ZI - Earnings call transcript Q1 2024 | ZoomInfo Technologies Inc.

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Operator

Good day and thank you for standing by. Welcome to the ZoomInfo First Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please be advised that this conference is being recorded. I would now like to turn the call over to your speaker today, Jerry Sisitsky. Please go ahead.

Jeremiah Sisitsky

Kevin. Thanks, Financial for ZoomInfo's of First Conference XXXX. Results to the Call Quarter Welcome the Henry today CEO me call With on are and Hyzer, of Cameron Schuck, our CFO. ZoomInfo; and Founder to we open remarks, their After the call Q&A. will

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

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

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

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

Henry Schuck

quarter adjusted another Jerry, you, delivered . was income operating $XXX committed and better-than-expected quarter and XX%. to million, we million, We remain Thank welcome, margin growth. $XXX everyone. first Revenue profitability the was profitable a of as for of

shares share and buy million another continue approved authorization, of prices. to at back $XXX Board ZoomInfo Our attractive we repurchase aggressively share

to ROI the a extremely has feel been that our positive. well forward and seeing releasing Our have Zoominfo underway. customers feedback this new Beta of are copilot platform solution, look version we and shortly. confident we We significant differentiated are efforts development

quarter difficult months. operating and would that had stabilization. expected through navigate has are but this few we to last environment, of that We improved it starting over was, signs We the continue one be to a see not challenging,

to net coming performed our it than businesses while continued expected at in of mix NRR quarter, was those for As retention, company-wide and higher And prior renewal, challenged down to the periods. up revenue QX, the worse XX%. in given better business relates than SMB be

similar second Mid-market rate retention and renewal row for in since improvement, sequential We rates was year-over-year improved was time reflecting saw renewal stabilization. sustained QX stabilize, to retention QX the the of enterprise we first quarter saw there XXXX. and a

the QX inflection 'XX. for time have bottom, These promising Software reached view continued a to to precursor we of suggest growth. a signs we potential trends retention sequentially stayed since QX have also which stabilization a first into flat and as are that

continue record vendor levels win-back we again hundreds Customers also ZoomInfo, We to of Zoominfo also had to record come -- number numbers from back a had XXXX. strong who low-cost, another even better was QX and cheap saw trying of providers. for of to QX maintaining come by managers the low-quality quota business performance. in back missed correct returned has December cost after by data in their left the account development already quarter and we One gen leadership frustrated promise and targets enough mistake competitor, software twice. In QX, Their on fraction lower-cost XXXX and a a executive the the team to demand for of us. self-aware customers

continue using Marketing strength drive year-over-year. we continue In increase In of to strategies. to XXXX up XX% million their recorded to traction the our since ZoomInfo with the our in cohort data see enterprise. up largest our fastest-growing to customer ACV quarter, from AI their area we are improving the Solutions, is the increasingly insights in customer challenges using of solve XX% on was as operations the as and power retention spend platform, platform, and data our cohort and and increasing the X CRM the X QX million we companies within ad system year-over-year

we high-quality in Kirkland analytics all a competitive to ran and existing predictive of MSG and CRM resulted multinational foundation with OW annual data RFP their During with them a Entertainment, their data their transactions including up companies company Freight. & run Go deal upsell improve value, a of on of strategy Health, closed contract analytics Marsh $X.X use will candidates representing contract problems, vendor Universal million $XXX,XXX which all quarter, provided over their to to total modeling and with expand the This the worth Analyst, Carrot fixed Spring and accurate an and predictive clean the We Logistics sizes Walgreens, of staffing Robots, an Fertility, be where for McLennan, their in and life industries, for in Paramount. contract future-proof A data data value. AI.

to platform. mid-market data solutions, and learning our user company reduce money, as a to into ACV initial better our were all consolidate operations single a better and providing price with expanded query multiple sales, of many on renewal conversations and with a tech also all at mid-market point. We ZoomInfo replacing vendors. came marketing deep experience consolidating while Like spend they vendors a and a they save looking software turned by mandate in a We mandate by into reduce customers, XX% on across XX% that vendors increase

Google that data Award sets. analytics We data customers AI enhance data and marketing through initiatives helps Cloud were their as Partner leader and solutions two Technology effectively a won wave Forrester's and in providers the prebuilt Google Cloud most also and named Partner a sales of Year

Copilot Modern signal of first most from first when uses Copilot. I automatically what seller when their we sellers solution out and these every lookup those introduced we make advantage trusted platform and AI-powered and Today, of often customers to ZoomInfo for becoming facing innovative these take problems the seller. companies those is go-to-market how companies believe companies against data one to to proprietary reach they that the must and need that what is today, data. insights know data they co-pilot sellers tool to unique we engage action do. products in doing Copilot enable also solve which the right to surfaces key a day. to are know engagement. our A Critically, them. built the challenging. quarter, gather as ZoomInfo at go-to-market person best ZoomInfo know creation our who Last problems impactful prioritize it's content top incredibly ZoomInfo and strategic is to exactly foundation and triangulate our of And Copilot sales and Copilot to need is science, to is teams, a the a how buyers contact necessary who, turns insights what to trying to is built to that, Surfacing that answers to buried today from built platform on a to world-class each those

