Earnings call transcript Q2 2023

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Operator

Good day, and thank you for standing by. Welcome to the ZoomInfo Second Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Sisitsky, conference Investor like speaker to now Jerry today, Relations. would hand over the your I Please go ahead.

Jerry Sisitsky

me today Thanks, Q&A. call Amy. CEO After the With their for results of conference the Welcome to Hyzer, will the second ZoomInfo's ZoomInfo; and remarks, quarter our Founder we Henry to Schuck, are financial Cameron call on and call CFO. XXXX. the open

are future to including, securities and to call, forward-looking this any of including During and laws. expressions, reflect safe U.S. intended terminology provisions of similar expressions believe are expectations pursuant forward-looking outlook, which anticipate identify the harbor something the made performance Expressions will, facts for without goals, statements. business financial than expect, other may, and using statements future limitation, items, historical

number no to Forward-looking after SEC of sections risks to from any this The statements Risk law. in may statements including except required forward-looking may materially conference reflect and by update our the in order events those as arise differ obligation a that statements. of revise undertakes involve or discussed any Factors forward-looking filings. call, results Actual uncertainties, company

please cautionary the posted at reconciliation release website. in can statement IR our the results to more in slides financial are website refer the on press our ir.zoominfo.com. or Investor otherwise in Relations this metrics noted. to A For to All slides call information, unless the non-GAAP, be posted found

I'll that, With the to call turn over Henry.

Henry Schuck

margin We second quarter and of Thank with $XXX income delivered million the of and in adjusted you, $XXX XX%. Jerry, welcome, a in everyone. operating revenue million

context a reducing disproportionately in lower spending who growth leaders in software the sales sit vertical customers, environment. are of the Our

proved companies demand expecting expand and reduced solution. particular, to our substantial in investors have have profitability, of has For are been these impacted meaningfully ability the cuts growth ZoomInfo's high higher levels and where

I've technology growth quarter, clients. dozens of talked last the Over to our high

of of of was agreements. member reps their that I'll as XXX. into example. highlight that XX% by a something our had path company million sales XX to similar year-over-year In In holders to would XXXX growing an a effectively the XX% ZoomInfo one overnight. SaaS All the XXXX, license of XX% to of while XXXX back funding, ZoomInfo them, breakeven their share XX% demanded XXXX year-over-year. and trajectory. half team growing end a growth sales built in back free growth XXX to Their all on expected grow They $XXX the year-over-year, flow cash get than and more X% from XXXk of and investors different. which to XX to scaled cohort over went raised while

of account beginning been this managing through Our have the headwind managers the year. since

and on these pressures As we look our forward, their we believe renewals customer no longer in health, ease near corresponding the budgetary downward will pressure that reviewing term.

Our full adjusted for expectations which revenue now year, this XX% reflect for belief. call the growth

we expected these delivers While ZoomInfo have a our regardless and this not The growth their customers, for do better. value to of date our ROI time a reflect job customers to us I in platform a challenging to to enough done good them. demonstrating environment, compelling results

professionals. million To adding matching contact our internationally with I'm over that few on coverage last number fresh over them, the applied XXX profiles data know and phone and which net coverage the beginning million year our meaningfully most we've domestically the deliver been We XX There of the quarters. surpassing international new a increased on focus since out, both for We have customers drive data, performance and business several confident will that accurate improvement. we are rolling most that the initiatives coverage. need

performance see our and ASPs. lower cohort. more Dasdan, the values, we larger grade search sales our competitors, business, when most momentum in in strong We compared where which we competition XX% performance and still our value lower to also of new SMB in Sales Ali decreased close of the segment and platform. XX% our million We've that indicate leadership $X latency times faster price resources decreased load by loyal stability to CTO, contact under enterprise and times on remains the win enterprise our proposition where our higher quarter. application contract obvious. by see we and customers see allocated created, pipeline OS our the process quality with engineering invested has In higher rates, Metrics have improved focus

adoption more around strong We're offerings. impacted is X in performance customer where complex in This demand to API business to less businesses and focus at rates also investing are that engage the base by our since points the at highest our who who customer our we previously the percentage rates continue and for. coming been demand We're and we're and our drive knowing post-sales beginning non-software rates. engagement, has driven year. our up we retain team the NPS intentionally sales higher match on see growing the cube resourced more resourcing also environment customers retention where increasing new on to focus We've data highest than of among

further at execute the we more the to levels June, and streamlining organization In efficiently. adjusted staffing operate company,

team resourced We appropriately make have are and we long our role we success. right the that continue right the and drive that term sure to to

we're also to we core solution our pressing undertake on total of demonstrate advantages our large addressable efforts, focused market. our across improvement these power the As

year-over-year. that is First, with XX% of the clients growth outside a among vertical, software segment growing

our $X Second, using infrastructure. critical go market the with a are component of their in year-over-year, customers to more million ZoomInfo platform reflection increased XX% that our a as which customer cohort, expansion

companies and is models that will We to data data Third, platform and their leverage language market we the ZoomInfo every important accurate believe motion. that the accurate highly to now in starts go than and use data AI insights an ever. in with be more initiative AI platform and believe comprehensive data can the foundational having large

for recent details I'll long the more will press are help provide grow advantages illustrate stories term. we that what on ZoomInfo and doing to these customer

Cox Communications, Telecom, a Singapore finance, the go This as addresses continue UScellular, of sizes Principal choose across Boston the to social sporting modernize organizations all that ZoomInfo, industries to quarter, we Group, Celtics. to See’s and media, Financial market their world Candies, Snapchat, platform market telecommunications, our and These TikTok, leading testament closed the large need organizations motion. and

and over saw intelligence. data logistics deep This with partner employees, company, insights Leveraging centralized growth ZoomInfo's of a strategy. they a reduction transportation logistics that increased and customer segment intent a a by following their deploying company year-over-year. demand grew and among XXX global especially included sales workforce contact We customers, XX% strong our $XXX,XXX improved ZoomInfo data by which generation,

result, customer targeted the As integrated their more addressable and total successfully market multiple CRM a effectively instances.

