ZoomInfo Technologies Inc.

Thank you for standing by, and welcome to the Zoom Info Third Quarter Year 2021 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this time, simply press star 1 on your telephone. We do ask that you limit your questions to 1. Please be advised, if you require any further assistance, please press star 0. I would now like to turn the call over to your speaker for today, Mr. Jerry Sosinski. Please begin.

Thanks, Jenny. Welcome to ZoomInfo's Financial Results Conference Call, highlighting our results for the third quarter of 2021. With me on the call today are Henry Schuch, founder and CEO of ZoomInfo, and Cameron Heiser, our Chief Financial Officer. After their remarks, we'll open the call to Q&A. During this call, any forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Expressions of future goals, including business outlook, expectations for future financial performance, and similar items, including without limitation, expressions using the terminology may, will, expect, anticipate, and believe, and expressions which reflect something other than historical facts, are intended to identify forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, including those discussed in the risk factor sections of our filings with the SEC. Actual results may differ materially from any forward-looking statements. The company undertakes no obligation to revise or update any forward-looking statements in order to reflect events that may arise after this conference call, except as required by law. For more information, please refer to the cautionary statement included in the slides that we have posted to our investor relations website at ir.zoominfo.com. All metrics discussed in this call are non-GAAP unless otherwise noted. Our reconciliation can be found in the financial results press release or in the slides that we have posted to our investor relations website. Lastly, we are participating in a number of investor conferences over the next few months, including RBC, Credit Suisse, Wells Fargo, the NASDAQ Conference, Raymond James, Barclays, and UBS. We hope that we will have the opportunity to connect with you at one of those events. With that, I'll turn the call over to our CEO, Henry Schuch.

Thank you, Jerry, and welcome, everyone. In Q3, we delivered another quarter of accelerating growth with both strong operating margins and strong free cash flow generation. The team is executing well across every area of the business. Adoption of new products and new features and functionality is exceeding expectations. International growth is accelerating, and enterprise investment continues to yield results. ZoomInfo is increasingly becoming known as a category-defining company by delivering end-to-end success for go-to-market teams worldwide. This was our best-ever third quarter for New Customer Edition, and the leading indicators are pointing to meaningfully higher annual net dollar retention rates with expected improvements across customers of all sizes. In the quarter, we delivered GAAP revenue of $198 million, representing 60% year-over-year growth, up from 57% in Q2, and up 12% sequentially when adjusted for the number of days in the quarter. We delivered unlevered free cash flow of $73 million, up 23% year over year. We closed the quarter with more than 25,000 customers, of which more than 1,250 customers have greater than $100,000 in ACV. The number of customers with more than $100,000 in ACV grew more than 70% year over year. Our investments internationally continue to be a success story. We materially grew our data coverage in Europe and expanded the number of reps targeting the international opportunity. We're in the process of opening an office in the UK and have already hired our first team of sales reps that will be based there. Because of our highly differentiated offering, demand for our platform is high, driving year-over-year international revenue growth greater than 80% in a quarter, with international representing more than 11% of our overall business or over $80 million on an annualized basis. Based on these results, we're again raising our financial guidance for the year. In the third quarter, we continue to expand our modern go-to-market platform and drove further innovation and integration across the intelligence, engagement, and orchestration layers of the ZoomInfo platform. Prospects and customers tell us they want a one-stop shop, a unified platform, and they want their investments across the sales tech stack to be integrated. This further reinforces the competitive moat that we are building with our unified platform. Starting with the intelligence layer, we continue to grow our contact and company animation. We now have information on more than 150 million business professionals and 100 million companies. Internationally, we grew our company and contact data coverage in Europe by approximately 80% this past year, and we now cover nearly all businesses with more than 100 employees in Europe. We have expanded our healthcare data asset, adding nearly a half a million new contacts and enriching 750,000 others with supplemental contact information. We have also innovated with new data privacy features. Customers can now exclude contact data from certain geographies and create a public presence flag to highlight data that is available in the public domain. And we've built technology to support preemptive opt-outs for contacts not yet in the Zoom Info platform. These enhancements enable our customers to control and customize their data experience in Zoom Info and further reinforce why our continued investment in privacy is a competitive differentiator. During