Zuora

What is Zuora?

Founded in 2007, Foster City-CA based Zuora provides subscription billing as well as recurring revenue, payments, and billing solutions. The company’s solutions cover subscription packaging catalog, subscription lifecycle management, hosted B2C commerce pages, automated invoicing, electronic payment collections, taxation, and numerous other features. It provides its solutions to industries such as cloud services, communications, media, and healthcare industries worldwide.

How much are they worth and why?

$1.12 billion as of March, 2015.  Zuora is a lesser-known unicorns, but it powers the subscription sales of a lot of big businesses like Dell, Box, and Qualcomm. Zuora is rumored to be getting ready for an IPO and in preparation the company has already raised a total of $243 Million.  In a Wall Street Journal article dated March of 2015, Zuora CEO Tien Tzuo said the company was closing in on a $100 million revenue run rate. The implied Sales multiple is approximately 10. As a benchmark, average revenue multiples in Software for System and Applications is around 5.

Strengths

Ease of Use and Integrations:  Zuora provides everything customers need to set up subscriptions for their products, whether they be tangible items or online services. Zuora easily handles billing, collections, accounting and metrics on subscriptions that customers can track. The software is already integrated with Salesforce and other most major Accounting Cloud products.

Team:  Zuora was founded by Tien Tzuo , the 11th employee at Salesforce.com and helped build that company, a major innovator in the Cloud software industry.  Mr. Tzuo believed correctly that the shift to Cloud change would also force a shift in the way people paid for things, from discrete one-off payments to online subscriptions.

Weaknesses

Dependencies:  Zuora is dependent on both the Cloud trend (its business is Cloud based) and the trend towards Subscriptions. If either of those shifts, the company may not have time to adapt.

Opportunities

Analytics:  The company has only made one acquisition so far (Frontleaf) but could do many more to achieve the goal of helping customers not just manage but also fully understand and optimize their Subscriptions an Sales.

 Threats

ERP players:  companies like Oracle and SAP have deep pockets and the customers in place to offer subscription management services. If they entered the market, it would pose an immediate threat to Zuora.

Startups: After Zuora started,  a wide range of startups entered the market to challenge Zuora. These include Aria, Recurly, Chargify, and Spreedly.

Note for our customers in Japan:  Zuora already has an office in Japan and is actively targeting Japanese customers.