who've in looking leveraged overall providing through data. to We're redeploy force the customer to go outside on the or the data needed expansions within of centralized including stream ZoomInfo accurate enrich They customers power we their base accurate spend. more them them seen marketing to and a ZoomInfo reduction most power strong latest, proactive enrichment We've of outreach. of realize for Helping drive which Hitachi, by to continuous highly their several a help market outreach data more with motion. experienced replicate datasets increasing also steady our this opportunities teams, maintaining strategy, software, to

of and combined data for quality with to efficiencies market enrichment ongoing driving cleansing their Our high meaningful offering routing that go is organization.

automation their they financial as a services of standardize service quickly Fortune to multi-million spend decrease clean their data company more a units. data and automation its business than ZoomInfo multi-million email marketing XX solutions and that ZoomInfo system provider was data their expanded a duplicative. to year in third A a ZoomInfo systems company up their dollar using of bounce and throughout and for rates used our dollar service half annual discovered information to their And data banking across usage their from a as CRM contact XXXk IT on by marketing

realized, our complement this, their sales to service and infrastructural In to With data recently initiatives, AI companies contact data see cube. our these data customer cubes dedicated is and systems, XXX and as intent and response, customer many firmographic, we've base for an we our demand data a have element initiatives. campaigns, our their data ZoomInfo's technographic, increased CRM As business. across

strategic for AI And demand services the launching also solutions. our arm is AI ZI Labs, response growing to an focused in practice

personalization We have leveraging has strategic which already modules for engagement and with generative into Data. leaned its one-to-one drive customers efficiencies. frontline go multiple also service into company software strategy contracted We're customer strategies leveraging ZoomInfo their drive like to Boomi, AI to to AI market incorporating by the

AI sellers generated taking the burden of discussed taking before, Chorus are we've with away summaries. meeting generative As we from no

We've by its in increased high with this more the hitting XX integrated of now X for power Gen-AI XX meeting release summaries Slack. our has last release million and NPS the our of delivered percentage since functionality, summaries Chorus on months. customer meeting XX% over already base over points, a than May Following

We're compounding also to free cash remain in commitment continuing industry flow drive profitability to our and steadfast leading growth.

while more maintain increasing product data new levels in we AI our of invest on side and expect sales expansion and business to the We margin capacity a we longstanding strengthen leadership, add XX% see in excellence, platform invest demand. where

enhancing our By our position that, our we're demand the we in efficiency, has operation. post refining and to product doing on capitalize customers the customer making challenging opportunity to prioritize our our I in we strategies. for confident ROI we've improvements the optimizing to driving go seized platform, and offerings, the the proposition to the conditions product base are aim our sales of our market remain stabilized. ourselves and rebound conditions, value Amid and to

turn I'll Cameron. over that, to With the call

Cameron Hyzer

sequentially Henry. GAAP GAAP operating days and margin up million of income for EPS better as QX $XX was $X.XX Non recognition. was XX% Adjusted was and QX, $XXX than GAAP income million of per up X.X% we expected per XX%. million, revenue delivered in Thanks, year-over-year adjusted EPS $XXX share. with $X.XX share. of revenue was a net In

end degraded As environment to of Henry putting the second relative incremental net further expectations, the downward retention. on quarter indicated, the toward pressure

the further where business, what action previous their in less had renewals of true we challenges some Software we customers addressed. that beginning of overbuying the This lap already last renewing even expected. took than from been particularly for had year to to is are address

spend As those year. customers average reduce further on this

renewals continues current more in round prove prudently year. beginning cycle are of challenging the Given assuming we the the are environment, of the than economic through end that last the that renewal second to we year

continued The percent of year. elevated relative getting many The by Meanwhile, of during biggest XX Additionally, customers to going the contribution non-software increase saw software in as those XX% ago. platform for our plus grew customers plus industry our down systems business, for a declining our manifested in represents for revenue as quarter, from from XX% ACV increasing the the smaller more tremendous evidenced spend last operating are they vertical with now customers. the year-over-year, customers are customers. overall time we whereas write the offs They from on XX% this has pressure and platform. value the million are year deeper leveraging software $X

most. their XXXX were are Taking year. functionality guidance fewer down challenged. up sells now XXXX Revenue Digging renewals adjusting a and year our With for the continues of from from with particularly the We impacted revenue. drive to saw year. QX retention, deeper we growth whom into this further being and total more impacted comprises in spend for and customers cohorts saw help together, our sells the last net customers the full advanced mid-market reduced third we

that climate third the even fourth in this more challenging will the become assuming year. are We quarter

revenue growth. such, XX% XX% XX% prior deliver even margin operating for year, lower expect at to we our expect guidance We growth to midpoint with profitability expected maintain the revenue. than a from and the of down remain the to committed adjusted As

where efficiency investments on hiring we the expect the focus to will make continue will greatest We selectively impact. and

flow approximately unlevered to of Turning which cash margin flow. was Operating XX% adjusted $X credit cash first repricing of was in the cash lien with related operating the representing our free lower of free QX. million, payments a million, to flow Unlevered in payments, $XXX quarter million $XXX for QX successful and income. cash interest included agreement XX% interest flow

term we we to With operating For QX, the $XXX balance cash expect second XXs million expectations X.X the the flow adjusted ratios respect in approximately our with ended end quarter an cash X.X full XXXX. trailing investments. which all free for gross XX X.X times equivalents Down has conversion in as a of billion in growth, our credit is year fixed in ratio short with EBITDA agreement. as of debt, unlevered sheet, June the cash, income. In percentage $X.XXX We carried we of with and as the times and hedged lowered defined in cash X.X rates. EBITDA, a leverage leverage consolidated times months and which EBITDA again from trailing of or net respectively adjusted XX interest times drove improvement months of

repurchased we of million a we quarter, in stock at an authorization of share. total second today $XXX share the To repurchase $XX our million X.X $XX.XX million of During the share program. of approved shares that Board average per a have has deployed we announced million date, repurchase March and price $XXX authorized new ZoomInfo

the billion, repurchase quarter future Given expected $X.X and the healthy million, obligations free to performance to delivered next cash months. which strong our to the million unearned expect $XXX RPO at continue performance With balance be or generation $XXX we of XX obligations, revenue to and opportunistically remaining was and flow in liabilities were of sheet, shares. end respect are

to that, let With me turn guidance.

