Ladies and gentlemen, thank you for standing by. Welcome to ZoomInfo Third Quarter 2025 Financial Results Conference Call. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Jerry Sisitsky, Vice President of Investor Relations. Please go ahead.

Thanks, Michelle. Welcome to ZoomInfo's Financial Results Conference Call for the third quarter 2025. With me on the call today are Henry Schuck, Founder and CEO of ZoomInfo; and Graham O'Brien, our Chief Financial Officer. During this call, any forward-looking statements are made pursuant to the safe harbor provisions of U.S. securities laws. Expressions of future goals, including business outlook, expectations for future financial performance and similar items, including, without limitation, expressions using the terminology may, will, expect, anticipate, and believe, and expressions which reflect something other than historical facts are intended to identify forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, including those discussed in the Risk Factors section of our SEC filings. Actual results may differ materially from any forward-looking statements. The company undertakes no obligation to revise or update any forward-looking statements in order to reflect events that may arise after this conference call, except as required by law. For more information, please refer to the forward-looking statements and the slides posted to our Investor Relations website at ir.zoominfo.com. All metrics on this call are non-GAAP, unless otherwise noted. A reconciliation can be found in the financial results press release or in the slides posted to our IR website. With that, I'll turn the call over to Henry.

Great. Thank you, Jerry, and welcome, everyone. We are executing well and capitalizing on a rapidly growing AI opportunity and go-to-market. In Q3, we continued to improve the business across every metric. GAAP revenue was a record $318 million, up 5% year-over-year, and adjusted operating income was $118 million, a margin of 37%, both were above the high end of our guidance with the highest level of AOI margin we've reported since Q4 of 2024 and the first time we exceeded the Rule of 40 since Q1 of 2024. During the quarter, we accelerated upmarket growth, improved net revenue retention for the fifth straight quarter, delivered another quarter of strong profitability, and are again raising our financial guidance for the year. We are aggressively expanding the product portfolio with innovative go-to-market AI and workflow products as we continue our shift upmarket. I believe we are building and delivering the best solutions that we've ever put in front of customers, which is driving stronger daily engagement from a diverse set of go-to-market personas. Our operations suite again grew more than 20% year-over-year as our proprietary data asset continues to prove mission-critical to any AI-driven initiative that touches go-to-market. This is our fastest-growing product, and it's accelerating as it gets bigger. And with the launch of Copilot last year, its expansion into GTM Workspace this quarter and the evolution of our GTM Studio platform, we've begun to play offense again. Through the innovation we are driving, I believe it is only a matter of time before ZoomInfo will be synonymous with AI and go-to-market. We believe that our unique and proprietary data assets put us in the winners column as AI proliferates across go-to-market teams. While LLMs can reliably deliver data points available through the second or third page of search results, it is unique data not available on the public web that go-to-market teams require in order to stand out in increasingly competitive markets. If a customer is looking for every residential or commercial roofer in the United States or every company with at least three vehicles in their fleets or every non-franchised quick service restaurant in a certain ZIP code or to identify the buyers visiting their website or researching their competitors, they come to us, not just for this unique data asset, but also for our ability to tie that data asset to our contact and signal data and put them in a position to execute a sales or marketing workflow around these go-to-market attributes. By using Copilot and GTM Workspace, frontline go-to-market professionals get a single pane of glass to execute their daily workflows. GTM Studio is already generating strong interest from operations leaders and their counterparts in frontline sales leadership as they look to close the gap between idea and execution. We're also winning with our account-based marketing platform. ZoomInfo is recognized as the only vendor positioned in the Customers' Choice quadrant in the 2025 Gartner Voice of the Customer