ZoomInfo Technologies Inc.

Good day, and thank you for standing by. Welcome to the Zoom Info Third Quarter 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 the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would like to hand the conference over to your speaker today, Jerry Szczeski. Please go ahead.

Thanks, John. Welcome to ZoomInfo's financial results conference call, highlighting our results for the third quarter of 2022. 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 will open the call to Q&A. During this call, any forward-looking statements are made pursuant to the safe harbor provisions of U.S. securities laws, 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 section 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 on this call are non-GAAP unless otherwise noted. A reconciliation can be found in the financial results press release or in the slides that we've posted to our IR website. With that, I'll turn the call over to our CEO, Henry Schuch.

Thank you, Jerry, and welcome, everyone. Today, more than ever, go-to-market teams are looking to do more with less, and the ZoomInfo platform is the only solution that can deliver exactly that for companies of all sizes. We're at the beginning of a generational shift of digital transformation for B2B sellers, and our business model has proven powerful even in a challenging macroeconomic environment. Our all-in-one platform drives efficiency at a time when every dollar spent is being scrutinized, and it does that by connecting businesses with the people who are most likely to purchase their solutions and giving them the technology they need to engage at scale. ZoomInfo's Q3 results once again beat expectations on the top and bottom line, and we're again raising our full-year revenue and profitability guidance. In the third quarter, we delivered gap revenue of $288 million and adjusted operating income of $118 million. This represents year-over-year growth of 46% and an adjusted operating income margin of 41%. up approximately 120 basis points sequentially, and up approximately 180 basis points from last year. We generated $100 million in unlevered free cash flow in the quarter, or nearly a dollar per share on an annualized basis, underpinning our leading combination of growth and profitability at scale. In Q3, we sold the largest expansion deal in the company's history, another eight-figure TCV client. We also sold the largest new business deal in company history, our first land to exceed a million dollars, with SalesOS, OperationsOS, Engage, and Enrich being leveraged. The platform strategy is increasingly resonating, and we continue to consolidate point solutions across sales engagement, conversation intelligence, data, and account-based marketing, like we did this quarter with Rider Systems, Taylor Corporation, and USI. While these deals demonstrate that we're continuing to execute well, as we made our way through Q3, we began to see increased macro pressure on deals, causing the level of deal review to increase and sales cycles to elongate further. Since this started very late in the quarter, it only modestly impacted Q3 results. This elongation trend has continued into Q4, and we do expect it to impact growth in the short term. While we can't control the macro, and we know that we could deliver even more growth in a more stable economic environment, we can't control how we manage the business. And you will see the resiliency of our model play out in the form of strong and consistent margin gains driving earnings. We are confident in raising guidance for 2022, and we expect to continue driving a sustainable combination of best-in-class growth, profitability, and free cash flow generation at scale. With that, let me highlight some of the many customer successes in the quarter. First, we ended the quarter with 1,848 customers who spend more than $100,000 a year with us. That's up 40 plus percent year over year. We again drove record ACV per customer. And as I mentioned earlier, we sold the largest expansion and new business deal in the company's history. We continue to close transactions with customers across all industries. seeing the strongest growth in the transportation and logistics, finance, insurance, real estate, and manufacturing verticals. Advanced functionality now represents 30% of ACV, and we continue to go deeper and increase our strategic value to our customers. More than ever, organizations want to work with fewer, more strategic partners, and as a result, the full stack of our integrated best-in-class platform is even more relevant. As an example, a top news and entertainment broadcasting company went from a demo with a single rep to a multimillion dollar transaction that went wall to wall across their entire sales team. This deal accelerated the digitization of their sales motion, giving their sales and sales ops professionals the best opportunity to win with highly accurate data and insights that are cleansed and routed to the right sales reps, plus the automation, workflows, and engagement tools needed to efficiently close a deal. Their team said it best. There are going to be two types of sales teams going forward, successful and efficient teams that have Zoom info and mediocre teams that do not. Next, a Fortune 50 consulting infrastructure and software company expanded their licenses to further streamline their go-to-market strategy with best-in-class global data, insights, and automation. As an enterprise organization, they needed to select a vendor that they could trust, and our investments in privacy and data stewardship gave them the confidence in our platform and our company. Their investment expanded their sales OS users by more than 300%, to over 3,500 professionals across 63 countries. ZoomInfo allows them to reach the right stakeholders at the right time when they are in market. A large public telecommunications company with more than 3 million customers wanted to improve efficiency by consolidating several vendor relationships. They already used ZoomInfo for data orchestration, but decided to unify their go-to-market strategy by expanding with SalesOS, MarketingOS, and OperationsOS. This full-stack deal represented a more than 10x expansion with ZoomInfo. And a $15 billion market cap financial data services company was looking to rationalize spend across their tech stack without losing the efficiency of their sales team in the face of an uncertain macro environment. We helped them consolidate vendors by adding our intent and chat products, providing them one end-to-end go-to-market suite while growing their sales OS seats by 50%. We continue to focus our development efforts to create integrated experiences across the entire platform and to deliver data-driven engagement workflows to help our customers drive efficient growth. In SalesOS, we continue to invest behind unifying the sales professional's experience for prospecting, engagement, and closing deals onto a single platform by integrating our core sales intelligence, engage, and core conversation intelligence products. Customers are now able to streamline prospecting and engagement in SalesOS using one-click engagements, advanced sales automation, and the integration of conversation intelligence. We also continue to invest in our footprint across the go-to-market