ZoomInfo Technologies Inc. (GTM) Q1 2025 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the ZoomInfo First Quarter 2025 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. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Jerry Sisitsky, Vice President of Investor Relations. Please go ahead.

Great. Thanks, Lisa. Welcome to ZoomInfo’s financial results conference call for the first quarter 2025. With me on the call today as we announce our financial results live from the NASDAQ market site in Times Square are Henry Schuck, Founder and CEO of ZoomInfo; and Graham O’Brien, our interim CFO. Earlier today, we rang the closing bell at the NASDAQ, and we announced that tomorrow morning, ZoomInfo will begin trading under the symbol GTM. 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. We delivered another consecutive quarter of better-than-expected financial results, continued momentum upmarket, and improved net retention. We dramatically expanded the capabilities of our Go-To-Market Intelligence platform to empower our customers to accelerate revenue growth. ZoomInfo now includes even more sophisticated AI-powered applications and agents with the technology, integrations and intelligence for go-to-market team. As we continue to drive innovation in the ways businesses market and sell, today we announced at the NASDAQ that we are changing our trading symbol from ZI to GTM to reflect our commitment to building the core software platform for go-to-market. Much like Workday is synonymous with enterprise HR and ServiceNow for enterprise IT, ZoomInfo will be synonymous with enterprise go-to-market. In Q1 2025, GAAP revenue was $306 million and adjusted operating income was $101 million a margin of 33%, both above the high end of our guidance. Our shift upmarket continued on the right path during the quarter. We now have 1,868 customers with more than $100,000 in ACV, a sequential increase of one customer and a year-over-year increase of 108 customers. This is after a period of declines and marks our fourth straight quarter of sequential improvement. In our $1 million cohort, we drove sequential and year-over-year growth in the total ACV as well as the average ACV per customer. This quarter, we again drove better-than-expected performance upmarket, which grew 3% year-over-year and now represents 71% of our business. With more than 70% of our business growing and accelerating growth, we are increasingly confident in our longer-term growth aspiration. Net revenue retention also improved in the quarter while rounding to 87% for the second consecutive quarter. During the quarter, we closed enterprise opportunities with Lionbridge, Wipro, Integrity Express Logistics, RSM, Sprinklr, Wiz, and Dice Career Solutions. Stripe is now deploying ZoomInfo Copilot across more than 300 sellers to increase conversion, win rates, and deal size by leveraging real-time insights. Copilot will deliver better account prioritization, create more opportunities for upsell and cross-sell and help to close more deals at higher price points. One of the largest food delivery vendors is activating our full Go-To-Market Intelligence platform to support their expansion efforts and extend their reach into international markets. They have deployed thousands of ZoomInfo seats to drive account prioritization and more efficient prospecting, while our strategic account insights improve win rates, and we expanded our relationship with Intuit to become a more strategic partner on their outbound sales motion. We’re helping them build durable and repeatable sales plays to mid-market accounts and helping them leverage intent data, implement advanced data tracking, integrate APIs for real-time data management, and build sophisticated audience segments for programmatic advertising. Our traction is powered by the increasing pace of innovation across data, intelligence, and go-to-market AI. Our Copilot product is successfully rolling out into our customer base and accelerating our expansion beyond SDR prospecting into AE and AM use cases. This persona represents a 3x opportunity in our customer base, and Copilot has converted AM and AE users on the platform to be as active as our SDR prospecting users. Earlier today, we launched Go-to-Market Studio to enable revenue leaders and operators to architect their go-to-market with intelligence and AI. The single biggest ask from our customers is to unify all CRM alone is no longer sufficient to run go-to-market. Critical signals like product usage, marketing engagement and voice of customer insights sit fragmented across enterprise system. Revenue teams need this data to effectively target, prioritize and execute revenue campaigns. There are only two ways to solve this problem in modern GTM, either by building a complete in-house solution with a massive engineering investment which is in-accessible to all organization or by deploying ZoomInfo’s best-in-class data platform which was built on billions of mess data problems and applying it to solve a customer’s internal go-to-market environment. To launch GTM Studio, we expanded our data asset into core enterprise operations use cases running on our technology platform, built through the successful integration of our acquisitions of RingLead for data management, Chorus, Conversation Intelligence for unstructured go-to-market data, and SetSail for CRM attribution. This positions us as the only vendor with natively integrated data, orchestration, AI, and frontline execution. GTM Studio is the revenue leader and operator solution to run go-to-market, and then Copilot is the frontline activation that turns campaigns into revenue execution. Over the last two years, we have been fixated on making every sales rep more productive, every campaign more targeted, and every workflow more intelligent. This has resulted in record levels of NPS scores these last two quarters, with enterprise NPS up more than six points year-over-year in Q1. In our pursuit of this vision, ZoomInfo has become so much more to our customers than just a provider of company and contact lookup information. Our Go-To-Market Intelligence platform supercharges CRM, giving our customers a living, breathing view of who’s in market and where sales resources should be allocated across the entire total addressable market. Beyond sales, we continue expanding across the entire revenue cycle, increasing the number of and types of go-to-market professionals that use our platform every day. ZoomInfo Marketing now generates 80% of its revenue upmarket and plays a key role in bringing sales and marketing into tighter, more strategic alignment on the Go-To-Market Intelligence platform. With expanded workflow management, we’re embedding our intelligence deeper into our customers’ ecosystems, making their operations more connected, more creative, and more powerful. Our innovation is giving revenue teams the advantage they need to move faster, sell smarter and win bigger. Our trading symbol change reflects our creation of a new category, Go-To-Market Intelligence. This isn’t just a name change, it’s a commitment to building the best go-to-market engine for all companies. We are very pleased with our execution and how that has translated into strong financial results. We continue to reallocate resources upmarket where we are accelerating the transition, as we successfully drive better growth and profitability outcomes. Today, 71% of our business is growing