ZoomInfo (GTM)

Go-to-market intelligence provider ZoomInfo (NASDAQ:GTM) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 4.7% year on year to $318 million. Guidance for next quarter’s revenue was better than expected at $308.5 million at the midpoint, 1.2% above analysts’ estimates. Its non-GAAP profit of $0.28 per share was 9.5% above analysts’ consensus estimates.

Company Overview

Operating a platform it calls "RevOS" - short for Revenue Operating System - ZoomInfo (NASDAQ:GTM) provides sales, marketing, and recruiting teams with business intelligence and analytics to identify prospects and deliver targeted outreach.

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 integrates data analytics with sales and marketing functions.

ZoomInfo's primary competitor is Microsoft-owned LinkedIn (NASDAQ:MSFT), particularly its Sales Navigator product. Other competitors include data providers like Dun & Bradstreet (NYSE:DNB), Apollo.io, and Clearbit, as well as sales engagement platforms such as Outreach and SalesLoft.

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, ZoomInfo’s sales grew at a solid 23.7% compounded annual growth rate over the last five years. Its growth beat the average software company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. ZoomInfo’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

This quarter, ZoomInfo reported modest year-on-year revenue growth of 4.7% but beat Wall Street’s estimates by 4.7%. Company management is currently guiding for flat sales next quarter.

Looking further ahead, sell-side analysts expect revenue to decline by 1.3% over the next 12 months, a slight deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will face some demand challenges.

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

ZoomInfo’s billings came in at $277.5 million in Q3, and over the last four quarters, its growth was underwhelming as it averaged 1% year-on-year increases. This performance mirrored its total sales and suggests that increasing competition is causing challenges in acquiring/retaining customers.

This quarter, ZoomInfo reported 1,887 enterprise customers paying more than $100,000 annually, an increase of 3 from the previous quarter. That’s a bit fewer contract wins than last quarter and quite a bit below what we’ve observed over the previous year, suggesting its sales momentum with new enterprise customers is slowing. It also implies that ZoomInfo will likely need to upsell its existing large customers or move down market to accelerate its top-line growth.

The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.

It’s relatively expensive for ZoomInfo to acquire new customers as its CAC payback period checked in at 90.9 months this quarter. The company’s drawn-out sales cycles partly stem from its focus on enterprise clients who require some degree of customization, resulting in long onboarding periods that delay delay returns and limit customer growth.

For software companies like ZoomInfo, gross profit tells us how much money remains after paying for the base cost of products and services (typically servers, licenses, and certain personnel). These costs are usually low as a percentage of revenue, explaining why software is more lucrative than other sectors.

ZoomInfo’s gross margin is one of the highest in the software sector, an output of its asset-lite business model and strong pricing power. It also enables the company to fund large investments in new products and sales during periods of rapid growth to achieve higher profits in the future. As you can see below, it averaged an elite 87.5% gross margin over the last year. That means ZoomInfo only paid its providers $12.51 for every $100 in revenue.

The market not only cares about gross margin levels but also how they change over time because expansion creates firepower for profitability and free cash generation. ZoomInfo has seen gross margins decline by 1 percentage points over the last 2 year, which is poor compared to software peers.

ZoomInfo produced a 86.7% gross profit margin in Q3, in line with the same quarter last year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs have been stable and it isn’t under pressure to lower prices.

ZoomInfo has been a well-oiled machine over the last year. It demonstrated elite profitability for a software business, boasting an average operating margin of 16.3%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, ZoomInfo’s operating margin rose by 5.1 percentage points over the last two years, as its sales growth gave it operating leverage.

This quarter, ZoomInfo generated an operating margin profit margin of 21.2%, up 6.9 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

ZoomInfo has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the software sector, averaging an eye-popping 33.3% over the last year.

ZoomInfo’s free cash flow clocked in at $95.3 million in Q3, equivalent to a 30% margin. The company’s cash profitability regressed as it was 6.5 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.

Over the next year, analysts’ consensus estimates show they’re expecting ZoomInfo’s free cash flow margin of 33.3% for the last 12 months to remain the same.

ZoomInfo reported $135 million of cash and $1.56 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $468.8 million of EBITDA over the last 12 months, we view ZoomInfo’s 3.0× net-debt-to-EBITDA ratio as safe. We also see its $41.7 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by ZoomInfo’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also glad its full-year EPS guidance trumped Wall Street’s estimates. On the other hand, its new large contract wins slowed and its billings fell short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock traded up 1.5% to $12 immediately after reporting.

Updated: December 4, 2025 at 9:10 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in ZoomInfo.

We see the value of companies addressing major business pain points, but in the case of ZoomInfo, we’re out. Although its revenue growth was solid over the last five years, it’s expected to deteriorate over the next 12 months and its ARR has disappointed and shows the company is having difficulty retaining customers and their spending. And while the company’s admirable gross margin indicates excellent unit economics, the downside is its expanding operating margin shows it’s becoming more efficient at building and selling its software.

ZoomInfo’s price-to-sales ratio based on the next 12 months is 2.6x. This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $12.35 on the company (compared to the current share price of $9.91).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.