What Happened:
Shares of sales intelligence platform ZoomInfo fell 18% in the morning session after the company reported second quarter earnings results. ZoomInfo missed analysts' revenue and earnings expectations. Its full-year revenue guidance also dropped, sending shares lower. Overall, this was a bad quarter for ZoomInfo.
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What is the market telling us:
ZoomInfo's shares are very volatile and over the last year have had 16 moves greater than 5%. But moves this big are very rare even for ZoomInfo and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 25.9% on the news that the company reported first quarter earnings results. Revenue guidance missed analysts' expectations, and customer numbers are declining. Notably, the company lowered full-year guidance for revenue, adjusted operating income, and free cash flow, which is never a good sign. The company noted that small business customers were more challenged in Q1.
Overall, this was a tough quarter for ZoomInfo.
Following the results, Wall Street analysts downgraded the company's rating. Goldman Sachs downgraded the stock's rating from Neutral to Sell and lowered the price target from $19 to $12. Similarly, Piper Sandler lowered the stock's rating from Overweight to Neutral, adding "Our patience has worn thin in waiting for a fundamental recovery at ZI on further erosion across the cohort of SMB and mid-market customers that has been spotty for the past two years but is now showing further signs of another leg down."
ZoomInfo is down 54.6% since the beginning of the year, and at $8.08 per share it is trading 57.4% below its 52-week high of $18.94 from December 2023. Investors who bought $1,000 worth of ZoomInfo's shares at the IPO in June 2020 would now be looking at an investment worth $237.50.
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