What Happened:
Shares of subscription management platform Zuora (NYSE:ZUO) jumped 15.5% in the afternoon session after 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.
Is now the time to buy Zuora? Access our full analysis report here, it's free.
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 8 months ago, when the stock dropped 9.5% on the news that the company reported second-quarter revenue that narrowly missed Wall Street's estimates. On the other hand, earnings per share beat and gross margin improved. Looking ahead, next quarter's revenue guidance missed Wall Street's estimates. Similarly, full-year revenue guidance was lowered and came in below expectations. Investors should note that this drop stems from lower-than-expected professional services revenue, which is a lower margin than the company's subscription revenue. Thus, Zuora is still raising its adjusted operating income and EPS guidance for the full year. Overall, the market was likely looking for stronger topline growth, an area in which Zuora did not meet expectations.
Zuora is up 11.1% since the beginning of the year, but at $9.75 per share it is still trading 17.4% 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 $497.47.
Do you want to know what moves the business you care about? Add them to your StockStory watchlist and every time a stock moves more than 5%, we provide you with a timely explanation straight to your inbox. It's free and will only take you a second.