ZoomInfo Technologies Inc. (GTM) August 2026 Conference Transcript

All right. I think we'll kick things off. I'm DJ Hines. I'm the senior software analyst here at Canaccord. This is the 46th year we've been doing this conference. We couldn't do it without the support of the corporates who come and bring all the great content. So thank you to Zoom Info team for being here. We're going to do this as a fireside chat. I have questions that can get us probably more than a half hour, but I also want this to be collaborative. So if there are questions from the audience as we get into things, just raise your hands. Happy to integrate them into the conversation, but we have CFO Graham O'Brien here with us today. I think with that, we can kind of kick things off. Graham, why don't we talk a little bit, just since it's top of mind, about Q2. We were just talking, you guys reported last week. What's top of mind coming out of the quarter? What do you want investors to know about kind of where Zoom Info's business stands today? And maybe if there's anything that feels different than it did three or six months ago, that's obviously interesting.

Yeah, I think coming out of Q2, I feel like this was a quarter of kind of rapid innovation for us. GoToMarketStudio is kind of one of our newest AI forward products. This was kind of like the first quarter of significant traction where we were seeing the growth sequentially month over month. It was really promising and we're hoping to continue that as we get into the back half of the year. We talked about rolling out hybrid consumption in pricing later this year in a kind of a more unified application experience that provides more flexibility to customers and prospects for how and where they use ZoomInfo, both in our ecosystem and in a headless manner outside of ZoomInfo. So I think that the product progress and then kind of the go-to-market and finance side of the pricing, the packaging, was really promising coming out of the quarter. We continue to face headwinds in software, but we're kind of taking advantage of that window to set us up in a better position as we get to the other end of that also better profitability than i would have thought a few quarters ago we restructured the business in the middle of the quarter our updated guidance reflects over 100 basis points of adjusted operating margin improvement year over year yeah um there's a lot in there that we will unpack as we go through this um i think you know the takeaway is interesting things happening kind of beneath the hood but but still some headwinds to the the headline numbers you know to that point, I think net revenue retention is just below 90%.

Q3, you got it towards revenue declines. Maybe just talk about where you see genuine stability in the business and where there are still challenges.

Yeah. Outside of the software vertical, we're seeing stability and we're actually seeing improvement in some areas. So we're seeing in our non-software verticals, gross retention is actually improving year to date on a year over year basis. I also want to call out kind of performance with our largest customers, not just from an employee size but from a spend size, those customers are performing better this year than they performed last year. On the new business front, we talk about our 100k cohort, so customers that spend at least $100,000 with us annually, we have about 1,900 of those customers. Our new business in that cohort, so basically landing customers at that 100k or higher entry point, we had our, I think it was our best quarter ever on that front. So enterprise, new business, especially that 100K threshold and growth retention improvements outside of software, we're really promising in the quarter.

Maybe we could double click on what's happening in software just because it's a relevant area to everyone in this audience and a challenge part of the business. What's driving the headwinds there? Is it budget constraints? Is it prioritization? Is it as simple as just we're laying salespeople off? And what do you think we need to see stabilization in software?

Yeah, so we called this out at the end of Q1, where we were starting to see specifically kind of the lower end of our upmarket business. customers that are in the software vertical, they're starting to have kind of more, well, there's confusion or build versus buy conversations as it relates to AI and their tech stack. And that led to some extended sales cycles for us that led to elevated levels of churn and downsell at the lower end of our upmarket business. That continued in Q2. We're being proactive in that we're changing the way that we package and sell so that we're making sure we're still plugging in Zoom Info's data and context layer wherever it fits for the customer regardless of whether they're going to build something or not separately i would say that the kind of the bigger piece of the story now in software in q2 is that it's just broadly pressured more so than it was six months ago yeah and you know this is you see this in the form of these software customers are also facing different growth environments and growth trajectories which are informing budget constraints, headcount constraints. It's just a tougher buying and selling environment than it was three to six months ago. And maybe that's cyclical. I don't know how or when that changes, but I do think that the changes we are making to the products that we're selling and how we sell those should help us longer term to improve retention in that protocol. Yeah.

