bymuratdeniz2023 was the year of artificial intelligence (AI). And this is continuing into 2024. But I'm looking for companies set to benefit from the proliferation of AI that haven't taken off yet. One such company is ZoomInfo (NASDAQ:ZI). ZI's business-to-business (B2B) contact database is the biggest and most up-to-date in the world. And this data will be imperative for marketing and sales teams to use in their generative AI models. The Fuel of AI Data fuels AI. Without data, AI models could not be t ...

Helping businesses find, acquire, and grow customers, ZoomInfo Technologies (ZI 0.51%) and its business-to-business data platform has been on an absolute roller-coaster ride in its first few years as a public company. After making it through what might've been one of the worst possible times to go public in June 2020, ZoomInfo's stock rocketed to new all-time highs by 2021.Bolstered by low interest rates and a venture capital market asking businesses to grow at all costs, ZoomInfo's sales-growth-focused pla ...

JHVEPhoto/iStock Editorial via Getty ImagesAn unpleasant artifact of the tech boom-is it ready to regenerate? First, a bit of mea culpa here. I have been a partisan of ZoomInfo (NASDAQ:ZI) shares for some time now, and have the bloodied countenance to prove it. I was mesmerized by the opportunity to really automate the B to B sales process and ignored the glaring issue of sector concentration. And then I was further mesmerized by what looked to be a compressed valuation and ignored the rather obvious fa ...

VANCOUVER, Wash.--(BUSINESS WIRE)--ZoomInfo (NASDAQ: ZI), the go-to-market platform to find, acquire, and grow customers, secured the top spot on 30 grids among its 150 No. 1 rankings in G2’s Winter 2024 Grid® Reports, which calculate customer satisfaction and market presence across more than 1,000 categories. ZoomInfo sits in the top 0.01% of companies with the most No. 1 rankings in G2’s Winter 2024 Reports, which assess over 16,000 products across more than 1,000 categories. ZoomInfo was recognized as ...

ZoomInfo Technologies Inc. (NASDAQ:ZI) Q3 2023 Results Conference Call October 30, 2023 4:30 PM ET Company Participants Jerry Sisitsky - IR Henry Schuck - Founder and CEO Cameron Hyzer - CFO James Roth - Chief Revenue Officer Conference Call Participants Mark Murphy - JPMorgan Tyler Radke - Citi Brad Zelnick - Deutsche Bank Michael Turrin - Wells Fargo Brent Bracelin - Piper Sandler Koji Ikeda - Bank of America Alex Zukin - Wolfe Research Elizabeth Porter - Morgan Stanley Kash Rangan - Goldman Sachs D.J. Hy ...

