ZoomInfo Technologies Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 12, 2025
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Operator

Good day and thank you for standing by. Welcome to the ZoomInfo First Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press 11 on your telephone.

Operator

You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Jerry Czajewski, Vice President of Investor Relations. Please go ahead.

Jerry Sisitsky
Jerry Sisitsky
VP, IR at ZoomInfo

Great. Thanks, Lisa. Welcome to ZoomInfo's financial results conference call for the first quarter twenty twenty five. With me on the call today as we announce our financial results live from the NASDAQ market site in Times Square are Henry Schuck, Founder and CEO of ZoomInfo and Graham O'Brien, our Interim CFO. Earlier today, we rang the closing bell at the NASDAQ and we announced that tomorrow morning, ZoomInfo will begin trading under the symbol GTM.

Jerry Sisitsky
Jerry Sisitsky
VP, IR at ZoomInfo

During this call, any forward looking statements are made pursuant to the Safe Harbor provisions of U. S. Securities laws, expressions of future goals, including business outlook, expectations for future financial performance and similar items, including without limitation, expressions using the terminology may, will, expect, anticipate and believe, and expressions which reflect something other than historical facts are intended to identify forward looking statements. Forward looking statements involve a number of risks and uncertainties, including those discussed in the Risk Factors sections of our SEC filings. Actual results may differ materially from any forward looking statements.

Jerry Sisitsky
Jerry Sisitsky
VP, IR at ZoomInfo

The company undertakes no obligation to revise or update any forward looking statements in order to reflect events that may arise after this conference call, except as required by law. For more information, please refer to the forward looking statements in the slides posted to the Investor Relations website at ir.zoominfo.com. All metrics on this call are non GAAP unless otherwise noted. A reconciliation can be found in the financial results press release or in the slides posted to our IR website. And with that, I'll turn the call over to Henry.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Thank you, Jerry, and welcome everyone. We delivered another consecutive quarter of better than expected financial results, continued momentum up market and improved net retention. We dramatically expanded the capabilities of our go to market intelligence platform to empower our customers to accelerate revenue growth. ZoomInfo now includes even more sophisticated AI powered applications and agents with the technology, integrations, and intelligence for go to market teams. As we continue to drive innovation in the ways businesses market and sell, today we announced at the NASDAQ that we are changing our trading symbol from ZI to GTM to reflect our commitment to building the core software platform for go to market.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Much like Workday is synonymous with enterprise HR and ServiceNow for enterprise IT, ZoomInfo will be synonymous with enterprise go to market. In Q1 twenty twenty five, GAAP revenue was $3.00 $6,000,000 and adjusted operating income was $101,000,000 a margin of 33%, both above the high end of our guidance. Our shift up market continued on the right path during the quarter. We now have eighteen sixty eight customers with more than $100,000 in ACV, a sequential increase of one customer and a year over year increase of 108 customers. This is after a period of declines and marks our fourth straight quarter of sequential improvement.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

In our million dollar cohort, we drove sequential and year over year growth in the total ACV as well as the average ACV per customer. This quarter, we again drove better than expected performance upmarket, which grew 3% year over year and now represents 71% of our business. With more than 70% of our business growing and accelerating growth, we are increasingly confident in our longer term growth aspirations. Net revenue retention also improved in the quarter while rounding to 87% for the second consecutive quarter. During the quarter, we closed enterprise opportunities with Lionbridge, Wipro, Integrity Express Logistics, RSM, Sprinklr, Wizz, and Dice Career Solutions.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Stripe is now deploying ZoomInfo Copilot across more than 300 sellers to increase conversion, win rates, and deal size by leveraging real time insights. Copilot will deliver better account prioritization, create more opportunities for upsell and cross sell, and help to close more deals at higher price points. One of the largest food delivery vendors is activating our full go to market intelligence platform to support their expansion efforts and extend their reach into international markets. They have deployed thousands of ZoomInfo seats to drive account prioritization and more efficient prospecting, while our strategic account insights improve win rates. And we expanded our relationship with Intuit to become a more strategic partner on their outbound sales motion.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

We're helping them build durable and repeatable sales plays to mid market accounts and helping them leverage intent data, implement advanced data tracking, integrate APIs for real time data management, and build sophisticated audience segments for programmatic advertising. Our traction is powered by the increasing pace of innovation across data, intelligence, and go to market AI. Our Copilot product is successfully rolling out into our customer base and accelerating our expansion beyond SDR prospecting into AE and AM use cases. This persona represents a three x opportunity in our customer base, and Copilot has converted AM and AE users on the platform to be as active as our SDR prospecting users. Earlier today, we launched go to market studio to enable revenue leaders and operators to architect their go to market with intelligence and AI.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

