ZUO - Earnings call transcript Q3 2022

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Operator

Good afternoon. And welcome to Zuora's Third Quarter of Fiscal 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. like of the remarks. Investor would Luana over I Head Wolk, Relations, that, to call turn to With for introductory

Luana Wolk

you. welcome XXXX And Good third Thank fiscal quarter to earnings Zuora's call. conference afternoon.

are today Todd for session. into provide Chief the The the and Revenue us Chief Executive Zuora's for will also review me Founder third be our and to full-year financial Tien and XXXX. Joining McElhatton, Traube, our Robbie Q&A outlook Chief Officer. purpose XXXX. Financial Officer, fourth of today's also call Officer; Zuora's is fiscal upcoming our quarter for our and fiscal Tzuo, quarter provide results We'll preliminary joining year outlook

Some will our of and responses discussion today statements. include forward-looking

our result results as actual materially reminder, of factors. differ a could as So, several a

can financial and will those information issued And our and factors our earnings the included are the referring recent be earnings related regarding to finally, today release. in in measures SEC. release filings reconciliations non-GAAP with to we most GAAP measures we find You risk several

the For to earnings our more Relations Zuora, visit of filings, a call our to release, about please links of learn investor.zuora.com. at a website Investor or replay copy today's SEC

turn to Now, I'd Tien. to call like the over

Tien Tzuo

been level this strong the delivered total metrics, for We quarter highest quarters. the XX% Luana. XXX%. And financial earnings up last That's quarter, the another revenue thank non-GAAP we and exceeded rate us. Thank based XX loss retention last key of XXXX you, from Zuora's subscription guidance And our year. including from you operations joining a quarter. quarter has dollar is and dollar-based to rate yet we delivered over retention fiscal This last XXX% is everyone across third Welcome call. revenue, headline The

continued time ARR quarter our rise, rate year. quarter, XX% this last growth growth at up XX%, closing from the to This

innovate. quarter, This we continued to

Zuora's in powering customer product quarter highest Our the generate upsell history. to introductions strong continue interest, new

This set we on beginning the goals team our do I'd Day deliver we am year, the quarter, that with continued to we ZEOs execution. of shared at April. that out the the Investor at our proud like I the incredibly and world. shout in a out you continued to focus all and to around of back

let areas. to Now, more me some color quarter the three add in specific

First, the market. we our seeing continued and evolution growth that in are

this our in making new product we're And Next, on quarter's developments strategy. an go-to-market the progress our finally, portfolio. update that exciting with

market. Let's start with the

up the it's shift heard this, say subscription woke the power Last the more more need companies and You've me economy. of models. digital but service Businesses year, to recognize to across to worth repeating. sectors

us our their to only large believe powering breadth be that to to the scale of shift incumbents able and on companies our into for and for them the is are today. coming both bring expertise Zuora enterprise that capabilities, we solution innovative continue this help We the disruptors go-to These momentum guide alike. the to future. platform, continues what of the our management subscription to is journey are

disruptors. at look Let's

of hyper managing our about Zoom, growth talk companies, us the or CLEAR. We're heard subscribers You've millions like Vivint platform. on

This quarter, we bring scaling new disruptors. to continued fast on

platform support a over confident education that there their came helps for X learn we world will online scale platform on experts. and famous subscribers, continued come. billing For revenue for Zuora people brought years to are to from example, an they disrupter With this million recognition

disruptors, of to Our scale. continuing existing also are course,

recent developers by used additional leading millions fact, world this business its with In platform business a acquisition. unit communications of work the expanded an a Zuora to around quarter, power after

this billing scale. collect will Zuora As new they and enable continue volume and grow, to

to innovate to On like dominant Honeywell economy. come Zuora they in Caterpillar, new and compete to gain brands about talk and who need us the side, the incumbent the you've digital heard agility

This company a this products. and and with growth service equipment quarter, enables Today, seeing By to effectively. construction agriculture to products also to subscription-based strategies of portfolios as XXX incredible that leader Today, this customers exciting to new better manage their they list. they're modernizing their added Zuora, their more manufacturing we longer monetization is selling implement just that another sell world they area in positioned billing Fortune new power are no growth.