and accelerating growth with demonstrably better profitability than our down-market business. We are being very intentional with the down-market portion of our business, as we continue to move our business up-market and develop solutions that are defining the future of go-to-market. ZoomInfo now does what no other software company does. We unify first and not just sales, not just marketing, not just Rev Ops. That’s what GTM means. It’s not a department, it’s the entire revenue engine, and Go-To-Market Intelligence aligns and activates the whole engine in real-time. Over the last two years, this is a vision we’ve been relentlessly focused on, and it’s the future of go-to-market. With that, I’ll turn over the call to Graham. Graham O’Brien: Thanks, Henry. Q1 GAAP revenue was $306 million and adjusted operating income was $101 million, a margin of 33% above the guidance ranges we provided. Annualized sequential revenue growth for the quarter was 1.1% and as Henry indicated, net revenue retention improved in the quarter while still rounding to 87%. We delivered strong results in the quarter and while we remain as optimistic as ever about the trajectory of the business and have not seen any impact to customer behavior in the current environment, we are including an incremental layer of caution in our guidance, raising the low-end of our full year revenue guidance and reiterating our AOI and cash flow guidance. Over the past year, we transformed the business from higher volumes of transactional new business to a place now, where our growth foundation is rooted in more durable upmarket customer relationships. This transition was notably evident in the first quarter, as our upmarket growth of 3% year-over-year accelerated, while we intentionally continued on the path toward a smaller and healthier version of our down-market business, with down-market declining 10% year-over-year. In Q1, we lacked a significant volume of down-market transactions from last year that predated the introduction of our new business risk model in Q2 2024. So, as we progress further into 2025, a greater percentage of our first year expiring population will have experienced more rigorous qualification during their initial purchase in 2024, potentially leading to better renewal outcomes. We see continued opportunity to drive upside in our upmarket business, while continuing to aggressively manage the contribution from the down-market. In Q1, we drove an acceleration in upmarket growth, leading to a one point shift in upmarket mix from 70% to 71% of the business. We are seeing returns from shifting resources upmarket, while qualifying risk out of our down-market revenue, evident in decreasing write-off activity, efficient cash collections and more reasonable bad debt expenses. These are all signs that our strategy and execution are delivering the intended results. It’s also important to note that upmarket also has better economics than our down-market business, with a margin difference of several thousand basis points. As we expand more upmarket that gives us more opportunities to expand margins, while still resourcing for growth. ZoomInfo Copilot showed continued traction in the quarter as did operations. Copilot continues to attract new to the franchise customers, while we continue to achieve uplift on a per seat basis via our customer migration motion, and we have an exciting product roadmap to finish out the year. Our operations business is growing double-digits and continues to be one of the fastest areas of growth within ZoomInfo. We expect that the launch of Go-To-Market Studio will further support that momentum in the back half of the year. Within operations, our data as a service solution is showing strong traction with new logos up 24% year-over-year and average ACV per customer up approximately 10% year-over-year. Performance was consistent across verticals. Retention in our software vertical improved sequentially for the fourth quarter in a row. From a macro perspective, we continue to monitor verticals to better understand any potential impacts from tariffs, and if there is any measurable impact from the evolving economic environment, and while we do think businesses are looking for more clarity on the economic environment, we have not seen meaningful changes to the way our customers operate. Turning to share repurchases, in Q1, the company repurchased 8.6 million shares of common stock at an average price of $11.05 for an aggregate $95 million. With the Board of Directors approving an incremental $500 million share repurchase authorization in February, as of the close of Q1, there was $543 million in remaining share repurchase authorizations. As you will see in our 10-Q filing, following the close of the quarter, we have already deployed another $50 million plus in cash towards repurchases in Q2, as we use the dislocation and share price created over the past month to retire nearly $7 million shares of stock at an average price of $8.27 per share. To date, we have retired approximately $85 million shares of common stock through share repurchases, one of the factors contributing to our expected growth in adjusted net income per share. Turning to cash flow. Operating cash flow was $119 million in Q1, and unlevered free cash flow for the quarter was $125 million, a margin of 41%. We expect to continue to primarily use the cash flow we generate to retire shares of ZoomInfo, as we believe that will generate the best possible return for shareholders, as we continue on our path to reaccelerating revenue growth. We ended the quarter with $143 million in cash, cash equivalents, and investments, and we carried $1.24 billion in gross debt. Our net leverage ratio is 2.5x trailing 12 months adjusted EBITDA and 2.3x trailing 12 months cash EBITDA, which is defined as consolidated EBITDA in our credit agreements. With respect to liabilities and future performance obligations, unearned revenue at the end of the quarter was $484 million and remaining performance obligations or RPO were $1.13 billion of which $837 million are expected to be delivered in the next 12 months. Before I move to guidance, while our strong operating performance continues to underpin our confidence in the promising trajectory of the business, given the unique current economic environment, we thought it prudent to add an incremental layer of caution into the guide. With that, let me turn to guidance for Q2. We expect GAAP revenue in the range of $295 million to $298 million. We expect adjusted operating income in the range of $101 million to $104 million and non-GAAP net income in the range of $0.22 to $0.24 per share. For the full year of 2025, we are raising the low end of our revenue guidance, and with share count reductions from repurchase activity year-to-date, we now expect higher adjusted net income per share. For the full year 2025, we expect to deliver GAAP revenue in the range of $1.195 billion to $1.205 billion representing negative 1.2% annual growth at the midpoint of guidance and adjusted operating income in the range of $426 million to $436 million, representing a 36% margin at the midpoint of guidance. We expect non-GAAP net income in the range of $0.96 to $0.98 per share based on $352 million weighted average diluted shares outstanding, and we expect unlevered free cash flow in the range of $420 million to $440 million Now, I will turn it over to the operator to open the call for questions.