The single biggest ask from our customers is to unify all go to market data so teams can target, prioritize, and execute in one place. Traditional CRM alone is no longer sufficient to run go to market. Critical signals like product usage, marketing engagement, and voice of customer insights sit fragmented across enterprise system. Revenue teams need this data to effectively target, prioritize, and execute revenue campaigns. There are only two ways to solve this problem in modern GTM.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Either by building a complete in house solution with a massive engineering investment, which is inaccessible to nearly all organizations, or by deploying ZoomInfo's best in class data platform, which was trained on billions of messy data problems and applying it to solve a customer's internal go to market environment. To launch GTM Studio, we expanded our data asset into core enterprise operations use cases running on our technology platform built through the successful integration of our acquisitions of RingLead for data management, Chorus conversation intelligence for unstructured go to market data, and SetSale for CRM attribution. This positions us as the only vendor with natively integrated data, orchestration, AI, and frontline execution. GTM Studio is the revenue leader and operator solution to run go to market. And then Co Pilot is the frontline activation that turns campaigns into revenue execution.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Over the last two years, we have been fixated on making every sales rep more productive, every campaign more targeted, and every workflow more intelligent. This has resulted in record levels of NPS scores these last two quarters with enterprise NPS up more than six points year over year in q one. In our pursuit of this vision, ZoomInfo has become so much more to our customers than just a provider of company and contact lookup information. Our go to market intelligence platform supercharges CRM, giving our customers a living, breathing view of who's in market and where sales resources should be allocated across the entire total addressable market. Beyond sales, we continue expanding across the entire revenue cycle, increasing the number of and types of go to market professionals that use our platform every day.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

ZoomInfo marketing now generates 80% of its revenue upmarket and plays a key role in bringing sales and marketing into tighter, more strategic alignment on the go to market intelligence platform. With expanded workflow management, we're embedding our intelligence deeper into our customers' ecosystems, making their operations more connected, more creative, and more powerful. Our innovation is giving revenue teams the advantage they need to move faster, sell smarter, and win bigger. Our trading symbol change reflects our creation of a new category, go to market intelligence. This isn't just a name change.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

It's a commitment to building the best go to market engine for all companies. We're very pleased with our execution and how that has translated into strong financial results. We continue to reallocate resources upmarket where we are accelerating the transition as we successfully drive better growth and profitability outcomes. Today, 71% of our business is growing and accelerating growth with demonstrably better profitability than our down market business. We are being very intentional with the down market portion of our business as we continue to move our business upmarket and develop solutions that are defining the future of go to market.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

ZoomInfo now does what no other software company does. We unify first and third party data insights and automation and execution to serve the entire go to market organization, not just sales, not just marketing, not just rev ops. That's what GTM means. It's not a department, it's the entire revenue engine. And go to market intelligence aligns and activates the whole engine in real time.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Over the last two years, this is the vision we've been relentlessly focused on, and it's the future of go to market. With that, I'll turn over the call to Graham. Thanks, Henry. Q1 GAAP revenue was $3.00 $6,000,000 and adjusted operating income was $101,000,000

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

a margin of 33% above the guidance ranges we provided. Annualized sequential revenue growth for the quarter was 1.1% and as Henry indicated, net revenue retention improved in the quarter while still rounding to 87%. We delivered strong results in the quarter and while we remain as optimistic as ever about the trajectory of the business and have not seen any impact to customer behavior in the current environment, we are including an incremental layer of caution in our guidance, raising the low end of our full year revenue guidance and reiterating our AOI and cash flow guidance. Over the past year, we transformed the business from higher volumes of transactional new business to a place now where our growth foundation is rooted in more durable upmarket customer relationships. This transition was notably evident in the first quarter as our upmarket growth of three percent year over year accelerated.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

While we intentionally continued on the path toward a smaller and healthier version of our downmarket business, with downmarket declining 10% year over year. In Q1, we lapped a significant volume of downmarket transactions from last year that predated the introduction of our new business risk model in Q2 twenty twenty four. So as we progress further into 2025, a greater percentage of our first year expiring population will have experienced more rigorous qualification during their initial purchase in 2024, potentially leading to better renewal outcomes. We see continued opportunity to drive upside in our upmarket business, while continuing aggressively manage the contribution from the downmarket. In Q1, we drove an acceleration in upmarket growth, leading to a one point shift in upmarket mix from 70% to 71% of the business.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

We are seeing returns from shifting resources upmarket while qualifying risk out of our downmarket revenue, evident in decreasing write off activity, efficient cash collections and more reasonable bad debt expenses. These are all signs that our strategy and execution are delivering the intended results. It's also important to note that upmarket also has better economics than our downmarket business with a margin difference of several thousand basis points. As we expand more upmarket, that gives us more opportunities to expand margins while still resourcing for growth. ZoomInfo Copilot showed continued traction in the quarter as did operations.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Copilot continues to attract new to the franchise customers while we continue to achieve uplift on a per seat basis via our customer migration motion and we have an exciting product roadmap to finish out the year. Our operations business is growing double digits and continues to be one of the fastest areas of growth within ZoomInfo. We expect that the launch of go to market Studio will further support that momentum in the back half of the year. Within operations, our data as a service solution is showing strong traction with new logos up 24% year over year and average ACV per customer up approximately 10% year over year. Performance was consistent across verticals.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Retention in our software vertical improved sequentially for the fourth quarter in a row. From a macro perspective, we continue to monitor verticals to better understand any potential impacts from tariffs and if there's any measurable impact from the evolving economic environment. And while we do think businesses are looking for more clarity on the economic environment, we have not seen meaningful changes to the way our customers operate. Turning to share repurchases. In Q1, the company repurchased 8,600,000.0 shares of common stock at an average price of $11.05 for an aggregate $95,000,000 With the Board of Directors approving an incremental $500,000,000 share repurchase authorization in February, as of the close of Q1, there was $543,000,000 in remaining share repurchase authorizations.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

