Shares in Zuora Inc. surged nearly 6% in late trading today after the cloud subscriptions services company beat earnings and revenue expectations in its fiscal 2025 second quarter and forecast a stronger-than-expected outlook.
For the quarter that ended on July 31, Zuora reported adjusted earnings per share of 19 cents, up from seven cents in the same quarter of fiscal 2024, on revenue of $115.4 million, up 7% year-over-year. Both were beats, as analysts had expected to see adjusted earnings per share of 10 cents on revenue of $112.62 million.
Subscription revenue in the quarter rose 9% year-over-year, to $104.1 million, driven by customer growth and increased spending. Zuora ended the quarter with annual recurring revenue of $412.3 million, up from $384.2 million the year prior. It also ended July with 445 customers with an annual contract value equal to or greater than $250,000, up one from a year ago. Customer acquisitions in the quarter included Canva Pty. Ltd., The Economist Newspaper Ltd. and Dark Matter Technologies Inc.
Net cash provided by operating activities in the quarter came in at $11.4 million, up from $5.4 million a year prior, and Zuora ended the quarter with $542.4 million in cash and investments on hand.
“In the second quarter, we reached our goal to operate at a Rule of 30 two quarters ahead of plan,” said Chief Financial Officer Todd McElhatton. “We remain committed to margin expansion and profitability as we navigate this challenging market.”
Highlights in the quarter included the announcement on June 18 that Zuora had entered an agreement to acquire Sub(x), an artificial intelligence solution for digital publishing and media companies, for an undisclosed price. Zuora intends to use the technology from Sub(x) to transform its existing paywall offering into an AI-powered paywall solution to gain deeper insights into subscriber behavior. The acquisition was finalized earlier this month.
The acquisition of Sub(x) followed Zuora’s acquisition of software-as-a-service and pricing platform company Togai Inc. for an undisclosed sum in the previous quarter.
For its fiscal third quarter, Zuora expects adjusted earnings per share of 11 to 12 cents on revenue of $115 million to $117 million. Analysts had been expecting 10 cents and $115.1 million.
Zuora revised its fiscal full-year forecast upwards as revenue starts coming in from its acquisitions of Sub(x) and Togai, with the company now expecting adjusted earnings per share of 56 to 58 cents on revenue of $455.5 million to $461.5 million.