Cover page
Cover page - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 11, 2020 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-39310 | |
Entity Registrant Name | ZoomInfo Technologies Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 84-3721253 | |
Entity Address, Address Line One | 805 Broadway Street | |
Entity Address, Address Line Two | Suite 900 | |
Entity Address, City or Town | Vancouver | |
Entity Address, State or Province | WA | |
Entity Address, Postal Zip Code | 98660 | |
City Area Code | 800 | |
Local Phone Number | 914-1220 | |
Title of 12(b) Security | Class A common stock, par value $0.01 per share | |
Trading Symbol | ZI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001794515 | |
Current Fiscal Year End Date | --12-31 | |
Class A common stock | ||
Entity Common Stock, Shares Outstanding | 69,240,501 | |
Class B common stock | ||
Entity Common Stock, Shares Outstanding | 228,488,162 | |
Class C common stock | ||
Entity Common Stock, Shares Outstanding | 91,582,353 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 304.9 | $ 41.4 |
Restricted cash | 1.1 | 1.1 |
Accounts receivable | 90.4 | 86.9 |
Prepaid expenses and other current assets | 10.2 | 8.3 |
Deferred costs | 10.7 | 6.6 |
Income tax receivable | 4.1 | 3.9 |
Total current assets | 421.4 | 148.2 |
Property and equipment, net | 28.4 | 23.3 |
Operating lease right-of-use assets, net | 34 | 36.8 |
Other assets: | ||
Intangible assets, net | 340 | 370.6 |
Goodwill | 966.8 | 966.8 |
Deferred tax assets | 238.1 | 0 |
Deferred costs, net of current portion | 19.8 | 16.2 |
Total assets | 2,048.5 | 1,561.9 |
Current liabilities: | ||
Accounts payable | 9.7 | 7.9 |
Accrued expenses and other current liabilities | 52.5 | 62.9 |
Unearned revenue, current portion | 175.3 | 157.7 |
Income taxes payable | 5.1 | 0.5 |
Current portion of operating lease liabilities | 4.9 | 4 |
Current portion of long-term debt | 0 | 8.7 |
Total current liabilities | 247.5 | 241.7 |
Unearned revenue, net of current portion | 0.7 | 1.4 |
Tax receivable agreements liability, net of current portion | 182.6 | 0 |
Operating lease liabilities, net of current portion | 37 | 40.7 |
Long-term debt, net of current portion | 744.3 | 1,194.6 |
Deferred tax liabilities | 7.9 | 82.8 |
Other long-term liabilities | 8 | 14.3 |
Total liabilities | 1,228 | 1,575.5 |
Series A Preferred Units | 0 | 200.2 |
Commitments and Contingencies | ||
Permanent Equity (Deficit) | ||
Members' equity (deficit) | 0 | (207.8) |
Additional paid-in capital | 402.1 | 0 |
Accumulated other comprehensive income (loss) | (2.9) | (6) |
Retained Earnings | (29.5) | 0 |
Noncontrolling interests | 446.9 | 0 |
Total equity (deficit) | 820.5 | (213.8) |
Total equity (deficit) | (213.8) | |
Total liabilities, temporary, and permanent equity (deficit) | 2,048.5 | 1,561.9 |
Class A common stock | ||
Permanent Equity (Deficit) | ||
Common stock | 0.7 | 0 |
Class B common stock | ||
Permanent Equity (Deficit) | ||
Common stock | 2.3 | 0 |
Class C common stock | ||
Permanent Equity (Deficit) | ||
Common stock | $ 0.9 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Class B common stock | ||
Common stock, par value (in dollars per share) | 0.01 | 0.01 |
Class C common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Income Statement [Abstract] | |||||
Revenue | $ 123.4 | $ 79.1 | $ 336.5 | $ 202.2 | |
Cost of service: | |||||
Cost of service | [1] | 21.2 | 11.2 | 64.2 | 30.5 |
Amortization of acquired technology | 5.5 | 6.6 | 16.7 | 19.6 | |
Gross profit | 96.7 | 61.3 | 255.6 | 152.1 | |
Operating expenses: | |||||
Sales and marketing | [1] | 46.1 | 24.2 | 139.7 | 63 |
Research and development | [1] | 10.6 | 7.5 | 36.9 | 21.6 |
General and administrative | [1] | 17.1 | 9.1 | 45.3 | 25.9 |
Amortization of other acquired intangibles | 4.6 | 4.6 | 13.9 | 12.9 | |
Restructuring and transaction related expenses | (0.1) | 2.8 | 12.3 | 11.8 | |
Total operating expenses | 78.3 | 48.2 | 248.1 | 135.2 | |
Income (loss) from operations | 18.4 | 13.1 | 7.5 | 16.9 | |
Interest expense, net | 9.7 | 26.5 | 59.3 | 76.9 | |
Loss on debt extinguishment | 0 | 0 | 14.9 | 18.2 | |
Other (income) expense, net | (3.8) | 0 | (3.8) | 0 | |
Income (loss) before income taxes | 12.5 | (13.4) | (62.9) | (78.2) | |
Benefit (expense) from income taxes | (1.4) | 1 | (9.8) | 5.7 | |
Net income (loss) | 11.1 | (12.4) | (72.7) | (72.5) | |
Less: Net income (loss) attributable to ZoomInfo OpCo prior to the Reorganization Transactions | 0 | (12.4) | (5.1) | (72.5) | |
Less: Net income (loss) attributable to noncontrolling interests | 6.2 | 0 | (38.1) | 0 | |
Net income (loss) attributable to ZoomInfo Technologies Inc. | $ 4.9 | $ 0 | $ (29.5) | $ 0 | |
Net income (loss) per share of Class A and Class C common stock | |||||
Basic (in dollars per share) | [2] | $ 0.03 | $ (0.26) | ||
Diluted (in dollars per share) | [2] | $ 0.02 | $ (0.26) | ||
Cost of service [Extensible List] | us-gaap:ServiceMember | ||||
[1] | Amounts include equity-based compensation expense, as follows: Cost of service $ 6.8 $ 1.0 $ 23.8 $ 2.9 Sales and marketing 15.2 3.1 53.6 7.2 Research and development 1.8 0.5 11.9 3.4 General and administrative 4.6 0.9 14.9 3.6 Total equity-based compensation expense $ 28.4 $ 5.5 $ 104.2 $ 17.1 | ||||
[2] | Basic and diluted net income (loss) per share of Class A and Class C common stock is applicable only for the period from June 4, 2020 through September 30, 2020, which is the period following the initial public offering ("IPO") and related Reorganization Transactions (as defined in Note 1 to the Unaudited Consolidated Financial Statements). See Note 13 for the number of shares used in the computation of net income (loss) per share of Class A and Class C common stock and the basis for the computation of net income (loss) per share. |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Total equity-based compensation expense | $ 28.4 | $ 5.5 | $ 104.2 | $ 17.1 |
Cost of service | ||||
Total equity-based compensation expense | 6.8 | 1 | 23.8 | 2.9 |
Sales and marketing | ||||
Total equity-based compensation expense | 15.2 | 3.1 | 53.6 | 7.2 |
Research and development | ||||
Total equity-based compensation expense | 1.8 | 0.5 | 11.9 | 3.4 |
General and administrative | ||||
Total equity-based compensation expense | $ 4.6 | $ 0.9 | $ 14.9 | $ 3.6 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 11.1 | $ (12.4) | $ (72.7) | $ (72.5) |
Other comprehensive income (loss), net of tax | ||||
Unrealized gain (loss) on cash flow hedges | (1.5) | (1.4) | (11.1) | (7.3) |
Realized loss (gain) on settlement of cash flow hedges | 1.7 | 0.1 | 4 | 0.1 |
Amortization of deferred losses related to the dedesignated Interest Rate Swap | 0 | 0 | 3 | 0 |
Other comprehensive income (loss) | 0.2 | (1.3) | (4.1) | (7.2) |
Comprehensive income (loss) | 11.3 | (13.7) | (76.8) | (79.7) |
Less: Net income attributable to ZoomInfo OpCo prior to the Reorganization Transactions | 0 | (13.7) | (12.8) | (79.7) |
Less: Comprehensive income (loss) attributable to noncontrolling interests | 6.3 | 0 | (35.7) | 0 |
Comprehensive income (loss) attributable to ZoomInfo Technologies Inc. | $ 5 | $ 0 | $ (28.3) | $ 0 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity (Deficit) - USD ($) $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | Common StockClass A | Common StockClass B | Common StockClass C | Additional Paid-in Capital | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | AOCI | Noncontrolling Interests | Pre-Acquisition ZI |
Beginning balance, Stockholders' Equity at Dec. 31, 2018 | $ (119.1) | $ (1.8) | $ (119.1) | $ (1.8) | $ 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member | ||||||||||
Net income (loss) | $ (40.2) | (40.2) | |||||||||
Member distributions | (6.1) | (6.1) | |||||||||
Equity-based compensation | 5.6 | 5.6 | |||||||||
Ending balance, Stockholders' Equity at Mar. 31, 2019 | (161.6) | (161.6) | 0 | ||||||||
Beginning balance, Stockholders' Equity at Dec. 31, 2018 | (119.1) | $ (1.8) | (119.1) | $ (1.8) | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | (72.5) | ||||||||||
Net income (loss) prior to Reorganization Transactions | 72.5 | ||||||||||
Other comprehensive income (loss) | (7.2) | ||||||||||
Ending balance, Stockholders' Equity at Sep. 30, 2019 | (217.2) | (210) | (7.2) | ||||||||
Beginning balance, Stockholders' Equity at Mar. 31, 2019 | (161.6) | (161.6) | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | (19.9) | (19.9) | |||||||||
Member distributions | (7.3) | (7.3) | |||||||||
Other comprehensive income (loss) | (5.9) | (5.9) | |||||||||
Repurchase outstanding equity / member units | (11.9) | (11.9) | |||||||||
Equity-based compensation | 5.9 | 5.9 | |||||||||
Ending balance, Stockholders' Equity at Jun. 30, 2019 | (200.7) | (194.8) | (5.9) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | (12.4) | (12.4) | |||||||||
Net income (loss) prior to Reorganization Transactions | 12.4 | ||||||||||
Member distributions | (3.1) | (3.1) | |||||||||
Other comprehensive income (loss) | (1.3) | (1.3) | |||||||||
Repurchase outstanding equity / member units | (5.2) | (5.2) | |||||||||
Equity-based compensation | 5.5 | 5.5 | |||||||||
Ending balance, Stockholders' Equity at Sep. 30, 2019 | (217.2) | (210) | (7.2) | ||||||||
Beginning balance, Members' Deficit at Dec. 31, 2019 | (213.8) | $ (207.8) | |||||||||
Beginning balance, Stockholders' Equity (in shares) at Dec. 31, 2019 | 0 | 0 | 0 | ||||||||
Beginning balance, Stockholders' Equity at Dec. 31, 2019 | (213.8) | $ 0 | $ 0 | $ 0 | $ 0 | 0 | (6) | $ 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | (5.9) | (5.9) | |||||||||
Member distributions | (5) | (5) | |||||||||
Other comprehensive income (loss) | (6.7) | (6.7) | |||||||||
Equity-based compensation | 11.3 | 11.3 | |||||||||
Ending balance, Members' Deficit at Mar. 31, 2020 | (207.4) | ||||||||||
Ending balance, Stockholders' Equity (in shares) at Mar. 31, 2020 | 0 | 0 | 0 | ||||||||
Ending balance, Stockholders' Equity at Mar. 31, 2020 | (220.1) | $ 0 | $ 0 | $ 0 | 0 | 0 | (12.7) | 0 | |||
Beginning balance, Members' Deficit at Dec. 31, 2019 | (213.8) | (207.8) | |||||||||
Beginning balance, Stockholders' Equity (in shares) at Dec. 31, 2019 | 0 | 0 | 0 | ||||||||
Beginning balance, Stockholders' Equity at Dec. 31, 2019 | (213.8) | $ 0 | $ 0 | $ 0 | 0 | 0 | (6) | 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | (72.7) | ||||||||||
Net income (loss) prior to Reorganization Transactions | 5.1 | ||||||||||
Other comprehensive income (loss) | (4.1) | ||||||||||
Ending balance, Members' Deficit at Sep. 30, 2020 | 0 | ||||||||||
Ending balance, Stockholders' Equity (in shares) at Sep. 30, 2020 | 69,173,426 | 228,491,601 | 91,582,353 | ||||||||
Ending balance, Stockholders' Equity at Sep. 30, 2020 | 820.5 | $ 0.7 | $ 2.3 | $ 0.9 | 402.1 | (29.5) | (2.9) | 446.9 | |||
Beginning balance, Members' Deficit at Mar. 31, 2020 | (207.4) | ||||||||||
Beginning balance, Stockholders' Equity (in shares) at Mar. 31, 2020 | 0 | 0 | 0 | ||||||||
Beginning balance, Stockholders' Equity at Mar. 31, 2020 | (220.1) | $ 0 | $ 0 | $ 0 | 0 | 0 | (12.7) | 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) prior to Reorganization Transactions | 0.8 | 0.8 | |||||||||
Net income subsequent to Reorganization Transactions | (78.7) | (34.4) | (44.3) | ||||||||
Member distributions | (1.8) | (1.8) | |||||||||
Other comprehensive loss prior to Reorganization Transactions and IPO | (1) | (1) | |||||||||
Other comprehensive loss prior to Reorganization Transactions and IPO | 4.5 | 4.5 | |||||||||
Initial effect of the Reorganization Transactions and IPO on noncontrolling interests (in shares) | 242,414,027 | 98,381,656 | |||||||||
Initial effect of the Reorganization Transactions and IPO on noncontrolling interests | $ 2.4 | $ 1 | (628.1) | 8.4 | 412.4 | 203.9 | |||||
Issuance of Class A common stock in IPO, net of costs | 48,528,783 | ||||||||||
Issuance of Class A common stock in IPO, net of costs | 1,016.6 | $ 0.5 | 1,016.1 | ||||||||
Purchases of ZoomInfo OpCo units in connection with IPO (in shares) | 2,370,948 | (2,370,948) | |||||||||
Purchases of ZoomInfo OpCo units in connection with IPO | (47.2) | (47.2) | |||||||||
Purchases of Class C units in connection with IPO (in shares) | 275,269 | (275,269) | |||||||||
Purchases of Class C units in connection with IPO | (5.5) | (5.5) | |||||||||
Opco Units exchanged into Class A shares (in shares) | 878,984 | (878,984) | |||||||||
Opco Units exchanged into Class A shares | 0 | ||||||||||
Forfeitures / cancellations (in shares) | (59,693) | (10,882) | |||||||||
Forfeitures / cancellations | 0 | ||||||||||
Series A Preferred Unit redemption accretion | (74) | (74) | |||||||||
Increase in deferred tax asset from step-up in tax basis under TRA related to unit exchanges | 126.3 | 82 | 1.4 | 42.9 | |||||||
Other comprehensive loss subsequent to Reorganization Transactions and IPO | 3.4 | 1.1 | 2.3 | ||||||||
Equity-based compensation subsequent to Reorganization Transactions | 60 | 23.1 | 36.9 | ||||||||
Ending balance, Members' Deficit at Jun. 30, 2020 | 0 | ||||||||||
Ending balance, Stockholders' Equity (in shares) at Jun. 30, 2020 | 51,994,291 | 239,153,213 | 98,106,387 | ||||||||
Ending balance, Stockholders' Equity at Jun. 30, 2020 | 783.3 | $ 0.5 | $ 2.4 | $ 1 | 366.4 | (34.4) | (2.8) | 450.2 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | 11.1 | 4.9 | 6.2 | ||||||||
Net income (loss) prior to Reorganization Transactions | 0 | ||||||||||
Other comprehensive income (loss) | 0.2 | 0.1 | 0.1 | ||||||||
Paid and accrued tax distributions | (7.2) | (7.2) | |||||||||
Equity-based compensation | 28.4 | 11.7 | 16.7 | ||||||||
Exchanges (in shares) | 17,179,135 | (10,655,101) | (6,524,034) | ||||||||
Exchanges | 0 | $ 0.2 | $ (0.1) | $ (0.1) | 19.3 | (0.2) | (19.1) | ||||
Forfeitures / cancellations (in shares) | (6,511) | ||||||||||
Forfeitures / cancellations | 0 | ||||||||||
Series A Preferred Unit redemption accretion | (74) | ||||||||||
Tax receivable agreement adjustments | 4.7 | 4.7 | 0 | ||||||||
Ending balance, Members' Deficit at Sep. 30, 2020 | $ 0 | ||||||||||
Ending balance, Stockholders' Equity (in shares) at Sep. 30, 2020 | 69,173,426 | 228,491,601 | 91,582,353 | ||||||||
Ending balance, Stockholders' Equity at Sep. 30, 2020 | $ 820.5 | $ 0.7 | $ 2.3 | $ 0.9 | $ 402.1 | $ (29.5) | $ (2.9) | $ 446.9 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (72.7) | $ (72.5) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 37 | 36.7 |
Amortization of debt discounts and issuance costs | 3.2 | 3.6 |
Amortization of deferred commissions costs | 17.5 | 4.5 |
Loss on early extinguishment of debt | 14.9 | 9.4 |
Deferred consideration valuation adjustments | 1.2 | 1 |
Equity-based compensation expense | 104.2 | 17.1 |
Deferred income taxes | 4.5 | (6.1) |
Tax receivable agreement remeasurement | (3.9) | 0 |
Provision for bad debt expense | 1.1 | 0.4 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | (4.6) | (7.4) |
Prepaid expenses and other current assets | (2.7) | (1.3) |
Deferred costs and other assets | (22.3) | (13.2) |
Income tax receivable | (0.2) | (1.9) |
Accounts payable | 1.8 | 4.7 |
Accrued expenses and other liabilities | 6.9 | 6.2 |
Unearned revenue | 16.8 | 46.2 |
Net cash provided by (used in) operating activities | 102.7 | 27.4 |
Cash flows from investing activities: | ||
Purchases of property and equipment and other assets | (11.8) | (9.3) |
Cash paid for acquisitions, net of cash acquired | 0 | (714.9) |
Net cash provided by (used in) investing activities | (11.8) | (724.2) |
Cash flows from financing activities: | ||
Payments of deferred consideration | (24.7) | (0.3) |
Proceeds from debt | 35 | 1,220.8 |
Repayment of debt | (510.9) | (647.6) |
Payments of debt issuance costs | (1) | (16.7) |
Repurchase outstanding equity / member units | (332.4) | (11.9) |
Proceeds from equity offering, net of underwriting discounts | 1,023.7 | 200.2 |
Payments of IPO issuance costs | (7.2) | 0 |
Tax distributions | (9.9) | (16.5) |
Net cash provided by (used in) financing activities | 172.6 | 728 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 263.5 | 31.2 |
Cash, cash equivalents, and restricted cash at beginning of period | 42.5 | 9 |
Cash, cash equivalents, and restricted cash at end of period | 306 | 40.2 |
Supplemental disclosures of cash flow information | ||
Interest paid in cash | 56.8 | 70.7 |
Cash paid for taxes | 0.8 | 0 |
Supplemental disclosures of non-cash investing and financing activities: | ||
Deferred variable consideration from acquisition of a business | $ 0 | $ 33.2 |
Organization and Background
Organization and Background | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Background | Note 1 - Organization and Background Business ZoomInfo Technologies Inc. through its operating subsidiaries provides a go-to-market intelligence platform for sales and marketing teams. The Company’s cloud-based platform provides accurate and comprehensive information on organizations and professionals in order to help users identify target customers and decision makers, obtain continually updated predictive lead and company scoring, monitor buying signals and other attributes of target companies, craft messages, engage via automated sales tools, and track progress through the deal cycle. Unless otherwise indicated or the context otherwise requires, references to “we,” “us,” “our,” “ZoomInfo,” and the “Company” refer (1) prior to the consummation of the Reorganization Transactions, to ZoomInfo OpCo and its consolidated subsidiaries, and (2) after the consummation of the Reorganization Transactions, to ZoomInfo Technologies Inc. and its consolidated subsidiaries. Organization ZoomInfo Technologies Inc. was formed on November 14, 2019 with no operating assets or operations as a Delaware corporation for the purposes of facilitating an initial public offering (“IPO”) and other related transactions in order to carry on the business of ZoomInfo Holdings LLC (“ZoomInfo OpCo”) (formerly known as DiscoverOrg Holdings, LLC), a Delaware limited liability company. Following consummation of the Reorganization Transactions (as described below), ZoomInfo OpCo became a direct subsidiary of ZoomInfo Intermediate Holdings LLC (“ZoomInfo HoldCo”), a Delaware limited liability company and an indirect subsidiary of ZoomInfo Technologies Inc. The Company headquarters are located in Vancouver, WA, and we operate in six offices throughout the U.S. and one office in Israel. Initial Public Offering On June 8, 2020, ZoomInfo Technologies Inc. completed the IPO, in which it sold 51,175,000 shares of Class A common stock (including shares issued pursuant to the exercise in full of the underwriters’ option to purchase additional shares) at a public offering price of $21.00 per share for net proceeds of $1,019.6 million, after deducting underwriters’ discounts (but excluding other offering expenses and reimbursements). ZoomInfo Technologies Inc. used all of the proceeds from the IPO to (i) purchase 48,528,783 newly issued HoldCo Units from ZoomInfo HoldCo for approximately $966.9 million (which ZoomInfo HoldCo in turn used to purchase the same number of newly issued OpCo Units from ZoomInfo OpCo); (ii) purchase 2,370,948 OpCo Units from certain Pre-IPO OpCo Unitholders for approximately $47.2 million; and (iii) fund $5.5 million of merger consideration payable to certain Pre-IPO Blocker Holders in connection with the Blocker Mergers (as defined below). Reorganization Transactions In connection with the IPO, the Company completed the following transactions (“Reorganization Transactions”): • ZoomInfo OpCo effected a four—for—one reverse unit split; • ZoomInfo Technologies Inc. formed a new merger subsidiary with respect to each of the Blocker Companies through which certain of our Pre-IPO Blocker Holders held their interests in ZoomInfo OpCo, each merger subsidiary merged with and into the respective Blocker Companies in reverse-subsidiary mergers, and the surviving entities merged with and into ZoomInfo Technologies Inc. (such mergers, the “Blocker Mergers”), which Blocker Mergers resulted in the Pre-IPO Blocker Holders receiving a combination of (i) shares of Class C common stock of ZoomInfo Technologies Inc. and (ii) a cash amount in respect of reductions in such Pre-IPO Blocker Holders’ equity interests, based on the initial offering price of the Class A common stock in the IPO; • certain pre-IPO owners acquired interests in ZoomInfo HoldCo as a result of the merger of an entity that held OpCo Units on behalf of such pre-IPO owners into ZoomInfo HoldCo (the “ZoomInfo HoldCo Contributions”) and the redemption of some OpCo Units pursuant to which the holders of such OpCo Units received HoldCo Units; and • the limited liability company agreement of each of ZoomInfo OpCo and ZoomInfo HoldCo was amended and restated to, among other things, modify their capital structure by reclassifying the interests held by the Pre-IPO OpCo Unitholders, the Continuing Class P Unitholders, and the Pre-IPO HoldCo Unitholders, resulting in OpCo Units of ZoomInfo OpCo, Class P Units of ZoomInfo OpCo, and HoldCo Units of ZoomInfo HoldCo, respectively (such reclassification, the “Reclassification”). We refer to the Reclassification, together with the Blocker Mergers and the ZoomInfo HoldCo Contributions, as the “Reorganization Transactions.” Following the Reorganization Transactions, ZoomInfo Technologies Inc. became a holding company, with its sole material asset being a controlling equity interest in ZoomInfo HoldCo, which became a holding company with its sole material asset being a controlling equity interest in ZoomInfo OpCo. ZoomInfo Technologies Inc. will operate and control all of the business and affairs, and consolidate the financial results, of ZoomInfo OpCo through ZoomInfo HoldCo and, through ZoomInfo OpCo and its subsidiaries, conduct our business. Accordingly, ZoomInfo Technologies Inc. consolidates the financial results of ZoomInfo HoldCo, and therefore ZoomInfo OpCo, and reports the non-controlling interests of the Pre-IPO HoldCo Units and Pre-IPO OpCo Units on its consolidated financial statements. As of September 30, 2020, ZoomInfo Technologies Inc. owned 98% of the outstanding HoldCo Units, and ZoomInfo HoldCo owned 42% of the outstanding OpCo Units. In connection with the Reorganization Transactions and the IPO, ZoomInfo Technologies Inc. entered into two tax receivable agreements. See Note 17. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 2 - Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Certain information in footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”) has been condensed or omitted pursuant to those rules and regulations. The financial statements included in this report should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2019. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2020 or any future period. The accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair statement of financial position as of September 30, 2020, and results of operations for the three and nine months ended September 30, 2020 and 2019, and cash flows for the nine months ended September 30, 2020 and 2019. The Condensed Consolidated Balance Sheet as of December 31, 2019 was derived from the audited consolidated balance sheets of the Company but does not contain all of the footnote disclosures from those annual financial statements. Accordingly, certain footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Principles of Consolidation The consolidated financial statements include the accounts of ZoomInfo Technologies Inc. and its subsidiaries that it controls due to ownership of a majority voting interest or pursuant to variable interest entity (“VIE”) accounting guidance. All intercompany transactions and balances have been eliminated in consolidation. ZoomInfo Technologies Inc., through our intermediate holding company ZoomInfo Holdco, owns a minority economic interest in, and operates and controls all of the businesses and affairs of, ZoomInfo OpCo. ZoomInfo Technologies Inc. has the obligation to absorb losses of, and receive benefits from, ZoomInfo OpCo, that could be significant. We determined that, as a result of the Reorganization Transactions described above, ZoomInfo OpCo is a VIE. Further, ZoomInfo Technologies Inc. has no contractual requirement to provide financial support to ZoomInfo OpCo. Accordingly, ZoomInfo Technologies Inc. has prepared these consolidated financial statements in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“Topic 810”). Topic 810 requires that if an entity is the primary beneficiary of a VIE, the assets, liabilities, and results of operations of the variable interest entity should be included in the consolidated financial statements of such entity. The Reorganization Transactions were accounted for consistent with a combination of entities under common control. As a result, the financial reports filed with the SEC by the Company subsequent to the Reorganization Transactions are prepared “as if” ZoomInfo OpCo is the accounting predecessor of the Company. The historical operations of ZoomInfo OpCo are deemed to be those of the Company. Thus, the financial statements included in this report reflect (i) the historical operating results of ZoomInfo OpCo prior to the Reorganization Transactions; (ii) the consolidated results of ZoomInfo Technologies Inc. and ZoomInfo OpCo following the Reorganization Transactions; (iii) the assets and liabilities of ZoomInfo OpCo and ZoomInfo Technologies Inc. at their historical cost; and (iv) ZoomInfo Technologies Inc. equity structure for all periods presented. No step-up basis of intangible assets or goodwill was recorded. ZoomInfo OpCo has been determined to be our predecessor for accounting purposes and, accordingly, the consolidated financial statements for periods prior the Reorganization Transactions have been adjusted to combine the previously separate entities for presentation purposes. The Company’s financial position, performance and cash flows effectively represent those of ZoomInfo OpCo as of and for all periods presented. