Shares of customer data platform ZoomInfo Technologies (ZI +4.43%) skyrocketed on Wednesday after the company reported financial results for the fourth quarter of 2024. As of 3:15 p.m. ET, ZoomInfo stock was up 24%.
ZoomInfo beat low expectations
ZoomInfo helps its customers find and acquire customers of their own, which sounds helpful. But the company's growth has flatlined recently. And this is still true, with Q4 revenue down 2% year over year to $309 million. That said, investors seem encouraged that, during Q4, it added 58 new customers spending $100,000 annually, taking the total to 1,867.
NASDAQ: ZI
Key Data Points
Multiple analysts upgraded their outlooks for ZoomInfo stock today because these results were better than expected. And even though the company is guiding for numbers that are essentially flat in the coming year, they're encouraged the decline seems to be bottoming out.
For 2025, ZoomInfo expects revenue of about $1.2 billion, compared with revenue of $1.2 billion in 2024. And management expects to generate unlevered free cash flow of $420 million to $440 million. For perspective, it had free cash flow of $447 million in 2024. Therefore, these numbers represent a slight dip, but not as troublesome as investors feared.
Time to buy ZoomInfo stock?
ZoomInfo stock was priced as if substantial declines would continue. As of this writing, it trades at just under 10 times its unlevered free cash flow, which is quite cheap. This valuation indicates that investors expected the business to decline. Business stabilization, therefore, is a relative improvement.
Does this make ZoomInfo stock a buy? Not necessarily. ZoomInfo stock appears reasonably valued, but a 2% drop in revenue in 2024 and ongoing flat growth in 2025 is reason for concern, in my opinion. This business model is built on finding and acquiring new customers, which seems to be a challenge for ZoomInfo itself right now. Therefore, I don't personally plan to invest unless something could convince me its growth rate could pick up in the near future.
