- Zuora’s stock surged nearly 6% following better-than-expected Q2 earnings.
- Adjusted earnings per share rose to 19 cents, with revenue hitting $115.4 million, a 7% year-over-year increase.
- Subscription revenue grew 9% to $104.1 million, driven by customer expansion and higher spending.
- The company ended the quarter with $412.3 million in annual recurring revenue and 445 large-scale customers.
- Cash from operating activities more than doubled to $11.4 million; cash reserves reached $542.4 million.
- Zuora acquired Sub(x) to enhance its AI-powered paywall solutions following a previous acquisition of Togai Inc.
- Q3 forecast slightly above expectations; full-year outlook revised upwards due to recent acquisitions.
Main AI News:
Zuora Inc.’s stock price surged nearly 6% after it exceeded earnings and revenue expectations for its fiscal 2025 second quarter and issued an optimistic outlook.
For the quarter ending July 31, Zuora reported adjusted earnings per share of 19 cents, a significant jump from seven cents a year earlier, on revenue of $115.4 million, up 7% year-over-year. These results surpassed analysts’ predictions of 10 cents per share on $112.62 million in revenue.
Subscription revenue rose 9% year-over-year to $104.1 million, driven by customer growth and increased spending. The company ended the quarter with an annual recurring revenue of $412.3 million and 445 customers with annual contracts valued at $250,000 or more, up slightly from the previous year. Notable customer additions included Canva Pty. Ltd., The Economist Newspaper Ltd., and Dark Matter Technologies Inc.
Net cash from operating activities more than doubled to $11.4 million, and the company closed the quarter with $542.4 million in cash and investments.
During the quarter, Zuora acquired Sub(x), an AI-driven solution for digital publishing, to enhance its paywall offering with AI capabilities. This acquisition followed the previous quarter’s acquisition of Togai Inc., a SaaS and pricing platform.
Looking ahead, Zuora forecasts adjusted earnings per share of 11 to 12 cents on revenue of $115 million to $117 million for its fiscal third quarter, slightly above analyst expectations. The company also revised its full-year forecast upward, expecting adjusted earnings per share of 56 to 58 cents on revenue between $455.5 million and $461.5 million, supported by the recent acquisitions.
Conclusion:
Zuora’s strong performance and strategic acquisitions signal robust growth potential in the subscription management space. The company’s focus on expanding its product offerings through AI-driven solutions positions it well to capture a larger market share. This factor could set a precedent for increased competition among cloud service providers to integrate advanced technologies and secure higher-value contracts. As Zuora strengthens its market position, it may drive innovation and further consolidation within the industry, benefiting businesses seeking more sophisticated subscription management tools.