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. These estimates relate to, but are not limited to, revenue recognition, allowance for doubtful accounts, contingencies, valuation and useful lives of long-lived assets, fair value of tangible and intangible assets acquired in business combinations, equity-based compensation, and income taxes, among other things. We base these estimates on historical and anticipated results, trends, and other assumptions with respect to future events that we believe are reasonable and evaluate our estimates on an ongoing basis. Given that estimates and judgments are required, actual results may differ from our estimates and such differences could be material to our consolidated financial position and results of operations. Revenue Recognition The company derives revenue primarily from subscription services. Our subscription services consist of our SaaS applications and related access to our databases. Subscription contracts are generally based on the number of users that access our applications, the level of functionality that they can access, and the amount of data that a customer integrates with their systems. Our subscriptions contracts typically have a term of 1 to 3 years and are non-cancellable. We typically bill for services annually, semi-annually, or quarterly in advance of delivery. The Company accounts for revenue contracts with customers through the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price; and (5) recognize revenue when or as the Company satisfies a performance obligation. We recognize revenue for subscription contracts on a ratable basis over the contract term, beginning on the date that our service is made available to the customer. Unearned revenue results from revenue amounts billed to customers in advance or cash received from customers in advance of the satisfaction of performance obligations. Determining the transaction price often involves judgments and estimates that can have a significant impact on the timing and amount of revenue reported. At times, the Company may adjust billing under a contract based on the addition of services or other circumstances, which are accounted for as variable consideration under Accounting Standard Update (“ASU”) 2014-09, Revenue from Contracts with Customers , later codified as Accounting Standards Codification (“ASC”) Topic 606 (collectively with subsequent amendments, “Topic 606”). The Company estimates these amounts based on historical experience and reduces revenue recognized. Cash and Cash Equivalents Cash equivalents consist of highly liquid marketable debt securities with remaining maturities of three months or less at the date of purchase. We classify our investments in marketable debt securities as “available-for-sale.” We carry these investments at fair value, based on quoted market prices or other readily available market information. Unrealized gains and losses, net of taxes, are included in accumulated other comprehensive income, which is reflected as a separate component of stockholders’ equity in our Condensed Consolidated Balance Sheets. Gains and losses are determined using the specific identification method and recognized when realized in our Consolidated Statements of Operations. If we were to determine that an other-than-temporary decline in fair value has occurred, the amount of the decline related to a credit loss shall be recognized in income. Fair Value Measurements The Company measures assets and liabilities at fair value based on an expected exit price, which represents the amount that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: Level 1 - Observable inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities Level 2 - Other inputs that are directly or indirectly observable in the marketplace Level 3 - Unobservable inputs that are supported by little or no market activity, including the Company’s own assumptions in determining fair value The inputs or methodology used for valuing financial assets and liabilities are not necessarily an indication of the risk associated with investing in them. Concentrations of Credit Risk and Significant Customers Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company holds cash at major financial institutions that often exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. The Company manages its credit risk associated with cash concentrations by concentrating its cash deposits in high-quality financial institutions and by periodically evaluating the credit quality of the primary financial institutions holding such deposits. The carrying value of cash approximates fair value. Historically, the Company has not experienced any losses due to such cash concentrations. The Company does not have any off-balance-sheet credit exposure related to its customers. Concentrations of credit risk with respect to accounts receivable and revenue are limited due to a large, diverse customer base. We do not require collateral from clients. We maintain an allowance for doubtful accounts based upon the expected collectability of accounts receivable. The Company performs ongoing credit evaluations of its customers and maintains allowances for possible losses, which, when realized, have been within the range of management’s expectations. No single customer accounted for 10% or more of our revenue for the three and nine months ended September 30, 2020 and 2019, or accounted for more than 10% of accounts receivable as of September 30, 2020 and December 31, 2019. Net assets located outside of the United States were immaterial as of September 30, 2020 and December 31, 2019. Accounts Receivable and Contract Assets Accounts receivable is comprised of invoices of revenue, net of allowance for doubtful accounts and does not bear interest. Management’s evaluation of the adequacy of the allowance for doubtful accounts considers historical collection experience, changes in customer payment profiles, the aging of receivable balances, as well as current economic conditions, all of which may impact a customer’s ability to pay. Account balances are written-off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have significant bad debt experience with customers, and therefore, the allowance for doubtful accounts is immaterial as of September 30, 2020 and December 31, 2019. The assessment of variable consideration to be constrained is based on estimates, and actual consideration may vary from current estimates. As adjustments to these estimates become necessary, they are reported in earnings in the periods in which they become known. Changes in variable consideration are recorded as a component of net revenue. Contract assets represent a contractual right to consideration in the future. Contract assets are generated when contractual billing schedules differ from revenue recognition timing. Property and Equipment, Net Property and equipment is stated at cost, net of accumulated depreciation and amortization. All repairs and maintenance costs are expensed as incurred. Depreciation and amortization costs are expensed on a straight-line basis over the lesser of the estimated useful life of the asset or the remainder of the lease term for leasehold improvements. Qualifying internal use software costs incurred during the application development stage, which consist primarily of internal product development costs, outside services, and purchased software license costs, are capitalized and amortized over the estimated useful life of the asset. Estimated useful lives range from 3 years to 10 years. Deferred Commissions Certain sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These sales commissions for initial contracts are capitalized and current amounts are included in Deferred costs and noncurrent amounts are included in Deferred costs, net of current portion in our Condensed Consolidated Balance Sheets. Deferred sales commissions are amortized on a straight-line basis over the estimated period of benefit from the customer relationship which we have determined to be 1 and 3 years for renewals and new clients, respectively. We determined the period of benefit by taking into consideration our customer contracts, our technology, and other factors. Amortization expense is included in Sales and marketing expense on the Consolidated Statements of Operations. Certain commissions are not capitalized as they do not represent incremental costs of obtaining a contract. Such commissions are expensed as incurred. Advertising and Promotional Expenses The Company expenses advertising costs as incurred in accordance with ASC 720-35, Other Expenses - Advertising Cost. Advertising expenses of $3.4 million and $8.9 million were recorded for the three and nine months ended September 30, 2020. Advertising expenses of $3.5 million and $6.9 million were recorded for the three and nine months ended September 30, 2019. Advertising expenses are included in Sales and marketing on the Consolidated Statements of Operations. Research and Development We account for research and development costs in accordance with the ASC 730, Research and Development. Under ASC 730, all research and development costs are expensed as incurred. Our research and development costs consist primarily of salaries, employee benefits, related overhead costs associated with product development, testing, quality assurance, documentation, enhancements, and upgrades. Restructuring and Transaction-Related Expenses The Company defines restructuring and transaction related expenses as costs directly associated with acquisition or disposal activities. Such costs include employee severance and termination benefits, contract termination fees and penalties, and other exist or disposal costs. In general, the Company records involuntary employee-related exit and disposal costs when there is a substantive plan for employee severance and related costs that are probable and estimable. For one-time termination benefits for key members of management (i.e., no substantive plan), transaction related bonuses and employee retention costs, expense is recorded when the employees are entitled to receive such benefits and the amount can be reasonably estimated. Contract termination fees and penalties and other exit and disposal costs are generally recorded when incurred. Business Combinations We allocate purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The purchase price is determined based on the fair value of the assets transferred, liabilities assumed and equity interests issued, after considering any transactions that are separate from the business combination. The excess of fair value of purchase consideration over the fair values of the identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets and contingent liabilities. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer bases, acquired technology and acquired trade names, useful lives, royalty rates, and discount rates. The estimates are inherently uncertain and subject to revision as additional information is obtained during the measurement period for an acquisition, which may last up to one year from the acquisition date. During the measurement period, we may record adjustments to the fair value of tangible and intangible assets acquired and liabilities assumed, with a corresponding offset to goodwill. After the conclusion of the measurement period or the final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to earnings. In addition, uncertain tax positions and tax-related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items based upon the facts and circumstances that existed as of the acquisition date, with any revisions to our preliminary estimates being recorded to goodwill, provided that the timing is within the measurement period. Subsequent to the measurement period, changes to uncertain tax positions and tax-related valuation allowances will be recorded to earnings. Goodwill and Acquired Intangible Assets Goodwill is calculated as the excess of the purchase consideration paid in a business combination over the fair value of the assets acquired less liabilities assumed. Goodwill is not amortized and is tested for impairment at least annually or when events and circumstances indicate that fair value of a reporting unit may be below its carrying value. The company has one reporting unit. We first assess qualitative factors to evaluate whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount or elect to bypass such assessment. If it is determined that it is more likely than not that the fair value of the reporting unit is less than its carrying value, or we elect to bypass the qualitative assessment, we perform a quantitative test by determining the fair value of the reporting unit. If the carrying value of the reporting unit exceeds the fair value, then an impairment loss is recognized for the difference. Acquired technology, customer lists, trade names or brand portfolios, and other intangible assets are related to previous acquisitions (see Note 7). Acquired intangible assets are amortized on a straight-line basis over the estimated period over which we expect to realize economic value related to the intangible asset. The amortization periods range from 2 years to 15 years. Indefinite-lived intangible assets consist primarily of brand portfolios acquired from Pre-Acquisition ZI and represent costs paid to legally register phrases and graphic designs that identify and distinguish products sold by the Company. Brand portfolios are not amortized, rather potential impairment is considered on an annual basis in the fourth quarter, or more frequently upon the occurrence of a triggering event, when circumstances indicate that the book value of trademarks are greater than their fair value. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than the carrying value as a basis to determine whether further impairment testing under ASC 350 is necessary. No impairment charges were recorded for the three and nine month periods ended September 30, 2020 and 2019. Impairment of Long-lived Assets Long-lived assets, such as property and equipment and acquired intangible assets, are reviewed for impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future cash flows expected to be generated by the asset or group of assets. If the carrying amount of the asset exceeds the estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the estimated future cash flows of the asset. Leases We determine if an arrangement is or contains a lease at contract inception. Determining if a contract contains a lease requires judgement. In certain of our lease arrangements, primarily those related to our data center arrangements, judgment is required in determining if a contract contains a lease. For these arrangements, there is judgment in evaluating if the arrangement involves an identified asset that is physically distinct or whether we have the right to substantially all of the capacity of an identified asset that is not physically distinct. In arrangements that involve an identified asset, there is also judgment in evaluating if we have the right to direct the use of that asset. We do not have any finance leases. Operating leases are recorded in our Condensed Consolidated Balance Sheets. Right-of-use assets and lease liabilities are measured at the lease commencement date based on the present value of the fixed minimum remaining lease payments over the lease term, determined using the discount rate for the lease at the commencement date. Because the rate implicit in our leases is not readily determinable, we use our incremental borrowing rate as the discount rate, which approximates the interest rate at which we could borrow on a collateralized basis with similar terms and payments and in similar economic environments. Some leases include options to extend or options to terminate the lease prior to the stated lease expiration. Optional periods to extend a lease, including by not exercising a termination option, are included in the lease term when it is reasonably certain that the option will be exercised (or not exercised in the case of termination options). Operating lease expense is recognized on a straight-line basis over the lease term. We account for lease and non-lease components, principally common area maintenance for our facilities leases, as a single lease component. Short term leases, defined as leases having an original lease term less than or equal to one year, are excluded from our right-of-use assets and liabilities. Unearned Revenue Unearned revenue consists of customer payments and billings in advance of revenue being recognized from our subscription services. Unearned revenue that is anticipated to be recognized within the next 12 months is recorded as Unearned revenue, current portion and the remaining portion is included in Unearned revenue, net of current portion in our consolidated balance sheets. Debt Issuance Costs Costs incurred in connection with the issuance of long-term debt are deferred and amortized as interest expense over the terms of the related debt using the effective interest method for term debt and on a straight-line basis for revolving debt. To the extent that the debt is outstanding, these amounts are reflected in the consolidated balance sheets as direct deductions from a combination of current and long-term portions of debt. Upon a refinancing or amendment, previously-capitalized debt issuance costs are expensed and included in loss on extinguishment of debt, if the Company determines that there has been a substantial modification of the related debt. If the Company determines that there has not been a substantial modification of the related debt, any previously-capitalized debt issuance costs are amortized as interest expense over the term of the new debt instrument. The company performs assessments of debt modifications at a lender-specific level for all syndicated financing arrangements. Income Taxes The Company is comprised of two limited liability companies that are treated as partnerships for tax purposes, ten limited liability companies that are single member entities and disregarded for tax purposes, four corporations, and one foreign entity. For partnership and disregarded entities, taxable income and the resulting liabilities are allocated among the owners of the entities and reported on the tax filings for those owners. We record income tax provision, deferred tax assets, and deferred tax liabilities only for the items for which the Company is responsible for making payments directly to the relevant tax authority. Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws expected to be in effect when such differences are expected to reverse. Such temporary differences are reflected as other assets and deferred tax liabilities on the consolidated balance sheets. A deferred tax asset is recognized if it is more likely than not that a tax benefit will be respected by a taxing authority. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will be realized and, when necessary, a valuation allowance is established. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. We are required to identify, evaluate and measure all uncertain tax positions taken or to be taken on tax returns and to record liabilities for the amount of these positions that may not be sustained, or may only partially be sustained, upon examination by the relevant taxing authorities. Although we believe that our estimates and judgments were reasonable, actual results may differ from these estimates. Some or all of these judgments are subject to review by the taxing authorities. We recognize the tax benefit from entity level uncertain tax positions if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Equity-Based Compensation Expense The Company periodically grants incentive units to employees and non-employees, which generally vest over a four typically in the form of profits interests. Profits interests are an interest in the increase in the value of the entity over a participation threshold. Prior to the IPO, the participation threshold was based on the valuation determined by the Board of Managers of OpCo Units on or around the grant date. Subsequent to the IPO, the participation threshold is determined by reference to the closing price of our Class A Common Stock from the preceding trading day. The holders of profits interests have the right to participate in distributions of profits only in excess of the participation threshold. The Company accounts for incentive units in accordance with ASC 718, Compensation-Stock Compensation (ASC 718). In accordance with ASC 718, compensation expense is measured at estimated fair value of the incentive units and is included as compensation expense over the vesting period during which an employee provides service in exchange for the award. The Company uses a Black-Scholes option pricing model to determine the fair value of stock options and profits interests, as profits interests have certain economic similarities to options. The Black-Scholes option pricing model includes various assumptions, including the expected life of incentive units, the expected volatility and the expected risk-free interest rate. These assumptions reflect the Company’s best estimates, but they involve inherent uncertainties based on market conditions generally outside the control of the Company. As a result, if other assumptions are used, compensation cost could be materially impacted. The Company measures employee, non-employee, and board of director equity-based compensation on the grant date fair value basis. Equity-based compensation expense is recognized over the requisite service period of the awards. For equity awards that have a performance condition, the Company recognizes compensation expense based on its assessment of the probability that the performance condition will be achieved. The Company classifies equity-based compensation expense in its Consolidated Statement of Operations in the same manner in which the award recipient’s salary and related costs are classified or in which the award recipient’s service payments are classified. Recent Accounting Pronouncements Recent Accounting Pronouncements Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met. The standard applies to contract modifications that replace a reference rate affected by reference rate reform and contemporaneous modifications of other contract terms related to the replacement of the reference rate. Further, the standard provides exceptions to certain guidance in ASC 815, Derivatives and Hedging, related to changes to the critical terms of a hedging relationship due to reference rate reform and provides optional expedients for fair value, cash flow, and net investment hedging relationships for which the component excluded from the assessment of hedge effectiveness is affected by reference rate reform. The standard is effective for us as of March 12, 2020 through December 31, 2022, and we may elect to apply the provisions of the standard as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 up to the date that the financial statements are available to be issued. Once elected, the provisions of the standard must be applied prospectively for all similar eligible contract modifications other than derivatives, which may be applied at a hedging relationship level. The standard would apply to our existing variable rate financing and derivatives designated as hedges if elected in the future. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in more timely recognition of credit losses. