ZUO - Earnings call transcript Q2 2023

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Operator

Good afternoon, and welcome to Zuora's Second Quarter Fiscal 2023 Earnings Conference Call. [Operator Instructions]. With that, I would like to turn the call over to Luana Wolk, Head of Investor Relations for introductory remarks.

Luana Wolk

Good afternoon, and welcome to Zuora's Second Quarter Fiscal 2023 Earnings Conference Call.

On the call today, we have Tien Tzuo, Zuora's Founder and Chief Executive Officer; and Todd McElhatton, Zuora's Chief Financial Officer. and the Officer, Q&A President joining also our for us session. Traube, Chief will Revenue be Robbie

During today's be call, our not expectations federal and be we'll laws. views make statements concerning securities as today events that only future relied as that and statements upon may These considered of under beliefs forward-looking reflect represent should our uncertainties outlook. representative that expectations. several update any to disclaim no of our obligation results to actual views cause subject as statements could of These or to any risks from are and subsequent date. We materially statements forward-looking differ

the risks finally, our And our of discussions further could refer with that filings important our affect discussion For results, to please material measures. and today SEC. factors includes the financial financial non-GAAP

today's GAAP of press year's to reconciliation table non-GAAP to in both prior includes the details a our which the adjustments selected release, results. that find measures reflects made and can current You

release Zuora's can replay press of results, website a call Relations investor.zuora.com. Investor today's and Our on found be at

I'll Now over Tien. you, to the turn call

Tien Tzuo

you, quarter. from announced. of got revenue, we just the including and Zuora. XXXX this Welcome long-term Fiscal today. Zuora's you, continued an was to financial Luana, lot key have across us joining Quarter everyone, a we've operations total Call. plan guidance exciting that laid all non-GAAP solid exceeded We've for quarter Second revenue We to QX and another loss cover to that we subscription acquisition as for execute against out. our There's metrics, Earnings Thank thank

impact impact foreign feel will And general machine our start There know that financial through environment side cash very picture. how to we in Not the this confident walk But the questions on recurring how navigate to Todd do customers have call, side the business well. big that exchange current is let protection. a do revenue affecting I that, from our business, with innovation macroeconomic do and built thinking a we're us. perspective. all revenue me Later rates, of in is of our climate. organic what The have we a layer are step double net-net But land of ability only acquisitions especially with the a there resilient is have macroeconomic we the I on model, is and by resilient The revenue built. first business, actually mission-critical we is a have recurring strategy in the adding more as But recurring customers. flow. our than current the we for expand

So and shift it's in a an strategic area that And economy the in. variety they industries. invest is continues subscription the on prospects growth of are the continuing different to to companies of to finally,

be that for And be right that strategy intact. the laid to do forces ago backdrop, strategy. the out driving continues we we so proving XX to the months what demand Against is

companies. on fastest-growing First, well best north to are become billion companies we enterprises would economy, as in who on subscription billion-dollar the that revenue in we said $X as companies focus of track the the

more doing In to this businesses, choice. volume resources has system. our more been this us, rate growing since that has churn and XXXX. are which segment us we saw saw adding of in of told we right public market churn with our products QX, even lowest as driving more QX, and percentage and scaled entering customers ARR going a our the experience through ultimately invest Our needed the In the lower businesses, subscription these in

XX% grown ARR cohort In this in look at fact, if you year-over-year. $XXX,XXX, customers year has by value ago a of with contract above our annual over cohort

QX, of all customers we enterprise have we more. with today, over XX annual biggest our in contracts In see you names with large million And so are And going us. or $X Sodexo to these companies over over XXX,XXX leaders billion employees, more BNP Santander continue like and live, and with over of in XXX,XXX including revenue, with take $XX with them Paribas employees. land

by of to last bringing ARR the few to our rate driving would that due XXX% percentage reported not target ARR professional the And if retention revenue plan. mix. in percentage basis, to great XX%, improvement our quarters, we've with continued And plus year-over-year of as and in services to we've grew mix QX result, professional we of increase Second, to over of from blended dollar. X from the with X progress growth, points XXXX, ahead business said for Dollar-based in ago, against over dollar-based by years XX%, we to points a our fiscal down basis so margins of continued XXX%, revenue XXX% X XXX as XX% hit improve strength of a saw XX% we on revenue goals, an rate, have year-over-year. be from subscription those gross that did XXX% also QX. total point retention of gross been XX% to up XXX% our made expected margin headwind while percentage again last services QX XX% about a year. we as up ticked the to In already

to deals saw transactions, on deliver. over and XX% these in SI we partners trending our each We partners relevance of that new And quarter. the would our have system and Third, QX, participate been us partners scale. we higher size focus give global in of to continued said integration business

helping partners year involved SIs go-lives were XX% SI more in QX. sourced are they ago. involved In of twice QX, as also that than were fact, were with partners over where -- just as go-lives big deals by in These drive our were X