As you will see in our 10 Q filing, following the close of the quarter, we have already deployed another $15,000,000 plus in cash towards repurchases in Q2, as we use the dislocation in share price created over the past month to retire nearly 7,000,000 shares of stock at an average price of $8.27 per share. To date, we have retired approximately 85,000,000 shares of common stock through share repurchases, one of the factors contributing to our expected growth in adjusted net income per share. Turning to cash flow. Operating cash flow was $119,000,000 in Q1 and unlevered free cash flow for the quarter was $125,000,000 a margin of 41%. We expect to continue to primarily use the cash flow we generate to retire shares of ZoomInfo as we believe that will generate the best possible return for shareholders, as we continue on our path to reaccelerating revenue growth.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

We ended the quarter with $143,000,000 in cash, cash equivalents and investments, and we carried $1,240,000,000 in gross debt. Our net leverage ratio is 2.5 times trailing twelve months adjusted EBITDA and 2.3 times trailing twelve months cash EBITDA, which is defined as consolidated EBITDA in our credit agreements. With respect to liabilities and future performance obligations, unearned revenue at the end of the quarter was $484,000,000 and remaining performance obligations or RPO were $1,130,000,000 of which $837,000,000 are expected to be delivered in the next twelve months. Before I move to guidance, while our strong operating performance continues to underpin our confidence in the promising trajectory of the business, given the unique current economic environment, we thought it prudent to add an incremental layer of caution into the guide. With that, let me turn to guidance for Q2.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

We expect GAAP revenue in the range of $295,000,000 to $298,000,000 We expect adjusted operating income in the range of 101,000,000 to $104,000,000 and non GAAP net income in the range of $0.22 to $0.24 per share. For the full year twenty twenty five, we are raising the low end of our revenue guidance and with share count reductions from repurchase activity year to date, we now expect higher adjusted net income per share. For the full year 2025, we expect to deliver GAAP revenue in the range of 1,195,000,000 to $1,205,000,000 representing negative 1.2% annual growth at the midpoint of guidance and adjusted operating income in the range of $426,000,000 to $436,000,000 representing a 36 margin at the midpoint of guidance. We expect non GAAP net income in the range of $0.96 to $0.98 per share based on $352,000,000 weighted average diluted shares outstanding. And we expect unlevered free cash flow in the range of $420,000,000 to $440,000,000 Now, I will turn it over to the operator to open the call for questions.

Operator

Thank The The first question today will be coming from the line of Alex Zukin of Wolfe Research. Your line is open.

Alex Zukin
Analyst at Wolfe Research LLC

Hey guys, thanks for taking the question and congrats on navigating a volatile macro environment. So maybe, Henry, just the first question, why now on the change around the name, the ticker, category, what's making right now the moment to kind of go double down on this motion? And maybe what are you seeing from the changing conversations as you're having with customers that you're renewing, particularly upmarket that's driving the acceleration? And I've got a quick follow-up.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Sure. Thanks for the question, Alex. I think there's a couple of things. One, we've expanded the platform broadly to not only be a platform for prospecting sellers, but also for account executives, account managers, customer success managers. When we launched CoPilot last year, we saw ourselves being pulled into a much broader set of conversations across go to market, into marketing, into RevOps.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

And then we released today our go to market studio product, which really allows any revenue operator, any revenue leader to bring their first and third party data together to leverage AI across that data asset and then to orchestrate campaigns with sellers, account managers, SDRs and marketing teams. So we're incredibly excited about the broad range of solutions that we're providing now beyond just sales and beyond just information, but throughout go to market. And so it felt fitting that our ticker symbol changed to encompass the solutions that we're now offering. In the upmarket, I think what we're hearing from our customers is two things. One, they are thirsty for data to leverage inside of their go to market organizations, particularly as they look to leverage AI to drive efficiency and effectiveness of their sales teams.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

And then when they see the power of that data, they wanna leverage a front end application to help their frontline teams execute. And so when we're having conversations, whether it be with Stripe or Intuit or SEMrush, when we're talking with them, they're telling us, yes, we need this data because we know we can drive efficiency if we leverage this data with AI, but we also need the platform where our frontline team can actually execute on the insights that are coming from that data. And so they're investing in our data asset and then our copilot platform to execute against that data asset.

Alex Zukin
Analyst at Wolfe Research LLC

Makes total sense. And then, Graham, maybe just one for you on NRR. Could you maybe just bifurcate that by what you're seeing with up market versus down market?

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

And then is there any sign of of improvements in ARR from here, either in the guidance and kind of what you're thinking and seeing in the pipeline and renewal activity for the year? Sure. Retention up market continues to improve. That's something we're really focused on and downmarket continues to be impaired, but not getting significantly worse. When we think about improvement going forward, we really think about it from a growth perspective, upmarket versus downmarket.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

The last time we talked about the upmarket business growing mid single digits in 2025 in the guidance, I think we're definitely on that path. And then down market, we were down 9% last year, we're down 10% year over year in Q1. And we had an expectation that that would get worse in 2025, and we still feel really comfortable managing the down market business within those original parameters.

Alex Zukin
Analyst at Wolfe Research LLC

Perfect. Thanks guys.

Operator

Thank you. One moment for the next question. And the next question will be coming from the line of Mark Murphy of JPMorgan. Your line is open.