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted ASU 2016-13 and ASU 2019-05 effective January 1, 2020. The adoption of this guidance was on a modified retrospective basis and did not have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which amends disclosure requirements for fair value measurements by requiring new disclosures, modifying existing requirements, and eliminating others. The amendments are the result of a broader disclosure project, which aims to improve the effectiveness of |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Note 3 - Revenue from Contracts with Customers Revenue Detail Revenue comprised the following service offerings (unaudited): Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2020 2019 2020 2019 Subscription $ 122.4 $ 78.0 $ 333.3 $ 199.2 Usage-based 1.0 1.1 3.2 3.0 Total revenue $ 123.4 $ 79.1 $ 336.5 $ 202.2 Go-To-Market business intelligence tools are subscription services that allow customers access to our SaaS tools to support sales and marketing processes, which include data, analytics, and insights to provide accurate and comprehensive intelligence on organizations and professionals. Our customers use our platform to identify target customers and decision makers, obtain continually updated predictive lead and company scoring, monitor buying signals and other attributes of target companies, craft messages, engage via automated sales tools, and track progress through the deal cycle. Usage-based revenue is comprised largely of email verification services, which is a service whereby customers can verify that emails are valid prior to sending and can be helpful to avoid wasting resources or being flagged as sending spam. We regularly observe that customers integrate our usage-based services into their internal workflows and use our services on an ongoing basis. We recognize usage-based revenue at the point in time the services are consumed by the customer, thereby satisfying our performance obligation. Of the total revenue recognized in the three and nine months ended September 30, 2020, $26.0 million and $142.8 million were included in the unearned revenue balance as of December 31, 2019, respectively. Of the total revenue recognized in the three and nine months ended September 30, 2019, $7.2 million and $46.6 million were included in the unearned revenue balance as of December 31, 2018, respectively. Revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods was not material for the three and nine months ended September 30, 2020 and 2019. Revenues derived from customers and partners located outside the United States, as determined based on the address provided by our customers and partners, accounted for approximately 9% and 9% of our total revenues in the three months ended September 30, 2020 and 2019, respectively. Revenues derived from customers and partners located outside the United States accounted for approximately 9% and 8% of our total revenues in the nine months ended September 30, 2020 and 2019, respectively. We have no Company sales offices located in a foreign country as of September 30, 2020, and we contract exclusively with our customers in the United States Dollar. Contract Assets and Unearned Revenue The Company’s standard billing terms typically require payment at the beginning of each annual, semi-annual or quarterly period. Subscription revenue is generally recognized ratably over the contract term starting with when our service is made available to the customer. Usage-based revenue is recognized in the period services are utilized by our customers. The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these services. The Company records a contract asset when revenue recognized on a contract exceeds the billings to date for that contract. Unearned revenue results from cash received or amounts billed to customers in advance of revenue recognized upon the satisfaction of performance obligations. The unearned revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, dollar size, and new business timing within the quarter. The unearned revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements. As of September 30, 2020 and December 31, 2019, the Company had contract assets of $2.1 million and $0.1 million, respectively, which are recorded as current assets within Prepaid expenses and other current assets in the Company’s Condensed Consolidated Balance Sheets. As of September 30, 2020 and December 31, 2019, the Company had unearned revenue of $176.0 million and $159.1 million, respectively. ASC 606 requires the allocation of the transaction price to the remaining performance obligations of a contract. Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods. Transaction price allocated to remaining performance obligations is influenced by several factors, including seasonality, the timing of renewals, and disparate contract terms. Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes unearned revenue and backlog. The Company's backlog represents installment billings for periods beyond the current billing cycle. The majority of the Company’s noncurrent remaining performance obligations will be recognized in the next 13 to 36 months. The remaining performance obligations consisted of the following (unaudited): (in millions) Recognized within one Noncurrent Total As of September 30, 2020 $ 349.0 $ 108.6 $ 457.6 |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | Note 4 - Business Combinations Komiko On October 9, 2019, through a newly formed wholly-owned subsidiary, DiscoverOrg Acquisition (Komiko), LLC, the Company acquired certain assets and assumed certain liabilities of Komiko LTD (“Komiko”), which offered an AI-powered sales and customer success solution for business to business companies under the Komiko trade name. The Company has included the financial results of Komiko in the consolidated financial statements from the date of acquisition. Transaction costs associated with the acquisition were not material. The acquisition date fair value of the consideration transferred for Komiko was $8.5 million, comprised of the following (in millions): Cash $ 8.3 Contingent earn-out payments 0.2 Total purchase consideration $ 8.5 The fair value of the contingent earn-out payments was determined based on the Company’s probability-weighted estimate of future payments. Potential contingent payments may be as high as $4.0 million if all performance criteria are met, of which 40% is attributable to purchase consideration and the balance compensation expense as it is contingent upon continued employment with the Company by Komiko’s co-founders. During the three and nine months ended September 30, 2020, the Company adjusted the Komiko contingent payment liability by $(0.4) million and $1.3 million, respectively. The following table summarizes the fair values of the assets acquired and liabilities assumed, as of the date of acquisition (in millions): Developed technology $ 2.4 Unearned revenue (0.2) Total identifiable net assets acquired 2.2 Goodwill 6.3 Total consideration 8.5 Contingent earn-out payments (0.2) Cash paid for acquisitions, net of cash acquired $ 8.3 The excess of purchase consideration over the fair value of net tangible and intangible assets acquired was recorded as goodwill. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions. The fair values of assets acquired and liabilities assumed may be subject to change as additional information is received, including the finalization of tax assets and liabilities. Identifiable intangible assets acquired consisted of primarily $2.4 million of developed technology with an estimated useful life of 7 years. Developed technology represents the fair value of the Komiko technology portfolio. The goodwill balance is primarily attributed to the expanded market opportunities when integrating Komiko’s technology with ZoomInfo’s technology and the assembled workforce. The goodwill balance is expected to be deductible for U.S. income tax purposes. Pre-Acquisition ZI On February 1, 2019, the Company, through a newly formed wholly-owned subsidiary, Zebra Acquisition Corporation, acquired 100% of the stock of Zoom Information, Inc. (“Pre-Acquisition ZI”). Pre-Acquisition ZI was a provider of company and contact information to sales and marketing professionals. Pre-Acquisition ZI served over 8,000 customers and has operations in the U.S., Israel and Russia. The acquisition qualifies as a business combination and will be accounted for as such. The Company has included the financial results of Pre-Acquisition ZI in the consolidated financial statements from the date of acquisition. The Company incurred approximately $2.7 million of transactions costs related to this acquisition which are included in Restructuring and transaction related expenses in the Consolidated Statements of Operations. The acquisition date fair value of the consideration paid by the Company for Pre-Acquisition ZI was $760.1 million, including cash acquired of $12.1 million, and was comprised of the following (in millions): Cash consideration $ 667.3 Liability for equity award settlement 25.2 Portion of replacement awards attributable to pre-acquisition service 27.9 Other purchase consideration liabilities 6.5 Deferred consideration 33.2 Total purchase consideration $ 760.1 In accordance with the purchase agreement, the Company agreed to pay deferred consideration of $25.0 million and $10.0 million on the first and second anniversary of the Pre-Acquisition ZI acquisition, respectively. As of September 30, 2020, $9.9 million was recorded in Accrued expenses and other current liabilities on the Company’s Condensed Consolidated Balance Sheets representing the present value of the $10.0 million deferred consideration to be paid in 2021. The fair value of the deferred consideration payments was determined using a present value calculation. The following table summarizes the fair values of the assets acquired and liabilities assumed, as of the date of acquisition (in millions): Cash, cash equivalents, and restricted cash $ 12.1 Accounts receivable 22.1 Prepaid expenses and other assets 4.2 Property and equipment 6.3 Operating lease right-of-use assets 28.6 Intangible assets 322.0 Accounts payable and other liabilities (6.8) Lease liabilities (28.6) Deferred tax liabilities (80.1) Unearned revenue (34.5) Total identifiable net assets acquired 245.3 Goodwill 514.8 Total consideration 760.1 Deferred consideration (33.2) Cash acquired (12.1) Cash paid for acquisitions, net of cash acquired $ 714.8 The excess of purchase consideration over the fair value of identifiable net tangible and intangible assets acquired was recorded as goodwill. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions given the currently available information. Additionally, the Company agreed with the sellers of Pre-Acquisition ZI to put a Cash Vesting Payment Program in place for employees that held non-vested options as of the acquisition date, after giving effect to the acquisition and any vesting that resulted from the acquisition. Under the Cash Vesting Payment Program, the Company agreed to make payments to employees in the amount of the value that they would have received, had their options been vested at the time of the acquisition. Payments will be made to employees that continue their employment with the Company through the vesting milestones defined in their Pre-Acquisition ZI option agreements, and can be accelerated in certain circumstances upon termination, if the employee is terminated without cause, as defined in the Cash Vesting Payment Agreement. Employees that terminate their employment in other circumstances will forfeit any future payments. As of September 30, 2020, the potential value of future payments under the Cash Vesting Payment Program was $5.9 million to be paid to employees through 2022, assuming continued employment for each employee. The Company recognized $1.3 million and $5.3 million of expense under the Cash Vesting Program for the three and nine months ended September 30, 2020, respectively. Based on the requirement for continued service, the cost related to payments under the Cash Vesting Payment Program is recognized as compensation and reflected on the Statement of Operations in the same category as salary expense of the recipient. The following table sets forth the components of identifiable intangible assets acquired and the estimated useful lives as of the date of acquisition (in millions): Fair Value Weighted Average Useful Life in Years Brand portfolio $ 33.0 Indefinite Developed technology 116.0 5.8 Customer relationships 173.0 15.0 Total intangible assets $ 322.0 Developed technology represents the fair value of the Pre-Acquisition ZI technology, including software and databases acquired. Customer relationships represent the fair values of the underlying relationships with Pre-Acquisition ZI customers. The goodwill balance is primarily attributed to the assembled workforce and the expanded market opportunities when integrating Pre-Acquisition ZI’s technology with ZoomInfo’s technology. The goodwill balance is not expected to be deductible for U.S. income tax purposes. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 9 Months Ended |
Sep. 30, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | Note 5 - Cash and Cash Equivalents Cash and cash equivalents consisted of the following as of September 30, 2020 (unaudited): (in millions) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Current assets: Cash $ 204.9 $ — $ — $ 204.9 Cash equivalents: Corporate debt securities 17.6 — — 17.6 Money market mutual funds 82.4 — — 82.4 Total cash equivalents 100.0 — — 100.0 Total cash and cash equivalents $ 304.9 $ — $ — $ 304.9 Cash and cash equivalents consisted of $41.4 million of cash as of December 31, 2019. See Note 10 for further information regarding the fair value of our financial instruments. We had immaterial gross unrealized losses related to our available-for-sale securities as of September 30, 2020. The following table summarizes the fair value of our available-for-sale securities that have been in a continuous unrealized loss position as of September 30, 2020: September 30, 2020 December 31, 2019 (in millions) Less Than Twelve Months More Than Twelve Months Less Than Twelve Months More Than Twelve Months (Unaudited) Corporate debt securities $17.6 $0.0 N/A N/A |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 6 - Property and Equipment The Company’s fixed assets consist of the following: September 30, December 31, 2020 2019 (in millions) (Unaudited) Computer equipment $ 6.4 $ 4.1 Furniture and fixtures 5.3 4.8 Leasehold improvements 7.0 5.0 Internal use developed software 25.1 19.7 Construction in progress 1.9 0.9 45.7 34.5 Less: accumulated depreciation (17.3) (11.2) Property and equipment, net $ 28.4 $ 23.3 |
Goodwill and Acquired Intangibl
Goodwill and Acquired Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Acquired Intangible Assets | Note 7 - Goodwill and Acquired Intangible Assets Intangible assets consisted of the following as of September 30, 2020 (unaudited): (in millions) Gross Carrying Amount Accumulated Amortization Net Weighted Average Amortization Period in Years Intangible assets subject to amortization: Customer relationships $ 268.6 $ (48.0) $ 220.6 15.0 Acquired technology 163.9 (79.2) 84.7 6.0 Brand portfolio 4.6 (2.9) 1.7 9.7 Net intangible assets subject to amortization $ 437.1 $ (130.1) $ 307.0 Intangible assets not subject to amortization Pre-Acquisition ZI brand portfolio $ 33.0 $ — $ 33.0 Goodwill $ 966.8 $ — $ 966.8 Amortization expense was $10.1 million and $11.2 million for the three months ended September 30, 2020 and 2019, respectively. Amortization expense was $30.6 million and $32.5 million for the nine months ended September 30, 2020 and 2019, respectively. Goodwill, as of September 30, 2020, was $966.8 million, and there have been no changes since December 31, 2019. Based on the results of the Company’s impairment assessment, the Company did not recognize any impairment of goodwill during the nine months ended September 30, 2020 or September 30, 2019. |
Financing Arrangements
Financing Arrangements | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Note 8 - Financing Arrangements As of September 30, 2020 and December 31, 2019, the carrying values of the Company’s borrowings were as follows (in millions): Carrying Value as of Instrument Date of Issuance Maturity Date Elected Interest Rate September 30, 2020 December 31, 2019 (Unaudited) First Lien Term Loan February 1, 2019 February 1, 2026 LIBOR + 3.75% $ 744.3 $ 841.6 First Lien Revolver February 1, 2019 February 1, 2024 LIBOR + 3.50% — — Second Lien Term Loan February 1, 2019 February 1, 2027 LIBOR + 8.50% — 361.7 Total Carrying Value of Debt $ 744.3 $ 1,203.3 Less current portion — (8.7) Total Long Term Debt $ 744.3 $ 1,194.6 First Lien Term Loan In conjunction with the acquisition of Pre-Acquisition ZI on February 1, 2019, ZoomInfo raised $965 million of first lien debt through the First Lien Credit Agreement. In addition to funding the purchase of Pre-Acquisition ZI, the proceeds were used to repay all previously outstanding indebtedness. On February 19, 2020, the Company completed a repricing of its First Lien Term Loan Facility in order to take advantage of currently available lower interest rates. The repricing decreased the interest rate by 50 basis points to LIBOR plus 4.00% per annum. The transaction did not include additional borrowings, and the maturity date of the financing arrangement remained unchanged. The first lien debt has a variable interest rate whereby the Company can elect to use a Base Rate or the London Interbank Offer Rate (“LIBOR”) plus an applicable rate. The applicable margin is 2.75% to 3.00% for Base Rate loans or 3.75% or 4.00% for LIBOR Based Loans, depending on the Company’s leverage. On June 17, 2020, the Company used approximately $101.2 million to prepay $100.0 million aggregate principal amount of the first lien term loans outstanding under the First Lien Credit Agreement, including accrued interest thereon of $1.2 million. The repayment was funded with a portion of the net proceeds received from the initial public offering of the Company’s Class A common stock. As of September 30, 2020, $756.4 million aggregate principal amount of term loans were outstanding under the First Lien Credit Agreement. The interest related portion of the repayment was recorded within Interest expense, net in its Consolidated Statements of Operations, and represented use of cash from operating activities in the Consolidated Statements of Cash Flows. The quarterly repayment requirement on first lien borrowings has been satisfied for the remainder of the term after the $100.0 million principal payment. The effective interest rate on the first lien debt was 4.3% and 7.5% as of September 30, 2020 and December 31, 2019, respectively. Second Lien Term Loan In conjunction with the acquisition of Pre-Acquisition ZI on February 1, 2019, ZoomInfo raised $370 million of second lien debt. On June 8, 2020, the Company used approximately $380.6 million of the proceeds of the IPO to repay the entire aggregate principal amount outstanding under the Second Lien Credit Agreement, including prepayment premiums of $3.7 million and accrued interest thereon of $6.9 million. The effective interest rate was 10.8% as of the repayment date. The Company recognized $7.3 million loss on the extinguishment of debt relating to the write-off of unamortized issuance costs. The company recognized $11.0 million within Loss on debt extinguishment on the Consolidated Statements of Operations comprised of the write-off of unamortized issuance costs and the prepayment penalty incurred on the payoff. The effective interest rate on the second lien debt was 11.9% as of December 31, 2019. First Lien Revolving Credit Facility In conjunction with the acquisition of Pre-Acquisition ZI on February 1, 2019, ZoomInfo entered into the First Lien Credit Agreement providing a $100.0 million credit facility. On June 8, 2020, the Company paid off the outstanding $35.0 million balance of the revolving credit facility with proceeds from the IPO. The effective interest rate was 3.7% as of the repayment date. Immaterial debt issuance costs were incurred in connection with the entry into the revolving credit facility. These debt issuance costs are amortized into interest expense over the expected life of the arrangement. Unamortized debt issuance costs included in Deferred costs, net of current portion on the accompanying Condensed Consolidated Balance Sheets were immaterial as of September 30, 2020 and December 31, 2019. First Lien Credit Agreement The First Lien Credit Agreement is secured by substantially all the productive assets of the Company. The First Lien Credit Agreement contains a number of covenants that restrict, subject to certain exceptions, the Company’s ability to, among other things: • incur additional indebtedness; • create or incur liens; • engage in certain fundamental changes, including mergers or consolidations; • sell or transfer assets; • pay dividends and distributions on our subsidiaries’ capital stock; • make acquisitions, investments, loans or advances; • engage in certain transactions with affiliates; and • enter into negative pledge clauses and clauses restricting subsidiary distributions. If the Company draws more than $35.0 million of the revolving credit loan, the revolving credit loan is subject to a springing financial covenant pursuant to which the consolidated first lien net leverage ratio must not exceed 7.65 to 1.00. The credit agreements also contain certain customary affirmative covenants and events of default, including a change of control. If an event of default occurs, the lenders under the credit agreements will be entitled to take various actions, including the acceleration of amounts due under the credit agreements and all actions permitted to be taken by a secured creditor. Redeemable Series A Preferred Units In conjunction with the acquisition of Pre-Acquisition ZI on February 1, 2019, ZoomInfo issued 51,750,000 of Series A Preferred Units in exchange for $200.2 million, net of issuance costs. On June 8, 2020, the Company redeemed and cancelled all outstanding Series A Preferred Units of ZoomInfo OpCo. Refer to Note 15 for additional discussion regarding Series A Preferred Units and related redemption. The expected future principal payments for all borrowings as of September 30, 2020 is as follows (in millions): Contractual Maturity Discounts and Issuance Costs As Presented For the year ended December 31, 2020 $ — $ (0.6) $ (0.6) 2021 — (2.6) (2.6) 2022 — (2.7) (2.7) 2023 — (2.9) (2.9) 2024 — (3.0) (3.0) Thereafter 756.4 (0.3) 756.1 $ 756.4 $ (12.1) $ 744.3 |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | Note 9 - Derivatives and Hedging Activities Hedge Accounting and Hedging Programs We are exposed to changes in interest rates, primarily relating to changes in interest rates on our first lien term loan. Consequently, from time to time, we may use interest rate swaps or other financial instruments to manage our exposure to interest rate movements. Our primary objective in holding derivatives is to reduce the volatility of cash flows associated with changes in interest rates. We do not enter into derivative transactions for speculative or trading purposes. We recognize derivative instruments and hedging activities on a gross basis as either assets or liabilities on the Company’s Condensed Consolidated Balance Sheets and measure them at fair value. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the earnings effect of the hedged forecasted transactions in a cash flow hedge. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. In April 2019, the Company entered into two separate interest rate swap agreements to convert a portion of the Company’s floating-rate debt that is based on LIBOR to a fixed-rate, reducing the impact of interest rate changes on future interest expense. The first agreement converts $350.0 million of floating rate debt under our first lien credit facility to fixed rate obligations. The second agreement caps the interest rate applied to $500.0 million of the Company’s floating-rate debt in the event the interest rate should rise above the cap strike rate. Our interest rate swap contracts mature in April 2022, and our interest rate cap contract matures in April of 2024. During the three months ended September 30, 2020, we began to hedge the variability of forecasted interest payments on our first lien debt using forward-starting swaps. The total notional amount of these forward-starting interest rate swaps is $500.0 million as of September 30, 2020. These forward-starting interest rate swaps will fix the benchmark interest rate and hedge the variability of forecasted interest payments from April 2022 through January 2026. During the second quarter of 2020, the Company reduced its LIBOR based debt to $756.4 million (refer to Note 8), which is below the total notional amounts of our Derivative Instruments of $850.0 million as of the date of the debt repayment. Consequently, concurrent with the repayment of the entire aggregate principal amount outstanding under the Second Lien Credit Agreement and prepayment of $100.0 million aggregate principal amount of the first lien term loans outstanding under the First Lien Credit Agreement, we dedesignated the Derivative Instruments. As the forecasted interest payments on $93.7 million not redesignated was probable to not occur, the Company reclassified the existing deferred loss on that portion of the derivative of $3.3 million from AOCI into Interest expense, net in the Consolidated Statements of Operations. During the three months ended September 30, 2020 the Company dedesignated and redesignated certain hedges contemporaneously with the inception of our forward-starting interest rate swaps to achieve optimal interest rate protections. As of September 30, 2020, $243.6 million of the notional amount of the interest rate cap contract is not designated as an accounting hedge. As of September 30, 2020, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk ($ in millions): Interest Rate Derivatives Number of Instruments Notional Aggregate Principal Amount Interest Cap / Swap Rate Maturity Date Interest rate cap contract One $ 256.4 3.500 % April 30, 2024 Interest rate swap contracts Two $ 350.0 2.301 % April 29, 2022 Forward-starting interest rate swap contracts Two $ 500.0 0.370 % January 30, 2026 The following table summarizes the fair value and presentation in the Company’s Condensed Consolidated Balance Sheets for derivatives as of September 30, 2020 (in millions): Fair Value of Derivative Liabilities Instrument Balance Sheet Location September 30, 2020 December 31, 2019 (Unaudited) Derivatives designated as hedging instruments Interest rate cap contract Accrued expenses and other current liabilities $ 0.2 $ 0.3 Interest rate cap contract Other long-term liabilities 0.2 0.4 Interest rate swap contracts Accrued expenses and other current liabilities 7.0 2.3 Interest rate swap contracts Other long-term liabilities 3.6 3.0 Forward-starting interest rate swap contracts Other long-term liabilities 1.0 N/A Total designated derivative liabilities $ 12.0 $ 6.0 Derivatives not designated as hedging instruments Interest rate cap contract Accrued expenses and other current liabilities $ 0.2 $ — Interest rate cap contract Other long-term liabilities 0.2 — Total undesignated derivative liabilities $ 0.4 $ — Total derivative liabilities $ 12.4 $ 6.0 The change in fair value of any derivative instruments was recorded, net of income tax, in Accumulated other comprehensive income (loss) (“AOCI”) on the Company’s Condensed Consolidated Balance Sheets to the extent the agreements were designated as effective hedges. In the period that the hedged item affects earnings, such as when interest payments are made on the Company’s variable-rate debt, we reclassify the related gain or loss on the