# EDGAR Filing Document

**Accession Number:** 0001423774
**File Stem:** 0001423774-23-000030
**Filing Date:** 2023-3
**Character Count:** 52048
**Document Hash:** 816a760d4c3fad60a9264ecc87d696b7
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001423774-23-000030.hdr.sgml**: 20230301

**ACCESSION NUMBER**: 0001423774-23-000030

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 13

**CONFORMED PERIOD OF REPORT**: 20230301

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230301

**DATE AS OF CHANGE**: 20230301

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ZUORA INC
- **CENTRAL INDEX KEY:** 0001423774
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-PREPACKAGED SOFTWARE [7372]
- **IRS NUMBER:** 205530976
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0131

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38451
- **FILM NUMBER:** 23693545

**BUSINESS ADDRESS:**
- **STREET 1:** 101 REDWOOD SHORES PARKWAY
- **CITY:** REDWOOD CITY
- **STATE:** CA
- **ZIP:** 94065
- **BUSINESS PHONE:** 888-976-9056

**MAIL ADDRESS:**
- **STREET 1:** 101 REDWOOD SHORES PARKWAY
- **CITY:** REDWOOD CITY
- **STATE:** CA
- **ZIP:** 94065

?xml version="1.0" ? zuo-20230301

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**_________________________________________**

**FORM 8-K**

**_________________________________________**

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934**

**Date of Report (Date of earliest event reported): March 1, 2023**

**_________________________________________**

**Zuora, Inc.**

(Exact name of registrant as specified in its charter)

**_________________________________________**

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| | | |
|:---|:---|:---|
| **Delaware** | **001-38451** | **20-5530976** |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |

---

---

| | |
|:---|:---|
| **101 Redwood Shores Parkway, Redwood City, California** | **94065** |
| (Address of principal executive offices) | (Zip Code) |

---

**Registrant's telephone number, including area code: (888) 976-9056**

**Not Applicable**

(Former name or former address, if changed since last report.)

**_________________________________________**

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

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| | | |
|:---|:---|:---|
| **<u>Title of each class</u>** | **<u>Trading Symbol(s)</u>** | **<u>Name of each exchange on which registered</u>** |
| **Class A common stock, par value $0.0001 per share** | **ZUO** | **New York Stock Exchange** |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □

 

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**Item 2.02 Results of Operations and Financial Condition.** 

On March 1, 2023, Zuora, Inc. ("Zuora") issued a press release announcing the financial results of its fiscal quarter and full year ended January 31, 2023. The press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

The information in this current report, including Exhibit 99.1, are furnished and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in Exhibit 99.1 shall not be deemed incorporated by reference in any registration statement or other document filed with the Securities and Exchange Commission by Zuora, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.

**Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.**

On February 24, 2023, Sri Srinivasan informed Zuora of his intention to resign from his position as Zuora's Chief Product and Engineering Officer effective on March 31, 2023. Zuora is conducting a search for his replacement, and internal leaders are managing the product and engineering organizations until such replacement is hired.

**Item 9.01 Financial Statements and Exhibits.** 

**(d) Exhibits**

The following exhibit is furnished as part of this report:

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| | |
|:---|:---|
| <u>Exhibit Number</u> | <u>Description</u> |
| 99.1 | <u>[Press release, dated March](a20230131q4earningsrelease.htm)[1](a20230131q4earningsrelease.htm)[, 202](a20230131q4earningsrelease.htm)[3](a20230131q4earningsrelease.htm)[, issued by Zuora, Inc.](a20230131q4earningsrelease.htm)</u> |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document). |

---

------

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | |
|:---|:---|:---|
| | | **ZUORA, INC**. |
| | | (Registrant) |
| &nbsp;&nbsp;Dated: March 1, 2023 | &nbsp;&nbsp;By: | &nbsp;&nbsp; /s/ Todd McElhatton |
|  |  | &nbsp;&nbsp;Todd McElhatton |
|  |  | &nbsp;&nbsp;Chief Financial Officer |

---

## Exhibit 99.1

Exhibit 99.1

**Zuora Reports Fourth Quarter and Full Year Fiscal 2023 Results**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• Full year subscription revenue grew 18% year-over-year, 20% on a constant currency basis.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• Full year total revenue grew 14% year-over-year, 17% on a constant currency basis.*

**Redwood City, Calif. –** March 1, 2023 **–** Zuora, Inc. (NYSE: ZUO), a leading monetization platform provider for recurring revenue businesses, today announced financial results for its fiscal fourth quarter and full year ended January 31, 2023.