Thank you. [Operator Instructions] The first question today will be coming from the line of Alex Zukin of Wolfe Research. Your line is open.

Hey guys, thanks for taking the question, and congrats on navigating a volatile macro environment. So, maybe Henry, just the first question. Why now on the change around the name, the ticker, the category, what’s making right now the moment to kind of go double down on this motion? And maybe what are you seeing from the changing conversations as you’re having with customers that you’re renewing, particularly upmarket, that’s driving the acceleration? And I’ve got a quick follow up.

Sure. Thanks for the question, Alex. I think there’s a couple of things. One, we’ve expanded the platform broadly to not only be a platform for prospecting sellers, but also for account executives, account managers, customer success managers. When we launched Copilot last year, we saw ourselves, being pulled into a much broader set of conversations across go-to-market, into marketing, into Rev Ops, and then, we released today our Go-To-Market Studio product, which really allows any revenue operator, any revenue leader to bring their first and third-party data together to leverage AI across that data asset and then to orchestrate campaigns with sellers, account managers, SDRs, and marketing teams. So we’re incredibly excited about the broad range of solutions that we’re providing now beyond just sales and beyond just information, but throughout go-to-market, and so, it felt fitting that our ticker symbol changed to encompass the solutions that we’re now offering. In the upmarket, I think what we’re hearing from our customers, is two things. One, they are thirsty for data to leverage inside of their go-to-market organizations, particularly as they look to leverage AI to drive efficiency and effectiveness of their sales team. And then, when they see the power of that data, they want to leverage a front-end application to help their frontline teams execute. And so, when we’re having conversations, whether it be with Stripe or Intuit, or Semrush, when we’re talking with them, they’re telling us, “yes, we need this data because we know we can drive efficiency if we leverage this data with AI, but, we also need the platform where our frontline team can actually execute on the insights that are coming from that data.” And so, they’re investing in our data asset and then our Copilot platform to execute against that data asset.

