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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 July 31, 2024
OR
☐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 classTrading Symbol(s)
Name of each exchange on which registered
Class A common stock, par value $0.0001 per shareZUONew 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 July 31, 2024, the number of shares of the Registrant’s Class A common stock outstanding was 143.0 million and the number of shares of the Registrant’s Class B common stock outstanding was 8.5 million.


Page
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.



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. Our fiscal year end is January 31. References to “fiscal” followed by the year refer to the fiscal year ended January 31 for the referenced year.
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,” "determine," “estimates,” “potential,” "possible," “continues,” “anticipates,” “intends,” “expects,” “could,” “would,” “projects,” “plans,” “targets,” "may affect," "seek," "future," strategy," "likely," "should," 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:
•trends in revenue, cost of revenue, and gross margin;
•economic uncertainty and associated trends in macroeconomic conditions, as well as geopolitical conditions, including the effects of economic downturns, inflation, rising interest rates, bank failures, debt ceiling negotiations, potential government shutdowns, and conflicts;
•trends and expectations in our operating and financial metrics, including customers with annual contract value (ACV) equal to or greater than $250,000, dollar-based retention rate, annual recurring revenue (ARR) and ARR growth, and growth of and within our customer base;
•currency exchange rate fluctuations;
•future acquisitions, the anticipated benefits of such acquisitions and our ability to integrate the operations and technology of any acquired company;
•industry trends, projected growth, or trend analysis, including the shift to recurring revenue business models;
•our investments in our platform and the cost of third-party hosting fees;
•the expansion and functionality of our technology offering, including expected benefits of such products and technology, and our ability to further penetrate our customer base;
•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 liquidity being sufficient to meet our working capital and capital expenditure needs for at least the next 12 months;
•the impact of actions that we are taking to improve operational efficiencies and operating costs, including prior workforce reductions;
•our ability to use our net operating loss (NOL) carryforwards to offset future taxable income or our research and development tax credits to offset our future taxes;
•disruptions to the U.S. and international banking systems;
•our ability to comply with all governmental laws, regulations and other legal obligations, including those related to evolving regulation of artificial intelligence (AI) and machine learning; and
•other statements regarding our future operations, financial condition, 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
1

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.
2

PART I—FINANCIAL INFORMATION
Item 1.    Financial Statements
ZUORA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 July 31, 2024January 31, 2024
Assets
Current assets:
Cash and cash equivalents$237,041 $256,065 
Short-term investments306,430 258,120 
Accounts receivable, net of allowance for credit losses of $1,797 and $2,142 as of July 31, 2024 and January 31, 2024, respectively
93,315 124,602 
Deferred commissions, current portion15,953 15,870 
Prepaid expenses and other current assets25,862 23,261 
Total current assets678,601 677,918 
Property and equipment, net26,882 25,961 
Operating lease right-of-use assets21,783 22,462 
Purchased intangibles, net21,590 10,082 
Deferred commissions, net of current portion25,421 27,250 
Goodwill69,739 56,657 
Other assets5,172 3,506 
Total assets$849,188 $823,836 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$773 $3,161 
Accrued expenses and other current liabilities21,621 32,157 
Accrued employee liabilities30,427 37,722 
Deferred revenue, current portion185,183 199,615 
Operating lease liabilities, current portion6,710 6,760 
Total current liabilities244,714 279,415 
Long-term debt365,300 359,525 
Deferred revenue, net of current portion1,454 2,802 
Operating lease liabilities, net of current portion34,508 37,100 
Deferred tax liabilities3,726 3,725 
Other long-term liabilities7,439 7,582 
Total liabilities657,141 690,149 
Commitments and contingencies (Note 14)
Stockholders’ equity:
Class A common stock14 14 
Class B common stock1 1 
Additional paid-in capital1,043,691 964,141 
Accumulated other comprehensive loss(1,120)(859)
Accumulated deficit(850,539)(829,610)
Total stockholders’ equity192,047 133,687 
Total liabilities and stockholders’ equity$849,188 $823,836 
See notes to unaudited condensed consolidated financial statements.
3

ZUORA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except per share data)
(unaudited) 
 Three Months Ended
July 31,		Six Months Ended
July 31,
 2024202320242023
Revenue:
Subscription$104,051 $95,473 $203,010 $185,184 
Professional services11,345 12,575 22,155 25,959 
Total revenue115,396 108,048 225,165 211,143 
Cost of revenue:
Subscription22,564 21,338 43,253 41,926 
Professional services14,728 16,443 29,100 33,201 
Total cost of revenue37,292 37,781 72,353 75,127 
Gross profit78,104 70,267 152,812 136,016 
Operating expenses:
Research and development26,454 26,256 50,020 51,924 
Sales and marketing36,137 42,799 71,982 84,243 
General and administrative25,202 19,451 44,471 38,267 
Total operating expenses87,793 88,506 166,473 174,434 
Loss from operations(9,689)(18,239)(13,661)(38,418)
Change in fair value of debt conversion and warrant liabilities(1,013)(4,786)(8,941)(4,756)
Interest expense(6,965)(4,607)(13,736)(8,994)
Interest and other income (expense), net8,168 5,657 13,483 11,367 
Loss before income taxes(9,499)(21,975)(22,855)(40,801)
Income tax (benefit) provision(2,278)587 (1,926)1,056 
Net loss(7,221)(22,562)(20,929)(41,857)
Comprehensive loss:
Foreign currency translation adjustment171 (404)(76)(687)
Unrealized gain (loss) on available-for-sale securities302 172 (185)512 
Comprehensive loss$(6,748)$(22,794)$(21,190)$(42,032)
Net loss per share, basic and diluted$(0.05)$(0.16)$(0.14)$(0.30)
Weighted-average shares outstanding used in calculating net loss per share, basic and diluted149,377 138,605 148,038 137,417 
See notes to unaudited condensed consolidated financial statements.

