Zuora (ZUO) 23 Aug 232024 Q2 Earnings call transcript

Good afternoon, and welcome to Zuora's Second Quarter of Fiscal 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] With that, I would like to turn the call over to Carolyn Bass, Investor Relations for introductory remarks. Please go ahead.

you. Thank welcome Quarter and Conference XXXX Zuora's Call. to afternoon, Fiscal Second Earnings Good

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

our future differ views representative today securities of forward-looking of will be as considered may statements risks actual We and date. we materially call, disclaim represent outlook. to laws. today's be that that statements statements or obligation our that relied are of any our under from events federal as views update expectations. expectations should not uncertainties any to several During cause and subsequent make to and only These subject These any reflect beliefs as concerning could upon statements forward-looking results

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

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

can GAAP results current both the release. year's to the today's from find prior a for and periods non-GAAP in You reconciliation press

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

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

I thank that second now. her off Thank on And of congratulating you, for welcome. listening although for quarter start Investor you, I'd birth our son. is the Carolyn. be in she second while suspect joining on Thank Head you, and to by Luana out stepping Welcome call. Relations, to Carolyn, everyone, Wolk, parental leave, might right in Luana like Zuora's us today, fiscal earnings of XXXX

in our and X% reported the XX% last reported. This was $XX.X is as where bottom XX% grew margin from solid on for currency we in up another the QX our ARR million, up second points of XXX coming guidance, was revenue top progressing quarter. non-GAAP basis of X% came delivered year. operating and XX% growing constant subscription from In line. QX as in our quarter, quarter we and quarter line and ahead at last QX.

through fiscal good time our a towards strategy progress a We and we to durable 'XX, our and made have the now and mission profitable building are halfway larger business. recap it's

thesis core company the of leading of business be secular the broad, beneficiary shift The long-term to is models. a in

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what we So is see QX this steady I'd as QX key in for goes. journey? do along message say she the

recurring As of are this we that we spend, around technology models. companies scrutiny go higher embrace continue to through period revenue seeing

focus we pay made on to continues smaller, lands dividends. But to the faster adjustments

our take of envious our continues forward enterprise a roll segment. to hold durability innovation We the and be of. And that continue base to demonstrate would companies customer finally, most within train

models this our each last QX. into we with the because for possible. in of that extended through a behavior said saw QX. point settled that be and around Why? business what go examples consistent businesses has we into that me Well, their Let call, what modern powers On must they business to their continues buyer Zuora this makes earnings demand good and do. There we customers know pattern center

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acquisition Zephr proud we subscribers, further media and signed The experience in which our this leading magazine which experiment Times be New to offer example and position together billing the and In The third new welcome and strengthened to the marketplace. in talked point vertical. success resources of about multi-platform of a reader our power publishing In and their QX, with will Atlantic, great the technologies XXX,XXX innovate. freeing A engineering last with relevant give with Zuora to quarters, to work proof York while Zuora Gannett. Zephr Atlantic, them to solutions. we've and our the Again, the were continue year, Billing previous we out over publisher enhance up flexibility paywall a

about quarter with in last displayed a And our that and did Zuora starting versus as lands to how pay-off full macro faster On QX. it product continued targeting we're earnings by the single adjusting the this with strategy customers to call, we agility, smaller, we talked suite.

QX we last XX% to new and logos of XX% compared sales closed more quarter, This year-over-year. by improved cycles our over over year, average

remain means that And have land it's accounts. as enterprise the agility the important This in that the right our do large with seeing smaller, to faster this deals we companies within we see that segment, in catalyst we're to deals, transformational projects. premium invest expand to it while durable segment still remember we the to committed means to we still big Now, also marketplace. runway have

customers ACV our above QX, or And in partners $X system ecosystem. average In eight an or one at $XXX,XXX, sequentially add of deals fact, important if with value look large course, also helped us our to we an closed million. integrator including remain deals at our $XXX,XXX. seven at contract you above QX with above These at

both In and fact, sourced influenced sequentially. in partner partner QX, increased bookings

many make to join to or proud. made continue of described machine I in where able know innovation our live June, four virtually me York, product key New were QX, announcements. online, in in us as we you live either Finally,

to enhancements for our announced that are the technology the consumption specifically we consumption and designed new building these rage capabilities, and First, recognition companies. Zuora billing all revenue only end-to-end models that solution for provides

helps we embedded proactively AI. Second, critical which admins manage activity, issues and multiple Command with Zuora troubleshoot the monitor environments announced Center,