of Now, long-term are course, these, some of bets.

our come. to to So, seeds we growth for continue power that the sow will years

example, an automotive. As

heard that XX you've target new Toyota. the them in auto months, we and General heard growth companies, Ford companies recent many of of these say of services. top power And announce Motors, digital You've including X like for

continued digital QX few Zuora's flows In we in been core fact, payments. economy. our billion technology transformed customer-centric increase platform. an our rate Disruptors, usage are tomorrow's, a incumbents, We've companies focus from by We forecasted system. technology the year-over-year have representing in to these Shifting subscription in-vehicle team. years generate business on models, and time leaders $XX the XXXX alone, micro billion and The In growth the growth services today's the that volume products. $XX exciting best services our last of see you transaction of XX%. volume, we new that to can their power through stack growth a and into modern handled of for

down the XX% shifted and scalability, margin our capacity XXX% gross to plan Officer, also our XX-year-old our and year. we Sri to the and of Technology Srinivasan, our Chief our fiscal into in us the our expect Just shut uptime, Under expansion. since cloud start engineering long-term center and by we've data increase Product month, QX increased last

of of Now, propelling we many this announced which our innovation, this is all quarter.

and enable to revamped and our an by of APIs and hours an launch us subscription platform. you're but Zuora entirely to capabilities to customers faster not that coding new from our XX%. subscriptions, of manage only. we hear SDKs quarter, set set our launched their going offerings subscription This reduce More all-new more, up let product Unified first, times as – announced a well on We up to to companies to with as Monetization, five mantra

lets version to quarter, their automate new XX% our Zuora really CPQ the complexities our about sales Revenue, companies launched recognition of process we product I this that up talk solution of CPQ a helps real that want But faster. revenue to work quarter, X, time. teams in This

from three We line have of growth triple-digit now average its Zuora one ago. top and had doubled quarters ACV year in just nearly Revenue, has for size

their have customer the this continue platform past This went And is Braze, This on other exciting successfully a I was to this in for news to me simplify fact, I was journey days. as Zuora because launch the In some of announcement quarter, reporting. in live they maintain milestone marketing, multichannel ITO very their revenue and key a Revenue. engagement share. early organization particularly today, for finally, part

renewal none This the has Revenue. multiyear quarter, to the I'm automate global signed than us pleased all say world, a other SaaS their Zuora of company with salesforce.com, to recognition that in with biggest revenue

look Finally, let's take a go-to-market. at

in is continues set years the transform to deliberate And you the world. pay out two upmarket. biggest a that to to ago, enterprises to Now, sell we decision that way what move we the effort saw We QX, off. in made

to as Toshiba. sign continue Hitachi to new deals, fantastic and addition salesforce.com, In and we upsell such

market leading customer at customers is greater to of XX% with above This our enterprise number larger constitutes In working. also deal by ACV increased Our now quarter. quarter, last deals over business. XX sizes signed ACV is lifetime segment within we million. focus with $XXX,XXX the This This past XX cohort two or $XXX,XXX, and our strategy of or over of at the to value. deals including $X growth short, on customer

Finally, the made in our investments strategic integrators results. to broader ecosystem and continue of show partners we've system

consultants SI globally versus ago. partners give system me partner. Over over a a of go-lives a the just our you now quarter XX have within Let integration examples. We XX% customer few involve XXX in certified year

basis, dollar XXX% SI-influenced by bookings from Finally, grew year-over-year. on over deals QX in a

our also partners, starting Beyond to technology our of expand ecosystem partners. SI strategic we're