interest rate swap cash flow hedges and any receipts on the cap to Interest expense, net and as operating cash flows in our Consolidated Statements of Cash Flows. Over the next 12 months, we expect to reclassify approximately $5.6 million into interest expense from AOCI. |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Note 10 - Fair Value The Company's financial instruments consist principally of cash and cash equivalents, prepaid expenses and other current assets, accounts receivable, and accounts payable, accrued expenses, and long-term debt. The carrying value of cash and cash equivalents, prepaid expenses and other current assets, accounts receivable, accounts payable, and accrued expenses approximate fair value, primarily due to short maturities. The carrying value of the Company’s cash equivalents, which consist of corporate debt securities and money market mutual funds, approximate fair value and are based on the closing price of these assets as of the reporting date. We classify our corporate debt securities and money market mutual funds as Level 1. The carrying values of the Company's debt instruments approximate their fair value based on Level 2 inputs since the instruments carry variable interest rates based on LIBOR or other applicable reference rates. The Company has elected to use the income approach to value the interest rate derivatives using observable Level 2 market expectations at measurement date and standard valuation techniques to convert future amounts to a single present amount (discounted) reflecting current market expectations about those future amounts. Level 2 inputs for the derivative valuations are limited to quoted prices for similar assets or liabilities in active markets (specifically futures contracts) and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR cash and swap rates, implied volatility for options, caps and floors, basis swap adjustments, overnight indexed swap (“OIS”) short term rates and OIS swap rates, when applicable, and credit risk at commonly quoted intervals). Mid-market pricing is used as a practical expedient for most fair value measurements. Key inputs, including the cash rates for very short term, futures rates and swap rates beyond the derivative maturity are interpolated to provide spot rates at resets specified by each derivative (reset rates are then further adjusted by the basis swap, if necessary). Derivatives are discounted to present value at the measurement date at LIBOR rates unless they are fully collateralized. Fully collateralized derivatives are discounted to present value at the measurement date at OIS rates (short term OIS rates and long term OIS swap rates). Inputs are collected from SuperDerivatives, an independent third-party derivative pricing data provider, as of the close on the last day of the period. The valuation of the interest rate swaps also take into consideration estimates of our own, as well as counterparty’s, risk of non-performance under the contract. We estimate the value of other long-lived assets that are recorded at fair value on a non-recurring basis based on a market valuation approach. We use prices and other relevant information generated primarily by recent market transactions involving similar or comparable assets, as well as our historical experience in divestitures, acquisitions and real estate transactions. Additionally, we may use a cost valuation approach to value long-lived assets when a market valuation approach is unavailable. Under this approach, we determine the cost to replace the service capacity of an asset, adjusted for physical and economic obsolescence. When available, we use valuation inputs from independent valuation experts, such as real estate appraisers and brokers, to corroborate our estimates of fair value. Real estate appraisers’ and brokers’ valuations are typically developed using one or more valuation techniques including market, income and replacement cost approaches. Because these valuations contain unobservable inputs, we classify the measurement of fair value of long-lived assets as Level 3. The fair value (in millions) of our financial assets and (liabilities) was determined using the following inputs: Fair Value at September 30, 2020 Level 1 Level 2 Level 3 Measured on a recurring basis: Corporate debt securities $ 17.6 $ — $ — Money market mutual funds $ 82.4 $ — $ — Derivative contract, net $ — $ (12.4) $ — Measured on a non-recurring basis: N/A $ — $ — $ — Fair Value at December 31, 2019 Level 1 Level 2 Level 3 Measured on a recurring basis: Corporate debt securities $ — $ — $ — Money market mutual funds $ — $ — $ — Derivative contract, net $ — $ (6.0) $ — Measured on a non-recurring basis: Impaired right-of-use assets $ — $ — $ 1.4 There have been no transfers between fair value measurements levels during the nine months ended September 30, 2020. See Note 5 for further information regarding the fair value of our financial instruments. |
Commitment and Contingencies
Commitment and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11 - Commitments and Contingencies Non-cancelable purchase obligations - As of September 30, 2020, we had additional outstanding non-cancelable purchase obligations with a term of 12 months or longer of $10.4 million over the corresponding amount disclosed in our audited financial statements for the year ended December 31, 2019, mainly related to third-party cloud hosting and sales and marketing activities. Sales and use tax - The Company has conducted an assessment of sales and use tax exposure in states where the Company has established nexus. Based on this assessment, the Company has recorded a liability for taxes owed and related penalties and interest in the amount of $2.1 million and $2.1 million at September 30, 2020 and December 31, 2019, respectively. This liability is included in Accrued expenses and other current liabilities in the Company’s Condensed Consolidated Balance Sheets. Contingent earn-out payments - As of September 30, 2020, the Company is contingently committed to making an earn-out payment of up to $4.0 million as part of our acquisition of Komiko (refer to Note 4 for additional information). Deferred acquisition related payments - In accordance with the purchase agreement, the Company will pay deferred consideration of $10.0 million on the 2nd anniversary of the Pre-acquisition ZI acquisition. Refer to Note 4. Legal Matters - We are subject to various legal proceedings, claims, and governmental inspections, audits, or investigations that arise in the ordinary course of our business. There are inherent uncertainties in these matters, some of which are beyond management’s control, making the ultimate outcomes difficult to predict. Moreover, management’s views and estimates related to these matters may change in the future, as new events and circumstances arise and the matters continue to develop. Although the outcomes of these matters cannot be predicted with certainty, in the opinion of management, the ultimate resolution of these matters would not be expected to have a material adverse effect on our financial position, results of operations, or cash flows. |
Noncontrolling Interest
Noncontrolling Interest | 9 Months Ended |
Sep. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest | Note 12 - Noncontrolling Interest ZoomInfo Technologies Inc. operates and controls all of the business and affairs, and consolidates the financial results, of ZoomInfo OpCo through ZoomInfo HoldCo and, through ZoomInfo OpCo and its subsidiaries, conducts our business. Accordingly, ZoomInfo Technologies Inc. consolidates the financial results of ZoomInfo HoldCo, and therefore ZoomInfo OpCo, and reports the noncontrolling interests of its consolidated subsidiaries on its consolidated financial statements based on the HoldCo Units and OpCo Units held by Continuing Members. Changes in ZoomInfo’s ownership interest in its consolidated subsidiaries are accounted for as equity transactions. As such, future redemptions or direct exchanges of HoldCo Units or OpCo Units by Continuing Members will result in a change in ownership and reduce or increase the amount recorded as Noncontrolling interests and increase or decrease Additional paid-in capital in the Company’s Condensed Consolidated Balance Sheets. As of September 30, 2020, ZoomInfo Technologies Inc. held 160,755,779 HoldCo Units, and ZoomInfo HoldCo held 164,963,877 OpCo Units resulting in an ownership interest of 41% in the consolidated subsidiaries. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 13 - Earnings Per Share Basic earnings per share of Class A and Class C common stock is computed by dividing net income attributable to ZoomInfo Technologies, Inc. by the weighted-average number of shares of Class A and Class C common stock outstanding during the period. Diluted earnings per share of Class A and Class C common stock is computed by dividing net income attributable to ZoomInfo Technologies, Inc., adjusted for the assumed exchange of all potentially dilutive instruments for Class A common stock, by the weighted-average number of shares of Class A and Class C common stock outstanding, adjusted to give effect to potentially dilutive elements. Prior to the IPO, the ZoomInfo OpCo membership structure included Series A Preferred Units, Preferred units, Common units, and Profits Interests in the form of Class P Units. The Company analyzed the calculation of earnings per unit for periods prior to the IPO and determined that it resulted in values that would not be meaningful to the users of these unaudited consolidated financial statements. Therefore, earnings per share information has not been presented for the three and nine months ended September 30, 2019. The followin g table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings (los s) per share of Class A and Class C common stock for the three and nine months ended September 30, 2020. The basic and diluted earnings per share period for the three and nine months ended September 30, 2020, represents only the period from June 4, 2020 to September 30, 2020, which represents the period wherein we had outstanding Class A and Class C common stock. Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 (Unaudited) Numerator: Net income (loss) $ 11.1 $ (72.7) Less: Net income (loss) attributable to ZoomInfo OpCo before Reorganization Transactions — (5.1) Less: Excess of consideration paid over carrying amount to holders of Series A Preferred Units attributable to common shares — 11.0 Less: Net income (loss) attributable to noncontrolling interests 6.2 (38.1) Net income (loss) attributable to ZoomInfo Technologies Inc. $ 4.9 $ (40.5) The following table sets forth the computation of basic and diluted net income per share of Class A and Class C common stock (in millions, except share amounts, and per share amounts, unaudited): Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Class A Class C Class A Class C (Unaudited) Basic net income (loss) per share attributable to common stockholders Numerator: Allocation of net income (loss) attributable to ZoomInfo Technologies Inc. $ 1.9 $ 3.0 $ (15.5) $ (25.0) Denominator: Weighted average number of shares of Class A and Class C common stock outstanding 61,153,504 94,631,630 59,075,363 95,420,020 Basic net income (loss) per share attributable to common stockholders $ 0.03 $ 0.03 $ (0.26) $ (0.26) Diluted net income (loss) per share attributable to common stockholders Numerator: Undistributed earnings for basic computation $ 1.9 $ 3.0 $ (15.5) $ (25.0) Increase in earnings attributable to common shareholders upon conversion of potentially dilutive instruments 0.6 1.0 — — Reallocation of earnings as a result of conversion of potentially dilutive instruments 2.4 (2.4) — — Reallocation of undistributed earnings as a result of conversion of Class C to Class A shares 1.6 (25.0) Allocation of undistributed earnings $ 6.5 $ 1.6 $ (40.5) $ (25.0) Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Class A Class C Class A Class C (Unaudited) Denominator: Number of shares used in basic computation 61,153,504 94,631,630 59,075,363 95,420,020 Add: weighted-average effect of dilutive securities exchangeable for Class A common stock: OpCo Units 213,965,530 — — — Class P Units 12,334,249 — — — HSKB I Class 1 Units 13,572,783 — — — HSKB II Class 1 Units — — — HSKB II Phantom Units — — — HoldCo Units 1,212,228 — — — Restricted Stock Units 202,703 — — — LTIP Units 22,817 — — — Exercise of Class A Common Stock Options 225,212 — — — Conversion of Class C to Class A common shares outstanding 94,631,630 — 95,420,020 — Weighted average shares of Class A and Class C common stock outstanding used to calculate diluted net income (loss) per share 397,320,656 94,631,630 154,495,383 95,420,020 Diluted net income (loss) per share attributable to common stockholders $ 0.02 $ 0.02 $ (0.26) $ (0.26) Shares of the Company’s Class B common stock do not participate in the earnings or losses of ZoomInfo Technologies, Inc. and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. The following weighted-average potentially dilutive securities were evaluated under the treasury stock method for potentially dilutive effects and have been excluded from diluted net loss per share in the periods presented due to their anti-dilutive effect: Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 OpCo Units — 216,801,480 Class P Units — 12,441,594 HSKB I Class 1 Units — 13,371,074 HSKB II Class 1 Units 1,957,685 1,891,249 HSKB II Phantom Units 364,281 369,741 HoldCo Units — 1,231,368 Restricted Stock Units — 246,749 LTIP Units — 24,706 Exercise of Class A Common Stock Options — 256,256 Total anti-dilutive securities 2,321,966 246,634,217 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Note 14 - Leases The Company has operating leases for corporate offices under non-cancelable agreements with various expiration dates. Our leases do not have significant rent escalation, holidays, concessions, material residual value guarantees, material restrictive covenants, or contingent rent provisions. Our leases include both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease components (e.g., common-area or other maintenance costs) which are accounted for as a single lease component. In addition, we have elected the practical expedient to exclude short-term leases, which have an original lease term of less than one year, from our right-of-use assets and lease liabilities as well as the package of practical expedients relating to adoption of Topic 842. The Company also has a sublease of a former corporate office. The sublease has a remaining lease term of less than one year. Sublease income, which is recorded as a reduction of rent expense and allocated to the appropriate financial statement line item to arrive at Income from operations in the Consolidated Statements of Operations was immaterial for the three and nine months ended September 30, 2020 and 2019. The following are additional details related to leases recorded on our balance sheet as of September 30, 2020 and December 31, 2019: September 30, December 31, 2020 2019 (in millions) (Unaudited) Assets Operating lease right-of-use assets, net Operating leases $ 34.0 $ 36.8 Liabilities Current portion of operating lease liabilities Operating leases $ 4.9 $ 4.0 Operating lease liabilities, net of current portion Operating leases $ 37.0 $ 40.7 Rent expense was $1.8 million and $1.8 million for the three months ended September 30, 2020 and 2019, respectively. Rent expense was $5.5 million and $4.3 million for the nine months ended September 30, 2020 and 2019, respectively. Other information related to leases was as follows: (unaudited, in millions) Three Months Ended September 30, Nine Months Ended September 30, Supplemental Cash Flow Information 2020 2019 2020 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 1.5 $ 0.9 $ 5.3 $ 2.5 Lease liabilities arising from obtaining right-of-use assets From Zoom Information, Inc. acquisition $ — $ — $ — $ 28.6 Other $ — $ — $ 0.1 $ 0.2 As of September 30, 2020 December 31, 2019 Weighted average remaining lease term (in years) 8.0 8.6 Weighted average discount rate 6.3 % 6.3 % The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases to the total lease liabilities recognized on the condensed consolidated balance sheets as of September 30, 2020 (in millions): Year Ending December 31, Operating Leases 2020 (excluding nine months ended September 30, 2020) $ 1.7 2021 7.5 2022 7.6 2023 7.2 2024 6.8 Thereafter 22.9 Total future minimum lease payments 53.7 Less effects of discounting 11.8 Total lease liabilities $ 41.9 Reported as of September 30, 2020 Current portion of operating lease liabilities $ 4.9 Operating lease liabilities, net of current portion 37.0 Total lease liabilities $ 41.9 The table above does not include any legally binding minimum lease payments for leases signed but not yet commenced. As of September 30, 2020, we had additional operating leases for office space that have not yet commenced with undiscounted future lease payments of $2.7 million. These operating leases will commence in the fourth quarter of fiscal year 2020. Expense associated with short term leases and variable lease costs were immaterial for the three and nine months ended September 30, 2020. The expense related to short-term leases reasonably reflects our short-term lease commitments. |
Redeemable Series A Preferred U
Redeemable Series A Preferred Units | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Redeemable Series A Preferred Units | Note 15 - Redeemable Series A Preferred Units On June 8, 2020, the Company redeemed and cancelled all outstanding Series A Preferred Units of ZoomInfo OpCo for $274.2 million, the total redemption price, resulting in a $74.0 million reduction to Additional paid-in capital . The total redemption price paid included the carrying amount of $200.2 million, accreted but unpaid dividends of $45.4 million, and an excess amount due upon early redemption of $28.6 million. Of the $28.6 million excess amount paid, $17.6 million was attributed to noncontrolling interests and $11.0 million to common stockholders. |
Equity-based Compensation
Equity-based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Equity-based Compensation | Note 16 - Equity-based Compensation 2020 Omnibus Incentive Plan - On May 27, 2020, the Board of Directors of the Company (the “Board”) adopted the ZoomInfo Technologies Inc. 2020 Omnibus Incentive Plan (the “Omnibus Plan”). The Omnibus Plan provides for potential grants of the following awards with respect to shares of the Company’s Class A common stock and OpCo Units: (i) incentive stock options qualified as such under U.S. federal income tax laws; (ii) non-qualified stock options or any other form of stock options; (iii) stock appreciation rights; (iv) restricted stock; (v) restricted stock units; (vi) OpCo Units, and (vii) Other equity-based and cash-based incentive awards as determined by the compensation committee of the Board or any properly delegated subcommittee. The maximum aggregate number of shares of the Company’s Class A common stock that may be issued pursuant to awards under the Omnibus Plan shall not exceed 18,650,000 shares (including OpCo Units or other securities which have been issued under the plan and can be exchanged or converted into shares of Class A common stock) (the “Plan Share Reserve”). The Omnibus Plan also contains a provision that will add an additional number of shares of Class A common stock to the Plan Share Reserve on the first day of each year starting with January 1, 2021, equal to the lesser of (i) the positive difference between (x) 5% of the outstanding Class A Common Stock on the last day of the immediately preceding year, and (y) the Plan Share Reserve on the last day of the immediately preceding year, and (ii) a lower number of shares of Class A Common Stock as may be determined by the Board. The Company currently has equity-based compensation awards outstanding as follows: Restricted Stock Units, Class A Common Stock Options, HoldCo Units, OpCo Units, Class P Units, and LTIP units. In addition, the Company recognizes equity-based compensation expense from awards granted to employees by noncontrolling interest holders of HoldCo Units and OpCo Units as further described below under HSKB Incentive Units. In connection with the Reorganization Transactions and the IPO, 1,950,930 Class P Units held directly by employees of the Company or indirectly through DiscoverOrg Management Holdings, LLC, were converted into 1,325,330 unvested HoldCo Units and 576,708 unvested Options based on their respective participation thresholds and the IPO price of $21.00 per share. In connection with this conversion of Class P Units as part of the Reorganization Transactions, the Company incurred incremental grant date fair value of $4.0 million. The HoldCo Units and Options issued upon the conversion remain subject to the same service vesting requirements of the original Class P Units. Except where indicated otherwise, the equity-based compensation awards described below are subject to time-based service requirements. For grants issued prior to June 2020, the service vesting condition is generally over four years with 50% vesting on the two Restricted Stock Units Restricted Stock Unit (“RSU”) activity was as follows during the periods indicated: Nine Months Ended September 30, 2020 Restricted Stock Units Weighted Average Grant Date Fair Value Unvested at beginning of period — $ — Granted 829,348 $ 27.85 Vested (20,625) $ 21.00 Forfeited (9,116) $ 23.67 Unvested at end of period 799,607 $ 28.07 Class A Common Stock Options Unvested Options activity was as follows during the periods indicated: Nine Months Ended September 30, 2020 Options Weighted Average Exercise Price Unvested at beginning of period — $ — Effect of Reorganization Transactions and IPO 576,708 $ 21.00 Forfeited (10,120) $ 21.00 Unvested at end of period 566,588 $ 21.00 The aggregate intrinsic value and weighted average remaining contractual terms of Options outstanding and Options exercisable were as follows as of September 30, 2020. September 30, 2020 Aggregate intrinsic value (in millions) Unit Options outstanding $ 12.5 Unit Options exercisable $ — Weighted average remaining contractual life (in years) Unit Options outstanding 9.7 years Unit Options exercisable N/A All Options outstanding were issued at the time of the IPO. No additional options have been issued to date. The fair value of Class A stock options granted at the time of the IPO was determined using the Black-Scholes option pricing model with the following assumption ranges and fair value per unit: Nine Months Ended September 30, 2020 Volatility 39.0% to 39.3% Expected life 5.6 to 5.9 years Risk-free rate 0.5% Fair value per unit $21.00 We estimated the future stock price volatility based on the volatility of a set of publicly traded comparable companies with a look back period consistent with the expected life. The estimated life for the units was based on the expected hold period of private equity owners. The risk-free rate is based on the rate for a U.S. government security with the same estimated life at the time of grant. HoldCo Units Unvested HoldCo Unit activity was as follows during the periods indicated: Nine Months Ended September 30, 2020 HoldCo Units Weighted Average Grant Date Fair Value Unvested at beginning of period — $ — Effect of Reorganization Transactions and IPO 1,332,239 $ 8.98 Vested (68,587) $ 6.08 Forfeited (12,773) $ 9.67 Unvested at end of period 1,250,879 $ 9.13 OpCo Units OpCo Unit activity was as follows during the periods indicated: Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 OpCo Units Weighted Average Grant Date Fair Value OpCo Units Unvested at beginning of period 228,819 $ 1.72 441,681 Effect of Reorganization Transactions and IPO (6,909) $ 10.48 — Vested (162,218) $ 1.72 (118,867) Forfeited (59,692) $ 0.68 (93,995) Unvested at end of period — $ — 228,819 Class P Units Class P Units were issued under both the prior and current LLC agreement of ZoomInfo OpCo. Class P Unit activity was as follows during the periods indicated: Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Class P Units Weighted Average Participation Threshold Class P Units Unvested at beginning of period 16,893,603 $ 6.19 5,716,467 Effect of Reorganization Transactions and IPO (1,950,930) $ 7.01 — Granted 642,500 $ 21.00 10,831,275 Vested (5,078,777) $ 5.27 — Forfeited (430,965) $ 6.56 (1,571,151) Unvested at end of period 10,075,431 $ 6.62 14,976,591 In September 2019, ZoomInfo OpCo expanded its employee incentive programs under a newly-formed upper tier entity DiscoverOrg Management Holdings, LLC (“Management Holdings”), established to issue Incentive Units to employees of the Company. Through this newly formed upper tier entity, Class P Units were issued by Management Holdings to employees, directors, and consultants or advisors of the Company, and ZoomInfo OpCo issued corresponding Class P Units to Management Holdings. The cancellation or forfeiture of any Management Holdings’ Class P Units automatically results in a cancellation of an equal number of ZoomInfo OpCo’s Class P Units. Management Holdings was subsequently merged with and into ZoomInfo HoldCo in connection with the Reorganization Transactions and IPO. On June 3, 2020 concurrent with the pricing of the IPO, the Company granted additional Class P Units. The fair value of these Class P Units was determined using the Black-Scholes option pricing model with the following assumption ranges and fair value per unit: Nine Months Ended September 30, 2020 2019 Volatility 39.9% 40.4% to 41.2% Expected life 6.5 to 6.8 years 4 years Risk-free rate 0.5% 1.8% to 2.5% Fair value per unit $21.00 $5.20 to $9.04 We estimated the future stock price volatility based on the volatility of a set of publicly traded comparable companies with