Zuora Earnings 2020-04-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

zuo-20200430

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_____________________________

FORM 10-Q

_____________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-38451

_____________________________

Zuora, Inc.

(Exact name of registrant as specified in its charter)

_____________________________


Delaware						20-5530976
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)


101 Redwood Shores Parkway, Redwood City, California						94065
(Address of principal executive offices)						(Zip Code)

(888) 976-9056

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

_____________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name on each exchange on which registered
Class A common stock, par value $0.0001 per share	ZUO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 31, 2020, the number of shares of the Registrant's Class A common stock outstanding was 99.9 million and the number of shares of the Registrant's Class B common stock outstanding was 16.0 million.


		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets as of April 30, 2020 and January 31, 20 20	2
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended April 30, 2 020 and 2019	3
	Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended April 30, 2020 and 2019	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30, 2020 and 2019	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33

PART II.	OTHER INFORMATION	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 6.	Exhibits	66
Signatures			67

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q (Form 10-Q) to “Zuora,” “Company,” “our,” “us,” and “we” refer to Zuora, Inc. and, where appropriate, its consolidated subsidiaries.

This Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. All statements contained in this Form 10-Q, other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. Words such as “believes,” “may,” “will,” “estimates,” “potential,” “continues,” “anticipates,” “intends,” “expects,” “could,” “would,” “projects,” “plans,” “targets,” and variations of such words and similar expressions are intended to identify forward-looking statements.

Forward-looking statements contained in this Form 10-Q include, but are not limited to, statements about our expectations regarding:

•the duration and impact of the ongoing coronavirus (COVID-19) pandemic on our business and the economy;

•trends in revenue, cost of revenue, and gross margin;

•our investments in our platform and the cost of third-party hosting fees;

•trends in operating expenses, including research and development expense, sales and marketing expense, and general and administrative expense, and expectations regarding these expenses as a percentage of revenue;

•our existing cash and cash equivalents, investment balances, funds available under our loan and security agreement, and cash provided by subscriptions to our platform and related professional services being sufficient to meet our working capital and capital expenditure needs for at least the next 12 months; and

•other statements regarding our future operations, financial condition, and prospects and business strategies.

Such forward-looking statements are based on our expectations as of the date of this filing and are subject to a number of risks, uncertainties and assumptions, including but not limited to, risks detailed in the “Risk Factors” section of this Form 10-Q. Readers are urged to carefully review and consider the various disclosures made in this Form 10-Q and in other documents we file from time to time with the Securities and Exchange Commission (SEC) that disclose risks and uncertainties that may affect our business. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and circumstances discussed in this Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance or achievements. In addition, the forward-looking statements in this Form 10-Q are made as of the date of this filing, and we do not undertake, and expressly disclaim any duty, to update such statements for any reason after the date of this Form 10-Q or to conform statements to actual results or revised expectations, except as required by law.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

ZUORA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)


	April 30, 2020		January 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	84,694	$	54,275
Short-term investments	87,898		117,662
Accounts receivable, net	59,365		68,875
Deferred commissions, current portion	10,080		9,585
Prepaid expenses and other current assets	15,550		16,387
Total current assets	257,587		266,784
Property and equipment, net	36,074		33,489
Operating lease right-of-use assets	52,857		54,286
Purchased intangibles, net	5,197		5,620
Deferred commissions, net of current portion	18,748		19,591
Goodwill	17,632		17,632
Other assets	4,076		4,825
Total assets	$	392,171	$	402,227
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	5,343	$	2,098
Accrued expenses and other current liabilities	14,083		17,731
Accrued employee liabilities	23,807		24,193
Debt, current portion	4,432		4,432
Deferred revenue, current portion	107,728		111,411
Operating lease liabilities, current portion	6,268		5,755
Total current liabilities	161,661		165,620
Debt, net of current portion	4,991		6,094
Deferred revenue, net of current portion	782		1,007
Operating lease liabilities, net of current portion	60,359		62,307
Deferred tax liabilities	1,591		1,569
Other long-term liabilities	954		971
Total liabilities	230,338		237,568
Commitments and contingencies (Note 14)
Stockholders’ equity:
Class A common stock	10		10
Class B common stock	2		2
Additional paid-in capital	570,239		555,307
Accumulated other comprehensive (loss) income	(82)		188
Accumulated deficit	(408,336)		(390,848)
Total stockholders’ equity	161,833		164,659
Total liabilities and stockholders’ equity	$	392,171	$	402,227

See notes to unaudited condensed consolidated financial statements.

