Earnings call transcript Q4 2023

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Operator

Ladies and gentlemen, good afternoon. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Zuora's Fiscal Year 2023 Fourth Quarter Earnings Call. Today’s conference is being recorded and all lines have been placed on mute to prevent any background noise. [Operator Instructions] Thank you.

turn Investor over Relations. now Vice Luana will of President I the to conference Wolk, And

You begin. may

Luana Wolk

Thank you. Good quarter fiscal afternoon, and welcome earnings call. to conference XXXX Zuora's fourth

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

that considered represent events today's under our relied and should our During make of subsequent of call, These future be will not views representative beliefs views of any laws. that securities date. statements may our only forward-looking we federal concerning be reflect today as as expectations statements upon as and

These could subject uncertainties We risks and actual statements cause several disclaim materially obligation or are update any to from that to to any results differ forward-looking expectations. outlook. statements

and of affect SEC. our discussions material our the results, further filings please financial could For important to refer risks factors that the with other

noted, revenue unless finally, mentioned numbers non-GAAP. otherwise And are today all except

can GAAP release. reconciliation results non-GAAP from to a press today's in You find

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

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

Tien Tzuo

our you where fourth we joining thanking came in call. quarter everyone, metrics, and Welcome cash of to [ph] income. revenue, us. operating for across flow, Zuora's including retention, [ZUOs] non-GAAP our free Thank operating Luana, want to you, quarter. and solid quarter another It’s thank earnings XXXX net by fiscal for I start delivering dollar guidance another ahead

XX% and Companies as on We as year grew revenue our grew retention at because bullish by XXX%. the continue to in reported long-term ended subscription currency dollar XX% XX% In ARR Zuora come potential. vision fourth and moving Investor within and critical XXXX, and on the constant mission to growth our our strategy a reported. remain leveraging and net our for laid up-market at anchored out system landing execute expanding integrators. that continue need to And solutions. back the see in ecosystem of Day against strategy we we quarter, they April accounts

on highlighted In as cash of are on we we while and year the quarter, strong environment. we committing stock-based macroeconomic ahead, profitability year-over-year remain also our sharply focused a more Now, we free cash we're compensation. our weight current and the free flow putting growth, closely given last will flow manage improvement

the this more call, in Todd but with later start discuss the me will in first, in macro detail what we're let environment. seeing

quarter, seeing in stabilize, the we installed started behavior buyer especially our Over past base.

has behavior at disappeared, While the it not in QX certainly of the has saw uncertainty buyer end we lessened.

this transformation. macroeconomic into new businesses and settle continue higher these revenue services. through interest companies to as Even they rates pursue extended They prioritize continue they growth digital scale and recurring lower launch digital streams period new to to of and revenue continue growth and

the As were in majority the quarter that third an of deals ultimately closed pushed QX. example, at our end of

In rates improved addition, we saw win also quarter-over-quarter. our

annual goal Zuora in [three] me in just its billion of revenue more years. you some industrial with selected with service accelerate XX% they [ph] AVEVA, software global companies Let one in a and software UK than revenue, more examples. QX, the the In leader give largest than Flex] help its recurring in coming the of to subscription through [ph] business [AVEVA of having $X

system. they review, last risk their known compliance homegrown and After [ph], in comprehensive a chose quarter [Four] Zuora's order full revenue suite DFIN, leader outgrowing Solutions, came Donnelley otherwise after Financial a of us solutions to as products. to

advanced consumption Zuora models. be the subscriptions DFIN platform of billing, we'll complex recurring transactions to to manage revenue, and better able streams from implementation multiple revenue the Following one-time and

were they This needed. and came powering more the monthly marketplace is we Germany available than million ImmoScoutXX best operates commercial And real option finally, And handle they and scale because the XX who and fast growth online in Austria. estate users. residential a to to Zuora ScoutXX,

For these that a competitive gives singular our and advantage. us is what here focus more, believe we companies

Now, copying what ultimately yet their there this do the And to ERP retreat. When to in past, again. focus players we we've at that multiple vendors [indiscernible] runs seen are signs only [ph] competencies. [and need big is large CRM] happening core uncertainly on take

from fact, multi-year to in CRM throwing a a quarter, saw solution deployments vendor. we billing In SaaS Zuora from on their choice company declared using this towel large after a who major the a be of system large

customers $X over fiscal XX%, the of matter to their macroeconomic year manage the compared companies revenue our us fact, climate, quote at need XXXX, a still over to prior million No in to during processes paying cohort And by scale. grew year.