leverage key our model. providing are partners to our Importantly,

now sell investment fact, one their to had big and salespeople opportunities their the X to customer looking of In to commitment into us. dedicated base, showing for Zuora

paths and delivered paths more to expand get key the all land-and-expand different we that multiple to as focus said the this companies, of our we have multiproduct door our value. strategy. we underpins large to is Finally, thing With in on wanted then

through expanding division world's product, of one Zuora power to one take [indiscernible] who, came they came differentiator for be and in-house for QX. they this after and their publications, Let's Azure the second is in Zuora to QX back which largest a their Zuora world's on millions support their in us, they Zuora QX of the shows Billing Revenue previous us being auto all customer in manufacturers, a needed that longer Microsoft, expanded investment their manage with Zuora footprint with substantially Zuora leaders subscribers. with it as the was just could scale monetize Collect our leasing a media continues product us for to clear no with many quarter. payments add Collect, years, to to of when solution also Revenue their past largest major payments to like

in fact, almost In we're and half products, our data their the QX, more included QX, for bookings investment deals from to for needed, to growth Cloud any in subscription and to into we In our March. with platform our drive market. It's extends for Secured back continuing announcement even us leading and Silver Share our year-over-year and our on to our Lake Zuora customers. brings making we with easier than it integration this monetization value ways new Snowflake. Data the And Zuora building This business innovate. Snowflake acquisition more our Zuora of doubled big Zuora's since Revenue Data Revenue today. customers We're data analyze launched custom data first

exceeds Our internal that in even what know. But see develop. a our customer can appetite as base innovation strong is machine cranking, you to we continue we

the excited we're team years. partner. expected who And customers is know has McClatchy industries. joint some we've are and which using this of industries, so a their pre-integrated as gotten the . a announce platform, of to over focus brands building and customers they've core technology one News acquisition experience Corp, people amazing their always include in and our companies an well. existing across early feedback traction we've a to with publishing lot is inorganic been Particularly, digital quarter, offers well And Zephr and solutions. machine. had in September. to vision, leading shared Zephr innovation with been our our the close impressed And It's like the We've from what In is been Zephr's actually they areas our media and work of our subscription and

is the industry new out time. a like been has subscriber in offer having, capabilities all personalized backed Zephr management. is Times and is overtook experience success experience. to connect this subscribers every happening subscription like the or growth of year media bundles, the the But offerings, what And decision importantly, and helps dynamic Netflix deliver opportunity at these industry what see capabilities the Why identity created these is right of growth, is The ones consistently if most that that right to in management, at by they're means exceeded who companies what the optimal able is have the to experiences Zephr? what experiment on new this you industry plans, subscriber that is million focus with for it do. companies trials, Disney, who new payrolls entitlements just deliver subscriber This figuring is subscriber. are specifically new New They this you services, an access intelligent Well, engine helps winners the ahead look this for to exactly services ways so So and the the in who York and media subscribers XX important?

that at for that, is subscriber that the to prime this an world. requests anonymous of So trial, know all free is in X for Zephr promotion And technology a example, and an offer. for already user this the a its user for publishers an scale. This or but handling billion will month nearly working biggest already is some is is throw existing upsell

powered from of of and Now imagine quarter. each Revenue products, Collect by engine, decision billions Zuora's tens this transactions Billing, data

industry can where media see need will will to the And beyond experience, and with platform software that that the expect the Now in In within to we customers goes, drive up right and you've we other in means more. companies are both near digital platform the formulate which go existing digital this time. publishing the to over customers in quarters. and relationships will of the to these coming monetize term, land and monetize But to and products also this to additional ultimately space. the retention believe we for going incredible services be able the path new Zuora, we have nurture the From new Companies optimize got media the for same have and experiences industries them, additional enhancements their and platform to understand potential our this rough, vertical subscription subscriber a expand to help offerings financial an retail follow. here's subscribers, economy growth. finally, conversion,

So we to wrap solid a it up, had quarter.

of but ability We are in macroeconomic to continue mission-critical. to of conditions, resiliency model subscription is those the mindful and because our navigate our because the confident the technology conditions we of be

We have the customer right base.