Makes total sense. And then Graham, maybe just one for you on NRR. Could you maybe just bifurcate that by what you’re seeing with upmarket versus down-market? And then is there any sign of improvements in IRR from here either in the guidance and kind of what you’re thinking and seeing in the pipeline and renewal activity for the year? Graham O’Brien: Sure. Retention upmarket continues to improve, that’s something we’re really focused on. And down-market continues to be impaired but not getting significantly worse. When we think about improvement going forward, we really think about it from a growth perspective, upmarket versus down-market. The last time we talked about the upmarket business growing mid-single-digits in 2025 in the guidance, I think we’re definitely on that path. And then, down-market, we were down 9% last year, we’re down 10% year-over-year in Q1. And we had an expectation that, that would get worse in 2025 and we still feel really comfortable managing the down-market business within those original parameters.

Thank you. One moment for the next question. And the next question will be coming from the line of Mark Murphy of JPMorgan. Your line is open. Q –Mark Murphy: Thank you very much. I’ll add my congrats as well. I’m curious where the Copilot ACV might have reached in Q1. Was that something that you mentioned, and/or any thought on, kind of overall glide path of that ACV stream for this year? Graham O’Brien: Yes. I can take that one. Copilot continued to grow at kind of a rate that we expect. I think we’re going to disclose milestones as we get to those milestones in the future, but, we’re really happy with not only the migration pattern, but also just the upsell opportunity that we continue to see there in Q1. Q – Mark Murphy: Okay. And how do you feel about this earlier stage copilot rollouts, because, I think commonly we’ve seen with other Copilots and agents out there that, companies will run into some hurdles. You’re trying to understand the security policies, looking at the governance and the data retention and sometimes they’re encountering some bugginess. Are you seeing any of those typical kind of speed bumps or does it feel like it’s full steam ahead?

We feel really good about the trajectory of Copilot, particularly in the upmarket. This was -- Q1 was a quarter where we saw the most upmarket deals for Copilot that we’ve seen, and so, we’re getting much better at the motion of navigating data privacy, data security, and AI governance boards within our clients, and that’s not creating a real speed bump for us today.

Thank you. One moment for the next question. The next question will be coming from the line of Elizabeth Porter of Morgan Stanley. Your line is open.

Great. Thanks so much for the question. I first want to just ask a little bit on the expense side, just given the better top-line, but operating income and free cash flow guidance looked like it was pretty unchanged for the year. So just given the continued shift up-market with better profitability and better top-line in the full year target, is there anything to consider, as it relates to investment priorities that may be limiting some of the flow through? And then, as a follow-up, just as you leverage your own tools, could you speak to the internal efficiencies that you’re seeing and how that may be reinvested or passed through over time?

Yes. I can cover the guidance upfront. So I want to reiterate that we saw no impact to the overall business in Q1 from the economic environment, and in a more normal economic environment, we probably would have felt comfortable flowing through more of the beats into the full year guide. So, for the avoidance of doubt, we’re not seeing anything material in how our customers behave. This approach to guidance is 100% driven by caution as it relates to the uncertain environment. Is it -- when you think about revenue versus adjusted operating income versus cash flow, we looked at revenue and the low end of the range was derisked by the magnitude of the beat in Q1, we’re still expecting to deliver 36% margins in 2025. And then, on margins specifically, the seasonality of our business has evolved. I think we’ve talked about this some over the past few quarters. We expected margins to be several points lower below full year margins in Q1 and several points above the full year margin in the back half of the year, so in line with our expectations. We’ve deployed Copilot across all of our go-to-market teams. I think what that’s really allowed us to do is, take the efficiencies gained by that deployment and their use of the platform and allowed us to invest more in our upmarket growth, our upmarket sales resource allocation. And so, we feel really good about our continued opportunity to shift more and more resources upmarket, as we get efficiencies across the sales team.

Great. Thank you.

Thank you. One moment for the next question. The next question will be coming from the line of Raimo Lenschow of Barclays. Your line is open.

Perfect. Thank you. Christy, on that topic, please, if you talked about the extra buffer where you kind of put it in. If you think about a downturn or like kind of tougher times in selling, where did you think the issue is going to be more on down-market that there you had already like quite a few years of issues or more on up-market and how do you brace for that?

Yes. I think the down-market will be more reactive to a macro slowdown than our up-market business. I think we’re -- I think we feel like we’re in better, probably the best shape we’ve really ever been in from an up-market, down-market mix perspective to weather something. So, we’re providing our initial guidance provided an opportunity for down-market to decline and be managed down at an acceleration relative to where we were in 2024. And our guidance today continues to allow for that. So, we continue to feel comfortable managing the down-market business to a place where it’s a smaller and healthier version of itself.

