Zuora Inc

Good afternoon and welcome to Zorro's fourth 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. If you would like to withdraw your question, press star one again. 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 Zora's fourth quarter fiscal 2022 earnings conference call. Joining me today are Team Zoe, Zora's founder and chief executive officer, and Todd McElhatton, Zora's chief financial officer. Robbie Traubert, our president and chief revenue officer, will also be joining us for the Q&A session. The purpose of today's call is to review our fourth quarter results and provide a financial outlook for the upcoming first quarter and full fiscal year 2023. Some of our discussions and responses today will include forward-looking statements. So as a reminder, our actual results would differ materially due to several factors. You can find information regarding those risk factors in the earliest release we issued today and our most recent filings with the SEC. And finally, we'll be referring to several non-GAAP financial measures and reconciliations to GAAP measures are included in earnings release. For a copy of earnings release, links to the SEC filing, a replay of today's call, or to learn more about Zuora, please visit our investor relations website at investor.zuora.com. Now, I'll turn the call over to you, team.

Thank you, Luana, and thank you, everyone, for joining us. Welcome. to Zoar's fourth quarter fiscal 2022 earnings call. We had an outstanding quarter. We continue to innovate and deliver value to our customers. In Q4, we beat guidance for subscription revenue and non-GAAP loss from operations. We saw continued momentum with a strong upsell motion, as well as a record-breaking quarter, signing on new logos. Not only did we deliver top-line growth, but we also saw growth in our bottom line. Fiscal 2022, marked our first year that we were free cash flow positive. This was a big year. We started the year with ambitious goals around ARR growth and dollar-based retention rates. And today, when I reflect on the quarter and the year, I am thrilled to share that we delivered. I'm also excited to share that Silverlake, a global leader in technology investing, is partnering with us by way of a $400 million investment into the business. The undeniable momentum of the subscription economy and the clear leadership we hold in the space was the catalyst to this relationship. This investment allows us to pursue new initiatives such as potential targeted acquisitions and other opportunities to broaden our product offerings and enable our customers to deliver exceptional subscriber experiences. I could not be more thrilled about the partnership. With that, let me share some additional details about our results for the quarter and the year. At the start of the year, we said that the biggest opportunity in the subscription economy lies with large companies, both enterprise incumbents and the fastest growing disruptors. And this year, we saw that this was absolutely the case. These companies are recognizing that recurring revenue business models Those that focus on building ongoing relationships with their customers offer a faster path to growth. In fact, our latest subscription economy index report, which analyzes anonymized and aggregated data of long-term Zora billing customers, just launched. And this time it found that subscription businesses continue to outpace the S&P 500, growing 4.6 times faster over the entire past decade. Now, while some have wondered whether the stay-at-home growth phenomenon was temporary, our data shows that overall, subscription economy businesses are holding on to their pandemic subscribers and accelerating into the new year. All this continues to create a tailwind of opportunities for us as these companies turn to Zora to help them on their subscription journey. For example, in fiscal 22, we brought on automotive leaders like Suzuki Motor Corporation, who's powering international connected car services. In fact, today, 12 of the top 15 largest auto manufacturers are now Zora customers. Disruptors like Gusto, just one of many Zora customers who are scaling and preparing for future IPOs. We've brought on established global technology leaders like Hitachi, Global manufacturing companies like Lexotica, the company behind eyewear brands like Oakley, Gucci, and Prada, or Kyocera, a Japanese multinational ceramics and electronics manufacturer, and HMD Global, better known for making Nokia mobile phones, who chose Zora this year to help them transform and embrace new customer-centric business models. In fact, in Q4, our continued focus on large companies resulted in eight deals, over $500,000 in annualized contract value, or ACV, four of which were over a million dollars. And we added a net 27 customers this quarter with average contract value over $100,000, ending the year at 747. This year, we said we would accelerate our innovation and execute our multi-product strategy, and we delivered. our multi-product strategy has become our critical differentiator. Why? Because more and more, as companies look to monetize their digital services, billing is only one key of the puzzle. Ultimately, they need to manage the entire quote to revenue process to shape the broader subscriber experience. Now, this is showing up in how companies are buying our software. In fact, in Q4, 18% of our first-time customers purchased our entire suite, including our market-leading Zora revenue product. As a result of the successful integration between Zora billing and Zora revenue, we really saw an acceleration in the demand this year for Zora revenue. As our second major product beachhead, bookings for Zora revenue nearly doubled in fiscal 2022. This quarter, we launched real-time revenue an enhancement to help our customers dramatically reduce their time to close the books. And we've already turned it on for 20% of Zora Revenue customers who are now processing transactions in real time. I'm also incredibly pleased to share that independent research firm MGI Research ranked Zora Revenue as the number one solution this year, automated revenue management report. And that's why we saw new customers like AdTran, provider of telecommunication networking equipment, turn to Zora Revenue to automate their previously manual processes of revenue recognition. And we also had a financial and investing media company purchase Zora Billing along with Zora Revenue to help them scale their subscription business. This all tops off a year of innovation that we are extremely proud of. Fiscal 22 was a year of numerous launches, including unified monetization, TPQX, central revenue, new API and new software development kits, a brand new user interface, and a universal custom payment gateway development kit, just to name a few. We invested heavily in engineering talent to support our fast pace of innovation, including nearly doubling our engineering capacity this year, and we delivered. Now, shifting to our go-to-market strategy. This year, we said we would accelerate growth while increasing our dollar-based retention rates with a land and expand motion. And that is exactly what we did. We said we would get to 17% ARR growth by the end of the year, and we surpassed this objective. Last quarter, we got to 19%. In this quarter, we reached 20% ARR growth. We are making great progress towards our fiscal 2025 target of achieving 25% to 30% ARR growth. We said we saw a $450 million upsell opportunity just within our install base, and that by going after this opportunity, we would take our dollar-based retention rates to 105% by the end of the year. Well, we surpassed this, delivering 110% in Q4, a full 5 percentage points ahead of our goal for the year. In fact, in Q4, we handled 21% billion in usage volume, bringing us to $75 billion for the entire year. In fact, that is more than the GDP of over half of the world's countries. Finally, as we laid out in our go-to-market strategy this year, we said that systems integration partners would become an important driver for the business, and that's exactly what happened. In Q4, we marked a record quarter for partner-influenced bookings, growing over 20% year over year. These firms continue to build out Zora practices and bring us into larger deals, helping us accelerate further into the enterprise space. We also grew the number of globally certified consultants with their SI partners over threefold year over year. And more than one third of our customer goal lives in the quarter involved a system integrator partner. All in, it has been a momentous year for Zora. and it has us more excited than ever about the opportunity that lies ahead. We see the subscription economy continuing to expand into new industries and across new business processes where we can expand our footprint. After a transformational year, we are now in a fantastic position. We've got what I believe is the best management team in the business who, along with our CEOs, are executing on our plan, and we are accelerating. And now we have the capital and the partnership with Silverlake to be able to lean in to the opportunity even further. I'll turn the call now to Todd to review our financials. But let me give a shout out to all our CEOs around the world and everything we've accomplished this year. We are now a very different company than how we started off. And with that, I'll turn it over to you, Todd.