the quarter, our privacy team engaged with dozens of multinational customers and prospects as subject matter experts on worldwide data use and privacy. Through guidance from that world-class privacy team, a Fortune 1000 network operations and security company rolled out our global data passport by leveraging the robust set of data privacy controls offered within our platform, including master suppression functionality and region-by-region granular privacy filtering capabilities. Additionally, a fast-growing internationally-based payments processor brought Zoom Info on in 2020 to fuel their expansion into North America. After a year of success with their North America-based teams, our privacy team began engaging with the company's data protection officer, who had more than 15 years of experience navigating data privacy regulations across more than 120 countries. Our team was able to walk through our global privacy notice framework, historical opt-out and notice metrics, and developments in platform native controls that would assist in their compliance practices. including our pre-built do-not-call screening and integrated master suppression filtering. The interactions with our privacy teams and the innovation we brought to our industry around privacy controls gave them the confidence to add ZoomInfo's global data passport across their international team. On the engagement layer of the ZoomInfo platform, we've continued to invest and engage our sales automation solution. We enhanced email analytics, enabling sellers to optimize their email content, timing, and audiences to improve response rates, and added an intelligent recommendations engine to deliver insights on the personas most likely to engage based on prospecting history. These recommendations are based on a combination of data from ZoomInfo and response activity from Engage Interactions with a seamless integration to easily import lookalike audiences that maximize future engagement rates. With these significant product improvements, in Q3 we added the most ACV ever for Engage. Since its introduction in Q3 of last year, we now have more than 2,000 customers leveraging Engage to drive automation and efficiency in their sales motions. As an example, in the quarter, we closed a six-figure enterprise deal with a Swiss-based pharmaceuticals company where nearly 50% of the ACV came from the intelligence layer and our global data passport, and the other 50% came from the engagement layer. In July, we acquired Chorus.ai, a leader in conversation intelligence, a market which we estimate to be an $18 billion opportunity. In addition to quickly integrating Chorus into the ZoomInfo platform, we are aggressively investing behind conversation intelligence, driving new and innovative capabilities to help our customers succeed and further drive our technology advantage. We plan to grow headcount on the Chorus product materially over the next year. Since the acquisition, we've rolled out a number of significant enhancements to the Chorus product. Chorus customers who use Salesforce and Engage can now automatically save call recordings, transcripts, and insights to their Salesforce CRM accounts. We also added a Chorus tab inside Zoom Info where go-to-market teams can find their interaction history, their video call recordings, email interactions, a contact list, including those at the company with whom they had interactions with, the ability to filter those interactions based on quick signals, keywords, and trackers, and momentum insights, where a detailed summary view of call and email activity indicates how interactions are progressing at each account. In September, we launched the next iteration of Chorus' revenue intelligence capabilities, which gives users a clear view of momentum across all deals in their pipeline. Sales leaders, managers, and reps all now have the tools that they need to analyze and identify opportunities or risks in the pipeline, enabling our customers to close more business and efficiently drive growth. We also launched the native Chorus app for Zoom video communications. The new app brings Chorus directly into the Zoom meeting experience, enabling improved tagging, note-taking, direct syncing with Salesforce, and the ability for sales reps to immediately activate specialists, overlay sales support, and others to join a call in real time. All of this investment has not gone unnoticed. Chorus was recently recognized as a strong performer in the Q4 2021 Forrester Wave conversation intelligence. Chorus was called out for having differentiated features and standing out above the rest and received the highest possible scores in eight categories, including sales performance measurement, sales modeling and forecasting, post-call coaching, product and technology innovation, roadmap, and others. Chorus continues to win other industry accolades as well. It was named the top-rated product in Software Reviews 2021 Conversation Intelligence Data Quadrant, recognized by G2 on seven of their 2021 Best Software Awards lists, and landed on TrustRadius' 2021 Top Rated Awards list for conversation intelligence. In addition to all of the development and integration work on conversation intelligence, we also integrated ZoomInfo chat inbox from our Q2 acquisition of Incent.ai. SDRs can now be notified and engaged directly with high-priority website visitors and live chat experiences within the ZoomInfo platform. We surround that in-app chat experience with company information, news, scoops, and buying committee data alongside the chat conversations. The ZoomInfo chat application is now supported as a Slack marketplace application, enabling sales