ZoomInfo Technologies Inc. Q3 FY2025 earnings call

Key Points

• Executing well and capitalizing on AI opportunity. Q3 saw improvement across all metrics, with GAAP revenue and adjusted operating income above guidance.
• Accelerated upmarket growth; upmarket business now 73% of total ACV. Net revenue retention improved for the 5th straight quarter, and Rule of 40 was achieved.
• Product innovation: Copilot, GTM Studio, and GTM Workspace are driving engagement. Wins with large customers like insightsoftware, Ryder System, etc.
• Margin improvement of nearly 300 basis points sequentially, and aggressive share repurchasing to drive shareholder value.

GAAP revenue in Q3 was a record $318 million, up 5% year-over-year. Adjusted operating income was $118 million, a margin of 37%. The Operations suite grew more than 20% year-over-year. The upmarket business now represents 73% of total ACV, up 10 percentage points in 2 years. Net revenue retention improved to 90% in the quarter, up 5 percentage points year-over-year. There are 1,887 customers with more than $100,000 in ACV, a 4% year-over-year increase. ACV for the $1 million cohort accelerated in the quarter and was up more than 30% year-over-year.

Q4 Guidance

• GAAP revenue expected in the range of $307 million to $310 million.
• Adjusted operating income expected in the range of $117 million to $120 million.
• Non-GAAP net income expected in the range of $0.27 to $0.29 per share.

Full Year 2025 Guidance

• GAAP revenue expected in the range of $1.237 billion to $1.240 billion (low single-digit growth).
• Adjusted operating income expected in the range of $440 million to $443 million (36% margin).
• Non-GAAP net income expected in the range of $1.04 to $1.06 per share.
• Unlevered free cash flow expected in the range of $424 million to $444 million.

Risks

• Uncertainties related to AI adoption and market competition could impact business performance.
• Seasonality may cause fluctuations in sequential revenue growth.
• Dependence on proprietary data assets and potential challenges in maintaining data quality could pose risks.

Q: Mark Murphy asks about revenue upside in Q3 and what fueled it.

A: Michael O'Brien responds that better renewal outcomes from products like Copilot, large TCV deal, upmarket shift, and usage-based revenue contributed to the revenue upside.

Q: Elizabeth Porter asks about GTM Studio early customer feedback.

A: Henry Schuck states early feedback on GTM Studio is positive, and it's bringing in greenfield adoption and replacing legacy tools for existing customers.

Q: Siti Panigrahi asks about upmarket retention.

A: Michael O'Brien and Henry Schuck discuss upmarket retention improvement, Copilot engagement leading to higher net retention, and growth in the $100,000 and $1 million ACV cohorts.

Q: Brad Zelnick asks about Agent Force integration.

A: Henry Schuck talks about the partnership with Salesforce, the revenue agent in Salesforce's marketplace, and upcoming products.

Q: Alex Zukin asks about billings vs RPO.

A: Michael O'Brien explains booking calculations have noise, and Q3 2024 had higher-than-normalized billings growth affecting comparisons.

Q: Taylor McGinnis asks about seasonality and Q4 guide.

A: Michael O'Brien and Henry Schuck discuss continuing to manage expectations with year-over-year growth focus and sequential trends fluctuating.

Q: Raimo Lenschow asks about geographies/verticals with positive trends.

A: Henry Schuck and Michael O'Brien mention positive trends in upmarket ACV acceleration, retention improvements, and operations growth across various areas.

Q: David Hynes asks about Copilot upmarket usage and pricing.

A: Michael O'Brien and Henry Schuck talk about Copilot's role in upmarket business, pricing design for customer simplicity, and focus on early adoption learning.

Q: Koji Ikeda asks about the private unified data and AI company sale.

A: Henry Schuck discusses the sales process with an existing customer, trust built, and ongoing opportunity for account growth.

Q: J. Lane asks about go-to-market resourcing and inorganic growth.

A: Henry Schuck talks about sales capacity, customer relationships, and potential inorganic contributions to accelerate the AI roadmap.

Q: Tyler Radke asks about Rule of 40 for 2026.

A: Michael O'Brien mentions focus on revenue growth, margin expansion, and aggressive share repurchases in 2026 to drive free cash flow per share growth.

Q: Johnathan McCary asks about net new business and Copilot personas.

A: Henry Schuck and Michael O'Brien discuss Copilot expanding personas from SDRs to various roles and GTM Studio extending persona expansion to RevOps and frontline leadership.

Q: Rishi Jaluria asks about PLG motion and AI search impact.

A: Henry Schuck talks about upmarket focus mitigating SEO/AIO impacts, PLG performance in line with expectations, and focus on growing upmarket customer base.

Q: Clark Wright asks about leveraging AI internally.

A: Henry Schuck discusses internal AI use for efficiency in sales, finance, and product organizations, impressing customers with best practices.

Q: Jackson Ader asks about 2026 free cash flow per share acceleration.

A: Michael O'Brien talks about contributors including revenue growth, margin expansion, and aggressive share repurchases driving free cash flow per share acceleration in 2026