Why Zuora Stock Fell Friday

MarketsMotley Fool

What happened

Shares of subscription-management platform Zuora (NYSE: ZUO) tumbled on Friday, falling about 15% as of 11:41 a.m. EDT.

Continue Reading Below

The stock's decline followed Zuora's fiscal 2019 fourth-quarter update, which featured strong growth but also included weaker-than-expected revenue guidance.

So what

For its fourth quarter, Zuora saw its revenue rise 29% year over year to $64.1 million. Subscription revenue rose 35% year over year to $46.7 million. Meanwhile, Zuora's non-GAAP net loss widened from $10.3 million in the fourth quarter of fiscal 2018 to $11.5 million in the fourth quarter of fiscal 2019.

Strong growth was helped by a 27% year-over-year increase in customers with an annual contract value of $100,000 or greater.

But Zuora's guidance for first-quarter revenue disappointed.

Now what

Under Zuora's new revenue recognition standard, ASC 606, Zuora guided for first-quarter revenue between $63.5 million and $64.5 million. This equates to $65 million to $66 million under the company's previously used revenue recognition standard, ASC 605 -- the standard analysts likely based their forecast on.

Analysts, according to data from Yahoo! Finance, were expecting fiscal first-quarter revenue of $65.6 million -- higher than the midpoint of Zuora's fiscal guidance range for the metric.

10 stocks we like better than ZuoraWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Zuora wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 1, 2019

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of Zuora. The Motley Fool has a disclosure policy.