GAAP Revenue of $313.8 million Grows 9%
year-over-year
GAAP Operating Margin of 20% and Adjusted
Operating Income Margin of 40%
Cash Flow from Operations of $80.8 million and
Unlevered Free Cash Flow of $94.8 million
ZoomInfo, (NASDAQ: ZI) the go-to-market platform to find,
acquire, and grow customers, today announced its financial results
for the third quarter ended September 30, 2023.
“In a more challenging operating environment, our team is
executing well and delivered Q3 financial results that exceeded
guidance,” said Henry Schuck, ZoomInfo Founder and CEO. “We
continue to grow profitably and return capital to shareholders
while investing in customer success, driving industry-leading data
quality, and delivering more AI functionality to customers.”
Third Quarter 2023 Financial and Other Recent Highlights
-
Financial Highlights:
- Revenue of $313.8 million, an increase of 9%
year-over-year.
- Operating income of $63.1 million and Adjusted Operating Income
of $126.2 million.
- GAAP operating income margin of 20% and Adjusted Operating
Income Margin of 40%.
- Cash flow from operations of $80.8 million and Unlevered Free
Cash Flow of $94.8 million.
Business and Operating Highlights:
- Expanded international coverage of businesses and business
professionals available on the ZoomInfo platform. In the last two
years, ZoomInfo has increased the number of global companies in its
data platform by more than 6x, while tripling both the number of
global contacts and the number of global mobile phone numbers,
while continuing to invest in artificial intelligence to guarantee
greater accuracy.
- Introduced more customer-facing AI initiatives, including
Chorus post-meeting briefs, that automatically draft follow-up
emails after meetings, leveraging the event transcript. To date,
more than 2.3 million meeting summaries have been generated. AI is
now applied across our data collection and extraction pipelines
throughout the platform.
- Partnered with The Trade Desk to expand the digital media
buying capabilities for ZoomInfo MarketingOS customers. Customers
now have access to more premium ad publishers and the ability to
deliver display, video, and audio ads internationally.
- During the three months ended September 30, 2023, the Company
repurchased 8,800,000 shares of Common Stock at an average price of
$18.19, for an aggregate $160.1 million, under the $600 million in
total repurchase authorizations.
- Closed the quarter with 1,869 customers with $100,000 or
greater in annual contract value.
Q3 2023 Financial Highlights
(Unaudited)
($ in millions, except per share
amounts)
GAAP Quarterly Results
Change YoY
Non-GAAP Quarterly
Results
Change YoY
Revenue
$313.8
9%
Operating Income
$63.1
22%
Adjusted Operating Income
$126.2
7%
Operating Income Margin
20%
Adjusted Operating Income Margin
40%
Net Income Per Share (Diluted)
$0.08
Adjusted Net Income per share
(Diluted)
$0.26
Cash Flow from Operating Activities
$80.8
(6)%
Unlevered Free Cash Flow
$94.8
(5)%
The Company uses a variety of operational and financial metrics,
including non-GAAP financial measures, to evaluate its performance
and financial condition. The accompanying financial data includes
additional information regarding these metrics and a reconciliation
of non-GAAP financial information for historical periods to the
most directly comparable GAAP financial measure. The presentation
of non-GAAP financial information should not be considered in
isolation or as a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP.
Business Outlook:
Based on information available as of October 30, 2023, ZoomInfo
is providing guidance for the fourth quarter and full year 2023 as
follows:
Q4 2023
Prior FY 2023
FY 2023
GAAP Revenue
$309 - $312 million
$1.225 - $1.235 billion
$1.232 - $1.235 billion
Non-GAAP Adjusted Operating Income
$122 - $124 million
$493 - $498 million
$494 - $496 million
Non-GAAP Adjusted Net Income per share
$0.24 - $0.25
$0.99 - $1.00
$0.99 - $1.00
Non-GAAP Unlevered Free Cash Flow
Not Guided
$445 - $455 million
$445 - $455 million
Weighted Average Shares Outstanding
405 million
415 million
412 million
Conference Call and Webcast Information:
ZoomInfo will host a conference call today, October 30, 2023, to
review its results at 4:30 p.m. Eastern Time, 1:30 p.m. Pacific
Time. To participate in the live conference call via telephone,
please register here. Upon registering, a dial-in number and unique
PIN will be provided to join the conference call.
The call will also be webcast live on the Company’s investor
relations website at https://ir.zoominfo.com/, where related
presentation materials will be posted prior to the conference call.