in range to we of $XXX operating $X.XX of million million expect share. million, per non-GAAP and range of to $X.XX income the QX, $XXX in For adjusted revenue $XXX the range the $XXX million income net in to

year, the in to million. in For adjusted of million $X.XXX range $XXX revenue now and deliver range we billion billion $XXX to the to full the expect operating of $X.XXX income

income million the of weighted on $X expect in per outstanding. diluted XXX shares non-GAAP share net $X.XX average We to range based

$XXX the unlevered $XXX in expect of million. free We million flow cash range to

margin implies of and adjusted guidance XX% XX%. midpoint Our an growth full operating the at year revenue

me it let turn call the over to open operator the for to questions. that, With

Operator

first JPMorgan. question you. from Our Instructions] comes Murphy Thank [Operator Mark with

is open. line Your

Mark Murphy

actually again much. in the very stronger you demand, it's and headlines, then you that macro -- is Fed -- we customers thank your downshifted in is hikes, look around like, or standpoint growth retrospect, spread GDP have and sounds think for incremental when the later month good look April anyway. the or that QX? the cautiousness Yes, the do CPI readings didn't from I'm out together crisis -- are is believe What exiting in interested because were back April it banking do rate improving. slowing QX, far of There's why so of you what causing QX and we is May you thereafter of seasonally it

Henry Schuck

Yes. Thanks, Mark.

those that expected. renewals that is, more I year. that tick segment driver we started of more lap to we So renewals to in to our much scrutiny the mind more be also biggest last my down saw really those challenging. we feel And customers on really started continues growth and than focus that new

are I customers. finding think people their focusing businesses new than necessarily existing more on

many and feel trends the right this assume kind while we this worsen, a had which expectations want year we year coming So the more QX, renewals to think up the through. of risk of the second that incremental of impact some the impact we of cohort to prudent those way were that And modest make that is of June impact have set therefore, we're we have coming to on that based last those for point view at half. renewals taking rest a sure first renewal

Mark Murphy

Yes.

whether private, of direct double this leadership. you industry the public when is Okay. seems has market quite triple That grid a and GX And one they press your in think that often lower broader that. XX higher whether we at when or it's little you the Crowd. or this outperforming that makes actually convey number year Henry, industry competitors, look have just how feels the maybe times outperforming kind in hard into revenue sure you're Do items we in market universe understand share, It of it one not the of then, to sense. because ZoomInfo's to I'm earnings at if just lightning see you're happening think seen strike rankings like -- possibly what's release, now? announcing or be growth you you about compare across, of XX% translating right

Henry Schuck

Mark. Thanks, Yes.

came of hear largely my I tough technology, growth think you the think, to nearly they very and think mean, from I look of it’s reasons, year front peers but particularly LinkedIn, renewals, I today. the us marketing same talk X% at first, XX% office down who about ago if different LinkedIn. And at and side really And buying tough sales are peers similar I is it a growth selling marketing I I when around about buyers sales to environment. office, house. a front and really the our for in sentiment

TrustRadia, -- when think through about I you our our set, so, and I pointed competitive against rates higher the market we're relates competitors. where I getting see our when or to them is in ability at GX are situations, look increasing win as as our is, broader when think selling those in segment I leadership, And our it what pipeline out, ASPs, increasing, we're see competitive SMB we

much I our see more reinforcing so position competitive any than around more -- than speculation really here. share so market of sort losing so us And

Mark Murphy

Thank Yes. Thank very It's in helpful around very results. we which that did you that, LinkedIn, the to color much. recent Henry. Microsoft add for you see

Operator

our next One moment for question.

Porter Elizabeth next Stanley. comes Morgan question Our with from

Your line is open.

Elizabeth Porter

to gross get quarter-over-quarter. little again were on [XXX,XXX] a you of bit and (ph) retention Thank as I much. some on retention some was down unpack logos more Great. the very side, what's color ACV the hoping particularly happening

So gross impacted buying does is downside, you. retention? actually incremental Thank that NRR the how much

Henry Schuck

Yes.

saw more this modestly than cancellations year seeing are last we we So year.

more and down So down more expectation the to up little. by being we of our do of net sells. a terms in is retention sells But retention gross tick fewer expect impacted

but more the challenging. So those it's seeing we're renewals customers, being more -- we're keeping

to that's with XXXX. real focus And respect the so gross retention I in think yes,

Elizabeth Porter

believe started as stabilization quick you your quarter sales efficiency. a And see and as of trend relates marketing to on sort I in that Thanks. just then How did to continued sales investment QX? And -- through heads? follow-up any last QX. in you. Got it read some in investment

Henry Schuck

Yeah.

any a sales in So than it retention sales. than based is did new And necessarily lot ticked on on more down month. I June think also that see more we that efficiency other is of on

spend our or sales more planning we to the there. during meet and to with to the that future. demand revenue side should sales continue and see overall out on grow particularly expect are foreseeable new line the we marketing that grow And We capacity less in sales

Elizabeth Porter

Thank you.

