Would you be interested in this company

Here’s Bert’s explanation of the debt:

Basically, what is now ZI bought its principal competitor as you can see below. To finance the transaction, it issued debt. Here is the relevant information from the 10k.

ZoomInfo was originally founded as DiscoverOrg in 2007 by Henry Schuck and Kirk Brown. It operated as DiscoverOrg until February 2019, when it acquired its competitor Zoom Information, Inc. and subsequently rebranded as ZoomInfo. Zoom Information was originally established in 2000 as Eliyon Technologies by founders Yonatan Stern and Michel Decary, and in August 2017 was acquired by Great Hill Partners, a private equity firm, for $240 million in cash. The company acquired RainKing in 2017 and NeverBounce in 2018, and, following the rebrand, Komiko in 2019 and both Clickagy and EverString Technology in 2020.

It is the rebrand of what was DiscoverOrg to ZoomInfo that is a bit confusing. But that is why they needed the funding.

Saul

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Interesting discussion on ZoomInfo (ZI)in this YouTube video. The balance sheet is discussed at the ~ 11:11 minute mark. https://www.youtube.com/watch?v=2RWx4-yEZPo

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Zoominfo raised $1b thru IPO to pay down the debt. They still have $744m long term debt. The debt will expire at Feb 1, 2026.

the Company also acquired Clickaway and Everstring for a total of $71.7m in 2020. I felt the company is growing up with a series of significant acquitsition. The goodwill in the balance sheet balloon to $1b. The growth through acquisition is not the way I like to see.

Also, I am not sure if selling contact informations obey the privacy regulation in USA. should it be a concern?

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Hi Covediver,

When you said I am not sure if selling contact informations obey the privacy regulation in USA. should it be a concern?
It reminded me of what Lamat said earlier,…scrapping (private) information and reselling it sounds… a bit risky?
I too feel similarly. I don’t want to spend a lot of my time following a company I don’t believe is doing the right thing, legality aside.

After reading a few more articles on ZI, I came across one from a writer on Seeking Alpha, he wrote a sell piece:
Gary Alexander-
ZoomInfo’s base of competitors is so broad it’s difficult to know if ZoomInfo will ever be a clear dominant force in this lead generation/database space. Uplead, LeadIQ, D&B Hoovers, and even LinkedIn - there are plenty of companies vying for this space, in part because the barriers to entry are fairly low.
I was almost thinking pass on this one. Then I re-read Bert Hotchfield’s write up he wrote on his service Tickertarget.com last week and is now appearing in SA:
Bert
The management of ZoomInfo Technologies has suggested that its addressable market has continued to grow. Last quarter, during the course of its conference call, the company used an addressable market estimate of $30 billion. Adding the recruiting engine to the stack is going to add billions to the estimated TAM. No more than DocuSign is a company about e-signatures, ZI is a company that has been able to take a relatively mundane set of data-a compilation of contacts-and create an automated go-to-market framework. A business will spend lots of money for a workflow/sales process framework and not so much for a list of prospects. .

Bert’s first hand knowledge base prior to investing was Sales in the tech space. I’ve subscribed to his service for years. I’ve always appreciated his transparency when discussing his thought processes. I’m planning to initiate a try it out position on Monday.

Jason

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I’ve looked into this business in the past and concluded it’s not for me. My primary concerns are, and continue to be, the data collection practices and the sustainability of the business.

The business, as I understand it, is essentially data harvesting. It’s collecting data from mostly unwilling participants for use by third parties for sales and marketing. I see this as a spam enabler. The company even has an automated sales dialer feature which allows users to “build dialing lists” and “leave prerecorded emails”. That sounds a lot like robocalls, and there doesn’t seem to be any policies aimed at users who abuse or misuse the product, just best practices the company recommends.

The company does have an opt-out. In a March press release, they highlighted a global notice and choice program where people are given notice and provided an opportunity to remove or update their information in the database. But it sounds a lot better in the press release than in practice.

I found numerous university IT departments identifying these emails as spam and warning students, faculty, and staff about them.

One went as far to say, “We believe that this opting out process is to give them a bare minimum defence for any legal action individuals may bring against the company for ‘scraping’ this information and selling it.”

https://uwaterloo.ca/arts-computing/news/zoominfo-spam
https://ccit.clemson.edu/cybersecurity/cybersecurity-alerts/…
https://security.virginia.edu/node/4656

As we move to a world where data collection practices are more scrutinized, this is the kind of business that will be in the crosshairs. Changes in regulation and data privacy practices are a major risk as is reputation. Will this negative attention scale as Zoominfo scales?

