Zuora Inc

Good afternoon, and welcome to Zwara's third quarter of fiscal 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star, followed by the number one on your telephone keypad. To withdraw your question, again, press star one. Thank you. With that, I would like to turn the call over to Luana Wolk, head of investor relations, for introductory remarks.

Thank you. Good afternoon and welcome to Zoar's third quarter fiscal year 2022 earnings conference call. Joining me today are Tin Zhou, Zoar's founder and chief executive officer, and Todd McElhatton, Zoar's chief financial officer. Robbie Trauber, our chief revenue officer, will also be joining us for the Q&A session. The purpose of today's call is for us to review our third quarter results and provide our financial outlook for the upcoming fourth quarter and full year fiscal 2022. We will also provide a preliminary outlook into fiscal year 2023. Some of our discussions and responses today will include forward-looking statements. So as a reminder, our actual results could differ materially due to several factors. You can find information regarding those risk factors in the earnings release we issued today and our most recent filings with the SEC. And finally, we'll be referring to several non-GAAP financial metrics and reconciliations to related GAAP measures are included in our earnings release. For a copy of our earnings release, links to the SEC filings, a replay of today's call, or to learn more about Zora, please visit our investor relations website at investor.zora.com. Now, I'd like to turn the call over to Tim.

Thank you, Luana, and thank you, everyone, for joining us. Welcome to Zora's third quarter fiscal 2022 earnings call. The headline is we delivered yet another strong quarter. We exceeded guidance across our key financial metrics, including total revenue, subscription revenue, and non-GAAP loss from operations. This quarter, we delivered a dollar-based retention rate of 110%. That's up from 108% last quarter and 99% last year. And this is the highest level that dollar-based retention rate has been over the last 10 quarters. This quarter, our ARR growth rate continued to rise, closing the quarter at 19%, up from 12% growth this time last year. This quarter, we continue to innovate. Our new product introductions continue to generate strong customer interest, powering the highest upsell quarter in Zora's history. This quarter, we continued to deliver on the goals that we set out at the beginning of the year that we shared with you at Investor Day back in April. I'd like to do a shout out to all the CEOs around the world. I am incredibly proud of our team and our continued focus and execution. Now, let me add some more color to the quarter in three specific areas. First, the continued evolution and growth that we are seeing in our market. Next, this quarter's exciting new developments in our product portfolio. And finally, an update on the progress that we're making with our go-to-market strategy. Let's start with the market. You've heard me say this, but it's worth repeating. Last year, companies woke up to the power of the subscription economy. Businesses across more and more sectors recognize the need to shift to digital service models. We continue to believe that this shift is what is powering our momentum today. So work continues to be the go-to subscription management solution for both innovative disruptors and large enterprise incumbents alike. These companies are coming to us for the breadth of our capabilities, the scale of our platform, and the expertise that only we are able to bring to help guide them on their journey into the future let's look at disruptors you've heard us talk about hyper growth companies like the zone vivint or clear who are managing millions of subscribers on our platform this quarter we continue to bring on new fast scaling disruptors for example we brought on an online education platform that helps people learn from world famous experts with over 2 million subscribers this disruptor came to zora for a billing and revenue recognition platform that they are confident will support their continued scale for years to come. Our existing disruptors, of course, are also continuing to scale. In fact, this quarter, a leading business communications platform used by millions of developers around the world expanded its work with Zora to power an additional business unit after a recent acquisition. As they continue to grow, Zora Billing and Collect will enable this new volume and scale. On the incumbent side, You've heard us talk about dominant brands like Honeywell and Caterpillar who come to Zora to gain the agility they need to innovate and compete in the new digital economy. This quarter, we added another Fortune 500 world leader in agriculture and construction products to that list. Today, this company has seen incredible growth as they are no longer just manufacturing and selling products. Today, they also sell a subscription-based service that enables their customers to manage their equipment portfolios more effectively. By modernizing their billing with Zora, they're better positioned to implement new modernization strategies to power this new, exciting area of growth. Now, some of these, of course, are long-term bets. But we continue to sow the seeds that will power our growth for years to come. As