Subscription software pioneer Zuora promises return to growth

It was Zuora’s first meeting with Wall Street analysts since the summer of 2019.

Subscription economy pioneer Zuora Monday held its first analyst day meeting since June of 2019, promising the attendees of the virtual event that its subscription revenue will rise 25% or more, annually, by the end of its fiscal year ending in January of 2025. 

Last year, revenue growth slowed to just 11% from the 17.4% it was in 2019.

Zuora's revenue growth slowed last year as the company ran into challenges integrating product and selling to larger enterprises. The company has since made changes to management, such as adding chief product officer Sri Srinivasan in January, formerly head of Cisco Systems's WebEx conferencing business, and Microsoft's Dynamics 365 software business.

In opening remarks to the analysts, Zuora's CEO and co-founder, Tien Tzuo, said the company had been "humbled" by the slowdown of its growth. 

"In the last couple of years, however, and now even as subscriptions continued to proliferate, you've seen our growth slow. And quite frankly it's been a humbling experience."

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Tzuo said the company has addressed challenges and is ready to return to growth:

Now in recent quarters you've heard us address some of our challenges. We had product integration challenges and you've heard us talk quarter-over-quarter about the steps that we took to overcome that. We did go-to-market motion now a quite frankly it wasn't scaling it wasn't evolving quickly enough to meet the needs of the market. And so you've heard us talk quarter-over-quarter about the steps that we took to overcome that. You know our technology has always been recognized as best-in-class. We realize that it was a bit rigid it was hard to customize for those last mile and needs which led to longer implementation times and some customer frustration. Now I'm here to say that we believe we've addressed these challenges and are now poised to return to the growth path that we've always envisioned. 

In a deck of slides prepared for the event, Zuora noted that established companies such as tire maker Bridgestone have signed up to use Zuora's software, joining early adopter customers such as Zoom. 

In addition to the subscription revenue growth, the company promised that its annualized recurring revenue, or ARR, will rise by 25% to 30% come 2025. 

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