ZoomInfo Technologies, Inc. ((ZI)) has held its Q4 earnings call. Read on for the main highlights of the call.
ZoomInfo Technologies, Inc. recently held its earnings call, revealing a generally optimistic sentiment despite certain challenges. The company showcased strong performance in its upmarket segment, significant growth in its operations business and Copilot, and an increase in high-value customers. However, it also acknowledged difficulties in the down-market segment and a forecasted negative growth for 2025. The overall tone of the call was positive, driven by strategic initiatives focused on upmarket expansion and innovation in AI and data services.
Better-Than-Expected Q4 Financial Results
ZoomInfo reported GAAP revenue of $309 million for Q4, with an adjusted operating income of $116 million, achieving a margin of 37%. These figures surpassed the high-end of the company’s guidance, indicating a robust financial performance for the quarter.
Strong Performance in Upmarket Segment
The upmarket segment, which constitutes more than two-thirds of ZoomInfo’s business, grew by 2% in 2024. This segment is on track for mid-single-digit growth, offering higher margins compared to the down-market segment.
Operations Business and Copilot Growth
ZoomInfo’s operations business experienced a 27% year-over-year growth in Q4. Additionally, Copilot exceeded expectations, achieving over $150 million in Annual Contract Value (ACV).
Increase in High-Value Customers
The company reported a sequential increase of 58 high-value customers, bringing the total to 1,867 customers with more than $100,000 in ACV, marking a year-over-year increase of 47 customers.
Improved Net Revenue Retention
Net revenue retention improved to 87% in the fourth quarter, marking the first sequential increase since Q1 2022, indicating enhanced customer satisfaction and retention.
Successful Customer Partnerships
ZoomInfo successfully closed transactions with major organizations such as CoStar, Athenahealth, and Cox Media. The company also partnered with Lumen Technologies for the deployment of Copilot.
Decline in Down-Market Segment
The down-market segment, which comprises less than one-third of the business, declined by 9% in 2024. This segment is expected to face further declines in 2025, reflecting ongoing challenges.
Negative Growth Forecast for 2025
ZoomInfo projects GAAP revenue for 2025 to be between $1.185 billion and $1.205 billion, representing a negative 1.6% annual growth at the midpoint of guidance. This forecast underscores the challenges in the down-market segment.
Challenges in Down-Market Customer Acquisition
The company has implemented disqualification policies for new down-market business, resulting in an estimated $2 million per month headwind, highlighting the strategic shift away from this segment.
Forward-Looking Guidance
For 2025, ZoomInfo anticipates GAAP revenue between $1.185 billion and $1.205 billion, with adjusted operating income ranging from $426 million to $436 million. The company expects non-GAAP net income between $0.95 and $0.97 per share. The guidance emphasizes a strategic focus on upmarket growth while maintaining a cautious approach to down-market contributions.
In summary, ZoomInfo’s earnings call conveyed an optimistic outlook, driven by strong upmarket performance and innovation in AI and data services. Despite challenges in the down-market segment and a negative growth forecast for 2025, the company’s strategic focus on high-value customers and successful partnerships positions it well for future growth.