with technology your analysis Third, is interface our new Zuora for in in all still the Zuora, And a warehouse industries, Zephr own all these subscriber-led allow announced we've to power large demo started seeing natural already language companies again in implement that innovations QX. talking warehouse industries by to the are BYOW AI. or using high-speed of And people bring data we powered that about. customers growth allowing our directly impact with volumes, finally, strategies all

a early more are For seeing example, Zuora with it universally Center to electronic consumption global Zuora helped ACV adopters billion making high productive close this grow. out Command And marketplace six-figure for who has see eager and them us operator. already $X they to XX are is rolled deal already

be their fitness XX faster, dynamic even first with to have personal came to gaming signed Hour XX expanded Zephr. new today, auto us major packaging close tailor to Zephr's we to Fitness, so dependency that IT products non-media been to SaaS more our market companies, customer helping and we and In They finally, while companies a be say locations busy companies, am we've across We'll offers. Zephr Hour excited And their chain. center to QX, all already relationship our bringing pricing their for for and Fitness reducing able memberships on internal all I showing and industries, to resources. with XXX training

The news doesn't there. stop

leader this and fact, knowledgeable month. lead work further We our was Connect come and taking be will excited our subscribed event London. at our upcoming who from subscribed Zuora are what's is being announcements under last Hirsch, charge already new financial deep I events to leadership. experience Pete's joined in I as about Pete he right product Officer, one us in and, and BlackLine am has Chief All by that global, to making am additional just now technology, Product we our Pete of accelerate incredible Technology the for led to understands and systems innovation, customers. is confident Pete this in October

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over to Todd to I'll our turn call that, financials. With the review

and growth QX, In executed thanks of everyone again Thank balancing profitability. plan you, joining. and on to Tien, we our once for

we During buying the QX. behavior same saw quarter, in the we observed

our QX total Our revenue with margin the guidance non-GAAP end our subscription operating revenue of exceeding range. and within were high

raising full reported. year a currency on cash Professional XX% our represented from headwind $XX.X and experience Similar fiscal X to last non-GAAP in adjusted free XX% $XX.X margin the XX% constant flow as In to we and million, was subscription QX, For growing revenue outlook. quarter, we're continue points 'XX, operating revenue business. partners a in decline of decrease of based SI FX XX% total the and more dollar. year-over-year year-over-year of taking PS of services The strength revenue. is implementation revenue was US million, result our the

partners environment, of deals adjusted $XXX done for digital have Total take constant range multiyear broader was revenue including on demand up year-over-year. reported the as in-house. current to we in and XX% in projects, currency has Given X% the those a have typically transformation declined million,

international, our $X of As total quarter. of revenue million over this which third headwinds is a reminder, created a FX approximately

of nearly in Non-GAAP off we basis margin continue Non-GAAP pay and as was our subscription see improvement points QX of XXX to points margin. XX%, year-over-year. expand our professional was XX services nearly margin gross investments year-over-year negative a in reduction basis X%, to gross infrastructure an

growth. investments make As may support margin fluctuate subscription to and our PS we customers stated near-term based on we previously,

operating in year. X%, The last driven gross of a in points of This $X.X non-GAAP was the basis nearly year-over-year. $X.X non-GAAP operating Our income blended loss a over QX QX was investments of by resulted by Non-GAAP year. prior was of This increase line million improvement mix margin basis top and was in XXX higher disciplined of compared significant driven business. XXX and a to subscription the growth improvement operating in revenue. non-GAAP increased points XX%, million margin subscription margin an

on quarterly basis We operating to going will non-GAAP forward. continue a generate income

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

of customer due points DBRR, volume has for reduction impacted some backdrop. ended year-over-year. the into the demand been at key retention and surprisingly, metrics. down sequentially XXX%, X macro dive Dollar-based let's point rate Now X or Not to

and staying customers to with how continue our are. growing We very We're strong retention rates. solutions our us, have given seeing mission-critical

third ARR. where In five in QX record past as rates was fact, quarter high of a a the retention quarters entering we've percentage seen

had $XXX,XXX the customers and XX% At at XXX spend business. XX% contract of average we represents sequentially in value, up that or cohort QX, our X% above which end as was over year-over-year, of

ACV this deals or $X seven the prior closed million with year. of deal QX we one more, quarter, with in This over includes an of none and $XXX,XXX compared

and end Now positive meaningful the expenditures, last flow in XX% QX, quarter, free cash adjusting over At year. Adjusted costs. million looking at $XX.X costs improvement was of free and operating capital QX $X ARR is flow cash litigation for grew million was reported. a acquisition-related course flow and ARR as cash $XXX.X free of flow. Adjusted non-ordinary cash million the of

annual basis timing believe flow a assess vendor to of our flow payments cash cash performance cash and As adjusted quarterly best on due basis. fluctuates We collections, a it's an to reminder, seasonality. on free the

was million. CapEx Total quarter $X.X the for

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

Turning to our financial outlook.

