Zoominfo Technologies Inc Q4 2024 Earnings Call Transcript

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

Question: Alex Zukin - Wolfe Research, LLC - Analyst : Hey, guys. Congrats on a solid quarter. I guess maybe just, Henry, first one for you. Just a sense for trends in both the SMB and the enterprise as we kind of exit the year and the pipelines that you're seeing, maybe tech sales hiring. And also, maybe just from a financials perspective how we should think about the growth rates of the two segments embedded in the guide differently for the coming year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 25, 2025 / 9:30PM, ZI.OQ - Q4 2024 Zoominfo Technologies Inc Earnings Call

Question: Alex Zukin - Wolfe Research, LLC - Analyst : And Henry, maybe on that, with everybody talking about AI agents, particularly on the go-to-market side, I think you guys talked about how it led to increase in close rates for you. Maybe just give us your perspective on the state of the world right now, and how key role you play in that ecosystem increasingly as we see here.

Question: Elizabeth Porter - Morgan Stanley & Co. LLC - Analyst : Great. Thank you so much. First I wanted to ask on the Copilot ACV. I think you mentioned a lot about new customer side and the focus to transitioning the installed base over is going to come more in fiscal '25 and '26. So I was wondering if you could just help us understand kind of that path to migration. Will these be more pushed upgrades at renewal or opt-in in upgrades? Just anything to help us get a sense for how quickly the installed base can start moving over to the new platform. Thanks.

Question: Elizabeth Porter - Morgan Stanley & Co. LLC - Analyst : Got it. And then just as a follow-up, I wanted to touch on the NRR improvement, really encouraging to see that tick up to 87% from 85% over the last couple of quarters. Could you just unpack some of the drivers from the growth retention side versus the expansion side? And how we could think about that playing out in calendar '25, as we start to get the benefit from migrations and lapping the new business risk model. Thank you.

Question: Jonathan McCary - Raymond James & Associates, Inc. - Analyst : Hey. Thanks for taking the question. This is Jonathan McCary on for Brian. So just getting into the 2025 guide another way, I know you gave some commentary on the NRR already here, but what do you have built in the outlook there? How much of that is still reliant on mid-market as the primary swing factor for NRR versus potential upside for migrations?

Question: Jonathan McCary - Raymond James & Associates, Inc. - Analyst : Got it. And then on the Copilot uptake, it's good to hear the new commentary on the ACV there. What are you seeing in terms of penetration with new lands. You've said that's mostly new customers? Is it -- how close is that to 100% attach rates when you land a new deal? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 25, 2025 / 9:30PM, ZI.OQ - Q4 2024 Zoominfo Technologies Inc Earnings Call

Question: Jack McShane - Stifel Financial Corp. - Analyst : Yeah. Good afternoon, guys. You've got Jack McShane on for Parker. Thanks for taking the question today. I'd be curious to hear your guys' thoughts on DeepSeek's potential impact to your business. It was reported that you guys are leveraging the R1 model within Copilot. So I'd be curious to hear how that may change things either on the cost side of the equation or maybe some potential performance improvements as a result.

Question: Jack McShane - Stifel Financial Corp. - Analyst : Got it. Understood. And then one more quick one. I'd be curious to hear the characteristics of the $100,000 cohort. And when I'm kind of parsing upsell versus maybe you seat growth, how does that $100,000-plus cohort kind of compared to the rest of your guys' customers?

Question: Michael Berg - Wells Fargo Securities, LLC - Analyst : Hey, thanks for taking my question. Michael Berg on for Michael Turrin here. I just wanted to double-click on the NRR, in particular with regards to the seat dynamic. You talked a lot about upselling Ops and Copilot. How was the seat environment looking -- I guess, in particular, if there's any difference in the upmarket versus downmarket as part of that equation? Thanks.

Question: Brent Bracelin - Piper Sandler & Co. - Analyst : Thank you. Good afternoon. Henry, I wanted to go back to kind of the $100,000 cohort customer. I think you added 58 net new customers this quarter. That's the most we've seen in two years. One read outside looking in is that maybe the worst of the churn for those software traditional customers is behind you. Is that a fair characterization? And I say that because a small software company could actually spend well north of $100,000 on the data, because there's such a dependency around landing new customers. So walk us through that outside looking in thesis, is that correct? Or how would you frame the momentum you're seeing on that new?

Question: Brent Bracelin - Piper Sandler & Co. - Analyst : Helpful color. Last question for me is on pricing. Any delta relative to pricing in upmarket versus pricing in the SMB. Just wondering -- I know SMB's pricing has been aggressive for a while. Are you seeing some of the aggressive pricing leak into mid-market, or that's just not happening?

Question: Kyle Diehl - KeyBanc Capital Markets - Analyst : Great. Thanks. This is Kyle Diehl on for Jackson Ader. Maybe just two quick ones. When we think about the competition upmarket, are there any different puts and takes you guys could call out that you're seeing further and further upmarket versus even maybe the mid-market and particularly with those Copilot-first deals?

Question: Kyle Diehl - KeyBanc Capital Markets - Analyst : Okay. Great. And then Graham, maybe one for you. I think that you've kind of called out a couple of times here at the discounting of downmarket for the '25 in the guide. What about as we think about '25, just overall, maybe how the fourth quarter play out from a macro perspective and what you're anticipating when you're putting together the guide from a macro perspective with more attention towards the mid-market and enterprise?

Question: Chris Fountain - RBC Capital Markets Wealth Management - Analyst : Hi. This is Chris Fountain on for Rishi. Thank you for taking my question. I wanted to ask about the downmarket disqualification of new business policies that you implemented. I believe in the past, you mentioned it was leading to a $2 million a month headwind. Has that amount changed from Q3? And are you expecting any changes to that level in 2025?

Question: Austin Cole - Citizen JMP Securities, LLC - Analyst : Hey, there, This is Austin Cole on for Pat Walravens. I appreciate you guys taking the questions here. I just wanted to ask, I guess, related to the upmarket, we've seen just kind of some continued layoffs out there in the market in Q1. Just given your commentary of being on that path to mid-single digits, can you just give us kind of a sense of the durability of that path and kind of what gives you confidence? And then as a quick follow-up, just what might kind of accelerate that growth kind of even further beyond and strengthening that upmarket to maybe kind of double digits? What are the drivers there? Thank you.