Following the conference call, an archived webcast of the call will
be available for one year on ZoomInfo’s Investor Relations
website.
Non-GAAP Financial Measures and Other Metrics:
To supplement our consolidated financial statements presented in
accordance with GAAP, this press release contains non-GAAP
financial measures, including Adjusted Operating Income, Adjusted
Operating Income Margin, Adjusted Net Income, Adjusted Net Income
Per Share, and Unlevered Free Cash Flow. We believe these non-GAAP
measures are useful to investors in evaluating our operating
performance because they eliminate certain items that affect
period-over-period comparability and provide consistency with past
financial performance and additional information about our
underlying results and trends by excluding certain items that may
not be indicative of our business, results of operations, or
outlook.
Non-GAAP financial measures are not meant to be considered in
isolation or as a substitute for the comparable GAAP measures, but
rather as supplemental information to our business results. This
information should be read only in conjunction with our
consolidated financial statements prepared in accordance with GAAP.
There are limitations to these non-GAAP financial measures because
they are not prepared in accordance with GAAP and may not be
comparable to similarly titled measures of other companies due to
potential differences in methods of calculation and items or events
being adjusted. In addition, other companies may use different
measures to evaluate their performance, all of which could reduce
the usefulness of our non-GAAP financial measures as tools for
comparison. A reconciliation is provided at the end of this press
release for each historical non-GAAP financial measure to the most
directly comparable financial measure stated in accordance with
GAAP. We do not provide a quantitative reconciliation of the
forward-looking non-GAAP financial measures included in this press
release to the most directly comparable GAAP measures due to the
high variability and difficulty to predict certain items excluded
from these non-GAAP financial measures; in particular, the effects
of stock-based compensation expense, taxes and amounts under the
exchange tax receivable agreement, deferred tax assets and deferred
tax liabilities, and restructuring and transaction expenses. We
expect the variability of these excluded items may have a
significant, and potentially unpredictable, impact on our future
GAAP financial results.
We define Adjusted Operating Income as income from operations
plus (i) impact of fair value adjustments to acquired unearned
revenue, (ii) amortization of acquired technology and other
acquired intangibles, (iii) equity-based compensation expense, (iv)
restructuring and transaction-related expenses, and (v) integration
costs and acquisition-related compensation. We define Adjusted
Operating Income Margin as Adjusted Operating Income divided by the
sum of revenue and the impact of fair value adjustments to acquired
unearned revenue.
We define Adjusted Net Income as Adjusted Operating Income less
(i) interest expense, net (ii) other (income) expense, net,
excluding TRA liability remeasurement expense (benefit) and (iii)
income tax expense (benefit) including incremental tax effects of
adjustments to arrive at Adjusted Operating Income and current tax
benefits related to the TRA. We define Adjusted Net Income Per
Share as Adjusted Net Income divided by diluted weighted average
shares outstanding.
We define Unlevered Free Cash Flow as net cash provided from
operating activities less (i) purchases of property and equipment
and other assets, plus (ii) cash interest expense, (iii) cash
payments related to restructuring and transaction-related expenses,
and (iv) cash payments related to integration costs and
acquisition-related compensation. Unlevered Free Cash Flow does not
represent residual cash flow available for discretionary
expenditures since, among other things, we have mandatory debt
service requirements.
Net revenue retention is an annual metric that we calculate
based on customers of ZoomInfo at the beginning of the year, and is
calculated as: (a) the total ACV for those customers at the end of
the year, divided by (b) the total ACV for those customers at the
beginning of the year.
Cautionary Statement Regarding Forward-Looking
Information
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. Actual results may differ materially from those expressed or
implied by these statements. You can generally identify our
forward-looking statements by the words “anticipate,” “believe,”
“can,” “continue,” “could,” “estimate,” “expect,” “forecast,”
“goal,” “intend,” “may,” “might,” “objective,” “outlook,” “plan,”
“potential,” “predict,” “projection,” “seek,” “should,” “target,”
“trend,” “will,” “would” or the negative version of these words or
other comparable words. Any statements in this press release
regarding future revenue, earnings, margins, financial performance,
cash flow, liquidity, uses of cash, or results of operations
(including, but not limited to, the guidance provided under
“Business Outlook”), and any other statements that are not
historical facts are forward-looking statements. We have based our
forward-looking statements on our management’s beliefs and
assumptions based on information available to our management at the
time the statements are made. We caution you that assumptions,
beliefs, expectations, intentions and projections about future
events may and often do vary materially from actual results.
