Zoominfo Technologies Inc Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Alex Zukin - Wolfe Research - Analyst : Congrats on navigating a volatile macro environment. So maybe, Henry, just the first question, why now on the change around the name, the ticker the category, what's making right now at the moment to kind of go double down on this motion? And maybe what are you seeing from the changing conversations as you're having with customers that you're renewing, particularly upmarket that's driving the acceleration? And I've got a quick follow-up.

Question: Alex Zukin - Wolfe Research - Analyst : Makes total sense. And then, Graham, maybe just one for you on NRR. Could you maybe just bifurcate that by what you're seeing both upmarket versus downmarket? And then is there any sign of improvements in IRR from here either in the guidance and kind of what you're thinking and seeing in the pipeline and renewal activity for the year?

Question: Mark Murphy - JPMorgan - Analyst : I'll have my congrats as well. I'm curious where the Copilot ACV might have reached in Q1. Was that something that you mentioned and/or any thought on kind of overall glide path of that ACV stream for this year?

Question: Mark Murphy - JPMorgan - Analyst : Okay. And how do you feel about this earlier-stage Copilot rollouts? Because I think commonly, we've seen with other Copilots and agents out there that companies will run into some hurdles. You're trying to understand the security policies, looking at the governance and the data retention and sometimes they're encountering some buggies. Are you seeing any of those typical kind of speed bumps or does it feel like it's full steam ahead?

Question: Elizabeth Porter - Morgan Stanley - Analyst : I first wanted just to ask a little bit on the expense side, just given the better top line, but operating income and free cash flow guidance looked like it was pretty unchanged for the year. So just given the continued shift up market with better profitability and better top line in the full year target, is there anything to consider as it relates to investment priorities that may be limiting some of the flow-through? And then as a follow-up, just as you leverage your own tools, could you speak to the internal efficiencies that you're seeing and how that may be reinvested or pass through over time?

Question: Raimo Lenschow - Barclays - Analyst : Could I stay on that topic, please? You talked about the extra buffer where you kind of put it in -- if you think about a downturn or like kind of tougher times in selling, where did you think the issue is going to be more on downmarket that there you had already like quite a few years of issues or more on upmarket? How do you brace for that?

Question: Raimo Lenschow - Barclays - Analyst : And then one follow-up for Henry. Obviously, in the front office space, there's a lot of talk on agents, Copilot, et cetera. Like what do you see in terms of customer understanding of where the different vendors with the different offerings fit in? And what can you do to kind of improve your spending gap? Thank you.

Question: Kash Rangan - Goldman Sachs - Analyst : My question would be with respect to the new emphasis of the company, go-to-market, Henry, which I can certainly appreciate, what new budgets can you go after with this new positioning? And what are the new terms you can go after as a result of that? Now so moving upmarket is laudable, but it's also higher cost of acquiring business. So as you move upmarket, what is the trade-off with respect to profitability that you might be making investing in new markets, new enterprise customers, new distribution can be

Question: Brad Zelnick - Deutsche Bank - Analyst : It's so great that you guys already here in New York. Nice to see the upmarket momentum here in Q1. I've got two questions. Maybe first for Henry. I was really intrigued by the Intuit relationship that you talked about. I want to understand, is that specific to Intuit Enterprise suite, their upmarket product? And can you maybe talk more about the economic relationship, what this can develop into? And how many more such relationships are out there that you can go after? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 12, 2025 / 9:00PM, ZI.OQ - Q1 2025 Zoominfo Technologies Inc Earnings Call

Question: Brad Zelnick - Deutsche Bank - Analyst : Huge opportunity. If I can follow up for you, Graham. As we think about your comments and the forecast that you put together in the conservatism, the embedded caution given the backdrop. I just want to be clear that in terms of close rates, pipeline build or anything, average discount trends, is there anything in the last six weeks here into Q2 that you're seeing that is informing the way that you think about the forecast? And if we think upmarket versus down market, is there one versus the other that you're perhaps more concerned about?

Question: Brad Zelnick - Deutsche Bank - Analyst : Just thinking upmarket versus downmarket, if there's one or the other you're more concerned about as you look to the remainder of the year?

Question: Jackson Ader - KeyBanc Capital Markets - Analyst : Henry, on the upmarket growth, how much of that growth is coming from some of those customers that are actually hiring sales reps, like adding new seats to the platform?

