In its first financial reporting since becoming a public company, Zuora posted some impressive numbers including,
The subscription billing company’s year-over-year subscription revenues grew 39 percent and total revenue grew an amazing 60 percent.
Customers with greater than $100,000 annual contract value (ACV) grew to 441.
Total quarterly revenue was $51.7 million, giving it a run rate that should exceed $200 million in its first year as a public company.
Also, non-GAAP loss from operations was $18.6 million which is a lot of money as a percentage of revenues.
Reading further you discover the company has over $200 million in the bank, mostly from the IPO. Net/net this young company is growing well and it has cash on hand to lift it to profitability. Spending on operations if it includes selling and marketing would seem tolerable since it’s going into growth and the results indicate the strategy is working.
If you’re an optimist and you own the stock it’s likely that you bought on the promise of the As-A-Service economy aka the “Subscription Economy” that the company touts. If memory serves, Salesforce went public with similar numbers and word is that they’re doing okay, so there’s a case for being optimistic.
The key question is whether the company in question represents a new category with great growth prospects or if it’s a me-too. Today a me-too might be an analytics company or a new CRM company, we already have too many of them. But subscription billing, while still a crowded market, has a lot of potential. More traditional companies are launching products as services and finding they need help with the books.
What these numbers might also show, in my opinion, is how difficult it is to launch a company into the financial space. It’s rather conservative after all as shown by the slower growth of cloud ERP companies compared to cloud front office companies.
So from my seat it looks like Zuora is growing nicely, they’ve got cash and if they ensure their spending drives activities that drive further growth, it’s all good.
This week, Zuora hosts its customers at its annual Subscribed conference. I will be reporting from the scene and it will be interesting to see what they have to say.
(Cross-posted @ Beagle Research Group)