ZI - ZoomInfo: Product Innovation Is Exciting But Growth Is Lacking
2024-03-28 13:33:00 ET
Summary
- ZoomInfo's revenue growth has slowed and margins have stagnated amidst a tough macroeconomic and competitive landscape, with declining number of enterprise customers and Net Retention Rate.
- The company is investing in product innovation, such as its AI-powered Copilot, resulting in higher Net Promoter Scores, win-back rates, and new customer acquisitions.
- However, the management has a lot to prove to regain investor confidence, and given the risk-reward, the stock is a "Sell".
Introduction & Investment Thesis
ZoomInfo ( ZI ) is a cloud-based sales and marketing platform that has underperformed the S&P 500 and the Nasdaq 100 YTD. The company released its Q4 FY23 earnings report last month, and while revenue and earnings met expectations, the company has guided revenue to grow just 2.4% in FY24 and non-GAAP operating income to remain flat YoY. In FY23, the company saw a decline in its enterprise customers as well as in its Net Retention Rate ((NRR)), which underlines the slowing spend and adoption among its existing customer base, which includes the software industry vertical, amidst tough macroeconomic conditions and a highly competitive market with increasing vendor consolidation....
ZoomInfo: Product Innovation Is Exciting, But Growth Is Lacking