ZoomInfo Technologies Inc.

Good day and thank you for standing by. Welcome to the Zoom Info fourth quarter and full year 2024 financial results conference call. At this time, all participants are in a 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. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jerry Szyzycki, Vice President of Investor Relations. Please go ahead.

Thanks, Lauren. Welcome to ZoomInfo's Financial Results Conference Call for the fourth quarter and full year 2024. With me on the call today are Henry Shuck, Founder and CEO of ZoomInfo, and Graham O'Brien, our Interim CFO. 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 sections 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. ZoomInfo is making meaningful progress, and I believe we're in a better position today than ever before. In Q2, we took a number of steps to set up the company for long-term growth and success. In Q3, we stabilized the business. And in Q4, we drove growth across all of our key operating metrics, which resulted in better than expected financial results achieved faster than we had anticipated. As a result, GAAP revenue for the fourth quarter was $309 million, and adjusted operating income was $116 million, a margin of 37%, both above the high end of guidance. The results in Q4 represent the culmination of changes to sales, product, and other operations that we enacted over the past two years. Our execution caught up to our innovation, leading to happier and more engaged customers. With our data and platform, our customers are winning in two key ways. They are winning with Copilot by leveraging the best go-to-market data, AI applications, and agents throughout their go-to-market teams. Copilot again exceeded expectations and now has over $150 million in ACV. And our customers are winning with ZoomInfo Operations, the data foundation that enriches and strengthens their internal systems, empowers their systems of record, data warehouses, and AI initiatives. Operations is the fastest growing area of our business, driving accelerating growth, and in Q4 was up 27% year over year. With the continued success and momentum of our data and operations solutions, we are well on our way to becoming the de facto provider of data and AI in the enterprise. We think of our market in two ways, upmarket and downmarket. And this is the framework that we will be using to talk about the business consistently moving forward. Upmarket includes our enterprise and mid-market businesses, where we are resourcing against the large and growing opportunity of companies with greater than 100 employees. For our upmarket customer base, we continue to add more reps and develop more data sets, features, and functionality for the platform. We have also expanded our trial motion flexibility, rebalanced account loads, and doubled down on services to delight the customer and drive their success. Upmarket is more than two-thirds of our business, grew 2% in 2024, and is on a path to growing mid-single digits and has significantly higher margins than down market, primarily due to the difference in customer lifetime value. We expect our continued shift up market to drive profitability improvement as well. We define down market as businesses with fewer than 100 employees. In this cohort, we are disqualifying more risky small business, requiring upfront prepayment, and onboarding customers efficiently through a digital first approach. Downmarket comprises less than one-third of our business, declined 9% in 2024, and shows signs of stabilizing to a smaller and healthier portion of the business. We expect to report on this upmarket-downmarket split going forward while sharing relative size and growth rates, but I think it is important to reiterate that more than two-thirds of our business is upmarket and strong and growing. Our investments upmarket continue paying off, and we see opportunities to drive upside to our upmarket growth while we are aggressively managing the contribution of the lower end of the market. The lower end of the market is going to continue to decrease as a percentage of the business, and while it will be smaller, it will be healthier, and we will discount its contribution to guidance so that we can minimize the potential impact of this transition. And we're already seeing our investments up market paying off. We see it in our 100K customers, our million-dollar-plus customers, and in net revenue retention. We now have 1,867 customers with more than $100,000 in ACV, a sequential increase of 58 customers, and a year-over-year increase of 47 customers. We also drove sequential and year-over-year growth in both the ACV and the number of customers in our million-dollar cohort. And net revenue retention increased to 87% in the fourth quarter, the first sequential increase in NRR since Q1 of 2022. Improving our customers' perception of us and staying aligned with our customers' go-to-market needs has been a key focus a key focus for us this year. As part of that effort, we recently conducted a brand survey of more than 400 marketing and sales leaders. The survey found that 99% of respondents said their perception of ZoomInfo has improved or stayed the same in the last six months, with the majority of those saying it improved. During the quarter, we closed transactions with CoStar, Athena Health, CareerBuilder, Hedrick & Struggles, Cox Media, Getty Images, Highgate Hotels, and the AICPA. We partnered with Lumen Technologies, a global telecommunications company, to equip 1,000 of their sales and customer support reps with Copilot to improve retention and upsell. Copilot is being deployed to drive sales productivity, combat competitive pressures, and drive revenue growth. The company also plans to leverage Zoom Info Labs, our white glove services arm, to prioritize leads within their marketing team and deliver them directly to sellers within Copilot. We partnered with a