Zuora (ZUO)

I wonder if anyone has looked at Zuora. The company enables businesses to convert to the subscription model but two analyst’s opinion differ on the opportunity here for the company’s growth. After the IPO pop the SP is now nicely falling back (hit quite hard yesterday) - but shorts have risen. I believe the founder formerly had a senior post at CRM. I am troubled by not being able to find an insider ownership figure though it must surely exist. The company is quite small (sales of ~ 187m) and some would also say the GM is too low to be worthy of interest (only 50!). Interested in any views.



I did a few weeks ago. I recommended again buying it. The stock is down from 36 to 25 which has improved it’s valuation quite a bit.



I don’t own any Zuora, but have considered it - I like the idea that they are enabling the “subscription” model for businesses - I think the merits of subscription based businesses have been discussed on the board and I’m convinced that the trend is important.

Whether Zuo is the right company to ride this wave into the future is another question - but I’m intrigued.


When picking up the best companies, why would you invest in Zuo when you could pick Smar? Smar is growing Revenues last quarter at 63% and it has a GM ratio of 90%. I think you have a better chance of Smar becoming profitable.



I am troubled by not being able to find an insider ownership figure…

You’re not likely to find a figure from a secondary source right now because the structure at
IPO was somewhat complicated and is still in flux.

Best thing to do is work it out yourself.

There are two classes of common stock, and there were six classes of preferred stock that had to
be converted at the IPO. You can work out the current insider ownership figure by starting with
the prospectus on 4/18/2018 and going through the subsequent Form 4’s, 3’s and 13-G’s. It might
take you 1/2 hour.


P.S., you’ve asked several times about a comparable index. There is one. It’s called the BVP
Cloud Index, maintained since 2011 by Bessemer Venture Partners:



Discussed in some detail on the NPI with the summary of bull/bear argument/concerns near end of thread.



Thanks Ethan, very helpful notes.