We're working. land We have and expand that product. is the strategy right our confident

acquisitions, making strong our of customers at and of financial organically, results. their continued innovate goals. another and you quarter focus for towards ZEOs do to progress this continue the now our center We of we our steady through and to putting driving everything while for all Thank from

Now review Todd financials. I'll to turn over our it to

Todd McElhatton

and thanks to call today. our Tien, for you, joining Thank everyone

were results financial quarter second Our solid.

exchange the We macro Zuora. for This quarter board are in long-term the largest the subscription We the across doubling economy down on despite foreign [indiscernible] with our we continue opportunity see reinforces the once environment and again and pleased expectations the companies see volatility. results. to

line. end Let's high exceeding at start reported, with year-over-year revenue was growing Professional in XX% as driven million, of continued Subscription was currency ended constant $XX go-to-market flat XX% year-over-year. our execution. services This revenue guidance. the million, and $XX.X top by

represent for to was As mix. total revenue of our XX% recall, objective midterm you our professional services

As pleased this reached Tien of mentioned, goal plan. we're we've ahead

with currency Non-GAAP XX%, professional million, below Total stronger up line PS Going XX% margin margins. revenue of high breakeven. improvement be an or more to was will at in XX% as XXX above our forward at vote gross guide near and points overall constant in at forward, end year-over-year. gross ended in result of of our than This run reported goal slightly XX% revenue $XX.X was the services gross margin will total revenue. basis negative subscription or Non-GAAP year-over-year. X%,

growing We partnership capacity, increase allowing services have more also leverage. us This to move to continue to see SI partners additional margin them. SI implementation with created

year-over-year, non-GAAP gross saw improvement Our of margin at basis quarter XX%. blended an XXX ending points the

quota-carrying while million half, an the We development compared loss our disciplined will the was sales was in disciplined when year. maintain driven year. $X.X improvement resulted and a product a in investment second X.X%, the capacity. Non-GAAP and managing accelerating expenses of loss non-GAAP top in operating over to of approach investments line operating in growth XXX-basis-point This prior million a negative in by continued margin $X.X This last business. operating

quarter fully both Our share of end the XXX methods. and the treasury was diluted stock using count approximately the million as shares if-converted of

the metrics our retention let XXX% headwinds. Now me year-over-year. some increased points double-based through of and quarter. FX point you for we QX, rate of X improvement sequentially the an walk despite was This key In to X

XX% sequentially. at In within our coming our we At $XXX,XXX base. $XXX,XXX to end of a above installed of Our a that the the XXX are multi-product represented land-and-expand full QX, or us has monetization ACV, cohort Customers strategy QX, accelerated in customers of had spend business. for decrease platform.

as ago. customers investments this since seeing expect More our in higher and X success, about cohort. of we at large churn went ACV talked to off $XXX,XXX customer success In customers X we've in importantly year of we're a our a year-over-year, and at To metric, of the market moving XX% or from expanding the The or with this over to customer grew public. the with the up up or with of has and quarters. an than ARR made strategy we landing $XXX,XXX close $XXX,XXX of entering from closed more, deals is we also ACV number led we percent number and above the do increase future of past, lowest

and Our larger strong duration deals. longer product portfolio also unlocking is

In from grow prior quarter, IPO. to year-over-year. the total our term and contract our performance $XX fact, quarter was average this the drove longest since obligations XX% This million remaining

to Turning building transaction volume.

$XX in and volume processed constant the systems year-over-year. in currency representing of XX% growth quarter, as reported Our billion XX% growth

metric revenue volume it not enterprise of differentiator key as level scale. transaction of we've as the highlights offer indicative building As noted solutions is because our efficiencies before, our they is another space. the customers This for cost process our our growth in gain we scale helpful customers,

about $XXX.X flow. to at the cash reported, ARR due looking of Now ARR free of QX, with X XX% and as FX. end million, grew At and point was headwind

negative XX%. million make the laid cash We of continue ARR flow Free by reaching out the we've XX% for fiscal to progress towards XXXX goals of was to growth $X.X quarter.

flow to collections flow longer and quarterly free due cash the term. believe reminder, We timing As cash a a to of may fluctuate our best seasonality. on basis assess a cash performance over

we pushing I'll month days discuss July, some a Total collection was by As later, average. the quarter for the timing $X.X up of CapEx million. during few observed on

We sequential the a decrease to in cash $X with quarter of and balance million Turning the sheet. cash equivalents, $XXX million. ended

give pending Before Zephr. on you our turn me outlook, we to some let acquisition color of

us publishing, customers also establish, Tien nurture gives subscriber holistic a As one acquisition and media portfolio addition and and to in noted, to our monetize adds of great relationships. this our to key strengthens verticals. This our product position solution

technology subject $XX believe if million to coming value achieved able our fiscal certain vertical, will expanded This to market $X customer other $X with Under will acquire for potential approximately ARR conditions. Zuora media definitive Zephr's transaction agreement, the in the in be is is are wider closing base by we million the objectives year. of bring of solutions growth we ARR our terms quarters. with cash, an earnout will current that of end a million. additional customary bring to this Zephr Beyond to

non-GAAP $X loss. a we approximately on managing transaction of revenue and We in our expect don't When fiscal plan the absorb committed material half to line subscription incremental closes, XXXX. in bottom impact operating expect Zephr of We're the to our second add the this for million half consolidated our to the second OpEx year.

our to financial let's turn Now outlook.