We'll products have collaboration with an integrate may working we Dynamics. Microsoft announced to exciting you Now in early be seen Microsoft. qX, into our

potentially within of potential of also own I Over we Azure as the excited It's the channel. our collaboration. further distribution across this be to into for ZEOs new strong taking advantage seeing open connect and Microsoft platform, truly am of remarkable. the drive a users early Power well alignment Microsoft ecosystem expect still wrap that value can use up, our about the are very days, BI I very customers. Zuora up for as that Zora. it and time, also quarter. opportunity our as we will thank To but again to The this focus is more innovation So, product another products to want We'll

expand to to continues us guide to their turning companies Our are market transformation. and

to operations creating two And between accelerating, upmarket ERP results. our in we that is place put further and strategy engine Our innovation ago legacy deliver and go-to-market us continue vendors. separation years

Now, I'll review turn to over Todd our financials. Todd? call the to

Todd McElhatton

Thank joined pride seen I and continuous months focus acknowledging in challenges, to And product today's Zuora I and I for XX I We've that done start execution. since together exceptional everyone, ZEO. you, overcome the our tremendous being rallied Tien. by call. the thanks, great pandemic to employees want our a joining go-to-market have ago. have have work on and strategy

Now let's preliminary for our for outlook and for our guidance QX results QX, XXXX. review the fiscal

measures. financial discussion non-GAAP includes Our

subscription non-GAAP includes measures today's a again financial reconciliation enterprise that was press reflects we strong and out the expectations both investor that working. our contribution is loss. to in can metrics. point revenue another quarter, our day deals, several multi-product adjustments We which to exceeded closed the partners. table You and of another both growth back and This prior-year the go-to-market our solid with find non-GAAP current laid the GAAP April in across execution from in QX had made selected operating quarter strategy SI proof results. great total QX strong details is and we in key space, revenue, release, past

Total year-over-year, of Subscription represented $XX.X services go-to-market Let's revenue. Professional $XX.X revenue driven our by continue quarter, into XX% performance. integrator up as top the million, million, was to partners. our XX% system overall was revenue year-over-year up was Subscription dive we third year-over-year. to total services improvement line $XX.X million XX% ship our in execution. revenue flat in

points driving over Non-GAAP XX%, As margin and partners, a an basis blended year-over-year. a improvement over of SI subscription services to was professional prior success gross point of year. the XXX XXX was improvement margin XX%, our non-GAAP result basis our

costs public includes driven cloud. gross Non-GAAP services As the associated a move training with reminder, X%, investments partners. negative professional in margin was our our to this the additional by

in resulted run in by operating margin to year. This prior income a non-GAAP driven R&D. sales, or in near of last X%, the a in planned the was was QX at decrease operating to year. million million objective compared Our marketing, from quarter breakeven investments and breakeven. $X.X This services loss is negative negative operating an of Non-GAAP of in $X.X our

million diluted fully of share was XXX treasury count Our quarter method. end at shares stock the using the the approximately

take XX-point XX XXX%, an spending let sequentially. dollar improvement. $XXX,XXX QX, expansion the the XX% base Now, based you at quarter rate quarter. of closed This retention customer to or our in In at me some through for key our of drove the XXX, metrics an over our of across Customers business. ACV represents impressive year-over-year increase

with or in deals continue our success million integrator the $X than salesforce.com partners. of We closed which strong deals RPO, non-current testament with our evident transaction system a total XX% remaining those with moving is success that also and was Two growing year-over-year. a obligations, greater or This XX% to year ACV including fix our X ago. ACV RPO above go-to-market We versus year-over-year performance upmarket. our of to have million, $X.X motion This grew and Tien in mentioned had earlier. XX

As we've has certified surpassed consultants, Investor now globally Day. Tien XXX doubled since which noted,

the Turning processed year-over-year. quarter, of our systems billion XX% growth to $XX in transaction volume volume, representing

as revenue platform, As while of customers in linearly is process efficiencies understanding transaction how does with you'll is helpful our running scale. they gain volume as on customers quarterly business much it recall, our track not