organization, adding products for account executives, account management, and customer success teams. We've integrated Zoom Info Intelligence into the post-call and pipeline review process via Chorus, so contact, company, and engagement functionality is available without leaving the platform. This includes our new meeting brief, that help our customers run effective meetings by pushing company, participants, and competitive intelligence, along with deal risks and engagement highlights right to our customers' inbox. In Marketing OS, we focus on automating key activities to help marketers achieve better targeting and alignment between sales and marketing. As part of our multi-year product vision, we're building out an integrated platform that optimizes end-to-end go-to-market motions by unlocking omnichannel cross-departmental use cases. This strategy is resonating with customers. Over 75% of marketing OS customers are already sales OS customers who want to get their teams onto the same tools, leveraging the same data. In the quarter, we added lead expansion capability, which allows users to expand their advertising audiences to similar target personas within the same account to influence a larger portion of the buying committee and better multi-thread the deals. Additionally, we know that responding to interested prospects within less than 90 seconds increases conversion rates by close to 400%. That's why we integrated Slack into our workflows engine, putting the right market and buyer intelligence in front of the right people in seconds. For example, if a prospect from one of your assigned accounts visits a high-value page on your website, we can automatically alert you and attach the relevant account and deal context for immediate outreach. We also expanded our campaign reporting capabilities to include insights into account creative and domain placement for DSP campaigns, which supports quick A-B testing and helps streamline workflows. In Operations OS, we're helping customers move beyond static data quality enrichment and into a world of continuously updated, ready-to-action data inside their CRM. Customers can now automatically capture all relevant companies inside their predefined total addressable market and operationalize them through sophisticated routing. They can append new information such as buying committees or sales signals to all accounts within the CRM. And they can track data changes through dynamic triggers to allow teams to take action on any detective changes at scale. For example, we will capture relevant sales signals such as a key contact moving to a new company and then automatically capture a replacement contact at the account and alert the sales reps so they can take action on this change, while automatically generating related records in the CRM. And from a data access standpoint, we delivered massive performance improvements to our APIs, reducing our API call time by 55%. The enterprise demand for our APIs has grown rapidly, with the number of API customers more than doubling this year alone. ZoomInfo APIs not only provide organizations with a means of connecting systems and applications, but often play a critical role in company-wide digital transformation initiatives. A second focus area in Q3 was to introduce new market signals to help provide our customers with the most actionable and complete data set. Intent data is an extremely important signal that sales and marketing teams increasingly rely on for prioritizing the right accounts to engage with. This quarter, we introduced the ability to bring outside intent sources into the ZoomInfo platform, starting with G2 intent data. Layering G2's intent signals on top of our powerful company and contact intelligence allows customers to take better advantage of their G2 intent signals by enabling direct action against those signals in our platform. In addition, we've improved our website's offerings so that customers can indicate high, medium, and low buying intents driven by visits to individual web pages, such as a pricing page visit being a higher buying signal than a visit to a careers page. These signals can then be leveraged to create high-intent audiences to power advertising campaigns or sales outreach. The third area of focus was to reduce friction in setup and user management processes for admin. As ZoomInfo's RevOS platform has become a solution for entire go-to-market teams, we have focused on delivering deeper account controls with frictionless setup. We have made multiple updates to automate the provisioning and deprovisioning of users, the ability for admins to manage and connect email accounts across their user base, driving better adoption within Chorus, as well as a self-service path for purchasing additional seats, data credits, and advertising media sets. And lastly, we've made continued investments to our data foundations. further deepening our competitive advantage. From a data coverage standpoint, we've invested in machine learning, data acquisition, and enhanced location-based matching technologies, increasing our data coverage. We nearly doubled our non-headquarter company locations to more than 35 million locations. We now list revenue headcount and industry classification for 100% of companies, including their NAICS and SIC codes. And we also expanded our technographic data set and now track more than 300 million pairings between companies and the distinct technologies, platforms, programming languages, and hardware they use. ZoomInfo can identify technologies across more than 200 technology categories, including a company's CRM, corporate performance management system, or even their travel and expense management system. Companies can leverage our technographic data to identify their competitors' customers, allowing sales teams to make their case for displacement and win-back business, or to gauge the relative sophistication of customers and determine their ideal customer profile. Nearly 90% of our active tech to company pairings have been updated within the past three months. Before I wrap up, I wanted to welcome the newest members of the ZoomInfo team, including the recently added leaders in HR, sales, marketing, and security, and the more than 150 employees across the company that we hired in Q3. There remains a huge opportunity ahead of us, and we continue to upgrade our team to support our long-term growth outlook while prudently investing in the business in the short term. In closing, we are the clear platform leader. Companies in all industries are looking to drive efficiencies across their go-to-market motion, and we are well positioned to capitalize on the generational shift as more and more sales teams use data and insights to drive their go-to-market motion. We have an amazing group of customers from enterprise to small businesses that we're helping grow efficiently, and we continue to invest in the platform and the team to drive customer success, a key part of the sustainable long-term growth plan. While the economic outlook remains uncertain, we remain committed to driving improved margin performance. Our financial model puts us in the elite category of high-growth software companies, that are delivering expanded profitability and free cash flow at scale. With that, I'll hand it over to our Chief Financial Officer, Cameron Heiser.