ZoomInfo Technologies Inc. (GTM) September 15, 2026 Conference Transcript

Should we jump right in? Yeah, let's do it. Well, for those in the room, my name is Billy Fitzsimmons. I cover application software here at Piper Sandler. For those of you who haven't met, I started at the start of this year, right in the midst of the SaaSpocalypse. I cover everything from the hyperscalers, application software, vertical software, everything from MegaCap to SmidCap. I want to welcome Graham O'Brien, CFO of ZoomInfo. We're happy to have you here. Maybe to start, can you give a quick kind of intro on ZoomInfo and the problem that solves for customers?

Yeah, sure. Thanks, Billy. We're really happy to be here. So at ZoomInfo, we equip our customers with the critical data and technology to help them effectively go to market. What that means is solving the context gap for them. And that means marrying our customers' first-party data with our proprietary data and then using technology to do that foundational architecture work, unifying internal systems, anchoring those systems to verified external intelligence to give go-to-market professionals and agents the coherent view of the world they need to go execute against.

Makes sense. And there's been a lot of product innovation months. Can you walk through some of the product enhancements, new features, and then initial customer reception to those?

Yeah, it's been a really exciting few quarters for us on the product innovation front. We describe it as a period of rapid innovation that is continuing through Q3, and we're really excited about what's to come on that front. The focus has really been on building and designing, designing, building, and delivering products that serve our customers across kind of an expanding go-to-market surface area. So whether it's GoToMarketStudio, the unified application experience that we're going to be rolling out later this year, our operations business, co-pilot, we've really been focused on designing those products in a way that customers can use them either in our ecosystem, in our platform, or outside of our ecosystem in a headless manner.

Expanding on this point, I want to go through some of the products you guys have brought online. There's GTMAI, which is kind of your headless context layer. There's also GTM Studio and GTM, the early customer feedback. And then how do you just think about pricing and pricing power with those products?

Yeah, I'll start with Studio. Go-to-market Studio, you can think of it like our control tower for a rev ops leader or a go-to-market strategy professional where they can go and orchestrate campaigns and push those out to the front lines using Studio. We had a really promising quarter in Q2 with Studio. and it's called a quarter of significant traction where we really started to see kind of the month-over-month growth that we want to see with that product. And then if you think about like Zoom Intel Copilot or Workspace, that's the execution layer. That's where kind of the tip of the spear, your AEs, your SDRs, your account managers go out and execute some of that intelligence that can be pushed down or out of go-to-market studio. When I think about the pricing, this has become kind of a feature topic for us is with historically a lot of our applications have been priced on a per-seat basis. We're shifting now towards a hybrid consumption model where customers can, you know, essentially pre-buy a set of credits and then they can use those credits across, again, kind of whether it's in our ecosystem, across Copilot or Studio or operations business, but also use those credits outside of our ecosystem. And that's what we're kind of testing with customers right now to really understand kind of the diverse appetites of the variable side of credits versus kind of the more fixed nature of a seat-based model.

I have a lot more questions on the shift to credits, but I want to start first on kind of your own go-to-market efforts. If we think about the second quarter, I believe you closed your largest ACV deal ever. That was a multi-year renewal, large software customer. But there are also a bunch of other enterprise customer wins cited on that call. Can we talk about the upmarket motion and the success you're seeing there? And can you talk about, like, the changes you've made to your own sales force to drive that success?

Yeah, I think Q2 is kind of more evidence of our progress moving the business upmarket. So we've shifted the ACV mix of our business more than 10 points upmarket over the last several years. And I'm, you know, excited about our ability to continue to do that as we get into 2027. When I think about some of the not only just kind of shifting resources to focus more upmarket, We changed kind of the talents that we wanted to hire for those upmarket positions. We changed comp plans to make sure that we were incentivizing specifically kind of our account executives to invest in kind of longer-term sales cycles and not really, you know, default to a quick land. And that was evident in Q2 specifically. Q2 is our best 100K logo acquisition quarter on record from an ACV perspective. And I expect that we'll continue to, you know, invest behind those larger customer relationships.

There's been a, on kind of the lower end of the market, there's been a broader shift to kind of reduce sales resources. And you're shifting to a PLG motion there. Just how do we think about that transition? Where are we? and potentially how do we think about that down market motion potentially kind of bottoming?

Yeah, I think our goal continues to be to make the down market business a smaller and healthier version of itself. So it's about 24% mix of the total business as of Q2. I expect that mix to continue to go down. We're going to deliberately make it smaller over the next several quarters. We've taken more resources out of that segment earlier in this year. And, you know, we've also started to de-prioritize revenue growth on there. That's still an important and valuable segment to us from a data acquisition and a logo acquisition perspective. But if we can get that mix overall closer to 80-20 up market, down market, then I think we'll be a healthier overall business.

Makes sense. And then on the, as we think about, like, kind of the different drivers of the business, let's talk about operations for a second. That's been a healthy grower. it's a non-seat-based motion has been for some time. How do we think about the resiliency of that business? What percent of it is it today of the overall business? And where are you seeing growth coming from in terms of your base?

