Earnings call transcript: ZoomInfo Q1 2025 beats forecasts, stock surges
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Overview
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.
Key Financial Performance
GAAP Revenue $306,000,000, a year-over-year increase of 1.1%.
Adjusted Operating Income $101,000,000, a margin of 33%, above guidance.
Net Revenue Retention 87%, improved for the second consecutive quarter.
Upmarket Growth 3% year-over-year, now representing 71% of the business.
Downmarket Decline 10% year-over-year decline.
Operating Cash Flow $119,000,000.
Unlevered Free Cash Flow $125,000,000, a margin of 41%.
Cash and Investments $143,000,000.
Gross Debt $1,240,000,000.
Net Leverage Ratio 2.5 times trailing twelve months adjusted EBITDA.
Unearned Revenue $484,000,000.
Remaining Performance Obligations (RPO) $1,130,000,000, with $837,000,000 expected to be delivered in the next twelve months.
Share Repurchases 8,600,000 shares at an average price of $11.05 for a total of $95,000,000.
Share Repurchase Authorization $543,000,000 remaining as of the close of Q1.
Average ACV per Customer in Operations Up approximately 10% year-over-year.
Data as a Service Solution Growth New logos up 24% year-over-year.
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Operating Highlights
New Product Launch: Launched Go to Market Studio to enable revenue leaders to architect their go to market with intelligence and AI.
AI Integration: Expanded capabilities of the go to market intelligence platform with sophisticated AI-powered applications.
Copilot Product: Successfully rolling out Copilot to enhance sales productivity and account management.
Market Positioning: Changed trading symbol from ZI to GTM to reflect commitment to go to market intelligence.
Market Expansion: Activated full go to market intelligence platform for a major food delivery vendor to support international expansion.
Customer Growth: Increased customer base with 1,868 customers generating over $100,000 in ACV, marking a year-over-year increase of 108 customers.
Operational Efficiency: Improved net revenue retention to 87% for the second consecutive quarter.
Cash Flow: Generated operating cash flow of $119 million in Q1.
Share Repurchase: Repurchased 8.6 million shares for $95 million, with an additional $15 million in Q2.
Strategic Shift: Focused on upmarket growth, with 71% of business now in the upmarket segment.
Resource Allocation: Reallocated resources from downmarket to upmarket to enhance profitability.
Long-term Vision: Positioned as the only vendor with integrated data, orchestration, AI, and execution for the entire go to market organization.
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Risk or Challenges
Economic Environment: The company has included an incremental layer of caution in its guidance due to the uncertain economic environment, despite not seeing any immediate impact on customer behavior.
Downmarket Business Risks: The downmarket segment is expected to decline further, with guidance indicating a potential contraction in the high negative teens for 2025, which poses a risk to overall revenue.
Customer Retention: While net revenue retention (NRR) is improving in the upmarket segment, the downmarket continues to experience lower retention rates, which could affect future growth.
Competitive Pressures: The company faces competitive pressures as it transitions to a more upmarket focus, which may require higher costs of acquiring new business.
Regulatory Issues: The company is monitoring potential impacts from tariffs and evolving economic conditions, which could affect its operations and customer behavior.
Operational Challenges: There are concerns about navigating data privacy, security, and AI governance, which could pose challenges in deploying new products like CoPilot.
Market Demand: The company is lightly penetrated in its enterprise customer base, indicating potential demand but also the risk of not meeting customer expectations if the market shifts.
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Guidance & Outlook
Trading Symbol Change: ZoomInfo will begin trading under the symbol GTM to reflect its commitment to building the core software platform for go to market.
Go to Market Studio Launch: Launched to enable revenue leaders to architect their go to market with intelligence and AI, unifying go to market data.
Copilot Product Expansion: Successfully rolling out into customer base, expanding beyond SDR prospecting into AE and AM use cases.
Customer Growth: Increased customer base with 1,868 customers having more than $100,000 in ACV, marking a year-over-year increase of 108 customers.
