Wall Street analysts rerated ZoomInfo Technologies Inc ZI after the company reported its fourth-quarter results Tuesday.Needham analyst Joshua Reilly reiterated ZoomInfo with a Buy and a $15 price target.Citizens Capital Markets analyst Patrick Walravens maintained ZoomInfo from Market Perform to Market Perform.Piper Sandler analyst Brent Bracelin upgraded ZoomInfo from Underweight to Neutral and raised the price target from $10 to $11.Also Read: Intuit Sees AI-Driven Growth With TurboTax, Credit Karma: Ana ...

Michael Wiggins De Oliveira is an inflection investor. This means buying into cheap companies at the moment when their narrative is changing and the business is on a path toward becoming significantly more profitable over the next year.With a focus on tech and “the Great Energy Transition (including uranium)”, Michael runs a concentrated portfolio with approximately 15 to 20 stocks and an average holding period of 18 months. Through his 10+ years analyzing countless companies, Michael has accumulated outsta ...

Financial Data and Key Metrics Changes - GAAP revenue for Q4 2024 was $309 million, with adjusted operating income of $116 million, representing a margin of 37%, both exceeding guidance expectations [9][36] - Net revenue retention (NRR) increased to 87% in Q4, marking the first sequential increase since Q1 2022 [18][37] - Unlevered free cash flow for Q4 was $94 million, with a margin of 30%, and for the full year 2024, it was $447 million, with a margin of 37% [41][42] Business Line Data and Key Metrics Changes - The operations business grew 27% year-over-year in Q4, driven by increased demand for data solutions [11][38] - Copilot, a key product, now has over $150 million in annual contract value (ACV), with significant growth in both new and existing customer segments [11][38] Market Data and Key Metrics Changes - Upmarket customers, defined as those with more than 100 employees, represent over two-thirds of the business and grew 2% in 2024, with expectations for mid-single-digit growth moving forward [14][16] - Down-market customers, those with fewer than 100 employees, declined 9% in 2024 but are stabilizing as a smaller, healthier portion of the business [15][16] Company Strategy and Development Direction - The company is focusing on upmarket growth, enhancing its product offerings and customer success initiatives to drive profitability [12][35] - Investments in AI and data solutions are expected to solidify the company's position as a leading provider of go-to-market data and AI for enterprise customers [12][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's momentum heading into 2025, with expectations for improved operating performance and profitability [46][47] - The company is discounting down-market contributions to guidance, focusing resources on upmarket opportunities [55][56] Other Important Information - The company has implemented a new business risk model that has improved customer onboarding and collection trends [37] - Share repurchases totaled 46.8 million shares at an average cost of $12, representing over 12% of total shares outstanding [39][40] Q&A Session Summary Question: Trends in SMB and enterprise segments - Management noted strength in the upmarket, particularly with operations and Copilot products, while the SMB segment is stabilizing but becoming a smaller part of the business [51][52] Question: Copilot ACV migration path - The company is migrating customers to Copilot both at renewal and off-cycle, with strong double-digit growth observed during migrations [66][67] Question: Drivers of NRR improvement - The improvement in NRR is attributed to better upsell opportunities in the upmarket and stabilization in the down-market [70][72] Question: Characteristics of the 100K customer cohort - The increase in the 100K customer cohort is driven by successful upselling and acquiring new customers, with a focus on maintaining quality [78][79] Question: Impact of layoffs on growth trajectory - Management remains optimistic about steady growth in the upmarket, driven by focused execution and product innovation [126][128] Question: Down-market disqualification of new business policies - The company does not anticipate changes to the $2 million a month headwind from down-market disqualifications [120][121]

Financial Performance - The company's Q4 2024 revenue was $309.1 million, a decrease of 2% year-over-year[53] - The company's FY 2024 revenue was $1.2143 billion, a decrease of 2% year-over-year[55] - Q4 2024 adjusted operating income was $115.9 million, a decrease of 8% year-over-year, with an adjusted operating income margin of 37%[53] - FY 2024 adjusted operating income was $428.5 million, a decrease of 14% year-over-year, with an adjusted operating income margin of 35%[55] - FY 2024 unlevered free cash flow was $446.9 million, a decrease of 4% year-over-year[50] Customer Metrics - The company has over 35,000 paying customers[48] - The company has 1,867 customers with greater than $100K in ACV as of December 31, 2024[7] - The company's net revenue retention rate was 87% for the trailing twelve-month period ended December 31, 2024[7] Future Outlook - The company expects 2025 revenue in the range of $1.185 billion to $1.205 billion[49] - The company expects 2025 adjusted operating income in the range of $426 million to $436 million[49] - The company expects 2025 unlevered free cash flow in the range of $420 million to $440 million[49] Capital Allocation - During the twelve months ended December 31, 2024, the company repurchased 46.8 million shares of common stock at an average price of $12.01, for an aggregate of $562.3 million[69]