clear this against demand be our there for backdrop, so macroeconomic to continues technology. And

and Let's strategy. our land about talk next expand

them can this they may in laid service are if Investor they critical billing stay very our You recall sticky fact is us. at with on strategy products. Day out that a we based rely back mission give and XXXX that recognition revenue our happy, keep customers we on, the If

In year, the as we churn percentage entering company our of a in history lowest fact, ARR. last had rates

this an us this and to is our innovations. deliver then up-sell new gives to us enabling cross-sell all strategy opportunity as we And customers, Now, to more working. roll-out value

six the Zuora technology than Let to now and rate. be revenue companies it now for space me is recognition including some like live that And revenue give revenue, an of over important our customers ago, you continues technology Zuora revenue. and at have product product Salesforce XXX examples. we is years is We the a Ford. now with on this leading double-digit the Less part deep Zuora growing portfolio. acquired

At Zuora. brands In [cloud automaker components of Zuora our and [ph] revenue Zuora are monetize analyzer Zuora's the billing of Microsoft Azure SSP] scale their connected Stellantis, revenue Jeep, services offerings. combining and using to using Maserati, quarter in fifth world's Chrysler, products. now important like largest the Fiat, they is the by last of

Zuora for climate. in that's We true are customers' today's our of revenue especially an integral part and businesses,

they Zephr less their latest us, work they In than another six as deal. us. joins Or their Our If does with months, and signed example, with expand books. their since opportunity grow companies to cannot and targets compliant, now if not our supporting also are Zephr, revenue when is than close strategy. properly, acquisition, another not larger recognition It's XX% integrated customers we our is have beat a Zuora, ARR their for land

capabilities. such selected fact, leader a and than leaders countries with In QX, global enhancing paywall in their XX personalized to media their subscriber as in newsletter drive more Zephr experiences

Finally, this land not on predicated technologies. is solely strategy acquired expand and

organic year continue launch also past innovations We that no to different. customers was and this consistently want our

deals. XX% XX the In in fact, to released products our last over months contributed of

examples this these Unified models. we complexity as sophisticated that revenue monetization, our In pricing and taking innovations. With comes customers consumption billing are advanced more and just packaging our added the can beyond models. simple some of we are consumption here recognition pay products, our to capability. QX, those new with handle models And you go customers

managed customer managed is can create greater our money, experience. quarter, customers time higher For the Last adoption services number because even plus we current bar we the seeing it set this something services, saves to the right end-to-end of everything we're doubled the for given means environment. customers owning and

no data share without since data another finally, Zuora quickly Snowflake's for custom Snowflake, cloud in and clear Zuora's and gaining continued what The we any to is today. of achieved our with data rolled-out integration. innovation is development And After focused July. years into innovation launching years secured it's which extends engine, solution we there just investment traction achieve shortcut have last product

year, year, and fiscal strategy. our partners deals integrators our us of In an the as than QX, brought those sourced partnership almost are business were last [post last deals. Xx partner those land systems And deals XX% partner. [ph]. fiscal Finally, new partner expand with price date. a In into to highest example, larger bigger big sourced the part consistently deals a business deals average of without all Xx have rates] were influenced that came selling the better partner new In

finally, And say to us these proud larger over certified we I'm deals. helping into now bring consultants XXX have to

Chief you innovation call. has in may incredible month. Product earlier about announcements, has leadership Zuora the as today's have a engine team. to helm the update Officer, you at our Engineering of and ramping been share at that seen to on about made leave decision end this heard we have Sri this our the up do difficult Lastly, Srinivasan, Sri an

aligns an operator personal from transitioning with goals, equity to role firm. his He will decision which away of different Sri's be I leadership type fully a a support. private at role

I is leaving While we've to rapid, the our incredibly machine the now well pace. organization offerings already in technology as first team culture launch rapid behind, started a a new search Sri that confident that evolve as continues that and the permanent for the customer permeates innovation the at replacement, in am

Product for Officer transformative Chief take Our eight us who's experienced is for Officer, Tom will the Chief with past Krackeler your development to over product Tom the as Thank leader years. Customer interim. you, two over Sri, years. Zuora been in almost contributions an

close dedication To thank year. our up [ZUOs] we [ph] want their I as for to out, another fiscal wrap

gives as Companies our our new agility behavior in environment. Higher to the capabilities into the settle feel position technology and We to to good starting because market. need. about them customers continue is coming normalize us are this they still

committed focus Looking increased to strategy balancing year, profitability. the to new growth remain our and we fiscal an on with

