ZoomInfo Technologies Inc.

Good day and thank you for standing by. Welcome to the ZoomInfo first quarter 2024 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that this conference is being recorded. I would like to turn the call over to your speaker today. Jerry Sositsky, please go ahead.

Thanks, Kevin. Welcome to ZoomInfo's financial results conference call for the first quarter of 2024. With me on the call today are Henry Schuch, founder and CEO of ZoomInfo, and Cameron Heiser, our CFO. 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 factors section of our SEC filings. 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 forward-looking statements in the slides posted to our investor relations website at ir.zoominfo.com. All metrics on this call are non-GAAP unless otherwise noted. A reconciliation can be found in the financial results press release or in the slides posted to our IR website. With that, I'll turn the call over to Henry.

Thank you, Jerry, and welcome, everyone. Revenue for the first quarter was $310 million and adjusted operating income was $119 million, a margin of 39%. We delivered another quarter of better than expected profitability as we remain committed to profitable growth. Our board approved another $500 million share repurchase authorization and we continue to aggressively buy back shares of ZoomInfo at attractive share prices. Our ZoomInfo co-pilot development efforts are well underway, beta customers are seeing significant ROI, and the feedback has been extremely positive. We feel confident that we have a differentiated solution, and we look forward to releasing this new version of our platform shortly. We continue to navigate through a difficult operating environment, one that has not improved over the last few months. We had expected that this quarter would be challenging, and it was, but we are starting to see signs of stabilization. As it relates to net revenue retention, in the quarter, our SMB business continued to be challenged and performed worse than prior periods. And while down in Q1, given the higher mix of those businesses coming up for renewal, company-wide NRR was better than expected at 85%. Mid-market retention was similar to Q4, and Q1 was the second quarter in a row of sequential renewal rate improvement, reflecting sustained stabilization. We saw enterprise retention stabilize, and we saw renewal rate there improve year over year for the first time since 2022. Software retention also stayed flat sequentially for the first time since Q1 of 22. These stabilization trends have continued into Q2 and are promising signs that suggest we have reached a bottom, which we view as a precursor to a potential inflection to growth. We also had a number we also had another quarter of strong win-back performance. Customers continue to come back in record numbers after trying low-cost, low-quality providers. In Q1, we again saw hundreds of customers come back to ZoomInfo, maintaining the record levels from Q4 and Q3 2023. One software vendor who left ZoomInfo in December 2023 for a lower-cost competitor on the promise of even better data for a fraction of the cost has already returned to us. their frustrated account executive and business development managers, missed demand gen and quota targets, and their leadership team was self-aware enough to correct the mistake. Buy cheap, buy twice. In the quarter, we recorded our largest increase in the million-dollar customer cohort since Q1 of 2023, as we continue to drive traction in the enterprise. ACV from our million-dollar customer cohort is up 16% year over year. In our marketing solutions, we continue to see strength with improving retention and increasing ad spend on the platform. And operations was the fastest growing area of the platform, up 18% year over year as companies are increasingly using Zoom Info to solve the data challenges within their CRM systems and using our data and insights to power their AI strategies. During the quarter, we closed transactions with companies of all sizes and in all industries, including Walgreens, Kirkland & Ellis, Martian McLennan, Universal Robots, Spring Health, MSG Entertainment, Carrot Fertility, OW Logistics, and Go Freight. A multinational staffing company ran an RFP for a vendor to clean up their CRM data to improve their modeling and predictive analytics on candidates. In a competitive deal where high-quality, accurate data was paramount, we fixed their existing data problems, future-proofed their data strategy, and provided a foundation for them to run predictive analytics and expand with their use of AI. This resulted in an upsell representing $925,000 in annual contract value, which over the life of the contract will be worth $2.7 million of total contract value. We also expanded with a mid-market data query and deep learning software company, as they were looking to save money, reduce vendors, and consolidate on a single platform. Like many of our mid-market tech customers, they came into our renewal conversations with a mandate to reduce spend by 20% across all vendors. We turned that initial mandate into a 60% increase in ACB by replacing multiple vendors and consolidating on Zoom Info sales, operations, and marketing solutions, all while providing a better user experience at a better price point. We were also named a leader in Forrester's Marketing and Sales Data Providers Wave and won two Google Cloud Technology Partner of the Year awards as a Google Cloud Partner that most effectively helps customers enhance their analytics and AI initiatives through pre-built data solutions and data sets. Last quarter, I introduced what we believe is one of the most impactful and innovative products for go-to-market teams, Zoom Info Copilot. Zoom Info