4

ZUORA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
(unaudited)
Six Months Ended July 31, 2024
Accumulated
Class AClass BAdditionalOtherTotal
Common StockCommon StockPaid-inComprehensiveAccumulatedStockholders'
SharesAmountSharesAmountCapitalLossDeficitEquity
Balance, January 31, 2024137,792 $14 8,240 $1 $964,141 $(859)$(829,610)$133,687 
Conversion of Class B common stock to Class A common stock 760 — (760)— — — — — 
Issuance of common stock upon exercise of stock options— — 991 — 3,120 — — 3,120 
RSU releases 3,614 — — — — — — — 
Issuance of common stock under the ESPP840 — — — 4,481 — — 4,481 
Stock-based compensation — — — — 44,169 — — 44,169 
Reclassification of debt conversion and warrant liabilities to equity— — — — 27,780 — — 27,780 
Other comprehensive loss— — — — — (261)— (261)
Net loss — — — — — — (20,929)(20,929)
Balance, July 31, 2024143,006 $14 8,471 $1 $1,043,691 $(1,120)$(850,539)$192,047 

Three Months Ended July 31, 2024
Accumulated
Class AClass BAdditionalOtherTotal
Common StockCommon StockPaid-inComprehensiveAccumulatedStockholders'
SharesAmountSharesAmountCapitalLossDeficitEquity
Balance, April 30, 2024139,747 $14 8,355 $1 $984,194 $(1,593)$(843,318)$139,298 
Conversion of Class B common stock to Class A common stock367 — (367)— — — — — 
Issuance of common stock upon exercise of stock options— — 483 — 1,528 — — 1,528 
RSU and PSU releases2,052 — — — — — — — 
Issuance of common stock under the ESPP840 — — — 4,481 — — 4,481 
Stock-based compensation— — — — 25,708 — — 25,708 
Reclassification of debt conversion and warrant liabilities to equity— — — — 27,780 — — 27,780 
Other comprehensive income
— — — — — 473 — 473 
Net loss— — — — — — (7,221)(7,221)
Balance, July 31, 2024143,006 $14 8,471 $1 $1,043,691 $(1,120)$(850,539)$192,047 

See notes to unaudited condensed consolidated financial statements.

5

ZUORA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
(unaudited)

Six Months Ended July 31, 2023
Accumulated
Class AClass BAdditionalOtherTotal
Common StockCommon StockPaid-inComprehensiveAccumulatedStockholders'
SharesAmountSharesAmountCapitalLossDeficitEquity
Balance, January 31, 2023127,384 $13 8,121 $1 $859,482 $(919)$(761,417)$97,160 
Conversion of Class B common stock to Class A common stock 203 — (203)— — — — — 
Issuance of common stock upon exercise of stock options— — 201 — 962 — — 962 
RSU releases 3,950 — — — — — — — 
Issuance of common stock under the ESPP911 — — — 4,765 — — 4,765 
Stock-based compensation — — — — 51,872 — — 51,872 
Other comprehensive loss— — — — — (175)— (175)
Net loss — — — — — — (41,857)(41,857)
Balance, July 31, 2023132,448 $13 8,119 $1 $917,081 $(1,094)$(803,274)$112,727 

Three Months Ended July 31, 2023
Accumulated
Class AClass BAdditionalOtherTotal
Common StockCommon StockPaid-inComprehensiveAccumulatedStockholders'
SharesAmountSharesAmountCapitalLossDeficitEquity
Balance, April 30, 2023129,123 $13 8,121 $1 $885,243 $(862)$(780,712)$103,683 
Conversion of Class B common stock to Class A common stock 107 — (107)— — — — — 
Issuance of common stock upon exercise of stock options— — 105 — 425 — — 425 
RSU releases 2,307 — — — — — — — 
Issuance of common stock under the ESPP911 — — — 4,765 — — 4,765 
Stock-based compensation — — — — 26,648 — — 26,648 
Other comprehensive loss— — — — — (232)— (232)
Net loss — — — — — — (22,562)(22,562)
Balance, July 31, 2023132,448 $13 8,119 $1 $917,081 $(1,094)$(803,274)$112,727 