As for the sales workflow/process point, isn’t that what Salesforce provides? I see that Zoominfo integrates with Salesforce and is often used that way, and I have hard time believing the true value is in the platform. Zoominfo even characterizes this integration as the syncing of “data source” with “CRM”. I don’t see much of a moat here. Most of the data is publicly available for collection or purchase. The company lists Salesforce and Microsoft/LinkedIn as potential competitors, and both appear well situated to provide a competing solution. LinkedIn, as Bert mentions in his article, already has an edge in recruiting and is moving into sales.

Personally, I just can’t get behind a company that reports billions of automated calls as a metric. Sounds a lot like billions of minutes of busy professionals being wasted. That certainly has been my experience.

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The business, as I understand it, is essentially data harvesting. It’s collecting data from mostly unwilling participants for use by third parties for sales and marketing. I see this as a spam enabler. The company even has an automated sales dialer feature which allows users to “build dialing lists” and “leave prerecorded emails”. That sounds a lot like robocalls…

Hi wheelzofsteel,

You may be correct and I may be wrong, but I think that you misunderstand the sophisticated process that this company does.

Forrester Wave rated ZoomInfo far and away the Leader in B2B Marketing Data Provider, especially in strongest strategy where there was no room to place it further. Here’s what Forrester wrote:

“In our 24-criterion evaluation of B2B marketing data providers, [Forrester] identified the 11 most significant vendors — Data Axle, Dun & Bradstreet, Enlyft, Global Database, InsideView, Leadspace, Oracle, SMARTe, Spiceworks Ziff Davis, TechTarget, and ZoomInfo Technologies — and researched, analyzed, and scored them. This report shows how each provider measures up and helps B2B marketing professionals select the right one for their needs.”

“Since our evaluation of this market in 2018, ZoomInfo has transformed its business and continues to expand aggressively. DiscoverOrg bought ZoomInfo in 2019, taking on the acquired company’s brand, and has bolstered its capabilities with acquisitions such as EverString to extend the breadth of its company and contact data and Clickagy to add its proprietary source of behavioral/intent data.”

“ZoomInfo is a best fit for organizations looking for a comprehensive data solution with an expanding array of complementary applications built on a shared data foundation.

Does that sound like a little robocall company to you? Automatic calls is just one optional feature in their comprehensive platform.

Here’s a link to see the Forrester Wave Leader Graph
https://www.zoominfo.com/resources/forrester-wave-b2b-market…

It’s not just Forrester that rates them like that:

“We continue to see broad-based momentum and positive feedback from customers and independent ratings firms as we invest in our product. For example, in G2’s Winter 2021 Grid Report released in December, ZoomInfo appeared on 37 Grids, our highest number ever, while also receiving 22 number one rankings (on those 37 grids), including new number one rankings in the Enterprise category for Account Data Management, and Lead Capture. This shows that not only are we building products that span a wide spectrum of go-to-market pain points, we are doing it with best-in-class products.”

Does that sound like a little robocall company to you?

Their CEO, Henry Schuck, made the list of 40 under 40 that is published by Fortune.

Does that sound like a little robocall company to you?

Their customers include companies like Marathon Oil, Toyota, Honeywell, Pitney Bowes, Stanley Black and Decker, SAP, etc

Does that sound like a little robocall company to you?

"In 2020, we shared a vision with our customers around being able to take a signal - a funding event, a new technology added to a company’s stack, a spending initiative in the works, or a spike in a relevant intent topic; and cross-reference that signal against an ideal customer profile - say - companies with more than 100 employees who use NetSuite and who are not current customers; and mapping that to their ideal prospect profiles; and then instantly activating a campaign targeting that audience. Our vision is a fully automated go-to-market motion from signal to action.

This capability is more than sales automation or marketing automation - it is true go-to-market automation - and is now fully available with our Workflows suite. Today, the Workflows suite which is available within our Elite package, includes a re-imagined interface that turns natural language statements into go-to-market workflows that integrate with a broad range of CRM, sales automation, marketing automation, and advertising platforms. We’ve also added contextual access to create workflows throughout the ZoomInfo platform and the ability to enable every user with this automation capability."

Just read that through!

