remove the
impact of foreign currency rate fluctuations, which we refer to as
constant currency. We believe providing revenue on a constant
currency basis helps our investors to better understand our
underlying performance. We calculate constant currency in a given
period by applying the average currency exchange rates in the
comparable period of the prior year to the local currency revenue
in the current period.
Investors are cautioned that there are material limitations
associated with the use of non-GAAP financial measures as an
analytical tool. The non-GAAP measures we use may be different from
non-GAAP financial measures used by other companies, limiting their
usefulness for comparison purposes. We compensate for these
limitations by providing specific information regarding the GAAP
items excluded from these non-GAAP financial measures.
Forward-Looking Statements:
Zuora’s Financial Outlook and other statements in this release
that refer to future plans and expectations are forward-looking
statements that involve a number of risks and uncertainties. Words
such as “believes,” “may,” “will,” “estimates,” “potential,”
“continues,” “anticipates,” “intends,” “expects,” “could,” “would,”
“projects,” “plans,” “targets,” and variations of such words and
similar expressions are intended to identify forward-looking
statements. Forward-looking statements are based on management's
expectations as of the date of this filing and are subject to a
number of risks, uncertainties and assumptions, many of which
involve factors or circumstances that are beyond our control. Our
actual results could differ materially from those stated or implied
in forward-looking statements due to a number of factors, including
but not limited to, risks detailed in our Form 10-Q filed with the
Securities and Exchange Commission on September 6, 2023 as well as
other documents that may be filed by us from time to time with the
Securities and Exchange Commission. In particular, the following
factors, among others, could cause results to differ materially
from those expressed or implied by such forward-looking statements:
we may be unable to attract new customers and expand sales to
existing customers; adverse impacts on our business and financial
condition due to macroeconomic or market conditions, such as
inflation, rising interest rates, and banking system instability;
we may not be able to manage our future growth and profitability
plans effectively; monetization platform software and related
solutions, as well as consumer adoption of products and services
that are provided through such solutions, may develop slower than
we expect; challenges related to growing our relationships with
strategic partners such as systems integrators and their
effectiveness in selling our products; the risk of loss of key
employees; the risk of currency exchange rate fluctuations; we face
intense competition in our markets and may not be able to compete
effectively; we have a history of net losses and may not achieve or
sustain profitability; our products may fail to gain, or lose,
market acceptance; our product development efforts may be
unsuccessful; we face risks with our debt obligations; we may not
be able to develop and release new products and services, or
successful enhancements, new features and modifications to our
existing products and services; customers may fail to successfully
deploy our solution after entering into a subscription agreement
with us; our sales and product initiatives may not be successful or
the expected benefits of such initiatives may not be achieved in a
timely manner; our security measures may be breached or our
products may be perceived as not being secure; we may be unable to
adequately protect our intellectual property; we may experience
interruptions or performance problems, including a service outage,
associated with our technology; litigation and related costs;
geopolitical conflicts or destabilizing events, such as the ongoing
conflict in Ukraine and Israel; other business effects, including
those related to industry, market, economic, political, regulatory
and global health conditions and other risks and uncertainties. The
forward-looking statements included in this press release represent
our views as of the date of this press release. We anticipate that
subsequent events and developments will cause our views to change.
We undertake no intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. These forward-looking statements should
not be relied upon as representing our views as of any date
subsequent to the date of this press release.
About Zuora, Inc.
Zuora provides a leading monetization suite for modern
businesses across all industries, enabling companies to unlock and
grow customer-centric business models. Zuora serves as an
intelligent hub that monetizes and orchestrates the complete quote
to cash and revenue recognition process at scale. Through its
industry leading technology and expertise, Zuora helps more than
1,000 companies around the world, including BMC Software, Box,
Caterpillar, General Motors, Penske Media Corporation, Schneider
Electric, Siemens and Zoom nurture and monetize direct, digital
customer relationships. Headquartered in Silicon Valley, Zuora
operates offices around the world in the Americas, EMEA and APAC.
To learn more about the Zuora monetization suite, please visit
www.zuora.com.
© 2023 Zuora, Inc. All Rights Reserved. Zuora, Subscribed,
Subscription Economy, Powering the Subscription Economy,
Subscription Economy Index, Zephr, and Subscription Experience
Platform are trademarks or registered trademarks of Zuora, Inc.
Third party trademarks mentioned above are owned by their
respective companies. Nothing in this press release should be
construed to the contrary, or as an approval, endorsement or
sponsorship by any third parties of Zuora, Inc. or any aspect of
this press release.