While macro believe environment. the in derisk growth solutions, current to our we for double-digit we prudent our our continue given see it's pipeline half second to

be we to continue disciplined invest growth We working towards on long-term financial will targets. our while nimble for how and

Zephr. assumes due benefit and uncertainty full a subscription revised macro outlook to million from an impact Our year revenue and $X to FX

for our implementation For are both our of SI partners. impact and we professional services, moving to services FX strategy accounting

revenue our or of slightly our services ahead, less total Looking mix professional revenue represent XX% mix. will

to Turning QX.

subscription $XX to Our million $XX.X services following: at the to outlook million. $XX million. million. we $X.X Total revenue of million is million A Professional million. of loss revenue non-GAAP operating expect million $XX.X $XX.X to of revenue $X.X to $XXX.X

purchase for finalize to the impacts have Zephr. including tax We yet accounting, price

expect shares we approximately will adjustments. net the . non-GAAP we close of provide per loss to average Subsequent $X.XX, weighted impacts, share these of acquisition, a Excluding to assuming of outstanding a any the $X.XX

full revising operating expect of Professional million now million, We outstanding outlook. $XXX loss accounting revenue the $XXX tax revenue to total the to and revenue of . $X a of million million, we of our impacts services to expect non-GAAP of For a approximately of subscription shares average revenue $XX $X.XX of $XX potential we million assuming $X.XX, million loss weighted year, per excluding Zephr, to share are $XXX million. net to breakeven. $XXX non-GAAP And purchase price

let cash currently X Next, review this me outlook year. based our our upon revising we're free outlook trends We're seeing. flow for

revenue is size. our more global footprint versus our We companies believe approximately advantage. which weighted other XX% this First, international, an is of heavily is of mix

lesser approximately exposes foreign Based impact at from us strength we seeing However, extent, on and our net trends, through bookings. current from the dollar. renewal We're this to be of time a year, the million. customers mix exchange impact international $XX our the new FX the of FX to anticipate

collection be few a days prudent timing simply recent as collections for We year. continue cash increase we our an to of In free will on payments flow. this impacting is the our it's we expect of impact average our not on have delay Note, believe saw quarter, time. of the in Second, to a balance overall collectibility most trend seen appears receivables. the this the

our assumes X cash into next that fiscal impacting outlook year. are These million the guidance. As result, free $X factors primary a the be pushed will

free guidance cash million does $X million. Zephr year flow impact prior We Our transaction. now expenses $XX of the This the was million. associated be negative to include $XX to negative acquisition-related to the for free million $X between with cash not expect flow for

year. $XX and and expenses these for expect weren't million. for current based been in XXXX. are approximately committed XX range within guided the business our cash business. We maintaining to goal We're to by FX positive year have managing fiscal impact the and on We're are we of $X disciplined flow towards to it the Rule we be trends running of If timing seeing a our would collection a drive the million,

Rule of defined subscription free of as the year-over-year reminder, growth margin. revenue plus cash a As flow sum XX a rate, is

better For is or and the retention XXX% of dollar-based growth maintaining better. we working. we're targets to on enterprise focus full ARR previous and off, To out, QX demonstrates the of out year, close our rate strategy the XX% laid

expand a continue land customers, monetization our and with them to differentiated We platform. offering

and is Our line with profitability. us towards business deliver believe an growth We it be to in very . allows a mission-critical to top transforming technology strong position us puts eye

the are economy. strength of subscription the confident We in

operator. our around I'll thank your I'd I the you a like that, world happy Before to it to Robbie team, questions, the are to to and and and moving big take With turn incredible commitment. Q&A, dedication employees all for their over to send of

Operator

Instructions]. [Operator

the of question Chad Craig-Hallum with line comes Your Capital. from Bennett first

Chad Bennett

So clarification Todd. just first of maybe point for a

on X And the overall. FX press overall in revenue $XX subscription you quarter, it is the X release a subscription to and both gave revenue then impact, in impact on your because points laid the your in I the cash the out the Just you flow free guide guide impact for give is second revenue year. for what overall in the you the half? on FX impact and guess didn't release, just it million subscription and

Todd McElhatton

a Chad, thanks the question. for lot so

then guide, you you take as went $X.XX to subscription we took if ahead we at I the what was to on we that revenue So de-risked I for a think piece balance that be added to $X.XX we the million a guide what $X.XX. to and $X on overall in to think there would And we we Zephr. $X.XX. said, look see what of And get did,

the we So million you've didn't flow subscription beat top revenue worth couple million dollars for and got QX. through end $X of there, then risk in a that extra the of we on

Chad Bennett

But you Because risk? when in FX-impacted de-risk, business FX about done that is assume think rates... a you talk big half? pretty that is that Or And getting -- actual is I risk is second headwind. didn't the the

Todd McElhatton

ahead. sorry, I'm go

Chad Bennett

I different rates when dramatically reported didn't from -- you assume you last are quarter.