Report for ABM platforms, and we added millions of ACV in the quarter as customers like EmployBridge, Ciena, and MasterControl migrated from legacy ABM providers to our integrated ABM platform. With our Salesforce partnership, ZoomInfo Revenue Agent is now bringing the industry's most comprehensive B2B data and agents directly into Agentforce. Our data is enabling sales teams to use natural language queries to uncover hidden opportunities and engage the right contacts at the right time within their existing Salesforce workflows. Through our expanded platform, our unique and proprietary data asset and through recently released partner integrations, our pace of innovation continues to accelerate. During the quarter, we closed upmarket opportunities with insightsoftware, a fast-growing software provider to the office of the CFO, Ryder System, a $12 billion transportation and logistics company; BrightView, a multibillion-dollar commercial landscaper; and Circle K, a multinational convenience store brand. These wins highlight our focused move upmarket and the large total addressable market we have across a wide range of industries. Additionally, a global professional services firm expanded ZoomInfo enterprise-wide, adding sales seats, data and our marketing and talent solutions. Their CMO called it a no-brainer to improve sales pipeline generation, identify active buying signals, reduce wasted time on unproductive leads and connect with the right decision makers. A large private unified data and AI company is now leveraging our sales intelligence platform to power its land-and-expand sales motion across enterprise accounts while also using us to efficiently penetrate new verticals. We demonstrated to one of the largest companies in the world how our data provided a 25% improvement in coverage rates compared to their existing data provider, including far superior coverage in the SMB and startup space. Through company data initiatives, we have increased match rates for customers by more than 20% over the last 6 months. This data advantage is increasingly creating upmarket displacement opportunities from organizations using legacy vendors that provide stale and low-quality data. Many of the world's fastest-growing and most innovative AI native companies like Levelpath, Harvey, Pano.ai, and TiLT choose ZoomInfo as they scale their sales teams and need data signals and workflow to scale in the enterprise. To continue to win, we are providing our customers more than just another fragmented tool or another buzzword solution. We are providing the unified data foundation that connects CRM data, engagement signals, intent data, call transcripts, and market intelligence into one AI-ready system, giving sellers AI to allow them to shift their focus away from the time-consuming low-value tasks of building decks and account plans, filling out CRM fields, prioritizing prospecting lists, and writing follow-ups to the art of sales, building relationships, adding consultative value and closing deals. For 20 years, ZoomInfo has been the trusted source of truth for company and contact data. That foundation isn't going away. It's becoming the launch pad for something much bigger. Today, our master data management capabilities unify fragmented go-to-market data across systems into a single intelligence layer, clean, connected, constantly updated. And now we turn that intelligence into action. With GTM Studio and GTM Workspace, execution becomes automatic. Sellers, operators, leaders, and even their AI agents know exactly where to focus, what to do next, and how to move the number. We're moving from powering decisions to powering outcomes from informing go-to-market to executing it. As we innovate for our customers, we continue to be disciplined capital allocators for our shareholders. In the quarter, we delivered a nearly 300 basis point sequential improvement in margins and are raising our growth expectations for the year. We remain confident in our ability to sustainably deliver revenue growth and expanding margins. We continue to be aggressive buyers of our stock. We are increasingly confident in the trajectory of the business, which gives us even more conviction that our ongoing share repurchases will drive substantial shareholder value, and we will continue to put the majority of the cash we generate into repurchasing ZoomInfo shares for as long as that is the best and highest return use of our free cash flow. AI is giving us an opportunity to capitalize on our proprietary data assets. We are building stickier user engagement and customer relationships, and we have improved net revenue retention for the fifth straight quarter. With that, I'll turn the call over to Graham.

