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ZoomInfo (NASDAQ:ZI) Beats Expectations in Strong Q3, Provides Optimistic Guidance For Next Quarter


Kayode Omotosho /
2021/11/01 4:23 pm EDT
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Sales intelligence platform ZoomInfo reported Q3 FY2021 results topping analyst expectations, with revenue up 60.1% year on year to $197.6 million. Guidance also came in very strong with next quarter revenues guided to $207 million, or 5.92% above analyst estimates. ZoomInfo made a GAAP loss of $40.9 million, down on its profit of $11.1 million, in the same quarter last year.

Is now the time to buy ZoomInfo? Access our full analysis of the earnings results here, it's free.

ZoomInfo (ZI) Q3 FY2021 Highlights:

  • Revenue: $197.6 million vs analyst estimates of $183.8 million (7.5% beat)
  • EPS (non-GAAP): $0.13 vs analyst estimates of $0.12 (8.43% beat)
  • Revenue guidance for Q4 2021 is $207 million at the midpoint, above analyst estimates of $195.4 million
  • Free cash flow of $41.7 million, down 54.5% from previous quarter
  • Customers: 1,250 customers paying more than $100,000 annually
  • Gross Margin (GAAP): 86.2%, up from 82.9% same quarter last year

“ZoomInfo delivered exceptional results, with another quarter of accelerating revenue growth, and strong free cash flow generation,” said Henry Schuck, ZoomInfo Founder and CEO.

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 representatives spend only a minority of their time actually selling, in large part because they must spend so much of their time researching potential prospects. Sales and marketing departments are coming under pressure to increase efficiency, and that drives demand for platforms like ZoomInfo.

Sales Growth

As you can see below, ZoomInfo's revenue growth has been exceptional over the last year, growing from quarterly revenue of $123.4 million, to $197.6 million.

ZoomInfo Total Revenue

This was another standout quarter with the revenue up a splendid 60.1% year on year. On top of that, revenue increased $23.6 million quarter on quarter, a solid improvement on the $20.7 million increase in Q2 2021, and happily, a slight re-acceleration of growth.

Analysts covering the company are expecting the revenues to grow 32.1% over the next twelve months, although estimates are likely to change post earnings.

There are others doing even better than ZoomInfo. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. You can find it on our platform for free.

Large Customers Growth

You can see below that at the end of the quarter ZoomInfo reported 1,250 enterprise customers paying more than $100,000 annually, an increase of 150 on last quarter. That's in line with the number of contracts wins in the last quarter and quite a bit again above what we have typically seen over the last year, confirming the company is sustaining a good pace of sales.

ZoomInfo customers paying more than $100,000 annually

Key Takeaways from ZoomInfo's Q3 Results

With a market capitalization of $17.9 billion, more than $233.3 million in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

We were impressed by the exceptional revenue growth ZoomInfo delivered this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. Zooming out, we think this was a fantastic quarter that should have shareholders cheering. The company is up 3.86% on the results and currently trades at $70.99 per share.

ZoomInfo may have had a good quarter, so should you invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.