See notes to unaudited condensed consolidated financial statements.
6

ZUORA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Six Months Ended
July 31,
 20242023
Cash flows from operating activities:
Net loss$(20,929)$(41,857)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and accretion9,177 8,892 
Stock-based compensation44,169 51,872 
Provision for credit losses1,670 279 
Amortization of deferred commissions9,209 9,746 
Reduction in carrying amount of right-of-use assets2,278 3,116 
Change in fair value of debt conversion and warrant liabilities8,941 4,756 
Other(2,414)186 
Changes in operating assets and liabilities:
Accounts receivable29,621 9,726 
Prepaid expenses and other assets(3,818)(4,317)
Deferred commissions(7,599)(7,647)
Accounts payable(2,407)(63)
Accrued expenses and other liabilities4,808 (5,102)
Accrued employee liabilities(7,295)(128)
Deferred revenue(15,780)(1,848)
Operating lease liabilities(5,329)(7,630)
Net cash provided by operating activities44,302 19,981 
Cash flows from investing activities:
Purchases of property and equipment(5,922)(3,838)
Purchases of short-term investments(181,467)(61,745)
Maturities of short-term investments136,301 165,128 
Cash paid for acquisition, net of cash acquired(19,763)(4,524)
Net cash (used in) provided by investing activities(70,851)95,021 
Cash flows from financing activities:
Proceeds from issuance of common stock upon exercise of stock options3,120 962 
Proceeds from issuance of common stock under employee stock purchase plan4,481 4,765 
Net cash provided by financing activities7,601 5,727 
Effect of exchange rates on cash and cash equivalents(76)(687)
Net (decrease) increase in cash and cash equivalents(19,024)120,042 
Cash and cash equivalents, beginning of period256,065 203,239 
Cash and cash equivalents, end of period$237,041 $323,281 
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment purchases accrued or in accounts payable$22 $6 
See notes to unaudited condensed consolidated financial statements.
7

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.
Zuora provides a leading monetization suite for a modern business, built to help companies launch and scale new services and operate dynamic, customer-centric business models, including subscription and usage-based models. Our technology solutions enable companies across multiple industries and geographies to build, run, and grow a modern business, automating the quote-to-revenue process, including offers, billing, collections, and revenue recognition. With Zuora’s solutions, businesses can change and evolve how they go to market through a mix of monetization models, efficiently comply with revenue recognition standards, analyze customer data to optimize their offerings, and build recurring relationships with their customers.
On September 2, 2022, Zuora acquired Zephr, a leading subscription experience platform used by global digital publishing and media companies. Additional information regarding the Zephr acquisition is contained in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024, filed with the Securities and Exchange Commission (SEC) on March 26, 2024 (Annual Report on Form 10-K). On May 9, 2024, Zuora acquired Togai Inc., a privately held metering and rating solution company. We have included the financial results of Togai in our condensed consolidated financial statements from the date of acquisition. Refer to Note 19. Acquisition for further information.
References to “Zuora”, “us”, “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 Zuora 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 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, 2024 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, 2025 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 our Annual Report on Form 10-K for the fiscal year ended January 31, 2024. Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
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. Actual results could differ materially from those estimates.
8

Our most significant estimates and assumptions are related to revenue recognition with respect to the determination of the standalone selling prices for our services; the expected period of benefit over which deferred commissions are amortized; valuation of certain stock-based awards, our convertible senior notes and warrants and short-term investments; estimates of allowance for credit losses; estimates of the fair value of goodwill and long-lived assets when evaluating for impairments and for assets acquired from acquisitions; useful lives of intangibles and other long-lived assets; and the valuation of deferred income tax assets and contingencies. We base our 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
Our significant accounting policies are discussed in Note 2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements in our Annual Report on Form 10-K. There have been no significant changes to these policies during the six months ended July 31, 2024.
Note 3. Investments
The amortized costs, unrealized gains and losses and estimated fair values of our short-term investments were as follows (in thousands):
July 31, 2024
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
U.S. government securities$99,869 $15 $(66)$99,818 
Agency bonds27,340 — (10)27,330 
Corporate bonds179,250 90 (58)179,282 
Total short-term investments$306,459 $105 $(134)$306,430 
January 31, 2024
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
U.S. government securities$98,206 $50 $(7)$98,249 
Agency bonds26,168 38 — 26,206 
Corporate bonds103,599 83 (3)103,679 
Commercial paper29,991 — (5)29,986 
Total short-term investments$257,964 $171 $(15)$258,120 
There were no material realized gains or losses from sales of marketable securities that were reclassified out of accumulated other comprehensive loss into investment income during the three and six months ended July 31, 2024 and 2023. We had no significant unrealized losses on our available-for-sale securities as of July 31, 2024 and January 31, 2024, and we do not expect material credit losses on our current investments in future periods. All securities had stated effective maturities of less than two years as of July 31, 2024.
9

