ZoomInfo Stock Falls After an Earnings Beat. Blame Demand.

ZoomInfo
(ticker: ZI) reported fourth-quarter adjusted earnings of 26 cents a share on revenue of $301.7 million, compared with profit of 18 cents a share on sales of $222 million last year. Wall Street was expecting adjusted earnings of 22 cents a share on revenue of $299.5 million.

Shares of ZoomInfo tumbled 11% in premarket trading Tuesday to $25.50.

ZoomInfo expects full-year revenue of between $1.28 billion and $1.29 billion. Analysts surveyed by FactSet were expecting full-year sales of $1.42 billion.

“We are cognizant of the ongoing macro challenges and acknowledge that our improvements could be offset by further deterioration in buyer sentiment and behavior. As a result, we think it is prudent to model net revenue retention at lower levels for the foreseeable future,” Chief Financial Officer Cameron Hyzer said on the company’s earnings call.

ZoomInfo said that its net retention rate for the year, or the percentage of recurring revenue from existing customers, was a disappointment, and was largely affected by the challenges sales representatives faced when trying to upsell current customers who are actively working to cut costs in a “more difficult operating environment.”

RBC Capital Markets analyst Rishi Jaluria wrote in a research note that “our near-term cautions around macro played out in the quarter and are likely to remain a drag for a couple quarters.” However, Jaluria remained bullish on the company with an Outperform rating and $30 price target, citing “an eventual bounce back in growth.”

Mizuho Securities analyst Siti Panigrahi lowered his price target to $36 from $45 but kept his Buy rating on the stock. He wrote that 2023 estimates “have been de-risked such that if macro improves, they could deliver beat and raise quarters.”

Write to Angela Palumbo at angela.palumbo@dowjones.com