Operator

for question. One our next moment

comes question Rangan next with Our Kash from Goldman Sachs.

open. is line Your

Kash Rangan

Hi. on curious take versus get Thank you existing of the is, a the the and very much. there's I'm renewals is with your versus Henry, shifting lower seats. That capacity to composition the of [SKUs] customers factor, of a non-renewal expansion. down shrinkage there (ph)

start dissect factors? that variables look? the those there, Thank trends Where just Cameron. trends against really you could normalize out? much. also, -- And for is this effect compounding first and these so the you If you When bottom quarter trends this are to the three how do is of comp would when maybe what different three

Henry Schuck

Sure.

we that in little just cost structure. a which seeing seats, that challenged. as cancellations, spend So we bunch more optimize their the down the are is A customers selling bit see, less little we is, but our they're that of to the technology. particularly looking also customers are to as small looking have But reducing are issue a of that, I'll full business about bigger talk bit kind more particularly of

of a a or sometimes perceive So the lead oftentimes same that to perhaps functionality value or don't either advanced they some a reduction, from the of we'll using downshift removing see seat aren't in. level not other only but

new as of world it fully, So, much of year the through belief the see layoff particularly seats, relates focused their watermarks this trying cost is to that us well. these softness in for environment then that And think for it, in renewal to we'll of lapping we trying particularly they down our of reduce take does remainder can. just expecting We're point, other it higher other customers really as opportunity people is there for get see the a their where that macro I call we sales think and do see us, them, And a places stabilization environment a in a side are when rethinking spend spend they're to sequential worsening is bottom? the as that, their us ideally cycle. for trying I to and once growth, to the accelerate kind and as more on terms once yes, structure the improvement the of in in to that that, but

Operator

question. Thank our moment next you. One for

with Our next Joshua Needham. Reilly question comes from

is open. line Your

Joshua Reilly

Yes. here. taking questions my for Thanks

that's for versus bit company little about is seats balance the kind of much functionality company And database If think online to relative that than the database you of at advanced should we here advanced more the the of and the coming contact functionality subscriptions within year? look expected. churn and How growth a contact trajectory of here products? how subscriptions the the

Henry Schuck

it's I more is that we on our core see call the part clients seat as advanced by that we advanced certainly, continue that fair quickly functionality levels. think that functionality, kind but amount of offer a much now pressure the of core some from functionality So within, of to does data the a it, their of looking And to evidenced I'll what reductions do functionality are is third revenue. fact optimize is than total There we spend offer. pressure grow a big of that

to I guidance. a through challenged as be looking on year remainder for we dynamic continue think where the opportunities, come the and think some our will that advanced spend their they're when to And where will functionality And they expect look opportunity think be may renewal of similar some that their can. think they of they us I also customers of that the optimize reducing will from the forward, based I reducing utilizing. the that have seats to I'd

Joshua Reilly

in come When I to managing contracts my near a a renewal? letting on coming that. and opening example, to these their want Or these you more seats you expected? here XXX Are And reduce the the are how before in sells as term the follow-up you just then you customers down from quick XX. like to say than cut in maybe previously them one

Henry Schuck

Yes, we're them of teams, lot market kind with we're seeing them work through this obviously do laid off which go a trying is pre-renew, What their we're what to to they've if with of. a chunk to trying that centralized about and Databricks their strategy databases. talked automation of exchange data data cleanses essentially they Snowflake marketing for I and their company and transportation with where their or logistics sales enriches CRM systems, OS seats can that

And so, we we're to if strategy, with with spend. can renewal, then enrichment driving and and transportation renewal that actually there can spend overall cut data swap know But we them time, goal a data service spend to this that that increased as in ZoomInfo. we at drastic centralized our firm that maintain until logistics which a and is maintain is when

Cameron Hyzer

people not But But that -- services just encourage before some be swap spend clear, of be portion customers to functionality. or the to just to do they they're clear we in yes, of other if their renewal. using can allow reduce we their seats all don't use to their

Operator

comes with Bank America. question of Our Ikeda Koji next from

is line Your open.

Koji Ikeda

the Hey, to think you question reaccelerate. potentially growth about guys. and on when bottom wanted revenue to could Thanks taking I how a ask for question.

the right look rate the year growth full implied So X%. about when we at is here, exit guidance

when I you're thinking start XXXX realize and true but be how for guiding should look proves to tough of not here. that if about And So first some revenue half growth XXXX reaccelerate? XXXX, at really just we the to the setup comps could and bottom today, has we

Cameron Hyzer

Yes.

are the layoffs through negativity by I that through cycles revenue kind growth year. of to So once we have point, end guiding sequential at renewal being view business generate. current the believe best probably and is of not the that to of this will XXXX. measured get as QX expecting We we that and believe momentum continue We're that peak do do we XXXX. renewal of the in challenging cycles, We we these the realistically, the

or do that that, renewal that opportunity the potentially growth, through period the the as we're believe time once lapsed that reaccelerate there's in macroeconomic I well. stabilizes particularly So environment to as cycle improves

Koji Ikeda

And exit verticals, second any it follow-up of quarterly Thanks, basis. it did retention and I commentary give don't other look guys color in XXX bifurcate quarter XXXX. like in here. Cam. sort it. revenue Got Net a it and between And it or Thanks maybe one maybe guys. too? was the just But software know realized, on on even what you

Cameron Hyzer

Yes.