an example, automotive, you've heard us say that we power eight of the top 10 auto companies, including companies like General Motors, Ford, and Toyota. And in recent months, you've heard many of them announce a growth target for these new digital services. In fact, these digital services are forecasted to generate $86 billion by 2025 from in-vehicle payments. Disruptors, incumbents, today's leaders, and tomorrows we focus on the best companies in the subscription economy we power the growth of their new customer-centric business models and you can see that growth in the continued increase of our transaction volume that flows through our system in q3 alone we handled 19 billion dollars in usage volume representing a year-over-year growth rate of 28 percent shifting the product The last few years have been an exciting time for Zora's technology team. We've transformed our core technology stack into a modern microservices platform. Just last month, we shifted 100% into the cloud and plan to shut down our 14-year-old data center in Q4 and expect this to increase our uptime, our scalability, and our long-term gross margin expansion. Under our Chief Product and Technology Officer, Sri Sreenivasan, We've also increased our engineering capacity by 40% since the start of the fiscal year. Now, all of this is propelling our innovation, many of which we announced this quarter. This quarter, we announced an entirely revamped set of APIs and SDKs that enable our customers to launch with Zora up to five times faster and reduce their coding hours by up to 80%. We launched unified monetization, and all new set of capabilities let out companies to manage subscriptions as well as product offerings on our platform. More and more, you're going to hear a new mantra from us. Subscription first, but not subscription only. This quarter, we launched CPQX, a new version of our CPQ solution that lets sales teams work up to 35% faster. For this quarter, I really want to talk about Zora Revenue, our product that helps companies automate the complexities of their revenue recognition process in real time. We have now had three quarters of triple digit top line growth for Zora Revenue, and its average ACV has nearly doubled in size from just one year ago. In fact, this past quarter, Braze, a customer engagement platform for multi-channel marketing, successfully went live on Zora Revenue. This launch was a key milestone in their IPO journey as they continue to simplify and maintain their revenue reporting. And today, finally, I have some other news to share. This is a particularly exciting announcement for me because I was part of this organization in the very early days. This quarter, I'm pleased to say that the biggest SaaS company in the world, none other than Salesforce.com has signed a multi-year renewal with us to automate all of their global revenue recognition with Zuora Revenue. Finally, let's take a look at go-to-market. Now, two years ago, we set out to transform the way we sell to the biggest enterprises in the world. We made a deliberate decision to move upmarket. And in Q3, what you saw is that that effort continues to pay off. In addition to Salesforce.com, we continue to sign fantastic new and upsell deals such as Hitachi and Toshiba. Our number of customers with ACV at or above $100,000 increased by 26 last quarter. This customer cohort now constitutes 94% of our business. This is also leading to larger deal sizes and greater customer lifetime value. This past quarter, we signed 10 deals with ACB at or over $500,000, including two deals over $1 million. In short, our strategy to focus and grow within the enterprise segment of the market is working. Finally, the investments we've made in our broader ecosystem of system integrators and strategic partners continue to show results. Let me give you a few examples. We now have over 200 globally certified consultants within our SI partners versus just 52 a year ago. Over 40% of customer goal lives in the quarter involved a system integration partner. Finally, on a dollar basis, bookings from SI-influenced deals in Q3 grew by over 130% year over year. Beyond our SI partners, We're also starting to expand our ecosystem of strategic technology partners. Now you may have seen early in Q3, we announced an exciting collaboration with Microsoft. We'll be working to integrate our products into Microsoft Dynamics, so users of that product can also use Zora. We'll also be taking advantage of Microsoft's Azure platform, as well as Power BI to drive more innovation and value within our own products, for our customers. Over time, we expect this will open up the opportunity to connect further into the Microsoft ecosystem as potentially a new distribution channel. It's still early days, but we are very excited about the potential of this collaboration. To wrap it up, I want to thank again our CEOs for another very strong quarter. The focus and the alignment that I am seeing across Zora is truly remarkable. Our market continues to expand, and companies are turning to us to guide their transformation. Our innovation engine is accelerating, creating further separation between us and legacy ERP vendors. And our upmarket strategy and go-to-market operations that we put in place two years ago continue to deliver results. Now I'll turn the call over to Todd to review our financials. Todd.