Sales intelligence platform ZoomInfo beat Wall Street’s revenue expectations in Q4 CY2024, but sales fell by 2.3% year on year to $309.1 million. Guidance for next quarter’s revenue was better than expected at $295.5 million at the midpoint, 1.2% above analysts’ estimates. Its non-GAAP profit of $0.26 per share was 14.8% above analysts’ consensus estimates.
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ZoomInfo (ZI) Q4 CY2024 Highlights:
- Revenue: $309.1 million vs analyst estimates of $297.7 million (2.3% year-on-year decline, 3.8% beat)
- Adjusted EPS: $0.26 vs analyst estimates of $0.23 (14.8% beat)
- Adjusted Operating Income: $115.9 million vs analyst estimates of $104.5 million (37.5% margin, 11% beat)
- Management’s revenue guidance for the upcoming financial year 2025 is $1.20 billion at the midpoint, beating analyst estimates by 1.1% and implying -1.6% growth (vs -2% in FY2024)
- Adjusted EPS guidance for the upcoming financial year 2025 is $0.96 at the midpoint, beating analyst estimates by 4.4%
- Operating Margin: 10%, down from 22.3% in the same quarter last year
- Free Cash Flow Margin: 30.3%, down from 36.4% in the previous quarter
- Customers: 1,867 customers paying more than $100,000 annually
- Market Capitalization: $3.31 billion
“Our Go-To-Market Intelligence Platform provides the best GTM data, AI-powered applications, and agents for the world’s most innovative and high-performing companies,” said Henry Schuck, ZoomInfo founder and CEO.
Company Overview
Founded in 2007 as DiscoveryOrg and renamed after a merger in 2019, ZoomInfo (NASDAQ: ZI) is a software as a service product that provides sales departments with access to a database of prospective clients.
Sales Software
Companies need to be able to interact with and sell to their customers as efficiently as possible. This reality coupled with the ongoing migration of enterprises to the cloud drives demand for cloud-based customer relationship management (CRM) software that integrates data analytics with sales and marketing functions.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, ZoomInfo grew its sales at a 17.6% annual rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds.
This quarter, ZoomInfo’s revenue fell by 2.3% year on year to $309.1 million but beat Wall Street’s estimates by 3.8%. Company management is currently guiding for a 4.7% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 3% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and indicates its products and services will face some demand challenges.
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Enterprise Customer Base
This quarter, ZoomInfo reported 1,867 enterprise customers paying more than $100,000 annually, an increase of 58 from the previous quarter. That’s quite a bit more contract wins than last quarter but also quite a bit below what we’ve observed over the previous year. This indicates the company is optimizing its go-to-market strategy to reinvigorate growth.
Key Takeaways from ZoomInfo’s Q4 Results
We were impressed by ZoomInfo’s significant improvement in new large contract wins this quarter. We were also glad its full-year EPS guidance trumped Wall Street’s estimates. Zooming out, we think this was a solid quarter. The stock traded up 12.7% to $10.75 immediately following the results.
Sure, ZoomInfo had a solid quarter, but if we look at the bigger picture, is this stock a buy? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
