ZoomInfo stock drops on disappointing outlook

ZoomInfo shares drop after the company cut its full-year guidance for revenue, free cash flow, and earnings. Following the results, Deutsche Bank downgraded the stock to "hold" from "buy." Yahoo Finance Live takes a look at the company's performance.

Video Transcript

JULIE HYMAN: Let's talk about some of their earnings, shall we? ZoomInfo, one of the movers we're watching. And it's down by 23%. Extending declines after cutting its full year guidance for revenue, free cash flow, and earnings.

It did report a beat in its second quarter results. But the company explaining in its earnings call that its growth could be offset by deterioration in buyer sentiment and behavior. Basically, this is lead generation and assistance software.

That's what ZoomInfo does here. Deutsche Bank cutting the stock here, its recommendation on the stock, saying, there is a quote, "persistent lack of visibility." It's cutting it to hold from buy.

So definitely, some pessimism around the stock this morning.

BRAD SMITH: Yeah, indeed. And as we were even taking a look at the shares, if we're able to zoom out for a broader view of-- I tried. I tried. You connect the dots here. That's all we could do.

ZoomInfo stock over the course of the past three months, it's down by about 10%, 11% here. And you look at that year-to-date performance, as well, having a dismal performance. It's down by about 34% on that scale.

Now, larger question for some of these B2B companies as of where they can continue to generate demand during a downturn, at least in some of the cost restructuring for some of the portfolio clients that they would have leaned on in the past. Typically, companies would kind of acquire to grow. But ZoomInfo and the cash that some companies have been able to deploy and add on to their service offerings, ZoomInfo not necessarily in the same instance as you would see in Microsoft, as you would see a Salesforce, or an Oracle, or even an Adobe.

Even if some of those deals get scrutinized, and don't come into the fray, ZoomInfo in a much more difficult position to try and make some of those big cash or cash and stock acquisitions that would allow them to go back to that portfolio client base and say, hey, we've added on this additional feature or this additional service here.

So we'll see what more the company has to say surrounding the results, as well as where they're going to initiate that demand generation here.