"Q4 was another solid quarter where we came in ahead of guidance across our operating metrics, including revenue, free cash flow, net dollar retention and non-GAAP operating income," said Tien Tzuo, founder and CEO at Zuora. "We continue to successfully execute our land and expand strategy based on the clear demand for billing, revenue and subscription management solutions. Looking ahead, we're committed to balancing growth and profitability in the upcoming fiscal year."

**Fourth Quarter Fiscal 2023 Financial Results:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Revenue:** Total revenue was $103.0 million, an increase of 14% year-over-year and 17% on a constant currency basis. Subscription revenue was $89.5 million, an increase of 16% year-over-year and 20% on a constant currency basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **GAAP Loss from Operations:** GAAP loss from operations was $23.7 million, compared to a loss from operations of $34.2 million in the fourth quarter of fiscal 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Non-GAAP Income (Loss) from Operations:** Non-GAAP income from operations was $2.2 million, compared to a non-GAAP loss from operations of $0.6 million in the fourth quarter of fiscal 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **GAAP Net Loss:** GAAP net loss was $31.9 million, or 31% of revenue, compared to a net loss of $35.2 million, or 39% of revenue, in the fourth quarter of fiscal 2022. GAAP net loss per share was $0.24 based on 134.3 million weighted-average shares outstanding, compared to a net loss per share of $0.28 based on 127.1 million weighted-average shares outstanding in the fourth quarter of fiscal 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**• Non-GAAP Net Loss:** Non-GAAP net loss was $5.8 million, compared to a non-GAAP net loss of $1.5 million in the fourth quarter of fiscal 2022. Non-GAAP net loss per share was $0.04 based on 134.3 million weighted-average shares outstanding, compared to a non-GAAP net loss per share of $0.01 based on 127.1 million weighted-average shares outstanding in the fourth quarter of fiscal 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Cash Flow:** Net cash used in operating activities was $18.0 million, compared to net cash provided by operating activities of $10.4 million in the fourth quarter of fiscal 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**• Free Cash Flow:** Free cash flow was negative $20.1 million compared to $7.6 million in the fourth quarter of fiscal 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Cash and Investments:** Cash and cash equivalents and short-term investments were $386.2 million as of January 31, 2023.

------

**Full Year Fiscal 2023 Financial Results:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Revenue:** Total revenue was $396.1 million, an increase of 14% year-over-year and 17% on a constant currency basis. Subscription revenue was $338.4 million, an increase of 18% year-over-year and 20% on a constant currency basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **GAAP Loss from Operations:** GAAP loss from operations was $111.5 million, compared to a GAAP loss from operations of $96.2 million in fiscal 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Non-GAAP Income (Loss) from Operations:** Non-GAAP income from operations was $2.5 million, compared to a non-GAAP loss from operations of $8.1 million in fiscal 2022. Fiscal year 2023 was the first full year that we generated positive non-GAAP income from operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**• GAAP Net Loss:** GAAP net loss was $122.0 million, or 31% of revenue, compared to a GAAP net loss of $99.4 million, or 29% of revenue, in fiscal 2022. GAAP net loss per share was $0.93 based on 131.4 million weighted-average shares outstanding, compared to a net loss per share of $0.80 based on 124.2 million weighted-average shares outstanding in fiscal 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Non-GAAP Net Loss:** Non-GAAP net loss was $17.2 million, compared to a non-GAAP net loss of $11.3 million in fiscal 2022. Non-GAAP net loss per share was $0.13 based on 131.4 million weighted-average shares outstanding, compared to a non-GAAP net loss per share of $0.09 based on 124.2 million weighted-average shares outstanding in fiscal 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Cash Flow:** Net cash used in operating activities was $20.6 million, compared to net cash provided by operating activities of $18.7 million in fiscal 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Free Cash Flow:** Free cash flow was negative $31.3 million compared to $10.3 million in fiscal 2022.

A description of non-GAAP financial measures is contained in the section titled "Explanation of Non-GAAP Financial Measures" below and a reconciliation of GAAP and non-GAAP financial measures is contained in the tables below.