ZUORA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands, except per share data)

(unaudited)


	Three Months Ended April 30,
	2020		2019
Revenue:
Subscription	$	56,896	$	47,311
Professional services	17,002		16,798
Total revenue	73,898		64,109
Cost of revenue:
Subscription	13,615		11,933
Professional services	18,682		20,098
Total cost of revenue	32,297		32,031
Gross profit	41,601		32,078
Operating expenses:
Research and development	17,543		17,015
Sales and marketing	28,496		25,501
General and administrative	13,265		10,445
Total operating expenses	59,304		52,961
Loss from operations	(17,703)		(20,883)
Interest and other income (expense), net	378		535
Loss before income taxes	(17,325)		(20,348)
Income tax provision	163		244
Net loss	(17,488)		(20,592)
Comprehensive loss:
Foreign currency translation adjustment	(427)		(75)
Unrealized gain on available-for-sale securities	157		24
Comprehensive loss	$	(17,758)	$	(20,643)
Net loss per share, basic and diluted	$	(0.15)	$	(0.19)
Weighted-average shares outstanding used in calculating net loss per share, basic and diluted	115,139		108,821

See notes to unaudited condensed consolidated financial statements.

ZUORA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

(unaudited)


	Three Months Ended April 30, 2020
													Accumulated
	Class A				Class B						Additional		Other			Total
	Common Stock				Common Stock						Paid-in		Comprehensive		Accumulated	Stockholders'
	Shares	Amount		Shares	Amount		Capital		(Loss) Income		Deficit		Equity
Balance, January 31, 2020	97,134	$	10	17,348	$	2	$	555,307	$	188	$	(390,848)	$	164,659
Conversion of Class B common stock to Class A common stock	2,186	—		(2,186)	—		—		—		—		—
Issuance of common stock upon exercise of stock options, net of repurchases	(2)	—		856	—		4,009		—		—		4,009
Lapse of restrictions on common stock related to early exercise of stock options	—	—		—	—		39		—		—		39
RSU releases	337	—		40	—		—		—		—		—
Stock-based compensation	—	—		—	—		10,884		—		—		10,884
Other comprehensive loss	—	—		—	—		—		(270)		—		(270)
Net loss	—	—		—	—		—		—		(17,488)		(17,488)
Balance, April 30, 2020	99,655	$	10	16,058	$	2	$	570,239	$	(82)	$	(408,336)	$	161,833





















	Three Months Ended April 30, 2019
									Accumulated
	Class A				Class B						Additional			Other			Total
	Common Stock				Common Stock						Paid-in			Comprehensive		Accumulated	Stockholders'
	Shares	Amount		Shares	Amount		Capital		Income			Deficit		Equity
Balance, January 31, 2019	77,119	$	8	32,575	$	3	$	488,776	$	481		$	(307,454)	$	181,814
Conversion of Class B common stock to Class A common stock	7,909	—		(7,909)	—		—		—			—		—
Issuance of common stock upon exercise of stock options, net of repurchases	(7)	—		1,247	—		4,846		—			—		4,846
RSU releases	76	—		51	—		—		—			—		—
Lapse of restrictions on common stock related to early exercise of stock options	—	—		—	—		205		—			—		205
Deferred offering costs	—	—		—	—		38		—			—		38
Stock-based compensation	—	—		—	—		7,959		—			—		7,959
Other comprehensive loss	—	—		—	—		—		(51)			—		(51)
Net loss	—	—		—	—		—		—			(20,592)		(20,592)
Balance, April 30, 2019	85,097	$	8	25,964	$	3	$	501,824	$	430		$	(328,046)	$	174,219

See notes to unaudited condensed consolidated financial statements.

