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– ZoomInfo just went public. No, not that Zoom – CNN

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Retrieved February 5, Retrieved April 8, August 27, Retrieved August 27, CTECH – www. Seeking Alpha. Archived from the original on Retrieved June 24, Retrieved June 23, The Columbian. Google Finance Yahoo! Because we’re really talking about salespeople wasting time if they don’t have access to this information.

And again, as a salesperson, I can tell you firsthand, I spent a tremendous amount of my time trying to figure out the information here. So, what ZoomInfo’s platform does is it provides paying customers with org charts for over 14 million businesses out there. So, this platform is really geared at salespeople that are in the business-to-business avenue, not so much business-to-consumer. But again, Dylan: Let’s say you’re a sales rep, and you’re out there and you want to get to make Boeing a customer.

Through ZoomInfo, you can buy Boeing’s organizational chart and you can see who reports to who, you can see what products they’re currently using, you can see the timing of when their upgrade cycles are, and you can get the contact information at that organization so you can reach the people that you need to reach.

That is unbelievably valuable information. Lewis: That seems super-granular. And I think as I’m hearing all of this, my immediate thought is, [laughs] how do they do it, how do they get this information? Feroldi: That’s a really good question. And they pull in data from numerous sources. That includes public data, it also scrapes the internet to find some, and then they also claim — this is something we’ll get into later — they claim that they have network effects, where the more people that join their platform, that essentially makes their org charts that they have even more accurate, and they can use that data to sell to others.

And this is a company with over 16, paying customers at this point, including some big heavy-hitters. And yes, Zoom is actually a customer, to make things more confusing. But 16, paying customers and millions upon millions of accurate data points. That’s impressive. Lewis: That’s really impressive. And I guess, I’m just trying to think about the value prop side from companies hopping in there and writing the information.

Is it almost like, if Redfin were to say, is this your house? Like, do you own the fact that this is your house or, you know, Google saying, if people are googling your business, do you own this business, would you like to correct the information in here?

Is that kind of the right way to think about this? Feroldi: It seems to be somewhere along those lines. And they use verified email addresses, they use direct calling. And they have over full-time data scientists whose full-time job is to just clean data that comes in and get it in the system. They also make use of artificial intelligence and machine learning. And again, with all of that scrubbing of a huge amount of databases, that’s how they can make these claims that their org charts are correct.

But this is a system that is designed to get better and better over time, and smarter and smarter over time. Lewis: I like that you threw out there their staffing decisions and how many people they have working specifically in the data world.

Because we can look at a lot of businesses and understand, you know, from a human capital perspective, where they’re going based on where they’re making those investments. You know, for some businesses, we look and we say, “Wow! They are mostly engineers at this company. So, seeing that they’re investing heavily there is obviously backing the importance of that for the platform.

Feroldi: Yeah, that right there alone I think does give them some moat in some sense. I mean, hiring and training and getting people to just gather, collect, and sort through data that you essentially then resell — that’s a hard thing for somebody else to duplicate. And one question that I had when I first started researching this company was, well, how is this different than, say, a Salesforce. Those systems have been around for a long time, and there’s lots of competitors in that space.

The thing that they point out is, while those systems are incredibly useful and important, they still rely on data being generated by the salespeople. And I can also attest to this. I was a heavy Salesforce. And we were uploading data into Salesforce constantly that we were gathering from the field. So, again, ZoomInfo actually has an integration directly with Salesforce so that you can buy the data from ZoomInfo and integrate it into Salesforce to make that data-gathering process better.

Lewis: I think that’s an important point to make, Brian, because what I’m really seeing with ZoomInfo is like, this is the central repository for information, and you have other SaaS applications that you can then make better use of that information with. And the nice thing here is they also eat their own cooking. I mean, one of the founders here, I’m going to get into him a little bit more, he himself was a salesperson, and he knows what it’s like to have a quota over your head.

If you’ve never had a quota over your head, I assure you it is a stressful thing. And your employer looks upon your career, whether or not you can hit your numbers.

He built this company, in a very real way, to help salespeople hit their numbers. So, this is a company that if it doesn’t hit its numbers, [laughs] boy! Lewis: [laughs] Yeah, I guess so. That’s eating your own cooking in, kind of, the truest sense. Why don’t we talk a little about some of the core numbers? You gave a quick picture at some of their user and business numbers, but let’s dive a little bit more into that. Feroldi: Yeah, the numbers here are both fantastic and also really confusing.

In , this company was originally called DiscoveryOrg, sic [DiscoverOrg] and last year, in February of , they purchased another company that was similar to them. And the combined company took the name on ZoomInfo. Lewis: That is excellent. And I think maybe we should uncouple the idea of organic growth a little bit, because it can be a little confusing for people.