quarter, we're in the service similar business more trends that This continue these our year. our implementation and relative noted, our will patterns the of continue seeing impact assumes on first partners work. outlook and We're we're SI second Tien enable the PS trends half. to partner of the for buying also take strategy professional will to assuming in remainder standing will last by the to As revenue our our

services with million. We total QX. Starting million currently professional to million $XX of of million, $XX.X to revenue million, our of $XX for $XXX.X subscription expect revenue revenue million guidance $XXX.X $XX.X to

income operating to million of income outstanding $XX assuming $X.XX and shares net approximately per share of expect of to We weighted million. $X.XX $XXX.X non-GAAP million non-GAAP $XX

services million $XXX XXX.X $XX of XXXX, fiscal million, of We and guidance free and revenue shares of share assuming to million of year full to end $XX of $XXX $XXX the subscription operating per $XXX of For non-GAAP net to approximately to income low expect of $X.XX $XX both $X.XX, million, raising revenue million, for our the now raising operating million million. and of revenue million we're non-GAAP $XX income cash million professional our subscription to adjusted non-GAAP average total revenue outstanding weighted income flow.

in least For from fiscal million are improvement XXXX. adjusted we $XX cash million, flow 'XX, flow the the from based on first free year, half generation to at our strong fiscal cash $XX raising of dramatic a our

also are operating the We a second row. our for objective increasing quarter profit in

points We committed minimum of margin the year, the initial are to XXX operating delivering guide a from fiscal now X% basis non-GAAP of for XXXX. up

and DBRR growth. to Turning ARR

XXX% growth For expect the XXX% to XX% and fiscal of DBRR year, we to to continue ARR XX%. of

X%. dilution share to fiscal 'XX X% for annual expect a of be under to continue with target midterm We

net the year, the year. the from monetize. trends during companies the to is this We demand finding secular calculated long-term shares of granted see by new For of dilution divided forfeitures outstanding total awards number at of fiscal equity models the business end purpose, of as

Looking focused and remain ahead, on current the put bottom on believe we it's to the environment, prudent balancing to line. profitability. dollars we Based growth

on to have we of sales needed. the our ability the to year, the capacity ramp up have second deliver and for half We the outlook as

customers our business. for critical are solutions run Our to their

multiproduct Our create to look continuing We grow customers customers to necessary monetize us. offerings. and the and with expand offers innovate forward more to our agility for opportunities to their portfolio

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

the Your first Hotchkiss. line Adam from comes Instructions] question of [Operator

open. is line Your

improvements? taking on you is guess, Tien, that color it for made of do by Thanks. form sales to start, made some the announcements of when I about you cycle my Or deal these to driving of the get momentum. And around you of this how of flow through think be to the just questions. start some some macro? that great June? would in revenue do Thanks might you it reacceleration? Is more comments you think What some purely and it some driven is of Great. is think improving in

I've I ERP-like say Yeah. that in. people But impression have got we we really and talked last Tien This about an here. is would jump quarter Robbie this system also I'll because sell in architecture one only deals implementations. us we to suite. can was to allows what highlight And not entire large actually, product, we that do large wanted and and go our -- with the

adjusted everything and we faster we smaller, the our year down given at last in in let's seeing And look, start so to sellers of were deals. to year direct the QX, say, QX take start to

that say, And so say, we come us that a and our in still we a company transformation we We catalyst wanted have large have put in a balance. project companies to look, requires place. to in see look, still

that. go with to could we some land of highlighted same market of large to did. have smaller, And tackle way, we're agile just deals the so seeing do positive don't the But land it that. us in that this billing, do deals, when we time, in we does the at we with just the just We our we in, We could and land revenue. allow Zephr impact to faster with can ability

the Yeah. say deals -- the smaller that know for the the And mission-critical we -- have we it's customers I a the don't and right? we land and I'd at do. have we we we But in We opportunity time, multi-products wish great. can are what same customers. solution. have us, at what to choice, the a is enterprise market

different us. working multiple has can we for well And can land we been expand. once can So we in that and ways, then then land it,

not as slower the and faster life, with land companies, targeting we and We targeting. world. our strategy. we're for goodness still continue so going goal and fantastic customers back to to what and we're all to biggest to we And the macro or if continue a in whether best these do companies execute speed. smaller believe We're be is can it's see up sign the customers up is adjusting expansion these to so if our companies the are That's or deals

how we, be outside should Thanks. but see of media space, how analysts, think there, out into impact these there's of to that as perspective? one these then know the thinking are push when launches subscribe as the But right, marketplace. really a lot from you product we consumption Got I warehouse recognize we And this will take about product financial it. thinking Zephyr from helpful. live, with might when financial we joined about a catalysts the some time play some that from Zephr That's billing. from you things? the improvements I mentioned customer about

