ZoomInfo Technologies (ZI) Piper Sandler's Growth Frontiers Conference summary

Business performance and headwinds

• Revenue exceeds $1 billion with over 30% operating and free cash flow margins, but the business is contracting in 2024 due to headwinds in the tech and software-heavy mid-market segment, which has faced contraction and downsell pressure for over two years.

• The software and tech vertical, once 40% of total ACV, dropped to 33% by the end of last year, reflecting significant downsell pressure and stabilization in Q2 for the first time since Q4 2021.

• SMB segment faced increased write-offs, rising from $5 million annually to $32 million in the first half, driven by changes in payment collection and risk models, leading to near-term growth headwinds but improved revenue quality.

• Business mix is now 40% enterprise, about a third SMB, and just below 30% mid-market.

• Non-software verticals like financial services, real estate, transportation, logistics, and manufacturing are experiencing solid double-digit growth.

Strategic initiatives and go-to-market evolution

• Segmentation was implemented in 2024, creating dedicated sales teams for enterprise, mid-market, and higher-end SMB, leading to longer sales cycles but higher quality deals.

• Verticalization is being tested, with early success in deploying reps with domain expertise in traditional industries.

• New business risk models and upfront cash collection have been introduced, temporarily slowing sales cycles but improving customer health.

• The go-to-market strategy is shifting upmarket, with investments in account management for enterprise and mid-market customers.

Product innovation and AI integration

• Copilot, an AI-powered product, launched in late May, generated $18 million ACV in its first five weeks, exceeding internal targets.

• Copilot adoption is driven by new customer acquisition, off-cycle upsells, and migrations at renewal, with 90% of new sales in June-July moving to Copilot.

• The company plans a three-year migration to Copilot, targeting double-digit per-seat price uplifts and expanding use cases beyond sales to account managers and customer success.

• AI is seen as expanding seat opportunities rather than reducing them, with significant white space in current customer bases.