Look, the business is clearly shifting upmarket. You talked about some of the metrics that you're proud of in that segment. I think it's now 76% of the business. What makes that a structurally healthier cohort? And how should we think about the tradeoff between kind of a healthier mix of business but slower growth here in the interim?

Yeah, I think the slower growth here in the interim is, again, mostly software-informed. And then we're going to essentially do things now, build things now that give us a better opportunity to accelerate growth in the future for the full segment. These customers generally have assigned a greater value to the data and applications that we sell. They're less transactional. They usually are kind of more ahead of the curve when it comes to their data strategy in concert with their AI strategy. And, you know, that generally leads to better retention outcomes for us upmarket.

Have you done, like, the LTV to CAC analysis, upmarket versus downmarket? Like, how divergent are we talking?

Very divergent. So, you know, when we looked at our downmarket business, which, you know, was growing years ago, but I think is secularly a tough place for growth. I'd say the retention outcomes in the down market business, even across vendors, are pretty consistently low. And the LTV to CAC there, when you look at it, could be in a place that doesn't make a lot of sense, low single digit numbers. And then when you look at the LTV to CAC, when we estimate that for up market business, you start to get very attractive double digit figures. Yeah, yeah. Okay. That's good. Double digit in the upper end.

Let's talk about the operations business. That's another bright spot. It's kind of informing your strategy as to where the business is going over time. I think that segment grew 20% in the most recent quarter. So what's driving that? And what does it tell you about kind of how your customers leverage and value the data?

Yeah, I think a lot of what's driving that are kind of the scale up of AI initiatives at large companies. So our operations business is growing 20%. It's about 20% of the total business as well. You want me to describe what operations is in case someone doesn't know? Yeah, so it's basically our DAS business. This is basically access to our data assets that we sell to customers on a data access subscription. So it's not seat-based. We're basically selling access to a part or all of the data set on usually like a multi-year contract. And as folks start to roll out more and more of these AI initiatives, what becomes clear very quickly is they're only going to succeed if they have the correct data foundation. And then you take that and you marry it with the first party data they have to create that context layer to really supercharge any of these go-to-market AI initiatives. We look at the performance of that business with, you can imagine, much better retention in the overall business, good economics, and that has helped us think about how should we price and package the existing seat-based business today, which is a little less than two-thirds of the business, to kind of mimic the financial performance of operations across the rest of the business. Yeah, yeah.

Okay, so the strategy then becomes we kind of detach the data from the seat, right, and you kind of can avail the data to LLMs, agents, customer workflows, like at a high level, what does that do to the opportunity? Like, how do you think about the TAM now that we're repositioning kind of the value prop?

Yeah, I think we want to make it easier to use Zoom Info across a much broader surface area. And I think that expands the TAM when you start to say like, whether it's in our application ecosystem, whether it's you're using leveraging Zoom Info via MCP and Cloud or ChatCPT or Gemini, or via API into whatever application you may be looking for. It's important to remember here that the preferences or the appetites from our existing customers are going to be diverse, and they're going to be diverse for a while. This is not going to be a flip the switch away from seats to consumption.

There are going to be customers who want to stay on seats for a period of time, and we are going to meet the customers where they are on this yeah yeah that's a good segue probably to talk about kind of hybrid pricing and you talked about you know plans to start to roll that out in q3 and i think you said maybe very end of the year early next year we'll start to go back into the installed base um what are you looking for in those initial i don't know if pilots is the right word but the the exploration phase of the new pricing model um what are the signals that you're looking for um that will kind of inform the strategy going forward?

