So yesterday OG SaaS pioneer Zuora agreed to be acquired by PE to go private for $1.7 Billion by GIC and Silverlake. This is good for SaaS.
CEO Tien Tzuo is an OG SaaS leader since being one of the very first leaders at Salesforce.
Zuora was very early to subscription management — maybe too early (2006) — and built a mature $400m ARR business focused on enterprise subscription management (and more).
- $416m ARR
- 9% growth
- 11% free cash flow margins
- 104% NRR
- 445 $250k+ customers
So … $1.7 Billion is 4.25x ARR. And that’s with an 18% premium to go private. Before, it was trading at $1.5 Billion, so less than 4x ARR.
That’s not a huge multiple, and in that sense, it’s a reminder that growth matters more than profitability today
But it’s also great to see PE continue to believe that can re-ignite growth in SaaS and make 3x+ their money here. Silverlake is very, very smart. Clearly they believe they can invest more and grow Zuora to $5B+ when it IPO’s again down the road.
Zuora got lean, it got cash producing, and while new customer growth slowed, it kept the 445+ big customers it had, with 104% NRR
For GIC and Silverlake, it’s a bet the magic of 100%+ NRR, with a chance to invest a bit more by going private, will still lead to big outcomes.
And a great classic SaaStr podcast with CEO Tien Tzuo and Harry Stebbings here:
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Jason Lemkin, Khareem Sudlow
