ZoomInfo is reporting on Tues, Feb 15. I’ve found it good practice to document my expectations in advance, so I know how to quickly react to earnings. Price action is often swift, so I want to take advantage of after hours trading. Posting it here in case anyone finds it helpful or has meaningful disagreement and rationale around why my expectations may be off base. I like to track and predict the metrics that the company include in the press release as “important” numbers. For ZoomInfo this is Revenue Growth, Unlevered Free Cash Flow (uFCF), and the number of customers with Annual Contract Values over $100k. I’m expecting another strong quarter from ZoomInfo, as shown in the table below. If I see numbers that are Below my expectations, that is an indicator to sell and shrink my position. If the report meets my expectations, I typically hold my existing postition. In most cases I will add if the numbers come in and exceed expectations.
For ZoomInfo in particular, I think expectations have to be in the 12-14% range for sequential revenue growth where they landed for 3 of the last 4 quarters, anything less would be a sign of slowing growth. The beauty of ZoomInfo is in its ability to keep generating cash. Last quarter hit a dip in the unlevered free cash flow, and I expect this to bounce back this quarter. ZoomInfo has grown large customers by at least 150, each of the last 2 quarters and I expect this to continue. ZoomInfo only reports its NARR annually, so I expect it to stay in the 108-109% range. It will be interesting to see how customer pressure on supply chains impact their spend on a product like ZoomInfo.
ZoomInfo Earnings Expectations:
ZI Rev YoY SQoQ TTM YoY uFCF GM *NARR **>100k ACV YoY SQoQ
F18 Q3 37.40
F18 Q4 40.80 9% 102%
F19 Q1 54.60 34%
F19 Q2 68.50 25% 201.3
F19 Q3 79.10 111% 15% 243.0
F19 Q4 91.10 123% 15% 293.3 41.5 86% 109% 580
F20 Q1 102.20 87% 12% 340.9 55.0 86% 630 9%
F20 Q2 110.90 62% 9% 383.3 90% 52.2 75% 650 3%
F20 Q3 123.40 56% 11% 427.6 76% 59.8 83% 720 11%
F20 Q4 139.70 53% 13% 476.2 62% 76.6 86% 108% 850 47% 18%
F21 Q1 153.30 50% 10% 527.3 55% 97.5 86% 950 51% 12%
F21 Q2 174.00 57% 14% 590.4 54% 91.8 86% 1100 69% 16%
F21 Q3 197.60 60% 14% 664.6 55% 73.3 86% 1250 74% 14%
**Mid-point Company Guidance:**
F22 Q1 (G) 207.0 5% 59.9
**My Expectations:**
Below <221 <12% <75 <86% <108% <1400
Meets 221-225 12-14% 75-95 86% 108-109% 1400-1450
Exceeds >225 >14% >95 >86% >109% >1450
*Net Annual Retention Rate (NARR): We measure our retention rate on an annual basis and define annual net revenue retention as the total ACV generated by our customers and customers of Pre-Acquisition ZI at the end of the year divided by the ACV generated by the same group of customers at the end of the prior year.
**Customers with $100,000 or greater in annual contract value.
Keeping score, here’s how we’re doing this quarter, IMHO:
DataDog: Exceeded expectations!
Cloudflare: Met expectations.
ZoomInfo: TBD
I hope you find this helpful.
Cheers,
Daws (Long ZI ~8%)