Thanks, Henry. In the third quarter, our GAAP revenue reached $318 million, reflecting a 5% increase compared to the same period last year. Adjusted operating income stood at $118 million, translating to a margin of 37%, which is above our initial guidance. Over recent quarters, we've noted a stabilization in our business, and I'm pleased to report various signs of improvement this quarter. Our emphasis on the upmarket sector has paid off, now accounting for 73% of our total annual contract value, a growth of 10 percentage points over the last two years. This focus resulted in a 6% growth in upmarket annual contract value, alongside a slight improvement in our downmarket performance, which saw a year-over-year decline of 10%, better than the 11% decline in the previous quarter. Our net revenue retention also improved to 90%, marking a 5 percentage point increase over the year and the highest we've recorded since the second quarter of 2023. For our upmarket clients, net revenue retention is once again over 100%, further solidifying ZoomInfo as an essential tool for larger businesses. We pride ourselves on operating efficiently with disciplined investments, reflected in our 37% adjusted operating income margin for the quarter and year-over-year margin improvements, allowing us to regain Rule of 40 status for the first time in six quarters. We now serve 1,887 customers with annual contract values exceeding $100,000, a 4% year-over-year increase, and growth in ACV from this group is significantly outpacing customer growth. This quarter’s ACV growth for this cohort was impressive, marking our best results in several years, five times more ACV added than in the same quarter last year. The ACV for our $1 million cohort also accelerated, exceeding 30% growth year-over-year. We are pleased with our strong results this quarter and are raising our expectations for the full year. Our upmarket strategy is effective, our innovation is accelerating, and our execution remains strong. We now project low single-digit revenue growth for 2025, with an adjusted operating income margin of 36%, and we believe we can consistently deliver Rule of 40 results annually through a combination of revenue growth and margin expansion. As we shift to performance-based equity, our stock compensation relative to revenue remains below average for the software industry and is on a downward trend. Consequently, our Rule of 40 demonstrates a robust combination of strong operational performance and financial discipline. Our operations growth has also accelerated, maintaining over 20% growth year-over-year, with Copilot demonstrating another successful quarter. Initial renewal rates for Copilot are optimistic, showing mid- to high single-digit uplifts compared to renewals on Sales OS. While we focus on upmarket growth, we also aim to enhance our downmarket business, making it easier for smaller customers to acquire the necessary packages while lowering our selling costs for this segment. Our internal teams effectively utilized ZoomInfo’s proprietary data to facilitate this transition, developing models to assess payment risks for smaller customers and predicting collection risks. These models integrate with our Salesforce system, offering real-time assessments that have helped lower our invoice write-offs by 45% since their launch in 2024. Additionally, the nature of write-offs has shifted, with most now occurring from later installments in contracts with downmarket customers, resulting in historically low levels of unpaid invoices. The quality of our customer base is improving, which is enhancing our revenue conversion and collection metrics. As our business moves upmarket, it is becoming more seasonal, making year-over-year growth a more critical measure, while sequential growth becomes less significant. We anticipate fluctuations in sequential revenue growth throughout the year, and it will be normal to see varying trends based on activity levels in the upmarket and downmarket sectors and the linearity of ACV added in recent periods. With our operational strength, positive outcomes in Copilot renewals, a smaller downmarket footprint, and improved upmarket net revenue retention, our overall net revenue retention is seeing a positive trend, up 5 percentage points for the year. We are also transitioning customers to longer-term contracts, with over 50% of our business now on contracts longer than one year. This allows our sales team to engage more consultatively, improving renewal processes and expected net revenue retention over time. On the cash front, operating cash flow for Q3 was $94 million. Unlevered free cash flow for the quarter was $95 million, reflecting an 81% conversion from adjusted operating income and a 30% margin. During the quarter, we repurchased 8.3 million shares of common stock at an average price of $10.46, totaling $87 million. Our weighted average diluted shares outstanding for calculating non-GAAP diluted earnings per share was 334 million, with the non-GAAP share count exiting the quarter at 330 million. We've used 116% of the unlevered free cash generated since early 2024 for share repurchases, decreasing our weighted average shares outstanding by approximately 80 million over the last two years. We plan to continue utilizing our quarterly cash flow to repurchase ZoomInfo shares, as we believe this strategy will yield the highest long-term returns for shareholders when executed at significant discounts to intrinsic value. By the end of the quarter, we had $135 million in cash and investments, alongside $1.3 billion in gross debt, resulting in a net leverage ratio of 2.6x trailing 12 months' adjusted EBITDA and 2.4x trailing 12 months' cash EBITDA. As for future performance obligations, our unearned revenue stood at $432 million, with remaining performance obligations at $1.17 billion, $824 million of which is expected to be recognized in the next 12 months. For those analyzing our calculated billings, remember that changes in our reserve estimates and practices related to higher-risk businesses requiring advance prepayments led to above-normal growth in calculated billings in Q3 last year. Therefore, I advise caution in making projections based on calculated billings growth this quarter. In conclusion, we've seen strong results this quarter with significant improvements. Looking ahead, we project Q4 GAAP revenue to be between $307 million to $310 million, with adjusted operating income ranging from $117 million to $120 million and non-GAAP net income projected between $0.27 and $0.29 per share. We're again increasing our full-year guidance. For 2025, we now anticipate GAAP revenue between $1.237 billion and $1.240 billion, suggesting a 2% annual growth at the midpoint, with adjusted operating income expected between $440 million to $443 million, yielding a 36% margin at the midpoint. Non-GAAP net income is expected to range from $1.04 to $1.06 per share, based on 341 million weighted average diluted shares outstanding, with unlevered free cash flow anticipated to be between $424 million to $444 million. In closing, we are dedicated to managing expectations with a guidance framework consistent with past quarters and committed to fostering revenue growth, margin expansion, and aggressive share repurchases in 2026, which collectively support our expectation of increasing free cash flow per share growth in 2026 versus 2025. Now I’ll turn the call over to the operator for questions.