Therefore, actual results could differ materially from those
expressed or implied by our forward-looking statements.
Factors that could cause actual results to differ from those
expressed or implied by our forward-looking statements include,
among other things: future economic, competitive, and regulatory
conditions, potential future uses of cash, the successful
integration of acquired businesses, and future decisions made by us
and our competitors. All of these factors are difficult or
impossible to predict accurately and many of them are beyond our
control. For a further list and description of these and other
important risks and uncertainties that may affect our future
operations, see Part I, Item 1A - Risk Factors in our most recent
Annual Report on Form 10-K filed with the Securities and Exchange
Commission, which we may update in Part II, Item 1A - Risk Factors
in Quarterly Reports on Form 10-Q we have filed or will file
hereafter. Our forward-looking statements do not reflect the
potential impact of any future acquisitions, mergers, dispositions,
joint ventures, investments, or other strategic transactions we may
make. Each forward-looking statement contained in this presentation
speaks only as of the date of this presentation, and we undertake
no obligation to update or revise any forward-looking statements
whether as a result of new information, future developments or
otherwise, except as required by law.
About ZoomInfo
ZoomInfo (NASDAQ: ZI) is the trusted go-to-market platform for
businesses to find, acquire, and grow their customers. It delivers
accurate, real-time data, insights, and technology to more than
35,000 companies worldwide. Businesses use ZoomInfo to increase
efficiency, consolidate technology stacks, and align their sales
and marketing teams — all in one platform. ZoomInfo is a recognized
leader in data privacy, with industry-leading GDPR and CCPA
compliance and numerous data security and privacy certifications.
For more information about how ZoomInfo can help businesses grow
their revenue at scale, please visit www.zoominfo.com.
Website Disclosure
ZoomInfo intends to use its website as a distribution channel of
material company information. Financial and other important
information regarding the Company is routinely posted on and
accessible through the Company’s website at
https://ir.zoominfo.com/. Accordingly, you should monitor the
investor relations portion of our website at
https://ir.zoominfo.com/ in addition to following our press
releases, SEC filings, and public conference calls and webcasts. In
addition, you may automatically receive email alerts and other
information about ZoomInfo when you enroll your email address by
visiting the “Email Alerts” section of our investor relations page
at https://ir.zoominfo.com/.
ZoomInfo Technologies
Inc.
Consolidated Balance
Sheets
(in millions, except share
data)
September 30,
December 31,
2023
2022
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
442.6
$
418.0
Short-term investments
125.3
127.7
Accounts receivable, net
218.6
222.9
Prepaid expenses and other current
assets
60.6
57.8
Income tax receivable
8.0
5.6
Total current assets
855.1
832.0
Restricted cash, non-current
9.9
6.1
Property and equipment, net
58.4
52.1
Operating lease right-of-use assets,
net
79.2
63.0
Intangible assets, net
349.5
395.6
Goodwill
1,692.7
1,692.7
Deferred tax assets
3,912.1
3,977.9
Deferred costs and other assets, net of
current portion
114.0
117.0
Total assets
$
7,070.9
$
7,136.4
Liabilities and Permanent
Equity
Current liabilities:
Accounts payable
$
20.3
$
35.6
Accrued expenses and other current
liabilities
91.4
104.1
Unearned revenue, current portion
399.2
416.8
Income taxes payable
3.7
5.9
Current portion of tax receivable
agreements liability
43.5
—
Current portion of operating lease
liabilities
9.0
10.3
Current portion of long-term debt
6.0
—
Total current liabilities
573.1
572.7
Unearned revenue, net of current
portion
3.9
3.1
Tax receivable agreements liability, net
of current portion
2,921.4
2,978.7
Operating lease liabilities, net of
current portion
88.3
67.9
Long-term debt, net of current portion
1,227.0
1,235.7
Deferred tax liabilities
2.1
1.0
Other long-term liabilities
4.7
5.5
Total liabilities
4,820.5
4,864.6
Commitments and Contingencies
Permanent Equity:
Common stock, par value $0.01;
3,300,000,000 shares authorized, 393,306,475 and 404,083,262 issued
and outstanding as of September 30, 2023 and December 31, 2022,
respectively
3.9
4.0
Preferred stock, par value $0.01;
200,000,000 shares authorized, 0 and 0 issued and outstanding as of
September 30, 2023 and December 31, 2022, respectively
—
—
Additional paid-in capital
1,922.2
2,052.1
Accumulated other comprehensive income
(loss)
35.5
39.7
Retained Earnings
288.8
176.0
Total equity
2,250.4
2,271.8
Total liabilities and permanent equity
$
7,070.9
$
7,136.4
ZoomInfo Technologies
Inc.
