| COMPANY |
ZoomInfo Technologies, Inc. |
| COURT |
United States District Court for the Western District of Washington |
| CASE NUMBER |
24-cv-05739 |
| JUDGE |
The Hon. Tiffany Mae Cartwright |
| CLASS PERIOD |
November 10, 2020 through August 5, 2024 |
| SECURITY TYPE |
Class A common stock |
LEAD PLAINTIFF DEADLINE IS NOVEMBER 4, 2024.
If you have suffered losses and would like to discuss your rights, please fill out this form or you may contact Jonathan Naji, Esq. at (484) 270-1453 or via e-mail at info@ktmc.com.
Case Background:
On November 1, 2022, ZoomInfo announced financial results for the third fiscal quarter of 2022, revealing that the company had experienced increased “scrutiny” by customers during the contract renewal process, which negatively impacted ZoomInfo’s financial results in the quarter and would cause ZoomInfo to “retrace” Net Revenue Retention (“NRR”) gains achieved in 2021. Further reflecting this loss of business, ZoomInfo further disclosed that its total Remaining Performance Obligations (“RPOs”) fell to $979 million, compared to $985 million the prior quarter, and that current RPOs fell to $757 million, compared to $764 million the prior quarter. On this news, the price of ZoomInfo Class A common stock fell more than 29%. Just two weeks later, on November 16, 2022, ZoomInfo revealed that intense customer scrutiny during the contract renewal process had continued into the fourth quarter, which would negatively impact ZoomInfo’s ability to grow its revenues in fiscal year 2023. On this news, the price of ZoomInfo Class A common stock fell approximately 17% over two trading sessions.
Thereafter, on July 31, 2023, ZoomInfo announced financial results for the second fiscal quarter of 2023, revealing that ZoomInfo’s customers with annual contract values of $100,000 or greater had declined to 1,893, compared to 1,905 clients in the prior quarter. ZoomInfo further reduced its annual revenue guidance, representing a reduction of $50 million at the mid-point. On this news, the price of ZoomInfo Class A common stock fell approximately 28% over two trading sessions. Subsequently, on May 7, 2024, ZoomInfo announced financial results for the first fiscal quarter of 2024, disclosing that the company had a large pool of small business customers that exhibited “weakness” during renewals in the period, which had caused NRR to decline sequentially to 85% from the 87% reported in the fourth quarter. ZoomInfo further reduced its annual revenue guidance from range. On this news, the price of ZoomInfo Class A common stock fell more than 24%.
Finally, on August 5, 2024, ZoomInfo announced financial results for the second fiscal quarter of 2024, disclosing that ZoomInfo was incurring a $33 million charge due to non-payments from customers and had been forced to implement a “new business risk model” to reduce write-offs. In connection with its new risk model, ZoomInfo stated that the company was altering its operational procedures to require up-front payments from small business customers, indicating that many of ZoomInfo’s previous customers had been unable to afford ZoomInfo’s products and services. As a result, ZoomInfo further reduced its annual revenue guidance by $65 million at the midpoint. On this news, the price of ZoomInfo Class A common stock fell more than 18%.
The complaint alleges that, during the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, Defendants misrepresented and/or failed to disclose that: (1) ZoomInfo’s financial and operational results during the Class Period had been temporarily inflated by the ephemeral effects of the COVID-19 pandemic, which had pulled-forward demand for ZoomInfo’s database of digital contact information; (2) material portions of ZoomInfo’s existing customer base were attempting to either substantially reduce their use of ZoomInfo’s product or abandon it altogether; (3) ZoomInfo had used manipulative and coercive auto-renew policies and threats of litigation to force customers into remaining with ZoomInfo for an additional contractual term even though such customers did not want to; (4) ZoomInfo’s coercive customer retention tactics had materially damaged ZoomInfo’s customer relationships, client franchise, and competitive advantages, and created a hidden demand cliff for costumer contract renewals in future periods; and (5) as a result of the foregoing, ZoomInfo’s reported revenues, operating income, and customer and retention metrics were materially overstated.
What is a Lead Plaintiff?
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.