And the first question will come from Mark Murphy with JPMorgan.

Congratulations on a great performance. The magnitude of revenue upside is just noticeably larger for Q3 than it has been in the recent past. I think we're seeing the same on RPO. I'm wondering if you can drill down into what you think might have fueled that extra strength there in the quarter, for instance, should we say that it's Copilot ramping into more materiality? Could it be boomerang customers coming back onto the platform? Or could it be Google's AI overviews even maybe causing some companies to lean back into their outbound SDR hiring?

Yes. Thanks, Mark. Look, by every metric, Q3 was a really strong quarter. We executed well across the business. I'd say that the products that we're delivering are delivering better renewal outcomes. That mid-to-high single-digit uplift on initial renewal from Copilot is certainly above our internal expectation, and that's contributing to revenue upside in the quarter. We talked about the largest TCV deal in history that we closed early in Q3. That contributed to revenue upside. Shifting the business upmarket is also contributing. So if you think about the 5 points that we've shifted away from downmarket to upmarket over the past year, the upmarket business is now 73% of total ACV. Those 5 points are effectively 5 points of revenue, whereas when that was down market, we would write off or churn through 20% to 30% of that. So when you look at the upmarket ACV growth of 6%, down market showing a sign of stabilization with the negative 10% year-over-year, you weight that and you start to get another kind of point or 2 of revenue growth just from better higher quality revenue base. The last part of that bridge is if you look at usage-based and other revenue, which we generally don't include in our ACV disclosures, that was up $3 million year-over-year as well. And that's another point of growth to contribute to that outsized revenue beat in Q3.

And our next question comes from Elizabeth Porter with Morgan Stanley.

I wanted to follow up on the GTM Studio that just recently went live. Could you share some of the early customer feedback on the solution and specifically the breakdown that you're seeing between greenfield adoption versus existing customers replacing legacy tools or workflows? And what kind of leverage do you expect to see in some of those upsells with the new solution?

Thank you, Elizabeth. The early feedback on GTM Studio has been really positive. We're really excited about bringing that to market. It's one of the most innovative solutions we've built at ZoomInfo and has the opportunity to be the biggest product we've ever released. At its core, GTM Studio is a data management platform that gives RevOps professionals and frontline sales leadership the ability to organize and then architect a go-to-market strategy. First, GTM Studio brings together and unifies all of your data, whether that be CRM data, call transcript data, email data, ZoomInfo data, or unique data that you have about product usage that lives in your data warehouses, bringing that all together in one dynamic workspace to build a complete AI-ready view of your target market. That allows revenue operations professionals and leadership to build really unique audiences. With GTM Workspace and Copilot, they can directly execute those campaigns in those audiences with their frontline sellers. We view this as an incredibly white space opportunity that we have to really execute against as we complete this year and into 2026 and see an incredible upside from what we're hearing from our customers and the innovative nature of the solution.

And the next question will come from Siti Panigrahi with Mizuho.

It's a great quarter. You mentioned that NRR is up 1 point. Graham, could you discuss the trends in upmarket retention? With the NRR growth, how much of that is influenced by seat count compared to cross-selling your various other modules?