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 inputInput definition
Level 1Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets
Level 2Inputs 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 3Unobservable 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, we use 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 we use 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 our fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis (in thousands):
July 31, 20241
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds$192,238 $— $— $192,238 
Total cash equivalents$192,238 $— $— $192,238 
Short-term investments:
U.S. government securities$— $99,818 $— $99,818 
Agency bonds— 27,330 — 27,330 
Corporate bonds— 179,282 — 179,282 
Total short-term investments$— $306,430 $— $306,430 
January 31, 2024
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds$207,632 $— $— $207,632 
Corporate bonds3,497 — — 3,497 
Total cash equivalents$211,129 $— $— $211,129 
Short-term investments:
U.S. government securities$— $98,249 $— $98,249 
Agency bonds— 26,206 — 26,206 
Corporate bonds— 103,679 — 103,679 
Commercial paper— 29,986 — 29,986 
Total short-term investments$— $258,120 $— $258,120 
Liabilities:
Warrant liability$— $— $11,992 $11,992 
Debt conversion liability— — 6,848 6,848 
Total liabilities$— $— $18,840 $18,840 
10

_____________________________
(1) As of June 27, 2024, we no longer account for the Silver Lake (as defined below) debt conversion or warrants as liabilities since we received stockholder approval on that date to issue the maximum number of shares of Class A common stock upon conversion of the notes and exercise of the warrants. As a result, we are no longer required to pay cash in lieu of issuing shares of Class A common stock in excess of the limitations under the New York Stock Exchange rules that applied prior to obtaining this stockholder approval. For more information, see Note 9. Debt.
Changes in our Level 3 fair value measurements were as follows (in thousands):
Warrant Liability
Balance, January 31, 2024
$11,992 
Change in fair value through June 27, 2024
9,369 
Reclassification of warrant liability to equity
(21,361)
Balance, July 31, 2024
$— 
Additional information about the Warrant liability, including the fair value inputs, is included in Note 10. Warrants to Purchase Shares of Common Stock.
Debt Conversion Liability
Balance, January 31, 2024
$6,848 
Change in fair value through June 27, 2024
(428)
Reclassification of debt conversion liability to equity
(6,420)
Balance, July 31, 2024
$— 
Additional information about the debt conversion liability, including the fair value inputs, is included in Note 9. Debt.
As of July 31, 2024, the net carrying amount of the 2029 Notes, defined in Note 9. Debt, was $365.3 million and the estimated fair value was $402.3 million. The fair value of the 2029 Notes is classified as a Level 3 measurement.
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.
Note 5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
 July 31, 2024January 31, 2024
Prepaid software subscriptions$7,321 $6,582 
Taxes5,064 4,348 
Contract assets3,611 1,380 
Interest receivable
2,027 1,377 
Prepaid insurance1,729 2,305 
Deposits1,207 699 
Prepaid hosting costs526 1,157 
Other4,377 5,413 
Total$25,862 $23,261 
11

Note 6. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
 July 31, 2024January 31, 2024
Internal-use software$41,304 $35,883 
Leasehold improvements13,546 14,013 
Computer equipment11,533 11,125 
Furniture and fixtures3,143 4,276 
Purchased software1,333 1,333 
70,859 66,630 
Less: accumulated depreciation and amortization(43,977)(40,669)
Total$26,882 $25,961 
The following table summarizes total depreciation and amortization expense related to property and equipment, including amortization of internal-use software, included primarily in General and administrative and Cost of subscription revenue in the accompanying unaudited condensed consolidated statements of comprehensive loss (in thousands):
Three Months Ended
July 31,		Six Months Ended
July 31,
2024202320242023
Total depreciation and amortization expense$2,564 $2,444 $4,933 $4,982 
Note 7. Purchased Intangible Assets and Goodwill
The following tables summarize the purchased intangible asset balances (in thousands):
July 31, 2024
Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Developed technology$30,697 $(10,848)$19,849 
Customer relationships5,527 (4,085)1,442 
Trade name1,719 (1,420)299 
Total$37,943 $(16,353)$21,590 
January 31, 2024
Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Developed technology$17,997 $(9,782)$8,215 
Customer relationships5,187 (3,786)1,401 
Trade name1,709 (1,243)466 
Total$24,893 $(14,811)$10,082 
Purchased intangible assets are being amortized to Cost of subscription revenue in the accompanying unaudited condensed consolidated statements of comprehensive loss on a straight-line basis over their estimated useful lives ranging from three to ten years. The following table summarizes amortization expense recognized on purchased intangible assets during the periods indicated (in thousands):
12