And then one follow-up for Henry. It’s like obviously in the front office space there is a lot of talk on agents, Copilots, et cetera. Like what do you see in terms of customer understanding or where the different vendors with the different offerings fit in and what can you do to kind of improve your standing there? Thank you.

Look, I think in go, I think of all the departments in Corporate America, go-to-market have been the slowest to leverage AI and agents, in their motions, and I think the big reason for that is that, you need -- it is necessary for you to leverage third-party data and third-party insights in order for you to build an AI agent that’s relevant to go-to-market professionals. You can’t just rely on your first-party data, the same way that you could rely on first-party data to build a support ticket agent or a customer service agent. The data that go-to-market professionals need exists outside of their first-party data. Now that first-party data is incredibly important, and it needs to be married to third-party data to actually execute, an AI-driven motion, which is why we built GTM Studio is to allow our customers to bring what was historically very siloed go-to-market data together with third-party data and then build those AI motions and AI agents off of perfected, enriched, and broad and a broad data asset that includes both first and third-party data. I think this is the unlock for go-to-market team to actually go-to-market with AI.

Thank you. And our next question will be coming from the line of Kash Rangan of Goldman Sachs. Your line is open.

Hi. Thank you very much. My question would be, with respect to the new emphasis of the company’s go-to-market, Henry, which I can certainly appreciate, what new budgets can you go after with this new positioning? And what are the new terms you can go after as a result of that? And also moving upmarket is laudable, but it’s also a higher cost of acquiring business. So as you move upmarket, what is the trade-off with respect to profitability that you might be making, investing in new markets, new enterprise customers, new distribution? It can be a bit of a trade-off in the near-term. How do you weigh the near-term versus a longer-term payoff? Thank you so much.

Yes. A lot in there. I think the first thing is in the down-market, we’ve been moving more and more of our business to digital self-service. And so in the micro SMB today we are pushing micro SMB to digital self-service where they’re transacting without the aid or help of a seller. That’s new. In our go to market motion, we feel good about the trajectory that’s happening there that has already allowed us to move and reallocate resources from the down-market and move those resources up market. I should remind everybody that our upmarket business is meaningfully more profitable than our down-market business, and so as we move more and more of the business upmarket, we have the opportunity to increase margins as that business is far more profitable than our down-market business. And then on the question of expanding within the enterprise and other budgets that we would unlock, I think our big opportunity that we have a number of opportunities there. First, with our Go-To-Market studio product that we launched this week, we have the opportunity to bring Rev Ops professionals, Sales Ops professionals and sales leadership into the ZoomInfo platform to help them to build the go to market motions and go to market campaigns that they’ve always had trapped in their heads but would have to sit in a long queue with it and data science to actually bring to life. And so we’re really excited about bringing a much broader spectrum of go to market leadership into the Zoom Info platform. And then also I mentioned this, the usage of our platform by account executives and account managers who are on copilot now matches the utilization of our platform by our heaviest SDR prospecting use case. And so that gives us real expansion to bring in a much broader spectrum of the go–to-market teams into ZoomInfo and to get more than just top of the funnel prospecting use cases and broaden that to account executive and account manager, and CSM use cases.

Thank you. And our next question will be coming from the line of Brad Zelnick of Deutsche Bank. Your line is open.

Great. Thanks so much for taking the question. It’s so great that you guys are right here in New York. Nice to see the upmarket momentum here in Q1. I’ve got two questions. Maybe first for Henry. I was really intrigued by the Intuit relationship that you talked about. I wanted to understand is that specific to Intuit Enterprise Suite, their upmarket product, and can you maybe talk more about the economic relationship, what this can develop into, and how many more such relationships are out there that you can go after?

Thanks, Brad. We are really excited about our partnership with Intuit. It is a partnership that has grown with merit over time, and we continue to find new and broadening use cases there. It’s not just limited to the enterprise suite at Intuit, it’s much broader than that. Particularly we’ve been helping them with their mid-market focused business and their outbound outreach and think that we can expand much further to more data management, data cleanliness opportunities within the company. Look, I think Intuit is a good example of what we see across all of our enterprise customers. We are lightly penetrated into our enterprise customers or upmarket customers, and we see no demand ceiling today in our ability to continue to grow within the enterprise. So, our job now is to execute on that opportunity to learn from the way that we’re deploying solutions and enabling our enterprise customers and then bring that across the enterprise base, but we don’t see any demand difficulties in continuing to grow that upmarket business because we’re so lightly penetrated across the enterprise.

