Zuora S-1(sec.gov)
sec.gov
Zuora S-1
https://www.sec.gov/Archives/edgar/data/1423774/000119312518085792/d481302ds1.htm
39 comments
I'm a former Zuora customer who transitioned to Stripe last year. Zuora is a good product for B2B businesses only. Their product roadmap and more importantly their data model for B2C businesses is beyond terrible. Their definition of an active subscriber was a clear mistake almost a decade ago that they have stubbornly stuck to.
Agreed. I was the engineering lead on our company's integration a couple years back, and we wound up cutting ties and sticking with our own solution.
The biggest pain points during the integration were:
* Zuora is run on a legacy tech stack (SOAP interfaces, inflexible and inextensible WSDL), and will continue to do so b/c a substantial part of the architecture & coding were outsourced overseas (as told to me by an integration consultant)
* Getting data in and out of their platform is very difficult, error-prone, time-consuming, and does not meet the high-volume demands of a digital subscription business
* ZOM (Zuora Object Model) is monolithic and hard to evolve your business around
* You need someone at your company (possibly 1+ engineering resources) to deeply understand and keep up to date with Zuora's platform. For engineers who want to learn and grow, this project is a potential de-motivator.
To be fair, we did this transition back in 2015, when Zuora was in its early stages with their REST api. Not sure how far they've come in that department since then.
Zuora appears best for transitioning brick-and-mortar shops to a digital business via their UI. If you're running an online-subscription-based business, I'd recommend:
* Stripe + keeping your data models in-housed * checking out a modern / extensible platform like Recurly * checking out an open-source solution like Killbill and see if it meets your set of needs
The biggest pain points during the integration were:
* Zuora is run on a legacy tech stack (SOAP interfaces, inflexible and inextensible WSDL), and will continue to do so b/c a substantial part of the architecture & coding were outsourced overseas (as told to me by an integration consultant)
* Getting data in and out of their platform is very difficult, error-prone, time-consuming, and does not meet the high-volume demands of a digital subscription business
* ZOM (Zuora Object Model) is monolithic and hard to evolve your business around
* You need someone at your company (possibly 1+ engineering resources) to deeply understand and keep up to date with Zuora's platform. For engineers who want to learn and grow, this project is a potential de-motivator.
To be fair, we did this transition back in 2015, when Zuora was in its early stages with their REST api. Not sure how far they've come in that department since then.
Zuora appears best for transitioning brick-and-mortar shops to a digital business via their UI. If you're running an online-subscription-based business, I'd recommend:
* Stripe + keeping your data models in-housed * checking out a modern / extensible platform like Recurly * checking out an open-source solution like Killbill and see if it meets your set of needs
and forgot to mention - bc their data-model is so poor they email us constantly like we are a still an active subscriber and sometimes like a completely new lead but never like a winback customer
I have never heard of this company before and if you told me their website was a parody of an enterprise software company I would believe you. It shouldn't take more than 10 seconds for me to understand what you do.
"ZUORA BRINGS FREEDOM TO THE SUBSCRIPTION ECONOMY" What the fuck does that mean!
"ZUORA BRINGS FREEDOM TO THE SUBSCRIPTION ECONOMY" What the fuck does that mean!
You're not the right customer.
Interestingly, their sales deck is one of the best (as considered by Andy Raskin who's very good at marketing): https://medium.com/the-mission/the-greatest-sales-deck-ive-e...
Interestingly, their sales deck is one of the best (as considered by Andy Raskin who's very good at marketing): https://medium.com/the-mission/the-greatest-sales-deck-ive-e...
How is that good? It basically said nothing. Cool.
I guess it again comes down to "you're not the right customer". They didn't file an IPO because they couldn't make any sales.
Zuora builds payments systems and other services to help companies who want to offer subscription-based products and services - a trend that has been seen in pretty much every industry from software to groceries.
Zuora builds payments systems and other services to help companies who want to offer subscription-based products and services - a trend that has been seen in pretty much every industry from software to groceries.
Why did they file an IPO? Revenue growth is unimpressive, they don’t make any money and their product is terrible according to those who have to implement it.
To make money.
Was that a serious question? It doesn't matter if the product is terrible as long as they can make sales, revenue growth looks fine (unless you've built a $100M business in a year?), and they definitely do make money unless you're talking about profit, which in VC-funded companies is traded for faster growth and exit (like an IPO).
Was that a serious question? It doesn't matter if the product is terrible as long as they can make sales, revenue growth looks fine (unless you've built a $100M business in a year?), and they definitely do make money unless you're talking about profit, which in VC-funded companies is traded for faster growth and exit (like an IPO).
“making money” always means profit. Losing horrendous amounts doesn’t “create” money, it burns it.
And its not growing rapdlit, and nor was its $100M in revenues built in a year.
And its not growing rapdlit, and nor was its $100M in revenues built in a year.