**Fourth Quarter Key Metrics and Business Highlights:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** Customers with ACV equal to or greater than $100,000 were 773, up from 747 as of January 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Dollar-based Retention Rate was 108%, compared to 110% as of January 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our ARR was $365.0 million compared to $313.9 million as of January 31, 2022, representing ARR growth of 16%, compared to 20% as of January 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Customer usage of Zuora solutions grew, with $23.8 billion in transaction volume through Zuora's billing platform during our fourth quarter, an increase of 12% year-over-year and 13% on a constant currency basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Launched purpose-built, end-to-end billing and revenue recognition for consumption-based pricing, giving companies a comprehensive solution to quickly iterate across quote-to-cash and revenue accounting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• New customer logos and go-lives included AVEVA, Donnelley Financial Solutions (DFIN), Microsoft, Scout24, SimpliSafe and Stellantis.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Announced the departure of Chief Product and Engineering Officer Sri Srinivasan, who will leave Zuora at the end of March. Zuora is conducting a search for his replacement, and internal leaders are managing the product and engineering organizations until the replacement is hired.

**Financial Outlook:**

As of March 1, 2023, we are providing guidance for the first quarter and full fiscal year 2024 based on current market conditions and expectations. We emphasize that the guidance is subject to various important cautionary factors referenced in the section entitled "Forward-Looking Statements" below.

For the first quarter and full fiscal year 2024, Zuora currently expects the following results:

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| | | |
|:---|:---|:---|
| | First Quarter | Fiscal 2024 |
| Subscription revenue | $88.0M - $89.5M | $374.0M - $384.0M |
| Professional services revenue | $13.0M - $13.5M | $54.0M - $56.0M |
| Total revenue | $101.0M - $103.0M | $428.0M - $440.0M |
| Non-GAAP income from operations | $4.0M - $5.0M | $26.0M - $31.0M |
| Non-GAAP net income per share<sup>1</sup> | $0.00 - $0.01 | $0.07 - $0.11 |
| ARR growth<sup>2</sup> |  | 12% - 15% |
| Dollar-based Retention Rate<sup>2</sup> |  | 107% - 109% |
| Free Cash Flow<sup>3</sup> |  | $24.0M+ |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Non-GAAP net loss per share was computed assuming 136.2 million and 140.0 million weighted-average shares outstanding for the first quarter and full fiscal year 2024, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Refer to the "Operating Metrics" section below for how we define ARR and Dollar-based Retention Rate. ARR growth is calculated by dividing the annual recurring revenue (ARR) as of a period end by the ARR for the corresponding period end of the prior fiscal year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Free cash flow includes the expected impacts of the following: tax-related and acquisition-related expenses associated with our acquisition of Zephr Inc Limited (Zephr), costs associated with the workforce reduction we approved in November 2022, and lower billings related to the macroeconomic environment including extended deal cycles.

These statements are forward-looking and actual results may differ materially. Refer to the "Forward-Looking Statements" safe harbor section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Zuora has not reconciled its guidance for non-GAAP income from operations to GAAP loss from operations or non-GAAP net income per share to GAAP net loss per share because stock-based compensation expense cannot be reasonably calculated or predicted at this time. Additionally, free cash flow has not been reconciled to operating cash flows as it cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation of these non-GAAP measures is not available without unreasonable effort.

**Webcast and Conference Call Information:**

Zuora will host a conference call for investors on March 1, 2023 at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss the company's financial results and business highlights. Investors are invited to listen to a live webcast of the conference call by visiting https://investor.zuora.com. A replay of the webcast will be available through March 1, 2024. The call can also be accessed live via phone by the toll-free dial-in number: 1 (888) 440-5655 or toll dial-in number: 1 (646) 960-0338 with conference ID 8022374. An audio replay will be available shortly after the call and can be accessed by dialing 1 (800) 770-2030 or 1 (647) 362-9199 with conference ID 8022374 available from March 1, 2023 at 4:00 p.m. PT to March 8, 2023 at 11:59 p.m. PT.

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**Explanation of Non-GAAP Financial Measures:**

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain non-GAAP financial measures, including: subscription revenue and total revenue that exclude the impact of foreign currency exchange rate fluctuations (constant currency basis); non-GAAP cost of subscription revenue; non-GAAP cost of professional services revenue; non-GAAP gross profit; non-GAAP total gross margin; non-GAAP subscription gross margin; non-GAAP professional services gross margin; non-GAAP research and development expense; non-GAAP sales and marketing expense; non-GAAP general and administrative expense; non-GAAP operating margin; non-GAAP income (loss) from operations; non-GAAP net loss; non-GAAP net loss per share; and free cash flow. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP.

We use non-GAAP financial measures in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our Board of Directors concerning our financial performance. We believe these non-GAAP measures provide investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of our operating results. We also believe these non-GAAP measures are useful in evaluating our operating performance compared to that of other companies in our industry, as they generally eliminate the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance.

