Zuora to Acquire Togai, Enhancing Usage-Based Offerings Amid the GenAI Explosion

Rhea-AI Summary

Zuora, Inc. (NYSE: ZUO) is acquiring metering and rating solution Togai to enhance its usage-based offerings amid the rising trend of generative AI technologies. The acquisition aims to empower developers and finance teams by uniting them to launch, iterate, and adapt usage-based models efficiently. Togai's low-code builder and developer-friendly interface will facilitate the configuration of raw events to help companies monetize their offerings effectively. The acquisition is set to close in early May 2024.

Positive

• Zuora's acquisition of Togai enhances its monetization suite, allowing developers to define and operate pricing models efficiently.

• Togai's metering system facilitates event ingestion from various sources and enables unique ways to package and bundle offerings.

• The acquisition strengthens Zuora's ability to provide innovative business models through Total Monetization for companies to align with customer demand.

Negative

• The complexity and cost of usage-based models could still pose challenges for many companies despite the acquisition.

• Developers may face difficulties managing product usage data with inadequate, custom-coded systems before the integration of Togai.

Insights

Financial Analyst

The merger of Zuora and Togai illustrates a strategic move to consolidate Zuora's position in the rapidly evolving usage-based business model landscape. Financially, such acquisitions can drive revenue growth by expanding product offerings and potentially improving margins through economies of scale. With GenAI technologies gaining traction, companies that can effectively manage and monetize their usage data will likely have a competitive edge. From an investor's perspective, the integration of Togai's metering and rating system could enhance Zuora's value proposition, potentially leading to an increase in market share and customer retention. The emphasis on a developer-friendly environment designed to manage complex billing at scale could address a critical pain point, hence boosting adoption. However, it's important to monitor post-acquisition integration, as the success of such deals often hinges on seamlessly blending technology and culture.

Market Research Analyst

The GenAI sector's growth propels a shift towards usage-based monetization models, making Zuora's acquisition a timely strategic initiative. With Togai's innovative low-code solutions, Zuora appears poised to meet the rising demand for flexible and scalable billing systems. For stakeholders, this acquisition might signal Zuora's anticipation of market shifts towards more granular and dynamic pricing strategies. Market research indicates a growing appetite for agile monetization platforms and Zuora's move could cater to this trend, strengthening its market positioning. However, it is imperative to evaluate customer response to these offerings and the competitive landscape to assess the long-term viability of the acquisition.

Tech Industry Analyst

Zuora's acquisition of Togai is a significant step towards simplifying the complex challenges associated with usage-based billing in the GenAI era. With Togai's event metering capacity and auditable data trails, developers and finance teams may see their collaboration enhanced, reducing the time-to-market for usage-based services. Analyzing the technological synergy of the two companies, the acquisition could result in a robust monetization framework applicable across various industries. For investors, the tech integration's success will be critical to follow, as it determines the actual value addition and the potential for Zuora to capitalize on the burgeoning GenAI market.

Acquisition empowers developers and finance teams to accelerate usage-based offerings

REDWOOD CITY, Calif.--(BUSINESS WIRE)-- Zuora, Inc. (NYSE: ZUO), a leading monetization suite for modern business, today announced its planned acquisition of metering and rating solution Togai, enhancing its usage-based offerings. With Togai’s low-code builder and developer-friendly interface to quickly configure metering and rating of raw events, the acquisition will help Zuora unite developers and finance teams to launch, iterate and adapt usage-based models.

(Graphic: Zuora)

The explosion of generative AI (GenAI) technologies has companies increasingly turning to usage-based business models, but added complexity and cost still prevent many companies from effectively monetizing their offerings. Developers often have sole access to product usage data and are left to manage it with inadequate, custom-coded systems, leaving finance teams unable to access the information they need to accurately invoice and recognize revenue.

Togai enhances Zuora’s monetization suite, enabling developers to work alongside finance teams to define and operate any pricing model with a solution that can be easily plugged into their existing data stack. Its metering system facilitates event ingestion from a variety of sources, and its flexible rating engine enables unique ways to package and bundle offerings. Developers can get started with Togai’s self-service interface in minutes, which can support up to a billion events per day and reduce customer disputes with fully auditable and traceable usage data. Its Revenue Simulator and pre-built CRM connectors also alert sales teams of upcoming upsell and renewal opportunities.

“Togai’s sophisticated metering and rating extends Zuora’s market-leading monetization suite to accelerate usage-based models,” said Tien Tzuo, Founder and CEO at Zuora. “Together, we will be strategically positioned to provide the right solutions for developers and finance teams to power the next generation of monetization.”

