What Happened?
Shares of sales intelligence platform ZoomInfo jumped 20.6% in the afternoon session after the company reported fourth-quarter 2024 results that highlighted a notable improvement in large contract wins, but sales declined 2% year on year. Despite the revenue dip, cost efficiencies helped sustain an adjusted operating margin of 37%, contributing to adjusted earnings per share that exceeded Wall Street's expectations.
Looking ahead, the company's full-year guidance for adjusted EPS also surpassed analysts' estimates, even as revenue is projected to decline. Overall, the quarter had a mix of positives and challenges; while revenue struggled, new contract wins, and better-than-expected earnings suggest resilience.
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What The Market Is Telling Us
ZoomInfo’s shares are quite volatile and have had 17 moves greater than 5% over the last year. But moves this big are rare even for ZoomInfo and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock dropped 25.9% on the news that the company reported first quarter 2024 earnings results. Revenue guidance missed analysts' expectations, and customer numbers are declining. Notably, the company lowered full-year guidance for revenue, adjusted operating income, and free cash flow, which is never a good sign. The company noted that small business customers were more challenged in Q1.
Overall, this was a tough quarter for ZoomInfo.
Following the results, Wall Street analysts downgraded the company's rating. Goldman Sachs downgraded the stock's rating from Neutral to Sell and lowered the price target from $19 to $12.
Similarly, Piper Sandler lowered the stock's rating from Overweight to Neutral, adding "Our patience has worn thin in waiting for a fundamental recovery at ZI on further erosion across the cohort of SMB and mid-market customers that has been spotty for the past two years but is now showing further signs of another leg down.".
ZoomInfo is up 9.1% since the beginning of the year, but at $11.41 per share, it is still trading 34% below its 52-week high of $17.29 from February 2024. Investors who bought $1,000 worth of ZoomInfo’s shares at the IPO in June 2020 would now be looking at an investment worth $335.70.
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