Yes, sure. The upmarket net retention was again above 100% in period in Q3. So we're definitely getting improving retention in that upmarket business as the mix becomes a greater part of the business, compounding effect. It's coming from a lot of different places. We started building products a couple of years ago that were aimed at optimizing retention outcomes, and we're starting to benefit from that as these customers renew at much higher rates. We have upsell opportunities with Copilot now with GTM Workspace. Our operations business, which is our fastest-growing business, accelerated in Q3. So we have a multitude of vectors that are contributing to specifically upmarket net retention improvement. Downmarket net retention improved sequentially in the quarter too, which was something that we wanted to see now that we're a year into the more rigorous qualification of new sales into that downmarket business into the pricing and packaging changes that we made at the beginning of Q3. You can also see this kind of as a sample in our $100,000 cohort, which had one of its best ACV quarters ever. Historically, we were very focused on taking a customer that was spending $50,000 or $70,000 or $80,000 and getting them up into that cohort above that $100,000 threshold. We're still delivering positive logo growth there. But what's really promising is taking those customers who are already spending $150,000 or $200,000 with us and getting them up to $500,000 or up into our $1 million cohort. That's where the lion's share of growth is coming from upmarket now in that cohort, and we are pleased to see another really strong quarter there for 100,000 logos in what is usually seasonally a little bit of a slower quarter.

And Siti, also on retention and engagement with Copilot, as we release Copilot out to our customers, we anticipated that higher engagement would lead to higher net retention rates. Obviously, we are just now sort of passing the first year of customers being on Copilot, and that is coming to fruition. Our customers who are on Copilot have higher engagement and are now showing higher net retention outcomes than their counterparts who are not on our Copilot solution. As we continue to release products that are more central to the workflow and more critical to go-to-market teams, we expect that trend to continue.

And the next question will come from Brad Zelnick with Deutsche Bank.

Congrats, a lot of good signal in these results. Henry, can you expand on the agent force integration opportunity? What exactly is the use case? And how do you size that opportunity and the interest level that you're seeing? I know it's early, but whatever it is that you're seeing out there.

Definitely. So at Dreamforce, Salesforce showcases a set of Agentforce agents. And we're really excited about this partnership because it's yet another proof point that AI and go-to-market should be grounded by ZoomInfo, whether that's in our products or agents running in other platforms like Agentforce. We grow when our intelligence gets consumed, and Agentforce is a great partnership for that reason. You can now find the revenue agent in Salesforce's marketplace. It's featured, promoted, and has co-selling incentives for the Salesforce team. There are more products and collaboration plans, including an upcoming prospecting agent that we'll announce with extended press coverage. We feel really good about the signal that says, if you want to build AI and go-to-market, that AI needs to be grounded in ZoomInfo Intelligence. We're seeing that across the enterprise, and across our customer base.

And the next question will come from Alex Zukin with Wolfe Research.

Could you provide more clarity on the difference between the strong 18% growth in cRPO subscription bookings and the weaker growth in billings? Additionally, what should we consider regarding the exit rate you’ve projected for the fourth quarter of next year in light of a seemingly improving demand environment and your enhanced competitive product offerings?

Yes. I can take that. I'd say around the guidance and the exit rate, the approach there is consistent with prior quarters. We're really focused on delivering an upside Q4 here. Then we'll start talking about what that means for 2026 on the next call. On the billings growth, revenue growth, bookings growth, I think what you see in the current RPO being up 6% year-over-year, implied current calculated bookings growth of 18% is that there's some noise in that bookings just from the nature of how bookings is calculated. But I think that the RPO growth, the current RPO growth is like a good proxy for performance in the quarter. Bridging that to billings, Q3 was largely the first clean year-over-year comparison we've had for a few quarters, except for billings. As I called out on the Q3 call last year, the mix of our balance sheet reserves and the changes that we talked about drove higher-than-normalized billings growth in Q3 last year, which makes that Q3 number this year look worse by comparison. When I think about the scale here, we're talking about an impact of about high single-digit millions year-over-year.

And the next question comes from Taylor McGinnis with UBS.

Could you discuss the assumptions behind your fourth quarter revenue guidance? It seems to not indicate increased seasonality despite your earlier comments about a shift toward more upmarket business leading to greater seasonality. Are there still challenges affecting revenue as we approach the fourth quarter? Additionally, as we consider seasonality and look ahead to 2026, what should we keep in mind regarding sequential growth and our modeling for that period?

