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Financial report summary
?Risks
- Business and Industry Risks
- Our current and potential customers may reduce spending on sales, marketing, recruiting and other technology and information as a result of weaker economic conditions, which could harm our revenue, results of operations, and cash flows.
- If we are unable to attract new customers, renew existing subscriptions, expand subscriptions of current customers, and collect revenue from our customers, our revenue growth, cash flows, and profitability will be harmed.
- If we are not able to obtain and maintain accurate, comprehensive, or reliable data, we could experience reduced demand for our products and services and have an adverse effect on our business, results of operations, and financial condition.
- Other companies, including larger and better funded companies with access to significant resources, large amounts of data or data collection methods, and sophisticated technologies may shift their business model to become competitive with us.
- We experience competition from other companies and technologies that allow companies to gather and aggregate sales, marketing, recruiting, and other data, and competing products and services could provide greater appeal to our customers.
- The markets in which we compete are rapidly evolving, which make it difficult to forecast demand for our services.
- Our platform integrates or otherwise works with third-party systems that we do not control.
- Our business could be negatively affected by changes in search engine algorithms and dynamics or other traffic-generating arrangements.
- We depend on our executive officers and other key employees, and the loss of one or more of these employees or an inability to attract, integrate and retain these and other highly skilled employees could harm our business.
- If we fail to maintain, upgrade, or implement adequate operational and financial resources, including our IT systems, we may be unable to execute our business plan.
- As we acquire and invest in companies or technologies, we may not realize expected business or financial benefits and the acquisitions or investments could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our business, results of operation, and financial condition.
- ESG matters and related reporting obligations, expose us to risks that could adversely affect our reputation and performance.
- Privacy, Technology, and Security Risk Factors
- Changes in laws, regulations, and public perception concerning data privacy, or changes in the patterns of enforcement of existing laws and regulations, could impact our ability to efficiently gather, process, update, and/or provide some or all of the information we currently provide or the ability of our customers and users to use some or all of our products or services.
- We may be subject to litigation for any of a variety of claims, which could harm our reputation and adversely affect our business, results of operations, and financial condition.
- New or changing laws and regulations may diminish the demand for our platform, restrict access to our platform or require us to disclose or provide access to information in our possession, which could harm our business, results of operations, and financial condition.
- We may not be able to adequately protect or enforce our proprietary and intellectual property rights in our data or technology.
- Investing in our AI capability introduces risks, which, if realized, could adversely impact our business.
- Our customers or unauthorized parties could use our products and services in a manner that is contrary to our values or applicable law, which could harm our relationships with consumers, customers, or employees or expose us to litigation or harm our reputation.
- Cyber-attacks and security vulnerabilities could result in serious harm to our reputation, business, and financial condition.
- Technical problems or disruptions that affect either our customers’ ability to access our services, or the software, internal applications, database, and network systems underlying our services, could damage our reputation and brands and lead to reduced demand for our products and services, lower revenues, and increased costs.
- Credit and Financial Risks
- We generate revenue from sales of subscriptions to our platform and data, and any decline in demand for the types of products and services we offer would negatively impact our business.
- Our failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies in the future could reduce our ability to compete successfully and harm our results of operations.
- Failure to maintain effective internal controls over financial reporting in accordance with Section 404 of SOX could impair our ability to produce timely and accurate financial statements or comply with applicable regulations and have a material adverse effect on our business.
- Because we recognize subscription revenue over the subscription term, downturns or upturns in new sales and renewals are not immediately reflected in full within our results of operations.
- We anticipate increasing operating expenses in the future, and we may not be able to maintain profitability.
- We have a significant amount of goodwill and intangible assets on our balance sheet, and our results of operations may be adversely affected if we fail to realize the full value of our goodwill and intangible assets.
- We have a substantial amount of debt, which could adversely affect our financial position and our ability to raise additional capital and prevent us from fulfilling our obligations.
- We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
- Interest rate fluctuations may affect our results of operations and financial condition.
- Changes in our credit and other ratings could adversely impact our operations and lower our profitability.
- Unanticipated changes in our effective tax rate and additional tax liabilities may impact our financial results.
- Changes in tax laws or regulations in the various tax jurisdictions we are subject to that are applied adversely to us or our paying customers could increase the costs of our products and services and harm our business.
- Our results of operations may be harmed if we are required to collect sales or other related taxes for subscriptions to our products and services in jurisdictions where we have not historically done so.
- Operations and sales outside the United States expose us to risks inherent in international operations.
- Global economic uncertainty and catastrophic events, including global pandemics such as the COVID-19 pandemic, continued hostilities between Russia and Ukraine, and Israel and Hamas, have and may disrupt our business and adversely impact our business and future results of operations and financial condition.
- Organizational Structure Risk Factors
- ZoomInfo Technologies Inc. is a holding company, its only material asset is its interest in ZoomInfo Intermediate Inc. and ZoomInfo OpCo, and ZoomInfo Technologies Inc. is accordingly dependent upon distributions from ZoomInfo OpCo and its subsidiaries to pay taxes, make payments under the tax receivable agreements, and pay dividends.
- ZoomInfo Intermediate Inc. is required to pay our Pre-IPO Owners for most of the benefits relating to any additional tax depreciation or amortization deductions that we may claim as a result of the ZoomInfo Tax Group’s allocable share of existing tax basis acquired in the IPO, the ZoomInfo Tax Group’s increase in its allocable share of existing tax basis, and anticipated tax basis adjustments the ZoomInfo Tax Group receives in connection with sales or exchanges of OpCo Units after the IPO, and certain other tax attributes.
- In certain cases, payments under the tax receivable agreements may be accelerated and/or significantly exceed the actual benefits the ZoomInfo Tax Group realizes in respect of the tax attributes subject to the tax receivable agreements.
- The acceleration of payments under the tax receivable agreements in the case of certain changes of control may impair our ability to consummate change of control transactions or negatively impact the value received by owners of our common stock.
- Ownership of Our Common Stock Risk Factors
- The parties to our stockholders agreement continue to have influence over us, and their interests may conflict with ours or yours in the future.
- Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.
Management Discussion
- Revenue. Revenue was $1,239.5 million for the year ended December 31, 2023, an increase of $141.4 million, or 13%, as compared to $1,098.0 million for the year ended December 31, 2022. The increase was primarily due to the addition of new customers over the past 12 months offset by fewer upsells, reduction in spend, and cancellations among existing customers.
- Cost of service. Cost of service was $178.1 million for the year ended December 31, 2023, a decrease of $10.3 million, or 5%, as compared to $188.4 million for the year ended December 31, 2022. Excluding equity-based compensation expenses, cost of service was $162.4 million for the year ended December 31, 2023, a decrease of $5.8 million, or 3%, as compared to $168.2 million for the year end December 31, 2022. The decrease was primarily due to the completion of amortization expense related to intangible assets from 2019 acquisitions, offset by increased hosting expenses to support new and growing customers and increased depreciation expense.
- Gross profit. Gross profit for the year ended December 31, 2023 was $1,061.4 million and represented a gross margin of 86%. Gross profit for the year ended December 31, 2022 was $909.6 million and represented a gross margin of 83%. The increase in gross profit in the year ended December 31, 2023 relative to the year ended December 31, 2022 was an increase of $151.8 million, or 17%, driven primarily due to higher revenues. The gross margin improvement in the year ended December 31, 2023 was primarily due to a lower headcount within cost of service.