real a is FX So headwind.

is business? purely So a slowdown the you're it FX? seeing Or in

Todd McElhatton

FX. all almost It's

Chad Bennett

Okay.

we are count size logo of standpoint, we deals, impactful, a wash? direct deals significantly from new and obviously, is And then like replacing more the certainly up SIs of logo it logos, year-over-year? deal just it's on actually more Okay. sounds a kind of doing terms deals in more volume-wise, new year-over-year. new kind deal are But net-net SI are Or with deals influential and

Todd McElhatton

Yes.

we if I ahead of you we've So metric, over is on you it. about would I'm that concerned let The walk take transformation I talked the is, done companies the a and what we've past not And me these you about biggest through and past are think that years. companies are couple larger on. and focusing over We through at customers. the we're focused what think We why. I years gone on tell hit talked few just the look go overly

the You've and seen million more doubled, of ARR are that customers is ASPs our XX, SIs more year-over-year integration. doing over of $X number not and

a the in in haven't maybe or out. just washing with much fit, minimal very we're had weren't companies. that launch companies are so subscription And companies through. they and had At the of those focused And put successful those larger business we business same great past, were a time, the bringing on some that

take actually that the we're Tien of grow whole we faster. year-over-year. a and companies replacing So fact referenced over lot them cohort that as grew these with of are XX% are if that revenue notice platform, companies And $XXX,XXX, the out, believe at larger companies you these in transitioning that, a the kind customers, look that our will much you'll

So have a through out. the the some they're aren't a brought ago of that fit, of transformation, going think we of on just good look, as that customers couple end years I you're go this seeing it we of

I in going future base in So and natural in a bit think I quarters, line see our really being little to you're have But the this it. general, customer metric. this to a evolution is, bottom noise of feel good about

Chad Bennett

one Got it. one maybe And then last on Zephr. real quick

and that nature but the kind business business do contracts that kind Any in small there terms business, it me price, expect BXC-focused Obviously, of of of just -- in how maybe seems to experience and of be doubled Just they but of less more we I business? growth kind like offering, BXB, a of of of year-over-year? wrong. it's has subscription But color a terms or the kind so could of there? kind

Tien Tzuo

X million, of we our into ours product what media X they're necessarily really I'll there. for in bringing always companies, the startup of Tien. majority We're base media base, their We since is This to to of ARR pricing vast excited their it, The a very, logos. to Sure. very in been because sell sub-$XX Look, $X optimizing in They've that the big gone -- the with they're as of many focus now jump not our companies, have it XX looking the but space. an traction the to get million have new company it's marketplace, revenue products call years. has company us around been to, are potential. have they into the about their sell opinion complementary. to has opportunity or

Our into subscriber experience many journey, their set companies. engine their decision really of to these a drive no-brainer subscriber that data for is

on continue I key to right subscription big our can the to call this continue to those so and sign more million that of invest our going And The and worth, that excited about it, we've of innovations, on the part logos, We're expand logos. delivering the continue is sign strategy for pretty then is, key us talked about type companies our land companies is within expand And a we're right picture footprint always more, think $X strategy. new it. more in to economy or be value. to by how

innovation do with it, about us of in side this X And what the really years. start acquisition seen will, You've the growth an the the over call if years. well with strategy at Silver organic we year, investments the you by to we especially vector, is really, last, Lake add journey. execute last said that the our that that but step this is we've We're an in side it, delivering excited first pretty And really the to for see we continue vector. to drive X as been opportunity over us wanted

Todd McElhatton

do us been growing I'd of come about they million color The that you, give very healthy a clip. they $X at is to ARR, Chad, only and have other

annually. You think about that over XX%

Operator

Your comes from with of line the Jefferies. Brent next question Thill

Luv Sodha

the for Luv the Maybe Brent just is Thill. on Sodha on Todd. guidance, previous This question clarify around to

that guide? that So into embedded have you saying headwinds are been macro no

Todd McElhatton

numbers. and like, together. so what The into we've putting proven about thought pretty our we've majority half and how what deals the got was looks that we FX, as second the derisked of pipeline good we're We've visibility looks vast like the

on X guide based So current environment. we the we've half appropriate an for think got

Luv Sodha

it. Got

that's -- the as So is gets worse? or little that stays you're a environment bit current assuming

Todd McElhatton

as assuming We're is. it

Tien Tzuo

there, you for we said, do about as to out strong, base possible the people look, so say on know forth. well market I would is customer the what both be as press in our continues do, in and seeing and and That demand we're the that, look, at I being broader reading are what recession talking so large, right?

smart a And job prudent of that into XX% trying is this. going and our But sure us make cautious taking future We're you're to about guiding to we're big definitely so we're and seeing impact is international. the being doing customers all. with our you in FX being best be for what We're that account.