Yeah, our operations business, basically our DAS business or our data as a service business, it's not seat-based like you mentioned. Customers basically sign up and pay a data access fee for access to portions or significant portions of our data assets. It's about 20% of the total business today and it's growing about 20% as well. When we look at the operations business, we've taken that business and it has informed how we think about the rest of the business as we shift away from seats. And whether we're shifting to more variable consumption for some of those customers or shifting more to just data access subscription, our ability to get off of a seat-based driver and into that more hybrid consumption and data access model is the goal.

If we go to kind of the financials of ZooInfo, arguably in the first quarter, there was a little bit of a reset relative to that initial 2026 guide. And there's a couple of moving pieces here, and I want to talk about each of those. So there's kind of the more pronounced shift to consumption from seats. We talked about that briefly, but I want to dig in here. There's the down market dynamics we just talked about. And then there's also kind of the tech vertical comments that you called out. Can we kind of talk about each of those things? And then arguably, you know, three months later, you reported 2Q, and you delivered upside relative to kind of the downward guide on 1Q. So let's talk about each of those kind of dynamics in the business and kind of visibility into them and what you've seen over the last years.

Yeah, sure. So we were pleased to deliver some upside in Q2 and kind of just carry that Q2 performance or upside into the back half of the year as it relates to the guidance. I'll start with the software vertical. We started seeing weakness there at the end of Q1 in the form of longer sales cycles, AI confusion, build versus buy conversations. That continued through Q2. In addition, we just started seeing more broad pressure on software, both public companies and private companies in our customer base. We expect that that doesn't get better. And, you know, we're doing proactive things kind of from a product and packaging perspective to make sure that we're able to meet customers where they are as it kind of relates to their AI journeys. But generally, we're not expecting our software end-user segment to improve. Next, we have the kind of pricing evolution that we've been talking about, shifting more towards consumption. We're still kind of the early innings there. I think we should be out in market to some extent at the end of Q3, but into Q4, and we'll be really learning in that phase. I want to continue to give us room to learn about kind of what the upside and downside in that pricing model is across a pretty diverse customer base.

And then in maybe it's still too early, but just digging on that shift to consumption, anything you're kind of seeing in that initial cohort that you migrate? Because you do have some products that are already on a consumption basis in terms of like that customer behavior. And then how do you think long-term about how these spend from consumption customers will compare to those from seed-based customers, acknowledging that it's kind of evolving in real time?

Look, if you split our business today, it's like about two-thirds, a little less than two-thirds seats and about a little more than one-third non-seats. I think our goal is to shift that over time closer to 50-50. If you think about our 35,000 customers, there's a diverse set of pricing preferences in that customer base. and there's a diverse set of appetites in kind of the funnel and across our prospect base. I imagine that that will be diverse for a – probably forever. And that means we need to be able to have products and kind of a commercial strategy that provides the flexibility to go deliver a consumption model to customers that prefer consumption and to deliver kind of a hybrid consumption model or something that has kind of more of a fixed nature to customers that prefer more of a fixed budget for their purchases. I think that this, you know, the first year of rolling this out, my goal is to learn as much as possible. And that kind of informs two principles when it comes to the pricing conversation here. One is simplicity for customers. Like, they're dealing with a lot of vendors that are going through similar evolutions. And that means, like, understanding currencies of credits and how much credit, you know, essentially a grid of what costs what. So I want to kind of default to simplicity where we can so the customers understand kind of the variable side of it and the fixed side of it, and then to also reduce barriers to consumption where we can kind of get customers in and get that time to value down so that we get a good look at what consumption trends look like when there's not kind of differing artificial ceilings for those customers.

And then as we think about the different verticals that ZoomInfo sells into, we talked a little bit about tech and kind of what you're seeing there. Are there any material differences vertical by vertical in terms of usage, consumption, deal momentum worth calling out?

I wouldn't look at it. We talked about software. Software is distressed right now for us, and we, again, don't expect that to improve. Outside of software, our non-software verticals are actually performing well. Growth retention has improved in our non-software verticals year-to-date, year-over-year. And we continue to grow, especially in our up-market business, if you slice out software. The non-software part of our up-market business is growing at a healthy clip. When you look at the trends there, I think it's too early to really look at the usage trends. We kind of look at that more product-by-product than segment-by-segment. But the usage trends I do look at are the consumption of credits across both our new products. So the go-to-market studio, the unified application that we're going to be rolling out later this year, and then in headless spaces, so via MCP or API. And those credit consumption trends I look at every day, they're very promising sequentially. It's still off of a very low number, but that's where I'm focused, and I'm hoping that as that number becomes bigger and bigger, we can start to share those consumption trends in kind of these next-gen spaces as we get into 2027.

You kind of answered my next question, which was going to be kind of, we're kind of mid, call it turnaround in some ways here, where there's a couple different moving pieces in the business. There's some high growth parts of the business. There's some parts of the business that we've acknowledged probably won't get better for a while, or you're assuming they won't, like the tech vertical. What metrics are you looking at or should investors look at as kind of signs that we're kind of on the upward swing of the turnaround, beyond what you just talked about?