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

Todd McElhatton

year the We Tien. with off QX. closed you, Thank solid a

will focus of balance on discussed, profitability. I As we forward, and a growth going

experienced quarter. we I'm behavior for revenue, non-GAAP in the we accomplished outlook pleased said, exceeded going subscription that operating for QX, revenue] buyer what our to the for adjusted we We do. [ph], we and While we margin were [total

growth. We were ARR also DBRR above for and both guidance

improved adjusting from reality. the materially not macro the QX, are While new has customers to

with quarter saw normalize the In uncertainty projects to reaching QX from on-hold start that level of the several fact, were we completion. prior in

some for especially be launch decision companies in They may to are there critical which making, additional streams. grow efficiencies, expect in environment. are revenue current Zuora's new are We also bringing products and the delays relevant however,

exceeding growing more our Subscription color revenue Let and $XX.X performance. guidance. of our QX me million, you high-end on XX% reported, XX% give some in year-over-year as constant currency the was

Dollar. to quarter the on during FX headwinds experience the We strength based of continue the U.S.

at For the full-year, constant of services XX% increase $XXX.X $XX.X an year-over-year year-over-year. XX% This Professional and total up million, in was million, of revenue. subscription our as revenue reported. revenue represented currency, ended XX% X%

services of relationship We going XX% integrators. as around be system revenue to revenue we strengthened further expect our forward with total professional

$XX.X strategy implementation at our X% or revenue million, leverage the services ended year-over-year, services. For to partners with aligned our down SI full-year,

the million, up the For of FX of $X is and reported. currency as approximately international, QX, the above $XXX for million our revenue at constant in created third XX% Over a high-end headwinds ended total quarter. which of XX% guide revenue

XX% revenue and as XX% $XXX.X full-year, the constant in currency, up For total million, ended reported.

by remaining gross XX%, year-over-year. our margin was QX, This in was future flat For infrastructure investments subscription margin drive non-GAAP continued driven expansion. to our

was improvement negative due margin gross X%, a services holiday days the point in Non-GAAP was billable driven XXX This by the season. professional fewer basis year-over-year. quarter, to

Our incremental gross points benefit XX%. quarter at non-GAAP the our illustrates from basis we've experienced as margin year-over-year saw channel. in leverage of blended our we partner with improvement an model working This ending the XXX

non-GAAP non-GAAP last a of prior income $X.X operating year. resulted over to in a operating in million basis a margin compared the X.X%, non-GAAP million, loss of This improvement QX year. operating was XXX $X.X point QX

Fiscal investment full-year XXXX and in line million. generating non-GAAP $X.X disciplined of operating our driven income profitability by non-GAAP was business. continued This first with top of the marks growth

operating income continue quarterly going to basis a non-GAAP forward. generating expect We on

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

point let's based as headwind. into sequentially, retention X reported. X a We point dive or which reduction metrics. and of Now, key year includes DBRR of some reduction dollar points FX XXX%, DBRR The was X with the ended year-over-year a of the

the impact trends overall strong uncertainty While to current buying had continue rates. market retention DBRR, an our we and see on

up the our retention that a again above full-year customers This at the and as value, XXX percentage in the ARR end mission had or and critical of of contract and sticky QX, had illustrates In QX, up the in entering we solutions sequentially we rate are. for $XXX,XXX X how improved company's average churn history. spend year-over-year. we our XX lowest At

our cohort to of earnings investors call. XX% become This since represent of business. as of In next to to our We less is additional metrics majority the with IPO customer execution continued business. our $XXX,XXX grown plan vast on metric cohort indicative our provide the the overall QX, our has

space. We of large our success number which enterprise in illustrates deals, continue a to the close continued

deals closed with we or of quarter, $XXX,XXX $X two This customers six ACV are over with million. us. including deals And these growing more,

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

noted reasons. before billing alone of have two We our that growth transaction not is indicative revenue processed volume for

customers a First, as efficiencies scale. cost gain our

a of only success the our accounts portfolio, part loan building a given for of our overall multi-product growth. revenue Second,

both the Zuora Zuora significant which Collect of and billing not Revenue growth metric. transaction year-over-year, are generate volume reflected in

As call. to metrics our a intention it's you next during our additional and our into other revisit visibility result, provide products

ARR of end cash the at of million million reported negative and looking QX, free Free quarter, flow Now, flow. ARR was X severance and grew and as points to FX. acquisition-related with Zephr. $XX.X $XXX about payments due with the was which associated included non-recurring cash At costs for the XX% reduction with workforce headwinds