Financial Performance - Net income for the three months ended September 30, 2023 was $30.2 million, compared to $17.9 million in the same period in 2022, representing a 69% increase[234] - Adjusted Operating Income for the three months ended September 30, 2023 was $126.2 million, up 7% from $118.4 million in the same period in 2022[240] - Revenue for the three months ended September 30, 2023 was $313.8 million, a 9% increase from $287.6 million in the same period in 2022[240] - Adjusted EBITDA for the three months ended September 30, 2023 was $131.1 million, a 6% increase from $123.2 million in the same period in 2022[246] - Adjusted Net Income for the nine months ended September 30, 2023 was $311.0 million, up 22% from $254.7 million in the same period in 2022[234] - Adjusted Operating Income for the nine months ended September 30, 2023 was $372.1 million, a 16% increase from $320.9 million in the same period in 2022[241] - Revenue for the nine months ended September 30, 2023 was $923.1 million, a 16% increase from $796.4 million in the same period in 2022[240] - Adjusted EBITDA for the nine months ended September 30, 2023 was $386.6 million, a 16% increase from $333.7 million in the same period in 2022[247] - The company's Adjusted Operating Income Margin remained consistent at 40% for both the three and nine months ended September 30, 2023[240][241] - Growth in revenue was driven by additional customers and increasing revenue from existing customers in both the three and nine months ended September 30, 2023[240][241] - Revenue for Q3 2023 was $313.8 million, a 9% increase compared to $287.6 million in Q3 2022, driven by new customer additions partially offset by cancellations[271] - Revenue for the nine months ended September 30, 2023 increased by $126.7 million (16%) to $923.1 million compared to $796.4 million for the same period in 2022, driven by new customer additions partially offset by cancellations[278] - Net income for the trailing twelve months ended September 30, 2023 was $136.0 million, with EBITDA of $412.8 million and Adjusted EBITDA of $518.2 million[310] Customer and Contract Metrics - ZoomInfo's net annual retention rate was 104% for the year ended December 31, 2022[228] - As of September 30, 2023, ZoomInfo had 1,869 customers with over $100,000 in ACV[228] - Over 40% of ZoomInfo's customer contracts (based on annualized value) are multi-year agreements[218] Share Repurchase Program - ZoomInfo repurchased 8,800,000 shares of Common Stock at an average price of $18.19, totaling $160.1 million, during the three months ended September 30, 2023[226] - ZoomInfo repurchased 12,705,412 shares of Common Stock at an average price of $19.44, totaling $247.0 million, during the nine months ended September 30, 2023[226] - As of September 30, 2023, $353.0 million remained available and authorized for repurchases under the Share Repurchase Program[226] - The Board of Directors authorized a share repurchase program of up to $600.0 million, including an additional $500.0 million approved in July 2023[323] Debt and Credit Facilities - ZoomInfo extended the maturity date of $213.0 million of its $250.0 million existing commitments of the first lien revolving credit facility to February 28, 2028[223] - ZoomInfo completed a repricing of its First Lien Term Loan Facility, extending the maturity date to February 28, 2030 and decreasing the applicable margin rate by 0.25%[222] - The company has a remaining balance of $595.5 million on its first lien term loans and $650.0 million in 3.875% Senior Notes, with principal payments due quarterly and at maturity dates in 2030 and 2029, respectively[302] - The effective interest rate on the first lien debt was 8.30% as of September 30, 2023, compared to 7.38% as of December 31, 2022[303] - The company's first lien term loan has a total principal balance outstanding of $595.5 million as of September 30, 2023, with a variable interest rate based on SOFR[332] Operating Expenses and Costs - Cost of service decreased by 7% to $44.8 million in Q3 2023, primarily due to the completion of amortization expenses related to intangible assets from a 2019 acquisition and reduced equity-based compensation[272] - Operating expenses increased by 10% to $205.9 million in Q3 2023, with a 16% increase excluding equity-based compensation, driven by higher sales and marketing expenses and increased accruals for bad debt[273] - Equity-based compensation expense decreased by 11% to $42.9 million in Q3 2023, primarily due to slower headcount growth and higher forfeitures of unvested awards[274] - Sales and marketing expenses (excluding equity-based compensation) increased by 10% to $84.8 million in Q3 2023, driven by additional salaries, benefits, and commission expenses[276] - Research and development expenses (excluding equity-based