CEO says more businesses are looking to incorporate subscription offerings
Shares of Zuora Inc. headed higher in after-hours trading Thursday after the software company that helps businesses create subscription models reported better-than-expected results for its latest quarter and issued an upbeat revenue outlook.
The company posted a fiscal third-quarter net loss of $16.8 million, or 14 cents a share, compared with a loss of $18.2 million, or 16 cents a share, a year earlier. After adjustments, Zuora ZUO, +1.72% lost a penny per share, an improvement from its 9-cent per-share loss a year earlier. Analysts tracked by FactSet were modeling a 5-cent adjusted loss per share.
Zuora’s sales for the fiscal third quarter rose to $77.2 million from $71.8 million, while analysts were expecting $73.9 million.
The stock was up more than 7% in after-hours trading.
Chief Executive Tien Tzou told MarketWatch that the company is noticing a warmer reception to subscription-based business models both from companies whose businesses have been negatively impacted by the pandemic and those who’ve seen positive effects. “The resilience of a recurring revenue model” is helping companies “weather the storm of the current situation,” he said.
Zuora’s churn rate was a source of concern coming out of the company’s last earnings report, but Chief Financial Officer Todd McElhatton said that the company has moved past some those headwinds. “We had a good quarter in terms of turning things around on churn,” he told MarketWatch.
Though Zuora’s net dollar retention rate stayed constant at 99% compared with what the company disclosed in its prior report, McElhatton said that the figure is a trailing four-quarter metric, meaning it will take time for Zuora to lap the weaker parts of the pandemic.
For the fiscal fourth quarter, Zuora expects revenue of $75 million to $77 million and an adjusted loss per share of 5 cents to 6 cents. Analysts tracked by FactSet were modeling $74.3 million in revenue and an adjusted loss per share of 5 cents.
Zuora shares have declined 18% so far this year as the S&P 500 SPX, -0.06% has risen 13%.