ZoomInfo recently announced a $1 billion stock buyback authorization alongside Q4 2025 earnings. With the stock down significantly from its highs, management is betting heavily that shares are undervalued.
The Business
ZoomInfo generates $1.25B in revenue with 36% operating margins and ~$300M in free cash flow. The concern: growth has slowed to ~1% and net revenue retention is 90%, meaning they lose 10% of existing customer revenue annually before new sales.
The Buyback
Management spent $328M on buybacks through September 2025, retiring 33 million shares (~10% of float) at an average of ~$10/share. They’re funding this through operating cash flow plus a $100M draw on their credit facility. Cash reserves have dropped from $447M to $125M.
What Buybacks Actually Do
Buybacks retire shares. The company spends cash, shares disappear, and the remaining shareholders own a larger percentage of the same business. The business itself is unchanged: same revenue, same margins, same cash flow, same challenges.
The Question Worth Asking
Management believes the stock is undervalued. But why is that management’s problem to solve?
If the stock is cheap because growth is 1% and customers are churning, the answer isn’t to buy back shares. It’s to fix growth and retention. Improve the business, and the stock price follows.
Buybacks are management reacting to the stock price instead of focusing on the business. $300M a year is real money. That could fund product development, acquisitions, or a cushion for uncertainty. Instead, it’s being used to retire shares, which doesn’t add a single customer, improve the product, or accelerate growth.
Valuation
At ~$2.1B market cap and ~$3.3B enterprise value, ZoomInfo trades at 2.6x revenue, priced for a no-growth business, which at 1% guided growth, it currently is.
The Key Question
Once cash goes into buybacks, it’s gone. It can’t fund an acquisition, invest in product, or provide a cushion if conditions worsen. With $125M in cash remaining, is retiring shares really the best idea that the current management team has?
Disclaimer: This is not investment advice.