Executive Summary

Q4 FY2025 total revenue was $117.7M (+6.4% YoY), with subscription revenue $106.5M (+6.3% YoY) and services $11.3M (+7.1% YoY); non-GAAP operating income was $26.9M (23% margin), and free cash flow was $16.3M .
ARR was $418.0M (+3.7% YoY), and DBRR slipped to 101% (from 106% YoY), indicating a weaker net expansion environment despite profitability gains .
Management did not host a Q4 earnings call and indicated final audited results may not be released given the proposed acquisition; guidance had already been withdrawn in Q3 due to the pending take-private transaction .
Prior quarters show consistent margin expansion and cash flow strength (Q2: non-GAAP op margin 22%, Q3: 21%), while growth metrics moderated (ARR growth ~6–8% earlier, 3.7% in Q4) .
Potential stock reaction catalysts: take-private dynamics overshadowed fundamentals and the continued moderation in ARR/DBRR; payments monetization and AI/consumption initiatives provide medium-term levers if/when standalone reporting resumes .

What Went Well and What Went Wrong

What Went Well

Non-GAAP profitability and margins improved materially: Q4 non-GAAP operating income $26.9M (23% margin), up from $15.9M in Q4 FY2024; FY25 non-GAAP operating income $96.2M (21% margin) vs $47.5M in FY24 .
Strong cash generation: Q4 operating cash flow $18.8M; Q4 free cash flow $16.3M; FY25 operating cash flow $85.5M and free cash flow $73.7M (vs negative FCF in FY24) .
Strategic product momentum: AI-driven consumption billing and payments monetization highlighted by management; “we reached our goal to operate at a Rule of 30 two quarters ahead of plan” (Q2) and are “committed to margin expansion and profitability” .

What Went Wrong

Growth deceleration in core KPIs: ARR grew 3.7% YoY to $418.0M; DBRR fell to 101%, reflecting churn and weaker net expansion through FY25 .
New logo softness and elongated sales cycles persisted; management noted “added conservatism” on ARR and DBRR earlier in the year due to timing risk in larger installed-base expansions .
Public-market guidance and communications constrained by the proposed acquisition: guidance withdrawn in Q3 and no Q4 call; final audited results may not be released .

Financial Results

Revenue, Profitability, and Cash Flow (Quarterly comparison; oldest → newest)

Metric	Q2 FY2025	Q3 FY2025	Q4 FY2025
Subscription Revenue ($M)	$104.1	$105.3	$106.5
Professional Services Revenue ($M)	$11.3	$11.7	$11.3
Total Revenue ($M)	$115.4	$116.9	$117.7
GAAP Loss from Operations ($M)	$(9.7)	$(11.7)	$(4.8)
Non-GAAP Op Income ($M)	$25.6	$25.1	$26.9
Non-GAAP Op Margin (%)	22%	21%	23%
Operating Cash Flow ($M)	$11.4	$22.4	$18.8
Free Cash Flow ($M)	$12.2	$25.5 (adjusted FCF)	$16.3
ARR ($M)	$412.3	$419.9	$418.0
DBRR (%)	104%	103%	101%

Year-over-Year Change (as disclosed)

Metric	Q2 FY2025 YoY	Q3 FY2025 YoY	Q4 FY2025 YoY
Subscription Revenue YoY	+9%	+7%	+6.3%
Total Revenue YoY	+7%	+6%	+6.4%
Professional Services YoY	-10%	-1%	+7.1%

Segment/Revenue Mix

Revenue Mix	Q2 FY2025	Q3 FY2025	Q4 FY2025
Subscription ($M)	$104.1	$105.3	$106.5
Professional Services ($M)	$11.3	$11.7	$11.3
Total ($M)	$115.4	$116.9	$117.7

KPIs

KPI	Q2 FY2025	Q3 FY2025	Q4 FY2025
ARR ($M)	$412.3	$419.9	$418.0
DBRR (%)	104%	103%	101%

Notes: EPS was not disclosed in the Q4 FY2025 preliminary 8-K; Q2/Q3 GAAP and non-GAAP EPS were disclosed but Q4 focused on operating metrics and cash flows .

Guidance Changes

Metric	Period	Previous Guidance	Current/Updated	Change
Subscription Revenue	FY2025	$414.5M–$416.5M (Q2 guide)	Guidance withdrawn (Q3)	Withdrawn
Professional Services Revenue	FY2025	$41.0M–$45.0M (Q2 guide)	Guidance withdrawn (Q3)	Withdrawn
Total Revenue	FY2025	$455.5M–$461.5M (Q2 guide)	Guidance withdrawn (Q3)	Withdrawn
Non-GAAP Op Income	FY2025	$90.0M–$93.0M (Q2 guide)	Guidance withdrawn (Q3)	Withdrawn
Non-GAAP EPS	FY2025	$0.56–$0.58 (Q2 guide)	Guidance withdrawn (Q3)	Withdrawn
Adjusted Free Cash Flow	FY2025	$82M+ (Q2 guide)	Guidance withdrawn (Q3)	Withdrawn
ARR Growth	FY2025	~6% (Q2 guide)	Guidance withdrawn (Q3)	Withdrawn
DBRR	FY2025	103%–104% (Q2 guide)	Guidance withdrawn (Q3)	Withdrawn

Q4: Company did not provide new guidance and disclosed that final audited results may not be released due to the proposed acquisition .

