On August 21, 2024, Zuora Inc (ZUO, Financial) released its 8-K filing for the second quarter of fiscal 2025, showcasing notable improvements in subscription revenue and operating margins. Zuora Inc provides cloud-based software on a subscription basis, enabling companies to manage and transform into subscription businesses through its Zuora Central platform and other related products.
Performance Overview
Zuora Inc (ZUO, Financial) reported total revenue of $115.4 million for Q2 FY2025, surpassing the analyst estimate of $112.62 million. Subscription revenue grew by 9% year-over-year to $104.1 million. The company also reported a GAAP net loss of $7.2 million, or $0.05 per share, which is an improvement from the $22.6 million loss, or $0.16 per share, in the same quarter last year.
Key Financial Achievements
Zuora Inc (ZUO, Financial) achieved significant milestones in Q2 FY2025:
- Non-GAAP income from operations increased to $25.6 million, compared to $9.6 million in Q2 FY2024.
- Operating cash flow rose to $11.4 million from $5.4 million in the previous year.
- Adjusted free cash flow improved to $12.2 million from $4.0 million last year.
Income Statement Highlights
| Metric | Q2 FY2025 | Q2 FY2024 |
|---|---|---|
| Total Revenue | $115.4 million | $108.0 million |
| Subscription Revenue | $104.1 million | $95.5 million |
| GAAP Net Loss | $7.2 million | $22.6 million |
| Non-GAAP Net Income | $29.1 million | $10.0 million |
Balance Sheet and Cash Flow
Zuora Inc (ZUO, Financial) reported cash and cash equivalents and short-term investments totaling $543.5 million as of July 31, 2024. The company’s net cash provided by operating activities was $11.4 million, a significant increase from $5.4 million in the same period last year.
Key Metrics and Business Highlights
- Customers with annual contract value (ACV) equal to or greater than $250,000 were 445, up from 444 as of July 31, 2023.
- Dollar-based retention rate (DBRR) was 104%, compared to 107% as of July 31, 2023.
- Annual Recurring Revenue (ARR) was $412.3 million, representing a 7% growth year-over-year.
Commentary and Analysis
“I’m proud of our ZEOs for delivering a solid second quarter,” said Tien Tzuo, Founder and CEO at Zuora. “From our install base to the analyst community, we continue to be recognized for our market leadership. When enterprise organizations want to win with a Total Monetization strategy, they come to us for our mission-critical technology.”
“In the second quarter, we reached our goal to operate at a Rule of 30 two quarters ahead of plan,” said Todd McElhatton, Chief Financial Officer at Zuora. “We remain committed to margin expansion and profitability as we navigate this challenging market.”
Conclusion
Zuora Inc (ZUO, Financial) has demonstrated robust performance in Q2 FY2025, with significant improvements in subscription revenue, operating margins, and cash flow. The company's ability to exceed revenue estimates and reduce GAAP net loss highlights its effective management and strategic initiatives. Investors and stakeholders will be keen to see how Zuora Inc (ZUO) continues to navigate the market and sustain its growth trajectory.
Explore the complete 8-K earnings release (here) from Zuora Inc for further details.