teams to leverage robust ZoomInfo data directly inside Slack as they engage with prospects. In Zoom Info Recruiter, we added a number of new features to improve the user experience and open up the platform for more integrations. While still early, we more than doubled the number of recruiter customers from Q2 2021. From a feature perspective, we added recruiter pipeline management, allowing users to track and manage candidates through pipeline stages for the specific hiring projects they are working on, and enabling better integration with applicant tracking systems. Through contributions from our innovation and data science teams, we added a likely-to-listen score that uses a variety of ZoomInfo data to help recruiters find candidates that are statistically more likely to be open to changing jobs. We also added a new integration with PCRecruiter, which allows talent acquisition professionals to add candidates to their candidate pipeline. Within the orchestration layer, we added significant capabilities through our acquisition of the leading data orchestration platform, Ringlead. Ringlead ingests, cleans, enhances, segments, scores, and routes customers' data, then provides a flexible, customizable, and rules-driven approach to integrating this data into a company's system of record. In Q3, we launched our first integration between Ringlead and ZoomInfo. Now when customers export records from ZoomInfo to Salesforce, they can first flow through Ringlead data orchestration workflows, ensuring deduplication, record normalization, and routing take place before the newly added records are passed over to their CRM. With our continued investment in data orchestration and routing and triggers that initiate workflows that drive go-to-market motions, more and more customers are realizing the value of truly automating their go-to-market motions based on insights surfaced through ZoomInfo. In the third quarter alone, we saw 25% sequential growth in this level of automation from our customers through increased adoption of our workflows functionality. During the quarter, we surpassed 25,000 customers. and we now have more than 1,250 customers with greater than 100K in ACV. These customers now represent more than 40% of our overall ACV, with the ACV from that cohort growing by more than 85% year-over-year. Growth is coming both from expansions of existing customers and landing new customers above the 100K threshold, with customers taking up more and more products at the point of initial sale. During the quarter, we landed multiple million-dollar plus TCV transactions with new customers. We continue to have increasing functionality that is driving success with our largest customers, driving ASP growth in that cohort, and reinforcing the increasingly central role we are playing in an organization's sales technology stack. One recent customer in the project management and collaboration space highlighted the power of our data and data orchestration platform. Their investment in ZoomInfo's data-as-a-service solutions built a foundation at the company, while they also invested in RingLead Cleanse and Multi-Vendor Enrich to automate lead flow and remove duplicate contacts. The customer wanted to understand as much as possible about a prospect at the beginning of the lead cycle, and the speed and accuracy of the ZoomInfo platform proved critical to increasing their speed to lead, driving increased conversion rates and more revenue for their organization. A client in the on-demand delivery service industry is making full use of our platform in every aspect of their business. Aside from using our intelligence layer to identify their next best customers, From our orchestration layer, they've also implemented our complete and enrichment solutions to increase website conversions and keep their customer and prospect data up-to-date and accurate. This customer didn't stop at the top of the funnel. They've also rolled out Chorus to their sales team to drive real-time coaching and competitive analytics from every digital interaction they have with customers and prospects. In order for us to drive success across the organization, we need a world-class team. The combination of our strong culture, which drives all of us to improve ourselves 1% every day, combined with a growing investment in recruiting and talent acquisition, has allowed us to attract, hire, and retain top talent at all levels of the organization. Zoom Info has been certified as a great place to work for five consecutive years. We've also won awards for being a best place to work for millennials, won 11 comparably awards in 2021, and were recognized by the Mass TLC as a top company for diversity. There is a global fight for talent, and we win more than our fair share because of the culture of success we've created. our continuing investment in our people to create long-term career development opportunities, and our focus on diversity and inclusion. As a result, in the third quarter alone, we hired more than 500 employees, and we continue to hire aggressively to support our long-term growth. In closing, Q3 was an exceptional quarter. We delivered great financial results, are again raising our outlook for the year, and continue to build on our substantial competitive moat by investing in all three layers of our integrated platform. the intelligence layer, the orchestration layer, and the engagement layer. The market opportunity is as big as ever, and as I indicated earlier, we continue to build a category-defining company by delivering end-to-end success for go-to-market teams worldwide. With that, I'll hand it over to our Chief Financial Officer, Cameron Heiser.