ZoomInfo (ZI) Delivers Beat-and-raise but Shares Drop 20% on Soft Tone

Shares of ZoomInfo (NASDAQ: ZI) are trading more than 21% in the red after the software maker presented its Q3 results and offered guidance for Q4 and full-year.

ZoomInfo topped analyst expectations for the third quarter as it reported EPS of $0.24 on revenue of $287.6 million, which compares to the consensus of $0.20 on revenue of $278.52 million.

“As a best-in-class high-growth software company with strong profitability, our customers are looking to us for best practices on how to grow efficiently - we do that by leveraging ZoomInfo's data, insights, and automation,” said Henry Schuck, ZoomInfo Founder and CEO.

For this quarter, ZI said it sees EPS between $0.21 and $0.22 on revenue of $298-300 million. Analysts were expecting an EPS of $0.21 on revenue of $297.71 million.

On a full-year basis, the EPS forecast is raised to $0.83-0.84 from the prior $0.78-0.80, therefore beating the consensus of $0.80. Full-year revenue is now seen at $1.095 billion (the midpoint), versus the consensus of $1.09 billion.

BofA analyst Koji Ikeda lowered the price target to $55 per share from $64 as softer billings suggest ZI is not immune to macro headwinds. The analyst reiterated a Buy rating based on the belief that ZI is a “disruptive next-gen customer enablement platform.”

“However, we recognize that the soft commentary from mgmt likely puts the business in the show-me category until there are concrete data points that the 3Q22 result was more a speed bump on the way to the $2bn+ 2025 revenue target, rather than a fundamental shift in the way the end-markets will consume ZoomInfo in the future and/or the overall sales motion needs a refresh,” Ikeda added.

Mizuho analyst Siti Panigrahi blamed the drop in shares on “weak Q4 guidance” and management’s commentary about the worsening macro environment. The analyst cut the price target to $50 from the prior $65 per share.

“While ZoomInfo is not immune to the macro, and we expect revenue growth to decelerate to 29% in 2023 (from 47% in 2022), we believe ZoomInfo continues to offer a best-in-class SaaS financial profile with strong cash flow generation, and expect management to prioritize margin improvement in the current market conditions.”

By Senad Karaahmetovic

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