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Q1 Sales Software Earnings Review: First Prize Goes to ZoomInfo (NASDAQ:ZI)


Jabin Bastian /
2022/07/05 4:23 am EDT
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As we reflect back on the just completed Q1 sales software sector earnings season, we dig into the relative performance of ZoomInfo (NASDAQ:ZI) and its peers.

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.

The 5 sales software stocks we track reported a decent Q1; on average, revenues beat analyst consensus estimates by 3.34%, while on average next quarter revenue guidance was 1% above consensus. Technology stocks have been hit hard on fears of higher interest rates and while some of the sales software stocks have fared somewhat better, they have not been spared, with share price declining 17.9% since earnings, on average.

Best Q1: ZoomInfo (NASDAQ:ZI)

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.

ZoomInfo reported revenues of $241.7 million, up 57.6% year on year, beating analyst expectations by 6.03%. It was a very strong quarter for the company, with an exceptional revenue growth and a very optimistic guidance for the next quarter.

ZoomInfo Total Revenue

ZoomInfo achieved the strongest analyst estimates beat, fastest revenue growth, and highest full year guidance raise of the whole group. The company added 171 enterprise customers paying more than $100,000 annually to a total of 1,623. The stock is down 28.2% since the results and currently trades at $35.34.

Read why we think that ZoomInfo is one of the best sales software stocks, our full report is free.

Freshworks (NASDAQ:FRSH)

Founded in Chennai, India in 2010 with the idea of creating a “fresh” helpdesk product, Freshworks (NASDAQ: FRSH) offers a broad range of software targeted at small and medium sized businesses.

Freshworks reported revenues of $114.6 million, up 42.2% year on year, beating analyst expectations by 5.91%. It was a very strong quarter for the company, with an exceptional revenue growth and a solid beat of analyst estimates.

Freshworks Total Revenue

The stock is down 19.1% since the results and currently trades at $13.74.

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

Slowest Q1: Salesforce (NYSE:CRM)

Launched in 1999 from a rented one-bedroom apartment in San Francisco by Marc Benioff and his three co-founders, Salesforce (NYSE:CRM) is a software as a service platform that helps companies access, manage and share sales information.

Salesforce reported revenues of $7.41 billion, up 24.2% year on year, in line with analyst expectations. It was a weak quarter for the company, with an underwhelming revenue guidance for the next quarter and a full year guidance missing analysts' expectations.

Salesforce had the weakest performance against analyst estimates, slowest revenue growth, and weakest full year guidance update in the group. The stock is up 4.56% since the results and currently trades at $168.31.

Read our full analysis of Salesforce's results here.

Zendesk (NYSE:ZEN)

Founded in 2006 by three Danish friends who got tired of implementing complex old-school solutions, Zendesk (NYSE:ZEN) is a software as a service platform that makes it easier for companies to provide help and support to their customers.

Zendesk reported revenues of $388.3 million, up 30.2% year on year, beating analyst expectations by 1.03%. It was a decent quarter for the company, with a strong top line growth.

Zendesk has agreed to be acquired by a group of buyout firms led by Hellman & Friedman and Permira for about $10.2 billion.

The stock is down 38.3% since the results and currently trades at $74.51.

Read our full, actionable report on Zendesk here, it's free.

HubSpot (NYSE:HUBS)

Started in 2006 by two MIT grad students, HubSpot (NYSE:HUBS) is a software as a service platform that helps small and medium-size businesses sell, market themselves, and get found on the internet.

HubSpot reported revenues of $395.5 million, up 40.5% year on year, beating analyst expectations by 3.31%. It was a mixed quarter for the company, with an exceptional revenue growth but an underwhelming revenue guidance for the next quarter.

The company added 8,247 customers to a total of 143,689. The stock is down 8.42% since the results and currently trades at $313.65.

Read our full, actionable report on HubSpot here, it's free.

The author has no position in any of the stocks mentioned