ZoomInfo Third Quarter 2026 Financial Results Conference Call - ZOOMINFO TECHNOLOGIES INC

Explicit Guidance:

• FY2026 Full Year:
  • Revenue: $1.2235–$1.2265 billion (2% YoY decline at midpoint).
  • Adjusted Operating Income: $452–$455 million (37% margin at midpoint).
  • Non-GAAP Net Income: $1.125–$1.135 per share (based on $318 million weighted average diluted shares).
  • Unlevered Free Cash Flow: $405–$425 million.
• Q4 2026 (Full Year 4th Quarter):
  • GAAP Revenue: $294–$297 million.
  • Adjusted Operating Income: $113–$116 million.
  • Non-GAAP Net Income: $0.285–$0.295 per share.
  • Assumptions: Guidance assumes a consistent environment, no shortening of sales cycles, and that pricing transitions/GTM1 rollout provide no net financial benefit (any improvement is upside).

Business-Segment Outlook:

• Upmarket vs. Downmarket: Upmarket ACV mix is 77% (14-point shift over 3 years); Upmarket ACV growth is flat YoY in Q3. Downmarket ACV declined 14% YoY in Q4; operations ACV continues to grow double digits.
• Vertical Trends: Software vertical (approx. 30% of business) remains challenged with longer sales cycles and larger buying groups. Large non-software customers (Finance, Insurance, Real Estate, Manufacturing) show record growth in ACV and number of million-dollar customers.
• Product (GTM1): Launching GTM1 introduces "real multiplayer go-to-market AI" and a consumption-based model where customers buy an "entity-resolved view" rather than seats.
• Consumption: Over 10,000 customers accessing data via new surfaces (MCP server, CLI, APIs, integrations); consumption doubled sequentially. Current usage draws down pre-existing credits; future revenue growth expected as customers expand and transition to consumption pricing.
• Agent Teams: Monetized through combined AI and data credits; adoption expected to drive consumption inflection as agents run repeatable go-to-market workflows (e.g., searching ZoomInfo data via Grok, Vercel, or Zapier).

Market and Competitive Outlook:

• Competitive Dynamics: Management anticipates consolidation of low-end "vibe-coded" AI competitors, with trust and compliance driving upmarket customers to ZoomInfo.
• Customer Behavior: Higher churn and re-acquisition rates observed; more customers leaving and returning (up >10% YoY in first three quarters) due to dissatisfaction with other providers' data quality.
• Pricing Strategy: Introduction of hybrid pricing models to balance fixed investment and variable consumption; aimed at reducing barriers to entry and enabling modular data usage for customers building custom front-end applications.

Macro / Industry Outlook:

• Software Sector: Expect continued pressure in software vertical with no immediate improvement in the operating environment; longer sales cycles driven by complex buying groups.
• Economic Environment: Management believes they are "approaching the trough" of growth headwinds despite a challenging market.
• Capital Allocation: Expect to continue delivering "attractive free cash flow per share outcomes over time." Net leverage improved to 2.2x (from 2.3x) for the third consecutive quarter.

Strategic Initiatives:

• GTM1 Platform Launch: Full market launch expected later in the current quarter; sales team fully deployed on the platform.
• Acquisitions Integration:
  • 00.ai: Agent team functionality coordinating teams of agents for go-to-market plays.
  • WorkBounce: Strengthened "context graph" with a semantic knowledge layer integrating unstructured data (emails, transcripts) with structured data.
• Product Expansions: Native integrations with ClickUp, N8N, and Salesforce's Hunter agent; unified platform where sales, marketing, and operations run on one instance.
• Capital Deployment: $35M senior notes retired (saving >$1M annual interest); $7.5M stock repurchase. Management expects to invest across the capital structure when opportunities arise.
• Litigation Settlement: MOU signed in October to settle 2024 securities litigation; pending court approval, expects $44M payment with $25M recoverable via insurance/legal costs.

Risks and Headwinds to Outlook:

• Sales Cycle Duration: Continued elongation of sales cycles in the software vertical and larger buying groups impacting new business and upsells.
• Consumption Timing: Current consumption growth may not immediately translate to revenue as it draws down pre-existing credit balances; financial impact lags usage increases.
• Guidance Sensitivity: Full-year and Q4 guidance assumes no improvement in sales cycles or immediate benefit from GTM1/pricing transitions; upside exists if these factors improve, but downside exists if they worsen.
• Retention Pressure: Net revenue retention (NRR) declined to 88% (from 89%) driven by fewer/smaller upsells in software; lower-end upmarket business faces greatest headwinds.

Management Tone on the Future:

• Confidence Level: High confidence in the durability of data assets and the opportunity presented by GTM1 and consumption trends.
• Key Sentiment: Encouraged by early field excitement for GTM1, record growth in the million-dollar customer cohort, and the "upside potential" as the company moves past the growth trough.
• Strategic Stance: Disciplined focus on long-term outcomes; intentional shift to upmarket customers and digital motion for downmarket to maintain resilience.

Miscellaneous:

• RPO/Backlog: RPO total $1.1B (of which $793M recognized in next 12 months); Current RPO decreased 4%, driven by fewer superseding deals and fewer large early renewals.
• Share Count: Weighted average diluted shares: $317M (Q3), exiting at $319M.
• Restructuring: Total estimated charges for May 2024 program approx. $33M ($29M incurred YTD).