ZoomInfo's (NASDAQ:ZI) Q4 Earnings Results: Revenue In Line With Expectations But Full Year Guidance Underwhelms

Radek Strnad /
2023/02/06 4:18 pm EST

Sales intelligence platform ZoomInfo reported results in line with analyst expectations in Q4 FY2022 quarter, with revenue up 35.7% year on year to $301.7 million. However, guidance for the next quarter was less impressive, coming in at $300 million at the midpoint, being 2.05% below analyst estimates. ZoomInfo made a GAAP profit of $23.2 million, down on its profit of $145.2 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 FY2022 Highlights:

  • Revenue: $301.7 million vs analyst estimates of $298.9 million (0.93% beat)
  • EPS (non-GAAP): $0.26 vs analyst estimates of $0.22 (18.9% beat)
  • Revenue guidance for Q1 2023 is $300 million at the midpoint, below analyst estimates of $306.2 million
  • Management's revenue guidance for upcoming financial year 2023 is $1.28 billion at the midpoint, missing analyst estimates by 2.7% and predicting 16.5% growth (vs 48.1% in FY2022)
  • Customers: 1,926 customers paying more than $100,000 annually
  • Gross Margin (GAAP): 87.8%, in line with same quarter last year

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 two years, growing from quarterly revenue of $139.7 million in Q4 FY2020, to $301.7 million.

ZoomInfo Total Revenue

And unsurprisingly, this was another great quarter for ZoomInfo with revenue up 35.7% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $14.1 million in Q4, compared to $20.5 million in Q3 2022. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Guidance for the next quarter indicates ZoomInfo is expecting revenue to grow 24.1% year on year to $300 million, slowing down from the 57.6% 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 $1.28 billion at the midpoint, growing 16.5% compared to 46.9% increase in FY2022.

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 1,926 enterprise customers paying more than $100,000 annually, an increase of 78 on last quarter. That's in line with the number of contracts wins in the last quarter but quite a bit below what we have typically seen over the last year, suggesting that the sales slowdown we saw in the last quarter continues.

ZoomInfo customers paying more than $100,000 annually

Key Takeaways from ZoomInfo's Q4 Results

Sporting a market capitalization of $11.7 billion, more than $545.7 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 enjoyed seeing ZoomInfo’s impressive revenue growth this quarter. That feature of these results really stood out as a positive. On the other hand, it was unfortunate to see that ZoomInfo's revenue guidance for the full year missed analysts' expectations and the revenue guidance for next year indicates quite a significant slowdown in growth. Overall, this quarter's results could have been better. The company is down 4.76% on the results and currently trades at $27.39 per share.

ZoomInfo may have had a tough quarter, but does that actually create an opportunity to 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.