Zoominfo Technologies Inc at UBS Global Technology and AI Conference Summary

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

Question: Taylor McGinnis - UBS Securities LLC - Analyst : <_ALACRA_META_ABSTRACT>Maybe, I think, a good place to start would just be in terms of what you guys are seeing in the demand environment. I know last print, I think there were some expectation around investors where you guys have been starting to see some improvement in the enterprise space, in the mid-market. And when we look at the 4Q guide and the reiteration, I think there were some questions on whether you saw anything weakened in the demand environment or anything got more challenging or if it was just you seeing more stabilization. So could you maybe comment a little bit on that? And if there are any areas that are maybe tracking a little bit slower relative to your expectations? Or if it's pretty much what you expected?

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Perfect. And then maybe expanding on that, Henry, I know you guys are getting a lot of questions just in terms of what you're seeing in sales hiring, right? And if you are seeing any green shoots, to say, and if that's across any of the verticals, so mind commenting on that. And then as a follow-up to that question, how quickly, I guess, if we do, let's say, see a recovery in the environment, how sensitive would your guys' model be to that?

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Oh, yeah, sensitivity.

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Perfect. And I know you guys have talked a lot about this path to low 90s dollar-based net retention rate. So in terms of what needs to happen to get there, do you need to see a recovery to get there? Maybe you can talk about what the big drivers of that would be.

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Perfect. And maybe let's dive into those three pieces. So first, starting with Copilot since this is an AI conference. Obviously, this is very topical. So I think one thing that's come to light where I think there might have been a little bit of a misunderstanding is that Copilot is really a platform shift, right, it sounds like, from Sales OS. So in terms of what you guys are seeing today in adoption, when you went from $80 million in ACV two quarters to now greater than $60 million, how much of that is coming from new logos versus existing customers? And when you see those existing customers shift, can you comment a little bit on what that does to the average size of the deal, right? How are those conversations going? Is there any concerns around this being like -- or I guess, is this any offset for bringing head count or seats down? How -- maybe you could just give like a color on that view.

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Perfect. And this might be a very tough question to answer because, obviously, Copilot has just been rolled out. But when you think about when those Copilot customers come up for renewal, maybe you can talk about what you're seeing in terms of usage of the platform, maybe breadth of users that it applies to relative to what you saw to Sales OS. So when those Copilot customers come up, is there any insights that you guys have gained that suggest you will see good expansion upon those renewals?

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Yeah, that's good. And then just building on that. So thinking about the enterprise ACV, which was up 1% quarter over quarter. So would that suggest that most of that uplift is coming from Copilot. So maybe you could delineate a little bit in terms of how the enterprise conversations that are going that are adopting Copilot, right? And then what are the conversations for those that maybe aren't quite there yet? And how do you see that evolving over the next couple of quarters as Copilot gain steam? It's been in the market for a while. Like, how are you guys thinking of that migration in the enterprise space?

Question: Taylor McGinnis - UBS Securities LLC - Analyst : That was all great color and provides really good context. Maybe if we shift to the second piece that you mentioned, which I think was around the new business risk model that you guys put into place. So Graham, this is probably a good one for you. But we did get some questions post the quarter on whether the increase in disqualified pipeline was expected, right, and built into your guys' expectations. And I guess, one, any clarity that you can provide on that? And then two, just as we think about the level of disqualified pipeline going forward and what that trend could look like with write-offs and bad debt expense, too. Any insight you could provide? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 11:15PM, ZI.OQ - Zoominfo Technologies Inc at UBS Global Technology and AI Conference

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Perfect. And then in terms of what you guys are seeing across customer segments, because I think you've seen very different trends on -- in the enterprise versus mid-market versus SMB. So could you unpack that a little bit more? I guess when you think about NRR's, right, new logo adoption, what historically has it looked like across those three different customer segments? And then as we get into next year, what are the puts and takes? It sounds like you have expectations for mid-market and enterprise to be on a path towards getting to mid- to high-single-digit growth. SMB might still be the drag. When do we start to lap that? What does all that look like?

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Makes sense. And if we just bring all of that together and try to understand what that means for growth next year and the mechanics behind it. So is it such that some of the SMB pressures and the new logo pressures are still going to weigh on the full year, despite you starting to, like, lap that in 2Q? Can you just like walk us through the scenarios and when we do start to reach that inflection point and potentially what that means for the full year?

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Perfect. And now let's turn to the third opportunity, which is the DaaS opportunity in the operations. I know that's something that you guys have been talking a lot about. Henry, you were talking a little bit earlier about this need to cleanse your CRM system and that being a big play there. So can you just talk about what the momentum you're seeing on that, the pipeline, maybe the conversations that you're having with enterprise on this, that's not necessarily something we see in numbers or appreciate today? Any update there, I think, would be helpful.

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Yeah. Interesting. Would you say it's similar to Copilot in the sense that it's becoming a lead gen opportunity for you guys? Or are you finding more new customers that are interested in that? Or is it still really a cross-sell motion for you?

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Perfect. And then, Graham, maybe turning to margins for a little bit. So you've been talking about free cash flow per share growing materially in 2025, but could you maybe offer a bit more color on what is meant by that? What are the drivers behind them as well, too?

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Could you talk about the sources of the operating leverage and cost efficiencies that you see in the business? So let's say, we run into a scenario where you're not necessarily maybe seeing a recovery as quick as you would have hoped in enterprise and mid-market. And I think you've mentioned that there's still opportunities for margins to come up. So what would be the drivers behind that?

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Perfect. And then maybe in the last minute or so that we have a question for both of you. So I'm sure that you've had a number of conversations post the print. And just in those conversations, I guess, what parts of the story do you feel like are misunderstood? And that -- because it clearly sounds like in your guys' tone and your messaging, you're very optimistic on the business. So would love your thoughts there and to leave anything with the audience.

Question: Taylor McGinnis - UBS Securities LLC - Analyst : Perfect. Graham, anything to add?