XX% X points looking by our ARR at ever. year-over-year, was of In our grew cash ARR year. upsell partially free quarter fiscal ahead This and objective ARR best for this QX, flow. Now our XX% driven

move XX% continue negative objective focus Free on accelerated investments ARR cash to flow fiscal into public was We by the to to includes XXXX. our cloud. to our of million, XX% which $X.X reach growth

was free flow continue both and year. to be the cash expect quarter QX CapEx to fiscal positive We this Total million. for for $X.X

look made balance progress ended with we've We and the Turning million to year sheet, $XXX fiscal $X.X million the to XXXX. the about equivalents, in cash cash past we quarter feel good and over forward the increase a prior the and over quarter. QX

to turn our let's So, financial outlook.

accelerate development and prior not were and investments while to go-to-market noted a last in costs product calls, rate As that year. initiatives run absorbing on continue our we

total million. of year, raising of outlook. a of $X outstanding million. to million. the million million. For revenue Subscription Non-GAAP share, net to $X.XX million shares approximately we're $XXX.X full Non-GAAP share of of currently loss revenue expect operating $XXX our XXX.X weighted We to $XXX.X $XX per $X.XX to $XXX assuming loss per million

net shares total weighted subscription we revenue to assuming $XX For of average to $XX operating currently of $X.XX million, XXX.X share per per revenue QX, of million million, of $X.XX loss $X.X expect of million $XX $X.X non-GAAP million. $XX a million, non-GAAP approximately to loss to million outstanding share,

our outlook in fiscal for execution, leadership position. finalized strong we've year. while not we'd product our a remain and ahead, portfolio our Zuora's We to XXXX like confident cycle, next preliminary planning Looking provide

always, through the we on cadence update As you move we'll as regular year. our

XXXX, total million fiscal million non-GAAP loss to expect currently million, we of to of of $XXX operating $XXX million to revenue revenue subscription million, For breakeven. negative $XXX $X $XXX

also our performance growth XX% of For or dollar-based the better. QX. very expect of with retention XXX% year, off, or close in and rate I'm better pleased we ARR To a

we deliver are making to your it With laid we'll Zuora's execution continue that, Robbie I We operator. questions, happy and take toward foundation to and to strong and objectives. the upon the long-term out turn Tien, progress over are

Operator

Instructions]. [Operator

with Your Bennett comes Chad question first from Craig-Hallum.

Chad Bennett

But fiscal Tien. Didn't I ARR. expect XXXX it terms for, the where at just great down-sell end of don't and downsells, but versus who the those. to year on we're the acceleration job is are or we I'm in was Robbie that, expansion the assume of the Nice evolution-wise net the tail on in to and And sure it's outlook. or know. on whole see great see upsell I quarter. working not this through Todd

the just that's So, the on headwind me give if from can we are update there us. behind an you on where and downsells

Todd McElhatton

Todd so an with of are year, really we're we've Look, we the to Last neighborhood, the puts accelerate in that. that year, DBRR full the our talked DBRR. to and and here. a now being we that feel we in for QX, able XXX%, us lapped really different entirely We're area past of downsells. pleased that

I plus XXX% shared be our We XXX% to are And talking we'll ranges long-term expectation XXX%. to is to our today, be as next year.

about good ability really to feel to we again, continue So, our upsell.

Chad Bennett

Todd, had maybe, upsell be was, few And and that Tien, quarter think indicated, year, think, you. last I the honest I you a them this your quarter. strongest I to with you've in think of

seems isn't away. it going So, like the momentum

In standpoint? the at than is the Revenues the it CPQ. over pipeline to of it's whether Unified if year, is really product innovation You've introduced what module Monetization more last like know from What's order, I probably upsell in it's driving you really guess, so the bookings rank or I you – it's driven. upsells? look new, lot a the that, if it want terms of driving

Tien Tzuo

centric certainly, to right, give that board. about, of we the reasons. three you It's when that really strategy talked year, right? QX on It's entire yet the that go-to-market customer is And put demonstration model ones of focus quarter in. has relationships, focused, that another that working. is the sales One, the core restructuring last of organization is sort the it's going even Robbie across back just long-term more I'll

really The the second is innovation.