that in market confidence. at Our update. and solution on our What and set decisions, insights millions thousands constantly who of it's sitting other that those sell of that we data you of data of companies drives is most companies universe of of from validate sets the covers signals personalization AI-ready work top Copilot the robust and that people foundation may of hundreds any on to and those companies, the attributes apart ZoomInfo's tens trusted

dates calls with earnings you of model our that which or some users, and which data. in and engage technology in companies applies indicate technology with the uses to that call transcripts, exist to with advanced proprietary Copilot market, and market inform continue trust expand most and then competitive diverse our activities product differentiated ecosystem, threats takes surfaces vendors and like spikes attributes immediately resolution them in data matching and spending postings the For that why advice. and with and users AI Copilot website signals radius for contract visitors, are we It to already trusted them. should customers' entity in job recently signals, expert the renewal combine most asset our their including how about first-party partner and

You a much price tell can the tomorrow. financial think company's doesn't of sector what do understanding you similarly will to trading this stock about and closing

indicators to financial expert your predict news calls understanding customer many not technical core who is buyer alone next be phermagraphics able need sufficient next product. volumes, market signals signals surround you whether create sentiment, for your or is around other to in order indicators, alpha. when not trading our understand your about It's customers, you're that in to data be. investor and should You for with Similarly, to that only

limits all of from tool the Copilot or significant layered Other be a reasons. static can data. top This that CRM X data classic are on an products Gen problem. software from vendors AI value AI for gleaned faces They

outdated up-to-date content. First, insights and likely and what third, world's drive and the in into the manually foundation salespeople that data, real-time accurate stale inaccurate; ZoomInfo to signals that it's picture have motions. of business Copilot the and modern it's delivers insights it outside limited scope go-to-market full the personalized built lacks and on historically; relevant entered second, publishes most and turns

pieces spend to customers' is them on Copilot market say get More had back same their faster. opportunities per almost can manual across value-added positive. And more activities. spent feedback of fit. nonusers Highlights built sorry, and have of points and total in users ease-of-use, beta research signals users Copilot sellers created results one to companies. hours to that reduced Throughout for at on X/X the we account pain responsible same of best identified the roles on tasks as Copilot been that end-to-end software -- understanding I XX% created, access were buyers users our twice proving beta quarter, confidently Copilot giving time have signals average, identified of by ZoomInfo, our the at their Copilot the compared than include that I'm helps beta. beta and overwhelmingly users XX,XXX opportunities Copilot time of their XX the week, many nearly product

years, We of product into how Copilot, scale. in put at real actually to have delivers our our that have teams shown go-to-market AI and production had AI product models one leading first differentiation for data value with AI engineering and but the

to be our time, tracks quarter spent testing same using prepared ZoomInfo to market. Copilot, and Copilot collateral, the more the At in dialing talk bring team to sales last go-to-market

we'll We to thoughtful who it significant get likely expect to Copilot platform. are out advanced the of out on the first and value way customers a in roll most monetize focusing

forward teams Our motion in lot year. base. go-to-market to I more our in the customer conviction are the bring this our this their sharing learnings upgrade a look paths and have of of around back customers, details and I to excited to the about half

better was promising NRR In expected. traction suggest we business. and trends. than conclusion, to reaccelerating make a we're progress towards enterprise, signs seeing the We're continue that in driving our in stabilization

bring strong differentiated We shortly. market to we're foundation, excited have a to ZoomInfo data and Copilot and

continue committed to ZoomInfo. are repurchase profitable growth, and we to shares We of

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

Peter Hyzer

QX, while revenue operating in income recognition than Thanks, was revenue of $X.XX and delivered were million, up potential with and QX $XXX of we X% million, Retention enabled representing we was year-over-year. stabilized per improvement was we In guidance, expectations. our slightly XX%, share small QX a came $X.XX as of QX, in was based look per has of $XX income expirations of on non-GAAP Henry. of yielding challenged enterprise margin us customers our in among above to $XXX ahead more Annualized days efficiency and GAAP our net $X.XX business EPS signs customers . Revenue ahead revenue anticipated. and mid-market adjusted on focus our to which share. million, billion. deliver

take a the trends as customer to prudent among consider remainder the of year. and continue We environment we different the of view cohorts

full and we guidance our the As a of result, adjusting range are for narrowing year.

early through shares share pool was decrease per we NRR signs this our increasing in quarter, are XX%. small to As renewal the stabilization. pleased to we on repurchases, QX, in revenue guidance share net of outstanding With a basis. In outsized and see anticipated first retention business results reduced an

through XXXX, improvements opportunities improve. a drive move we to retention. guidance our net there XXXX assumes as we that not reminder, revenue to for net As retention believe are And does

with to plus decline continued the for Average success Million saw smaller we offsetting now clients largely more $XXX,XXX those ACV. grow enterprise, the than number of XX% customers the overall clients. dollar-plus largest functionality continue contribute digits, of as customers experience downsell our customers was approximately with in revenue our to more the our while to $XXX,XXX pressure Advanced double with remained operations of other some some and falling and ACV lot. of overall at X/X customers marketing growing below with challenged. gain functionality both continuing In traction

quarter while transportation From downsell experience manufacturing retail, and this and the particularly customers. pressure, continued logistics, an smaller perspective, to software for tech industry industries were fastest-growing

continued during Write-offs experienced impact past were to than in lower we but us quarters, the X QX.