So in we the software particularly pressure, see continue world. to

So incremental if I year into high assuming our that expect net for think back are the you'd the see QX. the QX or you retention guidance, revenue XX% XX% of end in the to through expectations closer pressure even we that in and the

Koji Ikeda

it. Thanks the Cam. questions. for Got taking Thanks

Operator

our for moment next One question.

with Our next question Canaccord comes from D.J. Hynes Genuity.

open. is line Your

D.J. Hynes

the guys more need solution? a whether like, assess, against trying -- way you AI in upstart Hey, BXB independently in of advancements any for data make for source competitive did it actually I'm a AI third party up guys. to create without Henry, any easier in to data I'm to ramp or just could shift their themselves way. companies

Henry Schuck

why how spent sort doing to realize data on generative was we to of smartest a that startup it's and AI the public we're the signals maybe a unique the of coverage. buy asset something are It's web through or through help community company really data. gates that understand ton have proprietary collects D.J., had additive, time I proprietary understand really social billions try on signals and more out platform. IP all that And we not they're the with intent it's but question we I've or to the -- addition, that, of ZoomInfo or into could people unique they're our for accurate and gather publicly that jump not OpenAI, network, available at collecting that, look, data anything our put the Bard had else together who billions is of what from to too our that web. that the the and are trying ZoomInfo and public are LOM. whether model, customer we data what available proprietary our They large data, proprietary ultimately it contributory buy points of across everywhere data all the customers These graph ZoomInfo. our here through from what's DSP language collect incorporate data that as the well. And or And not is data, spend reason able generative time of more through

available further And either accuracy to data. stuck so, we the XX sort XX% know of than you with And not years largest sellers does you and is data, data, just that. data know any that accurate you really junkie in good of from marketers. the companies do BXB LLM what if for in is not pretty But this telling at space not want XX% the Atlanta, accuracy, that, trick BXB XX operating get

not is only to done make dataset but difference. XX%, big marketing available, so sets for and also proprietary a is and we really take And necessary incredibly we've data to XX% work not additional accuracy. and where that it's the that That work professionals sales

D.J. Hynes

Yes.

prior back pretty say in conservatism year. one on than sense. hear one Cameron, makes taking in quick have for guidance half sounds contemplated I periods? may you're philosophy. you It outlook at been Would you talk. you cautious there's just the more the That mean, there of a Okay. I like

Cameron Hyzer

contemplated Yes. conservative there have than in been There's more periods. may prior in

overall of with of in of half. to our the it's did But that June, of the year conservatism clients, the and seeing that expect guidance assumed a more trend, renewals. the continuing to QX think view we're beginning see we QX. healthy just think -- view versus to a degrade but prior it's software particularly in a second And to point degradation a we're respect we insert I healthy half technology what in which second to we the I given saw see stabilization, end at had into think and

D.J. Hynes

Yes. you, guys. Understood. Thank

Operator

One moment question. for our next

Our Turrin with Michael next Wells question comes from Fargo.

line Your open. is

Michael Turrin

just to maybe assume impacts just there's appreciate any into through want how renewal cohort, just the just assumed spend question. the the just is here approaching understanding to of commentary Hey, and what's is time compares fair I think what's year? can intended if embedded if And understand us thanks. the think back for the the with that it forecasts some that to rest software how you seasonal help part go and And that see is group year? sector through shape more if end the -- biased today. I to back half? I way more on for right, the taking is to of question you're degradation just And we the that that to towards Thanks. of

Henry Schuck

Yes, sure.

we world renewed they've we've more the expirations software for they do began is their towards bit seen the than really is And of more has every What the little probably end of bit a but see So of of through is of yes, the in XXXX. cohort into that, of and obviously little we see to companies business. to quarter. them. I quarters, degrade less. that QX view many other a part continued software that, renewals in think weighted challenges QX as some of have saw And the at timeframes. I think have QX that with previous Yes, last first those since have out you that kind where those taken second in renewals kind from world some was were and year And more that people the renewal challenging that, that of the their degraded stable view for might even would naturally come overbuying what that to been assumed we

customers for even gets challenging as seeing QX renewals go prudent renewing think view So assume kind QX to worse that it's that in based to of that end and more QX. We forward. this a of on we the we're really the world way that set evidence where in at first we're those

built that so, we're guidance assumption the is And that the off of.

Michael Turrin

A follow-up, mentioned has you currently where held there sit? we tiny that consistent add if July through anything Is or June just you worsening. can

Henry Schuck

with I think June. July is consistent

not it the we necessarily hasn't certainly ended gotten and consistent better worsened, stay but So it's quarter. with not where

Michael Turrin

Thank you.

Operator

One moment next our question. for

Stifel. with Lane Parker from comes question next Our

open. is line Your

Parker Lane

I plus? in there, there's for XX% companies million could give question. Henry, better non-software that X but of coming you you and primarily Yes, the the cohort Are customers. those this was the the software composition look that technology us uptick million in at space, into wondering a seeing when when evolving look a $X understanding healthy if there headwinds that is Obviously, of taking guys. plus lot you in at customers growth of the quarter, as sort is and of of technology well? you amount Thanks

Henry Schuck

Yes, enterprise not way. are we're We're sort very we rep talked has find seeing a still of from reps of in way sales the example this then a storm logistics that good to amount sales companies And in a seeing transportation their different seeing tech like going financial about. XXX large weathered come services XX companies there. there. They're in and I

There's of And million of that $X one platforms. customers buying OS. our OS. buying continue so so, marketing product buying platform a buying to They're $X cohort. from out data and million one the they then cohort not in buying product. our service. buying sales just customer And They're multitude They're offering is a ZoomInfo cohort or in multiple that's the be of single large they're

And strategic strategy there -- seeing really but to so, in be technology out -- product decent the we're as million these us. play for companies come the $X cohort, and it's that software still of also multi we're enterprise, it's amount new also well. continues And in entrants in a seeing

Parker Lane

the queue. for Thanks it. Got jump in I’ll back the color.

Operator

One moment for our next question.