$X.X longer-term. a it's was to CapEx collections of can the best timing due flow seasonality. flow over the assess quarterly cash a As for basis, cash fluctuate to our million. quarter reminder, free a believe We on Total cash and performance

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

Now, three prior in revenue, our on products to this our the outlook a prior financial outlook. remain over With two the to for buying that continues the we million we've compared headwind QX while days our reminder creates past prudent $X quarter. experienced the quarter, given fewer our behavior Starting our the to to QX quarters. a let's of turn demand with subscription of guidance, comparison approximately has grow,

to That well line result said, cutting expect our as some as we reduction, to also some workforce our December other bottom cost of measures. as a realize benefits

growth subscription of the at $XX.X representing expect currently midpoint. XX% to we million, of QX, year-over-year million $XX For revenue

outstanding services million. of share, revenue $X XXX.X weighted of X% million share operating non-GAAP the per net million, to representing a approximately revenue of and year-over-year to million million income $XXX assuming growth $XX.X breakeven Non-GAAP $X shares at Professional to to Total million. per $XXX of $XX.X average mid-point. $X.XX of income of million

of $XXX revenue $XX For to growth year-over-year to revenue services the of full-year, midpoint. Total million. to of representing million, expect at $XX year-over-year XX% the subscription $XXX Professional million representing mid-point. of revenue of at we growth currently $XXX the XX% million $XXX million million,

of non-GAAP average income a $X.XX, a to of of $XX to million net XXX outstanding per operating Non-GAAP share assuming and shares $X.XX $XX weighted income approximately million, million.

free cash our to Turning flow.

improvement least over are in to operating million, expect disciplined cash a $XX the full-year free million fiscal We year we be $XX committed for and a currently manner to significant at flow of from XXXX.

year delivering a non-GAAP environment. We operating margin of are of regardless committed the the macro to X% for minimum

to retention rate Turning dollar-based and growth. AR

DBRR to XX% expect XX% year. We XXX% of of XXX% to for and ARR growth the

provide visibility Finally, I to compensation. would into stock like based

expect XXXX, dilution X% target in year fiscal year. For per be under we X% of to a with mid-term annual share

net the For year calculated fiscal divided shares this equity the purpose, of number by fiscal [forfeitures] the a is of awards at granted the outstanding during of as end dilution total [ph] year.

while off, Zephr we products. we the see close environment and our macro Billing, challenging, areas To Revenue, the from benefits remains are current on. continue includes This focused Collect, to

focused and disciplined fiscal be to in continue will We XXXX.

growth, innovative delivering to Our significantly customers. free products while most improving and plan the profitability, is and cash to flow our balance

that, Tien, questions will the your and and turn it to operator. Robbie, take over With I'll I

Operator

from will Thank first Sachs. you. our take we [Operator Adam with Hotchkiss Instructions] And question Goldman

open. line Your is

Adam Hotchkiss

talked stability the we to of on should be call. are about that? that volume QX Thanks business aware QX. taking areas or be dynamic about remember quite you've on bit of in great growth you start versus by about questions. Todd, my stabilizing, there slowing Great. when other being of existing would commitment bit the customer think on with driver the for are we It talk commitments behavior base mentioned you you the I this When a volume the piece to digging more a referring relative

Todd McElhatton

thanks for question. the a lot Adam,

I stabilization. did the is folks wouldn't more from commitments across muted was a got additional a saw thought XX board on volume, it ago. products. certainly progressing. and little year comfortable how being were making more a months but not of we only the So, where upsells see with standpoint have we on we Companies behavior normal said, they other say, we a were That And

Adam Hotchkiss

profitability then of about operating guidance I that When the plus And super know the put you able mentioned months X% the guidance, on last margins. That's pull on some you that on think call sort XX great. the the helpful. had what months Okay, Thanks. and you you're next over today, out are to do there? think levers still of the willingness to outperform X to to your you so

Todd McElhatton

thinking challenged to investments make we prudent But way, very and think also continue those might put we’ll move bottom see be we dollars spending been got the I things about how a how that dollars holding on economy we're we've we've line. forward in further Again, we're or back that to been in if the if see opportunities and put to reductions. we've we

think our on I office. shrunk we're that to the There's on you're We've we better. down and there. the saw probably other looks quarter what this And certainly efficient you areas last piece, support. closed – Atlanta subscription sales also on COGS office. opportunities [hyperscaler] the rationalizing marketing do the within spend more side, [ph] the the There's opportunities getting We're seeing like. Boston our

to non-GAAP not also but profitable on least, a basis on professional last, services. committed And we've the be

got have So, that we levers during several the we've year. use I can we think that still

Tien Tzuo

is here. This add. Tien I'll just

is which level the that base us these of And manage customer fortunate base for think want being the product I times do, we unpredictable One make lost a that fortune of because have, able we certainty in of a product. having have of in sure because the to gives we even have, is customer solid sticky get the of to because business, things I us. we that doesn't what of a of the very

Adam Hotchkiss

Thanks, helpful. Tien. Really Thanks, Okay. Todd.