Yes. When I think about the Q4 guide, I'd say that the guidance philosophy has not changed. We're continuing to manage expectations in a consistent manner as we have in the past several quarters. I think it's best to measure the growth on a year-over-year basis moving forward with the sequential trends continuing to fluctuate. Q3 performance was more front-end loaded than usual, and we expect Q4 to be increasingly back-end loaded which can influence that trend, but generally, that doesn't matter as much year-over-year.

And I would just add, Taylor, that the momentum in our business feels better than it has in years, but we're going to continue to manage expectations to earn and keep our investors' trust.

And our next question will come from Raimo Lenschow with Barclays.

Congrats from me as well. Can you talk a little bit about like it does sound like the world is getting better there. Can you talk a little bit about more nuance in terms of geographies, verticals, etc., where you see like things getting really better versus kind of stable or still weak?

I think that there was a lot in the better column this quarter: upmarket ACV acceleration, our upmarket retention improvements, company-wide retention improving for the fifth straight quarter, the accelerating operations growth, Copilot growth, all the product innovation and the positive feedback that we're hearing on Go-To-Market Studio. And then we've continued to operate with discipline and improving our profitability. We reached Rule of 40 again this quarter. I think when we think about what's happening in the world with AI, and the AI transformations that are happening at companies across our customer base, we're getting more and more confident that those transformations can't be successful without a valid data foundation, which we think of as context, context for the AI that's going to be deployed. We feel really good about the fact that as those transformations continue here, that we're going to be a necessary component to any go-to-market AI transformation across our customer base and across the universe of prospects that we sell to. We feel really good about that. I think we saw improvement in downmarket retention sequentially as well, and we feel good about the new products driving better retention. There's just a lot in the positive column that gives us a lot of confidence in the business going forward.

We saw software retention improve sequentially for the sixth consecutive quarter, and we also experienced strong performance in telecom, manufacturing, and business services.

And the next question will come from DJ Hynes with Canaccord.

I'll share my congrats as well. Graham, for you, how much of the upmarket segment is on Copilot today? And then, Henry, the follow-up to that question is, do you feel like you have pricing right for Copilot now? Or are there still opportunities to potentially extract more value in the future?

Yes. We haven't disclosed what percentage of upmarket is on Copilot, but it's a significant portion. You've got to think about upmarket as well. If you think about operations, which is more than 15% of our overall ACV, that is dominating an upmarket product or an upmarket user. So we've got a good kind of diverse mix of products and pricing models for that upmarket business. When we think about pricing for GTM Workspace for GTM Studio, we're designing pricing to optimize for customer simplicity and to remove barriers for customer adoption by providing a frictionless path to value. We want to balance the value we're delivering with monetization. Generally, we're thinking about these products as having a platform fee and then a prepaid AI action credit allotment. What we're focused on in these next few months is driving early adoption learning as much as we can about customer usage trends as we head into 2026.

We feel great about the value we're delivering for our customers. We think that, with our new products, GTM Studio, and GTM Workspace, there are many more opportunities for our customers to consume our data, to consume our AI within their organizations with their frontline sellers. But right now, we're focused on delighting our customers and making them feel like they're getting an enormous value from our partnership. We're going to monetize where there are opportunities, but we want our customers to really be using our products in a mission-critical way. We'll see that benefit in net retention, and we'll see that benefit as they continue to consume our products throughout their organization.

And the next question will come from Koji Ikeda with Bank of America.

I wanted to ask about the private unified data and AI company mentioned in the prepared remarks, a nice win there and clearly shows that they couldn't do it themselves. And so maybe can you talk a little bit about how that sales process went? And was it a bunch of back and forth with many proof of concepts? Or was it a pretty typically easy and smooth sale for you guys with this company?

Yes. This was a customer who's been a customer of ZoomInfo for a number of years, and we've continued to grow that account through Merit across the organization. As that company continues to move their business upmarket to target new personas and to bring on new salespeople, we're well positioned as we've already cleared security, data privacy review. We've built trust with our stakeholders there, we're uniquely positioned to continue to grow the account there, and we executed against that. There's still a tremendous amount of opportunity within that account and across our enterprise clients. There are very few enterprise clients where we're wall-to-wall with an ELA of some sort. We see a lot of opportunities to continue to leverage our relationship with our customer base with the new products that we're releasing. Some of those products, when we're in the enterprise and we're selling large deals, those sales cycles are longer in the quarter but overall, our sales cycles were a little bit shorter than historically. As we continue to shift the business upmarket, those sales cycles will extend a bit, but they come with a much larger price tag.

