A decent first-quarter report is overshadowed by a weak outlook.
Stock investors tend to be a picky lot, and one item they’re picky about is a company’s financial guidance. It’s all well and good to post quarterly results that beat estimates. However, since most market participants are — sensibly — more concerned about the future than the past, if a business’s forecasts come in under expectations, it can be punished by Mr. Market.
That was the case this week with customer acquisition and management-software specialist ZoomInfo (ZI 1.43%). Guidance perceived as week led to a sell-off of the stock, which according to data compiled by S&P Global Market Intelligence tanked by almost 21% across the five trading days.
A pair of beats
On a positive note, ZoomInfo’s trailing first-quarter results revealed that the specialty-tech company managed to grow its revenue (albeit slightly) by 3% to $310 million. Also inching up was non-GAAP (adjusted) net income; this was $100.5 million ($0.26) for the period against the year-ago profit of $99.5 million.
Both of those numbers topped the average-analyst estimates, which were just under $309 million for revenue and $0.23 for adjusted-net income.
In its earnings release, ZoomInfo indicated that it would lean on the hot tech of the day — generative artificial intelligence (AI) — to help push those results higher. CEO Henry Schuck was quoted as saying that “Our team is innovating on the future of how companies will go-to-market with ZoomInfo Copilot, and we look forward to bringing this GenAI-powered solution to market shortly.”
Second-quarter guidance was weak
Management did publish updated guidance, which was marked by a slight lowering of its full-year estimations. For the entirety of 2024, it’s now expecting to earn nearly $1.26 billion to $1.27 billion on the top line, with adjusted-net income landing at $1 to $1.02 per share. The current analyst-consensus estimates fall within both ranges.
The story is different with ZoomInfo’s current (second) quarter guidance. It was unchanged but weak, at $306 million to $309 million for revenue and $0.23 to $0.24 per share. The collective-analyst estimates are a respective $313 million and $0.25.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