ZUORA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Three Months Ended April 30,
	2020		2019
			As Adjusted⁽¹⁾
Cash flows from operating activities:
Net loss	$	(17,488)	$	(20,592)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and accretion	3,495		2,285
Stock-based compensation	10,884		7,959
Provision for doubtful accounts	992		1,344
Amortization of deferred commissions	2,623		2,306
Reduction in carrying amount of right-of-use assets	2,286		1,736
Other	167		11
Changes in operating assets and liabilities:
Accounts receivable	8,518		4,453
Prepaid expenses and other assets	1,591		(2,471)
Deferred commissions	(2,275)		(1,924)
Accounts payable	2,096		4
Accrued expenses and other liabilities	(2,469)		(202)
Accrued employee liabilities	(386)		3,638
Deferred revenue	(3,908)		1,477
Operating lease liabilities	(3,175)		(2,186)
Net cash provided by (used in) operating activities	2,951		(2,162)
Cash flows from investing activities:
Purchases of property and equipment	(5,120)		(1,676)
Purchases of short-term investments	(10,901)		(67,705)
Sales of short-term investments	2,511		3,496
Maturities of short-term investments	38,500		55,900
Net cash provided by (used in) investing activities	24,990		(9,985)
Cash flows from financing activities:
Proceeds from issuance of common stock upon exercise of stock options	4,022		4,846
Repurchases of unvested common stock	(7)		(40)
Principal payments on long-term debt	(1,110)		—
Net cash provided by financing activities	2,905		4,806
Effect of exchange rates on cash and cash equivalents	(427)		(75)
Net increase (decrease) in cash and cash equivalents	30,419		(7,416)
Cash and cash equivalents, beginning of period	54,275		70,024
Cash and cash equivalents, end of period	$	84,694	$	62,608
Supplemental disclosure of non-cash investing and financing activities:
Lapse in restrictions on early exercised common stock options	$	39	$	205
Property and equipment purchases accrued or in accounts payable	$	2,604	$	288

(1) Effective February 1, 2019, the Company adopted Topic 842 using the modified retrospective approach. See Note 2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements.

See notes to unaudited condensed consolidated financial statements.

ZUORA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Overview and Basis of Presentation

Description of Business

Zuora, Inc. was incorporated in the state of Delaware in 2006 and began operations in 2007. Zuora’s fiscal year ends on January 31. Zuora is headquartered in Redwood City, California.

The Company provides software that enables companies across multiple industries and geographies to launch, manage or transform to a subscription business model. Architected specifically for dynamic, recurring subscription business models, Zuora's cloud-based software functions as an intelligent subscription management hub that automates and orchestrates the entire subscription order-to-revenue process, including billing and revenue recognition. Zuora's solution enables businesses to easily change pricing and packaging for products and services to grow and scale, to efficiently comply with revenue recognition standards, and to build meaningful relationships with their subscribers.

References to Zuora, “Company”, “our”, or “we” in these notes refer to Zuora, Inc. and its subsidiaries on a consolidated basis.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements, which include the accounts of the Company and its wholly owned subsidiaries, have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. All intercompany balances and transactions have been eliminated in consolidation.

The unaudited condensed consolidated balance sheet as of January 31, 2020 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by GAAP on an annual reporting basis. The unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets, statements of comprehensive loss, statements of cash flows and statements of stockholders' equity for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year ending January 31, 2021 or any future period.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2020, filed with the Securities and Exchange Commission (SEC) on March 31, 2020 (Annual Report).

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as reported amounts of revenue and expenses during the reporting period.

The Company’s most significant estimates and assumptions are related to revenue recognition with respect to the determination of the standalone selling prices for the Company’s services; estimates of the useful life of benefits of commissions; valuation of the Company’s stock-based awards; estimates of allowance for doubtful accounts; estimates of the fair value of goodwill, intangible assets, investments, and other long-lived assets; and the valuation of deferred income tax assets and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ materially from these estimates under different assumptions or conditions.

Note 2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements

The Company’s significant accounting policies are discussed in Note 2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2020, filed with the SEC on March 31, 2020. There have been no significant changes to these policies during the three months ended April 30, 2020 except for updates resulting from the adoption of Topic 326, as discussed below.

Recent Accounting Pronouncements—Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance for income taxes and making other minor improvements. The amendments in the ASU are effective for the Company on February 1, 2021. The Company does not plan to early adopt this ASU at this time and the adoption of this standard is not expected to have a material impact on the consolidated financial statements.

