ZoomInfo Technologies Inc. Q1 FY2025 earnings call

• Delivered better-than-expected financial results with GAAP revenue of $306 million and adjusted operating income of $101 million (33% margin) in Q1 2025, both above guidance. - Shifted upmarket continued with 1,868 customers with over $100,000 in ACV, fourth straight quarter of sequential improvement. - Expanded Go-To-Market Intelligence platform with AI-powered applications, including Copilot deployment at Stripe and activation by a large food delivery vendor. - Launched Go-to-Market Studio to unify go-to-market data and AI for revenue leaders. - Record NPS scores, with enterprise NPS up over six points year-over-year in Q1. - Reallocated resources upmarket, with upmarket business growing and having better profitability than down-market.

In Q1 2025, upmarket business grew 3% year-over-year and now represents 71% of the business. Down-market business declined 10% year-over-year. Upmarket has better economics than down-market, with a margin difference of several thousand basis points.

• Q2 GAAP revenue guidance: $295 million to $298 million; adjusted operating income: $101 million to $104 million; non-GAAP net income: $0.22 to $0.24 per share. - Full year 2025: GAAP revenue $1.195 billion to $1.205 billion (negative 1.2% annual growth at midpoint); adjusted operating income $426 million to $436 million (36% margin at midpoint); non-GAAP net income $0.96 to $0.98 per share; unlevered free cash flow $420 million to $440 million. - Added incremental caution to guidance due to unique current economic environment.

Q: Why now on the change around the name, the ticker, the category, and what are you seeing from changing conversations with renewing customers, particularly upmarket, driving acceleration?

A: Henry Schuck said there's expansion of the platform to be a broader go-to-market platform, not just for sellers but for account executives, etc. Upmarket customers are thirsty for data to leverage AI and need front-end applications to execute insights.

Q: What's the status of Copilot ACV and any speed bumps?

A: Graham O’Brien said Copilot continued to grow as expected, and Henry Schuck noted they're getting better at navigating data privacy, security, and AI governance with clients, not creating real speed bumps.

Q: On the expense side and internal efficiencies, how do you weigh near-term vs longer-term payoff?

A: Henry Schuck said guidance is driven by caution due to uncertain environment. Deployed Copilot across go-to-market teams, gained efficiencies to invest more in upmarket growth.

Q: How does down-market react to macro slowdown vs up-market?

A: Henry Schuck said down-market is more reactive; the company is comfortable managing down-market to a smaller, healthier version.

Q: On customer understanding of agents and Copilots, how do you improve standing?

A: Henry Schuck said go-to-market has been slow to leverage AI, need third-party data. GTM Studio allows bringing siloed go-to-market data with third-party data to build AI motions.

Q: New budgets and terms with new go-to-market positioning, trade-off with profitability?

A: Henry Schuck said down-market moving to digital self-service, reallocating resources upmarket which is more profitable. Go-To-Market Studio brings Rev Ops, etc., into the platform.

Q: On upmarket growth and seat hiring, mix of growth?

A: Graham O’Brien said mix of customers with sales rep hiring and operations product growth (double-digits year-over-year). Henry Schuck said Copilot expands use cases to account executives, etc.

Q: Remaining performance obligation growth and upmarket motion?

A: Henry Schuck said current bookings growth was 0% in Q1, trajectory improving, expect to get back to positive once lapping compare last year.

Q: Down-market business contraction duration?

A: Graham O’Brien said down-market expected to contract in 2025 faster than 2024, aiming for optimal mix to 80/20.

Q: Appetite for buyback and M&A?

A: Henry Schuck said aggressive with buybacks as intrinsic value higher than market value, opportunistic with M&A.

Q: NRR evolution and segments?

A: Graham O’Brien said NRR improvement driven by better upmarket retention, not large tailwind from mix yet.

Q: Q2 revenue guidance assumptions?

A: Graham O’Brien said incremental caution baked into guidance, similar philosophy as before.

Q: Excited roles for incremental adoption and seat penetration?

A: Henry Schuck said excited about account executives, account managers, Rev Ops, sales ops, and sales leadership; seat penetration in enterprise customers is low, but expanding.

Q: Genesis of go-to-market vision?

A: Henry Schuck said realization that frontline execution needed after pulling in insights, leading to Go-To-Market Studio and Copilot marriage.

Q: Pipeline and upmarket mix impact on remaining performance obligation?

A: Henry Schuck said current bookings growth trajectory improving, expect to get back to positive.

Q: Software vertical retention trends?

A: Henry Schuck said retention in software vertical improved for fourth quarter, no down sell pressure now, starting to upsell again.