I’ve seen this company mentioned here before but without much discussion. Zuora (ZUO) is an enterprise software company that designs SaaS applications and sells access to these applications, using a subscription business model, to client companies. Zuora’s applications are designed to automate billing, commerce, and finance operations.
It recently IPO’d in April with trading starting at $20. It rose into the mid to high 30’s a couple times with a high of $37.78 in June. It’s traded down to about $26 now.
It’s enterprise value is $2.6 billion with $168 million in revenue in 2018. This gives it an EV/S ratio of 15.5. Revenue growth was 22.6% in 2017 and 48.6% in 2018. Revenue is expected to increase 36.3% to $229 million over the next year. It’s not yet profitable but losses have been gradually decreasing from $37 million to $24 million over the past 3 years. One analyst expects it to break even on cash flow in 2020.
Here’s a positive write-up from the MF:
https://www.fool.com/investing/2018/08/11/its-time-to-get-gr…
It makes a bullish case with a comparison to the hugely successful VEEV (which I own) with the CEO following a similar path. The CEO is a former Salesforce executive (#11 employee) who left to found ZUO and owns just over 10% of shares. The company has a high glass door rating of 4.6 and high CEO approval rating of 94%. It has emerging moats from high switching costs and network effects.
It’s current addressable market is about $2 billion but this is expected to grow rapidly to about $9.3 billion by 2022 and ZUO is likely to expand into another areas.
What do others here think? Is ZUO a buy?
dave
(I hope this a decent introduction, let me know if it could be improved)