Recent Accounting Pronouncements—Adopted

The Company became a large accelerated filer on January 31, 2020 and lost the ability to delay adoption of new or revised accounting pronouncements. Effective February 1, 2019, the Company adopted FASB ASU No. 2016-02, Leases (Topic 842), which supersedes the guidance in ASC 840, Leases, and requires recognition of right-of-use (ROU) assets and lease liabilities on the Company's consolidated balance sheets. Amounts presented in the unaudited condensed consolidated financial statements for fiscal year 2020 have been adjusted to reflect the adoption of Topic 842.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, and also issued subsequent amendments to the initial guidance including ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11 (collectively, Topic 326), which introduced a new impairment model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses (CECL). The new model uses a forward-looking expected loss method rather than the incurred loss model for recognizing credit losses. Additionally, any expected credit losses are to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities. The Company adopted Topic 326 beginning February 1, 2020 and the adoption of the standard did not have a material impact on the its unaudited condensed consolidated financial statements. However, the adoption resulted in modifying the Company's policies for accounts receivable and available-for-sale securities as follows:

Accounts Receivable:

Trade accounts receivable are recorded at the invoiced amount. Prior to the Company’s adoption of Topic 326, the accounts receivable balance was reduced by an allowance for doubtful accounts that was determined based on the Company’s assessment of the collectability of customer accounts. Under Topic 326, the Company measures expected credit losses of accounts receivable on a collective (pool) basis, aggregating accounts receivable that have accounts balances above or below a certain threshold. For the receivable balances below the threshold, the Company applies a credit-loss percentage that is based on its historical credit losses. For the receivable balances above the threshold, the Company performs an analysis on the related customers and reserves the full amount for any customer accounts where collectability may be at risk. The COVID-19 pandemic and recent economic downturn also prompted the Company to include additional reserves for customers in industries that could be more heavily impacted by these events. The Company will reassess the impact of these events and any other events that may arise in the future in developing its estimates for expected credit losses, and will make any necessary adjustments to the related reserve balance.

The Company recorded an allowance for credit losses of $4.1 million as of April 30, 2020, and the allowance for doubtful accounts balance was $2.9 million as of January 31, 2020.

Available-for-Sale Securities:

Available-for-sale securities are reported at fair value, with unrealized gains and losses and the related tax impact included as a separate component of stockholders’ equity and in comprehensive loss. Accrued interest of $0.4 million as of April 30, 2020 is excluded from both the fair value and the amortized cost of the Company’s

available-for-sale securities and is recorded in prepaid expenses and other current assets in its condensed consolidated balance sheet. The Company has elected to not record an allowance for credit losses for accrued interest on available-for-sale securities and will reverse the accrued interest against interest income in the period in which it is determined that the accrued interest is uncollectible.

Prior to fiscal 2021, the Company followed the guidance in ASC 320 Investments-Debt and Equity Securities in determining whether unrealized losses were other than temporary. Under Topic 326, the Company now considers whether unrealized losses have resulted from a credit loss or other factors. The Company had no unrealized losses on its available-for-sale securities as of April 30, 2020 and as of January 31, 2020, and does not expect credit losses on its current investments in future periods. Therefore, the Company has concluded that an allowance for credit losses was unnecessary as of the February 1, 2020 adoption date and as of April 30, 2020. The Company had no realized losses on available-for-sale securities during the periods presented. The Company uses the specific identification method to determine the cost basis of investments sold.

Note 3. Investments

The amortized costs, unrealized gains and losses and estimated fair values of the Company’s short-term investments were as follows (in thousands):


	April 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. government securities	$	22,033	$	144	$	—	$	22,177
Corporate bonds	41,503		188		—		41,691
Commercial paper	24,030		—		—		24,030
Total short-term investments	$	87,566	$	332	$	—	$	87,898


	January 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. government securities	$	34,053	$	41	$	—	$	34,094
Corporate bonds	45,601		81		—		45,682
Commercial paper	37,886		—		—		37,886
Total short-term investments	$	117,540	$	122	$	—	$	117,662

There were no material realized gains or losses from sales of marketable securities that were reclassified out of accumulated other comprehensive (loss) income into investment income during the three months ended April 30, 2020 and 2019. All securities had stated effective maturities of less than two years as of April 30, 2020.

Note 4. Fair Value Measurements

The accounting guidance for fair value measurements establishes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:


Level input						Input definition

Level 1						Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets

Level 2						Inputs other than quoted prices included within Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date

Level 3						Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date

In general, and where applicable, the Company uses quoted prices in active markets for identical assets or liabilities to determine fair value. If quoted prices in active markets for identical assets or liabilities are not available to determine fair value, then the Company uses quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable either directly or indirectly.

