Original source text
3 High-Yield Banks for Investors to Buy on the DipZoomInfo Technologies NASDAQ: ZI is prioritizing enterprise customers, expanding consumption-based pricing and restructuring parts of its business as it seeks a return to durable growth, Chief Financial Officer Graham O'Brien said at the KeyBanc Capital Markets Technology Leadership Forum.O'Brien described ZoomInfo as a provider of data and software for business-to-business go-to-market professionals, including sales representatives and revenue operations teams. The company’s data asset includes more than 100 million companies and more than 500 million professionals, he said, along with billions of signals that are surfaced through artificial intelligence to help customers identify potential buyers and determine when and how to engage them.
Get ZoomInfo Technologies alerts:
Quarterly Results and Enterprise Momentum New York Community Bank stock plummets amid real estate risksO'Brien said ZoomInfo’s second-quarter results were generally above expectations, highlighting $107 million of unlevered free cash flow, up 7% year over year. He also pointed to year-over-year margin improvement after the company restructured its business and reduced its cost base during the quarter.
The CFO said ZoomInfo recorded one of its strongest quarters for new business involving customers spending at least $100,000 annually. The company attributed that performance to its focus on a dedicated enterprise account executive organization.
Banking and trucking: Is the economy rolling toward troubles?ZoomInfo began segmenting its sales organization roughly two years ago, according to O'Brien. The change involved accepting longer sales cycles, building buying committees within prospective customers and pursuing higher-value initial contracts that can later expand.
“You’re starting to see that,” O'Brien said of the strategy. “I think it started really catching, getting traction there about a year ago, but this was hit at full speed in Q2.”
The company has also increased specialization by industry, he said, assigning sales personnel more narrowly to verticals such as financial services or manufacturing rather than having them sell across several sectors.
AI, Data and New Pricing Plans O'Brien said ZoomInfo Copilot, the company’s AI product, has been in the market for more than two years and has generated hundreds of millions of dollars in annual contract value. Going forward, he said the company aims to increase consumption of both its data credits and AI credits through its own platform and through external integrations, including application programming interfaces and connections to platforms such as Claude, ChatGPT and Gemini.
ZoomInfo is moving toward a hybrid consumption model that can support customers using its products through software seats as well as customers using the company as a data and context layer for internally built applications.
The company’s Go-To-Market Studio gained traction in the second quarter after beginning its market rollout near the end of the first quarter, O'Brien said. ZoomInfo plans to introduce new pricing and packaging for new business at the end of the current quarter, followed by customer migrations later in the year and into 2027.
Under the new approach, customers will be able to access Studio, Copilot and ZoomInfo Marketing through a unified interface and apply purchased credits across a broader set of applications, O'Brien said. He added that the migration will not be mandatory, as some customers prefer seat-based pricing or specific products while others favor consumption models.
O'Brien pushed back on concerns that AI tools could diminish the company’s data advantage. He said most of ZoomInfo’s data is proprietary and argued that the ability to combine third-party data with customers’ first-party data creates an important context layer for AI-powered go-to-market activity.
Downmarket Pullback and Software Market Pressures ZoomInfo is intentionally reducing its emphasis on the downmarket segment, which represented 24% of the total business, O'Brien said. The company removed a substantial amount of downmarket sales resources in the second quarter and expects the segment to become closer to 20% of the business over the longer term.
Rather than relying on the segment as a major revenue contributor, ZoomInfo plans to pursue a more product-led approach with lower customer commitments and potentially lower price points, which O'Brien said could improve retention. He said downmarket customers remain valuable contributors to the company’s proprietary data asset.
Outside of software, ZoomInfo’s upmarket customers are performing well, O'Brien said. Software represents about 30% of the company’s total annual contract value, down from 40% at its peak five years ago. Gross retention among non-software upmarket customers has improved year over year, he said.
Software customers, however, have faced growing budget pressure. O'Brien said ZoomInfo began seeing more “build versus buy” discussions at the end of the first quarter, contributing to delayed purchases and downsells, particularly in the lower half of the upmarket segment. He said the environment has worsened as venture-backed and private-equity-backed software companies confront growth, profitability and financing challenges.
“I don’t expect software to get better anytime soon here,” O'Brien said.
Cash Flow, Capital Allocation and Margins O'Brien said free cash flow per share is an important measure of ZoomInfo’s operating economics. He said the company generated $1.20 in adjusted free cash flow per share last year and expects to exit the current year at a run rate of $1.25 per share.
He described ZoomInfo as a business with a $1.2 billion revenue run rate, approximately $740 million in annualized adjusted expenses after the restructuring, and annual debt service of between $55 million and $60 million.
In the second quarter, ZoomInfo broadened its capital-allocation approach beyond share repurchases to include debt repurchases, as some of its debt was trading at a significant discount to par. O'Brien said the company has no clear preference among debt repurchases, equity repurchases and reinvestment, adding that management believes it has the operating investments needed to support its product roadmap.
ZoomInfo’s adjusted gross margin is about 87%, O'Brien said. He said the company would be comfortable with the measure declining toward 85% if greater AI consumption produces higher gross profit, and added that cost discipline could help offset some margin pressure elsewhere in the business.
About ZoomInfo Technologies (NASDAQ:ZI)ZoomInfo Technologies Inc is a cloud-based software company specializing in business-to-business (B2B) intelligence and go-to-market solutions. Its platform aggregates firmographic, demographic, technographic and intent data to help sales, marketing and recruiting professionals identify, engage and close on high-value prospects. Subscribers gain access to a proprietary database of company and contact information, enabling targeted outreach and data enrichment across various workflows.
Founded in 2007 and headquartered in Vancouver, Washington, ZoomInfo has expanded its capabilities through both internal development and strategic acquisitions.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
Continue following MarketBeat
Add MarketBeat as your preferred source on Google to see our latest stories in your feed.
Should You Invest $1,000 in ZoomInfo Technologies Right Now?Before you consider ZoomInfo Technologies, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and ZoomInfo Technologies wasn't on the list.
While ZoomInfo Technologies currently has a Reduce rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
The AI boom is creating opportunities across semiconductors, cloud computing, enterprise software, infrastructure, cybersecurity, and automation.
Inside this report, you’ll find 10 companies positioned to benefit as artificial intelligence moves from hype to real-world deployment and becomes a core growth driver for corporate America.
Get This Free Report