ZoomInfo Technologies Q1 Earnings Call Highlights

Key Points

• ZoomInfo beat Q1 guidance with revenue of $310 million and adjusted operating income margin of 35%, but management said demand weakened late in the quarter, especially in software, leading to a more cautious outlook.
• The company cut full-year revenue guidance and announced a major restructuring that will eliminate about 600 roles, reduce annual operating expenses by roughly $60 million, and generate $45 million to $60 million in restructuring costs.
• ZoomInfo is shifting away from seat-based pricing toward a consumption model tied to data, insights, applications and agents, aiming to better align with AI-driven workflows and grow its non-seat-based business mix over time.

ZoomInfo Technologies NASDAQ: ZI reported first-quarter revenue and adjusted operating income above its guidance range, but management lowered its full-year outlook and announced a major restructuring as the company accelerates a shift away from seat-based software pricing toward data consumption models.

Founder and Chief Executive Henry Schuck said ZoomInfo generated first-quarter revenue of $310 million, up 1.5% year over year, and adjusted operating income margin of 35%, up more than two percentage points from the prior year. Chief Financial Officer Graham O'Brien said adjusted operating income was $110 million, while unlevered free cash flow reached $120 million.

Despite the better-than-guided quarter, Schuck said the company saw demand weaken late in March and into April, particularly among software customers. He described “AI and agentic confusion” in customer conversations, including uncertainty over what companies should build internally versus buy from vendors and where differentiation resides.

“This led to a pause in purchasing decisions,” Schuck said, adding that software customers were particularly affected by a confusing purchasing landscape and concern over disruption to their own growth.

Guidance Cut as Buyer Behavior Shifts

ZoomInfo now expects full-year 2026 GAAP revenue of $1.185 billion to $1.205 billion, which O'Brien said represents a 4% year-over-year decline at the midpoint. The company previously had not anticipated that the environment would worsen, he said.

For the second quarter, ZoomInfo guided for GAAP revenue of $300 million to $303 million, adjusted operating income of $103 million to $106 million and non-GAAP net income of $0.26 to $0.28 per share. For the full year, it expects adjusted operating income of $437 million to $447 million, a 37% margin at the midpoint, and non-GAAP net income of $1.10 to $1.12 per share.

O'Brien said the revised outlook includes more conservative assumptions around macroeconomic conditions, software vertical demand and the transition away from traditional seat-based pricing. In response to an analyst question, he said the largest portion of the guidance reduction came from restructuring the downmarket business, with additional impacts from cautious software assumptions, pricing changes and revenue-recognition variability tied to consumption plans.

O'Brien said the company expects growth to be “sustainably positive” by the second half of 2027 at the latest, following a period of transition.

Restructuring to Cut 600 Roles

ZoomInfo announced actions affecting 20% of employees, or about 600 team members, including the closure of its facilities in Israel. O'Brien said the changes are expected to reduce annual run-rate operating expenses by approximately $60 million, with restructuring largely complete by the first quarter of 2027.

The company expects restructuring costs of $45 million to $60 million, mostly cash costs, primarily incurred in the second and third quarters of 2026.

O'Brien said about half of the affected roles are in research and development, while most of the remainder are in downmarket sales and marketing. Some general and administrative roles are also impacted. He said some roles will be hired in other regions, while others will not be replaced.

Schuck said the decision was difficult because of its impact on employees, but necessary to reposition the company. He said ZoomInfo is shifting investment away from front-end application development and toward data, AI-enabled engineering, product-led growth, large language model interfaces and higher-margin customer segments.

Company Pushes Toward Consumption-Based Data Model

Schuck said AI has changed how software is built, bought and used, putting pressure on ZoomInfo’s traditional seat-based application model while creating an opportunity to make its go-to-market data more widely available across AI tools and internal customer workflows.

ZoomInfo plans to begin offering customers in the third quarter more flexibility to convert historical per-seat spending into consumption across its data, insights, applications and agents. O'Brien said the company will roll out a hybrid pricing model that pairs a low annual platform fee with pre-purchased credits instead of traditional seat-based packages.

Approximately one-third of ZoomInfo’s annual contract value is not tied to seats, O'Brien said, and the company aims to move closer to a 50-50 mix between seat-based and non-seat-based ACV over the next 18 to 24 months.

Schuck said the company’s strategy is to make ZoomInfo’s go-to-market data available wherever sales and marketing work is done, including ChatGPT, Claude, Perplexity, Microsoft Copilot, Google Gemini and internally built applications. He said customers increasingly want ZoomInfo’s data outside of its traditional SaaS interface, including through APIs and model context protocol connections.

ZoomInfo’s non-seat-based Operations and Data as a Service offerings grew more than 20% year over year in the quarter and now make up just under 20% of the business, Schuck said. O'Brien said the Operations business has stronger gross and net retention than other areas of ZoomInfo and is heavily weighted toward large enterprises across a diverse set of verticals.

First-Quarter Metrics Show Upmarket Growth, Downmarket Weakness

O'Brien said upmarket annual contract value grew 5% year over year in the first quarter, down from 6% growth in the fourth quarter but ahead of 3% growth in the year-ago period. Upmarket now represents 75% of ZoomInfo’s business.

Downmarket ACV declined 11% year over year, compared with a 10% decline in both the fourth quarter and the year-ago period. Net revenue retention was 90% for the third consecutive quarter.

Customers with more than $100,000 in ACV increased by 32 year over year but decreased by 21 sequentially. ACV from that cohort rose 10% year over year. O'Brien said the sequential change reflected weaker upsell activity late in the quarter, rather than a broad increase in churn or downsell among large customers.

In the software vertical, O'Brien said retention trends had improved sequentially for almost two years before flattening in the first quarter. He said software customers experienced elevated downsell and churn relative to the improving trends seen in 2025. By contrast, he cited solid quarters in finance, insurance, real estate, manufacturing and telecom.

Cash Flow, Buybacks and Customer Activity

ZoomInfo repurchased 13.1 million shares in the first quarter at an average price of $6.91, for an aggregate $90 million. O'Brien said the company had more than $1 billion in remaining repurchase capacity at quarter-end. ZoomInfo ended the quarter with $175 million in cash equivalents and investments and $1.3 billion in gross debt.

Schuck highlighted customer wins in the quarter with Sierra, Lyft and Wyndham Hotels and Resorts. He also cited a strategic win with a cloud software company serving managed service providers and an expansion with an AI-native security and compliance platform in a multiyear, seven-figure total contract value transaction.

Schuck said Salesforce released its prospecting agent with ZoomInfo as its first and primary external data provider, while HubSpot shipped its prospecting agent with a native ZoomInfo integration. He said those integrations support the company’s view that its data remains relevant as AI-driven sales workflows expand.

During the question-and-answer session, Schuck said AI-native customers are building their own internal revenue workflows and using ZoomInfo primarily for data on companies, contacts, hierarchies and signals. “These deals are much heavier on the data consumption side, and much lighter on the seats,” he said.

O'Brien said the company remains focused on protecting and growing cash flow per share “in any set of conditions” as it manages the transition.

About ZoomInfo Technologies NASDAQ: ZI

ZoomInfo Technologies Inc is a cloud-based software company specializing in business-to-business (B2B) intelligence and go-to-market solutions. Its platform aggregates firmographic, demographic, technographic and intent data to help sales, marketing and recruiting professionals identify, engage and close on high-value prospects. Subscribers gain access to a proprietary database of company and contact information, enabling targeted outreach and data enrichment across various workflows.

Founded in 2007 and headquartered in Vancouver, Washington, ZoomInfo has expanded its capabilities through both internal development and strategic acquisitions.

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