ZoomInfo Technologies Inc. (ZI) Q4 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with record revenue growth and improved customer satisfaction. The share repurchase program is substantial, enhancing shareholder value. The Q&A session indicates confidence in upmarket growth and product innovation, although management was vague on some specifics. The market cap suggests a moderate reaction, leading to a positive prediction for stock price movement over the next two weeks.
Key Financial Performance
GAAP Revenue Q4 2024 $309 million, up from previous year, driven by improved sales execution and customer engagement.
Adjusted Operating Income Q4 2024 $116 million, margin of 37%, reflecting better-than-expected performance and operational improvements.
Operations Business Growth Q4 2024 Increased 27% year-over-year, indicating strong demand for data foundation services.
Net Revenue Retention Q4 2024 Increased to 87%, the first sequential increase since Q1 2022, due to improved customer satisfaction.
Operating Cash Flow Q4 2024 $109 million, reflecting strong cash generation.
Unlevered Free Cash Flow Q4 2024 $94 million, margin of 30%, indicating effective cash management.
Unlevered Free Cash Flow 2024 $447 million, margin of 37%, showing overall strong cash flow performance.
Cash and Cash Equivalents End of 2024 $140 million, providing a solid liquidity position.
Gross Debt End of 2024 $1.24 billion, with a net leverage ratio of 2.4 times trailing 12 months adjusted EBITDA.
Share Repurchases 2024 Retired 46.8 million shares at an average cost of $12, representing over 12% of total shares outstanding.
Remaining Performance Obligations (RPO) End of 2024 $1.16 billion, with $850 million expected to be delivered in the next 12 months.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Copilot: Copilot exceeded expectations with over $150 million in Annual Contract Value (ACV).
New Data Products: New data products were created to help customers engage prospects precisely when they are in market for their products.
AI Agents: AI agents were expanded to automate core parts of a seller’s workflow, enhancing account planning and deal acceleration.
Upmarket Growth: Upmarket, which includes enterprise and mid-market businesses, grew 2% in 2024 and represents more than two-thirds of the business.
Down-market Strategy: Down-market, defined as businesses with fewer than 100 employees, declined 9% in 2024 but is stabilizing to a healthier portion of the business.
Net Revenue Retention: Net revenue retention increased to 87% in Q4, the first sequential increase since Q1 2022.
Share Repurchases: 46.8 million shares were retired at an average cost of $12, representing over 12% of total shares outstanding.
Leadership Changes: Transition of engineering leadership to Filip Popovic, with new board members Katie Rooney and Rob Giglio bringing extensive experience.
Operational Improvements: Operational improvements initiated in Q2 2024 are yielding better customer onboarding and success.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Competitive Pressures: The company is facing competitive pressures, particularly in the upmarket segment, where they are deploying Copilot to improve sales productivity and combat these pressures.
Regulatory Issues: There are inherent risks and uncertainties related to forward-looking statements, including regulatory issues that could impact business operations.
Supply Chain Challenges: No specific supply chain challenges were mentioned, but the overall economic environment could pose risks to operations.
Economic Factors: The company acknowledges economic factors that may affect their business, including the need for a strong data foundation to leverage AI, which is driving demand for their operations business.
Customer Quality and Risk Model: The company has implemented a new risk model to onboard better quality customers, indicating previous challenges with customer quality and financial stability.
Down-Market Decline: The down-market segment, which comprises less than one-third of the business, has declined by 9% in 2024, indicating challenges in this area.
Debt Levels: The company carries $1.24 billion in gross debt, which presents a financial risk, especially with a net leverage ratio of 2.4 times trailing 12 months adjusted EBITDA.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
GAAP Revenue Q4 2024: GAAP revenue for the fourth quarter was $309 million, exceeding guidance.
Adjusted Operating Income Q4 2024: Adjusted operating income was $116 million, a margin of 37%, above the high-end of guidance.
Copilot ACV: Copilot exceeded expectations with over $150 million in Annual Contract Value (ACV).
Operations Business Growth: Operations business grew 27% year-over-year in Q4.
Customer Growth: 1,867 customers with more than $100,000 in ACV, a sequential increase of 58 customers.
Net Revenue Retention: Net revenue retention increased to 87% in Q4, the first sequential increase since Q1 2022.
Share Repurchases: Retired 46.8 million shares at an average cost of $12, representing over 12% of total shares outstanding.
Q1 2025 Revenue Guidance: Expect GAAP revenue in the range of $294 million to $297 million.
Q1 2025 Adjusted Operating Income Guidance: Expect adjusted operating income in the range of $96 million to $99 million.
Full Year 2025 Revenue Guidance: Expect GAAP revenue in the range of $1.185 billion to $1.205 billion.
Full Year 2025 Adjusted Operating Income Guidance: Expect adjusted operating income in the range of $426 million to $436 million.
Full Year 2025 Unlevered Free Cash Flow Guidance: Expect unlevered free cash flow in the range of $420 million to $440 million.
CapEx Guidance: Expect CapEx in the range of 5% of revenue.
Non-GAAP Tax Rate Guidance: Expect non-GAAP tax rate to be approximately 13%.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Share Repurchase Program: For the full year, we retired 46.8 million shares at an average cost of $12, representing more than 12% of total shares outstanding. In Q1, the Board approved an additional $500 million share repurchase authorization on top of the $138 million remaining in existing authorizations entering 2025.