Mark Murphy
Mark Murphy
MD - Software Research at JP Morgan

Thank you very much. I'll add my congrats as well. I'm curious where the CoPilot ACV might have reached in Q1. Was that something that you mentioned and or any thought kind of overall glide path of that ACV stream for this year?

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Yeah, I can take that one. Co pilot continued to grow at kind of a rate that we expect. I think we're going to disclose milestones as we get to those milestones in the future. But we're really happy with not only the migration pattern, but also just the upsell opportunity that we continue to see there in Q1.

Mark Murphy
Mark Murphy
MD - Software Research at JP Morgan

Okay. And how do you feel about this earlier stage co pilot rollouts? Because I think commonly we've seen with other co pilots and agents out there that companies will run into some hurdles. You're trying to understand the security policies, looking at the governance and the data retention, sometimes they're encountering some bugginess. Are you seeing any of those typical kind of speed bumps?

Mark Murphy
Mark Murphy
MD - Software Research at JP Morgan

Or does it feel like it's full steam ahead?

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

We feel really good about the trajectory of CoPilot, particularly in the upmarket. This was Q1 was a quarter where we saw the most upmarket deals for Copilot that we've seen. And so, you know, we're getting much better at the motion of navigating data privacy, data security, and AI governance boards within our clients. And that's not creating a real speed bump for us today.

Mark Murphy
Mark Murphy
MD - Software Research at JP Morgan

Thank you very much.

Operator

Thank you. One moment for the next question. The next question will be coming from the line of Elizabeth Porter of Morgan Stanley. Your line is open.

Elizabeth Porter
Elizabeth Porter
Executive Director at Morgan Stanley

Great. Thanks so much for the question. I first wanted to just ask a little bit on the expense side, just given the better top line, but operating income and free cash flow guidance looked like it was pretty unchanged for the year. So just given the continued shift up market with better profitability and better top line in the full year target, is there anything to consider as it relates to investment priorities that may be limiting some of the flow through? And then as a follow-up, just as you leverage your own tools, could you speak to the internal efficiencies that you're seeing and how that may be reinvested or passed through over time?

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Yes, I can cover the guidance upfront. So I want to reiterate that we saw no impact to the overall business in Q1 from the economic environment. And in a more normal economic environment, we probably would have felt comfortable flowing through more of the beats into the full year guide. So for the avoidance of doubt, we're not seeing anything material in how our customers behave. This approach to guidance is 100% driven by caution as it relates to the uncertain environment.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

When we think about revenue versus adjusted operating income versus cash flow, we looked at revenue and the low end of the range was de risked by the magnitude of the beat in Q1. We're still expecting to deliver 36% margins in 2025. And then on margins specifically, the seasonality of our business has evolved. I think we've talked about this some over the past few quarters. We expected margins to be several points lower below full year margins in Q1 and several points above the full year margin in the back half of the year.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

So in line with our expectations.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

We've deployed Copilot across all of our go to market teams. I think what that's really allowed us to do is take the efficiencies gained by that deployment and their use of the platform and allowed us to invest more in our upmarket growth and our upmarket sales resource allocation. And so we feel really good about our continued opportunity to shift more and more resources upmarket as we get efficiencies across the sales team.

Elizabeth Porter
Elizabeth Porter
Executive Director at Morgan Stanley

Great, thank you.

Operator

Thank you. One moment for the next question. The next question will be coming from the line of Raimo Lenschow of Barclays. Your line is open.

Raimo Lenschow
Raimo Lenschow
Managing Director at Barclays

Perfect. Thank you. Christy, on that topic, please, if you and you talked about the extra buffer, where you kind of put it in. If you think about a downturn or, like, kind of tougher times in selling, where did you think the issue is going to be more on down market that there you had already like quite a few years of issues or more on the up market and how do you brace for that?

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Yeah, think the down market will be more reactive to a macro slowdown than our upmarket business. Think we're I think we feel like we're in better probably the best shape we've really ever been in from an upmarket, downmarket mix perspective to weather something. Worth reminding our initial guidance provided an opportunity for down market to decline and be managed down at an acceleration relative to where we were in 2024. And our guidance today continues to allow for that. So we continue to feel comfortable managing the down market business to a place where it's a smaller and healthier version of itself.

Raimo Lenschow
Raimo Lenschow
Managing Director at Barclays

And then one follow-up for Henry. It's like, obviously in the front office space, there's a lot of talk on agents, co pilots, etcetera. Like what do you see in terms of customer understanding or where the different vendors with the different offerings fit in and what can you do to kind of improve your standing there? Thank you.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

I think of all the departments in corporate America, go to market has been the slowest to leverage AI and agents in their motions and I think the big reason for that is that you need, it is necessary for you to leverage third party data and third party insights in order for you to build an AI agent that's relevant to go to market professionals. You can't just rely on your first party data the same way that you could rely on first party data to build a support ticket agents or a customer service agent. The data that go to market professionals need exists outside of their first party data. Now that first party data is incredibly important and it needs to be married to third party data to actually execute an AI driven motion, which is why we built GTM Studio is to allow our customers to bring what was historically very siloed go to market data together with third party data and then build those AI motions and AI agents off of perfected, enriched, and broad and a broad data asset that includes both first and third party data. We think this is the unlock for go to market teams to actually go to market with AI.

Raimo Lenschow
Raimo Lenschow
Managing Director at Barclays

Makes total sense. Thank you.