Huge opportunity. If I can follow-up for you, Graham. As we think about your comments and the forecast that you put together in the conservatism, the embedded caution given the backdrop, I just want to be clear that, in terms of close rates, pipeline build or anything, average discount trends, is there anything in the last six weeks here into Q2 that you’re seeing that is informing the way that you think about the forecast? And if we think upmarket versus down-market, is there one versus the other that you’re perhaps more concerned about? Graham O’Brien: I don’t think we’ve -- we haven’t seen anything in the past six weeks with our customers that is different. I think that our caution is informed by the broader uncertainty, and I think that’s really what’s informing this reiteration and slight raise on revenue. What was the last part of the question, Brad?

Just thinking upmarket versus down-market, if there’s one or the other you’re more concerned about as you look to the remainder of the year? Graham O’Brien: Yes. We continue to feel really bullish around the upmarket opportunity. We got to 3% growth in Q1, and we’re really excited about the path we’re on to mid-single-digits in 2025. Down-market would probably be earlier to react to some macro worsening. So I think that we recognize that. Our initial guidance accounted or gave us a lot of room to manage that part of the business, and we’re just not going to really rely on down-market, to contribute to our revenue guidance in any significant way.

Thank you. And our next question will be coming from the line of Jackson Ader of KeyBanc Capital Markets. Your line is open.

Great. Thanks for taking our questions guys. Henry, on the upmarket growth, how much of that growth is coming from some of those customers that are actually hiring sales reps and like adding new seats to the platform? Graham O’Brien: I can take that. It’s a mix. So we have -- some of our customers are hiring sales reps. A lot of our upmarket growth comes from our operations product, which is up double-digits year-over-year. That’s not really a seat-based model. That’s usually a data delivery model on a subscription basis. So we definitely have a mix of customers and prospects that are growing seats. We have a mix of customers that are signing up for our operations business.

And then also, I mentioned this, we are expanding our use cases across account executive, account manager, and CSM seats as well, where historically we may have been limited just to the top of the funnel SDR use case. Today, with Copilot, we’re able to expand beyond just that top-of-the-funnel use case, and so, those seats existed within our customer base. They don’t need to be hired for us to sell into. But now we have a product that delivers a use case, and a value proposition for them. And then the product itself is bringing them in and having them engage with the product at levels that are the same as our SDR prospecting use case.

Okay. So, I mean, would it be fair to characterize it as like sales hiring is not yet a tailwind if things improve through the year?

Yes, definitely.

Okay. Okay, cool. And then my follow-up, on remaining performance obligation, when should we expect the growth in those, whether it’s total or current, when should we expect those kind of more reflect what you’re seeing in the upmarket motion? Thank you.

Yes. I think when I look at the current bookings growth, we’ve been negative, and then I think we’re at 0% in Q1. So, the trajectory there is improving. I would expect to get back to positive there, it’s mostly a matter of time. Q1 was the last quarter where we were lapping a compare last year, where we had a high volume of down-market new business transactions that didn’t go through our more rigorous qualification process. So, we didn’t really fill the bucket up again with the same or similar transactions in Q1. Once we get into Q2 of this year, where we start lapping the introduction of the new business risk model last year, and we start to get into heavier upmarket quarters, we should have an opportunity to start to get back to positive current bookings growth.

Thank you. And our next question will be coming from the line of Brent Bracelin of Piper Sandler. Your line is open.

Thank you. Good afternoon. Graham, wanted to double click into the down-market business. I get that, you’re seeing a good healthy acceleration up-market, but the down-market business still looks like it’s a $350 million ARR business. How much do you think that business could contract? Do you see that contracting for the next year, for the next couple of years? I think it makes sense to focus upmarket, but any color on the duration of that business and how it contracts over time? And one quick follow-up for Henry. Thanks. Graham O’Brien: Sure. We expected it to contract in 2025 and contracted at a faster pace than it did in 2024. In 2024, it was down 9%. Our guidance in 2025 implied that it will be down in the high negative teens. I think the way we would think about this is getting to an optimal mix, upmarket versus down-market of the business. We’re at 71%, 29% right now. That first milestone is let’s get to 75%, and I think once we get to 80%, that would be my assumption around where down-market would probably stabilize, as the healthier and smaller version that we have been talking about.

Totally makes sense. Kind of more of an 80/20 model. And then Henry for you, the company is generating over $100 million a quarter in cash on average here. You’ve done a dozen acquisitions over the last 10 years, really helping kind of reposition the company. What’s your appetite to do both buyback and tech tuck-in M&A? Would love to get your thoughts there. Thanks.