Zukin next with Research. Our from comes question Alex Wolfe

open. line is Your

Alex Zukin

question. the guys. Hey, taking Thanks for

growing think the as single XX% does ago. think level, -- the So the year, if about maybe year about as from low percentage in exit high year, the digit XX% vertical, a the on of sense a at at back rest the you're like, But the magnitude non for know the it XX%, of about on giving all XXXX. think to a track. around tech and get deceleration calendar level, gets I how guidance we cohort of kind the if map we we tech least at Where exit trying the down a at not growth to you just ACV of a rate business a we're that high like

the here XX% going they of going to of prebought, if And low like -- process And rest a thought drive is into for tech then back rightsizing. business and don't go you how the so, over and digits will, tech overbought, business Or conceptually math, the is least reacceleration that, XX to from XX% the look, to what’s XX% now next months, grow the the they is the this teams? single build at you that's us next year? are

Henry Schuck

of a world, I as us we growth think through current which think And the have So terms in to sequential do of that cycle, take certainly QX growth. QX. the think timeframe. I challenging I renewal would and think going continue through sequential about to Alex, would we're maybe

out of there's and continue of our that their ton after their depending I go their penetrated start in, the that other we extent business to potential where And think are there, those very in think the for they improve cleared is improve. motions. that segment lightly -- where have to that business people goes opportunity yes, I us And their industries own that a modernize are still that potential overbuying. to to the market to with on out to respect to industries tech help for are there's there that, again, the about for businesses thinking growth business that historical

while of have for decades, inertia, there's many And centuries. those been sometimes around businesses

to think the of year. we those like we'd the that grow do success sequential to of see yes, good way. clip the to advanced a in growth helping half some have at them accelerate business We this opportunity see between a from good market see in second in that, to go that more two, continue I that And we'll overall part

Cameron Hyzer

of so And working an stay I opportunity with they and giving with have with them to us -- the customers think, internally grow in the those downsize that one we're that doing things is Alex, future. our we operationally as they

have was around example future. that the let's salespeople that contract let's same XXXX both customer back contract. is, our contract. $XX,XXX cohort We a XXX XX now is has in them in page this and another on with XXXk up that's mentality today. customer, But We're the with And the about our a year keep work literally had a in that growing

we're perspective, a from so start so, journey. they the on to retention that that can as gross doing and everything those again we're trusted turn a we to about growth on partner And hold that corner thinking customers

Alex Zukin

sit that That accurate, is from the looks Is you making center your the lever strategic how like about and that a that talked data new monetize, months? Is is products look back when for angle. positioning. your that either kind like A guess that part makes that about think ability does at I of data SKUs to a year? maybe quarter? growth sure or guys? create And of of I the six from that healthy, about then Is sense. think strategies. of Is the data you that or ZoomInfo, what SKU as and advanced a the a AI just ultimately productize of lot clean, is pipeline And companies the have you're kind

Henry Schuck

a to and mile in comes generative last couple the focused go this about when ways. think I Look, AI market. Yes. it of pretty everybody on One is, is to

email way, lose And right get on model context, the you the content which my of generative talking when customers at that you to the And contextualize about is way email the good is you and by everything go personalized can around one-on-one Can so, make out. AI, it able best get kind people mile it, generative to really write actually to for when for you me? about that to me? right things they focus they and of the into on And good AI being the the fed hear what for Can excited you wrapped last me? has prompt.

our And number feeding without out well data, date say, there an the view and continuously, that get to can't to you're really of you keeping if customer then mile, on giving it full we're you so last position, a hey, up element reaching we that you that to. and think focused one, of infrastructure really enriched

secondly, think interesting mile I a as last think actually we pretty deliver to position we're in the well.

everything testing, that we conversations will out they're AI release. end value Chorus with believe for contextualize ZoomInfo on customers. and drive ones Those in our the to are already our most hands from our emails customers' a we're the going beta based so, And that platform generative number search projects that users, And in internally, have are in we to of already Data. out

We expect around number half this of the a back in to have there. year releases of

Alex Zukin

guys. you, Thank Perfect.

Operator

One moment next for our question.

comes Our UBS. question next Taylor with McGinnis from

Your open. line is

Taylor McGinnis

so customers these Thanks for Hi. that Cameron, But much Yeah. answer. some to question. taking a may have one be overbought. mentioned This of might you tough my

we that through where So rest where Is those still as there are the in stand customers still customers I do throughout guess, of year, sizing? amount of may renewals might are the of of maybe up color this those last fair you to a we innings look overbought for right in have working renewal of and can XQ the first in this and XQ and XQ year? renewal on upcoming half we base coming any compare this give what of year. And maybe year how Thanks. saw terms

Cameron Hyzer

Yes.

down as half. have could in second still go environment sell on guidance third challenging the the the fourth are and who our definitely view based into So, bunch potential the certainly, more There clients the think renewal of I a that quarter. we get and to

when you that it this of when changed overbuying, this overbuying a between what's question September, to is of think base. year. versus I and part the extent in where they And renewed December of is world view that about November, their their perhaps think their coming the

in that's make and of put seeing come customers. we degrade their want that with built us. most additional June environment them that customers sure those started scrutiny we're back think as that the year spend then conservatives the reducing renewals for to we've because we're I further And on seeing in last to did

the goes terms but think through can probably think renewal I decide renewal eighth. what not you you not is, seventh cycle, can cycle And this I of QX. that, QX, that this or So it's in certainly inning if

Taylor McGinnis

much. so you Thank Great.

Operator

question. for next One our moment

question Barclays. Our next Lenschow from comes with Raimo

Your line is open.

Raimo Lenschow

peeking again. QX thank where saw are you I'm in Cameron, kind cut day get The getting, why from if you're you, Hey, the half, renewing that? kind had that what some the just and you beat in already Can here. outstanding of horse already then people -- anything that blockage might the you think Like, of mental half And kind kind moment of kind is might renew worse? in about of out certain it kind second like, numbers, would on to number that sorry of never renewals comps, I you I people down seats getting cut if you. you Cameron, renewals QX, about, delivered here. why and think that cut hitting of a a But -- and the I you once second it have worse? had dead clean there, of kind Like,

Cameron Hyzer

were out, What that is are And pressure what kind potential room to to in that other -- has the our this really and last therefore reduce see apply Raimo, based saying the normal year. stable worse. that on they model the more last that we were ones ones environment we last the cohort, terms a is kind that sales are of room That that cut additional against their in and have in year June laying is be renewing businesses able that first there that to we're didn't cut scrutiny we once are of efficiency. is are really view created of year which should previous a year. Those they that, seeing that mental that smooth of

game, that have creates them. are those last a we to have in that a to potential That ones renewing had harder than little the last and year. didn't a risk where also worse of environment So sort world the year late scrutiny are who

Raimo Lenschow

Yes.