I'm asking you if you've built something bigger and faster to be criticizing the revenue growth, since you claimed it wasn't impressive. How fast were you expecting it to be? Most companies are lucky to get this kind of double digit increases every year, if ever. And profit is what an IPO will let them do. You realize at some point profit does need to happen for the company to stay around right?
I find it strange that you say they aren't growing fast enough but yet say they don't make any money when they are delaying profits precisely for growth. Have you ever actually started or run a business?
I find it strange that you say they aren't growing fast enough but yet say they don't make any money when they are delaying profits precisely for growth. Have you ever actually started or run a business?
Kind of a straw man argument isn’t it? You don’t have to run a company to understand how to value businesses, or that when we are in a bubble Wall Street will try to push out any poop thru an IPO.
In this case, they are nowhere near profitability. They need the IPO to forestall bankruptcy, they are 12 months from running out of cash. Their profit margin is still a massively negative -35%. There are no signs this business can ever be significantly profitable.
And if that’s not good enough for you, companies I’ve founded have raised over $20M in VC funding, and one was 2 months from an IPO we pulled because though we were profitable our growth had fallen to “only” 20%. We sold that business for $100M to a public company.
In this case, they are nowhere near profitability. They need the IPO to forestall bankruptcy, they are 12 months from running out of cash. Their profit margin is still a massively negative -35%. There are no signs this business can ever be significantly profitable.
And if that’s not good enough for you, companies I’ve founded have raised over $20M in VC funding, and one was 2 months from an IPO we pulled because though we were profitable our growth had fallen to “only” 20%. We sold that business for $100M to a public company.
It means you aren't their target customer.
I think the importance of a website is vastly overestimated. The only question a business owner generally cares about is “does this solve my problem”. Ive learned pretty quickly when searching for solutions to ignore both smarmy marketing nonsense and slick, perfectly designed websites alike.
Zuora makes a lot of money with their “bad” website, so it obviously doesn’t matter very much.
Zuora makes a lot of money with their “bad” website, so it obviously doesn’t matter very much.
I would amend that statement to they hope to make a lot of money with their "bad" website.[0] If your messaging is incoherent I will have no idea if you are able to solve my problems in the first place.
[0] "We have incurred net losses in each fiscal year since inception, including net losses of $48.2 million, $39.1 million, and $47.2 million in fiscal 2016, fiscal 2017, and fiscal 2018, respectively, and we expect to incur net losses for the foreseeable future."
[0] "We have incurred net losses in each fiscal year since inception, including net losses of $48.2 million, $39.1 million, and $47.2 million in fiscal 2016, fiscal 2017, and fiscal 2018, respectively, and we expect to incur net losses for the foreseeable future."
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Website has words, words that don't make sense.
Case in the point, this fucking title tag: Zuora is unifying order-to-cash for a dynamic subscription world
What the fack is order-to-cash and a dynamic subscription world???
Someone needs to put down the dictionary and put their copy through a "grading" tool (https://readable.io/)
Case in the point, this fucking title tag: Zuora is unifying order-to-cash for a dynamic subscription world
What the fack is order-to-cash and a dynamic subscription world???
Someone needs to put down the dictionary and put their copy through a "grading" tool (https://readable.io/)
It means what it says. They simplify how a company can take an order and get the money. It’s a product for businesses.
And dynamic subscriptions means they have a way to change elements of a subscription (term length, renewal period). Dynamic means it’s something that changes.
And dynamic subscriptions means they have a way to change elements of a subscription (term length, renewal period). Dynamic means it’s something that changes.
https://en.wikipedia.org/wiki/Quote_to_cash
It's a real thing. I wouldn't have known before I worked on it.
It's a real thing. I wouldn't have known before I worked on it.
Order to cash is a core part of any ERP module and SAP and Oracle have been selling it for decades.
Maybe they saw this, or maybe they are A/B testing, but I saw, "Zuora creates cloud-based software on a subscription basis that enables any company in any industry to successfully launch, manage, and transform into a subscription business.
the subscription economy", which makes a bunch of sense to me.
But it's true, I'd never heard of them either.
But it's true, I'd never heard of them either.
Consider a company that used to sell stuff by the unit. Boxed software, DVDs, whatever.
There is a new world of their product, and even though it's 2018, they're not in it. It might feel like Spotify has won, Netflix has won, and so on, but in other verticals, subscriptions still aren't the norm.
Remember when Dollar Shave Club started selling razors by the month and got bought for a billion dollars? P&G needed to find a way to transition to subscriptions, and they paid up for it.
The subscription economy is a real trend, and it's not something you can just convert to overnight if you have a business that's a going concern. You have to figure out how to put out some new offerings, and the way people pay for these new subscriptions have to work with your existing business processes.
Zuora sells to those companies. Companies that want to sell subscriptions, but can't throw the baby out with the bathwater. They want to work with a company that understands that subscriptions are the new important thing, but not the only thing.
There is a new world of their product, and even though it's 2018, they're not in it. It might feel like Spotify has won, Netflix has won, and so on, but in other verticals, subscriptions still aren't the norm.
