Group 1: Earnings Performance - ZoomInfo reported quarterly earnings of $0.26 per share, exceeding the Zacks Consensus Estimate of $0.23 per share, with an earnings surprise of 13.04% [1] - The company posted revenues of $309.1 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.80%, although this represents a decline from year-ago revenues of $316.4 million [2] - Over the last four quarters, ZoomInfo has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Group 2: Stock Performance and Outlook - ZoomInfo shares have declined approximately 8.3% since the beginning of the year, contrasting with the S&P 500's gain of 1.7% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is $0.23 on revenues of $292.82 million, and for the current fiscal year, it is $0.94 on revenues of $1.18 billion [7] Group 3: Industry Context - The Computer - Integrated Systems industry, to which ZoomInfo belongs, is currently ranked in the top 33% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Total revenue for 2024 was $1,214.3 million, a decrease of 2.0% from $1,239.5 million in 2023[369]. - Gross profit for 2024 was $1,024.5 million, down from $1,061.0 million in 2023, reflecting a gross margin of approximately 84.3%[369]. - Net income for 2024 was $29.1 million, a significant decrease of 72.9% compared to $107.3 million in 2023[369]. - Comprehensive income for 2024 was $16.6 million, down from $94.9 million in 2023, reflecting a significant decline[372]. - Net cash provided by operating activities decreased to $369.4 million in 2024 from $434.9 million in 2023, indicating a reduction of 15%[377]. - The company reported a basic net income per share of $0.08 for 2024, down from $0.27 in 2023[369]. - Subscription revenue for 2024 was $1,200.4 million, down from $1,225.1 million in 2023, reflecting a decline of 2.0%[443]. Operating Expenses - Operating expenses for 2024 totaled $927.1 million, an increase of 15.7% from $801.5 million in 2023[369]. - Equity-based compensation expense for 2024 was $143.5 million, a decrease from $173.0 million in 2023[377]. - The company incurred total charges of $30.1 million related to legal settlements during the year ended December 31, 2024, all of which have been paid[498]. Assets and Liabilities - Total current assets decreased to $451.0 million in 2024 from $864.3 million in 2023, primarily due to a reduction in cash and cash equivalents[367]. - Total liabilities increased slightly to $4,774.1 million in 2024 from $4,749.0 million in 2023[367]. - Cash, cash equivalents, and restricted cash at the end of 2024 totaled $149.0 million, down from $456.2 million at the end of 2023[379]. - The total lease liabilities as of December 31, 2024, were $161.1 million, an increase from $101.1 million in 2023[517]. Debt and Financing - The company reported a total principal balance outstanding of $588.1 million on its first lien term loan as of December 31, 2024[341]. - The company has a substantial amount of debt, which may adversely affect its financial position and ability to raise additional capital[29]. - The effective interest rate on the first lien debt was 6.56% as of December 31, 2024, down from 7.83% in 2023[471]. - The company has a total of $1,238.1 million in expected future principal payments, with $655.9 million due in 2029[473]. Risk Factors - The company anticipates increasing operating expenses in the future, which may impact profitability[340]. - The company is exposed to market risks from interest rate fluctuations, which could affect its financial condition[341]. - The company has operations in multiple countries, exposing it to risks inherent in international operations[29]. - The company may face challenges in attracting new customers and renewing existing subscriptions, which could harm revenue growth[26]. - The company has noted that macroeconomic conditions, including inflation, may impact its business, financial condition, and results of operations[340]. Tax and Deferred Assets - Deferred tax assets amounted to $3,717.6 million as of December 31, 2024, compared to $3,707.1 million in 2023[367]. - The evaluation of the realizability of deferred tax assets was identified as a critical audit matter, with deferred tax assets primarily related to intangibles[360][361]. - The company recognized $1.9 million in research and development tax credits for the year ended December 31, 2024, reducing General and administrative expenses[435]. Share Repurchase and Equity - The total number of shares repurchased in 2024 was 46,801,742, resulting in a cash outflow of $567.0 million[377]. - The company authorized a share repurchase program with total authorizations of $600 million in 2023 and $500 million in 2024, with $137.6 million remaining available for repurchases as of December 31, 2024[506]. - Basic net income per share attributable to common stockholders was $0.08 in 2024, down from $0.27 in 2023[515]. Impairment and Lease Charges - The company experienced a significant asset impairment and lease abandonment charge of $57.4 million in 2024, compared to only $5.2 million in 2023[377]. - Impairment charges of $4.3 million were recognized to reduce the carrying value of right-of-use assets related to the third and fourth phases of the lease[522]. - Lease abandonment charges of $4.1 million were incurred for vacated spaces during the second quarter of 2024[522]. Currency and Interest Rate Management - The company has implemented a foreign currency hedging program to mitigate potential adverse effects from significant currency movements[344]. - In Q2 2024, the Company had outstanding interest rate derivatives designated as cash flow hedges with a notional amount of $500.0 million and an interest rate of 0.370% maturing on January 30, 2026[478]. - The fair value of the Company's interest rate swap contracts was $19.9 million as of December 31, 2024, compared to $36.8 million as of December 31, 2023[484].

