Zuora Stock Tanks 30% after Disappointing Sales Forecast

Zuora Inc

One $2.2 billion-dollar company saw almost a third of its market cap wiped off in a matter of hours. Shares of cloud-developer Zuora Inc (NYSE: ZUO) fell by almost 30 percent on Thursday in after-hours trading.

The software company provided a sales forecast that fell below what analysts had expected for the firm. As a result, the company fell drastically over the past few hours.

Zuora reported a narrower loss in the fiscal 2020 first quarter but saw its overall sales forecast decline. The company said it lost $20.6 million, or 19 centers per share, in the quarter. This was worse than the $17.8 million loss, or 40 cents per share, seen during the same time last year.

Despite the fact that revenue rose by 22 percent to $64.1 million, sales estimates for the year was around $30 million below what analysts had expected, $268 million instead of the anticipated $292 million.

“In the first quarter, we saw 32 percent growth in subscription revenue and an increase in customer usage of our solutions,” said Tien Tzuo, Founder and CEO of Zuora, in an official press release. “We continue to be excited by the healthy demand for subscription business models, but we are making changes to our sales approach to scale the business to the next level, which tempers our expectations for the remainder of the year. Our confidence in the long-term growth trajectory for the company remains unchanged.”

Zuora, which went public last year, ended up adopting new revenue recognition rules which came into effect February 1st. The new reporting methods changed when sales were recorded depending on the contract terms. The company’s software mainly targets B2B clients and other companies, helping manage their subscription businesses.

Zuora was first founded 12 years ago by Tien Tzuo, who used to be the former chief marketing officer at Salesforce. ‘

The company has yet to turn a profit, something not uncommon for tech start-ups, but most other results reported by the company were within analyst expectations. While shares surged post-IPO, they ended up tumbling back down shortly after and remained relatively low during the last quarter of 2018.

Shares of Zuora fell by $5.82, losing 29.25 percent and selling just under $14 per share. Over the past year, the company has had some volatile spikes, almost doubling a couple of times back in 2018.

While shares have risen somewhat over the past year, today’s drop marked the biggest single-day loss for the company, hitting a new all-time low since the company first went public in April at just over $14 per share.

Zuora Company Profile

Zuora Inc provides cloud-based software on a subscription basis that enables companies in various industries to launch, manage, and transform into a subscription business.

The firm offers Zuora Central platform that acts as an intelligent subscription management hub that automates the subscription order-to-cash process, including quoting, billing, collections, analytics, and revenue recognition.

Its products include Zuora Billing, Zuora RevPro, Zuora CPQ, Zuora Insights, and Zuora Collect. Zuora caters to various industries comprising software, hardware, media, transportation, construction, healthcare, education, retail, Internet of Things, and others worldwide. – Warrior Trading News