ZoomInfo Technologies (US:ZI)2023-02-07 02:57Financial Data and Key Metrics Changes - In Q4 2022, the company reported revenue of $302 million, representing a 36% year-over-year increase and a sequential growth of 5% to 6% compared to Q3 2022 [41] - For the full year 2022, revenue reached $1.1 billion, up 47% compared to 2021, with organic revenue growth of 41% [42] - Adjusted operating income for Q4 was $127 million, with a margin of 42%, up 100 basis points sequentially and 360 basis points year-over-year [41] - The company achieved unlevered free cash flow of $457 million for the full year, representing 102% of adjusted operating income [50] Business Line Data and Key Metrics Changes - The company ended 2022 with 1,926 customers spending over $100,000 annually, a 30% increase year-over-year [22] - The net retention rate for 2022 was 104%, which was considered disappointing due to lower upselling opportunities [21] - Advanced functionality now represents 31% of annual contract value (ACV) [22] Market Data and Key Metrics Changes - International customers contributed 13% of revenue in Q4, growing 49% year-over-year [48] - The economic environment is challenging across international markets, similar to or worse than the U.S. [48] Company Strategy and Development Direction - The company is focused on four priorities: surrounding itself with the right people, investing in enterprise solutions, delivering product experiences, and executing with excellence [11] - Significant changes to the leadership team have been made to enhance growth, including the hiring of a new Chief Technology Officer and Chief Revenue Officer [15][16] - The company aims to extend its lead in data excellence and invest in enterprise-grade settings and permissions [27][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the current economic environment has impacted customer spending and sales cycles, leading to elongation in sales processes [10][11] - The company expects continued challenges in 2023, with guidance for revenue growth at 17% at the midpoint [43] - Management remains focused on driving efficiency and profitability despite macroeconomic pressures [44][40] Other Important Information - The company ended Q4 with $546 million in cash and equivalents, and $1.25 billion in gross debt [51] - The unearned revenue at the end of the year was $420 million, with remaining performance obligations of $1.1 billion [53] Q&A Session Summary Question: What is the guidance regarding the software vertical exposure? - Management expects continued layoffs and a challenging macro environment, which is factored into the guidance [61] Question: What changes are expected from the new Chief Revenue Officer? - The new CRO is expected to drive a strong land-and-expand motion within the customer base, with a conservative approach to potential disruptions [70] Question: What are the trends in top-of-funnel demand? - The company anticipates a more challenging environment in 2023, with flat to lower new sales expected [71] Question: How does the company plan to improve upsell opportunities? - The focus is on targeting enterprise customers and enhancing the Marketing OS and Data-as-a-Service products [80] Question: What is the appetite for M&A in 2023? - The company is currently focused on driving business growth and is more selective regarding M&A opportunities [108]