Zoominfo Technologies Inc at Wells Fargo TMT Summit Transcript

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

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : So a lot of experience with Henry the Domain Space, it sounds like very much in your wheelhouse. So I think a lot of the conversation with investors around ZoomInfo is just trying to really just spend time understanding a couple of factors. Like one, what is happening to the business? What are the kind of pressure points that are weighing on growth currently? And when could those start to subside, right. And so I want to start with just the journey of what's gotten us to this point, right? Like we've seen macro pressures across software. We may see more pronounced macro factors hit the front office some of the more sales marketing focused software businesses. So where does ZoomInfo fit within that conversation? What have been the sort of the headwinds that growth has been running into as a starting point? And then we can start to talk about the factors of the timeline of when those could start to subside a bit.

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : This is just going to ask just on the small business side and why sort of the lagging timeline? What are your best guesses as to what drove the degradation relative to the stabilization of the other categories?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : And so just back to the enterprise and mid-market pieces of that, it sounds like gross retention has remained fairly consistent and stable. Is that a fair characterization?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : Okay. So can we double click on that for a minute and just maybe level set first for those who aren't as familiar what your copilot offering is? How you communicate differentiation to the market and early metrics or proof points that you're seeing that you could share?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : On the S&B side and the sort of the lagging nature and just the sort of the shape of attention there? Do you think about -- are you starting to mix away from that business? Do you think about focusing more on the mid-market and enterprise and de-emphasizing that side of the business or how are you looking at that opportunity versus the core enterprise mid-market piece? Which seems like it's showing more early shades of optimism?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : Is industry mix different in those categories. Meaning is industry mix more heavily weighted towards certain sectors in enterprise and mid-market than small business? 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 04, 2024 / 9:30PM, ZI.OQ - Zoominfo Technologies Inc at Wells Fargo TMT Summit

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : What are the other offsets beyond copilot that you're thinking about in building back the revenue, the expansion potential within the enterprise and mid-market? Are there other kind of data related products? Is it just a view that seats eventually come back? What would cause the retention rates to continue to improve over whatever period of time that that takes?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : We also just talk a little bit about just the renewal characteristics because I think we've talked with ZoomInfo in the past just about with the certain segmentation, with the focus on tech and in certain other industries, there's a renewal cohort that's heavier around this time of year. I think there have been challenges in just kind of calling where that renewal will come in because they're maybe not as transparent what they're doing with sales seats at certain points in time. But do you have any kind of early signals around how this year is shaping out that give you a sense that maybe that renewal dynamic is also stabilizing that we're not likely to see. Most of the conversations here have been more characterized with cautious optimism around how companies are thinking about '25. So I'm not sure if you have at this point, any read or anything that you can share just on what's happening with seats within the two up market segments? 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 04, 2024 / 9:30PM, ZI.OQ - Zoominfo Technologies Inc at Wells Fargo TMT Summit