Consolidated Statements of
Operations
(in millions, except per share
amounts; unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
$
313.8
$
287.6
$
923.1
$
796.4
Cost of service:
Cost of service(1)
35.3
35.9
104.0
103.4
Amortization of acquired technology
9.5
12.3
29.5
35.8
Gross profit
269.0
239.4
789.6
657.2
Operating expenses:
Sales and marketing(1)
102.3
96.4
308.1
275.7
Research and development(1)
47.3
54.2
141.6
149.3
General and administrative(1)
45.8
31.2
124.5
88.2
Amortization of other acquired
intangibles
5.4
5.6
16.5
16.5
Restructuring and transaction-related
expenses
5.1
0.2
9.9
3.8
Total operating expenses
205.9
187.6
600.6
533.5
Income from operations
63.1
51.8
189.0
123.7
Interest expense, net
11.9
11.6
33.8
35.1
Loss on debt modification and
extinguishment
—
—
2.2
—
Other income
(8.0
)
(9.8
)
(29.1
)
(7.0
)
Income before income taxes
59.2
50.0
182.1
95.6
Income tax expense
29.0
32.1
69.3
55.6
Net income
$
30.2
$
17.9
$
112.8
$
40.0
Net income per share of common stock:
Basic
$
0.08
$
0.04
$
0.28
$
0.10
Diluted
$
0.08
$
0.04
$
0.28
$
0.10
(1) Amounts include equity-based compensation expense, as
follows:
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Cost of service
$
4.3
$
5.1
$
11.8
$
14.7
Sales and marketing
17.5
19.2
54.6
55.7
Research and development
11.7
17.0
34.0
47.9
General and administrative
9.4
6.8
26.5
19.3
Total equity-based compensation
expense
$
42.9
$
48.1
$
126.9
$
137.6
ZoomInfo Technologies
Inc.
Consolidated Statements of
Cash Flows
(in millions; unaudited)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net income
$
112.8
$
40.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
60.5
65.2
Amortization of debt discounts and
issuance costs
1.8
2.2
Amortization of deferred commissions
costs
57.2
47.4
Asset impairments
5.2
—
Loss on debt modification and
extinguishment
2.2
—
Equity-based compensation expense
126.9
137.6
Deferred income taxes
68.5
47.5
Tax receivable agreement remeasurement
(13.8
)
(9.5
)
Provision for bad debt expense
22.0
1.8
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(17.7
)
22.6
Prepaid expenses and other current
assets
(4.5
)
(6.3
)
Deferred costs and other assets, net of
current portion
(53.0
)
(55.5
)
Income tax receivable
(2.4
)
(1.2
)
Accounts payable
(15.2
)
6.1
Accrued expenses and other liabilities
(27.6
)
(11.2
)
Unearned revenue
(16.8
)
10.2
Net cash provided by operating
activities
306.1
296.9
Cash flows from investing
activities:
Purchases of short-term investments
(145.0
)
(40.7
)
Maturities of short-term investments
151.5
26.6
Purchases of property and equipment and
other assets
(17.6
)
(22.5
)
Cash paid for acquisitions, net of cash
acquired
—
(143.7
)
Net cash used in investing activities
(11.1
)
(180.3
)
Cash flows from financing
activities:
Payments of deferred consideration
(0.4
)
(1.1
)
Repayment of debt
(4.5
)
—
Payments of debt issuance and modification
costs
(2.7
)
(0.4
)
Proceeds from exercise of stock
options
0.4
1.2
Taxes paid related to net share settlement
of equity awards
(17.0
)
(12.7
)
Proceeds from issuance of common stock
under the employee stock purchase plan
4.6
—
Payments of equity issuance costs
—
(0.3
)
Tax receivable agreement payments
—
(5.0
)
Repurchase of common stock
(247.0
)
—
Net cash used in financing activities
(266.6
)
(18.3
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
28.4
98.3
Cash, cash equivalents, and restricted
cash at beginning of period
424.1
314.1
Cash, cash equivalents, and restricted
cash at end of period
$
452.5
$
412.4
Cash, cash equivalents, and restricted
cash at end of period:
Cash and cash equivalents
$
442.6
$
406.3
Restricted cash, non-current
9.9
6.1
Total cash, cash equivalents, and
restricted cash
$
452.5
$
412.4
Supplemental disclosures of cash flow
information
Interest paid in cash
$
43.0
$
44.0
Cash paid for taxes
$
7.5
$
8.7
Supplemental disclosures of non-cash
investing and financing activities:
Deferred variable consideration from
acquisition of a business
$
—
$
1.1
Property and equipment included in
accounts payable and accrued expenses and other current
liabilities
$
0.2
$
0.8
Equity-based compensation included in
capitalized software
$
4.0
$
—
ZoomInfo Technologies
Inc.