Three Months Ended
July 31,		Six Months Ended
July 31,
2024202320242023
Purchased intangible assets amortization expense$934 $738 $1,542 $1,476 
Estimated future amortization expense for purchased intangible assets as of July 31, 2024 was as follows (in thousands):
Fiscal year ending:
2025 (remainder of the year)$1,995 
20263,547 
20273,234 
20283,234 
20293,174 
Thereafter6,406 
Total estimated amortization expense$21,590 
The following table represents the changes to goodwill (in thousands):
Goodwill
Balance, January 31, 2024$56,657 
Addition from acquisition12,614 
Effects of foreign currency translation468 
Balance, July 31, 2024$69,739 
Note 8. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
 July 31, 2024January 31, 2024
 Accrued outside services and consulting $8,060 $1,499 
 Accrued taxes 3,632 4,147 
 Accrued hosting and third-party licenses 2,834 2,707 
 Accrued interest 1,344 1,344 
 Warrant liability — 11,992 
 Debt conversion liability— 6,848 
 Other accrued expenses
5,751 3,620 
Total$21,621 $32,157 
Note 9. Debt
2029 Notes
On March 24, 2022 (Initial Closing Date), we issued convertible senior notes (Initial Notes) in the aggregate principal amount of $250.0 million pursuant to an agreement with certain entities affiliated with Silver Lake Alpine II, L.P. (Silver Lake). On September 22, 2023 (Subsequent Closing Date), we issued additional convertible senior notes in the aggregate principal amount of $150.0 million (Additional Notes and together with the Initial Notes, the 2029 Notes) under the agreement with Silver Lake. The 2029 Notes represent senior unsecured obligations of Zuora.
13

As a condition of the agreement with Silver Lake, we also issued warrants to Silver Lake to acquire up to 7.5 million shares of Class A common stock (Warrants). Refer to Note 10. Warrants to Purchase Shares of Common Stock for more information.
The purchase price of the 2029 Notes was 98% of the par value. The 2029 Notes bear interest at a rate of 3.95% per annum, payable quarterly in cash, provided that we have the option to pay interest in kind at 5.50% per annum. The 2029 Notes will mature on March 31, 2029, subject to earlier conversion or repurchase. The 2029 Notes are convertible at Silver Lake’s option into shares of our Class A common stock at an initial conversion rate of 50.0 shares per $1,000 principal amount ($20.00 per share, representing 20.0 million shares of Class A common stock), subject to customary anti-dilution adjustments. Any 2029 Notes that are converted in connection with a "make-whole fundamental change" are subject to an increase in the conversion rate under certain circumstances. The term "make-whole fundamental change" is defined in the indenture for the 2029 Notes, and generally refers to a "fundamental change" including a change in control of Zuora that meets certain specifications or the termination of trading of Zuora's stock on the New York Stock Exchange (or the NASDAQ Global Select Market or the NASDAQ Global Market, or any of their respective successors), in each case subject to certain exceptions and exclusions described in the indenture.
On the Initial Closing Date, we concluded that the conversion option contained in the 2029 Notes qualified for a scope exception from derivative accounting and therefore was not bifurcated and accounted for separately from the Initial Notes. On the Subsequent Closing Date, we reassessed the classification of the conversion option and concluded that a portion of the conversion option no longer qualified for equity classification under ASC 815-40 as a result of the issuance of the Additional Notes. Under certain make-whole fundamental change scenarios, we would be required to, at our option, either (i) seek and obtain stockholder approval prior to issuing 20% or more of our outstanding common stock or voting power or (ii) pay cash in lieu of delivering any shares at or above such 20% threshold. As a result of our sequencing policy described in Note 2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements in our Annual Report on Form 10-K, we separated a portion of the conversion option representing approximately 1.4 million shares of Class A common stock issuable upon conversion of the 2029 Notes valued at $6.1 million as of the Subsequent Closing Date from the 2029 Notes and recorded a debt conversion liability at fair value on bifurcation, with an offset to the carrying amount of the 2029 Notes. At our 2024 Annual Meeting of Stockholders on June 27, 2024 (Stockholder Approval Date), our stockholders approved the issuance of the maximum number of shares Class A common stock upon conversion of the 2029 Notes and Warrants. As a result, there is no longer a potential requirement to pay cash in lieu of delivering any shares at or above the 20% threshold. On the Stockholder Approval Date, we reassessed the classification of the portion of the conversion option that was bifurcated and accounted for separately from the 2029 Notes as of the Subsequent Closing Date and concluded that the previously separated portion of the conversion option again qualified for a scope exception from derivative accounting as of the Stockholder Approval Date. Accordingly, we reclassified the previously separated portion of the conversion feature valued at $6.4 million as of the Stockholder Approval Date to equity. For further information on our derivative financial instruments policy, refer to Note 2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements in our Annual Report on Form 10-K. We will reassess the classification of the debt conversion liability in future reporting periods to determine if any further change is required.
With certain exceptions, upon a "fundamental change" of Zuora, the holders of the 2029 Notes may require that we repurchase all or part of the principal amount of the 2029 Notes at a purchase price equal to the principal amount and accrued but unpaid interest outstanding, plus the total sum of all remaining scheduled interest payments through the remainder of the term of the 2029 Notes, at the 5.50% paid in kind interest rate. At any time on or after March 24, 2027, the holders of the 2029 Notes may require that we repurchase all or part of the principal amount of the Notes at a purchase price equal to the principal amount plus accrued interest through the date of repurchase. Upon certain events of default, the 2029 Notes may be declared due and payable (or will automatically become so under certain events of default), at a purchase price equal to the principal amount plus accrued interest through the date of repurchase. We have no right to redeem the 2029 Notes prior to maturity.
Deferred loan costs are being amortized to interest expense using the effective interest rate method over the five year expected life of the 2029 Notes (representing the period from the contract date to the earliest noncontingent put date of March 24, 2027), reflecting an effective interest rate of 7.6%.
14