Group 1: Earnings Performance - ZoomInfo reported quarterly earnings of $0.26 per share, exceeding the Zacks Consensus Estimate of $0.23 per share, with an earnings surprise of 13.04% [1] - The company posted revenues of $309.1 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.80%, although this represents a decline from year-ago revenues of $316.4 million [2] - Over the last four quarters, ZoomInfo has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Group 2: Stock Performance and Outlook - ZoomInfo shares have declined approximately 8.3% since the beginning of the year, contrasting with the S&P 500's gain of 1.7% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is $0.23 on revenues of $292.82 million, and for the current fiscal year, it is $0.94 on revenues of $1.18 billion [7] Group 3: Industry Context - The Computer - Integrated Systems industry, to which ZoomInfo belongs, is currently ranked in the top 33% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Total revenue for 2024 was $1,214.3 million, a decrease of 2.0% from $1,239.5 million in 2023[369]. - Gross profit for 2024 was $1,024.5 million, down from $1,061.0 million in 2023, reflecting a gross margin of approximately 84.3%[369]. - Net income for 2024 was $29.1 million, a significant decrease of 72.9% compared to $107.3 million in 2023[369]. - Comprehensive income for 2024 was $16.6 million, down from $94.9 million in 2023, reflecting a significant decline[372]. - Net cash provided by operating activities decreased to $369.4 million in 2024 from $434.9 million in 2023, indicating a reduction of 15%[377]. - The company reported a basic net income per share of $0.08 for 2024, down from $0.27 in 2023[369]. - Subscription revenue for 2024 was $1,200.4 million, down from $1,225.1 million in 2023, reflecting a decline of 2.0%[443]. Operating Expenses - Operating expenses for 2024 totaled $927.1 million, an increase of 15.7% from $801.5 million in 2023[369]. - Equity-based compensation expense for 2024 was $143.5 million, a decrease from $173.0 million in 2023[377]. - The company incurred total charges of $30.1 million related to legal settlements during the year ended December 31, 2024, all of which have been paid[498]. Assets and Liabilities - Total current assets decreased to $451.0 million in 2024 from $864.3 million in 2023, primarily due to a reduction in cash and cash equivalents[367]. - Total liabilities increased slightly to $4,774.1 million in 2024 from $4,749.0 million in 2023[367]. - Cash, cash equivalents, and restricted cash at the end of 2024 totaled $149.0 million, down from $456.2 million at the end of 2023[379]. - The total lease liabilities as of December 31, 2024, were $161.1 million, an increase from $101.1 million in 2023[517]. Debt and Financing - The company reported a total principal balance outstanding of $588.1 million on its first lien term loan as of December 31, 2024[341]. - The company has a substantial amount of debt, which may adversely affect its financial position and ability to raise additional capital[29]. - The effective interest rate on the first lien debt was 6.56% as of December 31, 2024, down from 7.83% in 2023[471]. - The company has a total of $1,238.1 million in expected future principal payments, with $655.9 million due in 2029[473]. Risk Factors - The company anticipates increasing operating expenses in the future, which may impact profitability[340]. - The company is exposed to market risks from interest rate fluctuations, which could affect its financial condition[341]. - The company has operations in multiple countries, exposing it to risks inherent in international operations[29]. - The company may face challenges in attracting new customers and renewing existing subscriptions, which could harm revenue growth[26]. - The company has noted that macroeconomic conditions, including inflation, may impact its business, financial condition, and results of operations[340]. Tax and Deferred Assets - Deferred tax assets amounted to $3,717.6 million as of December 31, 2024, compared to $3,707.1 million in 2023[367]. - The evaluation of the realizability of deferred tax assets was identified as a critical audit matter, with deferred tax assets primarily related to intangibles[360][361]. - The company recognized $1.9 million in research and development tax credits for the year ended December 31, 2024, reducing General and administrative expenses[435]. Share Repurchase and Equity - The total number of shares repurchased in 2024 was 46,801,742, resulting in a cash outflow of $567.0 million[377]. - The company authorized a share repurchase program with total authorizations of $600 million in 2023 and $500 million in 2024, with $137.6 million remaining available for repurchases as of December 31, 2024[506]. - Basic net income per share attributable to common stockholders was $0.08 in 2024, down from $0.27 in 2023[515]. Impairment and Lease Charges - The company experienced a significant asset impairment and lease abandonment charge of $57.4 million in 2024, compared to only $5.2 million in 2023[377]. - Impairment charges of $4.3 million were recognized to reduce the carrying value of right-of-use assets related to the third and fourth phases of the lease[522]. - Lease abandonment charges of $4.1 million were incurred for vacated spaces during the second quarter of 2024[522]. Currency and Interest Rate Management - The company has implemented a foreign currency hedging program to mitigate potential adverse effects from significant currency movements[344]. - In Q2 2024, the Company had outstanding interest rate derivatives designated as cash flow hedges with a notional amount of $500.0 million and an interest rate of 0.370% maturing on January 30, 2026[478]. - The fair value of the Company's interest rate swap contracts was $19.9 million as of December 31, 2024, compared to $36.8 million as of December 31, 2023[484].

