ZoomInfo shares fall 20% after missing on revenue, revising guidance lower; Deutsche Bank cuts rating

(Updated - August 1, 2023 5:34 AM EDT)

Investing.com -- ZoomInfo Technologies Inc (NASDAQ: ZI) stock fell as much as 20% in early Tuesday trading after the company's revenue guidance for the third quarter was weaker than expected.

The company, which makes a cloud-based platform for sales and marketing, reported adjusted earnings per share of 26 cents on revenue of $308.6 million, up 16%. Analysts expected earnings of 23 cents a share on revenue of $311.2M.

Shares were down 19% in after-hours trading and are down about 15% so far this year.

For the third quarter, the company sees adjusted earnings per share in the range of 24 cents to 25 cents and revenue of $309M to $312M, which would be below consensus for $325.7M.

For the full year, ZoomInfo sees adjusted earnings per share of 99 cents to $1 and revenue of $1.225 billion to $1.235 billion, a downward revision from prior guidance.

The company also said its board approved an additional share repurchase of $500M.

Following a weak Q2 earnings report, Deutsche Bank analyst Brad Zelnick downgraded the stock to Hold from Buy with a price target also cut by $11 to $20 per share.

"We downgrade shares of ZoomInfo to Hold from Buy following disappointing 2Q results that largely suffered from further deterioration and down selling within the tech customer vertical. While we are implicitly closer to a bottom and lowered FY23 guidance embeds further deterioration, we are concerned by management's persistent lack of visibility and a multiple (based on AH trading) that is not without downside risk," Zelnick said in a client note.

BofA analyst Koji Ikeda cut the price target by $2 to $28 per share on the Neutral-rated ZI stock.

"It will likely take several quarters of consistent execution to drive improving investor sentiment," he said in a note.

Additional reporting by Senad Karaahmetovic

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