Zuora, Inc., the leading provider of subscription commerce, billing and finance solutions, today announced that it has signed a definitive agreement to acquire Leeyo Software Inc.®, the undisputed leader in revenue recognition automation. Zuora will add Leeyo RevPro®, the cloud-based, enterprise-grade ASC 606 and IFRS 15 compliant revenue recognition solution, to its order-to-cash product portfolio. This creates a one-stop shop for automating financial operations, further increasing Zuora’s dominance in the $102 billion market for Subscription Economy® tools.
In recent years, many reports have documented the global subscription movement. The Economist found that 80 percent of customers are demanding new consumption models and moving away from traditional ownership. Credit Suisse reported that people in the U.S. spent $420 billion on subscriptions in 2015, up from $215 billion in 2000. Companies like Salesforce.com, Amazon, Netflix, and Box were the early disruptors in the Subscription Economy. However, the story is now far broader and deeper, and relevant to every industry in the world. Companies in media and entertainment, consumer services, telecom and utilities, financial services, healthcare, education, manufacturing and even farming are all pivoting to subscription businesses. According to McKinsey & Company, digital services are expected to account for about three-quarters of global growth over the coming decade.
As mixed business models emerge, the complexities of revenue reporting are forcing financial regulators around the world to change global accounting standards. As a result, beginning in fiscal 2018-2019 companies large and small, public and private, must now adopt the new ASC 606 and IFRS 15 revenue guidelines. This is the biggest change to accounting standards in the last 100 years. According to PwC, more than half of the affected companies – particularly those that bundle subscription and non-subscription services – are unprepared to adopt these new standards.
“We’ve been saying that accounting standards have to change to accommodate the Subscription Economy, and now they have,” said Tien Tzuo, CEO and founder of Zuora. “Every company, regardless of revenue mix, product or service offerings, will be impacted by these new accounting standards. We’ve partnered with Leeyo for over three years, and today we join forces to help our customers alleviate the burden of dealing with these new standards.”
Consistency and comparability of financial reporting across all industries, geographies and business models is beneficial to investors. However, the new standards significantly increase the compliance burden for reporting companies. This will lead to:
• Hours of additional manual labor for companies who manage these complex calculations with spreadsheets
• Costly earnings restatements and tarnished reputations for companies who report inaccurately
• Lengthy audits and potential litigation for companies that don’t comply with the guidelines
Reporting becomes increasingly time consuming, labor intensive and risky, wreaking havoc on finance teams if the rules are not adopted accurately and on time. Leeyo’s RevPro software automates these critical revenue recognition processes, helping businesses save countless hours, improving investor confidence and building greater stability in public markets.
RevPro has over one hundred customers running an estimated $266 billion annually through its revenue recognition engine. Together, the combined company becomes a one-stop shop for managing customer records, product catalogues, subscriptions, billing, orders, cash, and revenue recognition.
“At Leeyo, we are tremendously proud of the company and market leading product we’ve built. Being part of Zuora allows us to reach a broader range of companies looking for revenue automation, transparency and consistency in corporate financials,” said Jagan Reddy, CEO of Leeyo. “RevPro is a natural fit for Zuora’s product portfolio and completes the full order-to-revenue process.”
Customer and Analyst Comments
Zendesk VP Global Corporate Controller Christina Liu: “Traditional financial systems and manual processes don’t work for the fast paced world of Zendesk. Zuora and Leeyo have been critical to our ability to automate and scale our financial operations. We’re excited the two companies are coming together to allow us to have a single-source-of-truth for our order to cash process.”
Connor Group CEO Jeff Pickett: “With the latest changes in the accounting standards to globally unify revenue recognition, Zuora’s acquisition of Leeyo makes perfect sense. Combining all these capabilities under one roof will significantly help simplify compliance and financial reporting.”
MGI Research Managing Director Andrew Dailey: “This is a smart move that unites the best of breed leader in revenue recognition with an Agile Billing leader. It’s a win for Leeyo and Zuora customers, and adds breadth and depth to Zuora’s play in delivering an Agile Monetization Platform.”
SurveyMonkey COO and CFO Tim Maly: “As the world’s leading online survey platform with more than 3 million responses every day, SurveyMonkey relies on Leeyo to handle high volume transactions for our self-serve business and Zuora’s subscription billing streamlines our high-growth sales supported business. The benefits of both products keep us focused on what matters most, our customers.”
Learn more about Zuora and Leeyo at Subscribed on June 5-7, 2017 at the Marriott Marquis in San Francisco.