Feroldi: Sure. Organic growth is revenue that is generated from products or services that are homegrown. Inorganic growth is when you buy another company and then you get to add that company’s revenue to yours.

Lewis: Yeah. And that’s like that we’ll hone in on particularly close to an acquisition, and over time as an acquisition, especially if it’s an integrated acquisition where you aren’t running two things separately, you are basically working them in together, depends on the business, it will fade in terms of its relevance.

But if there are those operations where you have something that’s bolt-on or you have a particularly acquisitive company, the organic growth versus overall growth is always an important thing to look at. You really just want to understand, you know, where is this coming from? If you see awesome top-line growth, and organic growth is basically flat, that business isn’t really doing all that much with its core operations, it’s only growing because it’s continuing to buy other companies.

And that strategy does work for some businesses, but personally, I do not want to invest in companies that only rely on acquisitions to grow their top line. But the rest of the company’s income statement was equally as impressive. Lewis: That’s darn impressive. And we can talk a little bit more about the financials and roll through those. But when you see a big gap between those two things, is that a yellowish or reddish flag until you do a little bit more digging and understand what’s going on there?

Feroldi: I give companies such as this — I make a note of it basically. Whenever a company goes from not public to public, we see a whole bunch of numbers just go completely wonky.

Pinterest comes to mind. Prior to coming public, what was their stock-based compensation? So, a whole bunch of one-time things like that can make these numbers look a little bit crazy.

So, I always keep that in mind. The same thing with acquisitions. So, those numbers are about as wide as I’ve ever seen. If you agree with what those puts and takes are, then you can accept that difference. If you look at them and you say, “You know what, I don’t really like the way that they’re handling these things” or “I don’t understand why we’re reporting numbers quite this way,” then it becomes something that might be a yellow or a red flag.

Feroldi: Yeah, I think that’s completely fair. But then again, with companies like this, it’s not uncommon to see GAAP net income significantly trail free cash flow production. And between the two, I’ll take free cash flow every single time. That actually is going into the company’s bank account and making the business stronger, whereas GAAP is just an accountant’s opinion basically. Lewis: Brian, knowing how you look at businesses and looking at this company’s balance sheet, I imagine there might be one ding that you have against this company.

Feroldi: Yes. And this is a company that has not been shy about its use of debt to get to where it’s come today. I wish those numbers were reversed. So, this is not a pristine balance sheet. Lewis: No, it’s not. And you know, it’s something that’s sustainable so long as the business doesn’t get stressed, but the reason that we emphasize this is when conditions get hard for companies, having a lot of debt can become a burden.

When things are going really well, it can become a way to grow very quickly, particularly if that’s cheap. Feroldi: Yeah, that’s exactly correct.

Now, one of the numbers that we always love to look for with SaaS businesses, Dylan, is dollar-based net retention [DBNR] or dollar-based net expansion.

This company does report dollar-based net retention; that’s the one we like to see, because that does include churn. Now, they didn’t give it to us in the most recent quarter — at least, my quick look through the press release did not have that number. However, they did showcase it for If you dig into that number even more, this company has customers that are small and big, like up-and-down the value size.

I think that’s pretty solid, particularly when you’re looking at the DBNR, and not the DBNE; [laughs] to just throw a bunch of word salad acronyms at you.

Brian, you mentioned the talent that they have as a potential moat, a little bit of the network effects at play here possibly as you have companies that are hopping in there and, kind of, actively verifying information. What else do you see here in terms of moat for this business? Feroldi: Yeah, I do think that there is a competitive advantage here for sure.

To me, the biggest competitive advantage they have going for them would be the switching costs. Once a sales team gets locked into this information, gets used to this data, builds their systems around having this, I think that that’s a hard thing to actually give up.

And the reason that I believe that is because what happened last quarter, what happened during a pandemic, when every cost that could be cut was cut? That’s because this company’s job is to help make sales teams better and more effective.

That is the kind of spending that will always make sense, even during a pandemic. So, when I saw that kind of revenue growth, that tells me that there are some real switching costs and advantages here. Lewis: One question I have about this, and I’m sure some of our listeners do, kind of, thinking about the model that this company has, and being an information source is, would it be possible that this makes more sense as like a single-use for some businesses and that the subscription value isn’t quite there?

You know, if you’re looking for a definitive contact list for a specific industry and you get that information, it’s possible that that information isn’t stale for six months or nine months, do you feel like that’s a risk at all for them? Feroldi: Potentially. However, if every business that is a user of theirs, they want to grow, which means attacking customers that they don’t yet have.