compensation) decreased by 4% to $35.6 million in Q3 2023, primarily due to reduced salaries and benefits expenses[276] - General and administrative expenses (excluding equity-based compensation) increased by 49% to $36.4 million in Q3 2023, primarily due to increased accruals for bad debt[276] - Restructuring and transaction-related expenses increased by 2450% to $5.1 million in Q3 2023, primarily due to costs related to the Ra'anana lease impairment[276] - Cost of service decreased by $5.7 million (4%) to $133.5 million for the nine months ended September 30, 2023, primarily due to completion of amortization expense related to intangible assets and reduced equity-based compensation[279] - Operating expenses increased by $67.1 million (13%) to $600.6 million for the nine months ended September 30, 2023, with a significant increase in sales and marketing expenses (excluding equity-based compensation) of $33.5 million (15%) to $253.5 million[280] - Equity-based compensation expense decreased by $10.7 million (8%) to $126.9 million for the nine months ended September 30, 2023, primarily due to slower headcount growth and higher forfeitures of unvested awards[281] Cash Flow and Liquidity - As of September 30, 2023, the company had $442.6 million in cash and cash equivalents, $125.3 million in short-term investments, and $250.0 million available under its first lien revolving credit facility[285] - Unearned revenue as of September 30, 2023 was $403.1 million, with $399.2 million expected to be recognized as revenue within the next 12 months[287] - Net cash provided by operating activities for the nine months ended September 30, 2023 was $306.1 million, driven by net income of $112.8 million and non-cash charges of $330.5 million[291] - Cash used in investing activities for the nine months ended September 30, 2023 was $11.1 million, primarily consisting of purchases of short-term investments and property and equipment[297] - Adjusted EBITDA for the 12 months ended September 30, 2023 was $518.2 million, with a total net leverage ratio to Adjusted EBITDA of 1.3x[304][305] - Cash EBITDA for the 12 months ended September 30, 2023 was $542.0 million, with a consolidated first lien net leverage ratio of 0.1x[307][308] Tax and Financial Obligations - Income tax expense for the nine months ended September 30, 2023 was $69.3 million, representing an effective tax rate of 38.1%, down from 58.1% in the same period in 2022, primarily due to reduced non-deductible equity-based compensation[284] - The company had a liability of $2,964.9 million related to projected obligations under the Tax Receivable Agreements as of September 30, 2023[322] Leases and Real Estate - The company had additional operating leases for office space with anticipated undiscounted future lease payments of $293.6 million as of September 30, 2023[324] Macroeconomic and Currency Risks - Inflation has not had a material direct effect on the company's business, financial condition, or results of operations, but macroeconomic conditions including inflation could impact future performance[331] - A hypothetical 100 basis points change in the effective interest rate would cause an immaterial impact on the company's financials over the next 12 months[332] - The company initiated a foreign currency hedging program this quarter, with derivative financial instruments totaling $13.3 million in notional value for Israeli shekel exposure[335] - Foreign currency transaction gains and losses are recorded to non-operating income (loss), with past impacts of currency fluctuations being immaterial[336] - Sales contracts are primarily denominated in U.S. dollars, with foreign subsidiaries in Israel, Canada, the UK, India, and Australia using the U.S. dollar as their functional currency[334] - A stronger U.S. dollar could reduce demand for the company's solutions outside the U.S., while a weaker dollar could have the opposite effect[334] - All cash flow hedging relationships are designated as accounting hedges as of September 30, 2023[333] Investment and Credit Risk Management - The company holds cash with reputable financial institutions, often exceeding federally insured limits, and manages credit risk through diversified deposits and periodic evaluations[337] - The investment portfolio consists of highly rated securities with a weighted-average maturity of less than 12 months, aiming to preserve principal and maintain liquidity[337] Other Income and Expenses - Other income was $8.0 million in Q3 2023, primarily consisting of $6.7 million in investment income and a $2.6 million TRA remeasurement gain, offset by a $1.3 million loss on foreign currency transactions[275] - Interest expense, net increased by 3% to $11.9 million in Q3 2023, primarily due to fluctuations in derivative instruments, partially offset by higher deposit rates[276]

