ZoomInfo Technologies Inc.

Good day, and thank you for standing by. Welcome to the Zoom Info Third Quarter 2024 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 a session, you need to press Star 1-1 on your telephone. You then hear an automated message advising your hand is raised. To withdraw your question, please press Star 1-1 again. Please be advised that today's conference is being recorded I want to hand the conference over to your first speaker today, Jerry Suzitsky, Vice President of Investor Relations. Please go ahead.

Thanks, Victor. Welcome to ZoomInfo's Financial Results Conference call for the third quarter of 2024. With me on the call today are Henry Shuck, founder and CEO of ZoomInfo, and Graham O'Brien, our interim CFO. Hello. 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. Reconciliation can be found in the financial results press release or in the slides posted to our IR website. With that, let me turn the call over to Henry.

Thank you, Jerry, and welcome, everyone. We continue to see stabilization and improvement in our net retention rates and believe that we're moving forward with a clean slate while delivering improved financial results. Q2 was about implementing new initiatives to position the company for long-term success, and Q3 was about executing on these initiatives and moving the business forward. In Q2, we successfully deployed a new business risk model, which has successfully reduced the volatility around future write-offs. In the third quarter, we applied this model more broadly and transacted more than 55% of our new business opportunities through upfront prepayments, up from 33% in Q2. In doing so, we also disqualified more risky small businesses than ever before. While this is absolutely the right thing to do for the long-term health and durability of our business, it will remain a headwind to the optics of our growth in the coming quarters. In the quarter, ZoomInfo Copilot performed better than expected. Our NRR stabilized at 85% for the third consecutive quarter, And we accelerated our shift up market by delivering strong enterprise growth and growing both our $100K and million-dollar-plus customer cohorts sequentially. As a result, gap revenue for the third quarter was $304 million, and adjusted operating income was $112 million, a margin of 37%, both above the high end of our previously provided guidance. We remain committed to efficiency with a focus on growing levered free cash flow per share. To that end, unlevered free cash flow for the quarter was $111 million, up 17% year over year. In Q3, we also retired 24 million shares, approximately 7% of our total shares outstanding. Since March of last year, when we announced our first share repurchase authorization, we have retired 68 million shares or approximately 17% of total shares outstanding. We believe in a long-term opportunity to drive shareholder value through compounding growth and levered free cashflow per share. When you combine our strong cash generation with the ongoing share count reductions, we expect the company will do at least $1 of levered free cashflow per share this year. And we plan to grow that number meaningfully in 2020-25 in 2025 and expect to continue to grow it over the long term. In a seasonally slower quarter for our upmarket business, we were able to deliver another strong enterprise quarter. Our 100K customer cohort grew by 12, the second consecutive quarter of sequential growth, ending the quarter with 1,809 greater than $100,000 customers. Revenue from this cohort now makes up 44% of our ACV. We had one of our best year-over-year increases in million-dollar-plus customers and drove accelerating sequential ACV growth from that cohort. And enterprise ACV, which now represents approximately 41% of the business, grew 1% sequentially. More customers are turning to ZoomInfo because we're driving demonstrable results with strong ROI that helps customers increase their revenue and reduce their costs. During the quarter, we closed transactions with leading organizations of all sizes, such as Commerce Bank, Samsung, Bamboo HR, Sonesta Hotels, Bentley, Clary, and Premise Health. At Amplitude, we consolidated a number of existing data vendors deployed Zoom Info Copilot across 150 sales reps, added operations for their RevOps team, and continued to support their marketing and audience building and execution efforts with Zoom Info marketing. Recently, The Economist entered our $100,000 customer cohort through an investment in Copilot licenses as part of a multi-year agreement designed to drive efficiency in their sales and marketing operations. Facing challenges with data accuracy, CRMDK, and process automation, they chose our AI-driven solutions to consolidate intelligence providers and streamline workflows. This strategic decision aims to double their sales opportunities, bolster ABM strategies, and gain efficient access to global business intelligence. And a Fortune 50 customer successfully replaced a legacy firmographic provider with our operations and data as a service products and grew into our million dollar customer cohort. They will leverage ZoomInfo to better understand and expand their total addressable market in their SMB