We exclude the following items from one or more of our non-GAAP financial measures:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• Stock-based compensation expense*. We exclude stock-based compensation expense, which is a non-cash expense, because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, stock-based compensation expense is not comparable across companies given it is calculated using a variety of valuation methodologies and subjective assumptions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• Amortization of acquired intangible assets*. We exclude amortization of acquired intangible assets, which is a non-cash expense, because we do not believe it has a direct correlation to the operation of our business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• Charitable contributions*. We exclude expenses associated with charitable donations of our common stock. We believe that excluding these non-cash expenses allows investors to make more meaningful comparisons between our operating results and those of other companies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Certain litigation*. We exclude non-recurring charges and benefits, net of insurance recoveries, including litigation expenses and settlements, related to litigation matters that are outside of the ordinary course of our business. We believe these charges and benefits do not have a direct correlation to the operations of our business and may vary in size depending on the timing and results of such litigation and related settlements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*• Asset impairment*. We exclude non-cash charges for impairment of assets, including impairments related to internal-use software and office leases. Impairment charges can vary significantly in terms of amount and timing and we do not consider these charges indicative of our current or past operating performance. Moreover, we believe that excluding the effects of these charges allows investors to make more meaningful comparisons between our operating results and those of other companies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Change in fair value of warrant liabilities.* We exclude the change in fair value of warrant liabilities, which is a non-cash gain or loss, as it can fluctuate significantly with changes in Zuora's stock

------

price and market volatility, and does not reflect the underlying cash flows or operational results of the business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Acquisition-related transactions.* We exclude acquisition-related transactions (including integration-related charges) that are not related to our ongoing operations, including expenses we incurred and gains or losses recognized on contingent consideration related to our acquisition of Zephr. We do not consider these transactions reflective of our core business or ongoing operating performance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Workforce reduction*. We exclude charges related to the workforce reduction plan we approved in November 2022, including severance, health care and related expenses. We believe these charges are not indicative of our continuing operations.

Additionally, we believe that the free cash flow non-GAAP measure is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures, net of insurance recoveries, as these net expenditures are considered to be a necessary component of ongoing operations. Insurance recoveries include amounts paid to us for property and equipment that were damaged in January 2020 at our corporate headquarters.

Zuora also provides subscription revenue and total revenue, including year-over-year growth rates, adjusted to remove the impact of foreign currency rate fluctuations, which we refer to as constant currency. We believe providing revenue on a constant currency basis helps our investors to better understand our underlying performance. We calculate constant currency in a given period by applying the average currency exchange rates in the comparable period of the prior year to the local currency revenue in the current period.

Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. The non-GAAP measures we use may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures.

**Operating Metrics:**

*Annual Contract Value (ACV)*. We define ACV as the subscription revenue we would contractually expect to recognize from a customer over the next twelve months, assuming no increases or reductions in their subscriptions.

*Dollar-based Retention Rate*. We calculate our dollar-based retention rate as of a period end by starting with the sum of the ACV from all customers as of twelve months prior to such period end, or prior period ACV. We then calculate the sum of the ACV from these same customers as of the current period end, or current period ACV. Current period ACV includes any upsells and also reflects contraction or attrition over the trailing twelve months but excludes revenue from new customers added in the current period. We then divide the current period ACV by the prior period ACV to arrive at our dollar-based retention rate.

*Annual Recurring Revenue (ARR).* ARR represents the annualized recurring value at the time of initial booking or contract modification for all active subscription contracts at the end of a reporting period. ARR excludes the value of non-recurring revenue such as professional services revenue as well as contracts with new customers with a term of less than one year. ARR should be viewed independently of revenue and deferred revenue, and is not intended to be a substitute for, or combined with, any of these items.

