GTM — ZoomInfo Technologies Inc.

Summary of ZoomInfo Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $310 million, up 1.5% year-over-year, exceeding guidance.
• Adjusted Operating Income (AOI): $110 million, with a margin of 35%, up more than 2 points year-over-year.
• Unlevered Free Cash Flow: $120 million, representing a 39% margin.
• Net Revenue Retention (NRR): Held steady at 90% for the third consecutive quarter.
• Upmarket Annual Contract Value (ACV): Grew 5% year-over-year; however, downmarket ACV declined 11%.
• Customer Growth: 32 new customers with ACV over $100,000 year-over-year.

2. Strategic Updates and Business Highlights

• ZoomInfo's non-seat-based operations and Data-as-a-Service (DaaS) offerings grew over 20% year-over-year, now comprising nearly 20% of the business.
• The company is shifting towards a consumption-based pricing model, allowing customers to convert historical per-seat spending into data consumption credits.
• New integrations with major platforms like Salesforce, ChatGPT, and Microsoft Copilot were highlighted, reinforcing the value of ZoomInfo’s data.
• The company is restructuring to enhance operational efficiency, which includes a workforce reduction affecting 600 employees, primarily in R&D and downmarket sales.

3. Forward Guidance and Outlook

• Q2 2026 Guidance: Expected revenue between $300 million to $303 million and AOI between $103 million to $106 million.
• Full Year 2026 Guidance: Revenue revised to $1.185 billion to $1.205 billion (a 4% decline at midpoint) and AOI of $437 million to $447 million, with an expected margin of 37%.
• The company anticipates a return to growth by the second half of 2027, driven by strategic shifts and improved consumption metrics.

4. Bad News, Challenges, or Points of Concern

• Market Conditions: Macro conditions worsened towards the end of Q1, leading to a slowdown in purchasing decisions, particularly in the software sector.
• Customer Confusion: Increased uncertainty regarding AI capabilities has led to hesitancy in purchasing, particularly among software clients.
• Downmarket Performance: Continued decline in downmarket ACV and elevated churn rates in the software vertical, reflecting a challenging environment.
• Restructuring Costs: Anticipated restructuring costs of $45 million to $60 million, which may impact near-term financials.

5. Notable Q&A Insights

• Demand Patterns: There is a significant disparity in demand between the software vertical and traditional industries, with software companies facing more challenges.
• AI Confusion: The confusion surrounding AI's capabilities is impacting purchasing behavior, particularly among sophisticated software clients.
• Transition to Consumption Model: The company is confident that the transition to a consumption-based model will align better with customer needs and drive future growth.
• Customer Feedback: Initial trials of new tools like GTM Studio have received positive feedback, indicating strong potential for increased data consumption.
• Future Growth: The company expects to gradually shift towards a more balanced ACV mix between seat-based and non-seat-based models over the next 12 to 18 months, with a focus on enhancing customer value and reducing reliance on traditional pricing structures.

Overall, while ZoomInfo reported solid Q1 results, the company faces significant challenges from macroeconomic conditions and customer behavior shifts, prompting a strategic pivot towards consumption-based pricing and operational efficiency.