a look back period consistent with the expected life. The estimated life for the units was based on the expected holding period of private equity owners. The risk-free rate is based on the rate for a U.S. government security with the same estimated life at the time of grant. LTIP Units LTIP Unit activity was as follows during the periods indicated: Nine Months Ended September 30, 2020 LTIP Units Weighted Average Participation Threshold Unvested at beginning of period — $ — Granted 47,620 $ 21.00 Unvested at end of period 47,620 $ 21.00 HSKB Incentive Units The founders of the Company previously contributed membership units of ZoomInfo OpCo into an upper tier entity, HSKB Funds, LLC, which is controlled by the co-founder and current CEO of the Company (“HSKB Manager”). In connection with the Reorganization Transactions, HSKB was reorganized into HSKB I and HSKB II (together, “HSKB”), with HSKB I owning OpCo Units and HSKB II owning HoldCo Units. HSKB may issue LLC units to employees of the Company (“HSKB Grant”) in the form of Class 1 units and Class 2 units, with a Class 1 unit being exchangeable into one share of Class A Common Stock, and a Class 2 unit equal to any residual interests in HSKB upon liquidation. These awards are recorded in accordance with the measurement and recognition criteria of ASC 718 for awards made to non-employees. Prior to December 2019, most HSKB Grants were issued with a performance vesting condition wherein the award vests upon the cumulative change of more than 90% of the membership interests in the Company. In December 2019, unvested HSKB Grants were modified to add an alternative vesting condition and modify the forfeiture provisions, wherein 50% of an HSKB Grant will no longer be subject to forfeiture and will be eligible to vest on the later of September 1, 2020 or two years following the award grant date, and 1/48th will no longer be subject to forfeiture and be eligible to vest on the first day of each subsequent month. This additional vesting condition (but not the forfeiture modification) is conditioned upon the ability to exchange the HSKB Units for the Class A Common Stock of the Company after an IPO. This modification affected 142 grantees at the time and resulted in an increase in unrecognized equity-based compensation cost related to the HSKB Grants of approximately $88.4 million. Upon completion of the IPO in June 2020, this performance condition was satisfied and the Company will begin to recognize compensation cost under these awards on a straight-line basis in the same manner as if the Company had paid cash in lieu of awarding the HSKB Grants, per the requirements of ASC 718. In 2018, in connection with the Carlyle Investment described above, holders of HSKB Grants received $21.8 million in cash distributions. In addition, HSKB allocated $31.3 million to be paid over three years from 2019 to 2021 if the holder of the HSKB Grant remains employed by the Company as of the payment date. On March 31, 2020, HSKB allocated an additional $5.3 million to be paid out over four years, starting with March 31, 2020, to holders of HSKB Grants who received their grants after the March 2018 Carlyle Investment, subject to the holders continued employment by the Company. During the nine months ended September 30, 2020, HSKB paid $11.3 million from allocated funds and has $12.2 million remaining that it has allocated to be paid through 2023. HSKB Phantom Units - In December 2019, HSKB I adopted the HSKB Funds, LLC 2019 Phantom Unit Plan wherein HSKB may grant Phantom Units (“HSKB Phantom Units”) to employees of the Company. HSKB Phantom Units are recorded in accordance with the measurement and recognition criteria of ASC 718 for awards made to non-employees. HSKB Phantom Units represent the economic equivalent of one Class A Common Share in the Company and generally have the same vesting and forfeiture conditions as the modified HSKB Grants (see HSKB Incentive Units above). In connection with the Reorganization Transactions, all HSKB Phantom Units were moved from HSKB I to HSKB II. Within 30 days of the later of the date upon which a Phantom Unit vests and the date that HSKB II is capable of making an exchange of a corresponding ZoomInfo HoldCo Common Unit for Class A Common Stock, HSKB II must settle the HSKB Phantom Unit in exchange for either (1) cash or (2) Class A Common Stock as determined by the HSKB Manager, in each case, equal to the fair market value of such Common Unit at the time of such exchange. The HSKB Incentive Units and HSKB Phantom Units both have time-based vesting conditions that were conditional upon the completion of an IPO. In addition, there were four Class P Unit grants with vesting that accelerated upon completion of an IPO. As a result, in the quarter ended June 30, 2020, the Company recognized an additional $57.6 million of expense attributable to the service period already elapsed on HSKB Incentive Units and HSKB Phantom Units, plus the acceleration of vesting on select Class P Units. Including this extra charge as a result of completing the IPO, compensation expense incurred from all the equity-based incentive awards described above was the following (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited) (unaudited) Cost of service and Operating expenses include equity-based compensation expenses as follows: Cost of service $ 6.8 $ 1.0 $ 23.8 $ 2.9 Sales and marketing 15.2 3.1 53.6 7.2 Research and development 1.8 0.5 11.9 3.4 General and administrative 4.6 0.9 14.9 3.6 Total equity-based compensation expense $ 28.4 $ 5.5 $ 104.2 $ 17.1 As of September 30, 2020, unamortized equity-based compensation costs related to each equity-based incentive award described above is the following: Amount Weighted Average Remaining Service Period (years) Restricted Stock Units $ 21.1 3.5 Class A Common Stock Options 1.4 2.8 HoldCo Units 8.1 2.8 Class P Units 26.9 2.5 LTIP Units 0.9 4.2 HSKB Incentive Units 71.1 1.9 HSKB Phantom Units 5.0 2.7 Total unamortized equity-based compensation cost $ 134.5 2.4 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 17 - Income Taxes The Company recorded $1.4 million of income tax expense and $1.0 million of income tax benefit for the three months ended September 30, 2020 and 2019, respectively, and $9.8 million of income tax expense and $5.7 million of income tax benefit for the nine months ended September 30, 2020 and 2019, respectively. The Company’s estimated effective tax rate for the nine months ended September 30, 2020 was (15.5)%. The Company’s estimated annual effective tax rate differs from the statutory rate of 21.0% primarily due to certain compensation expenses that will not have a corresponding deduction for tax, and because the Company is not liable for income taxes on the portion of earnings that are attributable to non-controlling interest. As a result of the IPO, the Company recorded a change in the net deferred tax asset position, net of valuation allowance, of $224.4 million, which primarily consisted of the Company’s outside basis differences in its partnership subsidiaries. As a result of the Secondary Offering, the Company recorded an additional deferred tax asset, net of valuation allowance, of $92.9 million, which primarily consists of the Company’s outside basis differences in its partnership subsidiaries. In assessing the realizability of deferred tax assets, including the deferred tax assets recorded as a result of the IPO, Secondary Offering, and current year operations, management determined that it was more likely than not that the deferred tax assets will be realized. In addition, the Company has assessed the need for valuation allowances on indefinite lived assets recorded at its lower tier subsidiaries. As of the result, the Company has recorded a valuation allowance of $207.4 million related to the indefinite outside basis in the corporate stock of its wholly owned subsidiary. The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. The Act contained several retroactive corporate tax provisions, including modifications to net operating loss application and the Section 163(j) limitation on business interest expense. Under U.S. GAAP, the effect of a change in tax law is recorded discretely as a component of the income tax provision related to continuing operations in the period of enactment. The Act did not have a material impact on the income tax benefit or the deferred taxes of the Company for the three and nine months ended September 30, 2020. The Company does not believe it has any significant uncertain tax positions and therefore has no unrecognized tax benefits as of September 30, 2020, that if recognized, would affect the annual effective tax rate. Tax Receivable Agreement The Company expects to obtain an increase in its share of the tax basis in the net assets of ZoomInfo HoldCo when OpCo Units and HoldCo Units are exchanged by Pre-IPO OpCo Unitholders and Pre-IPO OpCo Unitholders, respectively. The Company intends to treat any redemptions and exchanges of HoldCo Units and OpCo Units as direct purchases for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that it would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. In connection with the Reorganization Transactions and the IPO, the Company entered into (i) the Exchange Tax Receivable Agreement with certain of our Pre-IPO OpCo Unitholders and (ii) the Reorganization Tax Receivable Agreement with the Pre-IPO Blocker Holder (collectively, the “Tax Receivable Agreements”). The Tax Receivable Agreements provide for the payment by ZoomInfo Technologies Inc. of 85.0% of the amount of any tax benefits that ZoomInfo Technologies Inc. actually realizes, or in some cases is deemed to realize, as a result of (i) increases in ZoomInfo Technologies Inc.’s share of the tax basis in the net assets of ZoomInfo HoldCo resulting from any redemptions or exchanges of HoldCo Units or OpCo Units, (ii) tax basis increases attributable to payments made under the Tax Receivable Agreements, and (iii) deductions attributable to imputed interest pursuant to the Tax Receivable Agreements (the ‘‘TRA Payments”). The Company expects to benefit from the remaining 15.0% of any of cash savings, if any, that it realizes. As of September 30, 2020, the Company had a liability of $182.6 million related to its projected obligations under the Tax Receivable Agreements. Tax Receivable Agreements related liabilities are classified as current or noncurrent based on the expected date of payment and are included in the Company’s Condensed Consolidated Balance Sheets under the captions Current portion of tax receivable agreements liability and Tax receivable agreements liability, net of current portion , respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 18 - Subsequent Events In October 2020, the Company acquired substantially all the assets, and certain specified liabilities, of Clickagy, LLC, a leading provider of artificial intelligence-powered buyer intent data. In November 2020, the Company acquired EverString Technology, LLC, a leading artificial intelligence-powered, business-to-business (B2B) data solutions provider. In connection with these acquisitions, the Company has agreed to pay an aggregate cash consideration, inclusive of vesting cash retention payments, of approximately $71.5 million, subject to working capital and other customary adjustments, and issued 67,075 shares of unregistered Class A common stock of the Company. We funded cash payments made at closing with cash on hand. Neither acquisition is expected to be material to the Company’s results of operations for the three months or year ended December 31, 2020 or the Company’s financial position as of December 31, 2020. The initial accounting of the business combinations is incomplete as of the issuance date of these financial statements. The Company has not yet determined the acquisition date fair value of the assets acquired and liabilities assumed. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) pertaining to interim financial information. Certain information in footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”) has been condensed or omitted pursuant to those rules and regulations. The financial statements included in this report should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2019. |
Organization and Principles of Consolidation | Organization ZoomInfo Technologies Inc. was formed on November 14, 2019 with no operating assets or operations as a Delaware corporation for the purposes of facilitating an initial public offering (“IPO”) and other related transactions in order to carry on the business of ZoomInfo Holdings LLC (“ZoomInfo OpCo”) (formerly known as DiscoverOrg Holdings, LLC), a Delaware limited liability company. Following consummation of the Reorganization Transactions (as described below), ZoomInfo OpCo became a direct subsidiary of ZoomInfo Intermediate Holdings LLC (“ZoomInfo HoldCo”), a Delaware limited liability company and an indirect subsidiary of ZoomInfo Technologies Inc. Principles of Consolidation The consolidated financial statements include the accounts of ZoomInfo Technologies Inc. and its subsidiaries that it controls due to ownership of a majority voting interest or pursuant to variable interest entity (“VIE”) accounting guidance. All intercompany transactions and balances have been eliminated in consolidation. |
Reorganization Transactions | We refer to the Reclassification, together with the Blocker Mergers and the ZoomInfo HoldCo Contributions, as the “Reorganization Transactions.” Following the Reorganization Transactions, ZoomInfo Technologies Inc. became a holding company, with its sole material asset being a controlling equity interest in ZoomInfo HoldCo, which became a holding company with its sole material asset being a controlling equity interest in ZoomInfo OpCo. ZoomInfo Technologies Inc. will operate and control all of the business and affairs, and consolidate the financial results, of ZoomInfo OpCo through ZoomInfo HoldCo and, through ZoomInfo OpCo and its subsidiaries, conduct our business. Accordingly, ZoomInfo Technologies Inc. consolidates the financial results of ZoomInfo HoldCo, and therefore ZoomInfo OpCo, and reports the non-controlling interests of the Pre-IPO HoldCo Units and Pre-IPO OpCo Units on its consolidated financial statements.The Reorganization Transactions were accounted for consistent with a combination of entities under common control. As a result, the financial reports filed with the SEC by the Company subsequent to the Reorganization Transactions are prepared “as if” ZoomInfo OpCo is the accounting predecessor of the Company. The historical operations of ZoomInfo OpCo are deemed to be those of the Company. Thus, the financial statements included in this report reflect (i) the historical operating results of ZoomInfo OpCo prior to the Reorganization Transactions; (ii) the consolidated results of ZoomInfo Technologies Inc. and ZoomInfo OpCo following the Reorganization Transactions; (iii) the assets and liabilities of ZoomInfo OpCo and ZoomInfo Technologies Inc. at their historical cost; and (iv) ZoomInfo Technologies Inc. equity structure for all periods presented. No step-up basis of intangible assets or goodwill was recorded.ZoomInfo OpCo has been determined to be our predecessor for accounting purposes and, accordingly, the consolidated financial statements for periods prior the Reorganization Transactions have been adjusted to combine the previously separate entities for presentation purposes. The Company’s financial position, performance and cash flows effectively represent those of ZoomInfo OpCo as of and for all periods presented |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. These estimates relate to, but are not limited to, revenue recognition, allowance for doubtful accounts, contingencies, valuation and useful lives of long-lived assets, fair value of tangible and intangible assets acquired in business combinations, equity-based compensation, and income taxes, among other things. We base these estimates on historical and anticipated results, trends, and other assumptions with respect to future events that we believe are reasonable and evaluate our estimates on an ongoing basis. Given that estimates and judgments are required, actual results may differ from our estimates and such differences could be material to our consolidated financial position and results of operations. |
Revenue Recognition | Revenue Recognition The company derives revenue primarily from subscription services. Our subscription services consist of our SaaS applications and related access to our databases. Subscription contracts are generally based on the number of users that access our applications, the level of functionality that they can access, and the amount of data that a customer integrates with their systems. Our subscriptions contracts typically have a term of 1 to 3 years and are non-cancellable. We typically bill for services annually, semi-annually, or quarterly in advance of delivery. The Company accounts for revenue contracts with customers through the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price; and (5) recognize revenue when or as the Company satisfies a performance obligation. We recognize revenue for subscription contracts on a ratable basis over the contract term, beginning on the date that our service is made available to the customer. Unearned revenue results from revenue amounts billed to customers in advance or cash received from customers in advance of the satisfaction of performance obligations. Determining the transaction price often involves judgments and estimates that can have a significant impact on the timing and amount of revenue reported. At times, the Company may adjust billing under a contract based on the addition of services or other circumstances, which are accounted for as variable consideration under Accounting Standard Update (“ASU”) 2014-09, Revenue from Contracts with Customers , later codified as Accounting Standards Codification (“ASC”) Topic 606 (collectively with subsequent amendments, “Topic 606”). The Company estimates these amounts based on historical experience and reduces revenue recognized. Deferred Commissions Certain sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These sales commissions for initial contracts are capitalized and current amounts are included in Deferred costs and noncurrent amounts are included in Deferred costs, net of current portion in our Condensed Consolidated Balance Sheets. Deferred sales commissions are amortized on a straight-line basis over the estimated period of benefit from the customer relationship which we have determined to be 1 and 3 years for renewals and new clients, respectively. We determined the period of benefit by taking into consideration our customer contracts, our technology, and other factors. Amortization expense is included in Sales and marketing expense on the Consolidated Statements of Operations. Certain commissions are not capitalized as they do not represent incremental costs of obtaining a contract. Such commissions are expensed as incurred. Unearned Revenue Unearned revenue consists of customer payments and billings in advance of revenue being recognized from our subscription services. Unearned revenue that is anticipated to be recognized within the next 12 months is recorded as Unearned revenue, current portion and the remaining portion is included in Unearned revenue, net of current portion in our consolidated balance sheets. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents consist of highly liquid marketable debt securities with remaining maturities of three months or less at the date of purchase. We classify our investments in marketable debt securities as “available-for-sale.” We carry these investments at fair value, based on quoted market prices or other readily available market information. Unrealized gains and losses, net of taxes, are included in accumulated other comprehensive income, which is reflected as a separate component of stockholders’ equity in our Condensed Consolidated Balance Sheets. Gains and losses are determined using the specific identification method and recognized when realized in our Consolidated Statements of Operations. If we were to determine that an other-than-temporary decline in fair value has occurred, the amount of the decline related to a credit loss shall be recognized in income. |
Fair Value Measurements | Fair Value Measurements The Company measures assets and liabilities at fair value based on an expected exit price, which represents the amount that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value: Level 1 - Observable inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities Level 2 - Other inputs that are directly or indirectly observable in the marketplace Level 3 - Unobservable inputs that are supported by little or no market activity, including the Company’s own assumptions in determining fair value |
Concentrations of Credit Risk and Significant Customers | Concentrations of Credit Risk and Significant Customers Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company holds cash at major financial institutions that often exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. The Company manages its credit risk associated |
Accounts Receivable and Contract Assets | Accounts Receivable and Contract Assets Accounts receivable is comprised of invoices of revenue, net of allowance for doubtful accounts and does not bear interest. Management’s evaluation of the adequacy of the allowance for doubtful accounts considers historical collection experience, changes in customer payment profiles, the aging of receivable balances, as well as current economic conditions, all of which may impact a customer’s ability to pay. Account balances are written-off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have significant bad debt experience with customers, and therefore, the allowance for doubtful accounts is immaterial as of September 30, 2020 and December 31, 2019. The assessment of variable consideration to be constrained is based on estimates, and actual consideration may vary from current estimates. As adjustments to these estimates become necessary, they are reported in earnings in the periods in which they become known. Changes in variable consideration are recorded as a component of net revenue. Contract assets represent a contractual right to consideration in the future. Contract assets are generated when contractual billing schedules differ from revenue recognition timing. |
Property and Equipment, Net | Property and Equipment, NetProperty and equipment is stated at cost, net of accumulated depreciation and amortization. All repairs and maintenance costs are expensed as incurred. Depreciation and amortization costs are expensed on a straight-line basis over the lesser of the estimated useful life of the asset or the remainder of the lease term for leasehold improvements. Qualifying internal use software costs incurred during the application development stage, which consist primarily of internal product development costs, outside services, and purchased software license costs, are capitalized and amortized over the estimated useful life of the asset. Estimated useful lives range from 3 years to 10 years. |
Advertising and Promotional Expenses | Advertising and Promotional ExpensesThe Company expenses advertising costs as incurred in accordance with ASC 720-35, Other Expenses - Advertising Cost. |
Research and Development | Research and Development We account for research and development costs in accordance with the ASC 730, Research and Development. Under ASC 730, all research and development costs are expensed as incurred. Our research and development costs consist primarily of salaries, employee benefits, related overhead costs associated with product development, testing, quality assurance, documentation, enhancements, and upgrades. |
Restructuring and Transaction-Related Expenses | Restructuring and Transaction-Related Expenses The Company defines restructuring and transaction related expenses as costs directly associated with acquisition or disposal activities. Such costs include employee severance and termination benefits, contract termination fees and penalties, and other exist or disposal costs. In general, the Company records involuntary employee-related exit and disposal costs when there is a substantive plan for employee severance and related costs that are probable and estimable. For one-time termination benefits for key members of management (i.e., no substantive plan), transaction related bonuses and employee retention costs, expense is recorded when the employees are entitled to receive such benefits and the amount can be reasonably estimated. Contract termination fees and penalties and other exit and disposal costs are generally recorded when incurred. |
Business Combinations | Business Combinations We allocate purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The purchase price is determined based on the fair value of the assets transferred, liabilities assumed and equity interests issued, after considering any transactions that are separate from the business combination. The excess of fair value of purchase consideration over the fair values of the identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets and contingent liabilities. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer bases, acquired technology and acquired trade names, useful lives, royalty rates, and discount rates. The estimates are inherently uncertain and subject to revision as additional information is obtained during the measurement period for an acquisition, which may last up to one year from the acquisition date. During the measurement period, we may record adjustments to the fair value of tangible and intangible assets acquired and liabilities assumed, with a corresponding offset to goodwill. After the conclusion of the measurement period or the final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to earnings. In addition, uncertain tax positions and tax-related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items based upon the facts and circumstances that existed as of the acquisition date, with any revisions to our preliminary estimates being recorded to goodwill, provided that the timing is within the measurement period. Subsequent to the measurement period, changes to uncertain tax positions and tax-related valuation allowances will be recorded to earnings. |