leading digital marketing company to completely transform the way they go to market. As they transition from product-led growth to sales-led growth and move more upmarket, we are providing them with the complete ZoomInfo go-to-market intelligence platform. From our marketing solution and call recording and transcription to enriching data and using Copilot, We are helping them execute account-based marketing strategies for new logo acquisition and driving cross-sell and up-sell as they expand up market. We also used our newly released trial motion for Copilot to grow a 100-seat proof of concept at one of the largest job search engines, more than tenfold. Our successful trial allowed us to prove that we could deliver more connects, build more pipeline, and drive better conversion for their reps. One of the key drivers of this quarter's success started two years ago when we embarked on a journey to up-level our product organization with AI and platform leaders who have dramatically accelerated our pace of innovation. From listening to thousands of client calls and meeting with hundreds of customers, it is clear that go-to-market leaders are all looking for success across four key areas. They want to grow new logos, expand their customer base, improve rep productivity, and leverage AI so that they do not fall behind. To deliver on that for our clients, we start with the highest quality B2B data in the world. In Q4, we created new data products that get our customers in front of prospects precisely when they're in market for their products and services. We enhanced our intent solution by introducing persona level website identification. allowing sellers to pinpoint high intent buyers within specific roles. Expanding beyond account level indicators to person level data has led to a 15% lift in action rates. Our co-pilot interface allowed us to activate this data innovation directly into the workflows of tens of thousands of users. In the quarter, we generated proprietary signals and accelerated deals for more than two-thirds of active opportunities for our upmarket customers. Those customers would have missed out on two-thirds of the deals in their pipeline without ZoomInfo. We continued our pace of innovation by expanding our co-pilot AI agents that automate core parts of a seller's workflow. By synthesizing live buyer interactions, our agents create dynamic, always up-to-date account plans that capture relevant signals the moment they surface. These AI agents automatically identify deal risks and recommend ways to expand buying groups. All of this runs on our enterprise-grade AI governance and customization framework, already deployed within some of the largest go-to-market organizations in the world, ensuring they can adapt these capabilities to highly complex and specialized sales motions. We're also expanding key use cases beyond sales development representatives and other top of the funnel prospecting use cases. We're now gaining traction among account executives, account managers, and customer success managers, a user base more than three times larger than SDR. Account executives and account management teams are adopting Copilot for automated account planning, account expansion, and deal acceleration. We have seen strong product market fit with Copilot activating the first cohorts of AEs and AMs at utilization levels comparable to our core SDR user base. I'm confident we'll continue to automate and move an increasing share of mission-critical go-to-market workflows onto the ZoomInfo platform. I would also like to take a moment to thank Ali Dazdan, our former chief technology officer who's transitioning engineering leadership to our Senior VP of Engineering, Philip Popovic. Ali played an important role in helping us build enterprise processes and infrastructure here, and we wish him all the best in his next endeavors. We're excited about Philip's expanded role and are confident that he will continue to accelerate our pace of innovation and serve as a strong partner to our customers and his internal counterparts throughout the company. I also want to thank Patrick McCarter, who after nearly eight years of partnership and board directorship is moving on from the ZoomInfo board. Patrick is someone that I respect deeply and who has been at the table for every strategic decision over nearly a decade. His knowledge, engagement, and experience will be missed, and we wish him the best as well. I'm also excited about the recent additions of Katie Rooney and Rob Julio to our board of directors. Katie had decades of experience in finance, operations, strategy, and corporate development. She was recently named CFO at Maven, the world's largest virtual health platform for women and families. Rob is currently Chief Customer Officer at Canva and previously was Chief Customer Officer at HubSpot and Chief Marketing Officer at DocuSign. At HubSpot, he oversaw the Flywheel organization, the marketing, sales, services, and revenue operations team. Rob also spent 11 years in senior marketing and sales leadership roles at Adobe. We are incredibly excited about the fresh perspective and long history of successful operating experience we add to the boardroom with these additions. In closing, we have always had a history of disciplined financial and operational execution. And now more than ever, our innovation engine is creating a tailwind on top of our data moats. We have taken the necessary steps to drive improved operating performance and set the company on a path to growth while driving industry-leading profitability, expanding free cash flow per share, and defining the future of go-to-market with innovative solutions that drive customer delight. We have a large, untapped addressable market, a strong innovation in data moat, and we are winning the opportunity to be the go-to-market data and AI partner for upmarket customers. With that, I'll turn the call over to Graham.