a the that's the been enormous amount focused standpoint. customer really platform revenue, sometimes excited about, we really built, resurgent are building an of so, needed that built, attacking organization of that's you a that as this legacy handle don't misunderstanding an it. things economy whitespace would whether solutions the success, with leader, really potential innovation capabilities, innovation marry the sets model we're what new I pent-up sales innovation we whitespace. can growing, that there's go I see whether third that's our set the on business really entirely And I'd attack we're this an the that a systems space. all that a whether as collect, tools us long-term up from that that say there's that ERP we that's of We're when the in And say you're that's what ERP. is clear new And the there's replacement thing really seeing. and in of that's subscription And is a

Todd McElhatton

It's really balanced on upsell. the

said, premium Tien the coming Central all As new with in products those are Revenue, really… Sandbox, support,

Tien Tzuo

Volume upsells…

Todd McElhatton

that usage the get to continue we And through. comes

you Where went reliant or and really six So, nice quarters five balanced. on if ago, back were we volume. it's heavily

up, seeing innovation the we're that. again, the So, on that's take customers nice from firing engine

Operator

from comes with Joshua Needham. question Reilly Next

Joshua Reilly

quarter little environment improvement, and on you've growth the organization and on would the a to much that, demand in more changes the macroeconomy of product Maybe ARR how last internal job improving is year? what and here. that Nice you the the here say, versus the was from digging driving bit over the made sales

Tien Tzuo

doing. requires the would for I year I the it model. and that But was significant would both. I would to credit basis, of launch compute capabilities, just companies long-term shipping which a into the credit cloud taking demand business are execution changes short-term would us of doing intent subscription-based But, the us. does time. It's power and say change direction new and terms innovations, On it's that macroeconomy. they're a in not that take to new a overnight. that the say we're on really I on basis, translation last build This companies' of There appreciation the

the on that favor is are in but really trends also long-term macro as seeing you're I short-term so, improvements our the And execution, our well. think

Joshua Reilly

number with seasonal ACV really and absolute a over $XXXk, on added strong customers both XX The net basis. a that's

mix? about larger how Is the at added? that think we it net customers, these that there mix? new additional though, Or there? that products? are How is customers about of customers If expanding should we profile the it existing you being Is you're to look think should balance

Tien Tzuo

working You're times to we we we about we yesterday. You when companies, when million. them they started do to feel how over to Aaron $XX Zoom, chime and but about there going great And, working power with of see about smaller on started still Robbie, lot they incumbents. started we talk and day a they're right? we them having free a talked We talk disruptors working grab them board in with $X were when Box. Congrats here. balance. with But, disruptors million. were bring But A

small So, deals start as is going But to too. success. grow if a at small higher many incumbents, tend at to those And companies oftentimes, and deal those are these companies. of $XXX,XXX start a point to we'll you have look

going to number. really you're XX that effects So, in see both

Joshua Reilly

Can I cut there? I more sorry. Oh, one Did you there? sneak off in

Robbie Traube

what I forward we've was It's expected. was say, of again, as we've just going forward. mix sort right. It's it's well. the as we expected, seen going was But to what as going seen

Joshua Reilly

just ERP a of necessarily I accelerate doing. Maybe next And into last more But migrations. much you're on think one that's has year? much said you there not been you know how tailwind quick how to what half? can key that the do here in in the that sneak second fiscal one that

Tien Tzuo

not really key models powering are is, system. power. We're the the replacing the of existing one never financial we're that not we're new built system ERP systems business definitely another like is financial with – [indiscernible]. ERP subtlety But to

that they're for growing business ERP which keep their will a business, Cat with But sales We're dollars car the subscription and fast in their of of grow the they the like that's but not Connect, years. is they powering GM, they're to the billions company connected businesses, expect businesses, that excavators, touching have Same on core putting tractors So, coming today and digital right? car specifically. sales selling us. we're systems Caterpillar