Financial Performance - GAAP revenue for Q4 2024 was $309.1 million, a decrease of 2% year-over-year[5] - GAAP operating income for Q4 2024 was $30.9 million, representing a 56% decline year-over-year[7] - Full-year 2024 GAAP revenue totaled $1,214.3 million, also a decrease of 2% year-over-year[9] - Adjusted operating income for FY 2024 was $428.5 million, a decrease of 14% year-over-year[9] - Total revenue for Q4 2024 was $309.1 million, a decrease of 2.1% from $316.4 million in Q4 2023[30] - Income from operations (GAAP) for Q4 2024 was $30.9 million, down from $70.5 million in Q4 2023, with a total for the year of $97.4 million compared to $259.5 million in 2023[43] - Adjusted Operating Income (Non-GAAP) for Q4 2024 was $115.9 million, a decrease from $126.5 million in Q4 2023, with a total for the year of $428.5 million compared to $498.6 million in 2023[43] - Revenue (GAAP) for Q4 2024 was $309.1 million, slightly down from $316.4 million in Q4 2023, with total revenue for the year at $1,214.3 million compared to $1,239.5 million in 2023[43] - Adjusted Net Income (Non-GAAP) for Q4 2024 was $93.6 million, down from $102.1 million in Q4 2023, with a total for the year of $363.8 million compared to $413.1 million in 2023[48] - Net income (GAAP) for Q4 2024 was $14.6 million, recovering from a loss of $5.5 million in Q4 2023, with total net income for the year at $29.1 million compared to $107.3 million in 2023[48] Customer Metrics - The company reported a net revenue retention rate of 87% as of December 31, 2024[5] - The company closed Q4 2024 with 1,867 customers with annual contract values of $100,000 or greater, an increase of 58 from the prior quarter[5] - Sales teams using ZoomInfo reported a 91% improvement in connect rates and booked 55% more meetings per month[5] Guidance and Expectations - For Q1 2025, the company expects revenue between $294 million and $297 million[11] - Full-year 2025 revenue guidance is set between $1.185 billion and $1.205 billion[11] Operating Expenses and Profitability - Operating expenses increased to $225.0 million in Q4 2024, compared to $201.3 million in Q4 2023, marking an increase of 11.8%[30] - Operating Income Margin (GAAP) for Q4 2024 was 10%, down from 22% in Q4 2023, with a total margin for the year at 8% compared to 21% in 2023[43] - Adjusted Operating Income Margin (Non-GAAP) for Q4 2024 was 37%, down from 40% in Q4 2023, with a total margin for the year at 35% compared to 40% in 2023[43] Cash Flow and Assets - Cash and cash equivalents decreased to $139.9 million at the end of 2024, down from $447.1 million at the end of 2023, representing a decline of 68.8%[32] - Total assets decreased to $6,467.6 million in 2024, down from $6,868.3 million in 2023, a reduction of 5.8%[28] - Total liabilities increased slightly to $4,774.1 million in 2024, compared to $4,749.0 million in 2023, an increase of 0.5%[28] - Unlevered Free Cash Flow for the twelve months ended December 31, 2024, was $446.9 million, a decrease of 3.6% from $463.5 million in 2023[38] - The company reported a net cash provided by operating activities of $369.4 million for the twelve months ended December 31, 2024, down from $434.9 million in 2023, a decrease of 15%[32] Equity and Compensation - ZoomInfo repurchased 46,801,742 shares of common stock, accounting for 12% of total shares outstanding, at an average price of $12.01, totaling $562.3 million[5] - Equity-based compensation expense totaled $138.0 million for the twelve months ended December 31, 2024, compared to $167.0 million in 2023, a decrease of 17.4%[30] - Equity-based compensation expense for Q4 2024 was $33.8 million, down from $40.7 million in Q4 2023, with total expenses for the year at $138.0 million compared to $167.6 million in 2023[48] Restructuring and Expenses - Restructuring and transaction-related expenses for Q4 2024 were $34.6 million, significantly higher than $0.4 million in Q4 2023, with total expenses for the year at $101.6 million compared to $10.3 million in 2023[48]