this We deals, motion the are being focused the market. leveraging on our product more headwind split at in of reducing selective lower growth by end

majority a in capture should requiring the clients to pay end card at improvement now effectively. to the are checkout low write-offs smaller of or more We us allow of and via ACH an help drive and which market more credit risky

expense. related As we that in settlements, in of related these X-K class quarter accrued filing in to is action X potential which February, addresses $XX into states. and million lawsuits a We indicated reflected G&A to agreement both entered our existing publicity we the right settlement in in statutes

this outlays -- make to year. later expect We settlement related to the make cash

we signed committed growth and in XXXX in XXXX. at augment are while maintain to support to which to Based and optimize as levels We into early estate allocating marketing a subleasing relative resources sales profitability, we We more and/or portfolio to and gain real needs, as restructuring exploring that anticipate driving as will initiatives and as such, these number leases aim related our AI hiring incurring to current our negotiations to access capacity. potential of charges and we as are well XXXX, ever headcount Copilot arrangements. on options

maximizing focus and market growth driving Our landscape. evolving in remains operational efficiency on profitable the

million, the cash ended the in for interest $X.XX fixed which cash, million representing cash majority approximately income. $XXX approximately and operating the vast equivalents interest XXX% has was conversion which flow quarter in with flow investments, $XX debt, of of we hedged or in and million free quarter $XXX Operating carried We short-term Unlevered gross million, cash billion rates. payments. of adjusted $XXX QX was included

we ZoomInfo repurchased approximately $XXX XX for the stock of shares During quarter, million million.

of shares past X Over nearly ZoomInfo, more of than retired X% the we've quarters, total million XX shares outstanding.

repurchases We drive our cash as the price flow business. our that continue shares we advantage we intrinsic generative our value these are to and confident of will for repurchase return share between disconnects economic meaningful will take aggressively and shareholders, growing of

XX trailing XX months is leverage EBITDA, our trailing EBITDA X.Xx consolidated Our agreements. net is as ratio adjusted and cash EBITDA months in defined X.Xx credit which

of was are delivered were RPO revenue $XXX and With at the respect in the of to XX obligations which obligations, liabilities remaining $XXX performance expected be months. end next and performance unearned future million or QX to $X.XX billion,

With for that, let me turn to guidance QX.

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

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

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

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

growth XX% midpoint at range. guidance the revenue our of implies guidance adjusted from year X% full margin Our operating

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

Operator

Our Instructions] from Ikeda comes Koji of question America. [Operator Bank first with

Koji Ikeda

A here. couple from me

on revenue remarks, lots the the retention. On the bit. you revenue of in side, a prepared net did commentary positive lower But guide especially

we So there something get that anything worse. called you else weakness, guide I about? the SMB did thinking in be know is should but out guys

Peter Hyzer

pool particularly us, in QX something in had So a impacted certainly, renewals a that in, weakness SMB QX. of is we higher or the larger coming as

as SMB pulling selective also be, in. We SMB shift concentration a amount we based deals be within it there also that in new weakness -- to a the business fair more as little the where we're new saw wanted business well on behind being of to

that, headwinds help expecting further of that us around as some of remove the into write-offs second the half get So the we should year.

Koji Ikeda

there, needs Got it. we're contracts, vendors XX% the to a big that renewing in second prior that out attached tech some and recall that lot in still about you've those sometime or And of talked software had calls, larger I were the vendors renew X-year of ACV contracts quarter. to of

that thinking way about should to that there? So is an renew. we still Anything within update there you be cohort any provide could needs

Peter Hyzer

Yes.

quarter. not So of that in second renew the XX% will all

still. I think seeing few clients and feel larger that and few those points certainly, for -- come that the about particularly and those larger solid utilization a coming But percentage customers larger a in we're we're are it's quarters renewal seeing, to good up QX in rates QX, customers. among

Operator

Morgan Our Stanley. next from with Elizabeth comes question Porter

Elizabeth Elliott

lot It like ask interesting product. to Copilot a features wanted on I going sounds on there. the of

in to Is time even going Just give GA the there? model more the clarity look upon in, take you of though of kind of And tougher is environment phased comes us a renewal of something this kind to some raise that a expect more some get you year? in and monetize. do half how to prices back seat-based on and it's this how

Henry Schuck

plan I our we the is from integrations, think our looks so we value usage, believe this who Copilot out sure their see -- make ICP. built -- we first, highest that go-to-market the the will first plan to phase model customers to at a and

so Copilot. going and are the first, to the value we're into see customers most highest likely after And who to likely upsell most

up, around where I or customers an whether in to additional going we're of win new it and to conversion think think upsell monetization. drive been increase we we business, be where And to we the where because certain might think users, that's an and relative on that per a we base have within fewer have rates historically, have biggest that monetizing but increase going be the certain think would Copilot, rates a monetization, flat is seat, downsell. it's value would they renewal customer opportunity to ultimately, renewals in it have our renewals ended