SOURCE: Zuora Financial
ZUORA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except per
share data)
(unaudited)
Three Months Ended
October 31,
Nine Months Ended
October 31,
2023
2022
2023
2022
Revenue:
Subscription
$
98,048
$
86,567
$
283,232
$
248,878
Professional services
11,801
14,505
37,760
44,168
Total revenue
109,849
101,072
320,992
293,046
Cost of revenue:
Subscription1
20,378
21,727
62,304
60,024
Professional services1
14,650
18,553
47,851
55,140
Total cost of revenue
35,028
40,280
110,155
115,164
Gross profit
74,821
60,792
210,837
177,882
Operating expenses:
Research and development1
27,504
28,413
79,428
77,639
Sales and marketing1
40,245
46,973
124,488
132,576
General and administrative1
15,893
19,327
54,160
55,433
Total operating expenses
83,642
94,713
258,076
265,648
Loss from operations
(8,821
)
(33,921
)
(47,239
)
(87,766
)
Change in fair value of warrant liability
and debt conversion liability
6,997
452
2,241
9,348
Interest expense
(5,610
)
(4,444
)
(14,604
)
(10,647
)
Interest and other income (expense),
net
2,272
1,187
13,639
98
Loss before income taxes
(5,162
)
(36,726
)
(45,963
)
(88,967
)
Income tax provision
340
308
1,396
1,145
Net loss
(5,502
)
(37,034
)
(47,359
)
(90,112
)
Comprehensive loss:
Foreign currency translation
adjustment
(696
)
(973
)
(1,383
)
(1,648
)
Unrealized (loss) gain on
available-for-sale securities
(18
)
(337
)
494
(1,013
)
Comprehensive loss
$
(6,216
)
$
(38,344
)
$
(48,248
)
$
(92,773
)
Net loss per share, basic and diluted
$
(0.04
)
$
(0.28
)
$
(0.34
)
$
(0.69
)
Weighted-average shares outstanding used
in calculating net loss per share, basic and diluted
141,488
132,579
138,789
130,461
_____________________
(1) Stock-based compensation expense was
recorded in the following cost and expense categories:
Three Months Ended
October 31,
Nine Months Ended
October 31,
2023
2022
2023
2022
Cost of subscription revenue
$
2,350
$
2,437
$
6,889
$
6,517
Cost of professional services revenue
2,747
3,479
8,997
10,186
Research and development
7,165
7,536
20,661
20,967
Sales and marketing
8,191
10,188
24,857
27,603
General and administrative
5,648
5,367
16,569
14,772
Total stock-based compensation expense
$
26,101
$
29,007
$
77,973
$
80,045
ZUORA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
(unaudited)
October 31, 2023
January 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
414,832
$
203,239
Short-term investments
78,905
183,006
Accounts receivable, net
78,297
91,740
Deferred commissions, current portion
15,298
16,282
Prepaid expenses and other current
assets
23,554
24,285
Total current assets
610,886
518,552
Property and equipment, net
25,570
27,159
Operating lease right-of-use assets
25,296
22,768
Purchased intangibles, net
10,689
13,201
Deferred commissions, net of current
portion
26,658
28,250
Goodwill
55,000
53,991
Other assets
4,035
4,677
Total assets
$
758,134
$
668,598
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
465
$
1,073
Accrued expenses and other current
liabilities
27,810
103,678
Accrued employee liabilities
30,992
30,483
Deferred revenue, current portion
158,407
167,145
Operating lease liabilities, current
portion
7,396
9,240
Total current liabilities
225,070
311,619
Long-term debt
356,645
210,403
Deferred revenue, net of current
portion
1,719
442
Operating lease liabilities, net of
current portion
38,060
37,924
Deferred tax liabilities
3,723
3,717
Other long-term liabilities
7,340
7,333
Total liabilities
632,557
571,438
Stockholders’ equity:
Class A common stock
13
13
Class B common stock
1
1
Additional paid-in capital
936,147
859,482
Accumulated other comprehensive loss
(1,808
)
(919
)
Accumulated deficit
(808,776
)
(761,417
)
Total stockholders’ equity
125,577
97,160
Total liabilities and stockholders’
equity
$
758,134
$
668,598
ZUORA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
October 31,
2023
2022
Cash flows from operating
activities:
Net loss
$
(47,359
)
$
(90,112
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation, amortization and
accretion
13,684
13,725
Stock-based compensation
77,973
80,045
Provision for credit losses
457
1,403
Donation of common stock to charitable
foundation
—
1,000
Amortization of deferred commissions
14,415
14,250
Reduction in carrying amount of