The following tables summarize the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis (in thousands):


	April 30, 2020
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	64,868	$	—	$	—	$	64,868
Short-term investments:
U.S. government securities	$	—	$	22,177	$	—	$	22,177
Corporate bonds	—		41,691		—		41,691
Commercial paper	—		24,030		—		24,030
Total short-term investments	$	—	$	87,898	$	—	$	87,898


	January 31, 2020
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	37,906	$	—	$	—	$	37,906
Short-term investments:
U.S. government securities	$	—	$	34,094	$	—	$	34,094
Corporate bonds	—		45,682		—		45,682
Commercial paper	—		37,886		—		37,886
Total short-term investments	$	—	$	117,662	$	—	$	117,662

The carrying amounts of certain financial instruments, including cash held in bank accounts, accounts receivable, accounts payable, and accrued expenses, approximate fair value due to their relatively short maturities. The carrying amount of debt approximates fair value due to its floating interest rate.

Note 5. Deferred Commissions

Deferred commissions related to incremental costs of obtaining customer contracts, and amortization expense for deferred commissions were as follows at the respective dates and for the periods presented below (in thousands):


	April 30, 2020		January 31, 2020
Deferred commissions	$	28,828	$	29,176

	Three Months Ended April 30,
	2020		2019
Amortization expense	$	2,623	$	2,306

There was no impairment loss in relation to the costs capitalized for the periods presented.

Note 6. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	April 30, 2020		January 31, 2020
Prepaid software subscriptions	$	4,836	$	4,036
Contract assets	2,119		2,476
Prepaid hosting costs	1,725		1,611
Insurance recovery receivable	1,442		1,442
Prepaid insurance	1,303		1,630
Taxes	613		729
Other	3,512		4,463
Total	$	15,550	$	16,387

Note 7. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	April 30, 2020		January 31, 2020
Leasehold improvements	$	18,740	$	16,865
Software	16,816		15,329
Servers	13,441		14,596
Computer equipment	11,940		11,249
Furniture and fixtures	5,060		4,987
Vehicles	104		108
	66,101		63,134
Less accumulated depreciation and amortization	(30,027)		(29,645)
Total	$	36,074	$	33,489

The following table summarizes the capitalized internal-use software costs included within the Software line item in the table above (in thousands):


	Three Months Ended April 30,
	2020		2019
Internal-use software costs capitalized during the period	$	1,438	$	430

	April 30, 2020		January 31, 2020
Total capitalized internal-use software, net of accumulated amortization	$	7,554	$	6,275

Total depreciation and amortization expense related to property and equipment, including amortization of internal-use software, was $2.3 million and $2.0 million for the three months ended April 30, 2020 and 2019, respectively, and is included in Operating expenses and Cost of subscription revenue in the accompanying unaudited condensed consolidated statements of comprehensive loss.

Note 8. Purchased Intangible Assets

The following table summarizes the purchased intangible asset balances (in thousands):

April 30, 2020

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Developed technology

Price	15.10	EPS	-1
Shares	112	P/E	-28
MCap	1,689	P/FCF	-222
Net Debt	-53	EBIT	-59
TEV	1,636	TEV/EBIT	-28
TTM 2019-10-31, in MM, except price, ratios

10-Q	2020-04-30	Filed 2020-06-08
10-K	2020-01-31	Filed 2020-03-31
10-Q	2019-10-31	Filed 2019-12-16
10-Q	2019-07-31	Filed 2019-09-16
10-Q	2019-04-30	Filed 2019-06-11
10-K	2019-01-31	Filed 2019-04-18
10-Q	2018-10-31	Filed 2018-12-13
10-Q	2018-07-31	Filed 2018-09-12
10-Q	2018-04-30	Filed 2018-06-13
S-1	2018-03-16	Public Filing

8-K	2020-07-21	Officers, Exhibits
8-K	2020-06-23
8-K	2020-06-03
8-K	2020-05-23
8-K	2020-04-30
8-K	2020-04-07
8-K	2020-03-12
8-K	2019-12-05
8-K	2019-09-26
8-K	2019-08-28
8-K	2019-06-18
8-K	2019-05-30
8-K	2019-05-29
8-K	2019-03-21
8-K	2019-03-21
8-K	2019-02-28
8-K	2018-11-29
8-K	2018-08-30
8-K	2018-08-15
8-K	2018-07-10
8-K	2018-05-31

EX-31.1	a20200430q1-ex311.htm
EX-31.2	a20200430q1-ex312.htm
EX-32.1	a20200430q1-ex321.htm
EX-32.2	a20200430q1-ex322.htm

ZUO 10Q Quarterly Report

Zuora Earnings 2020-04-30