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ZoomInfo Soars On Yet Another Impressive Earnings Performance

Published 08/02/2022, 11:32 AM
Updated 07/09/2023, 06:31 AM

Shares of ZoomInfo Technologies (NASDAQ:ZI) are trading sharply higher on Tuesday after the company once again delivered a solid earnings report.

Strong Demand And Even Stronger Execution

ZoomInfo raised its guidance for the full fiscal year, leading to positive reactions among the analysts and investors as shares opened over 10% higher on Tuesday.

ZI reported a Q2 adjusted EPS of 21c, compared to 14c in the year-ago period and above the consensus projection of 18c per share. ZoomInfo also reported Q2 revenue of $267.1 million, up 54% year-over-year, beating the estimates of $254.4 million.

The company reported GAAP operating income margin and adjusted operating income margin of 15% and 40%, respectively. Cash flow from operations stood at $106.2 million in the second quarter, while free cash flow was reported at $108.3 million.

The Vancouver, Washington-based company ended the second quarter with over 30,000 customers, 1,763 of which had $100,000 or more in annual contract value.

As far as the business outlook is concerned, the software company now expects full-year (FY) adjusted EPS to be in the range of 78c to 80c, higher than the previous forecast of 75c to 77c and higher than the 76c consensus.

For the third quarter, Zoom expects adjusted EPS in the range of 19c to 20c, compared to analysts’ estimates of 19c per share. The tech company expects Q3 revenue from $277 million to $279 million, topping the consensus estimates of $272.1 million.

Henry Schuck, founder and Chief Executive Officer of ZoomInfo, said:

“Customers of all sizes and industries are leveraging ZoomInfo data, insights, automation, and workflows to drive a more efficient go-to-market motion, which is critical in any economic environment.”

Building On Positive Business Updates

Earlier, ZoomInfo said it obtained the International Organization for Standardization (ISO) 27701 privacy certification, underscoring the company’s commitment to providing high-level data security and privacy. The certification provides companies with the necessary requirements and guidance to establish, implement and enhance their privacy information management system.

Furthermore, ZoomInfo acquired conversation intelligence solutions provider Chorus.ai, a move that the company hopes will expand its footprint through innovative technology. In other words, the acquisition will improve the way go-to-market teams search for target accounts, oversee account activity, trigger automated workflows, and expand buying committees.

ZoomInfo also announced the integration of the SalesOS experience, allowing customers to engage their sales via emails, calls, or 1-click sales automation solutions. Moreover, ZoomInfo said last month it has joined the AWS Partner Network (APN), one of the most popular and broadly adopted cloud solutions, to enhance data delivery via its OperationsOS platform.

The move enables thousands of customers of both companies to access ZoomInfo’s business data using AWS services directly. Moreover, customers are also able to utilize prebuilt datasets or collaborate with ZoomInfo’s services team to make personalized datasets. Schuck added:

“This exciting development allows our customers who leverage AWS to establish a highly scalable and reliable go-to-market data foundation.”

Integrating ZoomInfo’s data into AWS data workflows enables a seamless method for “capturing, unifying, analyzing, and, ultimately, consuming that data and creates the potential “to save companies meaningful time, effort, and money.”

Strong Quarterly Report Comes At The Right Time

U.S. equities have been on the rise in the past month, resulting in the S&P 500’s strongest monthly gain in nearly 2 years, driven by expectations that the Federal Reserve will slow the pace of interest rate hikes and stronger-than-expected Q2 corporate earnings.

The benchmark stock index has now entered a crucial period as August and September have historically been its worst-performing months.

However, the respected JPMorgan strategist Marko Kolanovic believes U.S. equities will end the year significantly higher, making him one of the very few bullish stock market strategists given that broader market sentiment remains highly pessimistic due to record-high inflation and recession fears.

Still, Kolanovic shared a significantly more optimistic view compared to his Wall Street peers as he believes that the worst of economic data is already priced in equities. As such, JPM’s top quant anticipates a strong rebound in the second half of the year. Kolanovic is one of the most closely-watched strategists on the Street.

Kolanovic wrote in a note to clients on Monday:

“Although the activity outlook remains challenging, we believe that the risk-reward for equities is looking more attractive as we move through the second half.

The phase of bad data being interpreted as good is gaining traction, while the call of peak Federal Reserve hawkishness, peak yields, and peak inflation are playing out.”

Looking at current short positioning data, it appears that Kolanovic’s expectations of a sustained recovery could materialize. Citigroup analyst Chris Montagu pointed out that short positions across the majority of the markets are facing sharp declines following last week’s move up, adding to fears over a short squeeze.

However, Kolanovic said valuations within the S&P 500 index seem better than fairly valued considering the quality of companies tracked by the index. He also said the rate at which stock multiples have shrunk recently is higher than the typical compression recorded during previous recession periods.

He expects investor expectations to reset regarding the Fed’s monetary policy and corporate earnings. Risky assets are surging higher in the face of disappointing earnings releases, which means that “bad news was already anticipated/priced in,” he said.

Given that ZoomInfo is a high-growth software stock, a surge in risky assets could see shares of the company rebound sharply higher on the back of the improving macroeconomic backdrop and strong earnings.

ZoomInfo shares are down over 35% YTD after staging a rebound of over 30% since printing the 21-month low in mid-June.

Bottom Line

ZoomInfo stock price is trading sharply higher on Tuesday after the software company again delivered a very strong quarterly report, which is likely to fuel the ongoing rebound in shares.

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