Problems at ZoomInfo Technologies (ZI)
Problems at ZoomInfo Technologies (ZI)
ZoomInfo Technologies (NASDAQ: ZI — $16.6 billion) describes itself as “a global leader in modern go-to-market software, data, and intelligence for sales, marketing, operations, and recruiting teams.” ZoomInfo markets itself as the champion of the small and medium businesses and claims “it’s our business to help grow yours.” Since its June 2020 IPO, ZoomInfo has repeatedly highlighted its 100%+ revenue retention metrics and best-in-class database — leading investors to value the company at around 20x revenue. That might be generous.
Through the Freedom of Information Act, The Bear Cave has obtained hundreds of pages of consumer complaints from small-businesses desperate to cancel ZoomInfo contracts. ZoomInfo often renews contracts against the wishes of its customers, threatens litigation to enforce renewals, and has admitted to the Washington State Attorney General of sometimes doing renewals “in error.” In addition, The Bear Cave has found that ZoomInfo’s data collection practices are much more aggressive, and potentially illegal, compared to its dozens of competitors. Upcoming legislation and ongoing litigation may add to the company’s headwinds.
Founded in 2007, ZoomInfo has assembled a database of email addresses and phone numbers on over 100 million global contacts from over 20 million companies, which it sells for upwards of $10,000+. ZoomInfo built its database through scraping email signatures, data brokers, and a handful of acquisitions. The company claims that its “software, insights, and data enable over 25,000 companies to sell and market more effectively.” As evidence, the company highlights strong annual (revenue) retention of “116%, 108%, and 109% in 2021, 2020, and 2019.” ZoomInfo’s 38-year-old founder and CEO, Henry Schuck, doubled down on this narrative during the company’s Q4 earnings call:
“We delivered on behalf of our customers… as a result, we drove record customer additions and record retention rates in 2021.”
Some customers tell a different story.
For example, a March 2022 complaint submitted to the Washington State Attorney General reads, in part,
“ZoomInfo has hidden language about an auto-renewal policy that requires customers to cancel their contract 60 days in advance of the auto-renewal date. … Right now, we have 30 days before the contract anniversary and they will not let me terminate the contract which will cost our small business $27K. This is a predatory retention strategy from a large technology company.”