The carrying value of the 2029 Notes was classified as long-term and consisted of the following (in thousands):
July 31, 2024January 31, 2024
2029 Notes principal$400,000 $400,000 
Unamortized deferred loan costs(34,700)(40,475)
Carrying value$365,300 $359,525 
Interest expense related to the 2029 Notes, included in Interest expense in the accompanying unaudited condensed consolidated statements of comprehensive loss, was as follows (in thousands):
Three Months Ended
July 31,		Six Months Ended
July 31,
2024202320242023
Contractual interest expense$3,950 $2,469 $7,900 $4,938 
Amortization of deferred loan costs2,990 2,094 5,775 3,998 
Total interest expense$6,940 $4,563 $13,675 $8,936 
To determine the valuation of the debt conversion liability as of the Stockholder Approval date and as of January 31, 2024, we used a binomial lattice model to value the bifurcated derivatives contained in the 2029 Notes. ASC 815 does not permit an issuer to account separately for individual derivative terms and features embedded in hybrid financial instruments that require bifurcation and liability classification as derivative financial instruments. Rather, such terms and features must be combined together, and fair-valued as a single, compound embedded derivative. We selected a binomial lattice model to value the compound embedded derivative because we believe this technique is reflective of all significant assumptions that market participants would likely consider in negotiating the transfer of the 2029 Notes. Such assumptions include, among other inputs, stock price volatility, risk-free rates, credit risk assumptions, early redemption and conversion assumptions, and the potential for future adjustment of the conversion rate due to triggering events.
The debt conversion liability's fair value was measured using a binomial lattice model using the following key inputs:
June 27, 20241
January 31, 2024
Fair value of common stock$9.62$9.14
Conversion price
$20.00$20.00
Expected volatility50.0 %47.5 %
Risk-free interest rate4.9 %3.8 %
Corporate bond yield
17.9 %19.2 %
Coupon interest rate
3.95 %3.95 %
_____________________________
(1) On the Stockholder Approval Date of June 27, 2024, the debt conversion liability was reclassified to equity.
We recognized gains on the revaluation of the debt conversion liability, summarized in the table below (in thousands), which are included in Change in fair value of debt conversion and warrant liabilities in the accompanying unaudited condensed consolidated statements of comprehensive loss. Refer to Note 4. Fair Value Measurements for the fair value of the debt conversion liability.
Three Months Ended
July 31,		Six Months Ended
July 31,
2024202320242023
Gain on change in fair value of debt conversion liability
$1,248 $— $428 $— 
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Debt Agreement
We have a $30.0 million secured revolving credit facility under an agreement with Silicon Valley Bank, a division of First-Citizens Bank & Trust. This credit facility matures in October 2025. The interest rate under the credit facility is equal to the prime rate published by the Wall Street Journal minus 1.0%. We had not drawn down any amounts under the facility as of July 31, 2024.
Note 10. Warrants to Purchase Shares of Common Stock
In connection with the issuance of the 2029 Notes (discussed Note 9. Debt), we issued to Silver Lake Warrants to acquire up to 7.5 million shares of Class A common stock, exercisable for a period of approximately seven years from the Initial Closing Date, which are comprised of (i) Warrants to purchase up to 2.5 million shares of Class A common stock are exercisable at $20.00 per share, (ii) Warrants to purchase up to 2.5 million shares of Class A common stock are exercisable at $22.00 per share, and (iii) Warrants to purchase up to 2.5 million shares of Class A common stock are exercisable at $24.00 per share. In addition, Silver Lake can elect to exercise the Warrants on a net-exercise basis. In the event of a "make-whole fundamental change" (as defined in the Form of Warrant, which has a similar definition as in the indenture, described above in Note. 9 Debt), the number of shares issuable by Zuora upon exercise of the Warrants may be increased, and the exercise price for the Warrants adjusted. As of July 31, 2024, all 7.5 million Warrants were outstanding.
On the Initial Closing Date, we classified a portion of the Warrants as a current liability due to certain settlement provisions in the Warrants. Under certain make-whole fundamental change scenarios, we would be required to, at our option, either (i) obtain shareholder approval prior to issuing 20% or more of our outstanding common stock or (ii) pay cash in lieu of delivering any shares at or above such 20% threshold. As a result, we concluded that approximately 2.8 million Warrants valued at $12.0 million as of the Initial Closing Date did not qualify for equity classification under ASC 815-40, pursuant to our sequencing policy. As a result of the issuance of the Additional Notes, we reassessed the classification of the Warrants and concluded that no Warrants qualified for equity classification under ASC 815-40. Accordingly, we reclassified 4.7 million Warrants valued at $7.7 million from equity to liability as of the Subsequent Closing Date. At our 2024 Annual Meeting of Stockholders on June 27, 2024 (Stockholder Approval Date), our stockholders approved the issuance of the maximum number of shares of Class A common stock upon exercise of the Warrants and therefore there is no longer a potential requirement to pay cash in lieu of delivering any shares at or above the 20% threshold. On the Stockholder Approval Date, we reassessed the classification of the Warrants and concluded that all Warrants fully qualified for a scope exception from derivative accounting as of the Stockholder Approval Date. Accordingly, we reclassified the Warrants valued at $21.4 million as of the Stockholder Approval Date to equity. We will reassess the classification of the Warrant liability in future reporting periods to determine if any change is required.
The liability-classified warrants' fair value was measured using a combination of Black-Scholes option pricing and Monte Carlo Simulation models that take into consideration probability factors of the various outcomes related to the exercise terms of the warrants using the following inputs:
 
