What Happened:
Shares of subscription management platform Zuora (NYSE:ZUO) jumped 11.6% in the pre-market session after the company reported first quarter earnings results. Revenue in the quarter beat by a modest amount, but operating income beat by a convincing margin. While full year revenue guidance was maintained, the company raised its full year outlook for operating profit. Said differently, topline growth is in line with expectations, but it's more profitable and efficient growth. Overall, this was a solid quarter for Zuora. After the initial pop the shares cooled down to $10.34, up 4.9% from previous close.
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What is the market telling us:
Zuora's shares are quite volatile and over the last year have had 21 moves greater than 5%. But moves this big are very rare even for Zuora and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was about 1 month ago, when the stock gained 15.5% on the news that Reuters reported the company is exploring options, including a potential sale following acquisition interests. According to the report, the company is working with investment bank Qatalyst Partners to advise on a potential deal.
Zuora is up 17.1% since the beginning of the year, but at $10.34 per share it is still trading 12.4% below its 52-week high of $11.81 from June 2023. Investors who bought $1,000 worth of Zuora's shares 5 years ago would now be looking at an investment worth $492.55.
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