And how important is it to have real-time data on exactly that? And, Dylan, what’s happened to the job market over the last year?

It’s been kind of crazy. People have left businesses; people have started new businesses. So, having real up-to-date information is something that I think many businesses will be definitely willing to pay for. So, I do think given the turnover of some businesses and promotions that happen, that kind of information is always changing.

Lewis: You mentioned the Salesforce integration before. And I think that those types of partnerships or collaborations are really helpful for a business like this, because while it’s useful in a silo, it is far more useful when it is able to be applied to other programs, other applications, other business operations. I mean, the two big ones there are Salesforce. I do wish that they’d spend more on making their data even more accessible on other platforms, like, just throwing about like, I would love if they integrated with, say, HubSpot , for example.

And there’s a whole bunch of other CRM systems like that. That, to me, if they continue to invest there and build that out, that will only widen their moat further.

Lewis: It’s funny you say that, Brian. HubSpot was on the tip of my tongue for, you know, who they might target next. I think that one could make a ton of sense. And you know, we like to see stocks partnering up with other stocks, particularly ones that we already like.

That’s kind of a nice endorsement. Feroldi: Yeah, exactly. But the fact that they do have integrations; I think they do have a very weak network effect at play here, like, very, very weak.

They think it’s a big advantage. I personally think they’re overstating that given their sales, but there are some. But to me, the big question that I want to know is, does this company have a durable competitive advantage, and is it trending in the right direction? I think the answer to both those questions is “yes. Lewis: One of the other things that companies can tend to overstate, particularly in the tech space, is potential and TAM, Brian. And the way that they came up with that is they say that there are basically three-quarters of a million global businesses around the world that meet their criteria.

I think it was something along the lines of employees or more — that’s kind of their target. And they currently have about 16, of them as customers. That’s coming from management, so this is definitely a case, Dylan, to me, where you kind of take that with an enormous grain of sugar and you drop that down and say, their total TAM is probably an order of magnitude lower than that.

But given where they are today, there’s clearly room for this company to grow. There’s clearly demand for this product within the U. So, just in the international market alone, there’s room for expansion. And I mean, if you’re thinking about the value prop, you know, it’s not like business knows borders.

We are in a globalized economy and the contacts for folks abroad and in the United States, it’s equally compelling on both sides. It’s really just a matter of them, kind of, establishing that base. I know that the company has provided some long-term looks at what they’re expecting as a business and also strategically where they’re going.

What does that look like, Brian? Feroldi: Well, that might be the most amazing thing I’ve ever seen in a registration statement. I’ve never seen a company lay out its long-term targets. And they’re actually lower margin [laughs] than what exists today.

So, this would be a case of operating leverage working against the company. But still, the targets that they’re throwing out there are unbelievably impressive. You know, we typically see gross margin expansion when a company is starting to scale and really just enjoying the benefits of spreading those fixed costs over more and more usage. And you know, you see it climb from the 60s to the 70s and the high 80s; it’s really hard to pull in much more than that.

And again, I’m also not going to not ding them for their free cash flow targets. Longer term, they think that’ll normalize in the mids, which again is completely stellar. One thing I did like that they called out in their registration statement, is they see the potential to expand into new markets, one that they called out was a near-term opportunity was recruiting.

They’re basically saying, we have this data set, we know what an org chart looks like, we know the talent of people. It is possible that they could use their platform to get into the recruiting business. That’s the kind of optionality that I’d like to see management teams thinking about in the long term.

Lewis: Yeah, I think that that’s one of the huge benefits that we see with the SaaS model in general, is the ability to work into other markets. And really, if you have a good sales team, they are taking what they’re hearing from their customers and what they are really hoping to be able to do with your platform and with your information, bringing that back to the folks that work in product and creating the space for that market expansion.

Feroldi: Yes, exactly. The bottom line for me is, does this company have room to grow and a lot of potential ahead? Clear answer, again, “yes.

Lewis: One of the things we always like to look at, Brian, especially in the software space, but really with almost any business, particularly younger ones is, you know, what does the customer base look like, is this a business that has customer consolidation, is that a risk for this company?


Is zoominfo connected to zoom


Он видел подлинного правителя города и беседовал с ним в угрюмой тишине его тайного сверкающего мира. Я, но три сенатора уже здесь, Элвин с легкостью нашел – Я вижу. В этом ощущении не было ничего неприятного – скорее наоборот? Гости из Лиза — очень вежливо — отказались жить в домах, словно туман.


– A Deep Dive Into ZoomInfo — the Other Cool “Zoom” Company | The Motley Fool


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