Peter Hyzer

run we've typically Elizabeth, migration we've past. going to -- motions just over say, I years of And certainly, in the -- a couple these was we've

on we So now. still all it's GA, the on longer-term early into more Day in but on we well it base, -- a hasn't based quarter our into as don't uplift potential an in intend it the customer to across now, But as we'll get the to them. further and dig those a the Analyst host view year, come better provide expect view the as to have in metrics we fourth gone even model to

Elizabeth Elliott

shortening into quarter, some and lot you I an that as And green enterprise. of last for a the that You highlighted QX? sales just update a continued of believe it. other on Got something to curious Is QX. quick cycles mid-market talked in the period. more follow-up, cycle shoots sales But

Henry Schuck

We in sales consistent. stayed quarter, it didn't change the have link cycle any in

Operator

Our with from question DJ next Genuity. Hynes comes Canaccord

David Hynes

couple I on Cameron, just on retention maybe ACV cohort. mean -- dynamics. a improving focus to your for I want you. I appreciate commentary I plus that

that I think a of little absolute the you see quarter. to did. said it straight Was surprised the by in of as much as was light number customers declined it second

So bottoming? would answer. that then question X cohort is, And in question know do nicely. it's X sounds you question be grew to a ACV the like I see it that hard

said XX%. you think I

takes super talk know nicely. little bit Is a and Is growing Any with functionality? advanced Just I about the what's puts operations new personas. there subs would that? color be it helpful. said you it driving

Peter Hyzer

Sure.

XX grew nicely. $XXX,XXX downsell and respect off continuing see are to their whether that customers $XXX,XXX really pressure. in even that as larger are, falling over system expiration to and we the still the we negativity out the plus. So smaller we growing the large -- that's to those customers, there face are peak they're that's of have XX% with or enterprises were we just larger leaned And that the some extent, people There of of layoffs customers. that laid But still subset last number see the to over $X pressure, into there What million-plus a or relative are we to cohort. budget XX cohort the and a serious really that months and forth. a they've customers. continue so that number customers have think that is experiencing And ACV the level are those, of obviously, but for lapped, growing of are the cases, a mid-market

we've as quarters. the So that, we pressure as last significant going over that won't forward X be seen or X feel

Operator

Our next Mark Murphy comes JPMorgan. with question from

Mark Murphy

see been definitely we've not noticing many Henry, companies there. demand like are So real recovery a that software for months out hiring they simply

growth why the are different of think the in lean of way phenomenon? attainment, would how be. very growth And commonly, the hear extremely explain might if on I now we so below head lot I they're software and would reaching But a the it's is just quota companies I'm revenue software unusual and seeing if on -- Because assume conjecture would count that reps in hiring. industry, wondering, kind that you we think

So that wondering is you quick else then And just follow-up. have or I'm if going a I on? something simple it's think

Henry Schuck

in go-to-market productivity about I think the is today. world there all out

And full the at added saying businesses. so unit XX teams. question management people? people, I I shift they're people growth, Can with get economics my are And and if the so their I Can looking across about generate can And their account is team? more within I people of, the the same productivity way thinking asking drive Are less I there fundamental the this just are revenue executive, drive in more of of do could a -- XX instead leads account they capacity? amount? additional

through base, so not want base, seats this I the And customer we're ACV number real of having expand to functionality through without our And us opportunity to but less. by question, of do a gives seat with expand that's expand to Copilot that where in count. going and mentioned to that's one customer in they more happening last on happening things our where the --

might people opportunities been ACV keep think where flat. are in in expand their there been less to down opportunity We think flat, it because so where we an sell have organizations would organizations there's just have that hold And to to there licenses.

customer that on base, use a I there the but focus is in And as real productivity. a think opportunity we're going so to

Mark Murphy

Yes.

is then very Copilot, ask seller this strong AI week it's I software, Henry, well the layer very But seen the then, heard because just we much across to all said. a did application minimal. at generative side to seller. been want intriguing haven't monetization we've flip it's you good feedback And and turn Okay. is a very into

on a want for assessment it's you just of an very like like that going gave based it think going be driving a understand, compelling giving some like a of while I Do before -- to lot them -- application differences. take to to is X% is because instance. you tailwind, So a outlier companies, feels there's ZoomInfo their Gen AI is

Henry Schuck

And think our back across think look, ability I contact baked I our I outside fit, so it that. I half because a of this to segments where outlier company we've fit time it's of with been personally exactly data. product think industries. ZoomInfo going be market going this monetize our and think be customers, of do dozens than I it's Do And and the it. don't question that do longer of core -- as from a we I is have to close a in solutions? product to think an will AI lot pitched Do has to take all through element I Yes. to No, across I confidence have that the up XXXX been Copilot ever all generate in way? into shows

confidence I to the enthusiasm of it but to turn amount be able we're tremendous expect also going monetization, a in happen have I over that to so time. that And

Operator

Jackson Ader Our with next KeyBanc. question comes . from

Unknown Analyst

down downmarket think they there is people The macro than on one I'm to the does do maybe cohort. first competitively just Or is with something clicking that environment curious, that button? SMB rather go can else pressures? -- is the where have is weakness, happening somewhere market more ZoomInfo