Luv Sodha

it. Got

have pipeline, you Or to is environment? seen the current done the of terms taking deal given get current deals it longer In pushouts? any

Tien Tzuo

And mixed of a here. there. in a Robbie seeing lot we're seeing can seeing cycles. go both actually maybe also Yes, jump but deals we're longer, we're deals picture But shorter sales have

So say picture do I that is of the it really root important. is us. And is for mixed a we what would

are So our to area. in customers continuing invest this

in and economy. that An numbers, seeing subscription still dollar-based companies in right? rate moving decrease increase to it's relevant but in the retention for churn, also all You're the the

Robert Traube

on agree that I side. Tien,

of It avenues terms I add talked I publisher at as think look we after like only multi-products, product. can that second quarter would with a in, with We into come organization. allows the the also another in we right? in Collect, other us large Zuora is, the auto say we some large of about sort continue more that's go

can again, different many So land I places that. around in

momentum So positive we from them can absolutely, see good there.

side, For a operationally do certain be more bigger focus macro a going continue to just and environment, we'll that lot and that on we're we to so.

Tien Tzuo

in runs macro operations level certainly Yes. right? is runs noise discipline when and or incredibly something tight tight organization there uncertainty. That is I macro He level ship. that important a emphasize, the last point Robbie would that is a

Luv Sodha

terms team, in from last in back bringing the deal Zephr. integration that to one day you're And I one, it. Any the here may, the Got on bear lessons, Leeyo if of plan?

Tien Tzuo

Yes.

to had something this that on-premise software, Leeyo. company software which sort mean, absolutely. years There's X I founded to the technology modern ago was umbrella. look, We're here, integration we through, a single-tenant lot it's with So made that is a not challenging. going those They've that much right? of already going built have more integration integration. problems now an to one under that deepen the We're

customers. You do joint have

brand-new say And a right, with General with drove that it's Robbie, a Counsel and of also Andy lot. whole here, side Cohen at acquisitions I team our learned with Todd, so EMC. -- look, would we bunch a

as area feeling in the this of So we're pretty good thing last we've Lake as is reasons of but bringing a the just deep good, say Silver have learned, what picked do experience well. join is, got partner and they've our I would a of Joe job bench a ability Board asset. one to the not And about this we about on

smart. So to look, want always you be

You be always want to careful.

You our lot sure job, execute. always a confidence good I've but that a you do of want to make got ability in to

Todd McElhatton

would have integrations. to built the on work we is I thing only capacity Maybe add, Luv, specifically

I happen been every at doing that XX have through well the the organizations think beginning thought the experience the plan We'll needs in fiscal good past pretty a experience. integration very but and has team next it next that's really over all it's got we've of -- the out and put running to X our next it successful literally good way out, months. step together the year, goes that of

Operator

next Your line comes Vafi from Canaccord. the Joseph of with question

Joseph Vafi

have see how And then just expand, the guys these well to you're with on related Zephr then a and as of early cross-sell know I into on you acquisition. fit to here And bigger with follow-up go-to-market Nice had new and product Zephr that, them? fit kind a Maybe of set -- basis I know on -- logos? of presence the land more playbook one your I follow-up. media Zephr or you quick kind presence. your more have see media a a really focused does how cross-sell a good kind the a do on products sales here. good effort forward perhaps Do a

Todd McElhatton

is Yes. many in look moving space. look, I media would big explosive you phase. the And, the certainly space ways, a new say, an at into is if picture,

Netflix competition athletic, companies started weren't look just It's strategy can We not Disney ESPN. We've got It's it's the that has is Plus bundle now got to is subscribers. XX has increasing if a Netflix they done, at If that When It's bundling. for these We've million saying, bundles. all Times their the got way Wordle. cooking. having was one caught pricing It's York sure up to But they in ability you it's them you together." journey, exceed they horse we've whole that were going New you this one-size-fits-all look same thing Disney "Look, have. winning, time, what even and they a to offerings it's a offering, get the thing. It's it's If various other million. bundling, the exceeded the pricing, race, the streaming, and long are Hulu. will. with

you to -- order both so to do going to strategies, is which do company is have those to that things. in And media have going every execute is to need

the what things you And have X table. to working have have have the do. call journey to call really have is experience what which certainly to closely And we I you You engine, these to together. brings Zephr engine I'll monetization what customer have the engine, is the which what

this that companies of can the same that success leaders excited pretty offering seeing help that type of we're the is space. the so in the have you're And

their into the focused our going into say the be here cross-selling us thing to both taking I'll cross-selling nothing there's industry. brand logos, base, into those base, products to are customer that And last all specific on. customer is, we're so things new their media And product

had BXB they're BXB. really, think company is to I in any subscription think technology. previous questions as do going BXC This a to as the any far applicable well just further type I But economy little company, things. same like thing ahead, of but the we bit have to the is about and caller as the also

pretty the And economy. big footprint. this I gives offering think unique big, lead broadens continue to subscription It a going to so really we're this And be our game excited in acquisition. think it us to is a changer. about We