And the next question will come from Parker Lane with Stifel.

Henry, earlier in the call, you mentioned you've begun to play offense again. I was just wondering if you could talk about the current level of resourcing in your own go-to-market organization if that's at a level that can support you going on offense, and has it all changed the way you're thinking about inorganic contributions to the business, perhaps to accelerate the AI roadmap?

Thank you for the question. Look, we feel like we have the right capacity within our sales organization to grow much faster than we've grown over the last number of years. We feel like what we've been missing are two things, one that we've rebuilt over the last number of years, which is a really strong relationship with our customers, and we’ve spent the last number of years building strong consultative relationships with our customers to put us in a position to bring new products to them and new innovations that they are excited to receive from us. We've done a lot to rebuild the mentality of our go-to-market teams and the way we serve our customers over the past few years to put us in a position where once we have products that we believe are best-in-class, innovative, and will change the way customers go to market, we’d have an audience that was excited to receive them. We think we're in that position now as we release GTM Workspace and GTM Studio to our customer base. We're excited about leveraging those relationships and the trust we've built. From a capacity perspective, we feel really good. From a demand perspective, one of the things we're seeing today, Mark mentioned it in his question, is that customers are leaning back into their outbound SDR motions, where historically, they were looking for inbound opportunities. The shift in AIO and using LLMs to answer questions has had an effect at the top of the funnel for our customers. It's had a demand effect. And how do you fill demand when inbound is not filling that demand anymore? You have to go outbound. Our customers are now hiring more sales development reps, hiring more full-cycle account executives, requiring self-sourcing from a prospecting perspective, and we're the partner they trust to arm those teams with the right data, signals, and insights and now AI to do that efficiently.

And the next question will come from Tyler Radke with Citi.

Earlier, you referenced the Rule of 40, and certainly seeing good progress on that this quarter, but is that something that we should expect for next year? And how do you think about the building blocks to get there? Is the 2% kind of exit rate a good proxy for next year?

Yes. I'm happy that on a quarterly basis, we achieved Rule of 40. This year, we're guiding to 2% revenue growth and 36% margin; so, it's less likely that we would get there on a full year basis for 2025. We're not guiding to 2026 today, but I will say we remain committed to managing expectations and then delivering revenue growth, margin expansion, and aggressive share repurchases in 2026. I think of it through the prism of accelerating free cash flow per share growth in 2026 relative to 2025.

And the next question will come from Brian Peterson with Raymond James.

This is Johnathan McCary on for Brian. Good to see the retention tick up, but I also wanted to ask on the net new business side, sales productivity there, and how that's performed against your expectations. And then, in some of those new Copilot wins, can you talk about any green shoots of evangelizing some of those new personas that you felt were a key unlock for ZoomInfo?

I'll add a piece and then pass it to Graham. When we released Copilot, the idea behind it was to take this massive data asset and signal universe that ZoomInfo provides go-to-market professionals and then use AI to make their prospecting journey more productive. It moved us from users having to manually sift through our data asset to using AI to tap into the full potential of our offering and then provide better go-to-market results. We are incredibly excited about the success that had for us. Particularly, it gave us this opportunity to go from what was historically top-of-the-funnel prospecting use cases, many times with SDRs, to a broader base of account executives, account managers, customer success managers who got Copilot to see risk in their business, prioritize their accounts, and know their next best action. That gave us an opportunity to expand seats and personas from SDRs and top-of-the-funnel prospectors to account executives, account managers, CSMs, and sales operations professionals. We feel like that's going to be an extension of our investment in Copilot. It will bring us even further into the use cases in account executives, account managers, SDRs, and now RevOps and frontline sales leadership who can leverage workspace and Go-To-Market Studio to drive execution in their go-to-market organizations. We feel really good about not only the success we had in expanding personas with Copilot but the opportunity in front of us to continue to expand personas with GTM Studio and GTM Workspace.