Togai was founded in 2022 by Abhishek Rajagopal, Aravind Sriraman, and Tholkappiyan Velavan, who will join Zuora with Togai employees. After closing, Togai’s metering and rating solution will become a part of Zuora’s existing product suite alongside Zuora Billing, Zuora Revenue, Zuora Payments, Zephr and Zuora Platform. It will be available both as a new standalone usage offering and with Zuora’s existing consumption solution. The acquisition also strengthens Zuora’s ability to enable Total Monetization, helping companies evolve their offerings to align with customer demand through a mix of innovative business models.

“Developers spend months building internal metering and rating systems, which can quickly evolve into a dedicated team of engineers as companies realize that building a usage-based billing system is not a one-time effort. Togai makes it possible to go live in hours with an out-of-the-box, flexible solution to model any type of pricing and reliably scale,” said Abhishek Rajagopal, CEO and Co-founder at Togai. “Combining Zuora and Togai is the right decision to bring together deep metering and rating with the scale of Zuora’s end-to-end monetization technology.”

The acquisition of Togai is expected to close in early May 2024 and is subject to customary approvals and closing conditions. Foros is acting as financial advisor and Freshfields Bruckhaus Deringer US LLP as legal advisor to Zuora. QED Corporate Advisors is acting as financial advisor and Argus Partners as legal advisor to Togai.

To learn more about Togai, please visit here.

About Zuora, Inc.

Zuora provides a leading monetization suite to build, run and grow a modern business through a dynamic mix of consumption models, subscription bundles and everything in between. From pricing and packaging, to billing, payments and revenue accounting, Zuora’s flexible, modular software platform is designed to help companies evolve monetization strategies with customer demand. More than 1,000 customers around the world, including BMC Software, Box, Caterpillar, General Motors, Penske Media Corporation, Schneider Electric and Zoom use Zuora’s leading combination of technology and expertise to turn recurring relationships and recurring revenue into recurring growth. Zuora is headquartered in Silicon Valley with offices in the Americas, EMEA and APAC. To learn more, please visit zuora.com.

Forward-Looking Statements

This press release relates to the pending acquisition of Togai by Zuora, Inc. ("Zuora", "we", "our" or "us"). This press release may be deemed to contain forward-looking statements. Words such as "plan," "continue," “expect” and "will" and variations of such words and similar expressions are intended to identify forward-looking statements. Such forward-looking statements involve risks and uncertainties, including statements regarding Zuora’s ability to power innovative business models and help companies accelerate usage monetization, the anticipated timing and impact of the proposed acquisition of Togai on Zuora’s business, Zuora's continued investment in innovation, and expected benefits of our products and the expansion of Zuora's product suite following the acquisition. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: risks associated with Zuora’s strategies, priorities, or plans taking longer to execute than anticipated; the effect of the announcement on the ability of Zuora or Togai to retain key personnel or maintain relationships with customers; risks that the acquisition could disrupt current plans and operations; the ability of the parties to consummate the acquisition on a timely basis; the satisfaction of customary closing approvals and conditions; and general market, business, competitive, economic conditions.

Information on these risks and additional risks and uncertainties that could cause actual outcomes and results to differ materially from those included in or contemplated by the forward-looking statements contained in this release is included under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024, which is available on the “Investors” page of our website at https://investor.zuora.com and on the U.S. Securities and Exchange Commission’s website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended April 30, 2024, and other documents that we may file from time to time with the Securities and Exchange Commission. All forward-looking statements contained herein are based on information available to us as of the date hereof. Except to the extent required by law, we do not assume any obligation to update these statements as a result of new information, future events, or otherwise.

© 2024 Zuora, Inc. All Rights Reserved. Zuora and Zephr 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

View source version on businesswire.com: https://www.businesswire.com/news/home/20240430174050/en/

Investor Relations:

Luana Wolk

investorrelations@zuora.com

650-419-1377

Media:

Margaret Juhnke

press@zuora.com

619-609-3919

Source: Zuora, Inc.

FAQ

What is Zuora acquiring?

Zuora is acquiring metering and rating solution Togai to enhance its usage-based offerings.

When is the acquisition expected to close?

The acquisition of Togai is expected to close in early May 2024, subject to customary approvals and closing conditions.

Who founded Togai?

Togai was founded in 2022 by Abhishek Rajagopal, Aravind Sriraman, and Tholkappiyan Velavan.

What are the benefits of the acquisition for Zuora?

The acquisition enhances Zuora's monetization suite, strengthens its ability to provide innovative business models, and facilitates the collaboration between developers and finance teams.