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**Forward-Looking Statements:**

Zuora's Financial Outlook and other statements in this release that refer to future plans and expectations are "forward-looking statements" that involve a number of risks and uncertainties. Words such as "believes," "may," "will," "estimates," "potential," "continues," "anticipates," "intends," "expects," "could," "would," "projects," "plans," "targets," and variations of such words and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on management's expectations as of the date of this filing and are subject to a number of risks, uncertainties and assumptions, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in our Form 10-Q filed with the Securities and Exchange Commission on December 8, 2022 as well as other documents that may be filed by us from time to time with the Securities and Exchange Commission. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: adverse changes in general economic or market conditions, including the impact that inflation or a slowdown in the economy, or market conditions may have on our business and our customers; we may be unable to attract new customers and expand sales to existing customers; we may not be able to manage our future growth effectively; the shift by companies to subscription business models may develop slower than we expect; the risk of currency exchange rate fluctuations; we may not achieve the benefits of the workforce reduction we approved in November 2022 and there may be possible changes in the size and timing of charges related to such reduction; the risk of loss of key employees; the anticipated impact of the acquisition of Zephr on Zuora's business and future financial and operating results, the ability of Zuora to successfully integrate Zephr's operations and technology, and the expected amount and timing of synergies and benefits from the acquisition; future responses to and effects of the ongoing COVID-19 pandemic, including the pandemic's impact on the economy, our customers and our businesses; we have a history of net losses and may not achieve or sustain profitability; we face intense competition in our markets and may not be able to compete effectively; our products may fail to gain market acceptance or our product development efforts may be unsuccessful; our products may fail to gain, or lose, market acceptance; customers may fail to successfully deploy our solution after entering into a subscription agreement with us; we may not be able to develop and release new products and services, or successful enhancements, new features and modifications to our existing products and services; our sales and product initiatives may not be successful or the expected benefits of such initiatives may not be achieved in a timely manner; challenges related to growing our relationships with strategic partners such as systems integrators and their effectiveness in selling our products; our security measures may be breached or our products may be perceived as not being secure; we may be unable to adequately protect our intellectual property; we may experience interruptions or performance problems, including a service outage, associated with our technology; current and future litigation including our current shareholder litigation could have a material adverse impact on our financial condition; general political or destabilizing events, including war, conflict or acts of terrorism, such as the ongoing conflict in Ukraine; other business effects, including those related to industry, market, economic, political, regulatory and global health conditions, and other risks and uncertainties. The forward-looking statements included in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments will cause our views to change. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

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**About Zuora, Inc.**

**Investor Relations Contact:**

Luana Wolk

investorrelations@zuora.com

650-419-1377

**Media Relations Contact:**

Margaret Pack

press@zuora.com

619-609-3919© 2023 Zuora, Inc. All Rights Reserved. Zuora, Subscribed, Subscription Economy, Powering the Subscription Economy, Subscription Economy Index, Zephr, and Subscription Experience Platform are trademarks or registered trademarks of Zuora, Inc. Third party trademarks mentioned above are owned by their respective companies. Nothing in this press release should be construed to the contrary, or as an approval, endorsement or sponsorship by any third parties of Zuora, Inc. or any aspect of this press release.

SOURCE: Zuora Financial

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**ZUORA, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS**

**(in thousands, except per share data)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>January 31,** | **Three Months Ended<br>January 31,** | **Fiscal Year Ended<br> January 31,** | **Fiscal Year Ended<br> January 31,** |
| | **2023** | **2022** | **2023** | **2022** |
| | (unaudited) | (unaudited) | (unaudited) | |
| Revenue: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subscription | $89513 | $77332 | $338391 | $287747 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Professional services | 13528 | 13360 | 57696 | 58991 |
| Total revenue | 103041 | 90692 | 396087 | 346738 |
| Cost of revenue: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subscription | 21070 | 18095 | 81094 | 68285 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Professional services | 16995 | 17603 | 72135 | 71821 |
| Total cost of revenue | 38065 | 35698 | 153229 | 140106 |
| Gross profit | 64976 | 54994 | 242858 | 206632 |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development | 24925 | 21654 | 102564 | 83219 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 41295 | 38236 | 173871 | 143366 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 22445 | 29292 | 77878 | 76223 |
| Total operating expenses | 88665 | 89182 | 354313 | 302808 |
| Loss from operations | (23689) | (34188) | (111455) | (96176) |
| Change in fair value of warrant liability | (134) |  | 9214 |  |
| Interest expense | (4486) | (40) | (15133) | (152) |
| Interest and other income (expense), net | 5888 | (748) | 5986 | (1670) |
| Loss before income taxes | (22421) | (34976) | (111388) | (97998) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax provision | 9437 | 206 | 10582 | 1427 |
| Net loss | (31858) | $(35182) | (121970) | (99425) |
| Comprehensive loss: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | 1187 | (287) | (461) | (673) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized gain (loss) on available-for-sale securities | 663 | (170) | (350) | (231) |
| Comprehensive loss | $(30008) | $(35639) | $(122781) | $(100329) |
| Net loss per share, basic and diluted | $(0.24) | $(0.28) | $(0.93) | $(0.80) |
| Weighted-average shares outstanding used in calculating net loss per share, basic and diluted | 134349 | 127102 | 131441 | 124206 |

