ZoomInfo (NASDAQ:ZI) Q4 Sales Beat Estimates But Stock Drops

Radek Strnad /
2022/02/15 4:25 pm EST

Sales intelligence platform ZoomInfo reported results ahead of analyst expectations in the Q4 FY2021 quarter, with revenue up 59.1% year on year to $222.3 million. On top of that, guidance for next quarter's revenue was surprisingly good, being $227 million at the midpoint, 5.26% above what analysts were expecting. ZoomInfo made a GAAP profit of $145.2 million, improving on its profit of $36.3 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) Q4 FY2021 Highlights:

  • Revenue: $222.3 million vs analyst estimates of $207.7 million (7.02% beat)
  • EPS (non-GAAP): $0.18 vs analyst estimates of $0.13 (40.6% beat)
  • Revenue guidance for Q1 2022 is $227 million at the midpoint, above analyst estimates of $215.6 million
  • Management's revenue guidance for upcoming financial year 2022 is $1.01 billion at the midpoint, beating analyst estimates by 3.44% and predicting 35.8% growth (vs 60.5% in FY2021)
  • Customers: 1,452 customers paying more than $100,000 annually
  • Gross Margin (GAAP): 86.8%, up from 85.7% same quarter last year

“In 2021 we delivered a leading combination of growth and profitability, significantly expanded our platform, added more new customers than ever before, and drove record customer 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.

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 integrate data analytics with sales and marketing functions.

Sales Growth

As you can see below, ZoomInfo's revenue growth has been exceptional over the last year, growing from quarterly revenue of $139.7 million, to $222.3 million.

ZoomInfo Total Revenue

This was another standout quarter with the revenue up a splendid 59.1% year on year. Quarter on quarter the revenue increased by $24.7 million in Q4, which was roughly in line with the Q3 2021 increase. This steady quarter-on-quarter growth shows the company is able to maintain a strong growth trajectory.

Guidance for the next quarter indicates ZoomInfo is expecting revenue to grow 48% year on year to $227 million, in line with the 50% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $1.01 billion at the midpoint, growing 35.8% compared to 60.5% increase in FY2021.

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 150% since the IPO last 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 1,452 enterprise customers paying more than $100,000 annually, an increase of 202 on last quarter. That is quite a bit more contract wins than last quarter and quite a bit above what we have typically seen lately, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

ZoomInfo customers paying more than $100,000 annually

Key Takeaways from ZoomInfo's Q4 Results

Sporting a market capitalization of $22.3 billion, more than $326.7 million in cash and with positive free cash flow over the last twelve months, we're confident that ZoomInfo has the resources it needs to pursue a high growth business strategy.

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. On the other hand, the revenue guidance for next year indicates a significant slowdown. Overall, we think this was still a really good quarter, that should leave shareholders feeling very positive. But investors might have been expecting more and the company is down 6.6% on the results and currently trades at $54.9 per share.

Should you invest in ZoomInfo 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.