right-of-use assets
4,876
5,859
Change in fair value of warrant liability
and debt conversion liability
(2,241
)
(9,348
)
Change in fair value of contingent
consideration
—
(1,800
)
Other
2,630
575
Changes in operating assets and
liabilities:
Accounts receivable
12,476
5,666
Prepaid expenses and other assets
878
(2,454
)
Deferred commissions
(12,013
)
(15,418
)
Accounts payable
(634
)
3,415
Accrued expenses and other liabilities
(82,904
)
2,819
Accrued employee liabilities
509
282
Deferred revenue
(7,461
)
(2,607
)
Operating lease liabilities
(10,962
)
(9,979
)
Net cash used in operating activities
(35,676
)
(2,679
)
Cash flows from investing
activities:
Purchases of property and equipment
(6,913
)
(8,471
)
Purchases of short-term investments
(66,665
)
(205,464
)
Maturities of short-term investments
175,128
89,013
Cash paid for acquisition
(4,524
)
(41,000
)
Net cash provided by (used in) investing
activities
97,026
(165,922
)
Cash flows from financing
activities:
Proceeds from issuance of convertible
senior notes, net of issuance costs
145,861
233,901
Proceeds from issuance of common stock
upon exercise of stock options
1,000
2,097
Proceeds from issuance of common stock
under employee stock purchase plan
4,765
4,485
Principal payments on debt
—
(1,480
)
Net cash provided by financing
activities
151,626
239,003
Effect of exchange rates on cash and cash
equivalents
(1,383
)
(1,648
)
Net increase in cash and cash
equivalents
211,593
68,754
Cash and cash equivalents, beginning of
period
203,239
113,507
Cash and cash equivalents, end of
period
$
414,832
$
182,261
ZUORA, INC.
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES
(in thousands, except
percentages)
(unaudited)
Subscription Gross Margin
Three Months Ended
October 31,
Nine Months Ended
October 31,
2023
2022
2023
2022
Reconciliation of cost of subscription
revenue:
GAAP cost of subscription revenue
$
20,378
$
21,727
$
62,304
$
60,024
Less:
Stock-based compensation
(2,350
)
(2,437
)
(6,889
)
(6,517
)
Amortization of acquired intangibles
(607
)
(586
)
(2,083
)
(1,512
)
Asset impairment
(439
)
—
(439
)
—
Workforce reduction
—
(147
)
(38
)
(147
)
Non-GAAP cost of subscription revenue
$
16,982
$
18,557
$
52,855
$
51,848
GAAP subscription gross margin
79
%
75
%
78
%
76
%
Non-GAAP subscription gross margin
83
%
79
%
81
%
79
%
Professional Services Gross
Margin
Three Months Ended
October 31,
Nine Months Ended
October 31,
2023
2022
2023
2022
Reconciliation of cost of professional
services revenue:
GAAP cost of professional services
revenue
$
14,650
$
18,553
$
47,851
$
55,140
Less:
Stock-based compensation
(2,747
)
(3,479
)
(8,997
)
(10,186
)
Workforce reduction
—
(399
)
(46
)
(399
)
Non-GAAP cost of professional services
revenue
$
11,903
$
14,675
$
38,808
$
44,555
GAAP professional services gross
margin
(24
)%
(28
)%
(27
)%
(25
)%
Non-GAAP professional services gross
margin
(1
)%
(1
)%
(3
)%
(1
)%
ZUORA, INC.
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)
(in thousands, except
percentages)
(unaudited)
Total Gross Margin
Three Months Ended
October 31,
Nine Months Ended
October 31,
2023
2022
2023
2022
Reconciliation of gross profit:
GAAP gross profit
$
74,821
$
60,792
$
210,837
$
177,882
Add:
Stock-based compensation
5,097
5,916
15,886
16,703
Amortization of acquired intangibles
607
586
2,083
1,512
Asset impairment
439
—
439
—
Workforce reduction
—
546
84
546
Non-GAAP gross profit
$
80,964
$
67,840
$
229,329
$
196,643
GAAP gross margin
68
%
60
%
66
%
61
%
Non-GAAP gross margin
74
%
67
%
71
%
67
%
Operating (Loss) Income and Operating
Margin
Three Months Ended
October 31,
Nine Months Ended
October 31,
2023
2022
2023
2022
Reconciliation of (loss) income from
operations:
GAAP loss from operations
$
(8,821
)
$
(33,921
)
$
(47,239
)
$
(87,766
)
Add:
Stock-based compensation
26,101
29,007
77,973
80,045
Amortization of acquired intangibles
607
586
2,083
1,512
Asset impairment
1,592
—
1,592
—
Charitable contribution
—
—
—
1,000
Shareholder litigation
(3,508
)
16
(3,265
)
246
Acquisition-related transactions
19
1,268
211
1,612
Workforce reduction
—
3,660
265
3,660
Non-GAAP income from operations
$
15,990
$
616
$
31,620
$
309
GAAP operating margin
(8
)%
(34
)%
(15
)%
(30
)%
Non-GAAP operating margin
15
%
1
%
10
%
—
%
ZUORA, INC.