Look, I think that we’re going to be opportunistic with M&A, particularly tuck-in M&A. But look, right now, we’re going to continue to aggressively reduce the share count, at these levels, given how much greater our intrinsic value is than the market value today. We have great confidence. I have tremendous confidence in the future of ZoomInfo, and I really believe that the best company to do M&A against today is ZoomInfo, and we’re going to use our cash to buy back shares of what we believe is the lowest price, most opportunistic company to buy shares again.

Thank you. And our next question will be coming from the line of Taylor McGinnis of UBS. Your line is open.

Yes. Hi. Thanks so much for taking my question. Graham, one for you. So, when we think about the evolution of NRR this year, how much of it is an improvement that you’re seeing in the different customer segments starting to emerge, so those specific NRRs versus mix? So, maybe you could talk a little bit about that. And part of the reason why I ask is, as you start to lap the SMB go-to-market changes that you made, I guess how much of a tailwind could that be to SMB, NRR, and, therefore, the total two? And then to the extent you can share what NRR is being baked into the guide, I think that would be helpful as well. Graham O’Brien: Yes. When I think about the proportion of just better upmarket mix versus improvements within those segments, right now, it’s really being driven by better upmarket retention. If you look back to when we were at 85% for several quarters there, the sequential uptick is coming from better retention upmarket, we are not getting a large tailwind yet from the better mix. I think over time, as we continue to improve upmarket retention, as we take the upmarket mix from the low 70s to the mid-70s, then it starts to become more 50/50, but right now, the biggest driver of our retention improvement is upmarket retention improvement. And then, I don’t think we’re going to talk or disclose explicitly the retention in the guide. I think you could just think about it as mid-single-digits upmarket growth that is being driven by improving retention in upmarket and then down-market eight to nine points degradation in year-over-year growth, where we see lower retention, and the potential for that to remain lower than it’s been.

Thank you. And the next question will be coming from the line of Michael Turrin of Wells Fargo Securities. Your line is open.

Hi, great. Thanks very much. Appreciate you taking the question. It’s the second straight quarter we’ve seen of pretty good consistent top-line upside. So just -- I wanted to spend some time just on the commentary you’re making around incremental conservatism and the rest of your forecast. Is there any more color you can add-on, which inputs are changing relative to what you’re assuming at the start of the year? And maybe any added commentary you have just around the visibility into rest of your targets, at least on the upmarket side, is just helpful context as we roll it all together? Thank you. Graham O’Brien: I think that the methodology and how we developed the guidance hasn’t really changed. We basically went through the same process for revenue, profitability, cash flow, adjusted earnings per share. And then, considering kind of the unique environment that we’re in right now, we just essentially the last step was layer on an incremental amount of caution around the guidance. So, I don’t think, there’s one or two things I would point to. I think you should still expect in the guide mid-single-digits, upmarket growth, decline in the down-market growth trajectory and consistent margins.

Thank you. Our next question will be coming from the line of Brian Peterson of Raymond James. Your line is open.

Thanks, gentlemen and congrats on the quarter. Henry, you’ve mentioned a few times that you’re expanding the roles that you’re addressing. I’m curious if there’s one role in particular, where you’re most excited about in terms of incremental adoption in 2025. And maybe just remind us, any sense of what your seat penetration is with your enterprise customers. Thanks, guys.

Sure. Seat penetration in enterprise customers is very low. I would tell you, like, maybe high single-digits, low double-digits. And then on roles that we’re most excited about, I don’t think there’s one. Let me give you a couple. I think, first, expanding into the account executive and account manager workforce, we think it’s a huge opportunity, it represents three times the seat opportunity as SDRs and top of the funnel sellers represent, and we have a great solution for them that they are leveraging and using, with Copilot. So we’re excited about continuing our journey to expand into that area. Then I would tell you that, Rev Ops, sales ops, and then by extension sales leadership with GTM Studio will be a target audience of ours. These are people in the company who have the most creative ideas about how to go-to-market, but they get stuck in a long line with IT and data science, and engineering just to see those ideas come to life, and that’s a pretty painful experience that we’ve been really focused on, building around, and giving them a solution to be able to get those creative ideas in the market, and executed on as fast as possible. And when we’re showing GTM Studio to those leaders, they’re incredibly excited about getting their hands on the platform, and we think we’re going to continue to have moments where we get to delight our customers like that, and are excited to have that opportunity.

Thank you. And the next question will be coming from the line of Patrick Walravens of Citizens. Your line is open.

Great. This is Austin Cole on for Patrick Walravens. Henry, I’m wondering about the kind of genesis for this new chapter of the ZoomInfo story, if you will. When did you start coming up with this larger go-to-market vision? It seems in some sense like a kind of natural evolution of the platform, but wondering if there were some maybe potential buyers out there that were inquiring about this kind of capabilities that Go-To-Market Studio can now provide.

