ZoomInfo's (NASDAQ:ZI) Q2 Sales Top Estimates, Stock Jumps 10.5%

Kayode Omotosho /
2022/08/01 4:10 pm EDT

Sales intelligence platform ZoomInfo announced better-than-expected results in the Q2 FY2022 quarter, with revenue up 53.5% year on year to $267.1 million. Guidance for next quarter's revenue was $278 million at the midpoint, 2.6% above the average of analyst estimates. ZoomInfo made a GAAP profit of $15.9 million, down on its profit of $24.5 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) Q2 FY2022 Highlights:

  • Revenue: $267.1 million vs analyst estimates of $254.4 million (4.96% beat)
  • EPS (non-GAAP): $0.21 vs analyst estimates of $0.18 (18.7% beat)
  • Revenue guidance for Q3 2022 is $278 million at the midpoint, above analyst estimates of $270.9 million
  • The company lifted revenue guidance for the full year, from $1.06 billion to $1.08 billion at the midpoint, a 1.87% increase
  • Free cash flow of $98 million, roughly flat from previous quarter
  • Customers: 1,763 customers paying more than $100,000 annually
  • Gross Margin (GAAP): 87%, in line with same quarter last year

“Customers of all sizes and industries are leveraging ZoomInfo data, insights, automation, and workflows to drive a more efficient go-to-market motion, which is critical in any economic environment,” 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 $174 million, to $267.1 million.

ZoomInfo Total Revenue

This was another standout quarter with the revenue up a splendid 53.5% year on year. On top of that, revenue increased $25.4 million quarter on quarter, a very strong improvement on the $19.4 million increase in Q1 2022, and a sign of acceleration of growth, which is very nice to see indeed.

Guidance for the next quarter indicates ZoomInfo is expecting revenue to grow 40.6% year on year to $278 million, slowing down from the 60.1% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 31.7% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. 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 1,763 enterprise customers paying more than $100,000 annually, an increase of 140 on last quarter. That is a bit less contract wins than last quarter but about the same as what we have typically seen over the last year, suggesting that the company still has decent sales momentum, even if this was a weaker quarter.

ZoomInfo customers paying more than $100,000 annually

Key Takeaways from ZoomInfo's Q2 Results

Sporting a market capitalization of $15.2 billion, more than $365.6 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 excited to see that it outperformed Wall St’s revenue expectations. On the other hand, there was a slight slowdown in new contract wins. Overall, we think this was still a really good quarter, that should leave shareholders feeling very positive. The company is up 10.5% on the results and currently trades at $41.75 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.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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