ZoomInfo Technologies Inc. boosted the price range for its initial public offering (IPO) on Tuesday (June 2), hoping to raise as much as $890 million.
Business summary:
Our mission is to unlock actionable business information and insights to make organizations more successful.
ZoomInfo is a leading go-to-market intelligence platform for sales and marketing teams. Our cloud-based platform provides highly accurate and comprehensive information on the organizations and professionals they target. This “360-degree view” enables sellers and marketers to shorten sales cycles and increase win rates by delivering the right message, to the right person, at the right time, to hit their number.
Financials seems to be pretty good.
2019 revenue up 103% to 293.3m
Q1 2020:
revenue up 87% to 102.2m
GAAP gross margin 80%
Non-GAAP operating margin 47%!!!
Almost GAAP net profitable, GAAP net margin -5.7%
Operator cash flow 28.3m, FCF 24.2m!
I haven’t dig into details yet but looking forward to your comments on ZI.
Personally. I won’t ever invest in an IPO. I want to see some public track record. Why would you like to invest in this. You didn’t say. I like a good story
That just means the insiders participating in the IPO did very well. It could also go down tomorrow. It isn’t really helpful as far as determiing if it will be a good investment.
I skimmed through registration statement. The catch is that REAL growth adjusted for acquisitions (they call it Allocated Combined Receipts) for 2018 and 2019 was around 40%. First 3 months i 2020 is also around 40%.
Second important point - NER in 2019 was 109%, 2018 - 102% (improvement). NER from enterprise customers - 127% (2019) from 125% (2018).
Revenues from enterprise customers are 34% of all revenues, 38% mid market and 28% smaller clients.
The business is highly profitable though with adj.op margins around 50%
I decided not to invest as the real rev growth is not 80-100% as some articles point out, but only around 40%. I don‘t need to explain how different is compounding at 40% compared to 80-100%.
It‘s a clear laggard compared to our top holdings - Zm, Ddog and Crwd.
If I miss something or misinterpret something, will be happy to be corrected.
My understanding is that the current EV/S is around 30+X which would put it in a similar range to ZM, DDOG, CRWD. I thought their growth was above 80% but V has pointed out that’s not the case (I’m not sure why as I’m still a beginner at this so will have to dig deeper).
My experience however is that ZI does have a pretty strong moat. There aren’t many places to get accurate lead data - especially phone numbers. There are smaller players but I don’t believe any come close to ZI.
I’ve been considering ZI as the more remote work increases, less sales people go to tradeshows and in person events, calling on and reaching out to sales prospects through phone becomes important and ZI gives that info to sales people very quickly.
I’ve read on this board to avoid investing in IPOs and it seems the stock has shot up very quickly, maybe too much hype?, coming down a bit yesterday. So right now I’m waiting and thinking on this.
Miklo, the logic here is if u can invest in 80/90/100%+ growers, why would u give ur hard-earned capital to a company growing 2-4x SLOWER than DDOG or ZM? A very valuable compilation of previous posts focusing on EXACTLY this point was done by Muji for u (and us).
LearningInvest0r I appreciate the reply and reminder. My understanding was that they were growing at around 80% (I believe I saw this in one of Bert’s posts as well). Seems like that may not be accurate so will need to dig into it.
As I’ve been giving this more thought and doing some research it does seem that while ZI is likely the best source of direct dials and contact info there are quite a few other small players who have landed large clients as well. So I’m not feeling a high level of conviction on this one yet.
Miklo, to be precise - they DO grow 80%+, but ORGANIC growth has been more than DOUBLE less than that (high 30s in 2018 and low 40s in 2019). So, in order to keep this kind of level of revenues growth either their organic growth need to accelerate DOUBLE than current one or they’ll have to acquire other companies. Acquisition seldom yield positive results unless these are bolt-on acquisitions or business model specifically built on serial acquisitions - good examples here are Coup and CSU (Canada).
I wouldn’t bet on super successful regular acquisitions in absence of opposite evidence. Hence, it’s likely that further organic growth would be hovering in the range of 40s. If it would accelerate to 50s - fine, but u can’t compare it to our top holdings with ORGANIC growth of 80%+.
Of course, theoretically it’s possible that they would accelerate organic growth to 80%+. But as history shows it’s highly unlikely as of today. In investing it’s about dealing with uncertainties and this leads us to making our calls based on probabilities and possibilities. I’m making my call as to ZI today as pass, but as Saul teaches us - we need to remain mentally flexible and should facts change, we will be ready to re-assess the case.
(and us).