Summary of Conference Call Company and Industry - **Company**: ZoomInfo - **Industry**: Technology and AI-driven go-to-market solutions Core Points and Arguments 1. **Future Vision**: ZoomInfo aims to be synonymous with AI and go-to-market strategies within five years, having changed its ticker from ZI to GTM to reflect this focus [5][6] 2. **Revenue Growth**: The company expects to accelerate revenue growth and expand margins while continuing to buy back shares, particularly when stock prices are below intrinsic value [6] 3. **Upmarket Focus**: Currently, 72% of ZoomInfo's business is upmarket, growing at 4% annually. The company is shifting its focus to this segment while enhancing self-service and AI-driven services in the downmarket [8][49] 4. **Data Importance**: ZoomInfo's proprietary data is crucial for AI-driven initiatives in go-to-market strategies, with operations numbers growing 20% year-over-year [9] 5. **CRM Limitations**: CRM data is static and often outdated, lacking comprehensive insights necessary for effective go-to-market strategies. ZoomInfo aims to integrate first-party CRM data with third-party data to provide a more complete view [11][12] 6. **Go-To-Market Studio**: The company has developed a unified go-to-market data warehouse that combines various data sources to support AI automation and insights for sales and marketing professionals [14][20] 7. **AI Integration**: ZoomInfo has embedded AI throughout its product organization, enhancing the speed and efficiency of product development [20] 8. **Customer Demand**: There is a growing demand for personalized interactions, with customers seeking row-by-row personalization in their messaging based on detailed engagement data [25][26] 9. **Market Dynamics**: The industry is experiencing a cycle of overconsumption, with many companies having purchased numerous technologies without fully utilizing them. ZoomInfo aims to help customers rationalize their technology stacks [39][40] 10. **Downmarket Strategy**: The downmarket segment is currently 28% of the business and is expected to decline to about 20% over the next few years, focusing on maintaining valuable customer relationships [49][46] Additional Important Content 1. **Customer Engagement**: ZoomInfo has seen record win-back performance, indicating a return of customers who previously opted for lower-quality providers [65] 2. **Sales Development**: Customers are hiring more sales development representatives (SDRs) to compensate for decreased website traffic and demand generation [68] 3. **Copilot Adoption**: Over 10% of the customer base is now using ZoomInfo Copilot, which integrates various functionalities to streamline workflows for sales professionals [73] 4. **Unit Economics**: The unit economics of Copilot are similar to the rest of the business, with high margins and positive indicators for retention and customer lifetime value [75] 5. **Foundation Models**: The company is leveraging various AI models (e.g., Anthropic, OpenAI, Google Gemini) to optimize costs and enhance functionality across different tasks [78][79] 6. **Software's Future**: There is a belief that software will continue to be essential, as building effective software requires deep understanding of customer workflows and domain knowledge [88][89]

ZoomInfo (ZI) Q1 2025 Earnings Call May 12, 2025 05:00 PM ET Company Participants Jerry Sisitsky - VP, IRHenry Schuck - Founder, Chairman of the Board & CEOGraham O’Brien - Interim CFOMark Murphy - MD - Software ResearchElizabeth Porter - Executive DirectorRaimo Lenschow - Managing DirectorKash Rangan - Managing DirectorBrad Zelnick - Managing DirectorJackson Ader - Managing DirectorBrian Peterson - Managing DirectorAustin Cole - Software Equity Research AssociateRishi Jaluria - Managing DirectorAllan Verkh ...

Financial Data and Key Metrics Changes - In Q1 2025, GAAP revenue was $306 million and adjusted operating income was $101 million, representing a margin of 33%, both exceeding the high end of guidance [7][17] - Annualized sequential revenue growth for the quarter was 1.1% and net revenue retention improved to 87% for the second consecutive quarter [17][18] - The company ended the quarter with $143 million in cash and cash equivalents, and carried $1.24 billion in gross debt, with a net leverage ratio of 2.5 times trailing twelve months adjusted EBITDA [24] Business Line Data and Key Metrics Changes - The upmarket segment grew 3% year over year, now representing 71% of the business, while the downmarket segment declined 10% year over year [18][19] - The million-dollar cohort saw sequential and year-over-year growth in total ACV and average ACV per customer [8] - The operations business grew double digits year over year, with data as a service solutions showing strong traction, with new logos up 24% year over year [20] Market Data and Key Metrics Changes - The company reported that 80% of its marketing revenue now comes from upmarket clients, indicating a strategic shift towards larger enterprises [14] - The downmarket business is expected to contract further, with guidance indicating a decline in the high negative teens for 2025 [81] Company Strategy and Development Direction - The company is focused on building a go-to-market intelligence platform, changing its trading symbol from ZI to GTM to reflect this commitment [6][14] - The launch of Go-To-Market Studio aims to unify go-to-market data and enhance operational efficiency across sales and marketing teams [12][29] - The strategy includes reallocating resources from downmarket to upmarket, which is expected to yield better growth and profitability outcomes [15][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the trajectory of the business, noting no significant impact from the current economic environment on customer behavior [17][41] - There is a cautious approach in guidance due to broader economic uncertainties, but confidence remains in the upmarket growth potential [24][94] - The company is seeing improved retention rates in the upmarket segment, which is expected to drive future growth [89][110] Other Important Information - The company repurchased 8.6 million shares at an average price of $11.05, with an additional $500 million share repurchase authorization approved [21][22] - Operating cash flow for Q1 was $119 million, with unlevered free cash flow at $125 million, a margin of 41% [22] Q&A Session Summary Question: Why now on the change around the name and ticker? - Management indicated that the platform has expanded to serve a broader range of roles beyond just sales, necessitating a change in branding to reflect this evolution [27][28] Question: Can you bifurcate net revenue retention by upmarket versus downmarket? - Upmarket retention continues to improve, while downmarket remains impaired but stable [31][32] Question: What is the current status of CoPilot's ACV? - CoPilot is growing at an expected rate, with significant upsell opportunities [35] Question: How is the company managing the downmarket business? - The downmarket business is expected to contract further, but management is comfortable with the current trajectory [81][82] Question: What is the appetite for M&A versus share buybacks? - The company will be opportunistic with M&A but is currently focused on share buybacks due to undervaluation [84] Question: How is the company addressing the evolving go-to-market landscape? - The company is leveraging AI and third-party data to enhance its offerings and improve customer engagement [50][105]