I think probably the big thing that we realized was no matter how great of an e-mail you put together, no matter how personalized it is, no matter if it brings in insights from the most rare bespoke sources, and is perfectly crafted, that unless a frontline seller or a marketer takes action against that perfect audience, no revenue is generated, and so, we were hearing from our customers, ‘‘hey. I’m pulling in intent and website visitors and all of these different unique data points, but I’m not seeing it turn into revenue the way that I anticipated it would.’’ Yes. It performs better than our last campaigns that were less personalized, but we want to see this move exponentially. And so, when we were able to bring Go-To-Market Studio together and marry that to Copilot in a way that gives Copilot the ability, to be in front of a frontline seller, connected to their Slack, connected to their Teams, connected to their e-mail, connected to their text messages, designed so that they could take action quickly with those audiences that their sales leaders and their Rev Ops and Sales Ops professionals are putting together for them. We recognize that, once you marry frontline execution with that perfect personalized insight created, e-mail and insight created TalkTrak, then that’s where you can really move the needle and go-to-market, and so, that was sort of the learning that we had, that drove us down this road to put those together.

Thank you. And our next question will come from the line of Surinder Thind of Jefferies. Your line is open.

Thank you. When you guys are thinking about kind of the pipeline and the idea that you’re excited about what you see in the upmarket, can you maybe talk about the mix itself? Copilot adoption early on was primarily newer customers, but it sounds like the increase in NRR of existing clients has been a more recent driver. Just how are you thinking about the different those two cohorts and kind of what’s ahead?

Yes. I think we view the net revenue retention as the primary driver of stabilization and return to reacceleration of revenue. Our new business pipeline is more segmented than it’s ever been. We introduced this in 2024. But, for the down-market customers, we’re able to score them, qualify them, figure out whether it should be going to a PLG digital motion, or if it’s more of the higher end of down-market, whether we should keep a sales rep in that sales cycle. And then upmarket, we’ve really specialized and segmented our account executive base, so that we are investing behind some of these longer sales cycles for these larger customers. So, we’re much more prescriptive and scientific with our customer acquisition engine and that will eventually -- that’s starting to show up in improving retention outcomes, but improvement in retention is the key driver in getting back to our growth goals.

Thank you. And our next question will come from the line of Rishi Jaluria of RBC. Your line is open.

Wonderful. Hi, Andrea and Graham, thanks so much for taking my question. Just one for me. I want to go back to the Q2 revenue guidance and maybe unpack some of the set of assumptions behind it. You saw in this quarter above 1% day’s adjusted sequential growth. Your guide calls for negative 4% days adjusted sequential growth by math. At the same time, you are seeing improving momentum off market. Your comps don’t get -- aren’t super difficult and you’re seeing success with Copilot as well. Maybe just walk us through kind of the set of assumptions you have behind it, how much of it is conservatism, especially as you’re saying the guidance philosophy is pretty similar as before? Thank you so much.

Sure. The incremental caution I’ve talked about was baked into both the full year and the quarterly guides. Of course, the magnitude is bigger by nature with the full year than the quarter. But, yes, Q1 was another great revenue quarter that was driven by great Q4 sales performance and continuing better cash collection and write-off outcomes. So there is a little bit of seasonality in there, relative to our upmarket opportunity, which we usually are starting to see more and more than the Q2 and Q4. But you could think about this incremental caution that we’ve layered in as applicable to the full year as well as the Q2.

Thank you. And our next question will be coming from the line of Allan Verkhovski of Scotiabank. Your line is open.

Hey, guys. Thanks for taking the question. Great to hear retention in the software vertical improved sequentially for the fourth quarter in a row, can you just go a layer deeper. On what trends you saw in this segment the past few months and can you update us on how this vertical is impacting Zoom Info’s total revenue growth? Thanks.

Yeah, so we saw retention in the software vertical improve sequentially for the fourth quarter in a row. Software vertical was one of the largest contributors to the deceleration and decline in growth that we saw starting in 2022. We experienced a lot of down sell pressure there. So, in general, we were able to keep most of those logos but at lower annual spends as we got into the middle of 2024 and more. So now we’re not. We don’t have that level of down sell pressure, and, in fact, we’re starting to get to more of an upsell opportunity place again with the software vertical. So, as a, the retention improvement is really positive for four quarters in a row. We think we’re almost at that place now where software is actually contributing back or back contributing to our aggregate growth as opposed to impairing it.

Great. Thank you, everybody, for joining us tonight. We appreciate it.

Thank you for participating in today’s conference call. You may all now disconnect.