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against ZoomInfo Technologies Inc. due to a class action lawsuit alleging breaches of fiduciary duties by the board of directors during a specified class period [1] Company Overview - ZoomInfo is a software and data company that provides customer contact and business information to its clients [2] Class Action Allegations - The class action lawsuit claims that ZoomInfo made false or misleading statements and failed to disclose critical information, including: - Financial results were temporarily inflated due to COVID-19, leading to pulled-forward demand [3] - Significant portions of the customer base were reducing or abandoning the use of ZoomInfo's products [3] - Use of manipulative auto-renew policies and threats of litigation to retain customers against their will [3] - Coercive retention tactics damaged customer relationships and created a hidden demand cliff for future renewals [3] - Reported revenues and customer metrics were materially overstated as a result of these practices [3] Financial Performance and Stock Impact - On November 1, 2022, ZoomInfo reported increased customer scrutiny during contract renewals, leading to a decline in Remaining Performance Obligations (RPOs) to $979 million from $985 million, causing a stock price drop of over 29% [4] - On November 16, 2022, continued scrutiny negatively impacted revenue growth for fiscal year 2023, resulting in a stock price decline of approximately 17% [5] - On July 31, 2023, ZoomInfo reported a decline in customers with annual contract values over $100,000 and reduced annual revenue guidance by $50 million, leading to a stock price drop of about 28% [6] - On May 7, 2024, a decline in Net Revenue Retention (NRR) to 85% from 87% was reported, along with a revenue guidance reduction, causing a stock price fall of more than 24% [7] - On August 5, 2024, ZoomInfo announced a $33 million charge due to non-payments and a new risk model requiring upfront payments, further reducing revenue guidance by $65 million, resulting in an 18% stock price drop [8]

Core Insights - ZoomInfo partners with Telmai to enhance data quality monitoring across its data ecosystem, utilizing machine learning for proactive management and integration with open table formats [2][3][4] Group 1: Partnership and Technology - Telmai is an AI-powered data observability platform that will help ZoomInfo manage data integrity and quality at scale [2][7] - The integration aims to improve customer experience through full-volume data quality monitoring, automated anomaly detection, and streamlined remediation workflows [4][6] Group 2: Data Management and Operations - ZoomInfo processes over 1.5 billion data points daily for over 35,000 businesses, necessitating high accuracy and timely delivery to maintain customer trust [3] - The company’s data is distributed across various platforms, including Snowflake, BigQuery, S3, and GCS, which require effective monitoring solutions [4] Group 3: Implementation and Efficiency - Telmai's user-friendly interface allows for quick adoption by ZoomInfo's teams, reducing setup time from weeks or months to just minutes [5] - During the pilot phase, Telmai's anomaly detection identified issues among billions of data points, enabling rapid response and resolution [6]

Group 1 - Michael Wiggins De Oliveira is an inflection investor, focusing on buying undervalued companies at pivotal moments when their profitability is expected to improve significantly over the next year [1] - The investment strategy emphasizes technology and the Great Energy Transition, including uranium, with a concentrated portfolio of approximately 15 to 20 stocks and an average holding period of 18 months [1] Group 2 - Michael has over 10 years of experience analyzing companies in the tech and energy sectors, and has built a following of over 40,000 on Seeking Alpha [2] - He leads the investing group Deep Value Returns, which offers insights through a concentrated portfolio of value stocks, timely updates, weekly webinars for live advice, and support for both new and experienced investors [2]

Core Viewpoint - The stock market is currently near all-time highs, and individual stock selection is becoming increasingly important, with expectations of a 10-15% correction in the S&P 500 [1] Group 1: Market Analysis - The S&P 500 is anticipated to experience a correction of 10-15%, indicating potential volatility ahead [1] - The importance of individual stock selection is emphasized as the market fluctuates [1] Group 2: Analyst Background - Gary Alexander has extensive experience in covering technology companies and has worked in Silicon Valley, providing insights into current industry themes [1] - He has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications, indicating a strong presence in the investment community [1]