Perfect. Okay.

all I actually. That's had, Okay. you. Thank

Operator

One moment for question. our next

comes Zelnick with Deutsche next Brad Our from Bank. question

open. Your line is

Brad Zelnick

as factor Copilot mile. Great. for delivering reason Sales Thanks and from maybe AI slowing so to change there moving AI questions. the customer Microsoft, that's But happening world around much to another that's song. from your with generative any Henry, question all Sales answer about is Alex's Is this my last Salesforce everybody them? down decisions they acclimate believe to this and GPT I taking the fast appreciate singing pretty the in

Henry Schuck

haven't evidence evidence change any their to our the any seen a haven't pace seen generative making. I driving AI I I in customers. when is that decision of of slowdown with talk that

a anything using your go So is, a that to that somewhere market you're today to go I in motion, is future. Salesforce’s using using order see couldn't AI the tell that exist systems I you you technologies out be or reaching tell out be you're you should to the data I in to something to, will has who Einstein should you perspective should else you currently in to or whether who is, trend Copilot in when What or you're them. to what your that it whether Microsoft's reaching generative that's out CIO be happening partners funding, direct would from use, them, generate and the saying to be reaching to get should what actually the are, them, they grab CIO contact who how with how why reports just is, in them, they big raised you they

that gets forgotten the because of a can LLM all so And write message. great really

out them one data enough important do How tell content to data that put good the automated your their customers. warehouses, about largely accuracy in you out any is into generative you do spit AI goes And the the how data and it the already be do CRM? customer How if you from a of to about gets to system? going you model about have. go feel it's feel your what you in But data into your a you around leveraged sent will in single marketing ask systems most not them to you feel automation

leverage they actually leverage a customers to sit so, they're And unless ZoomInfo. can't to we as that in really begin realizing tools and a way go in coming position them real today important those

messaging. at deliver the time with to messages the don't try media -- right And us came that, sent to they they vision. have able really to right this the with came AI. bespoke that write have realize, generative a customers up to multinational to customers bespoke quarter, messages using well, want as We right company out our we as to exactly be the data large large a to We soon

become And so that element. infrastructural we

tailwind sure us be make on for incumbent a should understand to is change future. world us it's a But Now customers in that. the that us that meaningful the for in

Brad Zelnick

it you. your possible. that assume quick productive one improving for reps believe color, critical helpful. to customers have Henry. seats? it's your average as they as that Thanks actually Because for have cut as left customers a be fair discount That's that to Cameron, is really the Is I

to are compress? renegotiate pricing able up So direction as of you in the you. list price Thank seats

Cameron Hyzer

think At this big struggling customers a and we is number that them. that. to good that, that with of are continue have a point, And that we be partners we we improvement their respect want haven't part seen a sure with make I of with business to material to

with If platform it's a using we're started out increase. to that's lowered to them a company their future it's that struggling going yes, lot, that them and they really has So that growing therefore our to lowered customer work which point give and them we've them everything team once prescriptive more sense drive we around. we're usage customer gone if that their headcount is, grow going and can price price AM pricing, that's and to with turn and get a the and for to else, the in a a makes

Brad Zelnick

Okay. Thank you so much.

Operator

our next for question. moment One

from comes Peterson Raymond James. question Our with Brian next

is open. line Your

Johnathan McCary

on is you. McCary Thank for This Brian Johnathan Peterson.

of of kind lot spent on revenue. related How XX% but know of terms I we linearity? some non-software to that of hoping there's now I time So mentioned is verticals. software, in know could total touch it's the the trended previous other of some questions. you of on those

services color helpful. Thanks So industries? versus business that there how of much is guys. would be other Any

Henry Schuck

Yes.

respect like plus do we much of of do are with kind to and services. do reasonably verticals to improve to efficiency vertical, to the them, well look services go logistics I’ll business financial for depends and best a actually industries, transportation, see But the number in traditional So continues better continue on growth line XX that their percent market. ways with to to rate. Really things that those, more performing call continue

Operator

next Brent Our comes Piper Bracelin Sandler. with from question

is Your line open.

Brent Bracelin

helping Consolidation lead sounds $X really a challenging important back plethora your in some the important tool occurs? over do it disruption a you last challenges get software out I'm industry on the and will of and much going consolidation platform to view software How term sales much forward? Good think given the tech step How persist challenges XX you're from this are apps as whole. afternoon. There's there, of some Henry, industry try near build of on to vendor and conditions like here. will Thanks. was you you a how years? going the billion seeing

Henry Schuck

Brent. Thanks,

managers. then I able to faster that to account use we of your to tools of sales a pane by We having tech by think I use months. perspective. And not the an there executives single think we of do to think with having like have with think those real We in those our tools those lot think insights, acquisitions really M&A a are end get that for And driving against right we tools we are value now, our Chorus focused opportunity reps, the platform having important over most the really data sales amount win those Right of development integrated there good from on applications. those we're to suite on engage we focused a consolidation look customers acquisitions. but value feel XX land. and the now to be those and for did incredibly users. last there customers. tremendous we're account acquisitions, about obvious We I And customers drive glass believe be really ability get by

And so, really, easy making focused to for on we're customers. really our use really that of all

that AI today clicks this and the take bring user value have customers generative XX, opportunities I it of can experience. would get the to we where something really via the two experience. XX XX, with lot space, think betas it to leveraging out to of AI one think we we in take or a out when a clicks and finally see that by of can one is generative comes simplifying And the of user that we number places down

and usage and And adoption so, excited engagement our customers. amongst that how better pretty about we're drive can that and

Brent Bracelin

you and are downgrades here back across broad Just to how Then color. cohorts? the for all understand on based Cameron focusing on the my it renewal cohorts profitability? smaller pervasive downgrades across whole Helpful last seeing software that Is Are venture that are renewals. question software the concentrated cohort? trying is within backed Thanks.