---

------

**ZUORA, INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(in thousands)**

---

| | | |
|:---|:---|:---|
| | **January 31, 2023** | **January 31, 2022** |
| | (unaudited) | |
| **Assets** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $203239 | $113507 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term investments | 183006 | 101882 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net of allowance for credit losses of $4,001 and $3,188 as of January 31, 2023 and January 31, 2022, respectively | 91740 | 82263 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred commissions, current portion | 16282 | 15080 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 24285 | 15603 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 518552 | 328335 |
| Property and equipment, net | 27159 | 27676 |
| Operating lease right-of-use assets | 22768 | 32643 |
| Purchased intangibles, net | 13201 | 3452 |
| Deferred commissions, net of current portion | 28250 | 26727 |
| Goodwill | 53991 | 17632 |
| Other assets | 4677 | 4787 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $668598 | $441252 |
| **Liabilities and stockholders' equity** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | $1073 | $6785 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 27678 | 14225 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued employee liabilities | 30483 | 32425 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debt, current portion |  | 1660 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue, current portion | 167145 | 152740 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities, current portion | 9240 | 11462 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 235619 | 219297 |
| Debt, net of current portion | 210403 |  |
| Deferred revenue, net of current portion | 442 | 771 |
| Operating lease liabilities, net of current portion | 37924 | 45633 |
| Deferred tax liabilities | 3717 | 3243 |
| Other long-term liabilities | 7333 | 1701 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 495438 | 270645 |
| Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class A common stock | 13 | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class B common stock | 1 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 859482 | 734149 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (919) | (108) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | (685417) | (563447) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 173160 | 170607 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $668598 | $441252 |

---

------

**ZUORA, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(in thousands)**

---

| | | |
|:---|:---|:---|
| | **Fiscal Year Ended January 31,** | **Fiscal Year Ended January 31,** |
| | **2023** | **2022** |
| | (unaudited) | |
| **Cash flows from operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(121970) | $(99425) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation, amortization and accretion | 18738 | 16760 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 96401 | 72070 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for credit losses | 2245 | 2919 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Donation of common stock to charitable foundation | 1000 | 1000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred commissions | 19291 | 16330 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reduction in carrying amount of right-of-use assets | 7363 | 9717 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Asset impairment | 4537 | 12783 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrant liability | (9213) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of contingent consideration | (380) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | (391) | 802 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (11081) | (6322) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | (7379) | (1179) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred commissions | (22802) | (24127) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (6084) | 4457 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other liabilities | 12353 | 1424 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued employee liabilities | (2161) | 1165 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 12020 | 24281 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | (13131) | (13969) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) provided by operating activities | (20644) | 18686 |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of property and equipment | (10634) | (8776) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insurance proceeds for damaged property and equipment |  | 344 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of intangible assets |  | (1349) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of short-term investments | (234246) | (109510) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maturities of short-term investments | 154806 | 99192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for acquisition, net of cash acquired | (41000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (131074) | (20099) |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of convertible senior notes, net of issuance costs | 233901 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of common stock upon exercise of stock options | 2471 | 18499 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of common stock under employee stock purchase plan | 7019 | 7428 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Principal payments on long-term debt | (1480) | (4444) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 241911 | 21483 |
| Effect of exchange rates on cash and cash equivalents | (461) | (673) |
| Net increase in cash and cash equivalents | 89732 | 19397 |
| Cash and cash equivalents, beginning of year | 113507 | 94110 |
| Cash and cash equivalents, end of year | $203239 | $113507 |