Yeah. I'll say it again. In the customer base, we want to meet the customer where they are. Two other things that kind of inform this from my perspective is simplicity where possible from a pricing perspective. If we can have as much uniform pricing as possible, that's good. And two, reducing barriers to consumption. I want this to be designed in a way that customers can get into the platform or get into their credit pool and start seeing value quicker. We want to be tying how we price our products and services to the work being done and less to something like a seat. I expect that we will start with the new business motion at the end of this quarter. That's usually a cleaner kind of testing ground. And that's where I really want to look at the early consumption trends when customers are buying or look like customers are buying a credit pool instead of a seat allocation. There's incentives here for the prospects or the customers. They'll effectively have unlimited seats. They'll have access to the full application suites in one interface. And we really want to know what kind of that expanded surface area does to the consumption side of it. In the customer base, I think there's going to be customers that are healthy and raise their hand and say, we want to go to the next-gen platform. And I expect that we'll be able to monetize uplift in those instances. And then there's going to be customers where they have fewer seats than they used to have and we're able to migrate them onto the hybrid consumption model. And that should optimize for kind of retention one and two and three years down the road. Is there an opportunity in that less healthy cohort to get more aggressive with price?

Like, how are you thinking about rolling that into the base as you start to have these conversations? Because I think one of the knocks has been like, oh, there's lower price alternatives out there. Maybe the data quality is not there, but good enough works in certain environments. As you look at that, you know, less healthy cohort, what's the strategy on price as you kind of now are revisiting contracts?

Yeah, like I think down market, we can be pretty flexible now that we've kind of taken further resources out of that segment. Like I'm going, I want to make that deliberately a smaller part of the business quicker. And that means, you know, accelerating the decline there over the next few quarters. One of the ways to do that is pricing and packaging, especially on the new business front. And then for a hypothetical less healthy customer at the lower end of upmarket, again, I want to do what's right to keep the logo and make sure that those customers are kind of accreting the value that they should be for the price they're paying for ZoomInfo. So that's not always going to show up in kind of the pricing at migration, but I expect it would show up in the form of gross retention and eventually net retention years one, two, and three down the road.

Yeah. And then maybe flipping that question on its head and looking at the healthy cohort where the customers are getting a lot of value out of the data and growing with you guys, pick a number, right? Say a customer is spending, and I know it's early to ask these questions given we haven't really pressed on this lever, but if a customer is spending $100,000 with you today and we cut them over to some sort of hybrid seats plus consumption, what could that $100,000 turn into? How do you think about that?

Yeah, I think we've had a kind of a version of this experiment or motion in the past with our ELA motion where a customer is spending, in your example, $100,000 with us. Maybe they're a co-pilot customer and they're about to become a co-pilot and an operations customer or a co-pilot and a studio or a Zoom Info marketing customer. And we say, let's take all these kind of disparate transactions. Let's get them under one enterprise license agreement. It's a 20% increase and you sign up for three years. That kind of informs our thinking here of like instead of just having point solutions and restrictions around seats, like let's make this simpler. You get credits that you can use across the landscape, and it opens up our ability to monetize that consumption in an upside way over time. Yeah, okay.

Look, you guys own the underlying data asset, right? I think from a breadth and quality perspective, there's really no one else in this space that can match you guys. The sales enablement in the kind of workflow tooling space has become pretty crowded, right? there's a lot of vendors there and some are doing well, some aren't. I'm curious what you think the underlying data asset does for competitive differentiation and how does that position your right to win on the sales enablement and the workflow side of things?

Yeah, I think the competitive differentiation is as clear as ever. I think how we win is what is going to change and what we are changing and that we are going to be less prescriptive and that we need to win the application layer and the data layer and the orchestration layer and if there are you know cases and we have good big customers that use us in a headless manner where we are just kind of the data asset and they're using us in other applications and other surface areas and that is really one of the kind of most compelling paths that we have moving forward is making sure that we are going to market and building products in a way that allows for that flexibility because And I think that's where the upside starts to come in.

