ZoomInfo Technologies Inc. (GTM) Earnings

Management highlights

- Strategic Priorities * Core strategic focus: Build innovative enterprise-grade solutions that drive customer value, expand into AI-powered workflow use cases, deliver durable growth, maintain profitability and strong free cash flow generation, and maximize long-term free cash flow per share. * Intentional business transition to shift the entire customer base upmarket, which is expected to create near-term uncertainty but deliver more resilient long-term growth. * Capital allocation prioritizes opportunistic, risk-adjusted returns for shareholders, with a focus on enhancing the company's capital structure and maintaining financial flexibility. - Product & AI Innovation * Launched GTM.AI in Q2, a headless GTM context layer with APIs, MCP and connectors that allow ZoomInfo data and insights to be seamlessly embedded into customer AI agent workflows. The platform enables customers to access ZoomInfo data wherever they conduct GTM work, whether for human-led or AI agent-led activity. * ZoomInfo has already integrated its platform natively with dozens of leading AI and developer tools including Codex, Cursor, Claude, Gemini, Amazon Quick, Copilot, Vercel, Perplexity and Zapier, meeting customer demand for flexible access alongside traditional per-seat offerings. * GTM Studio (launched GA in February 2026) has grown quarter-over-quarter in adoption velocity, enabling customers to build custom audiences combining their first-party data with ZoomInfo's data for sales teams to action in Workspace. * The company plans to roll out new flexible consumption-based pricing and hybrid packaging for existing per-seat customers starting later this quarter; it is testing migration approaches with select cohorts and prioritizes long-term customer health over a rushed rollout. - Customer & Business Development * Closed the largest ACD deal in company history during the quarter, a multi-year renewal with a leading software customer that expanded both data access and seat usage. * Closed notable new upmarket deals with Legora, Cohere, Bank of Montreal, and Korn Ferry, and expanded an existing relationship with a leading $2 trillion asset financial services firm into its investment banking division. * Passed a full vendor review after a third-party data breach as a stronger partner, demonstrating the strength of the company's security, governance and compliance investments which are a core competitive advantage for enterprise customers. * Nine out of 10 Fortune 10 companies, 70% of the Fortune 50, and every B2B company on the CNBC Top 50 Disruptors list are ZoomInfo customers. - Financial & Operational Execution * Adjusted operating income margin hit 35%, up 130 basis points year-over-year. Unlevered free cash flow was $107 million, up 7% year-over-year, with 98% conversion from adjusted operating income. * Implemented the previously announced restructuring: headcount is 350 people lower sequentially and 15% lower year-over-year, with several hundred more headcount reductions expected by the end of 2026. A $35 million restructuring charge (mostly for severance) was recorded in Q2, with remaining charges expected over the next six months. * Repurchased 6.3 million shares for $28 million (average price $4.51 per share), and retired $58.5 million in outstanding senior notes for $48 million at a discount to par, generating an $11 million gain and reducing future annual interest payments by $2.3 million. * Recorded a non-cash $651 million goodwill impairment charge driven by post-Q1 share price declines, which does not impact cash position, liquidity, debt covenants or non-GAAP results.

Guidance

Management raised full-year 2026 guidance following Q2 overperformance, maintaining the underlying conservative assumptions around market headwinds and new product rollout: * Q3 2026 guidance: GAAP revenue of $298 million to $301 million; adjusted operating income of $113 million to $115 million; non-GAAP net income of $0.28 to $0.29 per share. Management does not expect significant revenue impact from the new consumption-based pricing rollout in Q3, as rollout will start with new business and migrate existing customers gradually. * Full-year 2026 guidance: GAAP revenue of $1.207 billion to $1.217 billion (representing a 3% year-over-year decline at the guidance midpoint); adjusted operating income of $446 billion to $451 million (a 37% margin at the midpoint, up 130 basis points year-over-year); non-GAAP net income of $1.12 to $1.13 per share; unlevered free cash flow of $403 million to $423 million. * Management reconfirms it expects to reach a run rate of at least $1.25 adjusted levered free cash flow per share when entering 2027 across a range of operating scenarios. No revenue upside from new AI products (including GTM.AI) is baked into current guidance.

