Buy Rating on Zuora: Strategic Acquisition of Togai to Enhance Usage-Based Billing Capabilities

Needham analyst Joshua Reilly maintained a Buy rating on Zuora (ZUO – Research Report) today and set a price target of $15.00.

Joshua Reilly has given his Buy rating due to a combination of factors concerning Zuora’s strategic move to acquire Togai. This acquisition is set to bolster Zuora’s capabilities in the usage-based billing arena by introducing more precise metering for such billing scenarios. Togai’s platform, which includes a low-code builder and a developer-friendly interface, facilitates a more seamless collaboration between developers and finance teams, fostering improved cross-functional efficiencies.

Furthermore, Reilly is optimistic about the transaction as it promises to streamline the process for Zuora’s customers to implement new pricing models, potentially accelerating time-to-market and enhancing overall customer satisfaction. Although initially offered as a separate product, the expectation of Togai’s full integration into Zuora’s broader platform is seen as a long-term value-add, indicating a strategic vision that could lead to sustained growth and market expansion for Zuora.

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Zuora (ZUO) Company Description:

Zuora, Inc. operates as an online subscription billing and management platform. The firm’s products include Zuora Billing, Zuora RevPro, Zuora CPQ and Zuora Collect. Its Central Platform is composed of six core engines: Pricing Engine, Subscription Orders Engine, Rating Engine, Global Payments Engine, Subscription Metrics and Subscription Accounting Engine. It also offers traditional ERP software, such as Oracle Corporation and SAP AG. The company was founded in 2007 by K.V. Rao, Cheng Zou and Tien Tzuo and is headquartered in San Mateo, CA.