Operator

Thank you. And our next question will be coming from the line of Kash Rangan of Goldman Sachs. Your line is open.

Kash Rangan
Kash Rangan
Managing Director at Goldman Sachs

Hi, thank you very much. My question would be with respect to the new emphasis of the company go to market, Henry, which I can certainly appreciate, what new budgets can you go after with this new positioning? And what are the new terms you can go after as a result of that? And also moving up market is laudable, but it's also higher cost of acquiring business. So as you move up market, what is the trade off with respect to profitability that you might be making, investing in new markets, new enterprise customers, new distribution, can be a bit of a trade off in the near term?

Kash Rangan
Kash Rangan
Managing Director at Goldman Sachs

How do you weigh the near term versus a longer term payoff? Thank you so much.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

A lot in there. I think the first thing is in a down market, we've been moving more and more of our business to digital self-service. And so in the micro SMB today, we are pushing micro SMB to digital self-service where they're transacting without the aid or help of a seller. That's new in our go to market motion. We feel good about the trajectory that's happening there.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

That has already allowed us to move and reallocate resources from the down market and move those resources upmarket. I should remind everybody that our upmarket business is meaningfully more profitable than our downmarket business And so as we move more and more of the business up market, we have the opportunity to increase margins as that business is far more profitable than our down market business. And then on the question of expanding within the enterprise and other budgets that we would unlock, I think our big opportunity that we have a number of opportunities there. First with our go to market studio product that we launched this week, We have the opportunity to bring rev ops professionals, sales ops professionals, and sales leadership into the ZoomInfo platform to help them build the go to market motions and go to market campaigns that they've always had trapped in their heads, but would have to sit in a long queue with IT and data science to actually bring to life. And so we're really excited about bringing a much broader spectrum of go to market leadership into the ZoomInfo platform.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

And then also I mentioned this, but usage of our platform by account executives and account managers who are on Copilot now matches the utilization of our platform by our heaviest SDR prospecting use case. And so that gives us real expansion to bring in a much broader spectrum of the go to market teams into ZoomInfo and to get more than just top of the funnel prospecting use cases and broaden that to account executive and account manager and CSM use cases.

Kash Rangan
Kash Rangan
Managing Director at Goldman Sachs

Super. All the best for the journey, Kendrick. Thank you so much.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Thank you, Kash.

Operator

Thank you. And our next question will be coming from the line of Brad Zelnick of Deutsche Bank. Your line is open.

Brad Zelnick
Brad Zelnick
Managing Director at Deutsche Bank

Great. Thanks so much for taking the question. It's so great that you guys are right here in New York. Nice to see the upmarket momentum here in Q1. I've got two questions.

Brad Zelnick
Brad Zelnick
Managing Director at Deutsche Bank

Maybe first for Henry. I was really intrigued by the Intuit relationship that you talked about. I wanted to understand, is that specific to Intuit Enterprise Suite, their upmarket product? And can you maybe talk more about the economic relationship, what this can develop into, and how many more such relationships are out there that you can go after?

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Thanks, Brad. We are really excited about our partnership with Intuit. It's a partnership that has grown with Merit over time, and we continue to find new and broadening use cases there. It's not just limited to the enterprise suite at Intuit. It's much broader than that.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Particularly, we've been helping them with their mid market focused business and their outbound outreach and think that we can expand much further to more data management, data cleanliness opportunities within the company. Look, I think the Intuit is a good example of what we see across all of our enterprise customers. We are lightly penetrated into our enterprise customers or upmarket customers And we see no demand ceiling today in our ability to continue to grow within the enterprise. And so our job now is to execute on that opportunity to learn from the way that we're deploying solutions and enabling our enterprise customers and then bring that across the enterprise base. But we don't see any demand difficulties and continuing to grow that upmarket business because we're so lightly penetrated across the enterprise.

Brad Zelnick
Brad Zelnick
Managing Director at Deutsche Bank

Huge opportunity. If I can follow-up for you, Graham. As we think about your comments and the forecast that you put together in the conservatism, the embedded caution given the backdrop, I just wanna be clear that in terms of close rates, pipeline build or anything, average discount trends, is there anything in the last six weeks here into Q2 that you're seeing that is informing the way that you think about the forecast? And if we think upmarket versus downmarket, is there one versus the other that you're perhaps more concerned about?

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

We haven't seen anything in the past six weeks with our customers that is different. I think that our caution is informed by the broader uncertainty and I think that's really what's informing this reiteration and slight raise on revenue. What was the last part of the question, Brad?

Brad Zelnick
Brad Zelnick
Managing Director at Deutsche Bank

Just thinking upmarket versus downmarket if there's one or the other you're more concerned about as you look to the remainder of the year?

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Yes. We feel we continue to feel really bullish around the up market opportunity. We got to 3% growth in Q1 and we're really excited about the path we're on to mid single digits in 2025. Down market would probably be earlier to react to some macro worsening. So I think that we recognize that our initial guidance accounted or gave us a lot of room to manage that part of the business.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

And we're just not going to really rely on down market to contribute to our revenue guidance in any significant way.

Brad Zelnick
Brad Zelnick
Managing Director at Deutsche Bank

Makes perfect sense. Thanks so much, guys.

Operator

Thank you. And our next question will be coming from the line of Jackson Avelier of KeyBanc Capital Markets. Your line is open.