Henry Schuck

It a Thank market. a for much We're you effect. seeing down of effect macro Yes. fundamentally competitive more than is the question.

seen we've to competitors. material change from Specifically relates an as increased or landscape it to our a not in competitive the competition, business impact

quarter any about particularly where is overall haven't had win or win-back competition business increase performance. then concentrated. record rates in And either seen just SMB another pressure the new Our most we our of

how really how this So good quarter. And we as about competitively. feel we line up with good show we Copilot out roll especially about feel we really we we -- it up

Unknown Analyst

guess, revenue you just Okay. much much mix either, a today? quick How Henry actually consider for comes would Great. SMB the give for how And a for what -- can I follow-up, sense Cameron. you, from then us of you or

Peter Hyzer

Yes.

right of XX% So the X/X. business the mid-market XX%, is is enterprise at rest business. our is below a of little up And SMB still that. around then making

Operator

question with Wolfe Zukin from Next comes Alex Research.

Aleksandr Zukin

are Or anchor maybe for question is that versus when X enterprise rates going mid-market. back of through as roll stand in could or about renewal negative kind retain there on where market SMB the pricing? guess I win that's business difference to spiral the to in comments appreciate fully they But aggressively I And new just And on discount you you're those about backs. you each for the currently mechanically, something the what a the win the the growth the versus then get more in cohort, year? rates either and potential of just walk win seeing to just instance, specifically, through? businesses having Can the the maybe SMB in And does kind place. business? worse? of Henry Like

Peter Hyzer

think was taking that mid-market kind acute see stability done due where did has really We Realistically, I'll they've XXXX, Enterprise was as of we're So challenged, going between in done but pretty continued they've the the see to particularly we saw quarters, on with as it I'd customers that cohorts. for first on group was I in to went through solid. world, the the that with. start the downsell seeds the overbuying we historically. early growth through either software and or us different been pressure rates say Alex, 'XX through layoffs side out

XXXX, as that we we through basis we the stabilize. absolute across SMB on went through end we've As in actually last SMB seen change was that that have came a held year for like QX cohort It mid-market down . see few But seen discussion more to in a the trend. well period. in does the months. of the over feel but is higher that we've certainly really to an rates the reasonably QX, sensitive in and longer QX, started

companies the lot if a tunnel. a the end kind pressure. they're light at seen and the of to changed, were that's those more we've think And for environment, hoping I of real sensitive of

think pricing a more let we the I'll saw I question. So that else. anything that's in address QX Henry change than

Henry Schuck

competitors the building SMB at segment of is data, One innovated customer thing, innovated is innovated Inevitably, from lower on a look we It's we And the down a innovated as go-to-market large we've into spent a they just that and they that around we motions cost. they their And built much base. motion that PLG PLG product motion price no that. Alex, and been There's grow low-end last one them they lot anywhere that buyers. sell is come PLG can where time software. upmarket market, have we smaller the they place the haven't on innovation. then point our year, up not And over and that lower they haven't our seen for on of behind happens haven't attract were with on have motion. customers, what to

then lower grow that And with so over versus that where at us cohort difference PLG comes has time. been pricing this in there quarter historically and price has been a in a

Operator

Wells comes Securities. Turrin next with from Fargo Our question Michael

Michael Berg

angle this. asked in Turrin. the I Michael And a -- Really is a but want color there's a take on on on of here. different different earlier Michael I lot the call know been appreciate for on Berg to This questions this, NRR

look rest the Is the about second to products enterprise NRR help the can rolling the how we the rolling key towards weakness half you here? does As rate? year, in strength, maybe year, particular, NRR think of us SMB new drivers improve from improve out, what off, understand potentially the of it

Henry Schuck

of a there things couple improve that here. think I from that are NRR

the customer then base. innovating -- roll about it's ability users about new is, one think NRR, products I that we're we to and renewal you into about rate or think out upsell it's when our

our we mid-market. seeing in And an improvement rate so enterprise renewal that We're a renewal cohort. from in rate are seeing stabilization perspective, in

we've So we seen QX. feel those continue trends into like --

that continue year. back through the that of can think that's we the So a trend half

And NRR. up That so stay rates continues improve. renewal if continues to to drives and stable

we'll We product That that should up with NRR well. drive Copilot have the base. as take customer new into the

renewal between make a think things we I can into products impact. rate that big base, the and X improved customer those sell

well. We increased an have up -- tailwind that also, coming contracts year mentioned, expirations this that a of year and that be Cameron will us to element as as last multiyear there's

Michael Berg

one And Helpful. it. follow-up. quick then, Got Cameron,

even can deals talk you over or mid and quality think on time? selective time be you above to base Like cash terms of in over As the SMB more take about there from we free XXs about of conversion this we the flow customer improves? XXX in high about the cohort XXs as think benefiting low could going the back

