Zuora stock surges after earnings top expectations

The company posted a fiscal third-quarter net loss of $16.8 million, or 14 cents a share, compared with a loss of $18.2 million, or 16 cents a share, a year earlier. After adjustments, Zuora
ZUO,
+1.72%
lost a penny per share, an improvement from its 9-cent per-share loss a year earlier. Analysts tracked by FactSet were modeling a 5-cent adjusted loss per share.

Zuora’s sales for the fiscal third quarter rose to $77.2 million from $71.8 million, while analysts were expecting $73.9 million.

The stock was up more than 7% in after-hours trading.

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Chief Executive Tien Tzou told MarketWatch that the company is noticing a warmer reception to subscription-based business models both from companies whose businesses have been negatively impacted by the pandemic and those who’ve seen positive effects. “The resilience of a recurring revenue model” is helping companies “weather the storm of the current situation,” he said.

Zuora’s churn rate was a source of concern coming out of the company’s last earnings report, but Chief Financial Officer Todd McElhatton said that the company has moved past some those headwinds. “We had a good quarter in terms of turning things around on churn,” he told MarketWatch.

Though Zuora’s net dollar retention rate stayed constant at 99% compared with what the company disclosed in its prior report, McElhatton said that the figure is a trailing four-quarter metric, meaning it will take time for Zuora to lap the weaker parts of the pandemic.

For the fiscal fourth quarter, Zuora expects revenue of $75 million to $77 million and an adjusted loss per share of 5 cents to 6 cents. Analysts tracked by FactSet were modeling $74.3 million in revenue and an adjusted loss per share of 5 cents.

Zuora shares have declined 18% so far this year as the S&P 500
SPX,
-0.06%
has risen 13%.