Robbie Traube

many seeing of integrators. in really, of part I the a well. part direction We're it digital think – it's lot that say seeing a seeing that we're as that are is with to market, our piece but our system really transformation. I'd we're good also This

encapsulate So, saying. just Tien was to what

Operator

Thill Jefferies. Brent Your with comes next from question

Brent Thill

great This you Brent Sodha are that Thill. on had seeing. is a question first quarter. follow Maybe before. the momentum Great I Josh's to for see question Congrats up Luv to the on guys was

that this strong the verticals adoption verticals the XXXk, that in new Tien, you quarter, Are Zuora will? saw in? guess, you adopting adds outside you Zuora I On you more core new are of been net solution, seeing seeing has the over if historically

Tien Tzuo

and our past. say still the core interest right, I'd are media. three manufacturing services our see about strong to in We've core Those absolutely verticals. verticals. financial you're verticals new we talked continue in verticals are high But tech,

about picture, first, together what It's to sure customers online of be some It really about really, their starting the meeting continue that core our read But future the is would right feels like if and We retail get now, say, act still to sector, it. stores excited I are, they the they realize not where news, customers you is both three remain versus verticals in-store. ecommerce. the about and transformation. time, in will them we with to shifting to be make a position matter well. believe we really that those outside we're the healthy, We verticals need know It's love and of In every subscription Luv, sure in interest But are. just industry, company three every every big that a right? a have healthy economy. this, industry to in of help you as

Joshua Reilly

The Maybe Todd. encouraging. for is one for very year guide one quick next

I'm it For you're guessing the implies of growth subscription more. to guiding XX%. same time, But ARR revenue, or at XX%

that we towards term? subscription trend would of the ARR over how should how So growth growth long and think

Tien Tzuo

off Luv, you is why lags we've know subscription reporting of ARR revenue that. which certainly been

would And Todd, ARR. add that. to subscription some to catch on But you let so, I'll you expect more color up revenue

Todd McElhatton

XX%. reported lagging. quarters. by We ended XX% think, what Revenue And Today, to is, several really year, and That Tien we'll would metric. I is guidance really growth. the Luv, gave We the for done, metric just XX%. you last the be off we're we've good growth leading at said, It we we say of as is with giving year. ARR the that. we feel started I well lags at about that at next said

this guidance. we've I prudent. to we've be at so, I like, by on continue early. feel And we'll to given you a some really quarter quarter said, you It's want always time, good update And basis. like

Tien Tzuo

business best subscription ARR. off is The of run

And we why at that number, would you you that. point know that's So, obviously.

Joshua Reilly

Congrats.

Operator

Your next Berenberg. comes with question from Andrew DeGasperi

Andrew DeGasperi

maybe announcement the had weeks Microsoft ago. a few on that question one you had Just

Just wondering, that the relationship. the you expanding on besides as expanding, Can business go-to-market you the integration, that think like we elaborate looking I you're mentioned forward side? just think about Should to the relationship maybe on that?

Tien Tzuo

Well, is more, with GSIs. we months, in I over to think part ways, that where We we've is to brand billion can that from big that do ecosystem. get the us we where months believe marketplace, it by focusing in that a out you the really market we big is, in And XX maybe that, the building started on of tone, alone picture here change to or healthy last where figuring dollars a new this XX a what and is and, really going heard today got are many marketplace. in

does You hear being added us that vendors. Deloitte, is place really technology focus Microsoft talking progress to focus or that. start. integration. vendor, we've IBM, about a quarter-over-quarter really we a our as parallel And to with really on system technology What a chosen partnerships, on start That, EY, stronger a Accenture, require secondary to PwC, integration

channel. one, our we believe early we're part, should And you're that we first open do install phase so, If base Microsoft on which seeing distribution their of potentially But that up I is on and, partnership the and the focusing technology step what days now, right technology the integration. do would it's say is focused integration.

Andrew DeGasperi

renewed Revenue. that Maybe, for salesforce Tien, encouraging it's the you

Tien Tzuo

That sounds good.

