ZoomInfo Technologies (NASDAQ:ZI) was one of the first IPOs (Initial Public Offerings) that hit the markets after the novel corona virus led to shutdowns in the U.S. economy. And yes, the deal drew lots of interest. On the debut in early June, ZoomInfo stock spiked 62%.
The company, which was founded 2000, initially focused on building datasets to help sales people and marketers. But over the years, ZoomInfo would evolve its business through various acquisitions and infusions of capital. The latest deal actually came in February, in which the company sold itself to DiscoverOrg (a large enterprise software operator).
ZoomInfo’s platform is definitely substantial. The database includes over 100 million verified business professionals, 5.5 million executive-level contacts, and 16 million decisionmaker direct dials.
The data is a blend of publicly available information and proprietary sources. For example, ZoomInfo has something called the Contributory Network, which allows it users to contribute data. The company has also developed sophisticated systems to scrape unstructured information from webpages, newsfeeds, blogs and other public sources.
To greatly increase the value of the data, ZoomInfo has leveraged AI (Artificial Intelligence) and ML (Machine Learning) algorithms to clean the information and provide for valuable insights. A key part of this is the capturing of about 50 million contact records every day.
The Platform and Growth
Some of the key benefits of ZoomInfo include:
- A system to measure the revenue impact of utilizing the data. In fact, the return on investment (ROI) can be significant. For example, a tier-1 global bank reported $46 million in net new money from 13 top users of ZoomInfo in the first 12 months of use.
- ZoomInfo guarantees a 95%+ accuracy rate of its information.
- You can setup workflows, build territories, prioritize followups and score leads.
- There are integrations with a myriad of enterprise systems, such as from Salesforce (NYSE:CRM), Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL), Marketo and HubSpot (NYSE:HUBS).
Growth has certainly been robust. In the latest quarter, ZoomInfo reported a 62% spike in revenues to $110.9 million and cash flows from operations came to $25.3 million. The customer base is over 15,000 and the company estimates its market opportunity at about $24 billion.
According to CEO Henry Schuck, on the latest earnings call: “[W]ith low single-digit penetration rates, there are meaningful growth opportunities by continuing to leverage our efficient go-to-market engine, to add more customers to our platform, expand within the enterprise, build new solutions that add value to our existing customers, go into international markets and adjacencies like recruiting and by flexing our M&A muscle as we look for tuck-ins.”
The Bottom Line on ZoomInfo Stock
In late August, the company pulled off secondary offering. The deal did not result in any cash for the company. Rather, shareholders like TA Associates, Carlyle Group (NASDAQ:CG) and 22C Capital sold a total of 14.9 million shares at $37 each.
Such a transaction is normal, but in the case with ZoomInfo, it did come fairly soon after its IPO. As a result, this may be an indication that investors believe that ZoomInfo stock could be fetching a frothy valuation. Let’s face it, the tech sector has seen a major surge – with some moves looking like what happened during the dot-com era.
Besides, in the next few months, there will be a flood of new tech IPOs. Some of these will be large players like Airbnb, Palantir, Unity, Bumble and Snowflake. In other words, this may mean less attention for ZoomInfo stock.
Keep in mind that – since the IPO – the shares have gone from a high of $64 to $34. So for now, the best approach may be to hold off on ZoomInfo stock until there is some stabilization.
Tom Taulli (@ttaulli) is an advisor/board member for startups and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.