Another good segue. It's almost like you have my questions. You've talked about the second half being kind of your most ambitious product roadmap or initiatives in a while, right? I don't know how much specificity you can speak to, but like, what should investors be watching from you guys from a product perspective? And obviously, how does that feed into kind of your thoughts around retention and growth opportunities?

Yeah, look, there's going to be a gap between products adoption and consumption trends and financial outcomes. So I'm very focused on tracking and effectuating that leading indicator set. When I think about this, I look at kind of the consumption trends in one, our new products, and then two, headless or different expanded surface areas. So I look at go-to-market Studio. What are the data and AI consumption trends there? I look at consumption trends via MCP. I look at the consumption trends via API. And I see pretty promising sequential growth in this kind of pool of headless and next-gen products. But it's also coming from a very low number that basically was close to zero last year because it didn't exist. As that scales up, I believe that will be kind of the important leading indicator for financial outcomes. And I'm hoping we get to a place in the next few quarters where it's material enough that we can start to share that and translate what we think it means for retention, for revenue, and everything else.

You talked about one of the bright spots in Q2 was the profitability and being able to maintain what have historically been best-in-class margins while seeing some top-line headwinds. maybe just talk a little bit around capital allocation strategy. You've been buying back stock. Your debt's pretty cheap. How are you thinking about things from here? And, you know, obviously, you also just talked about a desire to invest in product. Like, what's the commitment to keeping margins up during this, you know, transitional period of growth?

Yeah, we restructured the business in Q2. I think that sets us up well to continue to deliver positive profitability outcomes consistent with the past and improving margins because we navigate this path to a more durable growth framework. I think our R&D team is smaller but more talented. And I think that the changes we made informed our ability to retain and attract top talent. Sales and marketing, we're well-resourced upmarket and we'll continue to right-size or we have continued to right-size the down-market business. And I expect that we'll continue to generate a lot of free cash flow. And I expect to efficiently deploy that free cash flow. In Q2, we did kind of expand that from, as you mentioned, beyond just share repurchases to buying back our debt at a discount. And I think you should expect that expanded approach to continue in the back half of the year.

I'll ask one more, and then I'll open it up to folks if there's any questions in the audience. But I asked Henry this a while ago. I'm curious your perspective. Has AI made it any easier to collect, maybe not the contact data that you guys have, but any of the intent signals? I'm thinking about if companies want to embark on this initiative on their own, is the tooling now there that they can do this? Or what separates what ZoomInfo does versus what somebody tries to do on their own?

Yeah, not at scale. I think the idea that you can token your way to recreate the data asset is misguided. There is publicly available information that is in our data asset, but the ability to actually kind of curate that, resolve it, match it, dedupe it, rank it with all of our proprietary data asset is where a lot of the value actually comes from. So, again, I do think that the clarity around the value of our data asset, especially with up-market customers, is becoming clearer the further along we go on the AI adoption curve. Yeah, okay.

Any questions in the room that we can address or keep going? Maybe just, I'd love to get your sense of competitive set and what's changed out there. And maybe you can break it into two parts. So you have like the data competitors and then you have like the sales enablement workflow folks. I'm curious if anyone stands out to you as trends are getting better, trends are getting worse. Like what are you seeing in competitive situations, et cetera?

Yeah, like I think down market, which I think is more the kind of data version of this, it's more the same. It's kind of a lower cost, lower quality providers and customers down there are very sensitive. Hence, kind of our deprioritization of revenue down market. And that actually unlocks our ability to compete more from a PLG perspective. I think at the highest end of upmarket, it's also kind of similar in that we don't have a lot of competition there. And then at the lower end of upmarket, it's noisier. You're getting a lot more kind of like startups that have built an application quickly. And it's usually application or workflow focused. like we still you know whether those are competitive or viable products either way like positioning ourselves as like yep you still need the data the plug-in the context for that I think is where we've you know started to evolve our thinking in some ways but that's just like specific software that's like a for now a very noisy space yeah yeah um we talked about kind of the revenue impacts maybe lagging some of the product initiatives and the pricing and packaging changes in that interim period?

