Zoominfo: A Case of Eating its Own Dog Food?
Efficient sales and marketing motion is evident, given Zoominfo is selling exactly that
Zoominfo continues to balance topline growth >40% with material free cash flow margin of ~35%, making it an exceptionally profitable, fast-growing tech company. Sales and marketing (S&M) are usually the highest expenses for a growing technology company, and they can eat up the entire gross profit dollars in some cases. Accordingly, it does make sense that Zoominfo – which provides S&M solutions to customers – can achieve greater selling efficiencies than most tech companies out there. It is a case of eating their own dog food. And Zoominfo’s combination of growth and profitability proves the efficacies of what they sell.
Positive highlights form Q1 2022:
Year on year revenue growth +58%
Organic growth was 49%, which is solid
$100k cohort grew by more than 65%, from 950 in Q1 2021 to 1,623; average revenue across these customers continued to grow. Sequential add here is 171, much higher than the 100 added sequentially in Q1 2021
New customers added in Q1 2022 were highest in terms of ACV and TCV
Bundling appears to improve attach rates of ancillary products, as evidenced by the >100% increase in customers using the combined Sales OS platform, Engage and Chorus offering
RPO grew by 55%, which bodes well for future revenue growth; sequentially, it grew by $53 million, which is much higher than the $33 million added sequentially in Q1 2021
Billings growth was 47% year on year, which is a slow down from the 65.5% growth seen in Q1 2021…I am less focused on billings, as timing of invoices plays a big part for this measure
Signed an 8-figure deal with Alphabet in Q1 2022
Shopify signed a multiyear deal expanding ACV by more than 5x, growing to hundreds of users for the Sales OS platform and adding automated data enrichment from Operations OS
International grew by 80% year on year and now at $100 million revenue run rate, continues to outpace the US, with record high new ACV added in EMEA
There were plenty of announcements on integrations and product innovations, including:
Integration with Google BigQuery
Launched Marketing OS, which leverages Zoominfo’s existing professional and company data, allowing marketers to achieve better targeting throughout display + social advertising networks, marketing and sales automation channels….sounds like an ad-stack in the making
Additional integrations for Chorus with Microsoft Dynamics and HubSpot
Two bolt-on acquisitions in Q1 2022: Comparably to augment Talent OS, and Dogpatch Advisors (sales advisory consultancy) to enhance GTM motion / expand sale channels
FY 2022 is projected at ~43% at the high end, up from 37% projected previously
Zoominfo tends to guide conservatively; FY 2021 was initially projected to grow by 37%, but actual was 57% (organic >50%)
FY 2021 is a tough comp though
FY 2022 organic growth not disclosed separately, but likely to end up in the high-30s, which is great considering tough comps
Conclusions:
I reckon DBNR for FY 2022 is going to be higher than 116%, based on momentum with large customers
Zoominfo’s combination of growth and profitability makes it a rare breed in the technology space
How Zoominfo continues to aggregate and update data in the context of data privacy is a concern that investors should be aware of; up to now, there has not been any material issue with the collection (and exchange) of private information from users
(Author is a shareholder of Zoominfo)
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