Remember when Dollar Shave Club started selling razors by the month and got bought for a billion dollars? P&G needed to find a way to transition to subscriptions, and they paid up for it.
The subscription economy is a real trend, and it's not something you can just convert to overnight if you have a business that's a going concern. You have to figure out how to put out some new offerings, and the way people pay for these new subscriptions have to work with your existing business processes.
Zuora sells to those companies. Companies that want to sell subscriptions, but can't throw the baby out with the bathwater. They want to work with a company that understands that subscriptions are the new important thing, but not the only thing.
Minor note: Dollar Shave Club was bought by Unilever, not P&G.
Numbers for the lazy: "For fiscal 2016, fiscal 2017, and fiscal 2018, our total revenue was $92.2 million, $113.0 million, and $167.9 million, respectively. We have made significant investments to grow our business, including in sales and marketing, infrastructure, operations, and headcount. As a result, we incurred net losses for fiscal 2016, fiscal 2017, and fiscal 2018 of $48.2 million, $39.1 million, and $47.2 million, respectively."
My experience with Zuora is that it's a feature-complete payments subscription that's an unholy pain to work with. We chose them over Stripe before Stripe has ACH.
My favorite part is that 25% of their revenue is professional services, and their professional services are sold essentially at-cost. You're going to need somebody to help you get set up, but at least the pricing on that extra headcount is fair :)
They're after large customers, and this is what they get.
"As a substantial portion of our sales efforts are increasingly targeted at large enterprise customers, our sales cycle may become increasingly lengthy and more expensive, we may encounter still greater pricing pressure and deployment and customization challenges, and we may have to delay revenue recognition for more complicated transactions, all of which could adversely impact our business and operating results."
My favorite part is that 25% of their revenue is professional services, and their professional services are sold essentially at-cost. You're going to need somebody to help you get set up, but at least the pricing on that extra headcount is fair :)
They're after large customers, and this is what they get.
"As a substantial portion of our sales efforts are increasingly targeted at large enterprise customers, our sales cycle may become increasingly lengthy and more expensive, we may encounter still greater pricing pressure and deployment and customization challenges, and we may have to delay revenue recognition for more complicated transactions, all of which could adversely impact our business and operating results."
This so much. Worst company I've ever had the misfortune to interact with, integrating with them is a disaster, don't waste your time. As a developer or CTO somehow they seem to get the ear of someone in business management or finance or accounting who believe their reporting lies, and they may attempt to cause this company to be forced upon you. Do not acquiesce, they are terrible, just so terrible. And if you let them in you're stuck with them and their professional services etc. We ended up just hiring one of their now former employees full time just to make sense of it. Bottom line if you're a big enough company for Zuora, you're big enough to negotiate a deal with stripe for reasonable pricing.
Heed this warning!
Heed this warning!
Not gonna argue that integrating with their platform is a gigantic pain in the ass, but I feel that part of it is the flexibility (and complexity) of their subscription model. Would you say different? Not too familiar with the other players in the field so I don't know how they compare really.
Definitely some reliability and performance concerns, though. I feel like half the pain is just having to shove so much defensive programming in our integration.
Definitely some reliability and performance concerns, though. I feel like half the pain is just having to shove so much defensive programming in our integration.
Stripe specifically has a great subscription model. When Zuora was getting started and gaining momentum they didn't. We've recently onboarded a Stripe Subscription with their connect accounts even and it's been extremely smooth.
Yup. Literally the worst. I've implemented 4 different payment providers and they're in last place, far behind any of the others.
Out of curiosity, who were the other? Aria? Stripe? PayPal nee Braintree?
(In order of ease of implementation)
Stripe, Braintree, Authorize.net
TBH though - Authorize.net was a pretty good experience overall (esp. considering when I had to implement it years ago). I'd still take their 10-year-old API over Zuora's nowadays. The docs were a bit rough, but nothing you couldn't sort out with some trial and error and brute forcing of a few weird payloads to their sandbox environment. :)
TBH though - Authorize.net was a pretty good experience overall (esp. considering when I had to implement it years ago). I'd still take their 10-year-old API over Zuora's nowadays. The docs were a bit rough, but nothing you couldn't sort out with some trial and error and brute forcing of a few weird payloads to their sandbox environment. :)
We had horrible interactions with Zuora in terms of integration. Worst vendor ever.
For those wondering like me what the UI looks like, here's a video:
https://youtu.be/9Vca8JBIiUY
https://youtu.be/9Vca8JBIiUY
That video and therefore the UI is not current.
What do you mean? Besides the color, the UI looks essentially identical to the UI I'm used to working with when I've previously worked with Zuora.
I would say more than color. Here is an example:
https://files.mtstatic.com/site_5921/2761/0?Expires=15214353...
But the way they organize data is similar.
https://files.mtstatic.com/site_5921/2761/0?Expires=15214353...
But the way they organize data is similar.
Can anybody chime in on how they are different from ChargeBee for subscription businesses?
Enterprise focused, aiming at integrating with big, complex, multinational, multi currency ERP kinds of projects.