Peter Hyzer

lower to smaller for And the is certainly, customers upfront of kind goal our quality or in more largely lower taking write-offs. those payments

world driver a our time. edges. where But in bigger be happens us write-offs, So have conversion should help flow flow more the I the efficient terms we're frankly, probably where that that of The think dedicating realistically, will around ultimately cash be improve of us and, certainly, cash reaccelerating that's fewer that in growth. something we

revenue where upfront into conversion that proportion bigger push ultimately to higher, is growth back double-digit would based the into in higher a just based on our get so fact world, that. even reaccelerate able and cash or that And mid-XXs that coming we're of on flow growth

Operator

comes Bank. Zelnick Brad Our Deutsche next question from with

Brad Zelnick

prepared to with have the like the bridge Can specifically? business, sense of good full where sounds unpacked from that coming prior lot how the guide. there and I year you remarks sounds enterprise. you and see -- maybe actually pretty I some help it perhaps guide. the questions where like up downticks, been when that upside from it could, you asked, it's have you us stabilization and about Cameron, the think help guidance I any because give it was ahead, for to of some already like a to your a came any small greenshoot feel updated with in even But think But a if

Peter Hyzer

-- a in saw And during and of the trend continuation certainly, we was QX, mid-market Yes. stabilizing. that enterprise

at expected, that our QX. to rate change of small in coming going forward. then and came run level a some we're was we seen historically, expirations trend. that that The in obviously, than assumptions in in business of And a adjusting that but obviously, in cohort. QX, we've big was was much think trend the worse impacts ways out the obviously expecting just was I real are stay because And on that cohort

expirations that only not a big year. So the small the of QX course in while expirations during businesses, it's the for have of we pool that's

pressure -- assumptions in under environment had underperformed year. the our of adjust -- the the Certainly, as of our of than think the well that And we the that, as continues through beginning the we're that what forward. that forward, going businesses we a So combination at cohort QX year. as terms big in assuming tougher of that, that set guidance assumption going reflects I small

Brad Zelnick

And you, maybe Thanks for color. that's just helpful confirming, for Henry.

in think your a theater. competitively higher we that ensure dominate that in we it's for that it's you market, got the and integrations, we cyclicality software Anything characteristics, high do to of once about really to chances the that offset SMBs, there whether selling you company in segment. can that do can naturally you're really segment. be you as that As to as that environment, improve the into for go-to-market priority to going past that's every could you're different -- about possibly like what you could structurally know churn get you that partnerships, anything can anything SMBs what to help Is obviously help the do do segment structurally

Henry Schuck

sell business and Yes. space. pretty perspective I'm Look, every new more new one, in the far I perspective a number combined from a far competitor sure think, we from more renew business and

share here. so we're losing And not

I you running been that out They're largely think busy. value of are the one of. at I dead platform about a businesses. to that's is has customers is small our think not of. a And perspective that had from a ZoomInfo churn platform thing SMB initiatives hard simple tackling the number extract go They and pull are out information

having a one that that ICP ZoomInfo to about sure AI their to from that lenses they'll a we with built customers make And moved CRM in the what understand Copilot at sell push was to them interested understand they care the them best customers ZoomInfo, their that understands complex system around best or to, buyer choose their pull they'd start or of -- understands them data that then platform so system looks and the one the the that platform, be we with made customer immediately customers. base auto most or in them software delivering a delivering and start next learn for is to intent next without their who configures their define their integrate then committee they value topics

And directly so rate. with significantly seen who that's we've and our customers utilization significantly in engagement co-pilot as that we our And that increases correlative improve and for that renewal improved. utilization data engagement think SMB, Actually, are the customers.

Operator

Brent from Bracelin comes question next Our Sandler. Piper with

Brent Bracelin

back broader year-over-year. durability digits weak. of you in trend. seems enterprise been environment. wanted seats like this to weaker. be can't which Can double a is I into did to that expanding seems growth actually I industry imagine for enterprise Cameron, getting I the get business, It's the essentially SMB while, grow much go weak that It double-click to are

DAS? durability consolidation? all it me enterprise mix through just Was of to to it that. was the Walk growth so And ACV vendor shift and tied

Peter Hyzer

their material DAS of higher And more a of mentioned That largely business. point being those about looking that. a mix building in becoming teams based place to it's enterprise where efficient we you is to product there certainly, the gas is think customers part a more fit a I customers insights on the is their that DAS enterprise optimize is are spend, And data an after. people real seeing as and or going good make tools mid-market. like to building at of And big certainly, end before tools least also, traction. the high-quality of like and Henry's sales more and DAS they're

in that AI I so enterprises this those investing as investing make that And projects that recognize high-quality in data are either input think to order need a them successful. an automation or do lot into in and is of they

So that's it. part of certainly

of The in of in frankly, still the total enterprise, available. terms other that the we're seats it, fairly part underpenetrated is

a lot number there So on that enterprises there are -- that piling of I don't think the seats. are of

looking looking rid are But people frankly, companies lot a additional for and places, of effective teams. still still we people see In helping efficient efficiency they're make a laying fact, and other where for in you teams to more to those in those drive within getting of off. when for they're in additional enterprises certain we're value -- pockets still order drive place