Andrew DeGasperi

a that, know was just have that. some little I'm you dynamic billing. wondering, can if curious. on competing that was they the background I a solution I maybe around bit? elaborate what on Maybe

Tien Tzuo

to is, at it because company this history to is salesforce certainly salesforce. used the billing got – I it's run the where system

really so, business really salesforce to models. their constraints to ability on got be no to And on their innovate from having where

I the that size, marketplace the they close the handle you of well. scale, size, competitive one would scan did that when the this what look scale product of look they the And I was our global solutions needs. organization came so, advisers say was with and at their process. the say at a They possible full have, that nature only really to and of a as did conclusion would can outside the that

the with say pretty biggest it's company able And world. results. so, And I'm to we in great that really to power be happy the the

Todd McElhatton

other The feel growing say, it XX%. Deals are that would thing are non-current I comments. really about grow. we that Andrew, things in RPO year-over-year, XX% talked is the the like helping We've good.

are us So, RPO. these really larger deals, longer helping durations the on

Operator

[Operator Instructions]. Vafi And Canaccord. comes your next question with from Joseph

Joseph Vafi

you're seeing RPO bit Great business you see what year visibility in momentum about versus continued that deals Todd, and the on increasing here. ago? looks It little have frame in forward following size saying just the results. Good up days, really the to the just is of maybe moving now comment. that on you a billings thinking early just were Maybe last business. RPO that versus a but versus Maybe like ARR.

Todd McElhatton

push to going to is everybody do. the best business is is It think indicator that to want leading still industry one growth. ARR of that thing we the I the how

teams RPO. that. And three-year us so, the progress I'd deals. duration made helping the the – higher at focused agreements with value being that that's to on. top vast these I up move to and That almost build were focus And deals, the XX the to about we on, like keep one that we larger term, all duration, that Robbie build That's we sales an we've focused continue things people align something look really on was been how do on, we'll longer of That said, were that and deals, feel these area are customers. of longer sure deals, I is with majority making worked they contracts longer with larger on good we've And those we there. them my if as

Tien Tzuo

decisions. is you and was this into mission Joe. I that to one would decision. with systems. Zuora this, The that the And – long-term doing contracts, going want using are are Revenue are lock critical add But just These longer-term businesses that these naturally to longer know XX-month obviously, those say lead certainly I'll decision a experiments deals, for side right? longer-term contracts. They, shows right? really long-term thing, they're salesforce no to people subscription

Joseph Vafi

deal. you Tien, salesforce Dynamics. Just one like know, have other own more mentioned follow-up vendors, on ecosystem just of a that. big Microsoft the their clearly software They I

this the integrated and expanded ecosystem deal with there. into Salesforce Just software wondering, selling vendors is there, opportunity on that that an are

Tien Tzuo

been salesforce a partner since early days. has the

a have We product integration the as to salesforce well. deep

natively a built on have system We CPQ Force.com. that's

And is so, I'd been proof of pretty product best say important would But running the excited me, part Microsoft deal, that's I proud I'm the always salesforce ecosystem. as really, that that's in say existed expanding that and something other we're think the the marketplace We're that I the subscription for that to have about businesses a ecosystems an point most we of. to business. and that's always well. our

Joseph Vafi

you're been frame holistically just no billing just and embrace now, platform selling what most your It might we would be great some and and validation. what those revenue sources that not to around what if because, at means understand And to customers to There's could platform was their business, there's That's means before subscription. companies it helpful have proposition what for? software look where how of then, Monetization are constraint you other the clearly, Unified the because value out boxed line. it to

Tien Tzuo

I Joe. you That's asking a it. great question, appreciate

companies subscription the with of I you obviously, as were businesses. Motors Caterpillar, types get are streaming the pure into think subscriptions, look if company, we But subscription started were and many, that businesses, business companies, like, SaaS our business of we XXX% XXX% those, larger companies at roots that mixed models, with right? General models. with companies many

subscription the it believe Unified that, only. with want Monetization point So, important to to want subscription but say don't we we is we can to be where was because future be for first yes, subscription the reach economy, us a we

a you're to company $XX view to bundles and that's a the starting a things, do you're streaming business services, we or to month, that to looking able you're evolved sell point need hardware, be sell subscription per to starting two So, to you're addition create that that. to to Zoom but you're subscription where looking company, hardware a whether has $XX, pure the across you're in you're sell pay

the is so, a announcement, great digital actually, as this a really for Monetization forward, announcement of business companies And types support we important really can models embrace And it all that, really, future. Unified It's going means us. milestone.