Segment performance

The company reports two core business segments: core go-to-market (GTM) subscription, and operations (data-focused) business. - Total GAAP revenue for Q2 2026 was $310 million, a 1.2% year-over-year increase. - Upmarket segment: Accounts for 76% of total annual contract value (ACV), upmarket ACV grew 3% year-over-year. The segment has 1,891 customers with at least $100,000 in ACV (9 more than a year prior), and million-dollar ACV cohort grew 16% year-over-year. The 3% overall upmarket growth masks a split: non-software vertical upmarket continues to grow at healthy rates, while lower-tire upmarket software creates a material growth headwind. Net retention at the very highest end of the upmarket segment improved year-over-year. - Downmarket segment: ACV declined 12% year-over-year. The company has intentionally reduced sales resources for this segment and shifted to a product-led growth (PLG) motion; improved gross retention partially offset declines, and the company expects downmarket to shrink as a share of overall business faster going forward. Downmarket net revenue retention held up better than expected due to more selective new customer onboarding. - Operations (data-focused) segment: Delivered 20% year-over-year ACV growth, and continued strong outperformance. Overall company net revenue retention was 89% in Q2, down from 90% in the prior three quarters, while gross retention remained stable supported by non-software vertical performance.

Risks & headwinds

* Persistent softness in the software vertical, particularly concentrated in the lower end of the upmarket segment, is creating headwinds to overall upmarket growth and overall net revenue retention. Management does not expect software conditions to improve in the near term. * The ongoing business transition (upmarket shift, new pricing model rollout, product realignment for AI use cases) creates near-term uncertainty around revenue growth and retention. * Forward-looking statements about future product performance, growth and financial results are inherently uncertain, and actual results may differ materially from projections due to the risks and uncertainties outlined in the company's SEC filings. * The company faces a noisy competitive environment with many competitors making overlapping product claims, which created customer confusion in Q1 and continued into Q2. * The company's existing debt maturities fall between 2028 and 20030, although management states it has sufficient liquidity and cash generation to meet future obligations.

Analyst Q&A

• Q: What drove Q2 overperformance that allowed the company to raise full-year guidance, and what is the split between upmarket software and non-software ACV growth?

  A: Raising guidance was purely a reflection of better-than-expected Q2 performance, while management maintained its original conservative assumptions around downmarket headwinds, software softness, and new pricing rollout. The overall 3% upmarket ACV growth is held back by weakness in the lower end of the upmarket software segment; excluding that impact, non-software upmarket verticals continue to grow at consistent healthy levels. (397 characters)

• Q: What early customer feedback have you received on GTM.AI, and what impact from consumption-based pricing is baked into the Q3 guidance?

  A: Customers are integrating GTM.AI into their internal workflows and LLMs, and the company has already seen healthy consumption growth on the platform. No upside from GTM.AI or the new pricing model is included in current guidance. The new pricing will roll out to new business at the end of Q3 and migrate existing customers gradually starting later this year, so no material revenue impact is expected in Q3. (392 characters)

• Q: Could you share the competitive outlook and how your product differs from competitors like Clay?

  A: Management notes the competitive environment is currently noisy, with many players making overlapping product claims that created customer confusion in prior quarters. ZoomInfo differentiates through its native integrations, ability to let customers build custom data audiences on top of the company's trusted, owned data foundation, which no competitor has matched. The company expects upcoming H2 2026 product launches will significantly strengthen its competitive position. (391 characters)

• Q: What is the company's long-term vision as customers shift to AI-first GTM operations, and how will this benefit ZoomInfo?

  A: Management notes that the need for GTM data and customer acquisition will not disappear even as companies downsize sales teams and adopt AI. The location of GTM work is shifting: more work is done in custom internal interfaces or LLMs, and ZoomInfo's new products and flexible pricing are built to meet customers wherever they work. More AI-driven GTM increases total data consumption, which will benefit ZoomInfo as customers expand usage. (406 characters) Total characters: 1586 / 2000 limit