Financial Data and Key Metrics Changes - GAAP revenue for Q3 2024 was $304 million, and adjusted operating income was $112 million, both exceeding the high end of previous guidance [8][18] - Unlevered free cash flow for the quarter was $111 million, up 17% year-over-year, with a margin of 36% [8][24] - Net revenue retention (NRR) stabilized at 85% for the third consecutive quarter [7][19] Business Line Data and Key Metrics Changes - The $100,000 customer cohort grew by 12, marking the second consecutive quarter of sequential growth, now representing 44% of annual contract value (ACV) [9] - The enterprise ACV, which constitutes approximately 41% of the business, grew 1% sequentially [20] - Copilot surpassed $60 million in ACV during the quarter, exceeding expectations [22] Market Data and Key Metrics Changes - The operations business increased by 22% year-over-year, indicating strong momentum in helping companies leverage AI [22] - The advanced functionality of products increased to 38% of the overall business in Q3, up from 35% in Q2 [22] Company Strategy and Development Direction - The company is focused on enterprise growth and driving customer outcomes with Copilot, aiming for long-term value creation through growing levered free cash flow per share [16] - A conservative approach to guidance is expected as the company navigates the transition in the SMB segment [17][26] - The company plans to disqualify more high-risk small business transactions to improve revenue quality and reduce write-offs over time [18][37] Management's Comments on Operating Environment and Future Outlook - Management noted stabilization in various business areas and early signs of growth, particularly in the enterprise segment [19] - The company is optimistic about the trajectory of NRR, especially in mid-market and enterprise segments, while being cautious about SMB [69][71] - Management emphasized the importance of high-quality data for building effective AI solutions, positioning the company favorably in the market [76][81] Other Important Information - The company retired 24 million shares, approximately 7% of total shares outstanding, as part of a share repurchase program [8][23] - Operating cash flow was $18 million in Q3, with a significant restructuring of real estate agreements expected to save over $100 million going forward [24] Q&A Session Summary Question: Demand environment and retention trends - Management indicated strong demand in the upmarket, particularly for Copilot, while the SMB segment remains challenged [29][30] Question: Free cash flow growth and revenue recovery - Management stated that top-line growth is prioritized for free cash flow growth, with margin expansion as a secondary lever [32] Question: SMB dynamics and charge-offs - Management clarified that charge-offs from Q2 did not persist into Q3, and disqualification of high-risk SMB transactions is expected to create a growth headwind [36][37] Question: Operational margin improvements - Management noted that operational margin is expected to improve, with a focus on levered free cash flow per share growth [40] Question: Copilot adoption and deal sizes - Management reported double-digit growth in average deal sizes for customers migrating to Copilot [41] Question: Data as a service momentum - Management confirmed strong momentum in the data as a service business, growing 22% year-over-year [47] Question: Exit growth rate and positive drivers for 2025 - Management highlighted growth in the enterprise business and improving retention in mid-market as key positive drivers [50][51] Question: Copilot's competitive advantage - Management expressed confidence in Copilot's foundation built on high-quality data, which is essential for effective go-to-market AI solutions [76][81]

Summary of Key Points Core Viewpoint - ZoomInfo reported quarterly earnings of $0.28 per share, exceeding the Zacks Consensus Estimate of $0.22 per share, and showing an increase from $0.26 per share a year ago, representing a 27.27% earnings surprise [1] Financial Performance - The company achieved revenues of $303.6 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.39%, although this is a decrease from $313.8 million in the same quarter last year [2] - Over the last four quarters, ZoomInfo has exceeded consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Stock Performance and Outlook - ZoomInfo shares have declined approximately 31.6% since the beginning of the year, contrasting with the S&P 500's gain of 25.8% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the revisions of earnings estimates [3][4] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $0.23 on revenues of $297.3 million, and for the current fiscal year, it is $0.88 on revenues of $1.2 billion [7] - The estimate revisions trend for ZoomInfo is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Computer - Integrated Systems industry, to which ZoomInfo belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, suggesting potential challenges ahead [8] - The performance of stocks in this industry can be significantly influenced by the overall industry outlook [8]

| --- | --- | |------------------------------------------------|-------| | | | | | | | | | | Investor Overview Q3 2024 Financial Results | | | November 12, 2024 DATE | | Q3 2024 EARNINGS CALL > SAFE HARBOR STATEMENT Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statement ...