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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