ZoomInfo Technologies (US:ZI)2023-07-31 23:35Financial Data and Key Metrics Changes - The company reported revenue of $309 million in Q2 2023, representing a 16% year-over-year increase and a 1.5% sequential increase adjusted for days of revenue recognition [59] - Adjusted operating income was $126 million with a margin of 41% [59] - The company expects full-year revenue growth of 12%, down from a prior guidance of 17% [60] Business Line Data and Key Metrics Changes - Revenue from advanced functionality now comprises one-third of total revenue, indicating strong growth in this segment [60] - The software vertical's contribution to overall business decreased to 35% from 40% a year ago, while non-software industry ACV grew over 20% [24] Market Data and Key Metrics Changes - The company experienced increased churn, particularly in the software sector, with customers reducing their spend and seats [8][60] - The transportation and logistics segment grew 37% year-over-year, showcasing strong demand in this area [56] Company Strategy and Development Direction - The company is focusing on retaining customers by offering centralized data strategies and enhancing customer engagement [19][33] - There is an emphasis on expanding the customer base among non-software businesses, which are less impacted by current economic conditions [19] - The company is investing in AI and data services to enhance its offerings and maintain competitive advantages [57] Management's Comments on Operating Environment and Future Outlook - Management anticipates a challenging renewal cycle through the end of the year, with expectations for net revenue retention to be in the high 80s [36][73] - The company believes that once the current renewal cycle is completed, there is potential for growth acceleration as the macroeconomic environment stabilizes [72] Other Important Information - The company repurchased 2.8 million shares at an average price of $21.99, with a new $500 million share repurchase program authorized [25] - Operating cash flow for Q2 was $117 million, with unlevered free cash flow of $122 million, representing a 39% margin [37] Q&A Session Summary Question: What caused the cautiousness in customer demand in Q2? - Management noted that the scrutiny on renewals from last year has led to more significant reductions in customer spending than expected [40][64] Question: How is the company managing down sells and renewals? - The company does not allow customers to reduce their contracts before renewal but encourages them to swap in services that they can use [69] Question: What is the outlook for revenue growth and renewals? - Management expects the renewal environment to become more challenging in the second half of the year, with a prudent view on future guidance [43][64] Question: How is the company addressing the impact of AI on data sourcing? - Management believes that while AI can help startups, the proprietary data and high accuracy provided by the company are key differentiators that customers rely on [78] Question: What is the strategy for maintaining customer relationships amid downsizing? - The company aims to work with customers to maintain contracts and support them through their downsizing, positioning itself as a trusted partner for future growth [101]