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)
(in thousands, except per
share data)
(unaudited)
Net (Loss) Income and Net (Loss) Income
Per Share
Three Months Ended
October 31,
Nine Months Ended
October 31,
2023
2022
2023
2022
Reconciliation of net (loss) income:
GAAP net loss
$
(5,502
)
$
(37,034
)
$
(47,359
)
$
(90,112
)
Add:
Stock-based compensation
26,101
29,007
77,973
80,045
Amortization of acquired intangibles
607
586
2,083
1,512
Asset impairment
1,592
—
1,592
—
Charitable contribution
—
—
—
1,000
Shareholder litigation
(3,508
)
16
(3,265
)
246
Change in fair value of warrant liability
and debt conversion liability
(6,997
)
(452
)
(2,241
)
(9,348
)
Acquisition-related transactions
19
1,268
211
1,612
Workforce reduction
—
3,660
265
3,660
Non-GAAP net income (loss)
$
12,312
$
(2,949
)
$
29,259
$
(11,385
)
GAAP net loss per share, basic and
diluted1
$
(0.04
)
$
(0.28
)
$
(0.34
)
$
(0.69
)
Non-GAAP net income (loss) per share,
basic and diluted1
$
0.09
$
(0.02
)
$
0.21
$
(0.09
)
_________________________________
(1) For the three months ended October 31,
2023 and 2022, GAAP and Non-GAAP net income (loss) per share are
calculated based upon 141.5 million and 132.6 million basic and
diluted weighted-average shares of common stock, respectively. For
the nine months ended October 31, 2023 and 2022, GAAP and Non-GAAP
net income (loss) per share are calculated based upon 138.8 million
and 130.5 million basic and diluted weighted-average shares of
common stock, respectively.
ZUORA, INC.
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)
(in thousands, except
percentages)
(unaudited)
Adjusted Free Cash Flow
Three Months Ended
October 31,
Nine Months Ended
October 31,
2023
2022
2023
2022
Net cash used in operating activities
(GAAP)
$
(55,657
)
$
(4,861
)
$
(35,676
)
$
(2,679
)
Add:
Shareholder litigation
71,377
54
72,130
237
Acquisition-related costs
28
—
135
—
Less:
Purchases of property and equipment
(3,075
)
(2,387
)
(6,913
)
(8,471
)
Adjusted free cash flow (non-GAAP)
$
12,673
$
(7,194
)
$
29,676
$
(10,913
)
Net cash provided by (used in) investing
activities (GAAP)
$
2,005
$
(19,416
)
$
97,026
$
(165,922
)
Net cash provided by financing activities
(GAAP)
$
145,899
$
575
$
151,626
$
239,003
Constant Currency Revenue
Three Months Ended
October 31,
Nine Months Ended
October 31,
2023
2022
% Change
2023
2022
% Change
Subscription revenue (GAAP)
$
98,048
$
86,567
13
%
$
283,232
$
248,878
14
%
Effects of foreign currency rate
fluctuations
821
5,594
Subscription revenue on a constant
currency basis (Non-GAAP)
$
98,869
14
%
$
288,826
16
%
Total revenue (GAAP)
$
109,849
$
101,072
9
%
$
320,992
$
293,046
10
%
Effects of foreign currency rate
fluctuations
711
5,592
Total revenue on a constant currency basis
(Non-GAAP)
$
110,560
9
%
$
326,584
11
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231129686403/en/
Investor Relations Contact: Luana Wolk
investorrelations@zuora.com 650-419-1377 Media Relations
Contact: Margaret Pack press@zuora.com 619-609-3919
Zuora (NYSE:ZUO)
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Zuora (NYSE:ZUO)
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