Sales teams have historically relied on experience and intuition to find and land new customers. That's true in just about every industry. But one company is helping them leverage data and technology to engage the right customers at the right time in an efficient way.

ZoomInfo (ZI 1.09%) collects data on businesses and professionals and uses artificial intelligence (AI) to help salespeople understand what is happening in their market and with their potential customers. To get a sense of the scale, the company makes more than 250 million changes to contact information every month.

A group in business attire looking at the camera with one person reaching out to shake hands.

Image source: Getty Images.

And the opportunity is just starting to take off. IT firm Gartner estimates 60% of business-to-business sales will be data-driven by 2025. Management believes the current penetration is in the single digits. The stock is up 44% already this year compared to 21% for the S&P 500 index. Here are three reasons why I think that outperformance will continue.

1. Growth is accelerating

As compelling as a large database of contacts is for a salesperson, it's the ancillary functions that make ZoomInfo's product truly powerful. Management has combined product development and acquisitions -- more on that later -- to add tools for outreach and engagement to the initial sales intelligence application.

The increased functionality has fueled accelerated growth on the top line. And the company consistently beats its own estimates.

Quarter Revenue Guidance* Actual Revenue YoY Growth Percent Above Guidance
Q2 2021 $162 million $174.0 million 57% 7%
Q1 2021 $145 million $153.3 million 50% 6%
Q4 2020 $130 million $139.7 million 53% 8%
Q3 2020 $117 million $123.4 million 56% 6%

Data Source: ZoomInfo; *Midpoint; YoY=year-over-year.

2. Retention and Customer engagement are climbing

It's impressive growth. But not all growth is created equal. Churning customers only to find new ones isn't a sustainable business model. That's why for a software-as-a-service (SaaS) business like ZoomInfo, retention metrics are so important. Specifically, net revenue retention (NRR) -- the amount customers spend in the past year compared to their spending in the year before that -- has become a critical indicator of sustainable growth. 

Unfortunately, management only reports NRR on an annual basis. At the end of 2020 it was 108%. That's impressive. But it isn't in the upper echelon of tech companies. For instance, Snowflake reported NRR of 169% in its latest quarter.

Management did share that the latest quarter was the best the company has had with respect to retention activity. And it is confident the retention number will be higher when shared at the end of this year.

In the absence of NRR, there are two other indicators that portend higher retention. The first is the growth in large accounts. The number spending more than $100,000 climbed above 1,100 -- up more than 70% year-over-year -- by the end of June. The other is user engagement. Thanks to additional tools and the highest level of data accuracy and coverage ever, metrics like daily active users, monthly active users, number of logins, and modules per account were all strong. Although the company didn't quantify the statement, it did say broadly that engagement was at an all-time high.

3. Management is using capital to expand the opportunity

With an accelerating business and happy users, many might be content to buy shares for the growth alone. However, Wall Street will eventually want profits -- or at least cash flow. And they'll want to believe management can choose the right opportunities for investing that cash back into the business. This is where I believe ZoomInfo is setting itself up for long-term success. It's creating a product that should be the foundation of the sales and marketing strategy for many of the world's largest businesses.

In July, the company bought -- a leader in conversation intelligence. It's application records and analyzes customer interactions enabling targeting, coaching, and decision-making based on real, data-driven insights. Combining it with ZoomInfo's platform adds more value than either product could deliver alone. Another recent purchase is It uses AI to identify and route website visitors to initiate a potential revenue-generating conversation. 

Quickly becoming a must-have tool for sales teams

These acquisitions -- and others -- as well as integrations with Snowflake, Microsoft, and are placing the company in a value-added position at each step of the go-to-market process. It's why I believe ZoomInfo's platform is quickly becoming a competitive advantage for its customers.

Tack on that management believes the additional modules the acquisitions brought have helped increase its total addressable market to roughly $70 billion, and it's obvious how ZoomInfo could keep handily outpacing the market for years.