ZoomInfo Technologies Inc. (GTM)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 84.37% | 85.60% | 82.84% | 81.71% | 77.43% |
| Operating profit margin | 8.02% | 20.94% | 22.43% | 23.59% | 13.92% |
| Pretax margin | 2.58% | 31.37% | 17.72% | 13.52% | -6.66% |
| Net profit margin | 2.40% | 8.66% | 5.76% | 15.63% | -7.64% |
The analysis of ZoomInfo Technologies Inc.’s profitability ratios over the period from 2020 to 2024 reveals significant insights into the company's financial performance and trend dynamics.
Gross Profit Margin: The gross profit margin exhibits a consistent upward trajectory, increasing from 77.43% in 2020 to a peak of 85.60% in 2023 before slightly declining to 84.37% in 2024. This pattern indicates an improvement in gross profitability, reflecting effective management of cost of goods sold relative to revenue and possibly fostering higher pricing strategies or cost efficiencies over time.
Operating Profit Margin: The operating profit margin displays notable growth from 13.92% in 2020 to a peak of 23.59% in 2021, followed by a slight decline to 22.43% in 2022, and then downward movements to 20.94% in 2023 and 8.02% in 2024. The initial sharp increase indicates enhanced operational efficiency in the earlier years, whereas the subsequent decline suggests challenges in maintaining operating profit margins amidst competitive pressures, cost increases, or changes in sales mix.
Pre-Tax Margin: The pre-tax margin demonstrates volatility, transitioning from a negative value of -6.66% in 2020 to positive figures such as 13.52% in 2021 and 17.72% in 2022, followed by a substantial peak of 31.37% in 2023. However, it diminishes sharply to 2.58% in 2024, indicating a substantial reduction in pre-tax profitability, which could be attributed to increased expenses, non-operating costs, or one-time charges impacting pre-tax income.
Net Profit Margin: The net profit margin mirrors the pre-tax trend, moving from a negative -7.64% in 2020 to positive values in subsequent years—15.63% in 2021, 5.76% in 2022, and 8.66% in 2023—before declining sharply to 2.40% in 2024. This pattern signifies that while the company achieved profitability in earlier years, its net margins deteriorated considerably in 2024, reflecting increased costs, reduced efficiencies, or other financial headwinds impacting bottom-line profitability.
Overall, the profitability ratios indicate that ZoomInfo experienced substantial improvements in gross and operating margins during the initial years, reaching peak levels around 2021-2023. However, from 2023 onward, there is a pronounced decline, especially notable in net and pre-tax margins in 2024. This trend suggests recent challenges to sustained profitability, emphasizing the need for ongoing cost management and strategic adjustments to restore profit margins.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 1.51% | 3.78% | 3.45% | 2.57% | 2.85% |
| Return on assets (ROA) | 0.45% | 1.56% | 0.89% | 1.70% | -1.56% |
| Return on total capital | 4.17% | 0.00% | 10.66% | 7.25% | 6.82% |
| Return on equity (ROE) | 1.72% | 5.06% | 2.78% | 5.85% | -7.24% |
The analysis of ZoomInfo Technologies Inc.'s profitability ratios over the specified periods reveals fluctuations and some notable trends.
Starting with the Operating Return on Assets (Operating ROA), there is a slight decrease from 2.85% at the end of 2020 to 2.57% in 2021. Subsequently, a steady increase is observed, reaching 3.45% in 2022 and further rising to 3.78% in 2023. However, this positive trajectory witnesses a significant decline in 2024 to 1.51%, indicating a possible reduction in operational efficiency or profitability from core business activities.
The Return on Assets (ROA), which accounts for net income relative to total assets, displays a negative figure of -1.56% at the close of 2020, suggesting net losses during that period. From 2021 onward, ROA improves considerably, reaching 1.70% in 2021 and maintaining positive but modest levels in 2022 (0.89%) and 2023 (1.56%). The decline in 2024 to 0.45% continues the trend of diminished overall profitability relative to total assets, reflecting perhaps increased expenses or other factors impacting net income.
Examining the Return on Total Capital, which evaluates the efficiency in generating profits from all capital sources, exhibits an upward trend from 6.82% in 2020 to a peak of 10.66% in 2022. This suggests strong capital utilization and profitability during that period. However, in 2023, the return drops sharply to zero, and in 2024, it recovers modestly to 4.17%. The zero return for 2023 indicates a period of minimal or no profit generated from invested capital, warranting further investigation into underlying causes.
Finally, the Return on Equity (ROE) shows a significant variation, starting from a negative value of -7.24% in 2020, indicative of net losses and possibly negative equity or high leverage effects. The figure improves markedly to 5.85% in 2021, demonstrating effective utilization of shareholders’ equity in generating profits. In subsequent years, ROE declines to 2.78% in 2022, then rises again to 5.06% in 2023, before decreasing to 1.72% in 2024. The overall trend reflects periods of profitability interspersed with diminishing returns, aligning with the fluctuations seen in other profitability ratios.
In summary, ZoomInfo’s profitability ratios over these periods depict a company that experienced a period of net losses before turning profitable, with notable improvements in 2021 and 2022. However, the subsequent decline in 2024 across multiple ratios suggests challenges in sustaining profitability, potentially due to operational, market, or strategic factors.