Does that sound like a little robocall company? Or a company way ahead in moving towards a sophisticated complex marketing platform.

But look, I’ve been wrong before. Do your own analysis.

Saul

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Saul, I can see the point that a company which uses highly sophisticated methods to identify who to call … or e-mail or whatever … but in the end the delivered action is to call, may not just be a robocall company, but they are delivering robocalls. I can understand not wanting to be associated with that activity, no matter how sophisticated* the operation behind it.

  • unlike the e-mail I got this morning suggesting that I serve as a middleman in a crude oil supply contract … and to the e-mail I use for wine-related communications at that.
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Not a professional salesman, but leads provided by ZoomInfo are just that. A salesperson completes the process by personally emailing/calling, the prospective client, right?

It’s not like Glengarry Glen Ross.

HP

HermanPotter:
A salesperson completes the process by personally emailing/calling, the prospective client, right?

A salesperson may be behind curating/managing the list of calls to make, but Zoom Info does have an automatic sales dialer feature:
https://engage.zoominfo.com/solutions/sales-dialer/

So technically that seems to fall into the category of robocalls, but it seems less egregious than purely random, unrelated, scatter-shot junk calls, as it seems that the list comprises those who’ve already expressed some interest or buying intent as determined by the sales force.

BLancaster

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ZoomInfo Picks Up Six Honors for Company Excellence from Comparably

Recognitions Include Best Sales Team, Best Engineering Team, Best Places to Work in Boston, and Best Company Outlook

https://www.businesswire.com/news/home/20210413005482/en/

BLancaster

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So technically that seems to fall into the category of robocalls, but it seems less egregious than purely random, unrelated, scatter-shot junk calls, as it seems that the list comprises those who’ve already expressed some interest or buying intent as determined by the sales force.

That’s only slightly better. But then I’m a single data point. I will not respond positively to any telephone solicitation, even if I’m interested in the product. When I’m ready I will reach out. Having a salesman call me will just irritate me.

So, no, I would not be interested in this company (to answer the OP’s question). The “product” offends me, regardless of the financials. They are using my utilities that I pay for (i.e. phone) to conduct their business. I actually think that should be illegal.

1poorguy

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We worry about zoominfo who uses multiple data sources to find ways to generate sales leads and direct marketing efforts at us, but we have no problems with google, trade desk, Facebook, countless others who direct ads at us and send us spam emails?

I guess I don’t see a moral issue here at all. Is increasing sales effectiveness bad? Doesn’t that ultimately serve society by generating more effective competition which ultimately reduces prices? Isn’t this what capitalism is all about?

Just curious about the righteous indignation…

Rob

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Just curious about the righteous indignation…

This is wandering a bit off topic, so I’ll only answer this one question out of respect for board integrity. I do think it is still relevant to the business being discussed, even if I’m a single data point.

Google, for example, does not call me. Their ads target my online activities. They do not interrupt me in the middle of dinner, for example. Emails can wait for days before I look at them. I do have my issues with spam emails and auto-run ad videos. But, as near as I can tell, that’s not what ZoomInfo does, so I did not comment on that. They bother me, uninvited, demanding my attention (i.e. a ringing phone). They are as bad as door-to-door salesmen and proselytizers, except that it’s easier to use the phone than to come to my door. But each is an unwelcome interruption to my day.

I may be the exception, but if someone calls me (or door-to-door), even if I’m interested in the product or support the charity (i.e. I have the same rule for charities) I will not respond positively. I will reach out to whomever I want when I’m ready. Cold calling guarantees you won’t get a sale (or donation) from me.

1poorguy

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We worry about zoominfo who uses multiple data sources to find ways to generate sales leads and direct marketing efforts at us, but we have no problems with google, trade desk, Facebook, countless others who direct ads at us and send us spam emails?

Who said we have no problems with the others? That’s a bit of a straw man setup.

My barrier is the time I have to spend to dismiss it. A google ad as a sidebar to a site I visit is no time at all, entirely irrelevant. It might even be humorous … as in “I already bought that 300mm lens, why are you trying to sell me another?” Spam emails are a minor inconvenience. If it makes it past the filter and I don’t recognize it, I click the spam button immediately, I do not waste time investigating.

Robo-calls are an entirely different thing. It’s an invasion of my space, requires my direct attention. It could be an emergency from a family member, so answering is important. But then I have to wait for the stupid dialer to detect “I got a live one”, and then I have to wait to be routed to the poor sap on the other end, or the automated recording to start. And then because the universe has a sarcastic sense of humour, the soup is probably boiling over just about then.