Adam, it's Todd. Hey,

as grow we have products, over obviously, time. they release we that an So expectation

So GA quarter over that last going just as see or time. these in products up we'll this are pick quarter, the

So Fitness. look, opportunities pipeline with our consumption there. good last Zephr six-figure Hour drew quarter. good feel We happened about deals really of what XX There's billing a as saw one high of like other

there. very the to of expect But So good we change prospects I outside don't overall, feel about guidance. our it

I and provide next into grow lead think year forward. build will us and this we pipeline to as the continue move certainly will this to

Thanks helpful. Really everyone. Okay.

Adam. Thanks,

the next from Your of of Reilly question Needham. comes Joshua line

line is Your open.

that What and and it's questions macro. around the my some should more Maybe rates Or we market what taking think I one guess a or from end the Do is out? just see change delaying demand nice to uncertainty of and would customers for some think do in projects? on there peak, and of could where catalyst then recovery? the current guys. just dynamic? tech digital ultimately as bottoms transformation the is Thanks they're demand general maybe the kind markets are here waiting where be here color see And everybody on why you watching to for economy quarter, weakness in be they their Job you the helpful. these hearing interest what on Yeah. you

is, generalized the scrutiny industry know that's would their experiencing there. there's at The you one scrutiny recurring are But to look, continue on It digital say depends revenue. in from. our revenue we're on going is monetizing different, the at hand, But because new specific companies be going seen Yeah. on space, is look overall, level, still on what these So saying, where future that, macro coming services. to I a media more when right? you've industries, spend. spend the subscriptions they currently future look, growth I think is be out invest there's to

So we this companies that And have in deals know look, important that you companies, to what's say, that Those macro, so space going saying, other we simply have is right? projects you. get can of now. to do. look, that want are something the regardless with on in the the are to in invest you bigger And seeing. know you started, this it's to we're we

started and to over downward on can grow don't part have with continue right you why time. of this you spend now, the pressure us If we portfolio in get

think us. with spend group, The out, year-on-year. pulled numbers I that year-on-year, $XXX,XXX $XXX,XXX grew to XX% we that I plus continue XX% customers, [indiscernible] they cohort, that mean,

So mission-critical that because to to what we it see they do. is continue

attack marketplace. we speaks have agility And to the that really that just the how and general we

for operating piece rest of this seem expenses? operating initial source That's it. What And see year plan look would the where areas guys. of the then find to change in to guidance, Thanks say of versus your biggest you continue do to fiscal helpful. if maybe year? operating is for you maybe savings savings there. the of the leverage your at guys income Got a you the And you continue in

continuing that we're be everything disciplined on to we're spending. So, super Josh,

the said that going We've feel year things either be to the good reacceleration the sense said want a the ahead year. where have the top of we're to we'd if in seen about beginning in we ability we not are to line we we line, was growth, market top invest to at go where makes One this market. the of on and be

spent so that's the a adding drive how not That in go-to-market helping lot do time area to efficient more capacity we there. areas certainly additional that's efficiencies. we're of -- an us. So will in get We've continue on

especially to COGS, side, the You XX%. subscription saw up jumped the on

at. we So another I put engineering with we're The G&A. there, good what's happening thing at feel resources same that taking look how a very area doing and about where looking

board our across it efficient. constantly our more Obviously, go. sense, in So it's area to to then and we'll the the really you that are spend continue makes like get biggest evaluate to is first market, we'll to leverage just of a to new continue said, become But that area more I go we the we And where and those of as and working company, dollars, to we're out. the as logos. that when of is as better we upsell to get them investing a bookings, more on continue a larger lot than grow bookings, CAC in and lot go

And more so as leverage to give that get operating we the in will larger, also us model. continue

opportunity I take the as of to stuff. the [indiscernible] some at Obviously, it's mean, this It's an about more Josh, do off is about productivity. of with day, this the it's resources. able same one end thing, to efficiencies, just being number show to more add Tien,

under five customers own on products efficient. as and can at using number that's you the XX days we think Todd's well. days become days look taken And with our that that IT from more have of partnering to technology the benefit If we our type really use Daisy, we've organization side, are organization, of to can close our we our thing down for a

helpful. Thanks guys. Super it. Got

comes next Craig-Hallum. Bennett Your of the from Chad question line of

is line Your open.

question. my taking for Thanks Great.

you're So the kind of and progress just on making the faster on smaller lands.

the where those of what a you've of where of the kind magnitude any if today terms kind data in just of about to is any seen and -- Just to of land would there historical way think be in past of difference magnitude, the there's kind ACV relative there?