Operator

with from question take our We next Craig-Hallum. Bennett Chad will

open. line Your is

Chad Bennett

my for Thanks questions. taking Great.

to, a reconcile kind would trying for just quarter. and stableness, fourth I the guess, in it you of the So, sense call get

that QX improved, closed, the You record which low win means and then rates pushed talked about QX I of into net just, QX. And deals with three churn the number majority of I I for reconciling the heard XXX,XXX deals. new of assume from kind think add over year,

whether in basis how not, net a how look or number we that at view Just new what of should year-over-year relative kind the quarter? to so you

Tien Tzuo

all to What trying out see there. is, say you the we're data

in slowdown trying QX a specifically in is us we're QX, the felt sensed month You companies. there talked a There's What more uncertainty look highlight October, on which in lots QX October. of happened and when Right. level at you is, we of what for was tech. just of to that in end it macro our certainly like lot if buyers to in

right, sure down, and wouldn't And Fed is the would what that they were going to do. is slow that lower. weren't other seem at least say sure weren't tech are, – whether to the growth back what factors to to be they going mode, the of uncertainty of And while a I economies level Feds the the industry do

we the in uncertainty so, has pipe And saw the lessened.

what you that's know communicate all questions of have about on I lot a macro. because we're the at to think I trying going what's

Todd McElhatton

Chad, I'd emphasize things. other couple like a to maybe

made think think we by is, we absolutely back decision talked land we component. saw of going years increase an couple important, a Tien to million right remember number focus And spending ago, this on customers huge I the enterprise that] call, expand strategy, been That's I strategy. XX% one of remember, a customers And and increased it's So, [because on year. [ph] customers. of expand the the $X over in earlier an have really a

and much about are a ASP. we're we've landing much those landing And customers larger talked that larger with

say, certainly we one that's the thoughtful still a cautious and We're make business on purchasing remains I that's two-pronged before very have and being environment And also would the strategy driving incremental so, new are but focused people things they of growth. decisions, here.

million. that and certainly over of quarter, $X over we those were new you had deals X We're customers this Two $X.X bringing on saw were million. deals

strategy] So, the has [ph] the [SI getting especially moved larger deals. land that with we're to

Chad Bennett

or maybe the And for based the net year. range expansion Okay. expectation follow-up a then just dollar on

terms know of mix growth I it this [XXX effectively past are with cross-sell, about thinking it's stable think you in terms upsell? relates this ended Todd, year Any year. you volume where change versus material you thinking XXX] or of how [ph], net there as in from how expansion? you're year about the

Todd McElhatton

Yes.

So, thanks a lot, Chad.

I being new we think hits that And chunk say also are looking how balance. want From seen of base. big along volume. down. that I on want you installed our being, about slowing the on expanding business certainly stable. that thinking We've with come the would So, that being we're at A range business from we're be does I to very yes, think We to back certainly have our prudent bringing said, technology. that

So, we that plan for accordingly.

products you would I we the out been in billings made of last XX% The too came the developed other is, had point XX our call is another year months. that earlier that last thing comment from incremental in

see out going that that engine driving have based coming to dollar be to of that will out I'm come the also things and this year year So, next expect retention. innovation things

maybe would compare I pretty I QX of [ph]. I then thing for as the year, about And is, we're that remember year, think that in a last we've say [lapping] strong the got think just especially last

I'm the XXX the why full-year. for to giving So, that's range of XXX think I

Chad Bennett

Got it. Maybe I one last could. one if

Sorry.

Thanks. annualize or led to time is they deals I'll how those what partner of the all when deal been looks expansion good the expansion like to environment terms relative rates net stuff. that is enough very current of strong a are hop it we those you're seems deals, win and of are and and net in higher, sizes rate? which traction off. it's duration even those in challenging have in kind partner Just Then Do seeing and enormous deals see,

Todd McElhatton

Yes.

based what of cohorts back seen actually is, over our we've on we that maybe had give some going would when older rate that at some a of DBRR take think the look better I of landed years. we've the a I only than several you years, last of they've dollar cohorts the color couple

Chad Bennett

Got you. it. Thank hear. Good to

Todd McElhatton

Chad. Thanks

Operator

next our And take Brent from we Thill Jefferies. with will question

Your line is open.

