More businesses turned to subscription services as a way to connect with customers kept at home by the pandemic.
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Zuora on Thursday posted better-than-expected results for the three months ended Jan. 31.
The provider of subscription-management software posted revenue for the quarter, the final reporting period of its fiscal year, of $79.3 million, up 13% from a year earlier, and ahead of the Wall Street consensus forecast of $76.1 million. Zuora (ticker: ZUO) had subscription revenue of $65.1 million, up 19%.
On an adjusted basis, the company lost 2 cents a share, while Wall Street had expected a loss of five cents. Under generally accepted accounting principles, the company lost $18.8 million, or 16 cents a share.
Management’s financial forecasts were generally in line with expectations. For the April quarter, Zuora is projecting revenue of $78 million to $80 million, with a non-GAAP loss of 3 to 4 cents a share. The Street has been projecting $79 million in revenue and a loss of 4 cents a share. For the January 2022 fiscal year, the company sees revenue of $335 million to $337 million, with a loss of 6 to 10 cents a share. The consensus call was for revenue of $333 million and a loss of 9 cents.
“It was a good quarter,” CEO Tien Tzuo said in an interview with Barron’s, “and we have a lot of optimism going into fiscal 2022.”. He said Zuora has demonstrated the resiliency of its business model, bouncing back strongly over the last two quarters from a difficult period in the early months of the pandemic. Tzuo said that after a pause last spring, more companies turned to subscription services as they sought new ways to engage with customers during the widespread stay-at-home orders early in the pandemic.
Tzuo noted that as the pandemic has worn on, the company has seen opportunities with companies that have not traditionally had subscription businesses. He pointed to Fender, the guitar brand, which he says now has more than 1 million subscribers to its online service for learning to play the instrument. A second example is Caterpillar, which he notes now has connectivity in all of its construction equipment with its Cat Connect service.
The Zuora CEO said he thinks the “subscription economy” is growing 15% to 25% a year, and that the company should grow at a comparable rate.
In late trading, Zuora is down fractionally at $15.15. The stock rallied 6% in the regular session.
Write to Eric J. Savitz at [email protected]