ASP landed on of ways. bringing couple quarters the a the but of of you size more a the having were from deals. One more a we look, those bit and is, logos I a standpoint over we new six-figure think They're at the not have are couple if like last Chad, lower nice what deals deals and still lower. on bit of there's half bringing them doing before, take

about to of would looking that want if five The customers, off four I are I thing in around those five those, $X say we're [XXX, a other now when XXX] And those million look our say I started running at right at customers over ARR. year top (ph).

shown certainly and we the fastest growing companies. mean the picked may best I that So And have they're we say the growing, fastest businesses. subscription

huge We expand. to have a opportunity

kind over so And the of are lands that we're grow after again, the when we with we're smaller long on can that term. sure that's is, going filter making putting companies there

scrutiny mean with spend, on grow then given that I each have point, started confidence not that the the and we're given But smaller if get customer companies we lifetime on, of right. now. these pursuing not Right? we're them macro we with that believe still them that can technology signing the start we That's why value has of to can situation, them that up changed.

XXX%. I on retention dollar-based maybe appreciate the And know then XXX% think, you just range. net XXX% the I Okay. the at to color. reiterated, I

and of trough terms level kind of XXX% visibility here. in that is the of confidence Just the

if you think gives Tien XXX% matter, over As improve you at or that. quarters for here, look you just that Todd potentially holds confidence or to that what the the that, next couple pipeline, Robbie of

I'll that. Chad. take maybe Sure,

rates, of highest of five is really record the that we've retention I things that the DBRR, of higher a quarters, time. good about another fact talked all rates historical retention retention about the our impact standpoint from feel two rates. quarter So this We and the last had the three first

to customers strategy ability feel them. ago keeping a been and about that lot So upon really and a enterprise. our after has And embarked going years of three right we the the good pick that

us seen four seen been The customers certainly have they're a is that we in And there's to the slowdown And a is what we've One element what a us. we've our drives actually expand about of for as think, time, or base. sequential certainly in first the quarters aren't is the on one on thing the growing that talked volume. from that volume as things second that five bit is of thing interesting additional that saw that there's uptick fast, a this volume. note, I that we purchasing of

say QX from was in The a compare year. last us tough really I other for mind, thing would is, keep

look looks of as like, take are for the our So their I reduced and see a needs different what customer and pipeline -- most we what that what recently can at and year. the that XXX% said bottom the excuse to exit the is the XXX% the we I'm or base range the confident we'll me, released, definitely beginning end year, we've products with of we in and as growth it, be at that XXX% as

Great guys. color. quarter, job Thanks the the for Great. on

Chad. Thanks,

Rob Baird. of question the next of comes line Oliver Your from

is line open. Your

Tien, Good afternoon. Good for Todd, then, one you. Great. to follow-up and the for I on guys. Thanks you be call. had a

And could the a made was hire. just you that or role. So what over bit the of out he had I Hirsch you a Tien, the to little priorities about in fit? are coming what good some enthusiasm wondering is you called and him Pete if talk has

Yeah.

for, So I he's the think, think right weeks been in I six now. job eight to

of a to little don't would were are -- we time. to really we're is is bit was understanding machine our the he's and first to innovation about So obviously capabilities brings major financial be around our adoption The point incredibly going in with of conversations to not a that well. any that is the in what at Accounting been looking Chief so we of going good to excited He's Things obviously CFOs ideas he's big systems. a AI deep view Pete that not But I a Officers areas and lot The of enthusiastic well. of and a were really drive -- of with looking here, right, starting him Pete, four do. say I lot past we and come where but in for one AI. is have make of future so going about really working people any years and want changes he's is short-term have. built that of there's surprise of thing the give a too changes, There's

month in our their in now big it's opportunity financial absolutely. experiences using to customers efficient a area right, we it and think a or more and announced announcements insights. step Center. been somewhere, Zuora financial to rates, lot the and in payment internally. areas, of It's right look obviously, more with AI XX% if AI a payments really say, systems to much, quite ago be AI obviously we you high much driving much, sort big, really products collection valuable, to But a of for from Zuora our We've retry XXs around completion use three capability product that It's capabilities subscriber all and capability back being operations, the Command area it, bit. had get We improve just can in of four to big better. does call the rates to able our a much have transform be We that around have and AI is Warehouse, something of allow

for That's you. helpful. that. one Todd, really Appreciate then, And Great.

