ZoomInfo Technologies (ZI) - 2024 Q3 - Quarterly Report

Revenue and Customer Metrics - ZoomInfo's net revenue retention rate was 85% as of September 30, 2024, indicating a focus on expanding customer relationships [221]. - As of September 30, 2024, ZoomInfo had 1,809 customers with over $100,000 in annual contract value (ACV) [221]. - Revenue for the three months ended September 30, 2024, was$303.6 million, a decrease of $10.2 million, or 3$313.8 million for the same period in 2023 [254]. - Revenue for the nine months ended September 30, 2024, was $905.2 million, a decrease of$17.9 million, or 2%, compared to $923.1 million for the same period in 2023 [269]. - The company reported unearned revenue of$419.2 million as of September 30, 2024, with $417.0 million expected to be recognized as revenue in the next 12 months [307]. Financial Performance - Gross profit for the three months ended September 30, 2024, was$256.3 million, representing a gross margin of 84%, down from $269.0 million and 86$23.8 million, a decrease of $6.4 million, or 21$30.2 million for the same period in 2023 [268]. - Gross profit for the nine months ended September 30, 2024, was $768.6 million, a decrease of$20.6 million or 3% compared to $789.2 million for the same period in 2023, maintaining a gross margin of 85$14.5 million, a decrease of $98.3 million or 87$112.8 million in 2023 [284]. - Adjusted Operating Income for the three months ended September 30, 2024, was $111.7 million, representing a decrease of$14.5 million or 11% from $126.2 million in 2023, with an Adjusted Operating Income Margin of 37$103.7 million, representing a decrease of $1.3 million, or 1$105.0 million in the same period of 2023 [298]. Expenses and Costs - Operating expenses for the three months ended September 30, 2024, were $212.8 million, an increase of$6.9 million, or 3%, compared to $205.9 million for the same period in 2023 [257]. - Cost of service for the nine months ended September 30, 2024, was$136.6 million, an increase of $2.7 million, or 2$133.9 million for the same period in 2023 [270]. - Sales and marketing expenses for the three months ended September 30, 2024, were $99.1 million, a decrease of$3.3 million, or 3%, compared to $102.4 million for the same period in 2023 [258]. - General and administrative expenses for the three months ended September 30, 2024, were$60.6 million, an increase of $10.1 million, or 20$50.5 million for the same period in 2023 [260]. - Research and development expenses for the three months ended September 30, 2024, were $47.7 million, an increase of$0.1 million, or less than 1%, compared to $47.6 million for the same period in 2023 [259]. Cash Flow and Financing - Net cash provided by operating activities for the nine months ended September 30, 2024, was$260.4 million, down from $306.1 million in the same period in 2023 [309]. - The company experienced a net cash decrease of$299.6 million for the nine months ended September 30, 2024, compared to an increase of $28.4 million in the same period in 2023 [309]. - Net cash used in financing activities for the nine months ended September 30, 2024, was$596.8 million, mainly due to common stock repurchases of $542.6 million [318]. - As of September 30, 2024, the company had$147.7 million in cash and cash equivalents and $250.0 million available under its first lien revolving credit facility [305]. Strategic Initiatives - The company plans to continue investing in research and development to enhance its platform and develop new software products [238]. - The company aims to grow its customer base while optimizing the profile of those customers and the go-to-market channels used to attract them [219]. - The company expects to continue pursuing acquisitions, although the magnitude and frequency of such acquisitions cannot be predicted [315]. Debt and Leverage - As of September 30, 2024, the total contractual maturity of outstanding indebtedness was$1,239.6 million, with a net contractual maturity of $1,083.0 million after accounting for cash and cash equivalents [326]. - The total net leverage ratio to Adjusted EBITDA as of September 30, 2024, was 2.3x, with Adjusted EBITDA for the trailing twelve months at$461.6 million [325]. Risk Management - The company has implemented a hedging strategy to mitigate interest rate risk through derivative instruments [342]. - The company initiated a foreign currency hedging program in the second quarter of 2024 to mitigate potential adverse effects from significant currency movements [345]. - The company manages credit risk by concentrating cash deposits with multiple high-quality financial institutions [348].