Joseph Vafi

the seem you the fast? at this very be APIs, What's a the software together next? at all are on about It to like suite level set one new nicely really products maybe being the the sounds thinking It like has Is APIs, point. in here this moving Just high of the sounds it's come really point? What in back clearly, expanding market. table at opportunity embraced M&A because, strategically.

Todd McElhatton

any not help our Joe, M&A. we at are constantly. to beachheads past. still where market of in we can we what or three no time, there's to think this areas product we the plan we've a in opportunity But change or the we've incumbent at subscription and doing where said, we we're in then use development in our about look talked That looking being companies can things upon lot and But open experience that is accelerate areas the if that out course, left of always got at our and platform.

Operator

Your next question Zlotsky Stanley. with Morgan from comes Stan

Stan Zlotsky

resurgence between already questions if forth that earnings, I'm strong if is year, then, Congratulations you're from asked. through on gave my XXXX well? of how factor cloud? the a guidance much And strong as if this jumping your you fiscal a results that, my that's the end. that very this and all, as seeing maybe, of the was thinking driven results. at migrations And apologies, I to quick Two And ERP a back you're by also have But follow-up?

Tien Tzuo

on. rather I think Stan, you parallel that going trends would of two I say, are

much these has One We're systems simply other of do of And same parallel ERP systems systems models ERP cloud. SaaS probably software moved into into thing. cloud, that the seeing so and effort, handle. we them is new you're I've move models got ERP which cannot is business certainly a more more, want financial the right, into the to systems

something away what's really a demand down look that's from models might business see when digital to we been traditional the future have our monetizing to in slowed a I subscriptions, that There built XXXX. or for causing March that's really more want realize April or I of products so, the what and demand these way, selling XXXX, and And digital you really short-term sit. really at pause system ERP And causing in. results it or in where that's that but that centric new That's about move that that's trend services. never companies

a As that retention dollar a neighborhood. based the about in really rate talked puts good us past, example, whole new in the we've

Stan Zlotsky

to net through XXX% rates, next certainly, Actually, nice very wanted based trend continuation back year, retention I this just versus come the seeing the for been infection dollar to the year. we've

what existing year, moving through? volume improvement more takes. us is it walk through the is it of and as up base, selling are just flowing is the SKUs, of customer continued more far through price kind As the drivers If it next puts products base that you into customer

Todd McElhatton

net one that next really dollar what's really continued on to driving seeing Stan, we that and felt thing on a good continue balance retention. is I this we've year year

new First off is really on coming and the out, seeing off are is take that, we're engine taking customers we're products. seeing those great innovation buying products

And the going we've of we're three again, row. forward. as a another quarters dollar up driver see least, driver, continue retention. and And quarter move really digits grown then that's but this revenue triple revenue And quarter this to you a about volume being talked last, we the not on Secondly, XX%. said, through in platform was for seeing usage that product That fire. has net

So, we fiscal move performance a as against XXXX. we into upsells the continue see to balanced

Tien Tzuo

Internally, growth quarters we call that would to a And that of us strategy. we the in how come that gives our we're really that' together. believe and strategy I pleased come. sustainable And multi-vector land expand say

Operator

I'll this further remarks. to the back questions at turn no time, call are There Tien closing Tzuo any for

Tien Tzuo

And an it's a clear to the we've land accomplished our big Zuora Well, that, from of we economy and have you. working. our you, joining QX and and ARR that for be to subscription people continues performance retention you everyone our and say of growth forward our lot FY to proud make dollar-based expand thank you I'm for us With Thank on room Thank together look The XXXX. upside. a It's incredible today. enterprise like ZEOs. is to what in strategy to call thank I'd and place again, all that our this big, quarter. to

Operator

This you today's concludes your for conference call. participation. Thank

You may now disconnect.

Zuora (ZUO) 2 Dec 212022 Q3 Earnings call transcript