ZoomInfo Q22021 BLOWOUT!

Sorry for the barrage of posts on ZoomInfo, but I’ve had a hard time containing my excitement from this quarter, which I see as their best yet and worthy of this board’s attention.

I got so motivated that I felt compelled to go back through their S-1 from 2020 and re-chart their past in my typical number keeping format for other companies I invest in.

I’ll do my best to summarize the relevant info here. One caveat is that I don’t have a hold of the conference call notes and didn’t have a chance to listen to the call.

This quarter was a significant re-acceleration in their revenue growth from 49.31% YoY last quarter to 56.21% YoY this quarter, and its not some kind of seasonal spike. In fact, in Q220 the growth of 60.68% was a (minor) sequential deceleration.

I looked at ZoomInfo’s top line guidance vs. their actuals in the 5 quarters they’ve been public. They’ve been pretty consistent with their beats, with an average beat of 5.74%.

Not only was this a great quarter a huge revenue beat, but if you take the average beat against their top line guide of $184M for Q3, you get an estimated continued acceleration of revenue growth from 56.21% to 57.09% next quarter!!

Also, note that in each quarter they’ve been public, their adjusted EPS has ticked up every quarter.

                              Q220      Q320      Q420      Q121      Q221      **Q321(ESTIMATE)**     
  Rev (in millions)           $110.90   $123.40   $139.70   $153.30   $174.00   **$194.56**  
  Rev Growth (YoY)(Organic)   60.68%    54.95%    52.53%    49.31%    56.21%    **57.09%**   
  Rev Growth (QoQ)(Organic)   8%        11%       13%       9%        13%       **12%**      
  EPS (GAAP)                  -0.22     0.02      0.14      0.02      0.05               
  EPS (Adjusted)              0.07      0.11      0.12      0.13      0.14               

On the income statement, their adjusted Operating Margins have moderated, but its only gone from the mid 50’s to mid 40’s over the past 3 years, at staying steady QoQ at a 43% Adj. Operating Margin.

The Gross Profit Margins are pretty insane. They are consistently around 89%!! on an adjusted basis, and as their business has matured on a GAAP basis they have pulled that margin up significantly since going public. They’ve been able to pull down their Cost of Revenue and their expenses on a GAAP basis for each of their first 5 quarters as a public company.

                            Q220   Q320   Q420   Q121   Q122  
  Gross Margin (GAAP)       70%    78%    81%    82%    83%   
  Gross Margin (non-GAAP)   89%    88%    88%    89%    89%   

I mentioned the uFCF in a previous post and forgot to link to the Investor Presentation where these numbers are, so here’s that link (see Slide 21 - https://ir.zoominfo.com/static-files/6b2b565e-3049-4cc8-83a6…).

                       Q220     Q320     Q420     Q121     Q221    
  uFCF (in millions)   $52.20   $59.80   $76.60   $97.50   $91.80  
  uFCF (YoY)           35%      28%      84%      77%      76%     

I also mentioned the $100k+ Customer count in a previous post, and since digging through the S-1 I was able to find a bit more numbers for this metric, and it shows on a YoY basis they’ve grown their $100k+ customers by 47%, 51%, and now 69% this quarter!!

                                     Q419   Q120   Q220   Q320   Q420   Q121   Q221   
  $100,000+ Customers                580    630    650    720    850    950    1,100  
  $100,000+ Customers Growth (YoY)                               47%    51%    69%    
  $100,000+ Customers Growth (QoQ)          9%     3%     11%    18%    12%    16%    

If you strictly follow the numbers, then it’s hard to find a reason not to put this company up with the best companies we invest in on this board. I know there’s been many ancillary discussions around whether this is a morally good business and whether or not they’ve got too much competition in the space, but when I see these numbers and the execution, I’m thinking my 9% position might still be too low.

Long ZI 9% (for now…)