ZoomInfo Technologies Inc. (NASDAQ:ZI) Q2 2023 Earnings Call Transcript July 31, 2023 4:30 PM ET Company Participants Jerry Sisitsky - VP, IR Henry Schuck - Founder and CEO Cameron Hyzer - CFO Conference Call Participants Mark Murphy - JPMorgan Elizabeth Porter - Morgan Stanley Kash Rangan - Goldman Sachs Joshua Reilly - Needham Koji Ikeda - Bank of America D.J. Hynes - Canaccord Genuity Michael Turrin - Wells Fargo Parker Lane - Stifel Alex Zukin - Wolfe Research Taylor McGinnis - UBS Raimo Lenschow - Barc ...

PART I - FINANCIAL INFORMATION [Financial Statements](index=1&type=section&id=Item%201.%20Financial%20Statements) This section presents ZoomInfo Technologies Inc.'s unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income, changes in equity, and cash flows, with detailed notes for Q2 and H1 2023 [Consolidated Balance Sheets](index=2&type=section&id=Consolidated%20Balance%20Sheets) Total assets reached **$7.19 billion** as of June 30, 2023, with goodwill and deferred tax assets as primary components, while total liabilities were **$4.85 billion** Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $509.7 | $418.0 | | Goodwill | $1,692.7 | $1,692.7 | | Deferred tax assets | $3,937.7 | $3,977.9 | | **Total Assets** | **$7,192.2** | **$7,136.4** | | **Liabilities & Equity** | | | | Unearned revenue, current | $438.1 | $416.8 | | Long-term debt, net | $1,228.0 | $1,235.7 | | Tax receivable agreements liability, net | $2,923.0 | $2,978.7 | | **Total Liabilities** | **$4,845.2** | **$4,864.6** | | **Total Equity** | **$2,347.0** | **$2,271.8** | [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2023 revenue increased 16% to **$308.6 million**, with net income more than doubling to **$38.1 million**, and H1 2023 revenue grew 20% to **$609.3 million** Statement of Operations Summary (in millions, except per share data) | Metric | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $308.6 | $267.1 | $609.3 | $508.8 | | Gross Profit | $265.4 | $220.1 | $520.6 | $417.8 | | Income from Operations | $59.6 | $39.5 | $125.9 | $71.9 | | Net Income | $38.1 | $15.9 | $82.6 | $22.1 | | Diluted EPS | $0.09 | $0.04 | $0.21 | $0.05 | - Total equity-based compensation expense was **$46.3 million** for Q2 2023 and **$84.0 million** for the first six months of 2023 [28](index=28&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased to **$225.2 million** in H1 2023, while investing cash outflow decreased significantly, and financing cash outflow rose due to share repurchases Cash Flow Summary (in millions) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $225.2 | $211.2 | | Net cash used in investing activities | $(33.0) | $(153.0) | | Net cash used in financing activities | $(96.9) | $(13.8) | | **Net increase in cash** | **$95.3** | **$44.4** | - The company repurchased **$87.0 million** of its common stock in the first six months of 2023 [38](index=38&type=chunk) [Notes to the Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies, including revenue recognition, financing arrangements, Tax Receivable Agreements, business combinations, and equity-based compensation - The company's primary revenue source is subscription services for its SaaS platform, with contracts typically lasting one to three years and billed in advance [57](index=57&type=chunk) - As of June 30, 2023, remaining performance obligations totaled **$1.11 billion**, with **$848.7 million** expected to be recognized within one year [111](index=111&type=chunk)[112](index=112&type=chunk) - In March 2023, the Board authorized a **$100.0 million** share repurchase program, with **$87.0 million** of common stock repurchased as of June 30, 2023 [101](index=101&type=chunk)[102](index=102&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=42&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2023 performance, highlighting 16% revenue growth, macroeconomic impacts on retention, operating results, non-GAAP metrics, liquidity, and debt obligations [Key Factors and Non-GAAP Measures](index=44&type=section&id=Key%20Factors%20and%20Non-GAAP%20Measures) Performance is driven by customer acquisition and expansion, with 1,893 customers exceeding **$100,000** ACV, and non-GAAP metrics like Adjusted Operating Income at **$125.6 million** for Q2 2023 - As of June 30, 2023, the company had **1,893** customers with over **$100,000** in ACV [224](index=224&type=chunk) - The net annual revenue retention rate was **104%** for FY2022, but is expected to be adversely impacted by near-term macroeconomic conditions [224](index=224&type=chunk) Non-GAAP Financial Metrics (Q2 2023 vs Q2 2022, in millions) | Metric | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Adjusted Operating Income | $125.6 | $106.9 | | Adjusted Operating Income Margin | 41% | 40% | | Adjusted Net Income | $106.4 | $84.1 | | Adjusted EBITDA | $130.4 | $111.5 | [Results of Operations](index=52&type=section&id=Results%20of%20Operations) Q2 2023 revenue grew 16% to **$308.6 million**, driven by new customers, while operating expenses increased 14% due to higher sales & marketing and G&A costs - **Q2 2023 vs Q2 2022**: Revenue grew **$41.5 million** (**16%**) to **$308.6 million**, primarily from new customers [268](index=268&type=chunk) - **Q2 2023 Operating Expenses**: Increased by **$25.2 million** (**14%**), driven by higher sales and marketing and general and administrative costs, including bad debt accruals [270](index=270&type=chunk)[273](index=273&type=chunk) - **Six Months 2023 vs 2022**: Revenue grew **$100.5 million** (**20%**) to **$609.3 million**, primarily due to new customer additions [275](index=275&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$509.7 million** in cash and **$250.0 million** available credit, a **1.1x** net leverage ratio, and significant debt obligations including a **$597.0 million** term loan - As of June 30, 2023, the company had **$509.7 million** in cash and cash equivalents and **$250.0 million** available under its revolving credit facility [282](index=282&type=chunk) - The total net leverage ratio to trailing twelve months Adjusted EBITDA was **1.1x** as of June 30, 2023 [300](index=300&type=chunk)[302](index=302&type=chunk) - The liability for Tax Receivable Agreements was substantial at **$2.97 billion** as of June 30, 2023 [317](index=317&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from inflation, interest rates, and foreign currency, with interest rate risk from its **$597.0 million** variable-rate loan partially hedged - The company has a **$597.0 million** first lien term loan with a variable interest rate, creating exposure to interest rate risk managed through derivative instruments [326](index=326&type=chunk) - Foreign currency exchange rate risk is currently not material as most contracts are U.S. dollar-denominated, but may increase with international expansion [328](index=328&type=chunk) [Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of June 30, 2023 [330](index=330&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2023 [331](index=331&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending against multiple putative class action lawsuits in Illinois, Washington, and Ohio, alleging violations of state Right of Publicity laws - The company is defending against multiple putative class action lawsuits in Illinois, Washington, and Ohio concerning alleged violations of state Right of Publicity statutes [160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) No material changes have been made to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - No material changes have been made to the risk factors disclosed in the 2022 Form 10-K [336](index=336&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2023, the company repurchased **2,847,121** shares for approximately **$62.6 million**, with **$13.0 million** remaining in the repurchase program Issuer Purchases of Equity Securities (Q2 2023) | Period | Total Shares Purchased | Avg. Price Per Share | Shares Purchased as Part of Program | Max Value Remaining in Program | | :--- | :--- | :--- | :--- | :--- | | April 2023 | 1,447,121 | $22.56 | 1,447,121 | $43.0M | | May 2023 | 1,404,890 | $21.41 | 1,400,000 | $13.0M | | June 2023 | 6,166 | $24.73 | — | $13.0M | | **Total** | **2,858,177** | | **2,847,121** | | - In March 2023, the Board authorized a **$100.0 million** share repurchase program with no expiration date [338](index=338&type=chunk) [Other Information](index=65&type=section&id=Item%205.%20Other%20Information) The company's CTO, Ali Dasdan, adopted a Rule 10b5-1 trading plan on June 15, 2023, for the sale of shares from a restricted stock unit grant - The company's Chief Technology Officer, Ali Dasdan, adopted a Rule 10b5-1 trading plan on June 15, 2023, for the potential sale of shares vesting from a prior RSU grant [341](index=341&type=chunk)