Question: Jackson Ader - KeyBanc Capital Markets - Analyst : Okay. So I mean, would it be fair to characterize it as like sales hiring is not yet a tailwind for you guys at the moment? Like it could be kind of upside as if things improve through the year?

Question: Jackson Ader - KeyBanc Capital Markets - Analyst : Okay. Okay. Cool. And then my follow-up, on remaining performance obligation, when should we expect the growth in those, whether it's total or current, when should we expect those to kind of more reflect what you're seeing in the upmarket motion?

Question: Brent Bracelin - Piper Sandler - Analyst : Graham, I wanted to double-click into the downmarket business. I get that you're seeing a good healthy acceleration upmarket. But the downmarket business still looks like it's a $350 million ARR business. How much do you think that business could contract? Do you see that contracting for the next year, for the next couple of years? I think it makes sense to focus on that market, but any color on the duration of that business and how it contracts over time? And one quick follow-up for Henry, thanks.

Question: Brent Bracelin - Piper Sandler - Analyst : Totally makes sense, kind of more of an 80/20 model. And then Henry, for you, the company's generating over $100 million a quarter in cash on average here. You've done a dozen acquisitions over the last 10 years, really helping kind of reposition the company. What's your appetite to do both buyback and tuck-in M&A? I love to get your thoughts there. Thanks.

Question: Taylor McGinnis - UBS - Analyst : Graham, one for you. So when we think about the evolution of NRR this year, how much of it is an improvement that you're seeing in the different customer segments starting to emerge to those specific NRRs versus mix? So maybe you could talk a little bit about that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 12, 2025 / 9:00PM, ZI.OQ - Q1 2025 Zoominfo Technologies Inc Earnings Call And part of the reason I ask is, as you start to lap the SMB go-to-market changes that you made, I guess, how much of a tailwind could that be to SMB NRR and therefore, the total to -- and then to the extent you can share what NRR is being baked into the guide? I think that would be helpful as well.

Question: Michael Turrin - Wells Fargo Securities - Analyst : Appreciate you taking the question. It's the second straight quarter we've seen a pretty good consistent top line upside. So I wanted to spend some time just on the commentary you're making around incremental conservatism in the rest of your forecast. Is there any more color you can add on which inputs are changing relative to what you're assuming at the start of the year? And maybe any added commentary you have just around the visibility into rest of your targets, at least on the upmarket side? It's just helpful context as we roll it all together. Thank you.

Question: Brian Peterson - Raymond James - Analyst : Congrats on the quarter. Henry, you've mentioned a few times that you're extending the roles that you're addressing. I'm curious if there's one role in particular what you're most excited about in terms of incremental adoption in 2025? And maybe just remind us, any sense of what your seat penetration is with your enterprise customers?

Question: Austin Cole - JMP Securities - Analyst : Great. This is Austin Cole on for Pat Walravens. Henry, I'm wondering about the kind of genesis for this new chapter, the ZoomInfo story, if you will. When did you start coming up with this larger go-to-market vision? It seems in some sense, like a kind of natural evolution of the platform. But wondering if there were some maybe potential buyers out there that were inquiring about these kind

Question: Surinder Thind - Jefferies - Analyst : When you guys are thinking about kind of the pipeline and the idea that you're excited about what you see in the upmarket, can you maybe talk about the mix itself, copilot adoption early on was primarily newer customers? But it sounds like the increase in NRR at existing clients has been a more recent driver. Just how are you thinking about the different -- those two cohorts and kind of what's ahead?

Question: Rishi Jaluria - RBC Capital Markets - Analyst : Just one for me. I want to go back to the Q2 revenue guidance and maybe unpack some of the set of assumptions behind it. You saw in this quarter above 1% days adjusted sequential growth, your guide calls for negative 4% base asset growth on my math. At the same time, you are seeing improving momentum up market. Your comps don't get -- aren't super difficult and you're seeing success with copilot as well. Maybe just walk us through kind of the set of assumptions you have behind it, how much of it is conservatism because you're saying the guidance philosophy is pretty similar as before? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 12, 2025 / 9:00PM, ZI.OQ - Q1 2025 Zoominfo Technologies Inc Earnings Call

Question: Allan Verkhovski - Scotiabank - Analyst : Great to hear retention in the software vertical improved sequentially for the fourth quarter in a row. Can you just go a layer deeper on what trends you saw in this segment in the past few months? And can you update us on how this vertical is impacting ZoomInfo's total revenue growth?