these curious given bit pipeline as something what Is encouraging With transformation it's to kind And the in back to those service of and sign, partners makes as this guys terms expect -- hear long partners large know revenue expect taking you be there's it on deals. professional it I'd portfolio, revert the take. digital revert lands? as impact I of pressure on the the for too. expect you the sense back the complete -- it some your do is with your return? to know does potentially a end an said continue you this back? deals something on PS that to strikes do large when Thanks. But smaller of you smaller creation of you me on

lot, Hey. Thanks a Rob.

grew in So That last constant revenue the side the XX% we're subscription business. quarter. on currency absolutely focused this of

to the And we XX%, where us, run ancillary to and slight at a that You make saw that business services we the money. breakeven at gross to the margin you a that's loss. know our increased

design in to the -- business. bring down said so by we And or want services mix we the design, to our of continue

for we've and It it And something That's work that, drive so something for also bit might that additional now. us we're helps be with talking And them. over our little about It's happy some very pipe to well work comfortable with. faster quite over time. been happening now time. take been a we're that we partners have

that's over remain that range being from kind get the subscription time several we're we and my great we'll the good at will think perspective, focused I about So and very us feel next next a where of quarters margin, because provides over the where healthy, is on.

win in I we as again, subscription so term. well, want It's the I And mean, to Right? the that can long best if growing companies about business world. for

And we're are to -- going there macro the adjusting We in two the done doing our that was, our example, global and Zuora. work and they they've they're us. with with and them, continue strategy, to of that people are the been so sponsoring we because current commitments SIs, first, they've of right? become to who've two as I their -- the same top partners for and is partner our So commitment, are, of

that a So absolutely, in partner-first that strategy. continue will strategy we relationship and

Thank you.

Berenberg. line question the Your Andrew DeGasperi of comes from next of

Your line is open.

The have just for you the my of deals there, June. in of that incremental kind maybe event? interest to in ramp congrats, activity seen call particular. Well, I releases wanted reception first, have not you wondering got in Thanks of a second, assumption but necessarily taking I out, terms kind on of guess, the Luana. touch since seen to up you question. from But billing I you made was customers,

closely Absolutely. we Look, launched we in I mean, I have customers. you capabilities the tell was something them when that It our June. excited with was could about worked

successes really this customers thing Group, are a And on -- call, We incubated Zuora wouldn't Advisory without have Zuora to ideas with and the probably the out this deal we call drove and the are it deal capabilities already consumption digits, and have of -- capabilities. I billing so happened seven just that involved high ZAG of called that. of consumption tried think six-digit the these deal shy the the our I highlight some that with, key

a in see Vision. highlighted here nonmedia really a the industries existing when acquisition, already was, they I like other And we're well. that and Atlantic. vision, can has the we we are was Zephr August became -- Zephr you impact that Zephr Zephr need obviously, our But was want it We did big as vision, announcing XX-hour media that sitting Zephr it with live have big, The of the the right? look, big customer customers of subscribed we we really, can and in all bet media June. It's and outside -- the saying, again, exciting fitness space we first and the take so in and into

And of so innovations these that happening fairly you're impact the seeing are quickly.

had I And of a for that. what Thanks question. two-part then, Todd, sort

but call -- anything billings there's First, the than off just a we've question the a wondering I the coming on as faster are Rob's normally in the bit earlier services, to just there. modeled. if you And on mean, really QX. I this strong know out, follow-up was numbers don't then I'm clearly, growth secondly,

of out that the this terms you steady-state aware point, see in a sort down we number foresee that even some do beyond slightly, the that not that of flattening year, you at there's some wondering not to other level would that if we see Just lower if see but range, of? element maybe continue Would improves? we're at kind level. macro this Or at of coming maybe

Okay.