Reconciliation of GAAP
Operating Cash Flow to Unlevered Free Cash Flow
($ in millions; unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Cash flow from operations
$
80.8
$
85.7
$
306.1
$
296.9
Purchases of property and equipment and
other assets
(5.0
)
(7.7
)
(17.6
)
(22.5
)
Interest paid in cash
18.4
18.4
43.0
44.0
Restructuring and transaction-related
expenses paid in cash
0.6
3.2
5.5
12.6
Integration costs and acquisition-related
compensation paid in cash
—
0.2
0.5
3.0
Unlevered Free Cash Flow
$
94.8
$
99.8
$
337.5
$
334.0
ZoomInfo Technologies
Inc.
Reconciliation of GAAP Net
Income (Loss) to Adjusted Net Income and Income (Loss) From
Operations to Adjusted Operating Income
(in millions, except per share
amounts; unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net income
$
30.2
$
17.9
$
112.8
$
40.0
Add: Expense from income taxes
29.0
32.1
69.3
55.6
Add: Interest expense, net
11.9
11.6
33.8
35.1
Add: Loss on debt modification and
extinguishment
—
—
2.2
—
Add (less): Other expense (income),
net
(8.0
)
(9.8
)
(29.1
)
(7.0
)
Income from operations
63.1
51.8
189.0
123.7
Add: Impact of fair value adjustments to
acquired unearned revenue
0.1
0.2
0.2
2.0
Add: Amortization of acquired
technology
9.5
12.3
29.5
35.8
Add: Amortization of other acquired
intangibles
5.4
5.6
16.5
16.5
Add: Equity-based compensation
42.9
48.1
126.9
137.6
Add: Restructuring and transaction-related
expenses
5.1
0.2
9.9
3.8
Add: Integration costs and
acquisition-related expenses
—
0.1
—
1.6
Adjusted Operating Income
126.2
118.4
372.1
320.9
Less: Interest expense, net
(11.9
)
(11.6
)
(33.8
)
(35.1
)
Less (add): Other expense (income), net,
excluding TRA liability remeasurement (benefit) expense
5.4
(0.6
)
15.2
(2.4
)
Less: Expense from income taxes
(29.0
)
(32.1
)
(69.3
)
(55.6
)
Add: Tax impacts of adjustments to net
income
14.4
22.7
26.8
27.0
Adjusted Net Income
$
105.0
$
96.8
$
311.0
$
254.7
Shares for Adjusted Net Income Per
Share(1)
411
411
414
410
Adjusted Net Income Per Share
$
0.26
$
0.24
$
0.75
$
0.62
___________________________________________
1.
Diluted earnings per share is
computed by giving effect to all potential weighted average Common
Stock, and any securities that are convertible into Common Stock,
including options and restricted stock units. The dilutive effect
of outstanding awards and convertible securities is reflected in
diluted earnings per share by application of the treasury stock
method, excluding deemed repurchases assuming proceeds from
unrecognized compensation as required by GAAP. Shares and grants
issued in conjunction with the IPO were assumed to be issued at the
beginning of the period.
Three Months Ended September
30,
Nine Months Ended September
30,
($ in millions)
2023
2022
2023
2022
Adjusted Operating Income
$
126.2
$
118.4
$
372.1
$
320.9
Revenue
313.8
287.6
923.1
796.4
Impact of fair value adjustments to
acquired unearned revenue
0.1
0.2
0.2
2.0
Revenue for adjusted operating margin
calculation
$
313.9
$
287.8
$
923.4
$
798.4
Adjusted Operating Income Margin
40
%
41
%
40
%
40
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231030485136/en/
Investor: Jeremiah Sisitsky VP of Investor Relations
IR@zoominfo.com Media: Erin Hendrick Senior Director,
Communications PR@zoominfo.com
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