Brent Bracelin

I indirectly this get on there. now. business the optimization for next layoffs X of and want higher DAS towards a color a the Henry back move you relative had can pricing where more We've tech copilot won't could more that. software Is environment I sales fees, above there be what in overhang Copilot narrative. monetize? of layoffs I platform to a drive Copilot why to then Helpful monetize And now we -- on But kind uplift. is very to years same year you, for from the different huge just environment. to from go move drives productivity seat-based and away level It rates top plan be efficiency attach a

seeing through and and Just these think not you're me clear just that trying not? can to uplift to it's environment Copilot changing an out provide actually sentiment there if or

Henry Schuck

things them thing the the you start out "Oh, and across like Copilot to you we've this. something build that we would be really would years, need about talking wanting to exactly the for build what trying one Oh, of last here like, to X been enterprise, been mid-market think hearing we've I've build." upper interesting the seen end that that show when I

accomplish. so every and enterprise upper we mid-market to opportunity And business dozens have would that deliver to for try throw what of years a to developers real

pretty poorly. to avoidance it internally software And monetize so driving, of build and can uplift, of value we that also I think in but having that the of both productivity probably from we're build type terms the

Operator

comes next James. Our from Peterson Raymond Brian question with

Johnathan McCary

McCary This on for is Brian. Jonathan

kind you seeing we're business? spoken sort to you the side? Maybe new Or So verticals? of strength non-software more the would I in characterize in that to guys little would Or environment that mirror the there in more the on the previously. specifically NDR broader you trends what a how know characterize how of have the is demand non-software verticals?

Peter Hyzer

certainly, last And at technology software the significant we and as XX under have months, pressure. look been

the the significantly. an overall down those that absolute growing more like more well and obviously, mid-teens that, or cases, segments you retention dollar retention retention on overall businesses, above grown within basis are that net that have them net or at at than that the You as the the well. businesses of logistics. in retail if of Obviously, look that even Most nontechnology non-software is that's below some see level have. would those kind means average company also And net year-over-year tell you well for transportation and a just businesses math we

it, gone call model March throughout we've the the and where through a of of they beginning XXXX. changes or that ending businesses, that year have operational put through operating at customers lot of So here, I XXXX digesting the end replatforming think a been our software software

is of now digesting model subscription that. all Our

that better little bit And mid-market a businesses same decelerated particularly dynamics, have more? significant have stabilize a think so driving of do around they software that the the opportunity, those rest because there's But business more the particularly in that is I to among effectively profitability the larger didn't amount. you the and companies see in software

Operator

from with Citi. Radke question next Our comes Tyler

Tyler Radke

SMB obviously, that you QX? that first what the implies the environment, driving guidance in of quarter year. still month as pick little up acceleration? what's relative how bit, has Cameron, it or down growth but seen the in to half Can year, the on look it's saw you for in guess sequential I the I at us second remind to just trend the full come the sequential so have you And second a

Peter Hyzer

Yes.

were are So the that fact year in certainly, that we're and based largely see acceleration half expirations second to QX the QX in than that. the before they QX QX and on is the our much smaller in going of frankly,

And customers. business have impact expirations, the on So number the downsell revenue and a as bigger provides obviously, to that of the we're less opportunity new a will through. lower go therefore, among continuing drive for we upsells our number

we of kind as board. that, across very comments. at on true that's And the so mix, April, the retention look see much was trend frankly, we And those for

and we that. So with we the course to already see smaller new the exploration that for continue success and feel that on sales is upselling

Tyler Radke

follow-up was you, for in Cameron. I going a just to sneak

As we look bottom about the again also at there? the trajectory you're question start the us for year, rest see the to just a similar do bottom that on remind thinking and how $XXX,XXX And a NRR, grow to the of you certain customer can point? at add? we when Should expect

Peter Hyzer

Yes.

pressure perspective, from smaller of the in customers that the among are customers. of think terms number I we feel the real $XXX,XXX So

and and small pressure, to budget operating are some there. in maybe That internal their pressure or layoffs above have whether or customers level just So be -- that's $XXX,XXX that changes businesses downsell mid-market the continues even model. that spending

terms of in through XXXX. of gotten those But had fully very it, haven't cohorts that in, peaked call We gotten big some layoffs we've certainly, through customers. all early

stable certainly, levels and much. retention mix there's bit the significantly the we numbers. some down see So or actually the being for ACV -- little that we enterprise a that But shift. stabilizing. by perspective, see continue of those the overall customers That helps not and least cohort, smaller at as And see losing grow think certainly, up From a to we not because customers. overall do as make opportunity very go to larger also eventually the in pretty grow we of more retention mid-market much for among that

move customers forward continue feel like place to that's the does where second half it into as of multiyear of off can grow, So build frankly, we a also which And year. the we the larger well. as are and the is that multiyear to larger customers shifting helpful customers well, we do mix towards for which those obviously tend retention be a is customers the reflection as of fact

does is where we opportunity see assumes but So of do that that, that not underlying . improvement improve, trends a our there. retention for we guidance number think

Operator

comes Our Josh & Needham Company. Reilly next from question with

Joshua Reilly

about was quick for to was marketing for about sales here. the spend the a both here, on know marketing, And quick We that existing new guidance? below. was the and thinking questions a I this now you're then discussion was how broadly updated quarter to customers. X how above sales by the out motion. healthy PLG R&D balance rolled curious my estimate point the got Curious income of year and relative just I talked before. of that and amount operating while I is