---

------

**ZUORA, INC.**

**RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES**

**(in thousands, except percentages and per share data)**

**(unaudited)**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** |
| | **GAAP** | **Stock-based Compensation** | **Amortization of Acquired Intangibles** | **Certain Litigation** | **Asset Impairment** | **Change in Fair Value of Warrant Liability** | **Acquisition-related Transactions** | **Workforce Reduction** | **Non-GAAP** |
| Cost of revenue: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of subscription revenue | $21070 | $(1624) | $(724) | $— | $— | $— | $— | $(400) | $18322 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of professional services revenue | 16995 | (2111) |  |  |  |  |  | (247) | 14637 |
| Gross profit | 64976 | 3735 | 724 |  |  |  |  | 647 | 70082 |
| Operating expenses: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development | 24925 | (4852) |  |  |  |  |  | (459) | 19614 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 41295 | (5472) |  |  |  |  |  | (1107) | 34716 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 22445 | (2297) |  | (22) | (4537) |  | (1541) | (496) | 13552 |
| (Loss) income from operations | (23689) | 16356 | 724 | 22 | 4537 |  | 1541 | 2709 | 2200 |
| Net loss | $(31858) | $16356 | $724 | $22 | $4537 | $134 | $1541 | $2709 | $(5835) |
| Net loss per share, basic and diluted<sup>1</sup> | $(0.24) |  |  |  |  |  |  |  | $(0.04) |
| Gross margin | 63% |  |  |  |  |  |  |  | 68% |
| Subscription gross margin | 76% |  |  |  |  |  |  |  | 80% |
| Professional services gross margin | (26)% |  |  |  |  |  |  |  | (8)% |
| Operating margin | (23)% |  |  |  |  |  |  |  | 2% |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** |
| | **GAAP** | **Stock-based Compensation** | **Amortization of Acquired Intangibles** | **Certain Litigation** | **Asset Impairment** | **Non-GAAP** |
| Cost of revenue: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of subscription revenue | $18095 | $(1718) | $(554) | $— | $— | $15823 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of professional services revenue | 17603 | (2787) |  |  |  | 14816 |
| Gross profit | 54994 | 4505 | 554 |  |  | 60053 |
| Operating expenses: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 21654 | (5526) |  |  |  | 16128 |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 38236 | (6491) |  |  |  | 31745 |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 29292 | (3770) |  | (7) | (12783) | 12732 |
| Loss from operations | (34188) | 20292 | 554 | 7 | 12783 | (552) |
| Net loss | $(35182) | $20292 | $554 | $7 | $12783 | $(1546) |
| Net loss per share, basic and diluted<sup>1</sup> | $(0.28) |  |  |  |  | $(0.01) |
| Gross margin | 61% |  |  |  |  | 66% |
| Subscription gross margin | 77% |  |  |  |  | 80% |
| Professional services gross margin | (32)% |  |  |  |  | (11)% |
| Operating margin | (38)% |  |  |  |  | (1)% |

---

(1) GAAP and Non-GAAP net loss per share are calculated based upon 134.3 million and 127.1 million basic and diluted weighted-average shares of common stock for the three months ended January 31, 2023 and 2022, respectively.