Cash Flow: Operating cash flow was $109 million in Q4, and unlevered free cash flow for the quarter was $94 million, a margin of 30%. Unlevered free cash flow for 2024 was $447 million, a margin of 37%.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:What are the trends in both the SMB and enterprise segments as you exit the year?
A:We’re seeing strength in the upmarket, particularly with our operations and Copilot products. In the SMB, we saw stabilization, but it's becoming a smaller portion of our business, and we expect growth to come from the upmarket.
Q:Can you provide insights on the growth rates of the SMB and enterprise segments for the coming year?
A:For 2025, we expect mid-single-digit growth in the upmarket and a decline in the down-market segment.
Q:What is the state of AI agents and your role in that ecosystem?
A:AI for go-to-market requires both first-party and third-party data. Our data asset is crucial for building successful go-to-market AI agents.
Q:Can you explain the migration path to Copilot for existing customers?
A:We are migrating customers to Copilot both off-cycle and at renewal times, with strong double-digit growth in migration.
Q:What are the drivers behind the improvement in NRR?
A:The improvement in NRR is due to better retention and upsell opportunities, particularly in the upmarket.
Q:What drove the uptick in the 100K customer count?
A:The increase is due to acquiring new customers, upselling existing customers, and losing fewer customers.
Q:What is the outlook for NRR in 2025?
A:We expect mid-market growth to improve, contributing positively to NRR.
Q:What is the impact of DeepSeek on your business?
A:DeepSeek has the potential to drive down costs across LLM providers, but it is not currently in production.
Q:What are the characteristics of the 100K cohort?
A:The 100K cohort is primarily upmarket, with opportunities for upselling and cross-selling.
Q:How does the seat dynamic differ between upmarket and down-market?
A:In the down-market, we are fully penetrated, while in the upmarket, there is significant room for seat expansion.
Q:What is the pricing strategy in the upmarket versus down-market?
A:Pricing in the down-market is aggressive for customer acquisition, while upmarket pricing remains stable.
Q:What is the impact of the down-market disqualification of new business policies?
A:The impact remains unchanged at $2 million a month, with no anticipated changes.
Q:What gives you confidence in the path to mid-single-digit growth in the upmarket?
A:We have focused execution, product innovation, and resource allocation in the upmarket.
Q:What could accelerate growth beyond mid-single digits?
A:Accelerating growth could come from Copilot and our operations business.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact timeline for customer migration to Copilot and the anticipated changes in the down-market disqualification impact.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI agent
Chief Customer
Customer Officer
HubSpot
Inc
LLC
OBrien
President Investor
SDR
Sisitsky Vice
Upmarket
Vice President
addition
area
base rep
client
contribution
core
customer success
decade
development
employee
end market
engine
framework
history
investment upmarket
leader
market AI
market product
marketing sale
moat
opportunity upmarket
pace
perception
role
seller
survey
third
thousand
trial motion
upmarket market
user base
workflow
ZI Transcript
Earnings call transcript: ZoomInfo Q1 2025 beats forecasts, stock surges
Positive5-12
The earnings call reveals strong financial performance, exceeding guidance in key areas such as GAAP revenue and adjusted operating income. The company's shareholder return plan, with significant share repurchases, is a positive indicator. While competitive pressures and market challenges exist, the company's strategic focus on upmarket growth and AI-driven products like CoPilot provide optimism. The Q&A highlights management's confidence in navigating challenges and potential for growth, particularly in the upmarket segment. Overall, the sentiment is positive, with a likely stock price increase of 2% to 8% over the next two weeks.
ZoomInfo Technologies Inc. (ZI) Q1 2025 Earnings Call Transcript
Positive5-12
The earnings call summary and Q&A indicate positive financial performance and strategic growth, particularly in upmarket segments and partnerships like with Intuit. Despite a decline in down-market revenue, strong metrics such as exceeding revenue guidance, high operating income, and substantial share repurchases reflect robust financial health. The cautious guidance due to uncertainty is not based on immediate negative trends. Given the company's market cap, the positive indicators, and strategic focus on profitable segments, the stock price is likely to see a moderate positive movement (2% to 8%) over the next two weeks.
ZoomInfo Technologies Inc. (ZI) Q4 2024 Earnings Call Transcript
Positive2-25
The earnings call highlights strong financial performance with record revenue growth and improved customer satisfaction. The share repurchase program is substantial, enhancing shareholder value. The Q&A session indicates confidence in upmarket growth and product innovation, although management was vague on some specifics. The market cap suggests a moderate reaction, leading to a positive prediction for stock price movement over the next two weeks.
ZoomInfo Technologies (ZI) Q3 2024 Earnings Call Transcript
Positive11-13
The earnings call highlighted strong financial performance with GAAP revenue and operating income exceeding guidance, a significant share repurchase program, and positive growth in enterprise ACV and Copilot adoption. The Q&A session indicated stable demand and positive customer feedback, despite some conservative guidance and challenges in the SMB segment. The company's focus on upmarket growth and margin expansion, along with a healthy cash position, suggests a positive outlook. Given the market cap, a 2% to 8% stock price increase is expected over the next two weeks.
ZI Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