Jackson Ader
Jackson Ader
Managing Director at KeyBanc Capital Markets

Great. Thanks for taking our questions, guys. Henry, on the upmarket growth, how much of that growth is coming from some of those customers that are actually hiring sales reps and like adding new seats to the platform?

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

I can take that. It's a mix. So we have, some of our customers are hiring sales reps. A lot of our upmarket growth comes from our operations product, which is up double digits year over year. That's not really a seat based model.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

That's usually data delivery model on a subscription basis. So we definitely have a mix of customers and prospects that are growing seats. We have a mix of customers that are signing up for our operations business.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

And then also, mentioned this, we are expanding our use cases across account executive, account manager, and CSM seats as well, where historically, we may have been limited just to the top of the funnel SDR use case. Today with Copilot, we're able to expand beyond just that top of the funnel use case. And so those seats existed within our customer base. They don't need to be hired for us to sell into. But now we have product that delivers a use case, and value proposition for them.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

And then the the product itself is the is bringing them in and having them engage with the product at levels that are the same as our SDR prospecting use case.

Jackson Ader
Jackson Ader
Managing Director at KeyBanc Capital Markets

Okay. So so, I mean, would it be fair to characterize it as, like, you know, sales hiring is not yet a tailwind for you guys at the moment? Like, it could be kind of upside as if things improve through the year?

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Yes. Definitely.

Jackson Ader
Jackson Ader
Managing Director at KeyBanc Capital Markets

Okay. Okay. Cool. And then my follow-up on remaining performance obligation, when should we expect the growth in those whether it's total or current? When should we expect those kind of more reflect what you're seeing in the upmarket motion?

Jackson Ader
Jackson Ader
Managing Director at KeyBanc Capital Markets

Thank you.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Yes. I think when I look at the current bookings growth, we've been negative and then I think we were at 0% in Q1. So the trajectory there is improving. I would expect to get back to positive there. It's mostly a matter of time.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Q1 was the last quarter where we were lapping a compare last year where we had a high volume of down market new business transactions that didn't go through our more rigorous qualification process. So, we didn't really fill the bucket up again with those same or similar transactions in Q1. Once we get into Q2 of this year, where we start lapping the introduction of the new business risk model last year, and we start to get into heavier upmarket quarters, we should have an opportunity to start to get back to positive current bookings growth.

Jackson Ader
Jackson Ader
Managing Director at KeyBanc Capital Markets

Got it. All right. Thank you very much.

Operator

Thank you. And our next question will be coming from the line of Brent Bracelin of Piper Sandler. Your line is open.

Brent Bracelin
Brent Bracelin
Sr. Research Analyst at Piper Sandler Companies

Thank you. Good afternoon. Graham, wanted to double click into the down market business. I get that you're seeing a good healthy acceleration up market, but the down market business still looks like it's a $350,000,000 ARR business. How much do you think that business could contract?

Brent Bracelin
Brent Bracelin
Sr. Research Analyst at Piper Sandler Companies

Do you hear that contracting for the next year, for the next couple of years? I think it makes sense to focus up market, but any color on the duration of that business and how it contracts over time? And one quick follow-up for Henry. Thanks.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Sure. We expected it to contract in 2025 and contracted a faster pace than it did in 2024. In 2024, was down 9%. Our guidance in 2025 implies that it would be down in the high negative teens. I think the way we would think about this is getting to an optimal mix up market versus down market of the business.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

We're at 71%, twenty nine % right now. That first milestone is let's get to 75%. And I think once we get to 80%, that would be my assumption around where down market would probably stabilize as the healthier and smaller version that we have been talking about.

Brent Bracelin
Brent Bracelin
Sr. Research Analyst at Piper Sandler Companies

Totally makes sense, kind of more of an eightytwenty model. And then Henry for you, company is generating over $100,000,000 a quarter in cash on average here. You've done a dozen acquisitions over the last ten years, really helping kind of reposition the company. What's your appetite to do both buyback and tech tuck in M and A? Love to get your thoughts there.

Brent Bracelin
Brent Bracelin
Sr. Research Analyst at Piper Sandler Companies

Thanks.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Look, I think that we're going to be opportunistic with M and A, particularly tuck in M and A. But look, right now, we're gonna continue to aggressively reduce the share count at these levels, given how much greater our intrinsic value is than than the market value today. We have great confidence. I have tremendous confidence in the future of ZoomInfo, And I really believe that the best company to do m and a against today is ZoomInfo, and we're gonna use our cash to buy back shares of what we believe is the lowest priced, most opportunistic company to buy shares again.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Makes sense. Thank you.

Operator

Thank you. And our next question will be coming from the line of Taylor McGinnis of UBS. Your line is open.

Taylor McGinnis
Taylor McGinnis
Equity Research Analyst at UBS Group

Yeah. Hi. Thanks so much for taking my question. Graham, one for you. So when we think about the evolution of NRR this year, how much of it is an improvement that you're seeing in the different customer segments starting to emerge, so those specific NRRs versus mix?