****

------

**ZUORA, INC.**

**RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)**

**(in thousands, except percentages and per share data)**

**(unaudited)**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Fiscal Year Ended January 31, 2023** | **Fiscal Year Ended January 31, 2023** | **Fiscal Year Ended January 31, 2023** | **Fiscal Year Ended January 31, 2023** | **Fiscal Year Ended January 31, 2023** | **Fiscal Year Ended January 31, 2023** | **Fiscal Year Ended January 31, 2023** | **Fiscal Year Ended January 31, 2023** | **Fiscal Year Ended January 31, 2023** | **Fiscal Year Ended January 31, 2023** |
| | **GAAP** | **Stock-based Compensation** | **Amortization of Acquired Intangibles** | **Charitable Contribution** | **Certain Litigation** | **Asset Impairment** | **Change in Fair Value of Warrant Liability** | **Acquisition-related Transactions** | **Workforce Reduction** | **Non-GAAP** |
| Cost of revenue: |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of subscription revenue | $81094 | $(8141) | $(2236) | $— | $— | $— | $— | $— | $(547) | $70170 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of professional services revenue | 72135 | (12297) |  |  |  |  |  |  | (646) | 59192 |
| Gross profit | 242858 | 20438 | 2236 |  |  |  |  |  | 1193 | 266725 |
| Operating expenses: |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development | 102564 | (25819) |  |  |  |  |  |  | (971) | 75774 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 173871 | (33075) |  |  |  |  |  |  | (3497) | 137299 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 77878 | (17069) |  | (1000) | (268) | (4537) |  | (3153) | (708) | 51143 |
| (Loss) income from operations | (111455) | 96401 | 2236 | 1000 | 268 | 4537 |  | 3153 | 6369 | 2509 |
| Net loss | $(121970) | $96401 | $2236 | $1000 | $268 | $4537 | $(9214) | $3153 | $6369 | $(17220) |
| Net loss per share, basic and diluted<sup>2</sup> | $(0.93) |  |  |  |  |  |  |  |  | $(0.13) |
| Gross margin | 61% |  |  |  |  |  |  |  |  | 67% |
| Subscription gross margin | 76% |  |  |  |  |  |  |  |  | 79% |
| Professional services gross margin | (25)% |  |  |  |  |  |  |  |  | (3)% |
| Operating margin | (28)% |  |  |  |  |  |  |  |  | 1% |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Fiscal Year Ended January 31, 2022**<sup>1</sup> | **Fiscal Year Ended January 31, 2022**<sup>1</sup> | **Fiscal Year Ended January 31, 2022**<sup>1</sup> | **Fiscal Year Ended January 31, 2022**<sup>1</sup> | **Fiscal Year Ended January 31, 2022**<sup>1</sup> | **Fiscal Year Ended January 31, 2022**<sup>1</sup> | **Fiscal Year Ended January 31, 2022**<sup>1</sup> |
| | **GAAP** | **Stock-based Compensation** | **Amortization of Acquired Intangibles** | **Charitable Contribution** | **Certain Litigation** | **Asset Impairment** | **Non-GAAP** |
| Cost of revenue: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of subscription revenue | $68285 | $(5875) | $(2050) | $— | $— | $— | $60360 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of professional services revenue | 71821 | (10274) |  |  |  |  | 61547 |
| Gross profit | 206632 | 16149 | 2050 |  |  |  | 224831 |
| Operating expenses: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development | 83219 | (21072) |  |  |  |  | 62147 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 143366 | (22484) |  |  |  |  | 120882 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 76223 | (12365) |  | (1000) | (176) | (12783) | 49899 |
| Loss from operations | (96176) | 72070 | 2050 | 1000 | 176 | 12783 | (8097) |
| Net loss | $(99425) | $72070 | $2050 | $1000 | $176 | $12783 | $(11346) |
| Net loss per share, basic and diluted<sup>2</sup> | $(0.80) |  |  |  |  |  | $(0.09) |
| Gross margin | 60% |  |  |  |  |  | 65% |
| Subscription gross margin | 76% |  |  |  |  |  | 79% |
| Professional services gross margin | (22)% |  |  |  |  |  | (4)% |
| Operating margin | (28)% |  |  |  |  |  | (2)% |

---

------

(1) Beginning with the second quarter ended July 31, 2021, we no longer exclude non-cash adjustments for capitalization and amortization of internal-use software from our non-GAAP financial measures. We believe that this change more closely aligns our reported financial measures with current industry practice. Our non-GAAP financial measures for the fiscal year ended January 31, 2022 were recast to conform to the updated methodology for comparison purposes.

(2) GAAP and Non-GAAP net loss per share are calculated based upon 131.4 million and 124.2 million basic and diluted weighted-average shares of common stock for the fiscal year ended January 31, 2023 and 2022, respectively.

**Free Cash Flow**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>January 31,** | **Three Months Ended<br>January 31,** | **Fiscal Year Ended<br> January 31,** | **Fiscal Year Ended<br> January 31,** |
| | **2023** | **2022** | **2023** | **2022** |
| Net cash (used in) provided by operating activities | $(17965) | $10366 | $(20644) | $18686 |
| Less: Purchases of property and equipment, net of insurance recoveries | (2163) | (2732) | (10634) | (8432) |
| Free cash flow | $(20128) | $7634 | $(31278) | $10254 |
| Net cash provided by (used in) investing activities | $34848 | $(18256) | $(131074) | $(20099) |
| Net cash provided by financing activities | $2908 | $5119 | $241911 | $21483 |

---

**Constant Currency Revenue**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>January 31,** | **Three Months Ended<br>January 31,** | | **Fiscal Year Ended<br> January 31,** | **Fiscal Year Ended<br> January 31,** | |
| | **2023** | **2022** |<br>**% Change** | **2023** | **2022** |<br>**% Change** |
| Subscription revenue (GAAP) | $89513 | $77332 | 16% | $338391 | $287747 | 18% |
| &nbsp;&nbsp;Effects of foreign currency rate fluctuations | 3105 |  |  | 7237 |  |  |
| Subscription revenue on a constant currency basis (Non-GAAP) | $92618 |  | 20% | $345628 |  | 20% |
| Total revenue (GAAP) | $103041 | $90692 | 14% | $396087 | $346738 | 14% |
| &nbsp;&nbsp;Effects of foreign currency rate fluctuations | 3413 |  |  | 9263 |  |  |
| Total revenue on a constant currency basis (Non-GAAP) | $106454 |  | 17% | $405350 |  | 17% |

---

<br>