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 facing contraction in 2024 due to headwinds in the tech and software-heavy mid-market segment.

• Tech/software vertical, once the largest growth driver, has seen significant downsell pressure, dropping from 40% to 33% of total ACV by end of last year.

• Q2 showed early signs of stabilization in tech/software retention, but leadership is cautious about declaring a trend.

• SMB segment faced increased write-offs due to changes in payment collection, leading to a near-term growth headwind as risk models now disqualify some new sales.

• Bad debt expense rose sharply from $5 million annually to $32 million in the first half, attributed to economic cycle impacts and delayed cash collection.

Customer and vertical mix

• Enterprise customers represent 40% of revenue, SMB about a third, and mid-market just below 30%.

• Non-software verticals such as financial services, real estate, transportation, logistics, and manufacturing have shown solid double-digit growth year-over-year.

• Expansion into traditional industries is supported by specialized sales reps and a large total addressable market.

Go-to-market and segmentation strategy

• 2024 saw a shift to segmentation-first sales, with dedicated teams for enterprise, mid-market, and higher-end SMB, aiming for larger deals and longer sales cycles.

• Verticalization is being tested, with early success where reps have domain expertise.

• New business risk models and upfront cash collection have added friction but are expected to improve revenue quality.

• Retention efforts focus on moving upmarket, with account management tailored for enterprise and mid-market customers.