{"id":21525,"date":"2022-12-07T01:17:44","date_gmt":"2022-12-07T01:17:44","guid":{"rendered":"https:\/\/mailinvest.blog\/index.php\/2022\/12\/07\/zuora-shares-drop-on-weak-outlook-and-staff-layoffs\/"},"modified":"2022-12-07T01:17:44","modified_gmt":"2022-12-07T01:17:44","slug":"zuora-shares-drop-on-weak-outlook-and-staff-layoffs","status":"publish","type":"post","link":"https:\/\/mailinvest.blog\/index.php\/2022\/12\/07\/zuora-shares-drop-on-weak-outlook-and-staff-layoffs\/","title":{"rendered":"Zuora shares drop on weak outlook and staff layoffs"},"content":{"rendered":"

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Shares of cloud subscription services company\u00a0Zuora Inc.<\/a>\u00a0dropped in late trading following a weaker-than-expected outlook in its latest earnings report and an announcement that it would lay off 11% of its staff because of macroeconomic conditions.<\/p>\n

For its third quarter ended Oct. 31, Zuora reported a\u00a0 loss before costs such as stock compensation of $2.9 million, or two cents per share, compared with a\u00a0 loss of $2.5 million, or two cents per share, in the same quarter of last year. Revenue rose 13%, to $101.1 million. Analysts had expected<\/a>\u00a0an adjusted loss of six cents per share on revenue of $100.22 million.<\/p>\n

Subscription revenue increased 17% year-over-year, to $86.6 million. Net cash flow in the quarter was $3.9 million, free cash flow was negative $7.2 million, and cash, cash equivalents and short-term investments sat at $400.6 million.\u00a0Annual recurring revenue was $350.7 million, up from $295 million a year ago, representing a growth of 19%. Customer usage of Zuora solutions grew 15% to $21.5 billion.<\/p>\n

Highlights in the quarter included the completion of the acquisition of Zephr Inc., a subscription paywall software startup Zuora announced\u00a0in August<\/a>\u00a0it has entered an agreement to acquire for $44 million.\u00a0Zephr said its platform offers an intuitive interface and plug-and-play integrations to develop powerful subscription relationships and deliver personalized experiences for every customer.<\/p>\n

New customer logos and go-lives in the quarter included The Michelin Group, Enercare Inc., Canon Inc. and Suzuki Motor Corp.<\/p>\n

The decision to lay off 11% of employees was described by Zuora as a way to \u201cimprove operational efficiencies and operating costs and better align our workforce with current business needs, priorities and near-term growth expectations, in light of current macroeconomic uncertainties.\u201d The layoffs are expected to cost $9.5 million, with $3.7 million of the expenses recognized in the third quarter and the remainder to be recognized in the company\u2019s fiscal fourth quarter.<\/p>\n

\u201cThe macroeconomic dynamic has led us to make the difficult decision to reduce our workforce by 11% to align our expenses to our near-term growth profile and improve profitability in the near-term,\u201d Zuora Chief Financial Officer Todd McElhatton said in a statement<\/a>.<\/p>\n

Zuora expects an adjusted loss per share of between six and seven cents on revenue of $99.5 million to $101.5 million. Analysts had expected a per-share loss of four cents and revenue of $103.12 million.<\/p>\n

For its full fiscal year 2023, the company expects an adjusted loss of 15 to 16 cents a share on revenue of $336.5 million to $337.5 million. Analysts had expected an adjusted loss of 16 cents and revenue of\u00a0 $394.77 million.<\/p>\n

Although Zuora\u2019s top line for the quarter was solid a beat, it was the miss on revenue and earnings, along with the layoffs, that investors paid attention to. Shares were down more than 6% after the bell.<\/p>\n

Image: Zuora<\/h5>\n
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