Taylor McGinnis
Taylor McGinnis
Equity Research Analyst at UBS Group

So maybe you could talk a little bit about that. And part of the reason I ask is, as you start to lap the SMB go to market changes that you made, I guess, how much of a tailwind could that be to SMB NRR and therefore the total two? And then to the extent you can share what NRR is being baked into the guide, I think that would be helpful as well.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Yes. When I think about the proportion of just better upmarket mix versus improvements within those segments, right now it's really being driven by better upmarket retention. If you look back to when we were at 85% for several quarters there, The sequential uptick is coming from better retention upmarket. We are not getting a large tailwind yet from the better mix. I think over time, as we continue to improve upmarket retention, as we take the upmarket mix from the low 70s to the mid 70s, then it starts to become more fiftyfifty.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

But right now, the biggest driver of our retention improvement is upmarket retention improvement. And then, I don't think we're gonna talk or disclose explicitly the retention in the guide. I think you could just think about it as mid single digit upmarket growth that is being driven by improving retention in upmarket and then downmarket eight to nine points degradation in year over year growth where we see lower retention and the potential for that to remain lower than it's been.

Taylor McGinnis
Taylor McGinnis
Equity Research Analyst at UBS Group

Great. Thank you so much.

Operator

Thank you. And the next question will be coming from the line of Michael Turrin of Wells Fargo Securities. Your line is open.

Michael Turrin
Michael Turrin
Managing Director, Software Equity Research Analyst at Wells Fargo

Hey, great. Thanks very much. Appreciate you taking the question. It's the second straight quarter we've seen of pretty good consistent top line upside. So just I wanted to spend some time just on the commentary you're making around incremental conservatism and the rest of your forecasts.

Michael Turrin
Michael Turrin
Managing Director, Software Equity Research Analyst at Wells Fargo

Is there any more color you can add on which inputs are changing relative to what you're assuming at the start of the year? And maybe any added commentary you have just around the visibility into rest of your targets, at least on the upmarket side, is just helpful context as we roll it all together. Thank you.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

I think that the methodology and how we develop the guidance hasn't really changed. We basically went through the same process for revenue, profitability, cash flow, adjusted earnings per share. And then considering kind of the unique environment that we're in right now, we just essentially the last step was layer on an incremental amount of caution around the guidance. So I don't think there's one or two things I would point to. I think you should still expect in the guide mid single digit upmarket growth, a decline in the downmarket growth trajectory and consistent margins.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Thank you.

Operator

Thank you. Our next question will be coming from the line of Brian Peterson of Raymond James. Your line is open.

Brian Peterson
Brian Peterson
Managing Director at Raymond James Financial

Thanks, gentlemen, and congrats on the quarter. Henry, you've mentioned a few times that you're expanding the roles that you're addressing. I'm curious if there's one role in particular where you're most excited about in terms of incremental adoption in 2025? And maybe just remind us any sense of what your seat penetration is with your enterprise customers? Thanks, guys.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Sure. Seat penetration in enterprise customers is very low. I would tell you like maybe high single digits, low double digits. And then on roles that we're most excited about, I don't think there's one. Let me give you a couple.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

I think first expanding into the account executive and account manager workforce, we think is a huge opportunity. It represents three times the seat opportunity as SDRs and top of the funnel sellers represent, and we have a great solution for them that they are leveraging and using with Copilot. So we're excited about continuing our journey to expand into that area. Then I would tell you that rev ops, sales ops, and then by extension sales leadership with GTM Studio will be a target audience of ours. These are people in the company who have the most creative ideas about how to go to market, but they get stuck in a long line with IT and data science and engineering just to see those ideas come to life.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

And that's a pretty painful experience that we've been really focused on building around and giving them a solution to be able to get those creative ideas in the market and executed on as fast as possible. And when we're showing GTM Studio to those leaders, they're incredibly excited about getting their hands on the platform, and we think we're gonna continue to have moments where we get to delight our customers like that and are excited to be in that to have that opportunity.

Brian Peterson
Brian Peterson
Managing Director at Raymond James Financial

Thanks, Henry.

Operator

Thank you. And the next question will be coming from the line of Patrick Walravens of Citizens. Your line is open.

Austin Cole
Software Equity Research Associate at Citizens JMP Securities, LLC

Great, this is Austin Cole on for Pat Walravens. Henry, I'm wondering about the kind of Genesis for this new chapter of the ZoomInfo story, if you will. When did you start coming up with this larger go to market vision? It seems in some sense like a kind of natural evolution of the platform, but wondering if there were some maybe potential buyers out there that were inquiring about these kind of capabilities that go to market studio can now provide.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

So I think probably the big thing that we realized was no matter how great of an email you put together, no matter how personalized it is, no matter if it brings in insights from the most rare bespoke sources and is perfectly crafted that unless a frontline seller or a marketer takes action against that perfect audience, no revenue is generated. And so we were hearing from our customers, Hey, I'm pulling in intent and website visitors and all of these different unique data points, but I'm not seeing it turn into revenue the way that I anticipated it would. Yes, it performs better than our last campaigns that were less personalized, but we wanna see this move exponentially. And so when we were able to bring go to market studio together and marry that to Copilot in a way that gives Copilot the ability to be in front of a frontline seller connected to their Slack, connected to their teams, connected to their email, connected to their text messages, designed

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

so

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

that they could take action quickly with those audiences that their sales leaders and their rev ops and sales ops professionals are putting together for them. We recognize that once that you once you marry frontline execution with that perfect personalized insight created email and insight created talk track, that that's where you can really move the needle and go to market. And so that was sort of the learning that we had that drove us down this this road to put those together.

Austin Cole
Software Equity Research Associate at Citizens JMP Securities, LLC

Super interesting. Thank you.

