Stock Story -
Sales intelligence platform ZoomInfo (NASDAQ:ZI) reported Q3 CY2024 results beating Wall Street’s revenue expectations, but sales fell 3.3% year on year to $303.6 million. The company expects next quarter’s revenue to be around $297.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.28 per share was also 26.9% above analysts’ consensus estimates.
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ZoomInfo (ZI) Q3 CY2024 Highlights:
- Revenue: $303.6 million vs analyst estimates of $299.3 million (1.4% beat)
- Adjusted EPS: $0.28 vs analyst estimates of $0.22 (26.9% beat)
- Adjusted Operating Income: $111.7 million vs analyst estimates of $107.7 million (3.7% beat)
- Revenue Guidance for Q4 CY2024 is $297.5 million at the midpoint, roughly in line with what analysts were expecting
- Management raised its full-year Adjusted EPS guidance to $0.93 at the midpoint, a 6.3% increase
- Gross Margin (GAAP): 87.6%, down from 88.8% in the same quarter last year
- Operating Margin: 14.3%, down from 20.1% in the same quarter last year
- Free Cash Flow Margin: 0.2%, down from 41.2% in the previous quarter
- Customers: 1,809 customers paying more than $100,000 annually
- Market Capitalization: $4.62 billion
Company OverviewFounded 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.
Sales Software (ETR:SOWGn)
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.Sales Growth
A company’s long-term performance is an indicator of its overall business quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for multiple years. Over the last three years, ZoomInfo grew its sales at a decent 22.5% compounded annual growth rate. Its growth was slightly above the average software company and shows its offerings resonate with customers.This quarter, ZoomInfo’s revenue fell 3.3% year on year to $303.6 million but beat Wall Street’s estimates by 1.4%. Company management is currently guiding for a 6% year-on-year decline next quarter.
Looking further ahead, sell-side analysts expect revenue to decline 2.4% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and indicates its products and services will face some demand challenges.