Luv Sodha

too. Brent Luv stabilization my you Hi. This and any Thill. from questions. guess And for you was see Todd Tien is new Robbie quarters? revenue Maybe, on, one I Thank on know you push know, you Sodha know, for Did into taking bit you little – did in lighter base, a QX deals the than I but future see expected. you mentioned unearned

Tien Tzuo

for thoughtful absolutely Thanks as People talked is environment it, out and question. very a as they're are We we've about delivered being the – there. it slower making decisions.

So, we about felt things for going good closed deals landed of We right we But about had it the through some those. think coming QX. slower was where were had were and the as We of we slipped the a quarter that things to, said I into in for that QX. we a majority pipeline. closed pipeline planned we

go that our as guidance that for material expect several we a next dynamic expected next in quarters. into we We be the it put move and year. as we forward through that change don't to I

Luv Sodha

any guess, Got how net you And you. macro then the this for you it or on And getting during it stabilizing guidance? dollar then it. position I [indiscernible] improving? know, year? when would based Thank incorporating retention bottom Todd, color should you, Is

Todd McElhatton

guidance the end The I'd of ARR say $XXX with exited low worth XXX. year the the of We in Luv, guidance. bank. about So million this the is that's

is low-end. quarters look feel get X to So got at I over what that add. we've we've the that incremental take got at revenue that of quarters, a a And very last if $X net X you to the get we've worsen even things added means achievable to goal million if to

From would is, We really in I retention. shows most products, that our that that in platform, showing are revenue and got So, quarter our our innovation, years. customers invested retention And success guidance our we the big We've customer dollar-based we've billing rate, that's back and that reasonable up in we've sure I of results. going several things very this every feel and a say fact a programs. invested given. I the believe improved that absolutely out I the year, getting the think making

through move level had write-off been a We using a And Zuora. They on And of ago that in CRM and decision they we're made said, We multiple of a going all should a you. one [indiscernible] years platform years, companies big consolidate company. big the had this had the been over. we've for took lowest $X since and about Zuora. churn talked after hit SaaS they public several million on

solution. the solution And with what think do. that's seen. been what consistent right It's can't This other to do I we're going we've

the So, and on more remember, for these recognizing us dependent we doing got billings, getting their They're enterprise more collections. and our installed base their bigger bigger, customers. their large Zuora, revenue, and have all-in is they're – on for and

compliant. are And mission type critical they're And SOX those things.

are a feel that lightly don't from those our position retention So, standpoint. things you changes make on and we really good about

Tien Tzuo

right, you've been have of company We're years volume. we time. is a I following on ago the where a within some a based very based of in last just why grow upsells Hello, different were were Today, us our the XX months about our only on in add, XX for we recently deals, much more balanced were ability and to our than know share months. I'll Tien. majority few that XX% data developed past this the the products accounts vast that's

base. much growth installed see And you within we more our to so, balanced approach now have a

Luv Sodha

Got it. Thank you. Perfect.

Operator

our And Stephan we'll Capital Lake Markets. with Street next take question Jacob from

line open. Your is

Jacob Stephan

to from European of you market, XX% but trends Hey, similar the the comes market. questions. revenue your seeing are focusing I U.S.? the thanks just for you said on that, know European my of what Maybe I kind mean taking over there

Todd McElhatton

is let take of I'll our But third real business About a Robbie that. So, Jacob. quick, international.

Asia got but So, what that's not maybe want in if Robbie, presence we're in some seeing you Europe. We've to Pacific, give all color on other Japan and Europe.

Robbie Traube

been you've provide example really seen softness other the bottom continued value line, too. some mentioned execution still there's in we ScoutXX we're that macro, region. overall, look, an EMEA, true but still as peers, been, has places, our And as impact in QX We're we've I Yes. space interest mean good to seen seeing due a particular that in now in in products had in product. Tien that actually base. selling

continue So, has been softness again, there, there. some that growth to we see but of

Jacob Stephan

Okay. Maybe you some just could margin, any give levers you the could what more on levers revenue be? there'd but focusing mentioned color be to – on gross so subscription those What might some margin. you increase pull of that

Todd McElhatton

Yes. I thinking we're you that maybe give things about. would three

First multi-cloud. now of all, we are

AWS. Azure. of our further opportunity we've team has products usage, better a our The a working using has get I get more job of those then to how controlled. team seeing spent leverage. So, dollars we're spend that us on out optimization We revenue the engineering for are much also got up from of done spun believe standpoint and fantastic gives –

And the costs only better opportunities we've I provide get on customer think that as there's our to is, spent support not in investments satisfaction, area thing last down but again to also more there, bring then efficient area.