Goodwill and Acquired Intangible Assets | Goodwill and Acquired Intangible Assets Goodwill is calculated as the excess of the purchase consideration paid in a business combination over the fair value of the assets acquired less liabilities assumed. Goodwill is not amortized and is tested for impairment at least annually or when events and circumstances indicate that fair value of a reporting unit may be below its carrying value. The company has one reporting unit. We first assess qualitative factors to evaluate whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount or elect to bypass such assessment. If it is determined that it is more likely than not that the fair value of the reporting unit is less than its carrying value, or we elect to bypass the qualitative assessment, we perform a quantitative test by determining the fair value of the reporting unit. If the carrying value of the reporting unit exceeds the fair value, then an impairment loss is recognized for the difference. Acquired technology, customer lists, trade names or brand portfolios, and other intangible assets are related to previous acquisitions (see Note 7). Acquired intangible assets are amortized on a straight-line basis over the estimated period over which we expect to realize economic value related to the intangible asset. The amortization periods range from 2 years to 15 years. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets Long-lived assets, such as property and equipment and acquired intangible assets, are reviewed for impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future cash flows expected to be generated by the asset or group of assets. If the carrying amount of the asset exceeds the estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the estimated future cash flows of the asset. |
Leases | Leases We determine if an arrangement is or contains a lease at contract inception. Determining if a contract contains a lease requires judgement. In certain of our lease arrangements, primarily those related to our data center arrangements, judgment is required in determining if a contract contains a lease. For these arrangements, there is judgment in evaluating if the arrangement involves an identified asset that is physically distinct or whether we have the right to substantially all of the capacity of an identified asset that is not physically distinct. In arrangements that involve an identified asset, there is also judgment in evaluating if we have the right to direct the use of that asset. |
Debt Issuance Costs | Debt Issuance Costs Costs incurred in connection with the issuance of long-term debt are deferred and amortized as interest expense over the terms of the related debt using the effective interest method for term debt and on a straight-line basis for revolving debt. To the extent that the debt is outstanding, these amounts are reflected in the consolidated balance sheets as direct deductions from a combination of current and long-term portions of debt. Upon a refinancing or amendment, previously-capitalized debt issuance costs are expensed and included in loss on extinguishment of debt, if the Company determines that there has been a substantial modification of the related debt. If the Company determines that there has not been a substantial modification of the related debt, any previously-capitalized debt issuance costs are amortized as interest expense over the term of the new debt instrument. The company performs assessments of debt modifications at a lender-specific level for all syndicated financing arrangements. |
Income Taxes | Income Taxes The Company is comprised of two limited liability companies that are treated as partnerships for tax purposes, ten limited liability companies that are single member entities and disregarded for tax purposes, four corporations, and one foreign entity. For partnership and disregarded entities, taxable income and the resulting liabilities are allocated among the owners of the entities and reported on the tax filings for those owners. We record income tax provision, deferred tax assets, and deferred tax liabilities only for the items for which the Company is responsible for making payments directly to the relevant tax authority. Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws expected to be in effect when such differences are expected to reverse. Such temporary differences are reflected as other assets and deferred tax liabilities on the consolidated balance sheets. A deferred tax asset is recognized if it is more likely than not that a tax benefit will be respected by a taxing authority. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will be realized and, when necessary, a valuation allowance is established. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. We are required to identify, evaluate and measure all uncertain tax positions taken or to be taken on tax returns and to record liabilities for the amount of these positions that may not be sustained, or may only partially be sustained, upon examination by the relevant taxing authorities. Although we believe that our estimates and judgments were reasonable, actual results may differ from these estimates. Some or all of these judgments are subject to review by the taxing authorities. We recognize the tax benefit from entity level uncertain tax positions if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. |
Equity-Based Compensation Expense | Equity-Based Compensation Expense The Company periodically grants incentive units to employees and non-employees, which generally vest over a four typically in the form of profits interests. Profits interests are an interest in the increase in the value of the entity over a participation threshold. Prior to the IPO, the participation threshold was based on the valuation determined by the Board of Managers of OpCo Units on or around the grant date. Subsequent to the IPO, the participation threshold is determined by reference to the closing price of our Class A Common Stock from the preceding trading day. The holders of profits interests have the right to participate in distributions of profits only in excess of the participation threshold. The Company accounts for incentive units in accordance with ASC 718, Compensation-Stock Compensation (ASC 718). In accordance with ASC 718, compensation expense is measured at estimated fair value of the incentive units and is included as compensation expense over the vesting period during which an employee provides service in exchange for the award. The Company uses a Black-Scholes option pricing model to determine the fair value of stock options and profits interests, as profits interests have certain economic similarities to options. The Black-Scholes option pricing model includes various assumptions, including the expected life of incentive units, the expected volatility and the expected risk-free interest rate. These assumptions reflect the Company’s best estimates, but they involve inherent uncertainties based on market conditions generally outside the control of the Company. As a result, if other assumptions are used, compensation cost could be materially impacted. The Company measures employee, non-employee, and board of director equity-based compensation on the grant date fair value basis. Equity-based compensation expense is recognized over the requisite service period of the awards. For equity awards that have a performance condition, the Company recognizes compensation expense based on its assessment of the probability that the performance condition will be achieved. The Company classifies equity-based compensation expense in its Consolidated Statement of Operations in the same manner in which the award recipient’s salary and related costs are classified or in which the award recipient’s service payments are classified. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recent Accounting Pronouncements Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met. The standard applies to contract modifications that replace a reference rate affected by reference rate reform and contemporaneous modifications of other contract terms related to the replacement of the reference rate. Further, the standard provides exceptions to certain guidance in ASC 815, Derivatives and Hedging, related to changes to the critical terms of a hedging relationship due to reference rate reform and provides optional expedients for fair value, cash flow, and net investment hedging relationships for which the component excluded from the assessment of hedge effectiveness is affected by reference rate reform. The standard is effective for us as of March 12, 2020 through December 31, 2022, and we may elect to apply the provisions of the standard as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 up to the date that the financial statements are available to be issued. Once elected, the provisions of the standard must be applied prospectively for all similar eligible contract modifications other than derivatives, which may be applied at a hedging relationship level. The standard would apply to our existing variable rate financing and derivatives designated as hedges if elected in the future. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in more timely recognition of credit losses. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted ASU 2016-13 and ASU 2019-05 effective January 1, 2020. The adoption of this guidance was on a modified retrospective basis and did not have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which amends disclosure requirements for fair value measurements by requiring new disclosures, modifying existing requirements, and eliminating others. The amendments are the result of a broader disclosure project, which aims to improve the effectiveness of disclosures. ASU No. 2018-13 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company adopted ASU 2018-13 on January 1, 2020, and the adoption did not have a material effect on the Company’s financial statements or disclosures. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Disaggregated by Service Offering | Revenue comprised the following service offerings (unaudited): Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2020 2019 2020 2019 Subscription $ 122.4 $ 78.0 $ 333.3 $ 199.2 Usage-based 1.0 1.1 3.2 3.0 Total revenue $ 123.4 $ 79.1 $ 336.5 $ 202.2 |
Remaining Performance Obligations | The remaining performance obligations consisted of the following (unaudited): (in millions) Recognized within one Noncurrent Total As of September 30, 2020 $ 349.0 $ 108.6 $ 457.6 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Komiko | |
Business Acquisition [Line Items] | |
Acquisition Date Fair Value of Consideration Transferred | The acquisition date fair value of the consideration transferred for Komiko was $8.5 million, comprised of the following (in millions): Cash $ 8.3 Contingent earn-out payments 0.2 Total purchase consideration $ 8.5 |
Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets acquired and liabilities assumed, as of the date of acquisition (in millions): Developed technology $ 2.4 Unearned revenue (0.2) Total identifiable net assets acquired 2.2 Goodwill 6.3 Total consideration 8.5 Contingent earn-out payments (0.2) Cash paid for acquisitions, net of cash acquired $ 8.3 |
Pre-Acquisition ZI | |
Business Acquisition [Line Items] | |
Acquisition Date Fair Value of Consideration Transferred | The acquisition date fair value of the consideration paid by the Company for Pre-Acquisition ZI was $760.1 million, including cash acquired of $12.1 million, and was comprised of the following (in millions): Cash consideration $ 667.3 Liability for equity award settlement 25.2 Portion of replacement awards attributable to pre-acquisition service 27.9 Other purchase consideration liabilities 6.5 Deferred consideration 33.2 Total purchase consideration $ 760.1 |
Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets acquired and liabilities assumed, as of the date of acquisition (in millions): Cash, cash equivalents, and restricted cash $ 12.1 Accounts receivable 22.1 Prepaid expenses and other assets 4.2 Property and equipment 6.3 Operating lease right-of-use assets 28.6 Intangible assets 322.0 Accounts payable and other liabilities (6.8) Lease liabilities (28.6) Deferred tax liabilities (80.1) Unearned revenue (34.5) Total identifiable net assets acquired 245.3 Goodwill 514.8 Total consideration 760.1 Deferred consideration (33.2) Cash acquired (12.1) Cash paid for acquisitions, net of cash acquired $ 714.8 |
Components of Identifiable Indefinite-Lived Intangible Assets Acquired | The following table sets forth the components of identifiable intangible assets acquired and the estimated useful lives as of the date of acquisition (in millions): Fair Value Weighted Average Useful Life in Years Brand portfolio $ 33.0 Indefinite Developed technology 116.0 5.8 Customer relationships 173.0 15.0 Total intangible assets $ 322.0 |
Cash and Cash Equivalents (Tabl
Cash and Cash Equivalents (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of Cash and Cash Equivalents | Cash and cash equivalents consisted of the following as of September 30, 2020 (unaudited): (in millions) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Current assets: Cash $ 204.9 $ — $ — $ 204.9 Cash equivalents: Corporate debt securities 17.6 — — 17.6 Money market mutual funds 82.4 — — 82.4 Total cash equivalents 100.0 — — 100.0 Total cash and cash equivalents $ 304.9 $ — $ — $ 304.9 Cash and cash equivalents consisted of $41.4 million of cash as of December 31, 2019. |
Schedule of Debt Securities, Available-for-sale, Unrealized Loss Position, Fair Value | The following table summarizes the fair value of our available-for-sale securities that have been in a continuous unrealized loss position as of September 30, 2020: September 30, 2020 December 31, 2019 (in millions) Less Than Twelve Months More Than Twelve Months Less Than Twelve Months More Than Twelve Months (Unaudited) Corporate debt securities $17.6 $0.0 N/A N/A |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | The Company’s fixed assets consist of the following: September 30, December 31, 2020 2019 (in millions) (Unaudited) Computer equipment $ 6.4 $ 4.1 Furniture and fixtures 5.3 4.8 Leasehold improvements 7.0 5.0 Internal use developed software 25.1 19.7 Construction in progress 1.9 0.9 45.7 34.5 Less: accumulated depreciation (17.3) (11.2) Property and equipment, net $ 28.4 $ 23.3 |
Goodwill and Acquired Intangi_2
Goodwill and Acquired Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible assets consisted of the following as of September 30, 2020 (unaudited): (in millions) Gross Carrying Amount Accumulated Amortization Net Weighted Average Amortization Period in Years Intangible assets subject to amortization: Customer relationships $ 268.6 $ (48.0) $ 220.6 15.0 Acquired technology 163.9 (79.2) 84.7 6.0 Brand portfolio 4.6 (2.9) 1.7 9.7 Net intangible assets subject to amortization $ 437.1 $ (130.1) $ 307.0 Intangible assets not subject to amortization Pre-Acquisition ZI brand portfolio $ 33.0 $ — $ 33.0 Goodwill $ 966.8 $ — $ 966.8 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Carrying Values of Borrowings | As of September 30, 2020 and December 31, 2019, the carrying values of the Company’s borrowings were as follows (in millions): Carrying Value as of Instrument Date of Issuance Maturity Date Elected Interest Rate September 30, 2020 December 31, 2019 (Unaudited) First Lien Term Loan February 1, 2019 February 1, 2026 LIBOR + 3.75% $ 744.3 $ 841.6 First Lien Revolver February 1, 2019 February 1, 2024 LIBOR + 3.50% — — Second Lien Term Loan February 1, 2019 February 1, 2027 LIBOR + 8.50% — 361.7 Total Carrying Value of Debt $ 744.3 $ 1,203.3 Less current portion — (8.7) Total Long Term Debt $ 744.3 $ 1,194.6 |
Expected Future Principal Payments for Borrowings | The expected future principal payments for all borrowings as of September 30, 2020 is as follows (in millions): Contractual Maturity Discounts and Issuance Costs As Presented For the year ended December 31, 2020 $ — $ (0.6) $ (0.6) 2021 — (2.6) (2.6) 2022 — (2.7) (2.7) 2023 — (2.9) (2.9) 2024 — (3.0) (3.0) Thereafter 756.4 (0.3) 756.1 $ 756.4 $ (12.1) $ 744.3 |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Outstanding Interest Rate Derivatives Designated as Cash Flow Hedges of Interest Rate Risk | As of September 30, 2020, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk ($ in millions): Interest Rate Derivatives Number of Instruments Notional Aggregate Principal Amount Interest Cap / Swap Rate Maturity Date Interest rate cap contract One $ 256.4 3.500 % April 30, 2024 Interest rate swap contracts Two $ 350.0 2.301 % April 29, 2022 Forward-starting interest rate swap contracts Two $ 500.0 0.370 % January 30, 2026 |
Fair Value and Presentation in the Consolidated Balance Sheets for Derivatives | The following table summarizes the fair value and presentation in the Company’s Condensed Consolidated Balance Sheets for derivatives as of September 30, 2020 (in millions): Fair Value of Derivative Liabilities Instrument Balance Sheet Location September 30, 2020 December 31, 2019 (Unaudited) Derivatives designated as hedging instruments Interest rate cap contract Accrued expenses and other current liabilities $ 0.2 $ 0.3 Interest rate cap contract Other long-term liabilities 0.2 0.4 Interest rate swap contracts Accrued expenses and other current liabilities 7.0 2.3 Interest rate swap contracts Other long-term liabilities 3.6 3.0 Forward-starting interest rate swap contracts Other long-term liabilities 1.0 N/A Total designated derivative liabilities $ 12.0 $ 6.0 Derivatives not designated as hedging instruments Interest rate cap contract Accrued expenses and other current liabilities $ 0.2 $ — Interest rate cap contract Other long-term liabilities 0.2 — Total undesignated derivative liabilities $ 0.4 $ — Total derivative liabilities $ 12.4 $ 6.0 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Assets and (Liabilities) Measured at Fair Value | The fair value (in millions) of our financial assets and (liabilities) was determined using the following inputs: Fair Value at September 30, 2020 Level 1 Level 2 Level 3 Measured on a recurring basis: Corporate debt securities $ 17.6 $ — $ — Money market mutual funds $ 82.4 $ — $ — Derivative contract, net $ — $ (12.4) $ — Measured on a non-recurring basis: N/A $ — $ — $ — Fair Value at December 31, 2019 Level 1 Level 2 Level 3 Measured on a recurring basis: Corporate debt securities $ — $ — $ — Money market mutual funds $ — $ — $ — Derivative contract, net $ — $ (6.0) $ — Measured on a non-recurring basis: Impaired right-of-use assets $ — $ — $ 1.4 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Net Loss Per Share | The followin g table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings (los s) per share of Class A and Class C common stock for the three and nine months ended September 30, 2020. The basic and diluted earnings per share period for the three and nine months ended September 30, 2020, represents only the period from June 4, 2020 to September 30, 2020, which represents the period wherein we had outstanding Class A and Class C common stock. Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 (Unaudited) Numerator: Net income (loss) $ 11.1 $ (72.7) Less: Net income (loss) attributable to ZoomInfo OpCo before Reorganization Transactions — (5.1) Less: Excess of consideration paid over carrying amount to holders of Series A Preferred Units attributable to common shares — 11.0 Less: Net income (loss) attributable to noncontrolling interests 6.2 (38.1) Net income (loss) attributable to ZoomInfo Technologies Inc. $ 4.9 $ (40.5) The following table sets forth the computation of basic and diluted net income per share of Class A and Class C common stock (in millions, except share amounts, and per share amounts, unaudited): Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Class A Class C Class A Class C (Unaudited) Basic net income (loss) per share attributable to common stockholders Numerator: Allocation of net income (loss) attributable to ZoomInfo Technologies Inc. $ 1.9 $ 3.0 $ (15.5) $ (25.0) Denominator: Weighted average number of shares of Class A and Class C common stock outstanding 61,153,504 94,631,630 59,075,363 95,420,020 Basic net income (loss) per share attributable to common stockholders $ 0.03 $ 0.03 $ (0.26) $ (0.26) Diluted net income (loss) per share attributable to common stockholders Numerator: Undistributed earnings for basic computation $ 1.9 $ 3.0 $ (15.5) $ (25.0) Increase in earnings attributable to common shareholders upon conversion of potentially dilutive instruments 0.6 1.0 — — Reallocation of earnings as a result of conversion of potentially dilutive instruments 2.4 (2.4) — — Reallocation of undistributed earnings as a result of conversion of Class C to Class A shares 1.6 (25.0) Allocation of undistributed earnings $ 6.5 $ 1.6 $ (40.5) $ (25.0) Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Class A Class C Class A Class C (Unaudited) Denominator: Number of shares used in basic computation 61,153,504 94,631,630 59,075,363 95,420,020 Add: weighted-average effect of dilutive securities exchangeable for Class A common stock: OpCo Units 213,965,530 — — — Class P Units 12,334,249 — — — HSKB I Class 1 Units 13,572,783 — — — HSKB II Class 1 Units — — — HSKB II Phantom Units — — — HoldCo Units 1,212,228 — — — Restricted Stock Units 202,703 — — — LTIP Units 22,817 — — — Exercise of Class A Common Stock Options 225,212 — — — Conversion of Class C to Class A common shares outstanding 94,631,630 — 95,420,020 — Weighted average shares of Class A and Class C common stock outstanding used to calculate diluted net income (loss) per share 397,320,656 94,631,630 154,495,383 95,420,020 Diluted net income (loss) per share attributable to common stockholders $ 0.02 $ 0.02 $ (0.26) $ (0.26) |
Potential Common Stock Equivalents Excluded from Calculation of Diluted Net Loss Per Share | The following weighted-average potentially dilutive securities were evaluated under the treasury stock method for potentially dilutive effects and have been excluded from diluted net loss per share in the periods presented due to their anti-dilutive effect: Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 OpCo Units — 216,801,480 Class P Units — 12,441,594 HSKB I Class 1 Units — 13,371,074 HSKB II Class 1 Units 1,957,685 1,891,249 HSKB II Phantom Units 364,281 369,741 HoldCo Units — 1,231,368 Restricted Stock Units — 246,749 LTIP Units — 24,706 Exercise of Class A Common Stock Options — 256,256 Total anti-dilutive securities 2,321,966 246,634,217 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Additional Details Related to Leases Recorded on the Balance Sheet | The following are additional details related to leases recorded on our balance sheet as of September 30, 2020 and December 31, 2019: September 30, December 31, 2020 2019 (in millions) (Unaudited) Assets Operating lease right-of-use assets, net Operating leases $ 34.0 $ 36.8 Liabilities Current portion of operating lease liabilities Operating leases $ 4.9 $ 4.0 Operating lease liabilities, net of current portion Operating leases $ 37.0 $ 40.7 |
Other Information Related to Leases | Other information related to leases was as follows: (unaudited, in millions) Three Months Ended September 30, Nine Months Ended September 30, Supplemental Cash Flow Information 2020 2019 2020 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 1.5 $ 0.9 $ 5.3 $ 2.5 Lease liabilities arising from obtaining right-of-use assets From Zoom Information, Inc. acquisition $ — $ — $ — $ 28.6 Other $ — $ — $ 0.1 $ 0.2 As of September 30, 2020 December 31, 2019 Weighted average remaining lease term (in years) 8.0 8.6 Weighted average discount rate 6.3 % 6.3 % |
Undiscounted Future Minimum Lease Payments Under Non-Cancelable Leases | The table below reconciles the undiscounted future minimum lease payments under non-cancelable leases to the total lease liabilities recognized on the condensed consolidated balance sheets as of September 30, 2020 (in millions): Year Ending December 31, Operating Leases 2020 (excluding nine months ended September 30, 2020) $ 1.7 2021 7.5 2022 7.6 2023 7.2 2024 6.8 Thereafter 22.9 Total future minimum lease payments 53.7 Less effects of discounting 11.8 Total lease liabilities $ 41.9 Reported as of September 30, 2020 Current portion of operating lease liabilities $ 4.9 Operating lease liabilities, net of current portion 37.0 Total lease liabilities $ 41.9 |
Equity-based Compensation (Tabl
Equity-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Restricted Stock Unit Activity | Restricted Stock Unit (“RSU”) activity was as follows during the periods indicated: Nine Months Ended September 30, 2020 Restricted Stock Units Weighted Average Grant Date Fair Value Unvested at beginning of period — $ — Granted 829,348 $ 27.85 Vested (20,625) $ 21.00 Forfeited (9,116) $ 23.67 Unvested at end of period 799,607 $ 28.07 |