What are the KPIs that investors should be paying the most attention to that signal to us, hey, they're onto something, that the revamp strategy is working?

Yeah. I think our assumption around the challenges we've seen in software is that it's not getting better. So, you know, I mentioned consumption trends to the extent that we're able to share them would be the milestones that I would look at. And as those scale up, you know, I'll be more comfortable kind of sharing the trends there. And ultimately, like that should inform, you know, better upmarket net retention and eventually overall net retention. I think those are probably like, and continue to be kind of the core metrics that are going to drive a reacceleration in this business.

And when we think about consumption, like, how's that going to work? Is it going to be like a rate card where different data is more valuable? I mean, I can imagine like logging in and getting someone's email is one thing, but then getting intense signals around like, hey, you know, whatever, they just hired a new CFO and they're maybe in the market for an ERP replacement. Like, that's far more valuable to me as a salesperson. How do you think about pricing that stuff?

Yeah, you're right. It basically is like a grid, which lends itself to some complexity. So we want to make sure, and I mentioned earlier, I want to err on the side of simplicity we're thinking about for customers. So I think in the first year or so, we want to basically design this in a way where customers aren't too worried about doing all of the math there, and that we can give them the comfort that they're spending for what they're getting. as we think about the you know the ai action credit part of this where we actually have you know some cost as we have the the data side of this like yeah there's basically going to be a grid of like this action costs this and customers generally are going to pre-commit to a set of credits at the beginning of a year and then we can help them track that and again in the first year i want to you know take a flexible approach so that we you know customers are not going to be super concerned about overages or underages, and we can give them the comfort as we actually learn on this. I want to learn a lot in the first, not just a year, but probably the first month that we have at the sound market.

Yeah, yeah, okay.

Maybe in the last minute here that we have left, we're probably going to do this conversation again in a year at this event, hopefully, God willing. what would you think what would you hope would kind of have changed the most between today and a year from now that we'll be talking about at that point yeah two things i want the business to be much more upmarket 76 24 i want that to keep moving to 80 20 and i want that those consumption trends in that i talked about earlier in the new product world and the headless surface area i want that to be significant enough from a growth perspective that we're talking about that yeah and in the interim we'll continue to generate a ton of cash and return it to shareholders yep

yep okay um maybe that's a good spot to leave if there's no other questions uh graham oh we got You have an inventory of portfolio capabilities on the organic growth capacity of the actual customer.

Where are you on that?

You generally have on average products with a client, and what do you kind of view as the realistic untapped opportunity on that? Maybe I'll just repeat for the webcast. I think the question was kind of getting at where are you from a wallet share perspective with your customers. You have a whole portfolio of products. You're not wall-to-wall with many of your customers. What's the install-based opportunity?

Yeah, I still think there's a lot of wallet share opportunity there. I think in the past, we've been a little bit more rigid on kind of an all-or-nothing application and data sale. I think as we open up kind of the avenues to be a little bit more a la carte, that that's a pretty good opportunity for us to go and capture a lot more of that wallet share.

And when you shift in the pricing model, WC-based usage, is that driven by just the market shifting and that's needed to survive? Or is it something that you think new customers would be excited to attempt to win?

Yeah, and again, I'll paraphrase. You know, I think it was kind of a push versus pull question. Like, are the changes you're making in the business reactive to what you're seeing in the market? Or is this proactive because you think you can grow faster?

It's reactive to a pocket of customers. This is not a broad kind of taste thing yet, but there are customers that are saying, we prefer this, and there's going to be customers who say, we don't want this, we want to stay on this model. So it's really informing the hybrid side of this and the idea that we need to be able to design and sell and build our products in a way that serves both purposes and kind of everything in between. Awesome.

That's a great spot to leave it. Graham, thank you very much for being here and look forward to the conversation in a year. Yeah, me too.