we subscription of back the to kind continue people. So go -- on calculated to focus billing,

renewals, impact That but for couple have what a certainly the this that terms and what we've we timely a a about billing bit our run of an renewals That's We've and look take it certainly talked quarter billings. ARR. situations we got Let's it. the exactly in quite That's business in things calculated movement in some of bank. forth. provides had little it, how at the time, that's in. of FX We've lot in companies different movement model bringing has and a -- is back there's where we've some some had

way the this a much -- subscription And it. at look if you again, that longer see where period to at what over time, ARR the you the pretty up is billing really, is year. look tracks XX% package growth of is So subscription the ARR

don't it’s why guide -- to flows, anything the I So to that's that think see in and and ebbs ARR. we that, there's just

go going are where I is, of services back what revenue, always or we from we services a point mix part two of quarters. couple the It's I -- think we're perspective have going look, an over to of next always revenue. ancillary might on a to you're business. standpoint a But We'll that said I'd as XX%. From change around be might probably be the our to

roll. Our to are look services how always expertise tremendous to is be there's and that implemented of knowledge that's team solve for deals teams solve team our companies have the going just to amount customers. hardest problem customers some train our that the by When to that's are to those want of help the that’s and there certain Zuora, going partners, it,

continue go said as margin that's really I on of on partner happy, the I our margins, look it's and the to though, want subscription I earlier, really to services. and preference our first. at well where the And -- to we're focused. Rob be where doing to that's Outside make revenue we on. we'll focus side, that, we're

recurring talk our which when at but subscription say, think not hey, that's our I people look is of fundamental think just I part all really of revenue. most it's the to of doing business investors, part almost I business,

Thanks. Great.

Thanks, Andrew.

Capital line Street Your Markets. Stephan next question comes of from Lake the Jacob of

Your line is open.

to well. quarter as and I'll just add my congrats here Luana congrats on the

grew me could Just to SI commentary we provide for you ones that I'm as we're QX. noted some into kind bookings QX sequentially go kind wondering partners if of here? Tien, quick seeing from what on just of two you here. QX

you want answer? do to Robbie,

Yeah.

actually extent I pieces creating our of the solutions -- them creating has SI or at partners. very the our in just think of we a And continued. that and that the actually opportunities with we're very in we we changing package mix QX partner. -- together has as direct terms momentum pipeline, there looking actual this with continued with look the And actually the was lands, at of closed one in terms that to through with to go specifically of market great

that continues So continues. pipeline that and

I highest the is look would a what or in four five nice and that if The other take growth partner is thing that, I Jacob, the that I at think, looking pipeline, pipeline this like, of sequential just was part. for fact, in and add quarter generating quarters to

about made beginning happy the really some we're of we how with of changes So the that progressing at year. the that's

over know Okay. and XXX. Great. you And they've kind in here? of out wondering so then give the on one cohort I grown could XXXX year, color But and cohort, broke just last us how XXXX maybe maybe grown here. kind by just over about some of XXX last both you or the has two ACV I'm year

can in that in that got at calls. something talk now. about It we future we’ve us right that something be front of might look not That's and

I'll that keep So in mind, Jacob.

of luck Best going forward. Understood. Okay.

All Thanks, Jacob. right.

the Jefferies. Brent Your of of next Thill question comes from line

line Your is open.

out Luv the Brent for This down line is Hi, Hi, $XX X% that ask did plans? that you Robbie. Todd, my about Was Tien. Hi, maybe maybe net ARR. just new internal questions. compare It was around taking looked Thill. Todd. to year-over-year. on that Thank how like in wanted for plans? your Sodha with, your Or with to one internal million, start you for to

Luv. Hey,

about question. it. lot the At end of we a So last for quarter, thanks talked the

million, thought added about accelerated $X some. worth actually I $X I I it'd million, we be We flat. said think

half in second So I did we was that to that year. accelerate we of have that acceleration. very pleased expect the again, would And the

SaaS guidance weighted done year, provide full on we done historically I look weighting what the higher in have we've And the in that do less the but have And take take not only than The much the as other is weighted look when we and Zuora, I a for the guide end. companies second thing guidance back what half. know, you second in when what the historically, half. is what at most at a got we've

I feel we pipeline, done that rates, close in that seeing if into we're comfortable take half. continue the seeing see again, in we're look So we'll what historically, at a second what the we've what acceleration

it. Got

around fair? guide, just a that ARR, are back guess, the factoring acceleration half in that you comment buying reconciling in with the in into half. expecting net some similar patterns Is back I So, you

a certainly like a keep had of I And correct. is you compare last One things is in of That QX mind. tough couple year. said, to in

an again, half half from third you any people as start will easier business cadence our third compare fourth that build of the close obviously, quarter the in as to But the And not is of the quarter or develop us. year fourth kick much other that, the new the be you certainly a see the year in works, second seeing we expect second their acceleration and quarter SaaS as pipeline, a the quarters. just for So company. start off, and territories, largest atypical always company, our second off

and headwinds I But against does the guess opportunity And upsell on that commentary ARR -- seeing? over you. the faster. you how the near I impact the one smaller term? it. landing obviously, maybe you longer that term, appreciate Thank do around And were quick the how over lands smaller the Got follow-up offset

mean a that's great Luv, I this Tien is here. question.

one, same question And lifetime what value is up we're look, customer believe still reasons smaller customer the of It's implications the are that? we lands, the doing if highlighted, you're target same. where is, the the so the we signing

with smaller, and live a ultimately continue once goal get can to we when doing faster them. them so we And we our land, grow are that is

we're the thinking how that you I business. would approach that so mindset about have And is the

Yeah.

do grow a that for to as that. opportunity it's results us, we seeing we an those ability the from relationship and Just that, it's to feel customers and And that's us our great and expand. for to forward. with us that then And we're great, strongly reiterate for go I have approach the

Got it. Appreciate it.