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : So stacking that all up and then I want to move over to margin because that's also a very important piece of the financial profile here. How should we think about like the drivers of sequential growth, the drivers of growth in the business? And just the time line that you're thinking about in terms of kind of weighing when macro pressures are using and you could start to add more capacity and think more about the potential for acceleration of growth at a certain point in the future?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : Can you talk about just free cash flow in the context of all the conversation and the focus there? The prioritization ways that you can drive free cash flow -- for free cash flow per share improvement even if we are in still a constrained environment. How are you thinking about that metric and ways to present that to investors is kind of the North star, at least for now with ZoomInfo?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : You just level set the buyback program, the sort of the just the way you think about the timeline, what's approved and then your decision criteria with just a little bit more context around what informs that?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : I don't know that you can directly speak to this, but we've also observed that Henry has been active and open market activity and purchasing shares. He's the founder of the company. I'm more curious from a cultural perspective like how that carries through if employees kind of see that as a signal of confidence and what you would say to investors just on that decision point and your founder kind of choosing to double down at this point?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : I wanted to just spend some time on the competitive landscape and this is an area that I think has gotten increasingly noisy. There were a lot of front office software vendors. There were a lot of -- I think solutions that were implemented that have been consolidated. The ZoomInfo is -- has been more data focused. Like I don't, we don't see as many vendors doing specifically what ZoomInfo does? How do you how would you characterize competitive differentiation in the space and is the competitive environment at all different if we're thinking about ZoomInfo and enterprise versus ZoomInfo and S&B or mid-market?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : How do you -- how does ZoomInfo think about the data that you've accumulated in a world where data is being talked about a lot as tied to generative applications? Does it help your copilot offering first and foremost? Is it kind of a wedge in the conversations for those that have CRM solution but are looking to kind of augment all the data that that supports or what's the data related conversation like ZoomInfo? Like given it seems like there's just greater focus around the category everywhere?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : I don't again -- I don't know how directly in your purview this is, but we cover the software industry, we've seen hubspot acquire a clear bit and it's a smaller player, it's a smaller market focus. So I guess the question is twofold. The first is does that create competitive noise down market at all? Second question is, does that validate the market in any way from your perspective, if they're saying we have CRM solution, but without data, the CRM solution is not particularly powerful. So we view this as a way to kind of augment and improve the sort of the immediate impacts that a customer would have in implementing a CRM?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : Let me just ask on the visibility. And if there are ways that you've been able to like lessons learned where you've been able to implement procedures that give you better visibility into the future. Can you just kind of speak to the duration of most customer contracts that you have and then are there fixes or things that you've put in place to improve visibility across the business? And I ask, because you ran into periods where it was just hard to your point to predict renewal behavior. And for gross retention rates as high as they've been for your business, I'd imagine there's a sort of a willingness to meet in the middle in some ways and have those more strategic conversations around just removing some of the variability. So I'm curious if you've been able to work to bridge that GAAP in any way, shape, or form in the good market or in the -- within the finance org? 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 04, 2024 / 9:30PM, ZI.OQ - Zoominfo Technologies Inc at Wells Fargo TMT Summit

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : Is there anything else you would bring into that conversation as investors are starting to think about '25 the shape of '25, just the ways that you're thinking about the business?

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : That's all super helpful. Just a little bit of time left. I want to open it up to the audience. If someone has a question for you to raise a hand, I may or may not be able to see it because the lights are exceptionally bright, but I'll pause for just a moment. Seeing no takers. So just -- I guess, I want to spend a little bit of time on how you think about the growth margin trade off and I can appreciate not a -- there's not a natural toggle like some of it ties back to growth, right, if you're outpacing targets and some of that fall to the bottom line. And but as you maybe you can talk first about sales capacity, if you've been adding sales capacity, where you've been adding sales capacity and how you're thinking about sales capacity in the context of what you just said, which is for several quarters we need to work through, but we may hit this more normalized period at some point in '25. And I suspect you'd like to be ready with productive sales activity when that happens. 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 04, 2024 / 9:30PM, ZI.OQ - Zoominfo Technologies Inc at Wells Fargo TMT Summit

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : So the enterprise, that type of rep is something that you feel you have adequate capacity for now.

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : Okay? And appreciating, I mean, you're saying growth is still a significant prior area as it feels like it should. But when we think about margin and drivers of margin longer term, we get that question often just because ZoomInfo margins have been outsized that the smaller scale than what many software companies need to get to the levels that ZoomInfo has been in the 35%, 40% range. What would allow margins to continue to scale? I guess I'll stop with that and I mean I guess I'm also curious about it just in the context of how you weigh those trade-offs and still the focus on growth.

Question: Michael Turrin - Wells Fargo Securities LLC - Analyst : Okay. It was super hopeful. I guess the last one we're coming up on time is just given various scenarios of play, coming into 2025. How do you approach planning activity? It sounds like you have a good handle on capacity and have that in place. You have the sort of the product focus to some degree as well. But what are the priorities you're thinking about in terms of '25 and what are the signals you'll continue to watch that will inform if that sort of growth improvement is starting to take shape under the under the covers there? 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 04, 2024 / 9:30PM, ZI.OQ - Zoominfo Technologies Inc at Wells Fargo TMT Summit