Financial Performance - GAAP revenue for Q4 2024 was $309.1 million, a decrease of 2% year-over-year[5] - GAAP operating income for Q4 2024 was $30.9 million, representing a 56% decline year-over-year[7] - Full-year 2024 GAAP revenue totaled $1,214.3 million, also a decrease of 2% year-over-year[9] - Adjusted operating income for FY 2024 was $428.5 million, a decrease of 14% year-over-year[9] - Total revenue for Q4 2024 was $309.1 million, a decrease of 2.1% from $316.4 million in Q4 2023[30] - Income from operations (GAAP) for Q4 2024 was $30.9 million, down from $70.5 million in Q4 2023, with a total for the year of $97.4 million compared to $259.5 million in 2023[43] - Adjusted Operating Income (Non-GAAP) for Q4 2024 was $115.9 million, a decrease from $126.5 million in Q4 2023, with a total for the year of $428.5 million compared to $498.6 million in 2023[43] - Revenue (GAAP) for Q4 2024 was $309.1 million, slightly down from $316.4 million in Q4 2023, with total revenue for the year at $1,214.3 million compared to $1,239.5 million in 2023[43] - Adjusted Net Income (Non-GAAP) for Q4 2024 was $93.6 million, down from $102.1 million in Q4 2023, with a total for the year of $363.8 million compared to $413.1 million in 2023[48] - Net income (GAAP) for Q4 2024 was $14.6 million, recovering from a loss of $5.5 million in Q4 2023, with total net income for the year at $29.1 million compared to $107.3 million in 2023[48] Customer Metrics - The company reported a net revenue retention rate of 87% as of December 31, 2024[5] - The company closed Q4 2024 with 1,867 customers with annual contract values of $100,000 or greater, an increase of 58 from the prior quarter[5] - Sales teams using ZoomInfo reported a 91% improvement in connect rates and booked 55% more meetings per month[5] Guidance and Expectations - For Q1 2025, the company expects revenue between $294 million and $297 million[11] - Full-year 2025 revenue guidance is set between $1.185 billion and $1.205 billion[11] Operating Expenses and Profitability - Operating expenses increased to $225.0 million in Q4 2024, compared to $201.3 million in Q4 2023, marking an increase of 11.8%[30] - Operating Income Margin (GAAP) for Q4 2024 was 10%, down from 22% in Q4 2023, with a total margin for the year at 8% compared to 21% in 2023[43] - Adjusted Operating Income Margin (Non-GAAP) for Q4 2024 was 37%, down from 40% in Q4 2023, with a total margin for the year at 35% compared to 40% in 2023[43] Cash Flow and Assets - Cash and cash equivalents decreased to $139.9 million at the end of 2024, down from $447.1 million at the end of 2023, representing a decline of 68.8%[32] - Total assets decreased to $6,467.6 million in 2024, down from $6,868.3 million in 2023, a reduction of 5.8%[28] - Total liabilities increased slightly to $4,774.1 million in 2024, compared to $4,749.0 million in 2023, an increase of 0.5%[28] - Unlevered Free Cash Flow for the twelve months ended December 31, 2024, was $446.9 million, a decrease of 3.6% from $463.5 million in 2023[38] - The company reported a net cash provided by operating activities of $369.4 million for the twelve months ended December 31, 2024, down from $434.9 million in 2023, a decrease of 15%[32] Equity and Compensation - ZoomInfo repurchased 46,801,742 shares of common stock, accounting for 12% of total shares outstanding, at an average price of $12.01, totaling $562.3 million[5] - Equity-based compensation expense totaled $138.0 million for the twelve months ended December 31, 2024, compared to $167.0 million in 2023, a decrease of 17.4%[30] - Equity-based compensation expense for Q4 2024 was $33.8 million, down from $40.7 million in Q4 2023, with total expenses for the year at $138.0 million compared to $167.6 million in 2023[48] Restructuring and Expenses - Restructuring and transaction-related expenses for Q4 2024 were $34.6 million, significantly higher than $0.4 million in Q4 2023, with total expenses for the year at $101.6 million compared to $10.3 million in 2023[48]

