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ZoomInfo Zooming Ahead, Post-Earnings Release
Stock Analysis & Ideas

ZoomInfo Zooming Ahead, Post-Earnings Release

In the words of Henry Schuck, the founder and CEO of ZoomInfo Technologies (ZI), his company “brings together best-in-class intelligence with comprehensive data management, workflow, and engagement software.”

Since the onset of the COVID-19 pandemic, ZoomInfo’s software-as-a-service offerings have been in high demand.

We’re living in a time when workflow is commonly situated online and in the cloud – and ZoomInfo’s booming business reflects the growth of the niche industry in which the company operates.

However, ZoomInfo’s growth story was put to the test during a recent quarterly data release. So, before considering a position in ZI stock, it’s important to know the essential facts surrounding both the share price as well as the company’s financial performance. (See ZoomInfo stock charts on TipRanks)

A Quick Look at ZI Stock

There’s no point in pretending that ZI stock is a perfect investment for everyone.

Value-focused investors, for example, might balk at ZoomInfo’s trailing 12-month price-to-earnings ratio of 340.23. That is undoubtedly on the high end of the spectrum, even for a technology company.

Furthermore, income seekers might not like the fact that ZI stock doesn’t pay a dividend.

Now, let’s look at the price action of ZI stock. Throughout the first half of 2021, $60 was a hard resistance level. Time and again, the buyers simply couldn’t break through that ceiling.

Some sort of catalyst was needed – and the company’s second quarter 2021 earnings report, released on August 2, fit the bill.

Consequently, in early August, ZI stock hurtled to a 52-week high of $67.63. However, that surge wasn’t destined to last for very long.

By Wednesday’s market close, the stock had fallen to $61.49. It’s not a massive pullback, but it retraced around 40% of the early-August rally.

If ZoomInfo stock can stabilize around its current level, then it may be a favorable time to start accumulating a long position.

An Eventful Quarter

There was a slew of essential data to be revealed in ZI’s Q2 earnings report. Before getting to that, it’s worth taking note of ZoomInfo’s amazingly eventful three months.

For one thing, ZoomInfo acquired Chorus.ai, a conversation-intelligence company which facilitates insight-driven coaching, targeting, and decision-making for teams.

ZoomInfo also acquired Insent.ai. That’s a company which identifies website visitors in real time, and leverages the power of artificial intelligence and advanced lead-routing rules to initiate conversations in real time.

In July, ZoomInfo issued $300 million of add-on senior notes, due in 2029, at a reasonable 3.875% interest rate. These notes were in addition to the ones issued in January at the same rate (the January notes raised $350 million).

The company also recorded $200 million of add-on Term Loan B at the Libor rate + 3%, with a maturity of February 2026. This is on top of the $756-million loan ZoomInfo secured via a Morgan Stanley-led arranger group back in January.

This debt could position the company nicely to make more acquisitions, though that remains to be seen.

More Customers, More Revenues

Clearly, ZoomInfo stayed busy during those three months. Yet, did the company grow from a financial standpoint?

We can definitely say that ZoomInfo acquired some big-ticket clients, as the company ended the second quarter with more than 1,100 customers having $100,000 or greater in annual contract value.

The company raked in $174 million in revenue for the quarter. On a year-over-year basis, that signifies an increase of 57%.

Moreover, the company reported $88.6 million of cash flow from operations for the quarter, signaling a consistent capital influx.

All in all, the company’s CEO observed that ZoomInfo “delivered another record quarter, including the highest levels ever for both retention activity and customer engagement, and accelerating revenue growth.”

Wall Street Weighs In

According to TipRanks’ analyst rating consensus, ZI is a Strong Buy, based on 10 Buy and three Hold ratings. The average ZoomInfo price target is $70.08, implying 14% upside potential.

The Takeaway

On the fiscal front, it’s no exaggeration to say this company is zooming ahead.

Meanwhile, ZI stock has recently pulled back from its peak price. For some investors, this should provide a prime opportunity to accumulate shares today.

Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

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