June 27, 20241
January 31, 2024
Fair value of common stock
$9.62 $9.14 
Exercise price
$20.00 - $24.00
$20.00 - $24.00
Expected volatility2
55.0 %41.8 %
Expected term (in years)4.45.2
Risk-free interest rate4.2 %3.9 %
Expected dividend yield— — 
_____________________________
(1) On the Stockholder Approval Date of June 27, 2024, the warrant liability was reclassified to equity.
(2) During the quarter ended April 30, 2024, we changed our approach for estimating our stock price volatility to use only Zuora's historical stock price trading data. Zuora now has sufficient historical trading data to fair value its financial instruments and we believe it better reflects the expected future trading volatility of the company's outstanding common stock. In previous periods, we used an average volatility based on historical trading data of Zuora and a group of similar publicly traded companies.
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We recognized losses on the revaluation of the liability-classified Warrants, summarized in the table below (in thousands), which are included in Change in fair value of debt conversion and warrant liabilities in the accompanying unaudited condensed consolidated statements of comprehensive loss. Refer to Note 4. Fair Value Measurements for the fair value of the liability-classified Warrants.
Three Months Ended
July 31,		Six Months Ended
July 31,
2024202320242023
Loss on change in fair value of warrant liability$(2,261)$(4,786)$(9,369)$(4,756)
Note 11. Deferred Revenue and Performance Obligations
The following table summarizes revenue recognized during the period that was included in the deferred revenue balance at the beginning of each respective period (in thousands):
Three Months Ended
July 31,		Six Months Ended
July 31,
2024202320242023
Revenue recognized from deferred revenue$89,184 $79,382 $144,234 $126,548 
As of July 31, 2024, total remaining non-cancellable performance obligations under our subscription contracts with customers was approximately $577.1 million and we expect to recognize revenue on approximately 55% of these remaining performance obligations over the next 12 months. Remaining performance obligations under our professional services contracts as of July 31, 2024 were not material.
Note 12. Geographical Information
Disaggregation of Revenue
Revenue by country, based on the customer’s address at the time of sale, was as follows (in thousands): 
 Three Months Ended
July 31,		Six Months Ended
July 31,
 2024202320242023
United States$73,062$69,348$141,745$134,755
Others42,33438,70083,42076,388
Total$115,396$108,048$225,165$211,143
Percentage of revenue by geographic area:
United States63 %64 %63 %64 %
Other37 %36 %37 %36 %
Other than the United States, no individual country exceeded 10% of total revenue for the three and six months ended July 31, 2024 and 2023.
Long-lived assets
Long-lived assets, which consist of property and equipment, net, deferred commissions, purchased intangible assets, net and operating lease right-of-use assets by geographic location, are based on the location of the legal entity that owns the asset. As of July 31, 2024 and January 31, 2024, no individual country exceeded 10% of total long-lived assets other than the United States.