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against ZoomInfo Technologies Inc. due to a class action lawsuit alleging breaches of fiduciary duties by the board of directors during a specified class period [1] Company Overview - ZoomInfo is a software and data company that provides customer contact and business information to its clients [2] Class Action Allegations - The class action lawsuit claims that ZoomInfo made false or misleading statements and failed to disclose critical information, including: - Financial results were temporarily inflated due to COVID-19, leading to pulled-forward demand [3] - Significant portions of the customer base were reducing or abandoning the use of ZoomInfo's products [3] - Use of manipulative auto-renew policies and threats of litigation to retain customers against their will [3] - Coercive retention tactics damaged customer relationships and created a hidden demand cliff for future renewals [3] - Reported revenues and customer metrics were materially overstated as a result of these practices [3] Financial Performance and Stock Impact - On November 1, 2022, ZoomInfo reported increased customer scrutiny during contract renewals, leading to a decline in Remaining Performance Obligations (RPOs) to $979 million from $985 million, causing a stock price drop of over 29% [4] - On November 16, 2022, continued scrutiny negatively impacted revenue growth for fiscal year 2023, resulting in a stock price decline of approximately 17% [5] - On July 31, 2023, ZoomInfo reported a decline in customers with annual contract values over $100,000 and reduced annual revenue guidance by $50 million, leading to a stock price drop of about 28% [6] - On May 7, 2024, a decline in Net Revenue Retention (NRR) to 85% from 87% was reported, along with a revenue guidance reduction, causing a stock price fall of more than 24% [7] - On August 5, 2024, ZoomInfo announced a $33 million charge due to non-payments and a new risk model requiring upfront payments, further reducing revenue guidance by $65 million, resulting in an 18% stock price drop [8]

Core Insights - ZoomInfo partners with Telmai to enhance data quality monitoring across its data ecosystem, utilizing machine learning for proactive management and integration with open table formats [2][3][4] Group 1: Partnership and Technology - Telmai is an AI-powered data observability platform that will help ZoomInfo manage data integrity and quality at scale [2][7] - The integration aims to improve customer experience through full-volume data quality monitoring, automated anomaly detection, and streamlined remediation workflows [4][6] Group 2: Data Management and Operations - ZoomInfo processes over 1.5 billion data points daily for over 35,000 businesses, necessitating high accuracy and timely delivery to maintain customer trust [3] - The company’s data is distributed across various platforms, including Snowflake, BigQuery, S3, and GCS, which require effective monitoring solutions [4] Group 3: Implementation and Efficiency - Telmai's user-friendly interface allows for quick adoption by ZoomInfo's teams, reducing setup time from weeks or months to just minutes [5] - During the pilot phase, Telmai's anomaly detection identified issues among billions of data points, enabling rapid response and resolution [6]

Group 1 - Michael Wiggins De Oliveira is an inflection investor, focusing on buying undervalued companies at pivotal moments when their profitability is expected to improve significantly over the next year [1] - The investment strategy emphasizes technology and the Great Energy Transition, including uranium, with a concentrated portfolio of approximately 15 to 20 stocks and an average holding period of 18 months [1] Group 2 - Michael has over 10 years of experience analyzing companies in the tech and energy sectors, and has built a following of over 40,000 on Seeking Alpha [2] - He leads the investing group Deep Value Returns, which offers insights through a concentrated portfolio of value stocks, timely updates, weekly webinars for live advice, and support for both new and experienced investors [2]