and mid-market segments, to identify high propensity to buy accounts, and to build dynamic audiences for digital activation. They will also rely on ZoomInfo to help create a new, more efficient outbound sales motion. In Q3, ZoomInfo Copilot showed strong performance, delivering results that exceeded our expectations, especially in our mid-market and enterprise segments. The driving force behind Copilot's adoption is the measurable return on investment it offers. Our customers report 25% of their total pipeline directly attributed to opportunities identified by Copilot. A 58% increase in prospect engagement rates a 62% improvement in email response rates, and productivity gains of eight hours per week per user. The foundation for Copilot's success is a combination of relevant customer context with best-in-class activation for go-to-market teams. Customer context comes from the strength of our data asset, unified with the customer's business context from systems like CRM or data warehouses. We're known for our leading contact and company data, which provide actionable insights against hundreds of millions of contacts and companies. Now our new sets of products expand into processing billions of data points daily to prioritize and personalize engagement at scale. During the quarter, our product innovation focused on increasing co-pilot opportunities and strengthening product market fit. First, we expanded our signal ecosystem to capture additional mission-critical go-to-market insights that neither exist nor are actionable in legacy CRM. We now process over 300 million daily signals to help every member of the go-to-market team win faster. For enterprise sellers, we added buying group and executive tracking signals, including hiring trends, expanded person moves, or updates to previously engaged contacts. For transactional and SMB sellers, we added SMB signals like business origination or lean data. For value selling, we added key unstructured data assets like earnings transcripts, financial filings, analyst research, or podcast transcripts that deliver relevant context, pain points, and growth expectations. And for competitive intelligence, we added competitive intent signals, social proof, and insight into customer satisfaction to increase retention, including integrations with competitive intelligence platforms like G2, TrustRadius, and TechnologyAdvice. Co-pilot in the signal ecosystem can now be activated by a larger share of our customer base thanks to new integrations with Microsoft Teams for Enterprise, HubSpot for downmarket customers and Outreach, SalesLoft and Groove for technology companies. In addition to existing integrations with Salesforce, Gong and Slack. Going forward, we will expand Copilot's use beyond prospecting to support key use cases for account executives and account management teams. Early results show Copilot is reactivating dormant seats and driving demand for expansion particularly in the mid-market and enterprise segments. Examples include account executives using AI-powered account planning, customer success teams managing renewal risk through signal monitoring, and marketing teams driving sales execution through co-pilot. This comes on the heels of recently being named a leader this year in the 2024 Gartner Magic Quadrant for account-based marketing platform. We believe this is a serious nod to the speed of innovation coming from our product and engineering teams and the market demand coming from the marketing departments of our customers. The demand for Copilot shows that successful automation and AI and go-to-market strategies require high-quality, reliable data. Our customers have realized that running large language models on their CRM data falls short. Zoom Info Copilot goes beyond the CRM to create a complete picture of the addressable market, every account, every buyer, what they care about, and how to engage them most effectively. What sets Zoom Info apart is our ability to unify contextual data across the entire customer journey with a multi-channel activation layer across sales and marketing. This combination of context and activation drives successful AI and go-to-market, and we're best positioned to capitalize on this platform shift. Before turning it over to Graham, I want to acknowledge and thank the team. Across the organization, we're doing great things, from the work in finance and accounting, to the innovation we're driving in product, to the sales team and beyond. We are focused, we are aligned, and we are operating with a sense of urgency. In Q2, we took the necessary steps to ensure that we will that we were very well set up for the future. And I'm pleased that our positive operating momentum translated into strong financial performance this quarter. We continue to focus on enterprise growth, driving customer outcomes with Copilot, and we're committed to driving long-term value creation through consistently growing levered free cashflow per share. While we are not guiding to 2025 today, I would call out that you should expect a very conservative approach to our guidance communications going forward in general, but particularly as we navigate this SMB transition. With that, I'll turn the call over to Graham.