And It's what have disciplined is again, think being opportunity the I initial their one land. we've that opportunity right the thing it's picking customers that's -- the and last within seen that is the well, size what you to their not One those who have we're super -- of the about in is build. and business. targeted

and starting the a that's very at that of business model. media the products of company beginning from that monetize automobile services. in opportunities, an is maybe the field not that's only someone to journey, advertising these billing maybe that's on. in new or we that's moving tech provide a huge subscriber there. additional suite the all us the through those We're full new manufacturer the And can their to products putting Maybe So add growing the

the deals that one two really quarter over Zephr. this deals And media us of the of But Atlantic And lighter. that Zuora. one help is Zephr for a was that you plus And deal good bit of highlighted. another Zuora, the the little other very had, The that's been us, saw thing was million tend a be of was, nice on biggest including was too, lands things Zephr and Zephr $X we again, the to that we plus

land of at we front the opportunities things can we've some a size, maybe have in them. So nice as those but opportunities large of past, a as done not got of we've the as lot growth in

it. Thanks, Got helpful. Super Todd.

Your next Vafi question Joseph Canaccord. comes of of from the line

Your line is open.

congratulations if on Luana, And you're your second afternoon. guys. Good son. Hey in, listening

She is I already. getting listening. am text

profitability know been I profile its outside is of the But the don't seem other maybe have of the Zephr media vertical. you of of lot like -- does that much terms But business metrics. maybe of just break some kind out it doing already. A and in asked all answered moving and well, questions

any Zephr And any over of so some perhaps if think least contribution should might products we there's provide kind mix add relative versus qualitatively, its it to on profile time. of at core you color how it can about the and

halfway the through so Zephr that far break about profile. their right? there's And plan change we margin only would for you would don't above year-to-date. but them really the year, I their gross it that They're is Yes, team special tell out, nothing

note, Joe, Zephr would us, extensible I second Zuora the guess I And thing of accelerator seeing in of plus vertical. that portfolio. an one the is now Zuora would the other technology is media is we're point for then things elsewhere is be in especially that that The too,

within fitness. saw You companies the talking with that that the of media we're of XX-hour that We've got upsell vertical. outside other are

again, So good now really fully is feel into But Zuora. we that. Zephr integrated about

room But we of we necessarily continue year, put And made saw were track that took business. the profit in you don't in. disciplined that incremental. our on that know, we so we And portfolio We investment, when investment very financials last as wasn't to we as the improve.

does was few thoughtful it later, a on mean a add, it I a Sure. like later, quarters so congrats that. year seem

were really here you macro with seeing cost and So slowing of structure we're kind as -- flow. maybe some the some know proactive solid down. And of secondly, was the obviously, profitability with the benefits I there free cash

of tweak like around for when and not you while your but to a or better or margin may your -- we go-to-market like you're high-class better, Just from in Thanks. macro profile would here strategy expect I macro. that if flattening to the versus a get would case we on we some like stronger a problem we just macro get just something be providing into we the of might see -- guidance, go-to-market how a gets -- expect know thoughts kind expect might what situation and a and wondering what

in two Joe. So ways, I'll I that guess answer

first the margins. we I our regardless thing the expanding what looks is are to of absolutely macro like think committed,

and good was able structured, to resources see on we would selling get be certainly the Robbie's opportunity and started leverage accelerate there if got add that. to to have that, able The that. we Now leverage team way to an additional you the be from make do investments to

you what growing continue grow. see is going the as might to they're margins aren't So fast, to but

Nice very to the see Thanks much, results. it. Got great guys.

Joe. Thanks,

Joe. Thanks,

turn I closing Tzuo call are further will for questions to back no any There at this the now time. Tien remarks.

we obviously a forward and and to for are our sharing importantly, another for to outside on talking remain everyone, entire lot. today. calls the all looking these solid Congratulations organization additional Thanks, most strategy Thanks with to in committed you of innovations product the quarter. us you year. rest We joining to the half and

today's concludes call. This conference

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