ZoomInfo (NASDAQ:ZI) Posts Q1 Sales In Line With Estimates But Stock Drops 15.9%

Adam Hejl /
2024/05/07 4:27 pm EDT

Sales intelligence platform ZoomInfo reported results in line with analysts' expectations in Q1 CY2024, with revenue up 3.1% year on year to $310.1 million. On the other hand, next quarter's revenue guidance of $307.5 million was less impressive, coming in 1.8% below analysts' estimates. It made a non-GAAP profit of $0.26 per share, improving from its profit of $0.24 per share in the same quarter last year.

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ZoomInfo (ZI) Q1 CY2024 Highlights:

  • Revenue: $310.1 million vs analyst estimates of $308.9 million (small beat)
  • EPS (non-GAAP): $0.26 vs analyst estimates of $0.23 (11.1% beat)
  • Revenue Guidance for Q2 CY2024 is $307.5 million at the midpoint, below analyst estimates of $313.3 million
  • The company dropped its revenue guidance for the full year from $1.27 billion to $1.26 billion at the midpoint, a 0.6% decrease
  • Gross Margin (GAAP): 89.1%, in line with the same quarter last year
  • Free Cash Flow of $103.1 million, down 18.2% from the previous quarter
  • Market Capitalization: $6.28 billion
  • ZoomInfo approved an additional $500 million under the share repurchase program, bringing the total aggregate authorization to $1.1 billion, of which $546.8 million remained outstanding as of quarter-end.

“We delivered another quarter of revenue growth, with better-than-expected profitability, and stabilizing net revenue retention,” 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 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

As you can see below, ZoomInfo's revenue growth has been very strong over the last three years, growing from $153.3 million in Q1 2021 to $310.1 million this quarter.

ZoomInfo Total Revenue

ZoomInfo's quarterly revenue was only up 3.1% year on year, which might disappoint some shareholders. On top of that, the company's revenue actually decreased by $6.3 million in Q1 compared to the $2.6 million increase in Q4 CY2023. Taking a closer look we can a similar revenue decline in the same quarter last year, which could suggest that the business has seasonal elements. Regardless, this situation is worth monitoring as management is guiding for a further revenue drop in the next quarter.

Next quarter, ZoomInfo is guiding for a 0.4% year-on-year revenue decline to $307.5 million, a further deceleration from the 15.5% year-on-year decrease it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 3.7% over the next 12 months before the earnings results announcement.

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Large Customers Growth

This quarter, ZoomInfo reported 1,760 enterprise customers paying more than $100,000 annually, a decrease of 60 from the previous quarter. We've no doubt shareholders would like to see the company regain its sales momentum.

ZoomInfo customers paying more than $100,000 annually

Key Takeaways from ZoomInfo's Q1 Results

We struggled to find many strong positives in these results. Revenue guidance missed analysts' expectations and customer numbers are declining. Overall, this was a tough quarter for ZoomInfo. The company is down 15.9% on the results and currently trades at $13.5 per share.

ZoomInfo may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.