Operator

Thank you. And our next question will come from the line of Surinder Thind of Jefferies. Your line is open.

Surinder Thind
Surinder Thind
Senior VP & Equity Analyst at Jefferies

Thank you. When you guys were thinking about kind of the pipeline and the idea that you're excited about what you see in the upmarket, Can you maybe talk about the mix itself? Copilot adoption early on was primarily newer customers, but it sounds like the increase in NRR of existing clients has been a more recent driver. Just how are you thinking about the different those two cohorts and kind of what's ahead?

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Yeah, I think we'd view the net revenue retention as the primary driver of stabilization and a return to reacceleration of revenue.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Our new business pipeline is more segmented than it's ever been. We introduced this in 2024. But for the down market customers, we're able to score them, qualify them, figure out whether it should be going to a PLG digital motion, or if it's more of the higher end of down market, whether we should keep a sales rep in that sales cycle. And then upmarket, we've really specialized and segmented our account executive base so that we are investing behind some of these longer sales cycles for these larger customers. So we're much more prescriptive and scientific with our customer acquisition engine, and that will eventually that's starting to show up in improving retention outcomes.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

But improvement in retention is the key driver in getting back to our growth goals.

Surinder Thind
Surinder Thind
Senior VP & Equity Analyst at Jefferies

Thank you.

Operator

Thank you. And our next question will come from the line of Rishi Jaluria of RBC. Your line is open.

Rishi Jaluria
Rishi Jaluria
Managing Director at RBC Capital Markets

Wonderful. Hey, and Graham, thanks so much for taking my question. Just one for me. I want to go back to the Q2 revenue guidance and maybe under unpack some of the set of assumptions behind it. You saw in this quarter above 1% days adjusted sequential growth.

Rishi Jaluria
Rishi Jaluria
Managing Director at RBC Capital Markets

Your guide calls for negative 4% days adjusted sequential growth by my math. At the same time, you are seeing improving momentum upmarket. Your comps don't get aren't super difficult and you're seeing success with co pilot as well. Maybe just walk us through kind of the set of assumptions you have behind it. How much of it is conservatism, especially as you're saying that the guidance philosophy is pretty similar as before?

Rishi Jaluria
Rishi Jaluria
Managing Director at RBC Capital Markets

Thank you so much.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Sure. The incremental caution I've talked about was baked into both the full year and the quarterly guides. Of course, the magnitude is bigger by nature with the full year than the quarter. But yeah, Q1 was another great revenue quarter that was driven by great Q4 sales performance and continuing better cash collection and write off outcomes. So there is a little bit of seasonality in there relative to our up market opportunity, which we usually are starting to see more and more at the end of Q2 and Q4.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

But you could think about this incremental caution that we've layered in as applicable to the full year as well as the Q2. Got it. Thank you.

Operator

Thank you. And our next question will be coming from the line of Alan Verzhusky of Scotiabank. Your line is open.

Allan Verkhovski
Associate Director - Equity Research at Scotiabank

Hey, guys. Thanks for taking the question. Great to hear retention in the software vertical improved sequentially for the fourth quarter in a row. Can you just go a layer deeper on what trends you saw in this segment the past few months? And can you update us on how this vertical is impacting Xumento's total revenue growth?

Allan Verkhovski
Associate Director - Equity Research at Scotiabank

Thanks.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

Yeah. So we saw retention in the software vertical improve sequentially for the fourth quarter in a row. Software vertical was one of the largest contributors to the deceleration and decline in growth that we saw starting in 2022. We experienced a lot of down sell pressure there. So, general, we were able to keep most of those logos, but at lower annual spends.

Graham O’Brien
Graham O’Brien
Interim CFO at ZoomInfo

As we got into the middle of 2024 and more so now, we're not we don't have that level of down sell pressure. And in fact, we're starting to get to more of an upsell opportunity place again with the software vertical. So as a, the retention improvement is really positive for four quarters in a row. We think we're almost at that place now where software is actually contributing back or back contributing to our aggregate growth as opposed to impairing it.

Henry Schuck
Henry Schuck
Founder, Chairman of the Board & CEO at ZoomInfo

Great. Thank you everybody for joining us tonight. We appreciate it.

Operator

Thank you for participating in today's conference call. You may all now disconnect.

Executives
Analysts
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Key Takeaways

  • ZoomInfo reported Q1 GAAP revenue of $306 million and adjusted operating income of $101 million (33% margin), both above the high end of guidance.
  • The company’s upmarket business now represents 71% of total revenue, with 1,868 customers paying over $100,000 in ACV (up 108 year-over-year) and 3% year-over-year growth in that segment.
  • AI-powered applications continue to gain traction: ZoomInfo Copilot has expanded beyond SDR prospecting into account executive and account manager roles, including deployment to over 300 Stripe sellers.
  • ZoomInfo launched GTM Studio to unify first- and third-party go-to-market data with orchestration and AI in one platform, leveraging its RingLead, Chorus and SetSale acquisitions.
  • Despite Q1 strength, management adopted a more cautious full-year outlook—revising 2025 revenue guidance to $1.195 billion–$1.205 billion at a 36% adjusted margin—while repurchasing over $110 million of shares in Q1–Q2.
AI Generated. May Contain Errors.
Earnings Conference Call
ZoomInfo Technologies Q1 2025
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