Jacob Stephan

Okay. you. Thank Got it.

Operator

And we Berenberg. will from take our DeGasperi Andrew next with question

line open. Your is

Andrew DeGasperi

that competitive more follow-up that, kind guess my taking a can with canceled, of just like – you a explain nameless, I yes. for guess, question. was win implementation to little Thanks as I large maybe

me? hear you Can Sorry.

Tien Tzuo

you hear can I now. Yes, Yes.

Andrew DeGasperi

what explain did charge mean, a any what, I of platform. to pretty do I many get can size so was as you take elaborate going years maybe drastic more that? made little a just it you that like him Can to you investing feedback kind seems like, to a, into say, maybe like of after

Todd McElhatton

Yes.

centralize the and on only complexity on was think organization the a and So X CPQ we've sense they from had billing longer was business their and they knew, but Andrew, ongoing their multiple we to no customer work. basically, not the an product, of And get hey, came had could types CIO a to were had difference I that makes it in where that for dialogue, what the of from they realized was situation worked to would complexities that platform. said, all And years. I at it in, not just of come actually, a have different it it something going

all with what basic a not was functionality case that was truly was needed. hey, had company that It of, that product at very a matched here

trying QX. came that said, to CPQ. they years going work the lot that [indiscernible] to and we're QX made after to doing upgrade meet back went continue so, that try into they putting to move most We it. a to for with at point, it, then And weren't didn't finally, this your hey, live go And needs. several to business us through going a our them and and to recent decision their that They on platform

Tien Tzuo

this mean, I is Yes. Andrew, Tien.

were acquired Customers Oracle continue like just take be, three at billing I suite and aren't build before how we've company think seen happy. people underestimate to by they complicated can billing. trying runs a NetSuite to

And environment so, focus core. we think to your on really in you of have where, this kind

billing. subscription all supporting core our of types news good rules. is and is rev is revenue different us these It for management. charge models It is The and rec recognition. is It taxes

ultimately, certainly feel our And good any so, we differentiated there's feel eventually and we growing, it and in really position, technology puts out, good will figure that if us and in business position. a our be and people good about there that very that really is you're really complexity your

Todd McElhatton

just Andrew, the I'd analogy. mean, I use

team. can with, world out the when world team. anybody – anybody play at can some hoops, need looking that play of working championship and the think basketball you championship a And I start shoot go companies they and like we're not everybody that not

best XX why R&D really the have and of revenue. approaching optimize billion delivery we to why billing years we $X of differentiated and products in And and the leader are that's breed for we're space. and and our just where are We this spent

Andrew DeGasperi

I good just the any platform, do the the, challenges that follow-up you on as That's kind XXXX? guess of products within for the incubation Sri's integrating, what departure, that example, Thanks. on front means or on wondering foresee analogy. Zephr, for of a new a for

Tien Tzuo

Yes. created He every he really modern for the and fully world-class would And I decision. I we don't team a team fantastic we're think say, technology fantastic. him, with great a going. – but came is team. He in, good came challenges. mission. that support in platform, he's his I He great Tien leaves I'll our here. place. processes. – in a infrastructure, us say confidence leaves a have behind great miss he got I any When been He accomplished innovation anticipate mission. Sri would machine this a in

Todd McElhatton

on Hey on we're in That more overachieved standpoint line. QX. absolutely overperformed top road the margin, Zephr a And We've at is, Andrew, the XX% map kept if that’s one product employee, and target. done. with thing operating absolutely non-GAAP look from we've how on has really QX is of over of pleased the a take you bottom our line

in very showing it of well, tuck-in fit that that and and we're So, our type great really way. we a was I it here did a acquisition, disciplined strategy, expand supports think

Andrew DeGasperi

Thank you. helpful. That’s

Operator

Needham. take our question will from Reilly Joshua We with next

Your line is open.

Joshua Reilly

Hi, there.

Or say If at they're you that more more of you the say like look and are that verticals? in media is dying you a that would out bit buy, tech as also would willing manufacturing customers to well?

