ZoomInfo Technologies Finds Key Support Amid Broad Market Decline

Sales reps are always looking for a way to get more leads faster, and business data provider ZoomInfo Technologies NASDAQ: ZI helps speed that process. 

The stock retreated 9.18% in the broad-market pullback. That’s not anything to panic about at this stage, as about three-quarters of stocks follow the market’s direction at any given time, and many growth stocks got hammered last week. 

Keep in mind: Whenever the market or an individual stock pulls back after a strong rally, headline writers often attribute the selloff to a news event. In this case, the Omricon variant of the Covid-19 virus is getting the blame. But it’s also possible that investors are looking to take some profits off the table after big rallies this year, especially as year-end tax decisions loom.

ZoomInfo went public in June 2020, as the first tech IPO following last year’s Covid lockdowns. It climbed over 60% in its first day of trading, illustrating investors’ enthusiasm for subscription software makers, a high-growth category whose promise was showcased following work-from-home orders. 

ZoomInfo helps enterprise users integrate their sales and marketing data with cloud-based systems made by Microsoft, Oracle and Salesforce, among others. 

The Vancouver, Washington, company has a market capitalization of $27.85 billion, a testament to its rallies in recent months and its successful IPO. 

The stock is up 1.26% in the past month, 13.47% in the past three months and  45.16% year-to-date. 

Shares closed Friday at $70.01, down $0.77 or 1.09% for the session. 

Increasing Annual Contract Value

When the company reported its third-quarter on November 1, founder and CEO Henry Schuck said the company closed the quarter with more than 25,000 customers, of which more than 1,250 customers have greater than $100,000 in annual contract value. “The number of customers with more than $100,000 in ACV grew more than 70% year over year,” he said. 

ZoomInfo grew earnings at a rate of 18%, to $0.13 per share, topping views by a penny. Revenue came in at $197.6 million, up 60%, also beating analyst expectations, according to MarketBeat earnings data. The company said 54% of that revenue came from organic growth. 

In the earnings call, chief financial officer Cameron Hyzer elaborated upon the customer base. 

“Customers with more than $100,000 in ACV now represent more than 40% of our subscription revenue, and the ACV contributed by these customers grew more than 85% relative to Q3 2020,” Hyzer said. 

Hyzer added that the third-quarter adjusted operating income was $78 million. “This exceeded our revenue guidance range of $72 million to $74 million and represents an adjusted operating income margin of 39%. The small margin performance combined with 54% organic revenue growth is consistent with the growth and profitability framework that we set out at our recent analyst day,” he said. 

The company boosted its full-year revenue guidance to a range of  $731 to $733 million, up from prior guidance of $703 to $707 million. ZoomInfo’s full-year earnings guidance was increased by a penny to a range of  $0.51 to $0.52 per share. 

Moves In Tandem With Broader Market

ZoomInfo shares have moved roughly in tandem with the broader market in recent sessions. The stock rallied to a new high of $79.17 on November 19, as the market was beginning to experience some choppy trade. 

Despite the big pullback last week, the stock found support above its 50-day moving average, a good sign that institutions have not (yet) decided to bail out. Of course, if the broad market pullback continues, that could change if ZoomInfo goes along for the ride down. 

At this juncture, because of the decline in both the stock and the broader market, it’s not the time to risk a buy. However, the company’s promising future bodes well for an eventual buy. Watch for a signal, such as a trend line or a price rise that clears a pattern buy point. In addition, it’s preferable if the broader market is also trending higher; that’s extra insurance that institutional buyers are in the mood to shop for their portfolios.