I'd say the trends there are what you would expect as we've deliberately shifted a lot of the resources upmarket. So down market, we've had fewer sellers where we’ve also rightsized packaging. We've qualified business at a more rigorous level. So on a pro rep basis, the productivity has been fairly consistent. Upmarket new business is still a $1 ACV number that's growing year-over-year. As we've shifted those reps to be more segmented and focused specifically on upmarket customers, that was a 9- to 12-month ramp to get fully into that motion. This quarter, Q2, Q3 was really the first time we've gotten to the place where we feel like we're fully ramped and fully set up to run an upmarket versus down market new business motion.

And the next question comes from Rishi Jaluria with RBC.

Great to see some positive underlying trends in the business. I wanted to go back to Henry; you talked about how there's been a little bit of a shift in some of your customer base in doing more outbound versus inbound. Maybe I want to ask about ZoomInfo as a company, right? You talked in the past about wanting to invest in a little bit more of a PLG motion, while simultaneously going after this enterprise opportunity, which you've clearly seen some good signs of success in. Maybe, can you walk us through what you’re seeing now with the changing search landscape with SEO becoming maybe a little bit less relevant, and AI search coming to the forefront? And what sort of impact that's had directly on your business?

Great. Thank you for the question. Look, we're seeing similar trends as others, and there's definitely an impact to the business from the AIO shifts. One of the positives here is that we have been in the process of shifting our focus upmarket to customers where the impact of AIO and the changes in the SEO landscape is very mitigated. We feel really good about the fact that we made these shifts, and the business is less exposed to these shifts in AIO and SEO. Our PLG motion continues to perform in line with our expectations for this year, and then our focus from a sales organization perspective is on our upmarket business. We want significantly more of our new business mix to be in the upmarket. We're focused on growing our customers and our customer base. You saw that in our $100,000 cohort, ACV growth in our $1 million cohort ACV growth and customer count growth, and you see that in our net retention numbers. We have a great customer base. They are hungry for new solutions, particularly around AI. They don't have a trusted partner there, and we feel we have a really good opportunity to provide them with innovative solutions and drive value for them. The business is much more upmarket today than it was a year or two ago, and that's given us a lot of protection from these SEO and AIO changes.

And the next question will come from Clark Wright with D.A. Davidson.

The Operations suite continues to be a key growth driver. Henry, you made the point that the proprietary data assets that ZoomInfo has enhances enterprise AI initiatives. How are you investing in leveraging AI internally to maintain and improve this data advantage?

Yes. We are proud of how we're using AI internally at ZoomInfo. We are customer-zero on all of the AI solutions we're releasing to our customers. We have thousands of salespeople on these products before we release them to our customers. They're leaned in, driving efficiency and their ability to engage with customers in insightful ways. It helps them create decks, QBR plans, and account plans and writes back to the CRM for them. It flags risk in their account base. We feel really good about the way we're leveraging AI across ZoomInfo. I would venture to guess that we are in the top decile of companies leveraging AI to drive efficiency, not just in our Go-To-Market organization. Graham talked about ways that we're using it in our finance organization. We're leveraging AI across our product organization. We've been able to drive efficiencies and lower headcount because we're leveraging AI to generate content for us to drive our product marketing motion. I think when we show other customers, our peer groups or our clients, the way we're using AI internally, they walk away incredibly impressed and wanting best practices, tear sheets that they can take back to their own organizations. We're going to continue to invest in AI to drive meaningful efficiency in our business.

The next question comes from Jackson Ader with KeyBanc.

Graham, the commentary on 2026 free cash flow per share acceleration. I'm just curious if you think about splitting that between operational improvement versus, I think, the word you used was aggressive repurchases next year? Like, how should we think about the contribution from each of those sources as we head into next year?

Yes. I think about all three of them as contributors. I know that hasn't necessarily been the case over the last couple of years. We view this as we are committing to growing the top line. We are committing to improving margins, and we are committed to continuing to be aggressive with buybacks, and we're really excited about the compounding effect that hitting all three of those levers will meanfully contribute to that acceleration of free cash flow per share in 2026.

I show no further questions in the queue at this time. This will conclude today's question-and-answer session and also the conference call. Thank you for participating, and you may now disconnect.