Cameron Hyzer

once is focused companies software in And it still mid-market maybe see end a more the as and How of of less enterprise. it kind as small act we but the in little well so, smaller kind focused to do you general. you they tend customers, the think anywhere like yes, to in mid-market software of than more get up in larger But enterprise companies enterprise larger else.

Brent Bracelin

Thank color. you. Helpful

Operator

One our moment next question. for

Our next from Capital Jaluria question RBC comes Rishi Markets. with

Your line is open.

Rishi Jaluria

Wonderful. in. Thanks for much me so squeezing

in some pricing Just and And the maybe ramp the you at one challenges. customers the demand the you've I changes making and question a to to that a continued on packaging changes my partners new Thank little high use customers price side. asked ticket How economy. little easier make and macro bought for and consider in would Would environment just you class. is, think and about daunting have top reason on any some maybe there, in you. potential this cases new less especially given first talked

Henry Schuck

you thank for Rishi, question. the Hey,

in we for better this job creating look, to -- value of our demonstrating I two think that think the do have I customers. one, Number of a ways. we're

them our to our we platform them. job how data, of so And for better driving is value insights, our have do a showing

quarterly that in a our you're for the I value job that really think reviews pricing to and highlight hearing customers. the we're not that, driving maybe we're executive around conversations better doing is disconnect business

think of there I an opportunity in packaging platform in the said, together SMB sense in and segment and our And now particularly we a drive being customers the number in simplifying for higher with to the market -- is a and our value our SMB of quarter. testing them by pricing value we'll of a our get that SMB to out can bring most to faster That we're in number packaging. simplify customers pricing that -- be think areas our

Rishi Jaluria

so much. Wonderful. Thank you

Operator

question. One moment next our for

Panigrahi Siti from comes Mizuho. question with next Our

open. is Your line

Siti Panigrahi

my for Thanks question. taking

You increased grow line guys Wondering year. your sales of better to talked in changes after beginning that about means joined renewal was you has you what somewhere mid-XXs, done on but either expected really confidence now expecting (ph) and you guys maybe [Dev] XXs. high gives that to the the in new That of what target? sort have achieving

Henry Schuck

Yes, Siti.

beginning think new I down when model. I if that do of -- it's from the run were do year see on to also would still assumption last the that that the where how we out the the reasonably at be and continues model I guidance, year. sales run do be based the from new guidance We down see sales but would I modestly well,

Siti Panigrahi

Thank Okay. you.

Operator

One moment question. our next for

next Walravens comes Patrick with from Our Securities. question JMP

line Your is open.

Patrick Walravens

Great. Thank you.

you've customer So we all locked to things the Henry, similar one the this. a until of got said on down I'm market corner. are we They turns heard was from spending and sure the comments

did these feel companies what [indiscernible]? what is So them? think do start Like, they are what turning for? When -- -- I'm corner is like the for looking What it to thinking? they're you

Henry Schuck

if more the I in types those basically opportunity mean for have there's a here's could is, no new lot I decided visibility. segment. what had of they customers would that ball, Pat, customer But we what Well, that see -- crystal think doing. be I They that growth

And them we'll more that keep and we And not business. out and all so, instead new we're and business going try marginally. of start in business our new we to And just then we we're to we're customer, new resources that can customer all take our going them logo, go resources of to trend changing to sure grow side. see from to on make customer going the maybe once customers away the to new the acquire that focus the we're going add base, on

I a them. in are start think position my the they to that, on obviously we're strong expectation their next in And so as they resources acquiring to that, spend seeing really stabilization And is base go help they see before trying logo. customer

what smaller to those Alex there let's think as and that help of customers, to it to do a when do to you get able so, can acquisition let types is, step we again. you're way, we customer, a meaningful And more to you way mentioned be for a you and as want in in where customer about starting us new point in keep

a your from that is of perspective, the the meantime, where designed back with a itself really account are we're time user and for make experience product base. well products quarter means us for that half the the to our in and Now growing sure lot that to year lent what spending of in this

us I grow there's logo start the user on new, place back they their customer companies project inside when year, right CIO, new account customer hiring that and interface the start the business. your if acquisition so, half in and in a who's who's them, plug base got can can And who's then growing, puts as start an position CMO, we releasing simplified managers in in growing those manager shrinking, go relevant of and way over base the that a who's experience be the their business getting great It well. And CFO, accounts account to products. raising think can help of types side who's their to of a money, more

Patrick Walravens

Thanks for that All right, great. perspective.

Operator

our for moment One next question.

question with Securities. next Truist Terry comes Tillman Our from

line Your is open.

Unidentified Participant

Hey, (ph) guys. partnership, the you're taking just so is Thanks view much. for around detail partner currently? just there Thanks Myers] into about a for thinking curious go could how rationale from you broader little This if around strategic of then the and Terry. a Databricks question. I'm strategy [Joe bit on

Henry Schuck

propensity automation in lakes go exist they data companies go when we systems, that data customers at their their internally customers going their to warehouses get to want the Thanks for run that think to when view of is that and marketing when XXX Great. generative the customer question. or Look AI, systems, they're to use like do Databricks. to buy using they to CRM a models data their their

right up those type ZoomInfo doing the data and our it enriched build that's set want and of live We a that enrich so to analysis for have lot and their leveraging Databricks data of territories easily of are inside the types propensity that's models, models partnership they to and they puts building data that with where bring to models. happening in these and most natively the or existing and our happening that data can they're cubes customers of And where so accurate build data segments customers Databricks. to buy and inside places our most and always

Operator

call. Thank And I'm time. all This participating. showing this you concludes today's for further questions conference at no

disconnect. now may You

ZoomInfo (ZI) 31 Jul 232023 Q2 Earnings call transcript