What happened

Shares of ZoomInfo Technologies (ZI -0.17%) were taking a dive today after the cloud software company offered disappointing guidance in its third-quarter earnings report.

As of 12:35 p.m. ET, the stock was down 26.6%.

So what

Shares of ZoomInfo, which helps companies identify target customers and provides go-to-market tools, reported solid results in the quarter with revenue up 46% to $287.6 million, which beat estimates at $278.5 million.

The company also delivered a strong profit with a generally accepted accounting principles (GAAP) operating margin of 18% and a non-GAAP (adjusted) operating margin of 41%. Adjusted earnings per share nearly doubled from $0.13 to $0.24, which topped expectations at $0.20.

Customer growth remained solid as the company closed the quarter with 1,848 customers with annual recurring revenue.

However, guidance seemed to come up short. Though the headline numbers essentially matched estimates, investors were expecting more of a guidance raise than they got.

ZoomInfo called for fourth-quarter revenue of $298 million to $300 million, which compares with the consensus at $297.9 million, but it also forecast revenue growth to slow to 33%.

On the bottom line, the company sees Q4 adjusted earnings per share of $0.21 to $0.22, which matched expectations but was only slightly better than the $0.18 per share it made in the quarter a year ago.

Now what

On the earnings call, ZoomInfo revealed more bad news as it expected dollar-based net retention to fall in 2022 as it said sales cycles were getting longer and stretching its sales force, making upsells more difficult. As a result, the company said it was taking a cautious view into the fourth quarter and 2023.

After the sell-off, ZoomInfo stock looks surprisingly affordable, trading at a price-to-earnings ratio of just 40 based on this year's expected earnings per share. For a fast-growing cloud stock, that seems like a great price even in a challenging macro environment.