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Note 13. Leases
We have non-cancelable operating leases for our offices located in the U.S. and abroad. As of July 31, 2024, these leases expire on various dates between 2026 and 2030. Certain lease agreements include one or more options to renew, with renewal terms that can extend the lease up to seven years. We have the right to exercise or forego the lease renewal options. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The components of our long-term operating leases and related operating lease cost were as follows (in thousands):
July 31, 2024January 31, 2024
Operating lease right-of-use assets$21,783 $22,462 
Operating lease liabilities, current portion$6,710 $6,760 
Operating lease liabilities, net of current portion34,508 37,100 
Total operating lease liabilities$41,218 $43,860 
Three Months Ended
July 31,		Six Months Ended
July 31,
2024202320242023
Operating lease cost1
$1,981 $2,183 $3,991 $4,409 
_____________________________
(1) Includes costs related to our short-term operating leases and is net of sublease income as follows (in thousands):    
Three Months Ended
July 31,		Six Months Ended
July 31,
2024202320242023
Short-term operating lease costs$374 $139 $825 $241 
Sublease income$(123)$(98)$(221)$(195)
The future maturities of long-term operating lease liabilities for each fiscal year were as follows (in thousands):
Maturities of Operating Lease Liabilities
2025 (remainder of the year)
$3,935 
20269,358 
20278,622 
20288,027 
20296,881 
Thereafter10,608 
   Total lease payments47,431 
Less imputed interest(6,213)
   Present value of lease liabilities$41,218 
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Other supplemental information related to our long-term operating leases includes the following (dollars in thousands):
July 31, 2024January 31, 2024
Weighted-average remaining operating lease term5.5 years5.9 years
Weighted-average operating lease discount rate5.0 %5.1 %
Three Months Ended
July 31,		Six Months Ended
July 31,
2024202320242023
Supplemental Cash Flow Information
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for operating leases$2,235 $4,038 $5,356 $7,528 
New right-of-use assets obtained in exchange for lease liabilities:
Operating leases obtained$1,615 $— $1,615 $6,973 
Note 14. Commitments and Contingencies
Letters of Credit
In connection with the execution of certain facility leases, we had bank issued irrevocable letters of credit for $3.0 million as of July 31, 2024 and $4.5 million as of January 31, 2024. No draws have been made under such letters of credit.
Legal Proceedings
From time to time, we may be subject to legal proceedings, as well as demands, claims and threatened litigation. The outcomes of legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and could be material to our operating results and cash flows for a particular period. Regardless of the outcome, litigation can have an adverse impact on our business because of defense and settlement costs, diversion of management resources, and other factors. As of the date of this Quarterly Report on Form 10-Q, we are not currently party to any legal proceeding that we believe could have a material adverse effect on our business, operating results, cash flows, or financial condition should such litigation or claim be resolved unfavorably.

Other Contractual Obligations
As of July 31, 2024, we have a contractual obligation to spend a minimum of $30.0 million in purchases of cloud computing services provided by one of our vendors for each of the years ending July 31, 2025, 2026, and 2027.
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Note 15. Income Taxes
The following table reflects our income tax provision, pretax loss and effective tax rate for the periods presented (in thousands, except percentages):
Three Months Ended
July 31,		Six Months Ended
July 31,
2024202320242023
Loss before income taxes$(9,499)$(21,975)$(22,855)$(40,801)
Income tax (benefit) provision(2,278)587 (1,926)1,056 
Effective tax rate24.0 %(2.7)%8.4 %(2.6)%
The effective tax rates differ from the statutory rates as a result of providing no benefit on pretax losses incurred in the United States, as we have determined that the benefit of the losses is not more likely than not to be realized. The tax expense for the six months ended July 31, 2024 included a benefit of $2.7 million for the partial release of valuation allowance. In connection with the Togai acquisition, we recorded a net deferred tax liability which provides an additional source of taxable income to support the realization of the pre-existing deferred tax assets. Accordingly, during the six months ended July 31, 2024, we released a total of $2.7 million of our U.S. valuation allowance.
Note 16. Stockholders’ Equity
Preferred Stock
As of July 31, 2024, Zuora had authorized 10 million shares of preferred stock, each with a par value of $0.0001 per share. As of July 31, 2024, no shares of preferred stock were issued and outstanding.
Common Stock
Prior to Zuora's IPO, which was effective in April 2018, all shares of common stock then outstanding were reclassified into Class B common stock. Shares offered and sold in the IPO consisted of newly authorized shares of Class A common stock. Holders of Class A and Class B common stock are entitled to one vote per share and ten votes per share, respectively, and the shares of Class A common stock and Class B common stock are identical, except for voting rights and the right to convert Class B common stock to Class A common stock.
As of July 31, 2024, Zuora had authorized 500 million shares of Class A common stock and 500 million shares of Class B common stock, each with a par value of $0.0001 per share. As of July 31, 2024, 143.0 million shares of Class A common stock and 8.5 million shares of Class B common stock were issued and outstanding.
Accumulated Other Comprehensive Loss
Components of accumulated other comprehensive loss were as follows (in thousands):
Foreign Currency Translation Adjustment
Unrealized Gain (Loss) on Available-for-Sale Securities
Total
Balance, January 31, 2024$(1,015)$156 $(859)
Foreign currency translation adjustment(76)— (76)
Unrealized loss on available-for-sale securities— (185)(185)
Balance, July 31, 2024$(1,091)$(29)$(1,120)
There were no material reclassifications out of accumulated other comprehensive loss during the three and six months ended July 31, 2024. Additionally, there was no material tax impact on the amounts presented.
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Note 17. Employee Stock Plans
Equity Incentive Plans
Our 2018 Equity Incentive Plan (2018 Plan) authorizes the award of stock options, restricted stock awards, stock appreciation rights, restricted stock units (RSUs), performance awards, and stock bonuses. As of July 31, 2024, approximately 29.7 million shares of Class A common stock were reserved and available for issuance under the 2018 Plan. In addition, as of July 31, 2024,