ZoomInfo Technologies (US:ZI)2023-05-02 00:22Financial Data and Key Metrics Changes - In Q1, the company reported revenue of $301 million, representing a 24% year-over-year increase and a 1.9% sequential increase on an annualized basis, adjusted for two fewer days of revenue recognition [14][63] - Adjusted operating income for Q1 was $120 million, yielding a margin of 40%, while GAAP net income was $45 million with GAAP EPS at $0.11 per share [52][63] - Operating cash flow in Q1 was $109 million, including approximately $19 million of interest payments, and unlevered free cash flow was $121 million, equating to 101% of adjusted operating income [33][34] Business Line Data and Key Metrics Changes - The company experienced a slowdown in RPO growth, which decreased to the high teens from mid-to-high 20s in the previous quarter, attributed to fewer long-term contracts and increased write-offs from small-business clients [7][8] - The majority of customers are in industries significantly affected by the current economic environment, including software and financial services, leading to increased scrutiny on spending and impacting overall sales efficiency [15][55] Market Data and Key Metrics Changes - International revenue grew by 32% compared to Q1 2022, contributing 13% of total revenue for the quarter [32] - The company ended Q1 with 1,905 customers with over $100K in ACV, marking a 17% year-over-year increase, although the $100K cohort experienced logo losses due to downsells in software companies [80] Company Strategy and Development Direction - The company continues to invest in its data assets and integrated experiences, aiming to differentiate itself through superior data coverage and accuracy [18][19] - A focus on product-led growth is evident, with initiatives to enhance self-service capabilities and improve customer acquisition and retention [65][132] - The company is capitalizing on opportunities in various sectors, including manufacturing and logistics, where demand is accelerating [64][87] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that as the economic outlook stabilizes, growth will accelerate, despite current challenges [13][55] - There is optimism regarding upsell opportunities as the company begins to lap tougher renewal comparisons from the previous year [24][31] - The competitive landscape remains stable, with no significant changes in win rates against competitors [17] Other Important Information - The company repurchased approximately 1 million shares at an average price of $23 per share, deploying $24 million of the $100 million share repurchase authorization [36][98] - The company expects unlevered free cash flow conversion to remain between 95% to 100% for the full year [34] Q&A Session Summary Question: What are the underlying mechanics behind the slowdown in RPO growth? - Management noted fewer long-term contracts and increased write-offs from small-business clients as key factors affecting RPO [8] Question: How is the competitive environment impacting pricing and renewals? - Management indicated that while there is pressure from lower-priced alternatives, the company has not experienced significant discounting pressure [17][139] Question: What is the outlook for upsell opportunities moving forward? - Management sees significant upsell opportunities as they begin to lap tougher renewal periods, particularly in larger customer segments [24][31] Question: How is the company addressing the impact of layoffs in the software sector? - Management acknowledged increased downsell activity in the software sector but noted that larger customers are focusing on efficiency, which may create upsell opportunities [24][135]