Yeah, so, again, the credit consumption trends sequentially. And then, you know, look, I think shift regardless of the product and pricing models that will roll out, I want upmarket mix to continue to increase. So 76% today of ACV, that should continue. I believe that will continue to progress over time.

I want to circle back to AI and kind of all the stuff you're doing. We've talked about this a little bit, But as we think about kind of your headless context layer, optimistically, ZoomInfo becomes your integrated usage and sticking.

I think the guiding principle here is tying ZoomInfo to the go-to-market work, wherever that work is being done. And when I look at some of the early usage trends for some of that early cohort of customers that are in these consumption products, What I focus on are like, who are the super users? What customers are doing 10x or 50x what the other customers are doing? And how can we go kind of replicate that across the customer base and the prospect base? So I almost describe it as like we're delivering for the customers of today and their preferences while also building for the customer of tomorrow.

And then as we think about, you're a CFO. How do we think about capital allocation for the business moving forward? You have high margins. How do you think about kind of where you're making incremental investments to potentially drive growth versus areas you can kind of save?

Yeah, I'll start with the margins. I'm pleased that we're a guide to margin improvement year over year with 37% adjusted operating income margin business. From a capital allocation perspective, we basically rolled out a more expanded capital allocation approach in Q2. So that meant in addition to buying back our shares, we started buying back our bonds for the first time. And I would expect that that kind of expanded approach would continue.

And then we're kind of asking every company this, but a lot has changed across software just in terms of how they are using AI internally to be more efficient. And we could take this in a number of different directions. Companies are talking about they're building software faster or we started using models from the frontier labs. now we're pivoting to model routing to be more efficient and that we can use that to kind of protect gross margins. Just how have processes internally changed at ZoomInfo year-to-date around AI?

Yeah, there's basically a sophistication curve for AI, but I think you need to lay a data sophistication curve kind of parallel to it where a lot of these, some of the more sophisticated or more forward AI adopters are also kind of catching up on the data foundation side of it and that you can't really have one without the other. I go back to, like, there's a very, there's kind of a long spectrum here of where customers are on that curve. I'll give you an example. We have, you know, we had transactions with two well-known AI companies in Q2. One has basically built a lot of their internal stack for the application side, but they're a big ZoomInfo data customer. Their go-to-market runs on ZoomInfo data and contacts, and they basically have just built application on top of it. Separately, there's another well-known large AI company that bought kind of our application set on a feed-based basis in Q2, where it's like, we don't want to build any of this. We want to use the full suite solution from ZoomInfo, and we have to basically continue to build and deliver in a way that serves both purposes.

And you touched on something here that I think is important to kind of ask, And obviously, I hear this debate across all of software and a number of names I cover. And increasingly, there's a focus on kind of what is the underlying mode of the software business, especially at the app layer? How should investors go?

Yes, it's still the proprietary data asset. That hasn't changed. What we're adding on top of that is our ability to create a context graph for customers where we're marrying our proprietary data asset with their first-party data in a way that becomes actionable. for either go-to-market professionals or agents.

Do you think there's, if we think about kind of the tech vertical and kind of what you're seeing there, do you think there's like a little bit of a disconnect between how they think about the challenge versus what you can actually deliver? I know we've seen that across a lot of software where, and you hear examples throughout the news of companies saying, we'll do this ourselves, we can figure it out. But then ultimately there are sometimes like broad challenges there. How do you think about that as you kind of interact with a certain customer?

Yeah, it's almost like a hype curve. Like there's a lot of early adopters, and then there's kind of a realization phase. So we're somewhere along that curve. You know, when I think about the messaging that goes into this, it really kind of is incumbent upon us to do that discovery, to understand where we can plug in to help those customers build out their go-to-market orgs in an AI world. there's um a lot of change in the business a lot of new products underlying trend or trends and we've talked about some kind of make you most excited uh in terms of business as we kind of look out to the next couple quarters of the next year yeah it's it's uh my internal view of the consumption month over month and seeing that you know grow to accelerate at an exciting pace I'll go back to just continuing to shift the business up markets. We're facing software challenges across all of our segments. But to the extent that we get beyond that, we're going to have a better, healthier, mixed business that's much more up market, that has better economics. And if we have an opportunity to accelerate growth there again, I think you're going to have a much more profitable, durable growing business.

We've talked about a lot of different kind of pieces of the business pretty extensively. Is there anything that we didn't talk about that you think investors are confused on and you want to make sure you clarify for them or any kind of broad-based questions that we didn't ask already?

Look, I think what I can come back to is we continue to generate a lot of cash or a very healthy cash generation business. That gives us a lot of options moving forward as it relates to capital deployment. And then separately, I'll go back to where I started with, the rapid innovation that I've seen internally from our product and engineering teams in the first half of the year, I expect will continue, if not accelerate, into the back half of the year. And we're going to have a pretty exciting product roadmap to share with you all.

If we skip 12 months and you and I are sitting here at the Piper Sandler Conference a year from now, what do you think we'll be talking about?

We're talking about a business that's more up-market and that has, you know, hopefully upside consumption trends that are leading to better financial outcomes. Should we wrap up that?

Graham, thanks for being here. Appreciate having you. Yeah, happy to be here. Thanks, everyone.