Schedule of Unvested Options Activity | Unvested Options activity was as follows during the periods indicated: Nine Months Ended September 30, 2020 Options Weighted Average Exercise Price Unvested at beginning of period — $ — Effect of Reorganization Transactions and IPO 576,708 $ 21.00 Forfeited (10,120) $ 21.00 Unvested at end of period 566,588 $ 21.00 The aggregate intrinsic value and weighted average remaining contractual terms of Options outstanding and Options exercisable were as follows as of September 30, 2020. September 30, 2020 Aggregate intrinsic value (in millions) Unit Options outstanding $ 12.5 Unit Options exercisable $ — Weighted average remaining contractual life (in years) Unit Options outstanding 9.7 years Unit Options exercisable N/A All Options outstanding were issued at the time of the IPO. No additional options have been issued to date. The fair value of Class A stock options granted at the time of the IPO was determined using the Black-Scholes option pricing model with the following assumption ranges and fair value per unit: Nine Months Ended September 30, 2020 Volatility 39.0% to 39.3% Expected life 5.6 to 5.9 years Risk-free rate 0.5% Fair value per unit $21.00 |
Common Units and Class P Units Activity | Unvested HoldCo Unit activity was as follows during the periods indicated: Nine Months Ended September 30, 2020 HoldCo Units Weighted Average Grant Date Fair Value Unvested at beginning of period — $ — Effect of Reorganization Transactions and IPO 1,332,239 $ 8.98 Vested (68,587) $ 6.08 Forfeited (12,773) $ 9.67 Unvested at end of period 1,250,879 $ 9.13 OpCo Unit activity was as follows during the periods indicated: Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 OpCo Units Weighted Average Grant Date Fair Value OpCo Units Unvested at beginning of period 228,819 $ 1.72 441,681 Effect of Reorganization Transactions and IPO (6,909) $ 10.48 — Vested (162,218) $ 1.72 (118,867) Forfeited (59,692) $ 0.68 (93,995) Unvested at end of period — $ — 228,819 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Class P Units Weighted Average Participation Threshold Class P Units Unvested at beginning of period 16,893,603 $ 6.19 5,716,467 Effect of Reorganization Transactions and IPO (1,950,930) $ 7.01 — Granted 642,500 $ 21.00 10,831,275 Vested (5,078,777) $ 5.27 — Forfeited (430,965) $ 6.56 (1,571,151) Unvested at end of period 10,075,431 $ 6.62 14,976,591 LTIP Unit activity was as follows during the periods indicated: Nine Months Ended September 30, 2020 LTIP Units Weighted Average Participation Threshold Unvested at beginning of period — $ — Granted 47,620 $ 21.00 Unvested at end of period 47,620 $ 21.00 |
Schedule of Valuation Assumptions | The fair value of these Class P Units was determined using the Black-Scholes option pricing model with the following assumption ranges and fair value per unit: Nine Months Ended September 30, 2020 2019 Volatility 39.9% 40.4% to 41.2% Expected life 6.5 to 6.8 years 4 years Risk-free rate 0.5% 1.8% to 2.5% Fair value per unit $21.00 $5.20 to $9.04 |
Equity-Based Compensation Expense | The HSKB Incentive Units and HSKB Phantom Units both have time-based vesting conditions that were conditional upon the completion of an IPO. In addition, there were four Class P Unit grants with vesting that accelerated upon completion of an IPO. As a result, in the quarter ended June 30, 2020, the Company recognized an additional $57.6 million of expense attributable to the service period already elapsed on HSKB Incentive Units and HSKB Phantom Units, plus the acceleration of vesting on select Class P Units. Including this extra charge as a result of completing the IPO, compensation expense incurred from all the equity-based incentive awards described above was the following (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited) (unaudited) Cost of service and Operating expenses include equity-based compensation expenses as follows: Cost of service $ 6.8 $ 1.0 $ 23.8 $ 2.9 Sales and marketing 15.2 3.1 53.6 7.2 Research and development 1.8 0.5 11.9 3.4 General and administrative 4.6 0.9 14.9 3.6 Total equity-based compensation expense $ 28.4 $ 5.5 $ 104.2 $ 17.1 |
Summary of Unamortized Equity-Based Compensation Costs | As of September 30, 2020, unamortized equity-based compensation costs related to each equity-based incentive award described above is the following: Amount Weighted Average Remaining Service Period (years) Restricted Stock Units $ 21.1 3.5 Class A Common Stock Options 1.4 2.8 HoldCo Units 8.1 2.8 Class P Units 26.9 2.5 LTIP Units 0.9 4.2 HSKB Incentive Units 71.1 1.9 HSKB Phantom Units 5.0 2.7 Total unamortized equity-based compensation cost $ 134.5 2.4 |
Organization and Background (De
Organization and Background (Details) $ / shares in Units, $ in Millions | Jun. 08, 2020USD ($)agreement$ / sharesshares | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Sep. 30, 2020USD ($)office | Sep. 30, 2019USD ($) |
Disaggregation of Revenue [Line Items] | |||||
Repurchase of shares, value | $ 5.2 | $ 11.9 | |||
Merger consideration payable | $ 24.7 | $ 0.3 | |||
Conversion ratio | 0 | ||||
Number of tax receivable agreements | agreement | 2 | ||||
HoldCo | |||||
Disaggregation of Revenue [Line Items] | |||||
Ownership of consolidated entity (as a percent) | 98.00% | ||||
Blocker Mergers | |||||
Disaggregation of Revenue [Line Items] | |||||
Merger consideration payable | $ 5.5 | ||||
HoldCo | |||||
Disaggregation of Revenue [Line Items] | |||||
Number of shares repurchased | shares | 48,528,783 | ||||
Repurchase of shares, value | $ 966.9 | ||||
OpCo | |||||
Disaggregation of Revenue [Line Items] | |||||
Number of shares repurchased | shares | 2,370,948 | ||||
Repurchase of shares, value | $ 47.2 | ||||
OpCo | HoldCo | |||||
Disaggregation of Revenue [Line Items] | |||||
Ownership interest in units (as a percent) | 42.00% | ||||
IPO | Class A common stock | |||||
Disaggregation of Revenue [Line Items] | |||||
Number of shares sold | shares | 51,175,000 | ||||
Public offering price (in dollars per share) | $ / shares | $ 21 | ||||
Net proceeds | $ 1,019.6 | ||||
U.S. | |||||
Disaggregation of Revenue [Line Items] | |||||
Number of offices | office | 6 | ||||
Israel | |||||
Disaggregation of Revenue [Line Items] | |||||
Number of offices | office | 1 |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segmentcorporationentitycompany | Sep. 30, 2019USD ($) | |
Disaggregation of Revenue [Line Items] | ||||
Advertising expenses | $ | $ 3,400,000 | $ 3,500,000 | $ 8,900,000 | $ 6,900,000 |
Number of reporting units (segment) | segment | 1 | |||
Impairment charges | $ | $ 0 | $ 0 | $ 0 | $ 0 |
Number of limited liability companies treated as partnerships for tax purposes | company | 2 | |||
Number of limited liability companies disregarded for tax purposes | company | 10 | |||
Number of corporations | corporation | 4 | |||
Number of foreign entities | entity | 1 | |||
Award vesting period | 4 years | |||
Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Subscription contract, term | 1 year | |||
Estimated useful life | 3 years | |||
Amortization period | 1 year | |||
Amortization period | 2 years | |||
Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Subscription contract, term | 3 years | |||
Estimated useful life | 10 years | |||
Amortization period | 3 years | |||
Amortization period | 15 years |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Revenue Disaggregated by Service Offering (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 123.4 | $ 79.1 | $ 336.5 | $ 202.2 |
Subscription | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 122.4 | 78 | 333.3 | 199.2 |
Usage-based | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 1 | $ 1.1 | $ 3.2 | $ 3 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||||
Revenue recognized that was previously included in unearned revenue | $ 26 | $ 7.2 | $ 142.8 | $ 46.6 | |
Contract assets recorded within Prepaid expenses and other current assets | 2.1 | 2.1 | $ 0.1 | ||
Unearned revenue | $ 176 | $ 176 | $ 159.1 | ||
Revenue from Contract with Customer Benchmark | Geographic Concentration Risk | Outside the United States | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk (as a percent) | 9.00% | 9.00% | 9.00% | 8.00% |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Remaining Performance Obligations (Details) $ in Millions | Sep. 30, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, amount | $ 457.6 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, period | 1 year |
Remaining performance obligations, amount | $ 349 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | Minimum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, period | 13 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | Maximum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, period | 36 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, period | |
Remaining performance obligations, amount | $ 108.6 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) customer in Thousands, $ in Millions | Feb. 01, 2021USD ($) | Oct. 09, 2019USD ($) | Feb. 01, 2019USD ($)customer | Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) | Feb. 01, 2020USD ($) |
Komiko | ||||||
Business Acquisition [Line Items] | ||||||
Value of consideration transferred | $ 8.5 | |||||
Potential contingent payments | $ 4 | $ 4 | $ 4 | |||
Contingent payments attributable to purchase consideration (as a percent) | 40.00% | |||||
Additional liability relating to contingent payments | (0.4) | 1.3 | ||||
Komiko | Developed technology | ||||||
Business Acquisition [Line Items] | ||||||
Identifiable finite-lived intangible assets | $ 2.4 | |||||
Estimated useful life | 7 years | |||||
Pre-Acquisition ZI | ||||||
Business Acquisition [Line Items] | ||||||
Value of consideration transferred | $ 760.1 | |||||
Ownership acquired (as a percent) | 100.00% | |||||
Number of customers served (over) | customer | 8 | |||||
Transaction costs incurred | $ 2.7 | |||||
Cash, cash equivalents, and restricted cash | 12.1 | |||||
Deferred consideration, current | $ 33.2 | $ 25 | ||||
Pre-Acquisition ZI | Cash Vesting Payment Program | ||||||
Business Acquisition [Line Items] | ||||||
Potential value of future payments | 5.9 | 5.9 | ||||
Contingent consideration expense | 1.3 | 5.3 | ||||
Pre-Acquisition ZI | Accrued expenses and other current liabilities | ||||||
Business Acquisition [Line Items] | ||||||
Deferred consideration, current | $ 9.9 | $ 9.9 | ||||
Pre-Acquisition ZI | Forecast | ||||||
Business Acquisition [Line Items] | ||||||
Deferred consideration, noncurrent | $ 10 | |||||
Agreements to pay deferred consideration | $ 10 | |||||
Pre-Acquisition ZI | Developed technology | ||||||
Business Acquisition [Line Items] | ||||||
Estimated useful life | 5 years 9 months 18 days |
Business Combinations - Acquisi
Business Combinations - Acquisition Date Fair Value of Consideration Transferred (Details) - USD ($) $ in Millions | Oct. 09, 2019 | Feb. 01, 2019 | Feb. 01, 2020 |
Komiko | |||
Business Acquisition [Line Items] | |||
Cash | $ 8.3 | ||
Contingent earn-out payments | 0.2 | ||
Total purchase consideration | $ 8.5 | ||
Pre-Acquisition ZI | |||
Business Acquisition [Line Items] | |||
Cash | $ 667.3 | ||
Liability for equity award settlement | 25.2 | ||
Portion of replacement awards attributable to pre-acquisition service | 27.9 | ||
Other purchase consideration liabilities | 6.5 | ||
Deferred consideration | 33.2 | $ 25 | |
Total purchase consideration | $ 760.1 |
Business Combinations - Fair Va
Business Combinations - Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Oct. 09, 2019 | Feb. 01, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Feb. 01, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 966.8 | $ 966.8 | ||||
Cash paid for acquisitions, net of cash acquired | $ 0 | $ 714.9 | ||||
Komiko | ||||||
Business Acquisition [Line Items] | ||||||
Unearned revenue | $ (0.2) | |||||
Total identifiable net assets acquired | 2.2 | |||||
Goodwill | 6.3 | |||||
Total consideration | 8.5 | |||||
Contingent earn-out payments | (0.2) | |||||
Cash paid for acquisitions, net of cash acquired | $ 8.3 | |||||
Pre-Acquisition ZI | ||||||
Business Acquisition [Line Items] | ||||||
Cash, cash equivalents, and restricted cash | $ 12.1 | |||||
Accounts receivable | 22.1 | |||||
Prepaid expenses and other assets | 4.2 | |||||
Property and equipment | 6.3 | |||||
Operating lease right-of-use assets | 28.6 | |||||
Intangible assets | 322 | |||||
Accounts payable and other liabilities | (6.8) | |||||
Lease liabilities | (28.6) | |||||
Deferred tax liabilities | (80.1) | |||||
Unearned revenue | (34.5) | |||||
Total identifiable net assets acquired | 245.3 | |||||
Goodwill | 514.8 | |||||
Total consideration | 760.1 | |||||
Deferred consideration | (33.2) | $ (25) | ||||
Cash acquired | (12.1) | |||||
Cash paid for acquisitions, net of cash acquired | $ 714.8 |
Business Combinations - Compone
Business Combinations - Components of Identifiable Intangible Assets Acquired (Details) - Pre-Acquisition ZI $ in Millions | Feb. 01, 2019USD ($) |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Total intangible assets | $ 322 |
Brand portfolio | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Fair Value | 33 |
Developed technology | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 116 |
Weighted Average Useful Life | 5 years 9 months 18 days |
Customer relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 173 |
Weighted Average Useful Life | 15 years |
Cash and Cash Equivalents - Com
Cash and Cash Equivalents - Components (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Cash and Cash Equivalents [Line Items] | ||
Cash | $ 204.9 | |
Cash Equivalents, at Carrying Value [Abstract] | ||
Total cash equivalents | 100 | |
Cash and cash equivalents | 304.9 | $ 41.4 |
Corporate debt securities | ||
Cash Equivalents, at Carrying Value [Abstract] | ||
Total cash equivalents | 17.6 | |
Money market mutual funds | ||
Cash Equivalents, at Carrying Value [Abstract] | ||
Total cash equivalents | $ 82.4 |
Cash and Cash Equivalents - Deb
Cash and Cash Equivalents - Debt Securities, Available-for-sale, Unrealized Loss Position, Fair Value (Details) $ in Millions | Sep. 30, 2020USD ($)instrument |
Debt Securities, Available-for-sale [Line Items] | |
Securities in an unrealized loss position for less than twelve months | instrument | 5 |
Corporate debt securities | |
Debt Securities, Available-for-sale [Line Items] | |
Less Than Twelve Months | $ 17.6 |
More Than Twelve Months | $ 0 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 45.7 | $ 45.7 | $ 34.5 | ||
Less: accumulated depreciation | (17.3) | (17.3) | (11.2) | ||
Property and equipment, net | 28.4 | 28.4 | 23.3 | ||
Depreciation expense | 2.4 | $ 1.8 | 6.4 | $ 4.2 | |
Computer equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 6.4 | 6.4 | 4.1 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 5.3 | 5.3 | 4.8 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 7 | 7 | 5 | ||
Internal use developed software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 25.1 | 25.1 | 19.7 | ||
Construction in progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 1.9 | $ 1.9 | $ 0.9 |
Goodwill and Acquired Intangi_3
Goodwill and Acquired Intangible Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | $ 437,100,000 | $ 437,100,000 | |||
Accumulated Amortization | (130,100,000) | (130,100,000) | |||
Net | 307,000,000 | 307,000,000 | |||
Acquired Indefinite-lived Intangible Assets [Line Items] | |||||
Goodwill | 966,800,000 | 966,800,000 | $ 966,800,000 | ||
Amortization expense | 10,100,000 | $ 11,200,000 | 30,600,000 | $ 32,500,000 | |
Impairment of goodwill | 0 | $ 0 | 0 | $ 0 | |
Pre-Acquisition ZI brand portfolio | |||||
Acquired Indefinite-lived Intangible Assets [Line Items] | |||||
Intangible assets not subject to amortization | 33,000,000 | 33,000,000 | |||
Customer relationships | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 268,600,000 | 268,600,000 | |||
Accumulated Amortization | (48,000,000) | (48,000,000) | |||
Net | 220,600,000 | $ 220,600,000 | |||
Weighted Average Amortization Period | 15 years | ||||
Acquired technology | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 163,900,000 | $ 163,900,000 | |||
Accumulated Amortization | (79,200,000) | (79,200,000) | |||
Net | 84,700,000 | $ 84,700,000 | |||
Weighted Average Amortization Period | 6 years | ||||
Brand portfolio | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Gross Carrying Amount | 4,600,000 | $ 4,600,000 | |||
Accumulated Amortization | (2,900,000) | (2,900,000) | |||
Net | $ 1,700,000 | $ 1,700,000 | |||
Weighted Average Amortization Period | 9 years 8 months 12 days |
Financing Arrangements - Carryi
Financing Arrangements - Carrying Values of Borrowings (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Total Carrying Value of Debt | $ 744.3 | $ 1,203.3 |
Less current portion | 0 | (8.7) |
Total Long Term Debt | $ 744.3 | $ 1,194.6 |
First Lien Revolver | ||
Debt Instrument [Line Items] | ||
Elected Interest Rate | 3.50% | 3.50% |
Total Carrying Value of Debt | $ 0 | $ 0 |
Term Loan | First Lien Term Loan | ||
Debt Instrument [Line Items] | ||
Elected Interest Rate | 3.75% | 3.75% |
Total Carrying Value of Debt | $ 744.3 | $ 841.6 |
Term Loan | Second Lien Term Loan | ||
Debt Instrument [Line Items] | ||
Elected Interest Rate | 8.50% | 8.50% |
Total Carrying Value of Debt | $ 0 | $ 361.7 |
Financing Arrangements - Narrat
Financing Arrangements - Narrative (Details) - USD ($) | Jun. 17, 2020 | Jun. 08, 2020 | Feb. 19, 2020 | Feb. 01, 2019 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||||||||
Prepayment of aggregate principal amount | $ 510,900,000 | $ 647,600,000 | ||||||
Aggregate principal amount outstanding | $ 756,400,000 | 756,400,000 | ||||||
Loss on extinguishment of debt | $ 14,900,000 | $ 9,400,000 | ||||||
Redeemable Series A Preferred Units | ||||||||
Debt Instrument [Line Items] | ||||||||
Stock issued (in shares) | 51,750,000 | |||||||
Sale of stock in connection with the acquisition of Pre-Acquisition ZI | Redeemable Series A Preferred Units | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds, net of issuance costs | $ 200,200,000 | |||||||
Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 3.50% | 3.50% | ||||||
Effective interest rate | 3.70% | |||||||
Maximum borrowing capacity | 100,000,000 | |||||||
Extinguishment of debt | $ 35,000,000 | |||||||
Draws on revolving credit loan which trigger springing financial covenant (more than) | 35,000,000 | $ 35,000,000 | ||||||
Term Loan | First Lien Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Face amount of debt | 965,000,000 | |||||||
Basis spread on variable rate | 3.75% | 3.75% | ||||||
Prepayment of aggregate principal amount | $ 101,200,000 | 100,000,000 | ||||||
Repurchased face amount | 100,000,000 | |||||||
Accrued interest | $ 1,200,000 | |||||||
Aggregate principal amount outstanding | $ 756,400,000 | $ 756,400,000 | ||||||
Effective interest rate | 4.30% | 4.30% | 7.50% | |||||
Net leverage ratio (not to exceed) | 7.65 | 7.65 | ||||||
Term Loan | First Lien Term Loan | LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Decrease to interest rate | 0.50% | |||||||
Basis spread on variable rate | 4.00% | |||||||
Term Loan | First Lien Term Loan | LIBOR | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 3.75% | |||||||
Term Loan | First Lien Term Loan | LIBOR | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 4.00% | |||||||
Term Loan | First Lien Term Loan | Base Rate | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 2.75% | |||||||
Term Loan | First Lien Term Loan | Base Rate | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 3.00% | |||||||
Term Loan | Second Lien Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Face amount of debt | $ 370,000,000 | |||||||
Basis spread on variable rate | 8.50% | 8.50% | ||||||
Prepayment of aggregate principal amount | 380,600,000 | |||||||
Accrued interest | $ 6,900,000 | |||||||
Effective interest rate | 10.80% | 11.90% | ||||||
Prepayment premiums | $ 3,700,000 | |||||||
Loss on extinguishment of debt | 7,300,000 | |||||||
Write-off of unamortized issuance costs and prepayment penalty incurred | $ 11,000,000 |
Financing Arrangements - Expect
Financing Arrangements - Expected Future Principal Payments for Borrowings (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Contractual Maturity | ||
2020 | $ 0 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 756.4 | |
Total | 756.4 | |
Discounts and Issuance Costs | ||
2020 | (0.6) | |
2021 | (2.6) | |
2022 | (2.7) | |
2023 | (2.9) | |
2024 | (3) | |
Thereafter | (0.3) | |
Total | (12.1) | |
As Presented | ||
2020 | (0.6) | |
2021 | (2.6) | |
2022 | (2.7) | |
2023 | (2.9) | |
2024 | (3) | |
Thereafter | 756.1 | |
Total Carrying Value of Debt | $ 744.3 | $ 1,203.3 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities - Narrative (Details) $ in Millions | Jun. 17, 2020USD ($) | Sep. 30, 2020USD ($)instrument | Sep. 30, 2020USD ($)instrument | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Apr. 30, 2019USD ($)instrument |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Variable rate debt | $ 744.3 | $ 744.3 | $ 1,203.3 | |||
Repayment of debt | 510.9 | $ 647.6 | ||||
First Lien Term Loan | First lien term loans | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Variable rate debt | 744.3 | 744.3 | $ 841.6 | |||
Repayment of debt | $ 101.2 | 100 | ||||
LIBOR | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Variable rate debt | 756.4 | 756.4 | ||||
Cash Flow Hedging | Designated as Hedging Instrument | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Notional amount | $ 850 | $ 850 | ||||
Interest rate swap contracts | Cash Flow Hedging | Designated as Hedging Instrument | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Number of derivative instruments | instrument | 2 | 2 | 2 | |||
Notional amount | $ 350 | $ 350 | $ 350 | |||
Interest rate cap contract | Cash Flow Hedging | Designated as Hedging Instrument | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Number of derivative instruments | instrument | 1 | 1 | ||||
Notional amount | $ 256.4 | $ 256.4 | $ 500 | |||
Interest rate cap contract | Cash Flow Hedging | Not Designated as Hedging Instrument | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Notional amount | $ 243.6 | $ 243.6 | ||||
Forward-starting interest rate swap contracts | Cash Flow Hedging | Designated as Hedging Instrument | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Number of derivative instruments | instrument | 2 | 2 | ||||
Notional amount | $ 500 | $ 500 | ||||
First Lien Term Loan | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Amount not redesignated for which forecasted interest payments is probable not to occur | 93.7 | |||||
Deferred loss reclassified from AOCI into Interest expense, net | 3.3 | |||||
Changes in fair value included in AOCI expected to be reclassified over the next 12 months | $ 5.6 | $ 5.6 |
Derivatives and Hedging Activ_4
Derivatives and Hedging Activities - Outstanding Interest Rate Derivatives Designated as Cash Flow Hedges of Interest Rate Risk (Details) - Designated as Hedging Instrument - Cash Flow Hedging $ in Millions | Sep. 30, 2020USD ($)instrument | Apr. 30, 2019USD ($)instrument |
Derivatives, Fair Value [Line Items] | ||
Notional Aggregate Principal Amount | $ 850 | |
Interest rate cap contract | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | instrument | 1 | |
Notional Aggregate Principal Amount | $ 256.4 | $ 500 |
Interest Cap (as a percent) | 3.50% | |
Interest rate swap contracts | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | instrument | 2 | 2 |
Notional Aggregate Principal Amount | $ 350 | $ 350 |
Swap Rate (as a percent) | 2.301% | |
Forward-starting interest rate swap contracts | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments | instrument | 2 | |
Notional Aggregate Principal Amount | $ 500 | |
Swap Rate (as a percent) | 0.37% |
Derivatives and Hedging Activ_5
Derivatives and Hedging Activities - Fair Value and Presentation in the Consolidated Balance Sheets for Derivatives (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative Liabilities | $ 12.4 | $ 6 |
Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative Liabilities | 0.4 | 0 |
Cash Flow Hedging | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative Liabilities | 12 | 6 |
Accrued expenses and other current liabilities | Interest rate cap contract | Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative Liabilities | 0.2 | 0 |
Accrued expenses and other current liabilities | Interest rate cap contract | Cash Flow Hedging | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative Liabilities | 0.2 | 0.3 |
Accrued expenses and other current liabilities | Interest rate swap contracts | Cash Flow Hedging | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative Liabilities | 7 | 2.3 |
Other long-term liabilities | Interest rate cap contract | Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative Liabilities | 0.2 | 0 |
Other long-term liabilities | Interest rate cap contract | Cash Flow Hedging | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative Liabilities | 0.2 | 0.4 |
Other long-term liabilities | Interest rate swap contracts | Cash Flow Hedging | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative Liabilities | 3.6 | $ 3 |
Other long-term liabilities | Forward-starting interest rate swap contracts | Cash Flow Hedging | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative Liabilities | $ 1 |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Measured on a recurring basis | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | $ 0 | |
Measured on a recurring basis | Level 1 | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | $ 17.6 | 0 |
Measured on a recurring basis | Level 1 | Money market mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | 82.4 | 0 |
Measured on a recurring basis | Level 1 | Derivative contract, net | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | 0 | |
