ZoomInfo (NASDAQ:ZI) shares tumbled 16% in premarket trading Tuesday after the company reported second-quarter earnings that missed analyst expectations and provided weaker-than-anticipated guidance.
The go-to-market platform provider also announced a leadership change in its finance department.
ZoomInfo reported adjusted earnings per share of $0.17 for the second quarter, falling short of the $0.24 analyst consensus. Revenue declined 6% YoY to $291.5 million, below the expected $307.68 million.
Despite the challenges, ZoomInfo reported growth in its high-value customer segment, adding 37 customers with annual contract values of $100,000 or more during the quarter.
"In the second quarter, we implemented a number of initiatives to position the company for long-term success," said Henry Schuck, ZoomInfo founder and CEO. "Having successfully launched ZoomInfo Copilot, our AI-powered go-to-market platform, we are further accelerating a shift upmarket."
Looking ahead, ZoomInfo forecasts third-quarter adjusted EPS of $0.21-$0.22, below the $0.25 consensus. Third-quarter revenue guidance of $298-301 million also missed analyst expectations of $317 million.
For the full year 2024, the company projected adjusted EPS of $0.86-$0.88 on revenue of $1.19-1.205 billion, both below consensus estimates.
The company also announced that Graham O'Brien, Vice President of FP&A, will become interim Chief Financial Officer on September 6, 2024, as current CFO Cameron Hyzer transitions to an advisory role.
Following the report, KeyBanc Capital Markets analysts downgraded ZI stock to Sector Weight from Overweight.
"The stock continues to get more attractive, but we can no longer make a clear-eyed fundamental argument for stepping in," analysts said.
"The write-downs of revenue due to the collectability issue is one thing, but removing the positive momentum in the up-market aspects of the business (while couched as extra conservatism) makes us nervous that there are more issues ahead for the current pockets of strength."
Separately, Jefferies analysts noted that "optics of the quarter look bad, and are bad," however, investors "shouldn't throw in the towel."
"We expect to see a material negative stock reaction tomorrow but believe investors who sell are likely doing so at or near a bottom," they wrote. Analysts highlighted several "green shoots" from the report, including unchanged firmware Net Revenue Retention (NRR), and strong net new Annual Recurring Revenue (ARR) growth.