Zuora Inc (NYSE:ZUO) Q2 2020 Earnings Conference Call - Final Transcript

Aug 28, 2019 • 05:00 pm ET


Zuora Inc (NYSE:ZUO) Q2 2020 Earnings Conference Call - Final Transcript


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Good afternoon. My name is Chris, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Zuora Second Quarter and Fiscal 2020 Earnings Conference Call. [Operator Instructions]

I'll now turn the call over to Joon Huh, VP of Investor Relations. You may begin the conference.

Joon Huh

Thanks, Chris. Good afternoon, and welcome to Zuora second quarter fiscal 2020 earnings conference call. Joining me today are Tien Tzuo, Zuora's Chief Executive Officer; and Tyler Sloat, Zuora's Chief Financial Officer. The purpose of today's call is for us to provide some color on our second quarter results, as well as provide our financial outlook for our third quarter and the remainder of the year.

Some of our discussion and responses today will include forward-looking statements. So as a reminder, our actual results could differ materially as a result of a variety of factors. You can find information regarding those factors in the earnings release we issued today and our most recent 10-Q filed with the SEC.

Finally, we'll be referring to several non-GAAP financial measures today. And reconciliations to the related GAAP measures are included in our earnings release. For a copy of our earnings release, links to our SEC filings, a replay of today's call or to learn more about Zuora, please visit our Investor Relations website at investor.zuora.com.

And with that, let me turn it over to Tien.

Tien Tzuo

Thank you, Joon, and welcome to our second quarter earnings call for fiscal 2020. The headline is that we had a solid quarter. Our second quarter financial results came in largely better than expectations, while we continue to focus on improving our operational metrics. Subscription revenue grew 24%, while professional services increased 12%, resulting in total revenues was $69.7 million, representing a 21% year-over-year growth. And we outperformed on operating income as we saw some savings in the quarter. Tyler will cover financials in greater detail later in the call.

In Q2, we continue to see signs that support our central thesis. That our core market remains strong, and that we are in the early stages of a broad shift to subscription business models, a shift that we believe will ripple through every industry. And that the needs of the companies in this new world cannot be met by traditional product centric ERP systems that are not designed for customer-centric, subscription-based business models.

In Q2, we continue to sign on customers, and of course, our technology vertical, such as Seiko Epson, Omni Tracks and virtual stream, but we also continue to see strong demand outside of the technology vertical. For example, this quarter we signed one of the largest electronic manufacturers in Japan. We signed a major manufacturer of ball bearings in Europe. Yet another automotive services provider, one of the largest global consulting firms and one of the top three educational publishers in the United States. So the shift to subscriptions remains strong.

We also saw susceptible life deployments for key customers, including Airbus, Diamond