Zuora Subscription Economy Index Shows Enduring Power of Subscription Businesses Amid Economic Uncertainty

Rhea-AI Summary

Zuora, Inc. (NYSE: ZUO) released its Subscription Economy Index™ (SEI) Snapshot, showing subscription businesses outperformed traditional firms in the S&P 500 during H1 2022. Revenue growth for SEI companies was 9% higher than the S&P 500, indicating resilience amid economic uncertainty. Key metrics include a 24% revenue growth advantage for SEI in Q2, subscriber growth rates over double 2021 averages, and churn rates lower than pre-pandemic levels. The report highlights the strength of recurring revenue models, suggesting sustained stability for companies leveraging these strategies.

Positive

• SEI companies saw a 9% higher revenue growth than S&P 500 companies in the first half of 2022.
• In Q2 2022, SEI revenue growth was 24% greater than that of S&P 500 firms.
• Subscriber growth rates for SEI companies in H1 2022 were more than double those from 2021.
• Churn rates for SEI companies remain lower than pre-pandemic levels.

Negative

• Average revenue per account (ARPA) growth decreased from 2.78% in Q4 2021 to 0.94% in Q1 2022 before rebounding to 1.89%.

Revenue growth for companies in the SEI was 9% greater than companies in the S&P 500 for the first half of 2022

REDWOOD CITY, Calif.--(BUSINESS WIRE)-- Zuora, Inc. (NYSE: ZUO), a leading monetization platform provider for recurring revenue businesses, today released a Subscription Economy Index™ (SEI) Snapshot, which found that even as the world faces economic uncertainty, subscription businesses in the SEI were resilient in the first half of 2022, with higher revenue growth compared to businesses in the S&P 500. These recurring revenue companies increased customer acquisition and revenue growth during the first half of the year, and subscription cancellations continued to be lower than pre-pandemic levels.

“Even amid increased inflation and bearish markets, we’re continuing to see recurring revenue business models provide durable growth and stability,” said Amy Konary, Founder and Senior Vice President of The Subscribed Institute at Zuora^®. “By providing ongoing value through outcomes and experiences, these services can become indispensable to customers, allowing the companies to nurture and monetize digital relationships.”

Key findings of the SEI Snapshot include:

• Subscriber-centric companies in the SEI continue to outperform more traditional, product-centric businesses: In the first half of 2022, revenue growth for companies in the SEI was 9% greater than companies in the S&P 500 (6.74% revenue growth for companies in the SEI compared to the S&P 500’s 6.16%).

• In Q2 2022, while S&P 500 companies' revenue growth decreased, SEI companies' revenue increased: Revenue growth for companies in the SEI was 24% greater than companies in the S&P 500 in Q2 2022.

• Despite macroeconomic headwinds, companies in the SEI increased subscriber acquisition: Companies in the SEI experienced subscriber growth rates through the first half of 2022 that were, on average, more than double that of those in 2021 (2021 quarterly average of 0.86% compared to 2.35% for the first half of 2022).

• SEI companies are retaining subscribers at higher rates than before the pandemic: Churn (a metric that can measure the health of subscription businesses) remains lower than pre-pandemic levels for companies in the SEI, with a 2019 average quarterly churn rate of 6.50% compared to 6.13% for the first half of 2022.

• SEI companies continue to nurture and grow their customer relationships: Average revenue per account (ARPA) growth in the SEI decreased from 2.78% in Q4 2021 to 0.94% in Q1 of this year, before rebounding in Q2 to 1.89%, which is higher than the three-year average of 1.81% (2019-2021).

Zuora’s Subscription Economy Index serves as a benchmark for recurring revenue businesses, comprised of a subset of more than 500 Zuora Billing customers across industries around the world. The complete Subscription Economy Index Snapshot is available for download here.

About Zuora, Inc.

Zuora provides a leading monetization platform for recurring revenue businesses across all industries, enabling companies to unlock customer-centric business models. After starting with Zuora Billing nearly 15 years ago, Zuora’s award-winning multi-product portfolio includes Zuora Revenue, Zuora Collect, and now, Zephr, a Zuora Company. Zuora serves as an intelligent hub that monetizes and orchestrates the complete quote to cash and revenue recognition process at scale. Through its industry leading technology and expertise, Zuora helps more than 1,000 companies around the world, including BMC Software, Box, Caterpillar, General Motors, Penske Media Corporation, Schneider Electric, Siemens and Zoom nurture and monetize direct, digital customer relationships. Headquartered in Silicon Valley, Zuora operates offices around the world in the U.S., EMEA and APAC. To learn more about the Zuora monetization platform, please visit www.zuora.com.

© 2022 Zuora, Inc. All Rights Reserved. Zuora, Subscribed, Subscription Economy, Powering the Subscription Economy, and Subscription Economy Index are trademarks or registered trademarks of Zuora, Inc. Third party trademarks mentioned above are owned by their respective companies.

Forward-Looking Statements

This press release contains forward-looking statements that involve a number of risks, uncertainties, and assumptions, including but not limited to statements regarding the expected growth and trends of subscription-based companies (including companies in the SEI report) and non-subscription based companies. Any statements that are not statements of historical fact may be deemed to be forward-looking statements, and actual results could differ materially from those stated or implied in forward-looking statements. The SEI report and this Snapshot also include market data and certain other statistical information and estimates from other parties, including industry analysts and market research firms. Zuora believes these third party reports to be reputable, but has not independently verified the underlying data sources, methodologies, or assumptions. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and may differ materially from actual events or circumstances.

SOURCE: ZUORA FINANCIAL

View source version on businesswire.com: https://www.businesswire.com/news/home/20221012005191/en/

Margaret Pack

press@zuora.com

619-609-3919

Source: Zuora, Inc.

FAQ

What is the revenue growth comparison between Zuora and the S&P 500 in 2022?

Zuora's Subscription Economy Index (SEI) found revenue growth for SEI companies was 9% greater than that of S&P 500 companies in the first half of 2022.

How much did Zuora's SEI companies grow in Q2 2022 compared to the S&P 500?

SEI companies experienced revenue growth that was 24% greater than the S&P 500 in Q2 2022.

What does the churn rate indicate for Zuora's subscription businesses?

Churn rates for SEI companies remain lower than pre-pandemic levels, indicating improved subscriber retention.

How has subscriber growth changed for Zuora's SEI companies in 2022?

Subscriber growth rates in the first half of 2022 were more than double the average rates from 2021.

What is the average revenue per account growth for Zuora in 2022?

ARPA growth decreased from 2.78% in Q4 2021 to 0.94% in Q1 2022, rebounding to 1.89% in Q2.