Zuora, a forward-thinking cloud-based business management provider that for years has proclaimed the viability of what it calls the “subscription economy,” started selling its stock publicly on the New York Stock Exchange April 12.
The Redwood City, Calif.-based company’s stock originally was offered at $14 per share under the “ZUO” symbol; the stock jumped 43 percent to $20 at opening, and by closing on April 12, the shares were priced at $20.05. The initial price range for the stock had been between $9 and $11, so the first day's performance was excellent by any standard.
Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC served as the joint lead bookrunners for the offering.
Zuora claims that its frontline product, Zuora Central, is the only cloud-based software platform that coordinates several business-model operations for any business.
What Zuora Does
Zuora Central is an intelligent hub that sits between ERP (enterprise resource planning) and CRM (customer relationship management). Neither of these technologies was originally designed to handle the operational and financial implications associated with subscription business models, CEO Tien Tzuo (pictured) told eWEEK.
Zuora Central enables any company to manage its complex, recurring and hybrid revenue business models in one dashboard, in real time, Tzuo said. Zuora Central integrates six essential order-to-cash engines that power the real-time updates across Zuora’s product portfolio (Zuora Billing, Zuora RevPro, Zuora Collect, Zuora CPQ, and Zuora Insights), third-party applications and the more than 100 apps in the Zuora Connect Marketplace.
So what was the biggest takeaway in going public on this big day in the 10-year-old company’s history?
“It’s mainly a testament to what we see as the arrival of the subscription economy,” Chief Financial Officer Tyler Sloat told eWEEK. “We’re going to use the money to continue to grow the business. We’ve shored up our balance sheet, and we have the capability of continuing to execute and innovating on new customers. We see this as a very long journey; we’re in the early days of the subscription economy, and we really are the only game in town.”
Now It Has the Financial Backing It Needs
About 20 percent of Zuora’s revenue comes from outside the U.S., including Japan, China and India, Sloat said. The company’s now past the $300 million annual revenue mark, yet it still had a lot of explaining to new to new potential customers.
“We’re dealing with some of the largest companies around the globe,” Sloat said. “They’re looking at us to be their future system of record to handle their new business models. Being a private company, I personally have had to get on the phone with CFOs of large companies to talk about financial viability, and are we going to be a sustainable business?
"And now we don’t have to have those conversations because they can see that we’ve built a business model that’s sustainable, that we have the capital that’s required, and that they can partner with us for the long haul.”
Sloat said Zuora is growing at 30 percent along with the subscription economy, and that the growth is accelerating. “We’re going to be there as companies begin to shift (to the cloud),” he said.
Zuora: The Only Game in Town?
Why does Zuora consider itself the only game in town, when it comes to cloud-based all-purpose business platforms?
“There’s a litany of small players out there, but none of these companies are going to be able to walk into Ford and say, ‘Are you going to trust your entire future connected-car initiative on us? Or go into GM and say, ‘Do you want to shift your entire OnStar business onto us?” Sloat said. “They can’t do that. We can. This is really, really hard what we’ve built. We’re the first company to build a cross-vertical, or any vertical solution, that serves both B2C and B2B, do it at scale—on one side enterprise grade—and do it on a global basis.
“It’s a core billing solution that can handle the entire customer record and everything around it.”
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Image by Chris Preimesberger from CNBC