Earnings Call Themes & Trends

Topic	Q1 FY2025 (Prev Mentions)	Q2 FY2025 (Prev Mentions)	Q4 FY2025 (Current Period)	Trend
AI/Consumption Monetization	Acquisition of Togai; framing “total monetization” beyond subscriptions	Advanced Consumption Billing fastest-growing; Togai integration; Sub(x) AI paywall for media	Q4 8-K focused on results; continued profitability; no call; product momentum context from prior quarters	Strategic emphasis sustained; execution continued pre-Q4
Payments Monetization	Noted strong cash and ability to invest; no direct payments rev share detail	Identified catch-up and ongoing rev share from payment processors; opportunity to expand “take rate”	Q4 metrics strong; narrative dominated by acquisition; payments lever remains implicit	Emerging lever; multi-quarter opportunity
Macro/Deal Scrutiny	Longer sales cycles; fewer transformational deals; ARR/DBRR headwinds	Continued elongated cycles; prudence on ARR outlook timing of large installed-base expansions	DBRR at 101%; ARR +3.7% YoY reflects continued pressure	Persistent headwinds; growth moderation
Installed-base Expansion	Cross-sell examples (automaker, Luxottica, contact center)	Two $1M+ ACV deals from installed base; multiproduct (Billing+Revenue) lands	ARR growth modest; profitability strong	Base remains durable; expansion timing variable
ESG/Recognition	N/A (ESG not highlighted)	Gartner: Leader in Recurring Billing; ISG: leader across 4 guides; MGI: ARM product #1; carbon-neutral/SBTi	No call; continued operations	External validation reinforces positioning

Management Commentary

“We reached our goal to operate at a Rule of 30 two quarters ahead of plan.” (Q2 CFO) .
“Advanced Consumption Billing was one of our fastest-growing products… enhanced with Togai… some of the most advanced metering and rating technology in the marketplace today.” (Q2 CEO) .
“We went back and did an audit with one particular [payment processor], and there was a catch-up… I would expect… this be a source of increased revenue for us.” (Q2 CFO) .
“We are switching more towards a classic inbound model… using more digital technologies… AI tools are certainly a big… part of that.” (Q1 CEO) .
Q4 8-K: “Given the proposed acquisition of Zuora, we may not ever release our final results.” .

Q&A Highlights

ARR/DBRR prudence: Management reset ARR to ~6% for FY25 amid timing uncertainty in large installed-base deals; DBRR guided to 103–104% earlier in the year (pre-withdrawal) .
Payments monetization: Identified rev-share catch-up and ongoing opportunity to monetize large payment volumes flowing through Zuora systems; high incremental margin .
New logo dynamics: Canva highlighted; ongoing caution in 7-figure new-logo commitments; emphasis on multiproduct lands (Billing+Revenue) .
Media vertical: Sub(x) AI paywall reinforcement; strong pipeline and use cases beyond tech (e.g., streaming, pay-per-view, hybrid monetization) .
Profitability durability: Cost structure sustainable with capacity to deliver more revenue without significant cost increases; potential further leverage into next year .

Estimates Context

S&P Global consensus estimates (EPS and Revenue) for Q4 FY2025 were unavailable due to missing CIQ mapping for ZUO at query time; therefore, comparisons to Wall Street consensus are not provided [SpgiEstimatesError].
Commentary focuses on actuals versus prior quarters and disclosed YoY growth; the company withdrew guidance in Q3 and did not provide Q4 guidance due to the proposed acquisition .

Key Takeaways for Investors

Profitability inflection: Non-GAAP margins and FCF materially improved through FY25; Q4 non-GAAP op margin 23%, FCF $16.3M—durable cost discipline and monetization levers support margin resilience .
Growth moderation: ARR growth slowed to 3.7% and DBRR to 101% in Q4, underscoring net expansion challenges in a cautious macro and slower new-logo environment .
Product/monetization catalysts: AI-driven consumption billing (Togai), AI paywall (Sub(x)), and payments monetization (rev share) create incremental revenue avenues with attractive margins over time .
Guidance withdrawn/take-private overhang: With guidance pulled in Q3 and no Q4 call, near-term public-market visibility is limited; acquisition dynamics overshadow near-term fundamentals .
Installed-base strategy: Multiproduct adoption and large installed-base expansions remain core to bookings; timing variability remains the primary risk noted by management .
Trading implications: Near-term stock moves are dominated by transaction outcomes rather than fundamentals; in a standalone scenario, watch DBRR stabilization and ARR reacceleration alongside continued margin expansion .
Medium-term thesis: If operating independently, sustained payments monetization, AI/consumption mix, and multiproduct penetration could support balanced growth and margin expansion despite macro headwinds .

Citations: Q4 FY2025 8-K preliminary results ; Q3 FY2025 8-K ; Q2 FY2025 8-K ; Q2 FY2025 call transcript –; Q1 FY2025 call transcript –.

ZUORA INC (ZUO)·Q4 2025 Earnings Summary