Robbie Traube

Joshua, the mix of It's across thing right? thanks one for the I'd the all Maybe say, mix, these. question. It's

large standpoint. We there top-tier wins about reading right, pharma, There's some wins services. great as also well. have from in Stellantis, into great going and in but information manufacturing it some like even transportation a And tech, in then automotive

the of and that mix more just out and more. it's So, seeing these, proving all and across that we're

Todd McElhatton

along with regardless fact they're And geographic transformation. of of We've mix. mix, enterprise it's where the are, with these many the and we're I a companies, good working got they only that think to make companies needing Josh,

next in What still what customers us focused to I environment opportunity companies and my So, do even do support gives year, base forward that in whole the lot year a grow looking we're do even the need to tough a where year of to are a of so, there's I that and challenging And environment. to after? to are business? just though need do there

Joshua Reilly

point you That's then your year at year how how of, you this see market? it. market as well? ago a year, just versus characterize a And the much last would or sense relative Do maybe us market that this you year-over-year give share versus the year position in even down quantitatively. not And deals qualitatively, market you Got helpful. RFPs just to share believe that entering broader in the can gained you've are

Robbie Traube

progress the in terms of forward is at take our we in pipeline look, looking buy it into as – we're one. good up, overall, QX. right? go we think And I run I'll that And as

also traction. momentum the source a pipeline that I think influence the momentum that of get more is proving amount and overall, too. we're seeing seeing partner increase from And we we're perspective, there there the out also pipeline in and

Joshua Reilly

one Todd. maybe Okay. quick one then just for And Got it. last

comment I at didn't there look revenue subscription a much how you for guidance headwind of XXXX, in ARR. the see FX about If assumed in the and

Todd McElhatton

Yes.

a that I we going and think we're they as-reported relatively are we've put from where are constant an is, what perspective. to from So, the done basis, assume rates planning it in today

Joshua Reilly

guys. Thanks it. Got

Todd McElhatton

Josh. Thanks,

Operator

we Vafi And come have from and question, Canaccord. one for will final that time Joseph with

Your line is open.

Joseph Vafi

here questions execution this Nice quarter. lot of guys. A already. Hey,

Just your on Tien, wanted Azure. there follow relative also a it customer. up, they're you to I think, they're Microsoft mean, obviously, on that? color Any I a like be to comment extra but partner, add and sounds can moving

Tien Tzuo

Yes.

in and that. several Microsoft excited delivered cases, using. on customer is that's pretty a product is we and have about committed we're Azure, our Microsoft So, what revenue on but

now to And that customer our under the going are Microsoft environment. multi-cloud customer we're and Azure in we happy continue first so, We're move to a pretty of stack. direction. have as to a And

Joseph Vafi

that, I kind ability wide. it? integrate them small map is platform Azure or customer that that you Is a pilot look to the like a in talk That's pretty huge and can obviously, size more to mean color I you to can the is what that great. any mean, Is on, opportunity extent it – be does still road add about for to of there and solution

Tien Tzuo

Yes.

the is really in a Maybe question Azure the company, – open-up for on obviously, us it Microsoft open-up? entire being places. large multiple Microsoft, it with hey, base. what And retailer is, them exciting So, more we're talking the to does

as customer an Azure that you Azure, use contract If Azure on buy and a Microsoft transaction. you're Zuora actually and credits you you can of your have revenue part

an reseller And be Dynamics so, space as example. exciting with position into those and we can now channel talk Microsoft where to it's Microsoft to perhaps co-sell in the us pretty actually the accounts, for into them

Joseph Vafi

just their going them kind really Sure. one That's It of to your a then aware products? nicely. ready great. integration this question. partners of kind point? your for like To sounds are, some Zephr it of be sale Is of included And guys. Zephr of at other deal extent systems is what Thanks the lot in,

Robbie Traube

We definitely EY, two they in been I there, but right actually media for very extremely were large interest came area, on actually [kick-off] solution] there's we've a specifically PwC, mean, growing had around across publishing RSM, [ph]. interested days, what Accenture had Deloitte, mean number I interest. ourselves offer. very, [them] definitely in-person focused is actually the Joe. that across [Zephr from way, [ph] has and and the to [ph] Yes,

Joseph Vafi

Great.

hear will that. more Thanks we about like Sounds guys.

Operator

your today's And and ladies and participation. for this you conference concludes thank gentlemen, we call,

now disconnect. You may

Zuora (ZUO) 1 Mar 232023 Q4 Earnings call transcript