ZoomInfo Sees Stock Surge As Analysts Spot Signs of Turnaround Amid Upmarket Growth

Wall Street analysts rerated ZoomInfo Technologies Inc ZI after the company reported its fourth-quarter results Tuesday.

• Needham analyst Joshua Reilly reiterated ZoomInfo with a Buy and a $15 price target.
• Citizens Capital Markets analyst Patrick Walravens maintained ZoomInfo from Market Perform to Market Perform.
• Piper Sandler analyst Brent Bracelin upgraded ZoomInfo from Underweight to Neutral and raised the price target from $10 to $11.

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Needham: Reilly noted that ZoomInfo is at an inflection point following GTM and product changes over the last 18 months. This positions the company to tackle their newly defined Up-Market (100+ employees) customer segment, which comprises 70% of ACV exiting the year and likely 75% by the year-end 2025.

CoPilot is now $150 million in ACV, and Operations OS growth accelerated sequentially by 5 points to 27% with over $100 million now in ACV. Reilly noted management wisely positioned guidance conservatively for 2025 and is increasingly confident they can return to a beat and raise cadence as the year progresses. Given the current valuation, he expects additional multiple expansion post-fourth-quarter results.

Reilly projected first-quarter revenue of $295.5 million and adjusted EPS of $0.22.

Citizens Capital Markets: Walravens rerated after the company reported better-than-expected fourth-quarter 2024 results with adjusted EPS of 26 cents (consensus 22 cents), operating margins of 37.5% (consensus 35.1%), and unlevered free cash flow of $93.6 million (Citizens $71.7 million) on revenue of $309 million (consensus $298 million), down 2% versus down 3% last quarter, cRPO of $850 million (Citizens $836 million), down 1% versus down 2% last quarter all of which left the stock up 15% in the aftermarket after having fallen 9% year to date versus a 1% decrease for the Nasdaq and flat for the Russell 3000.

On the positive side, ZoomInfo seems to be moving in the right direction. The company saw several positive developments in the fourth quarter. This includes an uptick in its $100,000-plus customer cohort, strength in the upmarket, stabilization in the SMB, and its first sequential increase in NRR since first-quarter of 2022 while on a more cautious note.

Walravens projected first-quarter revenue of $295.5 million and adjusted EPS of $0.22.

Piper Sandler: Operational challenges remain elevated despite better-than-feared results. Fourth-quarter revenue declined for the third consecutive quarter.

The tepid first-quarter growth outlook implies revenue could decline 4%- 5%, with operating margin sliding to 33% (versus 37.5% in the fourth quarter). That said, there were promising (albeit early) signs of stabilization after two years of eroding metrics. In-period NRR improved during the fourth quarter, helping to stabilize TTM NRR to 87% (versus 87% one year ago).

Downmarket customers (33% mix) remain a drag on growth. Bracelin, however, is encouraged by the highest number of new enterprise customer adds in two years. The combination of new DaaS products in May, more favorable SMB billing compares starting in April, and the continuation of double-digit enterprise ARR growth could kick-start a potential turnaround. The analyst upgraded, given that the first quarter could mark a fundamental trough in growth and margins.

Bracelin projected first-quarter revenue of $295.6 million and adjusted EPS of 22 cents.

Price Action: ZoomInfo stock is up 24.9% at $11.90 at last check Wednesday.

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