Zuora CEO Says It's on the 'Right Side of History,' Despite COVID Pressures - TheStreet

Zuora CEO Says It's on the 'Right Side of History,' Despite COVID Pressures

Zuora's third-quarter guidance failed to impress investors, but CEO Tien Tzuo says the company is on the right track despite economic turmoil.
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The economy may on shaky footing, but the subscription economy is still poised to soar. 

That's according to Tien Tzuo, CEO of Zuora  (ZUO) - Get Report, which sells software that automates recurring billing, collections, quoting, revenue recognition, and subscription metrics 

"There’s a lot of talk of the COVID situation accelerating underlying trends, and the interest in subscriptions have never been higher," said Tzuo. "We feel good about where we are." 

For the second quarter -- the first that crossed over with the pandemic and sinking economy --  Zuora reported total revenue of $75 million, up 8% year over year, including subscription revenue of $58.3 million, up 15%. Its third quarter forecast was slightly shy of analysts' forecasts, at $73 to $75 million compared to a consensus of $75.5 million. 

Zuora's customers skew towards larger enterprises, Tzuo noted, and the company isn't immune to the economic ripple effects of COVID-19. Zuora shares closed 1.6% lower on Wednesday at $10.01, and are down 32% year to date. 

As the pandemic wreaked havoc on hospitality and other sectors, Zuora customers that operate more heavily in those areas had to work "though disruptions in their industries," Tzuo said, and many can't be expected to grow as fast. 

Zuora didn't issue guidance beyond the third quarter of this year owing to economic uncertainty. But Tzuo said that Zuora's sales pipeline looks strong, and is showing improvement quarter-over-quarter.  

"We’re seeing massive interest...we feel like we’re at the right side of history," he added, while also noting that the full sales cycle can take time for large enterprise customers.

On its recent shareholder call, Zuora highlighted a number of customers who successfully spun up new services in response to the pandemic, such as The Seattle Times, Honeywell  (HON) - Get Report, and a leading auto manufacturer preparing to launch an electric vehicle.

Looking ahead, Tzuo also believes that Zuora's growing portfolio, which includes an analytics offering and other add-on products, will boost its revenue in the coming quarters. It also plans to roll out new partnerships in the coming months. 

"If you boil it down, we are about helping companies make money from their digital initiatives," Tzuo said.