Everyone associated with the robo-call industry is either shady, creepy, stupid, or desperate. Should I tell you how I really feel?

I’m not going to judge anyone for investing in this…at its heart, the market is fundamentally amoral and we aren’t supporting or denying support for a company when we purchase or sell a stock. We’re really just buying from each other for a chance at growth. But there are times when I don’t want to be associated with a company, and this appears to be one.

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I agree that “robocalls” are more irritating than Google, Trade Desk, Facebook, etc., ads. The difference is a matter of degree, however, not of kind. Even ads that appear peripherally on screen still command processing resources. But, the main point I wanted to make is that if these calls were so irritating, the business model would have failed long ago, and we wouldn’t be talking about ZoomInfo today

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I think we’ve run this thread into the ground with 26 posts in the thread. Some people have made it very clear over and over that they have very negative emotional feelings about ZoomInfo. I won’t take phone calls asking for money either, and hate them. However I am following two things:

Following the money, I have seen few if any companies with better metrics, ever.

Following the awards validating the company that they get from almost everybody (Forrester Wave first place; Grid Reports first on 22 of 37 metrics; Awards from Comparably: Best Sales Team, Best Engineering Team, Best Places to Work in Boston, Best Company Outlook, Best Company for Women,; Fortune Magazine’s 40 best CEO’s Under 40; etc, etc.)

Just because I personally hate cold calls at home doesn’t mean I’d react negatively if I was a purchasing agent and a sales person called me to offer to sell me just the product I was looking for.

And I try to invest rationally, not depending on my personal feelings about the product. (Although I won’t invest in things I feel are immoral or dangerous. I wouldn’t invest in a company pushing diet pills, just as an example of what I’m talking about). But I try to invest based on how excellent I feel a company’s business is, and when I mentioned .

FURTHER POSTS ON THIS THREAD, PRO OR CON, WILL BE DELETED.

Best,

Saul

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Unfortunately, ZI is guiding for $645-$655m revenue in 2021 which represents a large deceleration from 62% to 38%. Shouldn’t that be a cause for concern with its relatively high valuation? It does look like QoQ revenue growth is re-accelerating slightly:


        $ Q Rev  QoQ     YoY
4Q18	40.8			
1Q19	54.6	34%		
2Q19	68.5	25%		
3Q19	79.1	15%		
4Q19	91.1	15%	
1Q20	102.2	12%		
2Q20	110.9	9%		
3Q20	123.4	11%		
4Q20	139.7	13%	62%
							
4Q21	655	        38%

The business makes sense to me and I can understand this being really helpful to those in sales but why is it decelerating so much so soon?

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I looked at ZI around IPO last summer. The main point for me (not to buy at that time) was that organic growth was in low 40s if my memory serves me well. The rest was acquisitions. Compared to our other companies - it was worse. So, I passed.

I haven‘t dug into it now, but can respect and understand both decisions - invest or not - into this company as a lot of good things like high gross margin, profitability etc are there. But I was not impressed by organic growth rates.

Best,
V

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Unfortunately, ZI is guiding for… a large deceleration in revenue growth from 62% to 38%.

Hi buylower,
If you look at any of our companies, their guidance is always ridiculously low. No one believes it. In fact, no one is meant to believe it, but it gives the company a chance to beat guidance by a lot every quarter, and also to raise annual guidance each time, which gives the reporting company great headlines four times. That’s just the way the game is played.
Saul

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If you look at any of our companies, their guidance is always ridiculously low.

Thanks Saul, that is part of my concern. ZI does not have enough history of giving guidance for me to make this assumption. What qualifies to you as ridiculously low guidance? They have given guidance twice so far that we can compare to and they came in pretty close to what they were guiding towards.


     Guidance vs Actual
2Q20 455         476     (4.4%) 
3Q20 467         476     (1.9%) 

Guidance here is for the FY2020. So as you get closer to the close of the year you should be able to predict FY revenues better so I can understand them not beating by as much.

So let’s say they continue with their history and will beat FY2021 by 5%. That puts them with revenues of $688m and would make their YoY growth rate 44.5% down from 62%. That’s better but still a fairly large deceleration, no? I guess that’s what makes it more of a middle position for you as the other metrics are very strong and you have some optionality if the recruiting portion gains any traction.

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