ZoomInfo Technologies (ZI) Q4 2024 Earnings Call Summary

The earnings call for ZoomInfo Technologies (ZI) took place on February 25, 2025, to discuss the financial results for the fourth quarter and full year 2024, which ended on December 31, 2024.

The call was opened by the operator, who provided details about the format and structure, advising that all participants were in a listen-only mode.

Prepared Remarks

Jerry Sisitsky, Vice President of Investor Relations, welcomed participants to the conference call. He introduced Henry Schuck, Founder and CEO of ZoomInfo, and Graham O'Brien, Interim CFO. Jerry emphasized that forward-looking statements made during the call are subject to risk and uncertainty, and actual results could differ from expectations.

Henry Schuck noted that ZoomInfo has made significant progress over the year. In the fourth quarter, the company reported a GAAP revenue of $309 million and an adjusted operating income of $116 million, achieving a margin of 37%. These results exceeded the company's expectations and were attributed to improvements in sales and product operations implemented over the last two years.

Schuck stated that ZoomInfo's data offerings, particularly the Copilot platform, were key in supporting customer success, bringing in over $150 million in annual contract value (ACV). The company's Operations segment, providing data enrichment, experienced a year-over-year growth of 27%.

Schuck also described an ongoing strategy to focus on the upmarket segment, which includes businesses with over 100 employees, thereby expecting improvements in profitability. He mentioned that two-thirds of ZoomInfo's revenue comes from the upmarket segment, which grew by 2% in 2024, and noted a shift in focus from down-market businesses, which represented less than one-third of total revenue and declined by 9% in 2024.

Another highlight of Schuck's remarks was an improvement in net revenue retention (NRR) to 87%, the first increase since Q1 of 2022, driven by enhanced customer satisfaction and upselling opportunities. He also mentioned successful partnerships with various notable companies, including CoStar and Athenahealth, to enhance sales productivity through the ZoomInfo platform.

Financial Insights

Graham O'Brien followed with financial insights. He reiterated the revenue figures and explained the significant results from upmarket investments. The business risk model introduced earlier had led to better customer onboarding and improved retention metrics. O'Brien noted that the company delivered an unlevered free cash flow of $447 million with strong cash generation. He provided guidance for Q1 2025, expecting GAAP revenue between $294 million to $297 million and adjusted operating income between $96 million to $99 million.

O'Brien emphasized continued commitment to shareholder value through share repurchase plans, having repurchased 46.8 million shares at an average cost of $12. The company retains a strong cash position with $140 million in cash and $1.24 billion in gross debt.

Questions and Discussion

During the Q&A session, analysts asked various questions related to the company’s outlook and strategies. Schuck reassured stakeholders that growth is anticipated in the upmarket, although he acknowledged challenges in the down-market segment. Questions about AI's role in sales processes indicated that ZoomInfo's capabilities will continue leveraging data to enhance customer interactions.

Questions focused on how ZoomInfo plans to migrate existing customers to the enhanced features of Copilot, with some migration occurring at renewal times while others may occur off-cycle based on customer interactions. Analysts were encouraged to see an improvement in customer retention and anticipated that migrations would further bolster revenue in the next two years.

In conclusion, the earnings call emphasized ZoomInfo’s successful financial performance, strong focus on upmarket growth, improved customer relationships, and innovative solutions that enhance sales performance, positioning the company favorably for future growth opportunities.

ZoomInfo, Earnings, Q4