Measured on a recurring basis | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | (6) | |
Measured on a recurring basis | Level 2 | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | 0 | 0 |
Measured on a recurring basis | Level 2 | Money market mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | 0 | 0 |
Measured on a recurring basis | Level 2 | Derivative contract, net | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | (12.4) | |
Measured on a recurring basis | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | 0 | |
Measured on a recurring basis | Level 3 | Corporate debt securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | 0 | 0 |
Measured on a recurring basis | Level 3 | Money market mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | 0 | 0 |
Measured on a recurring basis | Level 3 | Derivative contract, net | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | $ 0 | |
Measured on a non-recurring basis | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | 0 | |
Measured on a non-recurring basis | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | 0 | |
Measured on a non-recurring basis | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets and (liabilities) | $ 1.4 |
Commitment and Contingencies (D
Commitment and Contingencies (Details) - USD ($) $ in Millions | Feb. 01, 2021 | Sep. 30, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||
Non-cancelable purchase obligations with a term of 12 months or longer | $ 10.4 | ||
Liability for taxes owed and related penalties and interest | $ 2.1 | $ 2.1 | |
Pre-Acquisition ZI | Forecast | |||
Business Acquisition [Line Items] | |||
Deferred consideration | $ 10 |
Noncontrolling Interest (Detail
Noncontrolling Interest (Details) | Sep. 30, 2020shares |
HoldCo Units | |
Noncontrolling Interest [Line Items] | |
Number of shares held | 160,755,779 |
HoldCo Units | OpCo Units | |
Noncontrolling Interest [Line Items] | |
Number of shares held | 164,963,877 |
Ownership interest (as a percent) | 41.00% |
Earnings Per Share - Basic and
Earnings Per Share - Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Earnings Per Share [Abstract] | |||||||||
Net income (loss) | $ 11.1 | $ (5.9) | $ (12.4) | $ (19.9) | $ (40.2) | $ (72.7) | $ (72.5) | ||
Less: Net income (loss) attributable to ZoomInfo OpCo prior to the Reorganization Transactions | 0 | $ 0.8 | 12.4 | 5.1 | 72.5 | ||||
Less: Excess of consideration paid over carrying amount to holders of Series A Preferred Units attributable to common shares | 0 | 11 | |||||||
Less: Net income (loss) attributable to noncontrolling interests | 6.2 | $ 0 | (38.1) | $ 0 | |||||
Net income (loss) attributable to ZoomInfo Technologies Inc. | $ 4.9 | $ (40.5) | |||||||
Basic net income (loss) per share attributable to common stockholders | |||||||||
Basic net income (loss) per share attributable to common stockholders (in dollars per share) | [1] | $ 0.03 | $ (0.26) | ||||||
Diluted net income (loss) per share attributable to common stockholders | |||||||||
Diluted net income (loss) per share attributable to common stockholders (in dollars per share) | [1] | $ 0.02 | $ (0.26) | ||||||
Class A | |||||||||
Basic net income (loss) per share attributable to common stockholders | |||||||||
Allocation of net income (loss) attributable to ZoomInfo Technologies Inc. | $ 1.9 | $ (15.5) | |||||||
Weighted average number of shares of Class A and Class C common stock outstanding (in shares) | 61,153,504 | 59,075,363 | |||||||
Basic net income (loss) per share attributable to common stockholders (in dollars per share) | $ 0.03 | $ (0.26) | |||||||
Diluted net income (loss) per share attributable to common stockholders | |||||||||
Undistributed earnings for basic computation | $ 1.9 | $ (15.5) | |||||||
Increase in earnings attributable to common shareholders upon conversion of potentially dilutive instruments | 0.6 | 0 | |||||||
Reallocation of earnings as a result of conversion of potentially dilutive instruments | 2.4 | 0 | |||||||
Reallocation of undistributed earnings as a result of conversion of Class C to Class A shares | 1.6 | (25) | |||||||
Allocation of undistributed earnings | $ 6.5 | $ (40.5) | |||||||
Number of shares used in basic computation | 61,153,504 | 59,075,363 | |||||||
Conversion of Class C to Class A common shares outstanding (in shares) | 94,631,630 | 95,420,020 | |||||||
Weighted average shares of Class A and Class C common stock outstanding used to calculate diluted net income (loss) per share (in shares) | 397,320,656 | 154,495,383 | |||||||
Diluted net income (loss) per share attributable to common stockholders (in dollars per share) | $ 0.02 | $ (0.26) | |||||||
Class A | OpCo Units | |||||||||
Diluted net income (loss) per share attributable to common stockholders | |||||||||
Units exchangeable for Class A common stock (in shares) | 213,965,530 | 0 | |||||||
Class A | Class P Units | |||||||||
Diluted net income (loss) per share attributable to common stockholders | |||||||||
Units exchangeable for Class A common stock (in shares) | 12,334,249 | 0 | |||||||
Class A | HSKB I Class 1 Units | |||||||||
Diluted net income (loss) per share attributable to common stockholders | |||||||||
Units exchangeable for Class A common stock (in shares) | 13,572,783 | 0 | |||||||
Class A | HSKB II Class 1 Units | |||||||||
Diluted net income (loss) per share attributable to common stockholders | |||||||||
Units exchangeable for Class A common stock (in shares) | 0 | ||||||||
Class A | HSKB II Phantom Units | |||||||||
Diluted net income (loss) per share attributable to common stockholders | |||||||||
Units exchangeable for Class A common stock (in shares) | 0 | ||||||||
Class A | HoldCo Units | |||||||||
Diluted net income (loss) per share attributable to common stockholders | |||||||||
Units exchangeable for Class A common stock (in shares) | 1,212,228 | 0 | |||||||
Class A | Restricted Stock Units | |||||||||
Diluted net income (loss) per share attributable to common stockholders | |||||||||
Units exchangeable for Class A common stock (in shares) | 202,703 | 0 | |||||||
Class A | LTIP Units | |||||||||
Diluted net income (loss) per share attributable to common stockholders | |||||||||
Units exchangeable for Class A common stock (in shares) | 22,817 | 0 | |||||||
Class A | Exercise of Class A Common Stock Options | |||||||||
Diluted net income (loss) per share attributable to common stockholders | |||||||||
Units exchangeable for Class A common stock (in shares) | 225,212 | 0 | |||||||
Class C | |||||||||
Basic net income (loss) per share attributable to common stockholders | |||||||||
Allocation of net income (loss) attributable to ZoomInfo Technologies Inc. | $ 3 | $ (25) | |||||||
Weighted average number of shares of Class A and Class C common stock outstanding (in shares) | 94,631,630 | 95,420,020 | |||||||
Basic net income (loss) per share attributable to common stockholders (in dollars per share) | $ 0.03 | $ (0.26) | |||||||
Diluted net income (loss) per share attributable to common stockholders | |||||||||
Undistributed earnings for basic computation | $ 3 | $ (25) | |||||||
Increase in earnings attributable to common shareholders upon conversion of potentially dilutive instruments | 1 | 0 | |||||||
Reallocation of earnings as a result of conversion of potentially dilutive instruments | (2.4) | 0 | |||||||
Allocation of undistributed earnings | $ 1.6 | $ (25) | |||||||
Number of shares used in basic computation | 94,631,630 | 95,420,020 | |||||||
Weighted average shares of Class A and Class C common stock outstanding used to calculate diluted net income (loss) per share (in shares) | 94,631,630 | 95,420,020 | |||||||
Diluted net income (loss) per share attributable to common stockholders (in dollars per share) | $ 0.02 | $ (0.26) | |||||||
[1] | Basic and diluted net income (loss) per share of Class A and Class C common stock is applicable only for the period from June 4, 2020 through September 30, 2020, which is the period following the initial public offering ("IPO") and related Reorganization Transactions (as defined in Note 1 to the Unaudited Consolidated Financial Statements). See Note 13 for the number of shares used in the computation of net income (loss) per share of Class A and Class C common stock and the basis for the computation of net income (loss) per share. |
Earnings Per Share - Potential
Earnings Per Share - Potential Common Stock Equivalents Excluded from Calculation of Diluted Net Loss Per Share (Details) - shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 2,321,966 | 246,634,217 |
OpCo Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 0 | 216,801,480 |
Class P Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 0 | 12,441,594 |
HSKB I Class 1 Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 0 | 13,371,074 |
HSKB II Class 1 Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 1,957,685 | 1,891,249 |
HSKB II Phantom Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 364,281 | 369,741 |
HoldCo Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 0 | 1,231,368 |
Restricted Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 0 | 246,749 |
LTIP Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 0 | 24,706 |
Exercise of Class A Common Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 0 | 256,256 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Sublease, remaining lease term (less than) | 1 year | |||
Rent expense | $ 1.8 | $ 1.8 | $ 5.5 | $ 4.3 |
Operating lease, lease not yet commenced, undiscounted amount | $ 2.7 | $ 2.7 |
Leases - Additional Details Rel
Leases - Additional Details Related to Leases Recorded on the Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Operating lease right-of-use assets, net | $ 34 | $ 36.8 |
Current portion of operating lease liabilities | 4.9 | 4 |
Operating lease liabilities, net of current portion | $ 37 | $ 40.7 |
Leases - Other Information Rela
Leases - Other Information Related to Leases (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Leases [Abstract] | |||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 1.5 | $ 0.9 | $ 5.3 | $ 2.5 | |
Business Acquisition [Line Items] | |||||
Lease liabilities arising from obtaining right-of-use assets | $ 0 | 0 | $ 0.1 | 0.2 | |
Weighted average remaining lease term | 8 years | 8 years | 8 years 7 months 6 days | ||
Weighted average discount rate | 6.30% | 6.30% | 6.30% | ||
From Zoom Information, Inc. acquisition | |||||
Business Acquisition [Line Items] | |||||
Lease liabilities arising from obtaining right-of-use assets | $ 0 | $ 0 | $ 0 | $ 28.6 |
Leases - Future Minimum Payment
Leases - Future Minimum Payments Under Non-Cancelable Leases (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 (excluding nine months ended September 30, 2020) | $ 1.7 | |
2021 | 7.5 | |
2022 | 7.6 | |
2023 | 7.2 | |
2024 | 6.8 | |
Thereafter | 22.9 | |
Total future minimum lease payments | 53.7 | |
Less effects of discounting | 11.8 | |
Total lease liabilities | 41.9 | |
Current portion of operating lease liabilities | 4.9 | $ 4 |
Operating lease liabilities, net of current portion | $ 37 | $ 40.7 |
Redeemable Series A Preferred_2
Redeemable Series A Preferred Units (Details) - USD ($) $ in Millions | Jun. 08, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Class of Stock [Line Items] | ||||
Series A Preferred Unit redemption accretion | $ 74 | |||
Series A Preferred Units, carrying amount | $ 0 | $ 200.2 | ||
Additional Paid-in Capital | ||||
Class of Stock [Line Items] | ||||
Series A Preferred Unit redemption accretion | $ 74 | $ 74 | ||
Redeemable Series A Preferred Units | ||||
Class of Stock [Line Items] | ||||
Outstanding preferred units redeemed and cancelled | $ 274.2 | |||
Series A Preferred Units, carrying amount | 200.2 | |||
Series A Preferred Units, accreted but unpaid dividends | 45.4 | |||
Series A Preferred Units, excess amount due upon early redemption | 28.6 | |||
Series A Preferred Units, excess amount due upon early redemption, noncontrolling interests | 17.6 | |||
Series A Preferred Units, excess amount due upon early redemption, common stock | $ 11 |
Equity-based Compensation - Nar
Equity-based Compensation - Narrative (Details) $ / shares in Units, $ in Millions | Dec. 31, 2020 | Jun. 08, 2020USD ($)$ / sharesshares | Mar. 31, 2020 | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($)grantee | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Jun. 07, 2020 | Sep. 30, 2020USD ($)shares | Sep. 30, 2019USD ($)shares | May 27, 2020shares | Nov. 30, 2019 | Dec. 31, 2018USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Equity award conversion, incremental grant date fair value | $ | $ 4 | ||||||||||||||
Award vesting period | 4 years | ||||||||||||||
Cash distributions | $ | $ 9.9 | $ 16.5 | |||||||||||||
Number of units with accelerated vesting | 4 | ||||||||||||||
Additional expense recognized attributable to service period already elapsed | $ | $ 28.4 | $ 5.5 | $ 104.2 | $ 17.1 | |||||||||||
Class A common stock | IPO | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Public offering price (in dollars per share) | $ / shares | $ 21 | ||||||||||||||
2020 Omnibus Incentive Plan | Class A common stock | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Number of Units authorized (in shares) | 18,650,000 | ||||||||||||||
2020 Omnibus Incentive Plan | Class A common stock | Forecast | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Increase to authorized plan shares based on stock outstanding, percentage | 5.00% | ||||||||||||||
Pre-IPO Awards | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Award vesting period | 4 years | ||||||||||||||
Pre-IPO Awards | Tranche one | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Award vesting period | 2 years | ||||||||||||||
Award vesting percentage | 50.00% | ||||||||||||||
Post-IPO Awards | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Award vesting period | 4 years | ||||||||||||||
Post-IPO Awards | Tranche one | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Award vesting percentage | 25.00% | ||||||||||||||
Post-IPO Awards | Quarterly vesting | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Award vesting percentage | 6.25% | ||||||||||||||
Exercise of Class A Common Stock Options | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares issued in conversion (in shares) | 576,708 | ||||||||||||||
Exercise of Class A Common Stock Options | Class A common stock | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares issued in conversion (in shares) | 576,708 | ||||||||||||||
HoldCo Units | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares issued in conversion (in shares) | 1,325,330 | 1,332,239 | |||||||||||||
Class P Units | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Shares converted (in shares) | (1,950,930) | (1,950,930) | 0 | ||||||||||||
Class 1 Unit | Class A common stock | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Economic equivalent of Unit (in shares) | 1 | ||||||||||||||
HSKB Incentive Units | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Performance vesting condition (more than) (as a percent) | 90.00% | ||||||||||||||
Number of grantees affected | grantee | 142 | ||||||||||||||
Increase in unrecognized equity-based compensation cost | $ | $ 88.4 | ||||||||||||||
Cash distributions | $ | $ 21.8 | $ 11.3 | |||||||||||||
Amount allocated to be paid if holder of grant remains employed | $ | $ 5.3 | $ 12.2 | $ 5.3 | $ 12.2 | $ 31.3 | ||||||||||
Employment period | 4 years | 3 years | |||||||||||||
HSKB Incentive Units | Tranche one | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Award vesting period | 2 years | ||||||||||||||
Award vesting percentage | 50.00% | ||||||||||||||
HSKB Phantom Units | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Additional expense recognized attributable to service period already elapsed | $ | $ 57.6 | ||||||||||||||
HSKB Phantom Units | ZoomInfo OpCo and HSKB 2019 Phantom Unit Plans | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Period to settle awards | 30 days | ||||||||||||||
HSKB Phantom Units | ZoomInfo OpCo and HSKB 2019 Phantom Unit Plans | Common Units | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Economic equivalent of Unit (in shares) | 1 |
Equity-based Compensation - Res
Equity-based Compensation - Restricted Stock Units Activity (Details) - Restricted Stock Units | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Shares | |
Beginning balance (in shares) | shares | 0 |
Granted (in shares) | shares | 829,348 |
Vested (in shares) | shares | (20,625) |
Forfeited (in shares) | shares | (9,116) |
Ending balance (in shares) | shares | 799,607 |
Weighted Average Grant Date Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 27.85 |
Vested (in dollars per share) | $ / shares | 21 |
Forfeited (in dollars per share) | $ / shares | 23.67 |
Ending balance (in dollars per share) | $ / shares | $ 28.07 |
Equity-based Compensation - Cla
Equity-based Compensation - Class A Common Stock Options Activity (Details) - Exercise of Class A Common Stock Options - USD ($) $ / shares in Units, $ in Millions | Jun. 08, 2020 | Sep. 30, 2020 |
Options | ||
Beginning balance (in shares) | 0 | |
Effect of Reorganization Transactions and IPO (in shares) | 576,708 | |
Forfeited (in shares) | (10,120) | |
Ending balance (in shares) | 566,588 | |
Weighted Average Exercise Price | ||
Beginning balance (in dollars per share) | $ 0 | |
Effect of Reorganization Transactions and IPO (in dollars per share) | 21 | |
Forfeited (in dollars per share) | 21 | |
Ending balance (in dollars per share) | $ 21 | |
Unit options outstanding, aggregate intrinsic value | $ 12.5 | |
Unit options exercisable, aggregate intrinsic value | $ 0 | |
Unit options outstanding, weighted average remaining term | 9 years 8 months 12 days |
Equity-based Compensation - Hol
Equity-based Compensation - HoldCo Unit Activity (Details) - HoldCo Units - $ / shares | Jun. 08, 2020 | Sep. 30, 2020 |
Shares | ||
Beginning balance (in shares) | 0 | |
Effect of Reorganization Transactions and IPO (in shares) | 1,325,330 | 1,332,239 |
Vested (in shares) | (68,587) | |
Forfeited (in shares) | (12,773) | |
Ending balance (in shares) | 1,250,879 | |
Weighted Average Grant Date Fair Value | ||
Beginning balance (in dollars per share) | $ 0 | |
Effect of Reorganization Transactions and IPO (in dollars per share) | 8.98 | |
Vested (in dollars per share) | 6.08 | |
Forfeited (in dollars per share) | 9.67 | |
Ending balance (in dollars per share) | $ 9.13 |
Equity-based Compensation - OpC
Equity-based Compensation - OpCo Unit Activity (Details) - OpCo Units - $ / shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Shares | ||
Beginning balance (in shares) | 228,819 | 441,681 |
Effect of Reorganization Transactions and IPO (in shares) | (6,909) | 0 |
Vested (in shares) | (162,218) | (118,867) |
Forfeited (in shares) | (59,692) | (93,995) |
Ending balance (in shares) | 0 | 228,819 |
Weighted Average Grant Date Fair Value | ||
Beginning balance (in dollars per share) | $ 1.72 | |
Effect of Reorganization Transactions and IPO (in dollars per share) | 10.48 | |
Vested (in dollars per share) | 1.72 | |
Forfeited (in dollars per share) | 0.68 | |
Ending balance (in dollars per share) | $ 0 |
Equity-based Compensation - C_2
Equity-based Compensation - Class P Units Activity (Details) - Class P Units - $ / shares | Jun. 08, 2020 | Sep. 30, 2020 | Sep. 30, 2019 |
Shares | |||
Beginning balance (in shares) | 16,893,603 | 5,716,467 | |
Effect of Reorganization Transactions and IPO (in shares) | (1,950,930) | (1,950,930) | 0 |
Granted (in shares) | 642,500 | 10,831,275 | |
Vested (in shares) | (5,078,777) | 0 | |
Forfeited (in shares) | (430,965) | (1,571,151) | |
Ending balance (in shares) | 10,075,431 | 14,976,591 | |
Weighted Average Grant Date Fair Value | |||
Beginning balance (in dollars per share) | $ 6.19 | ||
Effect of Reorganization Transactions and IPO (in dollars per share) | 7.01 | ||
Granted (in dollars per share) | 21 | ||
Vested (in dollars per share) | 5.27 | ||
Forfeited (in dollars per share) | 6.56 | ||
Ending balance (in dollars per share) | $ 6.62 |
Equity-based Compensation - Fai
Equity-based Compensation - Fair Value of Grants Made (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Exercise of Class A Common Stock Options | Employee Incentive Program | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Volatility, minimum | 39.00% | |
Volatility, maximum | 39.30% | |
Risk-free rate | 0.50% | |
Fair value per unit (in dollars per share) | $ 21 | |
Exercise of Class A Common Stock Options | Minimum | Employee Incentive Program | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life | 5 years 7 months 6 days | |
Exercise of Class A Common Stock Options | Maximum | Employee Incentive Program | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life | 5 years 10 months 24 days | |
Class P Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Fair value per unit (in dollars per share) | $ 21 | |
Class P Units | Employee Incentive Program | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Volatility | 39.90% | |
Volatility, minimum | 40.40% | |
Volatility, maximum | 41.20% | |
Expected life | 4 years | |
Risk-free rate | 0.50% | |
Risk-free rate, minimum | 1.80% | |
Risk-free rate, maximum | 2.50% | |
Fair value per unit (in dollars per share) | $ 21 | |
Class P Units | Minimum | Employee Incentive Program | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life | 6 years 6 months | |
Fair value per unit (in dollars per share) | $ 5.20 | |
Class P Units | Maximum | Employee Incentive Program | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life | 6 years 9 months 18 days | |
Fair value per unit (in dollars per share) | $ 9.04 |
Equity-based Compensation - LTI
Equity-based Compensation - LTIP Units Activity (Details) - LTIP Units | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Shares | |
Beginning balance (in shares) | shares | 0 |
Granted (in shares) | shares | 47,620 |
Ending balance (in shares) | shares | 47,620 |
Weighted Average Participation Threshold | |
Beginning balance (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 21 |
Ending balance (in dollars per share) | $ / shares | $ 21 |
Equity-based Compensation - Equ
Equity-based Compensation - Equity-based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total equity-based compensation expense | $ 28.4 | $ 5.5 | $ 104.2 | $ 17.1 | |
Total unamortized equity-based compensation cost | 134.5 | $ 134.5 | |||
Weighted Average Remaining Service Period (years) | 2 years 4 months 24 days | ||||
Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unamortized equity-based compensation cost, excluding options | 21.1 | $ 21.1 | |||
Weighted Average Remaining Service Period (years) | 3 years 6 months | ||||
Exercise of Class A Common Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unamortized equity-based compensation cost, options | 1.4 | $ 1.4 | |||
Weighted Average Remaining Service Period (years) | 2 years 9 months 18 days | ||||
HoldCo Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unamortized equity-based compensation cost, excluding options | 8.1 | $ 8.1 | |||
Weighted Average Remaining Service Period (years) | 2 years 9 months 18 days | ||||
Class P Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unamortized equity-based compensation cost, excluding options | 26.9 | $ 26.9 | |||
Weighted Average Remaining Service Period (years) | 2 years 6 months | ||||
LTIP Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unamortized equity-based compensation cost, excluding options | 0.9 | $ 0.9 | |||
Weighted Average Remaining Service Period (years) | 4 years 2 months 12 days | ||||
HSKB Incentive Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unamortized equity-based compensation cost, excluding options | 71.1 | $ 71.1 | |||
Weighted Average Remaining Service Period (years) | 1 year 10 months 24 days | ||||
HSKB Phantom Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total equity-based compensation expense | $ 57.6 | ||||
Unamortized equity-based compensation cost, excluding options | 5 | $ 5 | |||
Weighted Average Remaining Service Period (years) | 2 years 8 months 12 days | ||||
Cost of service | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total equity-based compensation expense | 6.8 | 1 | $ 23.8 | 2.9 | |
Sales and marketing | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total equity-based compensation expense | 15.2 | 3.1 | 53.6 | 7.2 | |
Research and development | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total equity-based compensation expense | 1.8 | 0.5 | 11.9 | 3.4 | |
General and administrative | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total equity-based compensation expense | $ 4.6 | $ 0.9 | $ 14.9 | $ 3.6 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 08, 2020 | |
Valuation Allowance [Line Items] | |||||
Income tax expense (benefit) | $ 1.4 | $ (1) | $ 9.8 | $ (5.7) | |
Effective tax rate | (15.50%) | ||||
Tax benefits realized which must be paid (as a percent) | 85.00% | ||||
Expected benefit from remaining cash savings (as a percent) | 15.00% | ||||
Projected obligations under Tax Receivable Agreements | $ 182.6 | $ 182.6 | |||
IPO, outside basis differences in partnership subsidiaries | |||||
Valuation Allowance [Line Items] | |||||
Valuation allowance | $ 224.4 | ||||
Second Offering, outside basis differences in partnership subsidiaries | |||||
Valuation Allowance [Line Items] | |||||
Valuation allowance | 92.9 | ||||
Basis in corporate stock of wholly owned subsidiary | |||||
Valuation Allowance [Line Items] | |||||
Valuation allowance | $ 207.4 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event - EverString Technology, LLC $ in Millions | Nov. 13, 2020USD ($)shares |
Subsequent Event [Line Items] | |
Cash | $ | $ 71.5 |
Class A common stock | |
Subsequent Event [Line Items] | |
Number of shares issued (in shares) | shares | 67,075 |