ZoomInfo Technologies: Despite 15x FCF, Not a Bargain Buy
December 22, 2023
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ZOOMINFO ($NASDAQ:ZI): ZoomInfo Technologies is a public company that operates a business intelligence platform and provides algorithms for gathering insights and analytics in the sales and marketing space. Its platform is used by some of the world’s largest companies, including Microsoft and Cisco. Despite its impressive growth, ZoomInfo Technologies is not a bargain buy at 15x its free cash flow. Despite this, ZoomInfo Technologies is still trading at 15 times free cash flow, which is significantly above the industry average of 8-10x.
This significant debt load could make it difficult for the company to continue to operate if growth stalls or the market environment changes. As a result, investors should be cautious when considering ZoomInfo Technologies as a potential long-term investment.
Stock Price
On Thursday, the company’s stock opened at $18.6 and closed at $18.9, up by 3.2% from last closing price of 18.4. Despite its 15x Free Cash Flow (FCF) ratio, ZoomInfo Technologies is not necessarily seen as a bargain buy – particularly when factoring in the current environment of uncertainty and financial market volatility. The company’s growth rate and potential are still attractive, but investors may be wary of investing in ZoomInfo Technologies when there are other tech stocks offering better value for money. It is likely that investors will wait and see how the company’s performance develops before taking a position on ZoomInfo Technologies’ stock. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Zoominfo Technologies. More…
| Total Revenues | Net Income | Net Margin |
| 1.22k | 136 | 11.9% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Zoominfo Technologies. More…
| Operations | Investing | Financing |
| 426.2 | -111.9 | -274.2 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Zoominfo Technologies. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 7.07k | 4.82k | 5.77 |
Key Ratios Snapshot
Some of the financial key ratios for Zoominfo Technologies are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 42.0% | 80.4% | 26.7% |
| FCF Margin | ROE | ROA |
| 32.8% | 8.9% | 2.9% |
Analysis
At GoodWhale, we have conducted an analysis of ZOOMINFO TECHNOLOGIES‘ fundamentals. Our Star Chart shows that ZOOMINFO TECHNOLOGIES is strong in growth, medium in profitability and weak in asset and dividend. By classifying it as a ‘gorilla’, we conclude that the company has achieved stable and high revenue or earning growth due to its strong competitive advantage. Investors who are interested in growth-oriented companies with strong competitive advantages may be interested in ZOOMINFO TECHNOLOGIES. Our analysis also found that the company has a high health score of 8/10 with regard to its cashflows and debt, meaning that it is capable to safely ride out any potential crisis without the risk of bankruptcy. More…
Peers
Its competitors include Salesforce Inc, Snowflake Inc, Microsoft Corp.
– Salesforce Inc ($NYSE:CRM)
Salesforce is a cloud-based customer relationship management software company. They offer a variety of software solutions for businesses of all sizes, including Sales Cloud, Service Cloud, Marketing Cloud, Commerce Cloud, and more. Their products are designed to help businesses automate and streamline their sales, marketing, customer service, and commerce processes. Salesforce has a market cap of $162.59B as of 2022 and a Return on Equity of 0.08%.
– Snowflake Inc ($NYSE:SNOW)
Snowflake Inc is a data warehouse company that focuses on cloud-based data warehousing. The company has a market cap of 51.3B as of 2022 and a Return on Equity of -8.11%. Snowflake was founded in 2012 and is headquartered in San Mateo, California. The company went public in September 2020.
– Microsoft Corp ($NASDAQ:MSFT)
Microsoft Corporation is an American multinational technology company with a market cap of 1.7 trillion as of April 2021. It develops, manufactures, licenses, supports, and sells computer software, consumer electronics, personal computers, and services. Its best known software products are the Microsoft Windows line of operating systems, the Microsoft Office suite, and the Internet Explorer and Edge web browsers. Its flagship hardware products are the Xbox video game consoles and the Microsoft Surface lineup of tablets, laptops, and desktop computers. The company also has a cloud computing division called Azure and a professional social network LinkedIn.
Summary
Investing in ZoomInfo Technologies at the current stock price may not be a cheap option. Since the announcement of the stock’s availability on the market, it has seen a spike in its price.
However, with a 15x Price to Free Cash Flow multiple, it is still a relatively expensive stock compared to its peers. Therefore, potential investors should carefully analyze the company’s financials and fundamentals before making a decision on whether to invest or not. They should also pay attention to any news and reports released by the company that might have an impact on its value and stock price. By taking these steps, investors can determine whether ZoomInfo Technologies is a good investment for their portfolio.
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