Joseph Vafi

a where ago picture well a then so. is or pretty humming follow-up, days. And today these of along a just are year business Great. higher of versus kind just kind kind Things level the of

new subscription-native businesses. looked kind logo maybe I as of guess, If you at wins kind more enterprise kind businesses of versus of,

Is enterprise and mix Just maybe kind trying that? you and days? between if the is businesses? in or of the in it about the where the of or subscription-native on mix points a If growth look where thought you kind a then for year segment enterprise you're now at -- versus for feel ago, these seeing faster current of more get upsell, you to

Tien Tzuo

winners And that the in in subscription we years the is economy starting figured we ago the a X because that, set company we businesses with the that build the a is seen of really is believe about us can big changes say who be of subscription would sense and customers -- have customers, I to growth billion is whole going are you've which best where going working right? be. really took out experience $X to so our

and And to so expand we're doing a right good job will land, taking the and then over. strategy take our companies choosing

terms which both. In you're see land, to to going of companies

as we But the the companies, SaaS world to unified be is with monetization, media going companies, example. to want in we look, going, be continue subscription don't -- saying where see our best subscription best only. subscription companies to You're first of been certainly while see to an that native we've want terms

customers see has the able unified using the journey. XX for up and module, subscriptions. be beyond but to us we can economy, the that business monetization that are along broaden upwards so of have go to that bring And a our us going to sign And already are really example, committed subscription model focus for you're companies mixed to perhaps them

Operator

Reilly of from comes with Company. Needham next question Joshua the Your line &

Joshua Reilly

ever that dollars? that of how local quarter. investors all issue terms Does And currencies move international be U.S. versus just dollar? with about of an your make would in just Or seeing U.S. then And what the pricing there demand of you do sense? to the in pricing execution that? should off, Nice you think of here contracts Maybe in are mix starting in Europe?

Todd McElhatton

Yes.

here outside. let So of the contracts the me waiting a question are of take from standpoint that first

is currencies. the customers that of we of company. is high what of contracted local is expectation local in business the A contract about We're that their in So is currency. frankly, And very want seen percent outside. a they we've to XX% our talked global

them global acting to because advantage that's in that type and so And how the more a like playing business company. we an market gives have done

your there. question first forgot your what was question that So I was.

Tien Tzuo

look, size see The strength, it's a is focusing to international U.S. global we subscription of our not that global U.S.-only, but I a is we overall, would right? trend. going a typically be certainly as scale a economy or That trend, on started company say, marketplace. and almost

of our mix see strength. So as overall, business our we geographical a

making the bit currencies tend dollar not we right that something year, customers the it and And in them manage to Push over-index, as thing year, strength But in to doing strength to a I of healthy do to more strength, that. and a to this see assure we U.S. certainly, Now know to smart, way up and with business when we business customers. Todd I is work a with is the don't a good want dollar, go the our the the on the anything it's year, unnatural we a that job well. I down think force little -- right? the that one admirable into currency manage do want want for another side

Todd McElhatton

EMEA. question I Josh, back first on seeing in And guess going what to your we're

out year-over-year. the is pipeline Europe I good place digits most earlier, the demand it in there seeing really do good feel noise up where think hit Robbie we're we're the is is nice and some see we generation probably about noise, really double we're the to there. but continuing seeing demand that

we we the that that. as seeing good second having And we're still customers. took So We're with about guidance, into thought account. interactions half

Joshua Reilly

ones. other couple And quick it. then a Got of

the got then any down You mentioned size there on collections with Is customer one vertical quick the some or particular extended I other flow the cash free with one. delayed And customers. is times payments?

Todd McElhatton

Sure.

So take let me what on you cash flow. free we're seeing through the

worth So that about concern is, any would what got as and have And is I take I there. on we're $X million seeing, seeing I we've off we're not want mentioned, -- you first of this risk collectibility. I a to start through

if at I And solid of days, than it's customers. a We enterprise base fact, in my X%. XX take have look really over ARR that's a good less

have things. early, have a we've So I we collectability we paid is, consistently big few some thing things have And that of couple that. us. pretty seem we've the days for One of a the out pushing slowdown don't quarter, seen a any issues. be is, especially second seen is customers, from and larger customers to at in that's What the a have end sliding and group seen of customers,

say next I of fantastic overall ability seeing. they've project continue, on concerns And of is, going But collect. year. that we've that's things believe it's health the will to a that the those and So prudent really get that thing pushed this. or we're primary top $X collections that, business to the got last the million overall about X no to again, are into I'd our team, stayed and