Financial Data and Key Metrics Changes - In Q1, the company reported revenue of $301 million, representing a 24% year-over-year increase and a 1.9% sequential increase on an annualized basis, adjusted for two fewer days of revenue recognition [14][63] - Adjusted operating income for Q1 was $120 million, yielding a margin of 40%, while GAAP net income was $45 million with GAAP EPS at $0.11 per share [52][63] - Operating cash flow in Q1 was $109 million, including approximately $19 million of interest payments, and unlevered free cash flow was $121 million, equating to 101% of adjusted operating income [33][34] Business Line Data and Key Metrics Changes - The company experienced a slowdown in RPO growth, which decreased to the high teens from mid-to-high 20s in the previous quarter, attributed to fewer long-term contracts and increased write-offs from small-business clients [7][8] - The majority of customers are in industries significantly affected by the current economic environment, including software and financial services, leading to increased scrutiny on spending and impacting overall sales efficiency [15][55] Market Data and Key Metrics Changes - International revenue grew by 32% compared to Q1 2022, contributing 13% of total revenue for the quarter [32] - The company ended Q1 with 1,905 customers with over $100K in ACV, marking a 17% year-over-year increase, although the $100K cohort experienced logo losses due to downsells in software companies [80] Company Strategy and Development Direction - The company continues to invest in its data assets and integrated experiences, aiming to differentiate itself through superior data coverage and accuracy [18][19] - A focus on product-led growth is evident, with initiatives to enhance self-service capabilities and improve customer acquisition and retention [65][132] - The company is capitalizing on opportunities in various sectors, including manufacturing and logistics, where demand is accelerating [64][87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that as the economic outlook stabilizes, growth will accelerate, despite current challenges [13][55] - There is optimism regarding upsell opportunities as the company begins to lap tougher renewal comparisons from the previous year [24][31] - The competitive landscape remains stable, with no significant changes in win rates against competitors [17] Other Important Information - The company repurchased approximately 1 million shares at an average price of $23 per share, deploying $24 million of the $100 million share repurchase authorization [36][98] - The company expects unlevered free cash flow conversion to remain between 95% to 100% for the full year [34] Q&A Session Summary Question: What are the underlying mechanics behind the slowdown in RPO growth? - Management noted fewer long-term contracts and increased write-offs from small-business clients as key factors affecting RPO [8] Question: How is the competitive environment impacting pricing and renewals? - Management indicated that while there is pressure from lower-priced alternatives, the company has not experienced significant discounting pressure [17][139] Question: What is the outlook for upsell opportunities moving forward? - Management sees significant upsell opportunities as they begin to lap tougher renewal periods, particularly in larger customer segments [24][31] Question: How is the company addressing the impact of layoffs in the software sector? - Management acknowledged increased downsell activity in the software sector but noted that larger customers are focusing on efficiency, which may create upsell opportunities [24][135]

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-39310 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ZoomInfo Technologies Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorpor ...