SaaS Unicorn Zuora Surges 50% in IPO

San Mateo, Calif.-based enterprise software provider Zuora was the latest tech unicorn to hit the public markets last week, beginning trading on the New York Stock Exchange under the ticker symbol ZUO.

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The 12-year-old company, head by well-known tech executive Tien Tzuo, saw its share price skyrocket from its initial public offering price of $14 on Wednesday night to $20.60 as of Monday close. Shares were initially priced between $9 to $11. ZUO’s IPO price reflects $154 million raised to give the company a $1.4 billion valuation, compared to its most recent private valuation of $737 million after a Series F round that closed in March 2015, according to PitchBook.

A 43% jump in ZUO’s stock price on its first day trading on Thursday brought its CEO’s 10% stake in the company to $200 million. Tzuo most recently served as chief strategist at CRM market leader, where he was number eleven in charge.

The cloud accounting software company seeks to overtake the functions of traditional Enterprise Resource Planning (ERP). ERP offers functions such as billing and the code for how cloud companies and other enterprises recognize revenues on a subscription business.

As more and more companies move to subscription-based business models, Tzuo indicates that old school ERP is not fit for the transition. The CEO told Barron’s in an interview that fundamental objects in a subscription-based business are not properly represented and tracked using older software from Zuora’s competitors such as Oracle Corp. and SAP.

"When you see how different a business model this is, you realize you need a different set of systems, something very different from the inventory and logistics systems you used in the product economy, the stuff you bought from Oracle and SAP," stated Tzuo.

While media and tech names such as Spotify SA, Netflix and Dropbox come to mind first when thinking of this shift to rely more on recurring revenue streams, Zuora is targeting businesses across industries, from manufacturers to industrial companies, retailers and utilities firms.

In fiscal 2018, Zuora earned $168 million in revenue and lost $47 million, compared to the year prior, wherein the company raked in $113 million in sales and lost $39 million.