ZoomInfo Technologies Stock Dives On Heels Of Q1 Earnings: 'Investors Need To Carefully Monitor The Macro'

Shares of ZoomInfo Technologies Inc ZI continued to tank on Wednesday, after having lost more than 21% in the premarket session.

The company reported results amid an exciting earnings season. Here are some key analyst takeaways.

• Goldman Sachs analyst Kash Rangan downgraded the rating from Neutral to sell, while cutting the price target from $19.50 to $12.00.
• Stifel analyst Parker Lane maintained a Buy rating, while reducing the price target from $24 to $20.
• DA Davidson analyst Gil Luria reiterated a Buy rating, while slashing the price target from $27 to $20.
• Needham analyst Joshua Reilly reaffirmed a Buy rating and price target of $25.

Check out other analyst stock ratings.

Goldman Sachs: ZoomInfo's first-quarter results indicate continued macro challenges and execution hurdles, and there is "increased lack of visibility around an inflection,” Rangan said in a note. He added that the company's net-new revenue continues to contract and cRPO growth is waning.

"With 4Q and 1Q being large renewal quarters for multi-year enterprise deals and SMB, we note that NRR was pressured as seat contraction was driven by headcount reductions over the past year," the analyst wrote. The lack of "significant upcoming catalysts" to support revenue re-acceleration suggests risk to the Street's expectations for 2025, he further stated.

Stifel: ZoomInfo's customers with annual contract value (ACV) of over $100,000 declined by 8% year-on-year to 1,760 and represented the fifth consecutive quarter of sequential declines, Lane said. The company's net revenue retention (NRR) rate came in at 85%, decelerating from 87% in 2023, he added.

"Guidance assumes no improvement to NRR, but management sees opportunities to drive the metric higher as we move through 2024," the analyst wrote.  For the second quarter, management guided to total revenue between $306 million and $309 million, below consensus of $313 million, and non-GAAP earnings of between 23 and 24 cents per share, short of Street's projection of 25 cents per share, he further stated.

DA Davidson: ZoomInfo's results reflected a worse-than-expected SMB segment, "partially offset by net positive underlying enterprise and mid-market trends relative to the prior quarter," Luria wrote in a note. The company's NRR declined to 85% in the first quarter, from 87% in 2023, mainly due to the "SMB renewal headwinds," he added.

Management lowered their 2024 revenue guidance from $1.26-$1.28 billion to $1.255-$1.270 billion, reflecting around 2% revenue growth at the midpoint, which implies a significant reacceleration from around 1.6% in the first half to about 3.0% in the back half of the year, the analyst stated.

Needham: ZoomInfo's first-quarter results were broadly in-line with expectations, while the guidance for the second quarter and full year were lowered due to "incremental SMB weakness based on both weaker than expected renewals plus less than expected net new business for SMB," Reilly said.

"Given the updated guide assumes a 2H re-acceleration, we believe investors will need to carefully monitor the macro to understand if ZoomInfo can hit their FY guide in the 2H," he added.

ZI Price Action: ZoomInfo Technologies had declined by more than 24% to $12.10 per share at the time of publication on Wednesday.

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