According to a Markets and Markets report, the global subscription and billing management market is estimated to grow at 14% CAGR to reach $7.8 billion by 2025. San Mateo-based Zuora (NYSE: ZUO) is a leading player in the market that has been improving its subscription payment products to cater to this growth.

Zuora’s Financials

For the second quarter of the year, Zuora’s revenues grew 8% to $75 million, surpassing the market’s estimated $72.8 million. With a break-even EPS, it surpassed the Street’s forecast of a loss of $0.07 per share.

By segment, subscription revenues grew 15% to $58.3 million and professional services revenues dropped 12.6% to $16.8 million.

Among key metrics, customers with ACV equal to or greater than $100,000 grew 14% to 645. Dollar-based retention rate was 99%. Customer usage of Zuora solutions grew 26%, with $12.7 billion in transaction volume through Zuora’s billing platform.

For the third quarter, Zuora forecast revenues of $73-$75 million with a loss of $0.05-0.03 per share. The market was looking for revenues of $75.5 million.

Zuora’s Product Upgrades

During the quarter, Zuora launched several upgrades to their billing solution with a focus on extending the company’s Order to Revenue applications. The upgrade will enable subscription businesses to seamlessly monetize, orchestrate, and analyze the success of the subscription experiences offered to customers. Subscription Economy services from Zuora help organizations improve their backend processes, manage their order to revenue processes, and analyze core subscription metrics to help accelerate their digital transformation activities.

Zuora realizes that as subscription business models become more complex, organizations will need to have visibility into their subscription KPIs such as recurring revenue, subscriber, subscriber value, retention, and receivable metrics. Some of the enhancements added include the availability of advanced usage charge models such as Multi-Attribute Pricing, High Water Mark, and Pre-Rated pricing models so that customers can achieve the flexibility needed to build their own charge models and scale their business to provide the best experience for their subscribers.

Native ramp deals allow customers to design the preferred enterprise subscription experience and lock-in multi-year bookings upfront. Zuora Analytics enables customers to measure and analyze their subscription business using a standard set of metrics from a single, self-service dashboard. The new Adaptive Performance Engine optimizes performance engine so that customers can reduce the time it takes to complete a bill run.

Besides product upgrades, Zuora is also looking at strategic partnerships. It recently announced an expanded partnership and product integration with GoCardless, a leading fintech for recurring payments. The GoCardless Global Payment service has found that customers are turning more to using bank debit to pay for online subscriptions instead of using alternatives to legacy payment methods like wire transfers, paper checks, and credit cards. To address the need for faster, higher acceptance rates, GoCardless and Zuora have entered into a partnership to build an out-of-the-box solution focused on the digital Subscription Economy and recurring payments.

Zuora’s competitors include Apttus and Chargify that also offer similar solutions. Like others in the space, Zuora currently does not have a PaaS strategy. It offers REST API capabilities to its developers to help them integrate Zuora’s offerings with their services.

Zuora’s stock is trading at $10.40 with a market capitalization of $1.2 billion. It was trading at a 52-week high of $17.79 in February. It has recovered from the 52-week low of $6.21 that it had fallen to in March.