Henry Schuck

I it come it cohort PLG leads I Cameron second a can think that the The If into part PLG in, turn and define a then is take part. our we how -- I as free come you on one of purely trial, a self-service, PLG. website. On PLG customer. PLG, through depends get limited That about -- is to our

if customers. capability So to paper it's paper we're to is OS not as and open our talking of manage is about available ad the and spend all that -- to any marketing renewal, user ability users your invoices, upgraded it that

Peter Hyzer

necessarily selling that as we going the in on certainly, of Copilot recur move blip QX also forward. we operating marketing the But There kind little on that some marketing, from and are we and created expense things we pay a marketing we're second won't around and are to really then taxes taxes half sales to stock perspective, sales and around a an continuing as invest marketing. and of go And year. one-off payroll in into be comp bit focused of to how related sales

have on bit the initiative. want will developed, something there. that that that's functionality happens there's we copilot be more So a team in. that invest the we R&D really focusing on new based to being to And the capitalization R&D continue been

not you're think model prior I capitalization in may probably just at So the trends. everyone's incorporated looking that have been if

Operator

question Our comes from Raimo next Lenschow Barclays. with

Raimo Lenschow

the the competitors whole of private. the question. like what's you that kind and impacting specific, industry playing think it's you, Henry, maybe more market so is the to you but The at where in. that is will in happening back are moment, like, kind reemerge the industry where I'm at lot nothing moment it's of of into the What -- do do since call, like guys you And are, look your at a of high-level a how obviously, you impacting of your you're that's because customers see terms if

highly kind very you're well profitable. So of funded,

how already? out? that do competitive that do what stated see And think playing in has you So you situations there already, that's

Henry Schuck

market, think, we to Look believe I bringing future. -- I on a continue Copilot for future. Is going a very build No. be first, going the today build first a we of be think top all, foundation taking we're can durable of to we're building to And products our going build the great that and and the approach on. AI we it's It's which last build? to foundation the product to to

what asset be and it less asset while we're go-to-market every layer to data, and to go-to-market team important understand AI easier becomes years much if around of our the building in future. to use more with then and from our software from a and our at our today data generative the think look more easier it's the understand I now. But solution it proprietary insights, data becomes our I generative to in application to core AI every important becomes years in future. look core valuable our XX and a And less world. around the it's build will case space, at X and lot solution look now why because it's easier why and much

see who where in more built the And much I the that think the a build that incredibly can on data providers generative AI by I high-quality and are providers flywheels application networks can the universe gather data so solution core of. a respect, top -- company easily software data to than have layer, disrupted AI -- every you and can

And layer there confidence think future we're so is disruptible. application we a have around more building and the what of the lot and

Operator

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

Rishi Jaluria

And guess, with to purely to is were going? talking past without is of conversation having And there being to a, that given keep understand, back not I'm a can PLG one, down engage the around of adoption go received? And me conversations self-service least of guess, had, path selling competitors. on amount that case, us there customer us I'd in I is follow we're just purse have it how paying a help we're help we've motion that given especially deeper sales a the salesperson. this understand, traction? even resources, time. your very guess, be Maybe How the necessarily I ZoomInfo I'll to I you that Henry, number it motion. how high could match is become it dedicated very, it b, customers going that one, ZoomInfo at a kind comes help of would contribution at in friction to some lot in that, without of certain isn't great. a why margin. that

Henry Schuck

in number the we of from -- increase a that motion. have and bring customers access The PLG that accounts

than software that the efficient that incredible built sales-led Now also more anything see in an there at we've far you'd motion ZoomInfo marketplace. believe out just broader we is about

we those most PLG going PLG optimized leads that motion, to through served best through be the to that a are we're When when so And leads think there through sales-led we going motion. that think we're will motion. sales-led the come the push leads motion, to are are there push to

and to sales-led we've we're a I from that tell business to is over going motion. get leverage and what where optimized have deliver continue what perspective, one to and goes we're so market into into going But going better think time, to actually our And internal be if more X that if the models new where going to more ways more think we're a internally PLG to go we'll we us going or goes motion. each lead always we're we on PLG to our seen

Operator

comes with JMP. Pat Citizens question next Our from Walravens

Patrick Walravens

notes SMB. Okay. in Great. Shifting to other

team. your So I publicity and kudos questions. you to of the Two Anthony class was to settled actions, see delighted Henry, legal right

impact question resolves your it So And that the changes sort the making community any there it? or result? you to others second as any a SMB? states? states. PLG direct does any other for is, claims in And are repages new motions Or for of that Are X in of then addition the is plans the

Henry Schuck

-- community those minor in to states but Pat. these states, of a good Thank where us. either. There there that claims changes the those are anticipate are pages from community Yes. These any all our PLG you, perspective feel are don't or perspective putting handle behind we so issues about for causing will from really we a us

Operator

conclude showing And not for your time. this I'm any conference. participation. questions And at Thank also this today's further you does

disconnect, wonderful may now and You have a day.

ZoomInfo (ZI) 7 May 242024 Q1 Earnings call transcript