Strategic Partnerships: Expanded relationships with companies like Intuit and Stripe to enhance their sales and marketing capabilities.
Q2 Revenue Guidance: Expected GAAP revenue in the range of $295,000,000 to $298,000,000.
Full Year 2025 Revenue Guidance: GAAP revenue expected in the range of $1,195,000,000 to $1,205,000,000, representing negative 1.2% annual growth at midpoint.
Adjusted Operating Income Guidance: Expected in the range of $426,000,000 to $436,000,000, representing a 36% margin at midpoint.
Non-GAAP Net Income Guidance: Expected in the range of $0.96 to $0.98 per share based on $352,000,000 weighted average diluted shares outstanding.
Unlevered Free Cash Flow Guidance: Expected in the range of $420,000,000 to $440,000,000.
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Shareholder Return Plan
Share Repurchase Program: In Q1, the company repurchased 8,600,000 shares of common stock at an average price of $11.05 for an aggregate of $95,000,000. The Board of Directors approved an incremental $500,000,000 share repurchase authorization in February, with $543,000,000 remaining as of the close of Q1. Following the close of the quarter, an additional $15,000,000 was deployed towards repurchases in Q2, retiring nearly 7,000,000 shares at an average price of $8.27 per share. To date, approximately 85,000,000 shares of common stock have been retired through share repurchases.
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Key Q&A
Q:Why now on the change around the name, the ticker, category, what’s making right now the moment to kind of go double down on this motion?
A:We’ve expanded the platform broadly to not only be a platform for prospecting sellers, but also for account executives, account managers, customer success managers. The launch of CoPilot and the new go to market studio product allows revenue operators to leverage AI across their data assets and orchestrate campaigns.
Q:Could you bifurcate NRR by what you’re seeing with up market versus down market?
A:Retention up market continues to improve, while down market continues to be impaired but not getting significantly worse.
Q:Where does CoPilot ACV stand in Q1?
A:CoPilot continued to grow at a rate that we expect, and we’re happy with the migration pattern and upsell opportunities.
Q:Are you seeing any typical speed bumps with CoPilot rollouts?
A:We feel good about the trajectory of CoPilot, particularly in the upmarket, and we’re getting better at navigating data privacy and security.
Q:Is there anything to consider as it relates to investment priorities that may be limiting some of the flow through?
A:We saw no impact to the overall business in Q1 from the economic environment, and the caution in guidance is driven by the uncertain environment.
Q:How do you brace for potential downturns in the down market versus up market?
A:The down market will be more reactive to a macro slowdown than our upmarket business.
Q:What new budgets can you go after with this new positioning?
A:We have the opportunity to bring rev ops professionals, sales ops professionals, and sales leadership into the ZoomInfo platform.
Q:What’s your appetite to do both buyback and tech tuck-in M&A?
A:We’re going to be opportunistic with M&A, particularly tuck-in M&A, but we will continue to aggressively reduce the share count.
Q:How much of the upmarket growth is coming from customers hiring sales reps?
A:It’s a mix; some customers are hiring sales reps, but a lot of growth comes from our operations product.
Q:What trends did you see in the software vertical?
A:Retention in the software vertical improved sequentially for the fourth quarter in a row, and we’re starting to see upsell opportunities.
Q:Review of Unclear Management Responses
A:Management avoided providing specific figures on CoPilot ACV and did not disclose explicit retention rates in the guidance.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI agent
CFO ZoomInfo
CoPilot
Deutsche Bank
GTM Studio
Interim CFO
Intuit
President Investor
Relations ZoomInfo
Schuck CEO
Vice President
Zelnick Deutsche
ZoomInfo line
account manager
audience
campaign
caution
co pilot
efficiency
frontline
idea
insight
line Vice
market opportunity
market studio
ops professional
party
retention upmarket
sale ops
seller
sense line
top funnel
upmarket downmarket
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
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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.