And so good. I feel

Tien Tzuo

sure -- If set of it some pushed we real right? We to impact operationally, last no those few saying Todd want on business. the fiscal But the you basically as expectations to the collections not place. guide you it's down, there's make guys weeks the simplify right year, get is of we out, that

Joshua Reilly

then should XX.X% I it. to one. quarter have there the billings? And the either anything year? parts or note last on the rest in aware the be calculated that Is there of we of any it Got quarter, quick at this about moving

Todd McElhatton

is think to We XX% a of of about things, way couple the all hate is, One Josh. billings because there. the out. to look talked noise So calculated ARR, at I going growth best in business. and which the the I had We probably

with have at take closer would you a that been If to FX, headwinds XX%. look

brought see up you'll see there. when assets, you XX% having we're it and it growth because you contract about billings the calculated the on Now,

at If in look you is And then XX%. it currency, I look think at constant that you if the...

Tien Tzuo

calculated. Subscription

Todd McElhatton

we're billings. lot take on a on half, get on look people we're you again, of thing ARR. growth And if Subscription the noise is calculated But that. about real that And calculated the then at XX% that the really to billing. focused first a trying

Tien Tzuo

to The other want you RPO. might thing to is point

Todd McElhatton

on the should a really too. RPO, Look, hit XX% Yes, quarter year-over-year. we up fantastic I have RPO, had

Tien Tzuo

capacity lot to based an be can simply going the you look, of technology, be environment adjust what certainly also is impact to build going hire continue, want we're of we do our what more plan, that FX We're in the in going of our We but the build managing are on FX to it. to we going We're see a we're to business. assume quota year. not is do look, We mode we where going want We're still into terms to going impact what in -- demand financial anything see smart. there. we're the a through sales is, the organization. is of transparent our to abnormal. We invest that want FX in to the to But we We're to end it. on want you all business. to So

Operator

Your next question Berenberg. line from of the comes with Andrew DeGasperi

Andrew DeGasperi

the big-picture wanted now a M&A I mean, question Zephr. ask on Just strategy. side, acquired to mostly they

see to lot Just behind wondering, that, more powder potential dry lot do for more you on given of integration gave you focus asset? do you near still some a like M&A future? expect in a activity the Or this

Tien Tzuo

from $XXX say, I we call know, million. you Silver took would this $XX million it Lake as transaction,

benefits down of we at do opportunities for excited already priority the is long-term an pretty And It's machine so lot powder. do a up as making that we it. We're our M&A spun We're we sure from the the an now. folks. But other seeing ground our that opportunities future we time about lines spun to got we've as make sure dry still looking do is have we we're ear that's have certainly -- We path. want looking that that. starting that make the optimize good gear and a Zephr time. we this acquisition this have it, a sure to make right specific all is We're We're to see not on But gain. that in job we integrating sure don't machine up to well. going M&A any

Todd McElhatton

Yes.

is do this and that other line done, that value things, as we've opportunity that our makes can the add we'll and see Tien you'll certainly right time find for the shareholders. on one We the it I said, first think, sense.

Tien Tzuo

and in customers space. It it, to one was of the ago is Last our was Chris, being founders, idea see years knew. can events some really company X at that you of subscribed were certainly a was into we Zephr James here, for thing talking right? where actually to thoughtful us but Zephr free our Feel dig partner. a the media

transactions as under strategy. this we with make belt our everything we're few to more success new sure derisk first we looking do our to so And get

Andrew DeGasperi

And slowdown That's have on it. peers in the announced maybe I'm of at at a then or some of investment helpful. -- your pace the least looking

Just And you look taken changes given a has months since the a strategy? your any wondering environment at on changed see current you the if do have ago, few horizon?

Todd McElhatton

in business. and to being how made Andrew. But Yes, a to a I'll and about of invest, adjustments take it. at assets going to we second to development. are have thoughtful some still we continue taken We're been plan. that we're quota-carrying the We've look the that, invest We've absolutely said, half growth going

noted that And And that. continue from going into we're operating to absorb do is, expense plan. so will to the we the also other acquisition our hiring thing Zephr you've

Tien Tzuo

to has is how want get make We're prudent. that being Look, very a middle we're name. managed last We believe joked marketplace company. that in still You've we we know his I mean growing. I certainly years. the lost. growth the don't over sure a still That that is we growing, business X prudence Yes. that said, He's right? seen Todd is

decision, operating approach. going to the our so to a And make existing and continue Zephr it see example, disciplined in into having you're be smart to expenses additive plan that absorb decision, for versus was be we our us sure to

Operator

questions. There are further no

for to call CEO, the remarks. turn I'll Tzuo, closing Now over Tien

Tien Tzuo

to look joining to for Thank talking you forward us. XX you joining days. our you. you call. thank for Well, QX in We Thank

Operator

conference today's concludes call. This

You may now disconnect.

Zuora (ZUO) 25 Aug 222023 Q2 Earnings call transcript