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MGI 360 Ratings - Zuora in Billing Management May 2 2018

MGI 360 RatingsRATING UPDATE: We increase MGI 360 rating of Zuora in the Billing Management market from 61 to 62 and re-iterate a POSITIVE outlook. 
OPINION: Over the last 12-18 months the company has shown a steady improvement in execution, sales focus and R&D discipline together with stronger cost controls and better customer feedback. Investment into microservices architecture is allowing for more modular packaging and faster time-to-market. Company is adding lightweight modules for CPQ and a Payment Management component that also provides expanded Collections capability. Acquisition of revenue recognition specialist Leeyo added an important product (RevPro - not rated here) that is currently in the sweet spot of customer demand together with skilled talent and an attractive client base. Zuora IPO in April of 2018 has received a generally favorable reception from institutions. Zuora component scores are all up except for Finance which reflects a larger EBITDA loss than the pre-IPO estimates. The next few quarters will be a significant test for Zuora as it deals with operating as a public entity and tries to meet or beat growth expectations. In our view, Zuora has significant headroom for further growth. 
USE CASE: Monetization projects that need subscription management with medium transaction volumes and modest to moderate complexity across a spectrum of company sizes (from SME to very large) with billing value of $25Mil to $250Mil as the sweet spot.
COMPANY DESCRIPTION: Zuora was founded in 2007 by former Webex and execs K.V. Rao, Cheng Zou and Tien Tzuo and has privately raised over $250Million in VC and institutional funding and over $150Mil in a recent IPO. Customer count is around 950. Annual customer billing volume is $7Billion with and average customer billing about $7.4 Million per year. Zuora sells its solutions directly via a direct sales force and leveraging partnerships with companies such as, Accenture, Deloitte, Cognizant and PwC. Zuora brand visibility, funding, pure-cloud architecture, deployment methodology and size of channel separate Zuora from the rest of the next-generation, SaaS-only vendors.
COMPETITORS: SAP Hybris Billing, Oracle BRM, Aria Systems, goTransverse, BillingPlatform
MGI 360 Ratings is a comprehensive system for evaluating technology companies. IT organizations use MGI 360 to track suppliers, assess purchasing risks and identify promising new vendors. Vendors utilize MGI 360 to track their markets and evaluate partners. Institutional investors use MGI 360 for independent assessment of tech companies. MGI 360 ratings help lower costs, save time, reduce risks, and identify new opportunities. 
The MGI 360 ratings are on a scale from 0 to 100 and reflect company opinions of MGI analysts in five key areas on a scale of 0 to 20:
  • PRODUCT: How strong is the product competitive position
  • MANAGEMENT: How competent and experienced is the management team
  • CHANNELS: Does the company have a sales capability and channels needed to bring products to market?
  • STRATEGY: Does the company have a realistic view of the opportunity and a compelling strategy for success?
  • FINANCE: Is the company growing and profitable
Each of these key criteria is subdivided into numerous sub-categories. In total, over 149 criteria are combined to generate an MGI 360 rating in each specific market space. Companies can have one or more MGI 360 rating - one for each market. MGI 360 ratings are revised as important developments occur. While the MGI 360 rating process is comprehensive, this scoring system is not meant to be a predictor of company solvency, liquidity, absence of accounting fraud or stock performance. Access to MGI 360 Ratings is by subscription.
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