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ZoomInfo just went public. No, not that Zoom - CNN - ZoomInfo is the technology sector’s biggest IPO in 2020
A Deep Dive Into ZoomInfo -- the Other Cool "Zoom" Company | The Motley Fool
Since the IPO, ZoomInfo has gained more attention from other companies with its new status as a public company. Since the pandemic, ZoomInfo has also tweaked some of its products and services because more people are working from home. ZoomInfo offers databases of direct office phone numbers to businesses looking for new clients. Think of it like an anonymous caller ID but at the company level.
We see if companies are increasing research for relevant things. For example, if ZoomInfo sees that a cluster of IP addresses associated with a bank are being used to research security services, ZoomInfo can sell those sales opportunities to its clients that offer that service. Those customers operate in sectors including retail, hospitality, airline and transportation.
Internally, Schuck has shined a light on diversity, equity and inclusion in the company. Less than two months ago, he hired a diversity recruiter to increase the percentage of employees of color.
So, this is a company that if it doesn't hit its numbers, [laughs] boy! Lewis: [laughs] Yeah, I guess so. That's eating your own cooking in, kind of, the truest sense. Why don't we talk a little about some of the core numbers? You gave a quick picture at some of their user and business numbers, but let's dive a little bit more into that. Feroldi: Yeah, the numbers here are both fantastic and also really confusing.
In , this company was originally called DiscoveryOrg, sic [DiscoverOrg] and last year, in February of , they purchased another company that was similar to them. And the combined company took the name on ZoomInfo. Lewis: That is excellent. And I think maybe we should uncouple the idea of organic growth a little bit, because it can be a little confusing for people. Feroldi: Sure. Organic growth is revenue that is generated from products or services that are homegrown.
Inorganic growth is when you buy another company and then you get to add that company's revenue to yours. Lewis: Yeah. And that's like that we'll hone in on particularly close to an acquisition, and over time as an acquisition, especially if it's an integrated acquisition where you aren't running two things separately, you are basically working them in together, depends on the business, it will fade in terms of its relevance.
But if there are those operations where you have something that's bolt-on or you have a particularly acquisitive company, the organic growth versus overall growth is always an important thing to look at. You really just want to understand, you know, where is this coming from? If you see awesome top-line growth, and organic growth is basically flat, that business isn't really doing all that much with its core operations, it's only growing because it's continuing to buy other companies.
And that strategy does work for some businesses, but personally, I do not want to invest in companies that only rely on acquisitions to grow their top line. But the rest of the company's income statement was equally as impressive. Lewis: That's darn impressive. And we can talk a little bit more about the financials and roll through those.
But when you see a big gap between those two things, is that a yellowish or reddish flag until you do a little bit more digging and understand what's going on there? Feroldi: I give companies such as this -- I make a note of it basically.
Whenever a company goes from not public to public, we see a whole bunch of numbers just go completely wonky. Pinterest comes to mind. Prior to coming public, what was their stock-based compensation? So, a whole bunch of one-time things like that can make these numbers look a little bit crazy. So, I always keep that in mind. The same thing with acquisitions. So, those numbers are about as wide as I've ever seen.
If you agree with what those puts and takes are, then you can accept that difference. If you look at them and you say, "You know what, I don't really like the way that they're handling these things" or "I don't understand why we're reporting numbers quite this way," then it becomes something that might be a yellow or a red flag. Feroldi: Yeah, I think that's completely fair. But then again, with companies like this, it's not uncommon to see GAAP net income significantly trail free cash flow production.
And between the two, I'll take free cash flow every single time. That actually is going into the company's bank account and making the business stronger, whereas GAAP is just an accountant's opinion basically. Lewis: Brian, knowing how you look at businesses and looking at this company's balance sheet, I imagine there might be one ding that you have against this company.
Feroldi: Yes. And this is a company that has not been shy about its use of debt to get to where it's come today. I wish those numbers were reversed. So, this is not a pristine balance sheet. Lewis: No, it's not. And you know, it's something that's sustainable so long as the business doesn't get stressed, but the reason that we emphasize this is when conditions get hard for companies, having a lot of debt can become a burden.
When things are going really well, it can become a way to grow very quickly, particularly if that's cheap. Feroldi: Yeah, that's exactly correct. Now, one of the numbers that we always love to look for with SaaS businesses, Dylan, is dollar-based net retention [DBNR] or dollar-based net expansion. This company does report dollar-based net retention; that's the one we like to see, because that does include churn.
Now, they didn't give it to us in the most recent quarter -- at least, my quick look through the press release did not have that number. However, they did showcase it for If you dig into that number even more, this company has customers that are small and big, like up-and-down the value size. I think that's pretty solid, particularly when you're looking at the DBNR, and not the DBNE; [laughs] to just throw a bunch of word salad acronyms at you.
Brian, you mentioned the talent that they have as a potential moat, a little bit of the network effects at play here possibly as you have companies that are hopping in there and, kind of, actively verifying information.
What else do you see here in terms of moat for this business? Feroldi: Yeah, I do think that there is a competitive advantage here for sure. To me, the biggest competitive advantage they have going for them would be the switching costs. Once a sales team gets locked into this information, gets used to this data, builds their systems around having this, I think that that's a hard thing to actually give up. And the reason that I believe that is because what happened last quarter, what happened during a pandemic, when every cost that could be cut was cut?
That's because this company's job is to help make sales teams better and more effective. That is the kind of spending that will always make sense, even during a pandemic. So, when I saw that kind of revenue growth, that tells me that there are some real switching costs and advantages here. Lewis: One question I have about this, and I'm sure some of our listeners do, kind of, thinking about the model that this company has, and being an information source is, would it be possible that this makes more sense as like a single-use for some businesses and that the subscription value isn't quite there?
You know, if you're looking for a definitive contact list for a specific industry and you get that information, it's possible that that information isn't stale for six months or nine months, do you feel like that's a risk at all for them? Feroldi: Potentially. However, if every business that is a user of theirs, they want to grow, which means attacking customers that they don't yet have.
And how important is it to have real-time data on exactly that? ZoomInfo is a business-to-business database software firm founded in , 11 years before Eric Yuan started Zoom Video. On Thursday, ZoomInfo went public, selling The company's sales surged last year but losses mounted -- which is often the case for tech companies going public.
The strong debut for ZoomInfo is the latest sign that the IPO market, much like the rest of Wall Street, is enjoying a huge comeback in recent months after stocks plunged in March due to the Covid outbreak.
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Software as a Service. Vancouver, Washington , United States. August Issue. BY Fraser Tennant.
Is zoominfo owned by zoom - none:. ZoomInfo Technologies Stock: Is A Rally Coming Soon?
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Backed by private equity firms Carlyle Group and TA Associates — which own a 60 percent stake in the firm — ZoomInfo began discussions for an IPO last year but paused preparations due to volatile financial markets — a move which coincided with a surge of interest from potential investors, with new business rising 87 percent in April year-on-year YOY.
Even so, the decision to go public — at a time when the US was embroiled in the COVID crisis as well as countrywide protests against racism — remained questionable.
Furthermore, ZoomInfo provides software, information and insights that give companies a degree view of their customers and their prospects. It also provides contacts, technology stack data, direct-dial phone numbers, email addresses, corporate hierarchy information, location maps and hundreds of additional fields. Promotions, bonuses and feelings of accomplishment are linked to that number — you either hit it, or you miss it, there is nothing in between.
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