Copilot is the first AI-powered go-to-market solution that uses a trusted data foundation to automatically prioritize who, when, and how to engage buyers from first signal to content creation and engagement. Modern sales is becoming a science, and we built CoPilot to enable our customers to make every seller their best seller. Today, sellers need to know which companies to contact, who the right person is at those companies, and exactly when to reach out to them. Critically, they must also know what problems those companies are facing and how they solve those problems today. Trying to gather and triangulate the data necessary to know these answers today is incredibly challenging. Surfacing these often buried insights is what we built Zoom Info Copilot to do. And in doing that, Copilot turns Zoom Info from a lookup tool to a platform that surfaces the key insights sellers need to take action against each day. A unique strategic advantage of our Copilot platform is that it's built on top of our world-class proprietary data. Our data covers the universe of companies that you may sell to, tens of thousands of attributes on those companies, hundreds of millions of people who work at those companies, and the most robust set of signals and insights that we constantly validate and update. What sets Zoom Info's Copilot apart from any other solution in the market is that it's sitting on top of our AI-ready, trusted data foundation that drives decisions, personalization, and confidence. For our users, Copilot surfaces diverse and differentiated signals, attributes, and activities that already exist in our proprietary data assets and our partner ecosystem, which we continue to expand with some of the most trusted vendors in the market, including most recently with TrustRadius and TechnologyAdvice. Copilot takes signals like website visitors, spikes in job postings, earnings call transcripts, contract renewal dates, and expert calls that indicate spending or competitive threats, then uses advanced entity resolution and matching to combine them with customers' first-party data. It then applies AI technology to model and inform users immediately about which companies are in the market for their products and how and why you should engage with them. You can think of this similarly to financial trading. Understanding a company's sector and closing price doesn't tell you much about what a stock will do tomorrow. You need indicators around trading volumes, technical indicators, investor sentiment, financial news, expert calls, and many other signals in order to create alpha. Similarly, for our customers, understanding firmographics alone is not sufficient to understand whether or not your next buyer is about to be in market for your product. It's only when you surround that core data with signals that you're able to predict who your next customer should be. Other gen AI or co-pilot products from classic software vendors face a significant problem. They are all layered on top of static CRM data. This data limits the value that can be gleaned from any AI tool for three reasons. First, it's limited in scope to what salespeople have manually entered historically. Second, it's outdated, stale, and likely inaccurate. And third, it lacks the outside signals and insights that drive modern go-to-market motions. Zoom Info Copilot delivers the full picture built on the foundation of the world's most accurate and up-to-date business data, publishes real-time insights, and turns that into personalized and relevant content. More than 20,000 beta users have had access to our Copilot beta. Throughout the quarter, their results and feedback have been overwhelmingly positive. Highlights include that on average, Copilot Beta users reduced their time spent on account research and manual tasks by 10 hours per week, giving them back almost a quarter of their time to spend on more value-added activities. Copilot Beta users identified signals I'm sorry, identified signals were responsible for 45% of total opportunities created, proving that Copilot helps sellers get to buyers faster. And Copilot users created nearly twice as many opportunities compared to non-users in the same roles at the same companies. I can confidently say that Copilot is one of the best pieces of software we've built at ZoomInfo. Across ease of use, end-to-end understanding of our customers' pain points and product market fit. We have had leading AI models in production for years, but with Copilot, our product and engineering teams have shown how to put our data and AI differentiation into one of the first real go-to-market AI products that actually delivers value at scale. At the same time, our go-to-market team spent the last quarter using Copilot, dialing in talk tracks, sales collateral, testing, and more to be prepared to bring Zoom Info Copilot to market. We expect a monetized Copilot and we'll roll it out in a thoughtful way, focusing first on the customers who are most likely to get significant value out of the advanced platform. Our go-to-market teams are excited to bring this to their customers, and I have a lot of conviction around the upgrade paths in our customer base. I look forward to sharing more details about this motion and our learnings in the back half of the year. In conclusion, We continue to make progress toward re-accelerating our business. NRR was better than expected. We're driving traction in the enterprise, and we're seeing promising signs that suggest a stabilization in trends. We have a strong and differentiated data foundation, and we're excited to bring Zoom Info Copilot to market shortly. We are committed to profitable growth, and we continue to repurchase shares of Zoom Info. With that, I'll turn the call over to Cameron.