ZoomInfo Technologies (ZI) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $291.5 million, down 6% year-over-year, impacted by a $33 million charge related to higher-than-expected write-offs, primarily from SMB customers, and a change in accounting estimate affecting revenue and bad debt expense.

• Net loss for Q2 2024 was $24.4 million, driven by lease impairments, abandonment charges, and legal settlement costs, while adjusted operating income margin was 28%.

• Operational changes included a new risk model requiring prepayment from riskier customers, a strategic shift upmarket to mid-market and enterprise segments, and the launch of Copilot, the AI-powered offering.

• Copilot exceeded expectations with $18 million ACV across 1,000+ customers, and data-as-a-service offerings grew 23% year-over-year.

• Repurchased 10.8 million shares for $147.4 million, with $399.4 million remaining under the repurchase program.

Financial highlights

• GAAP revenue for Q2 was $291.5 million; adjusted operating income was $81.6 million (28% margin); GAAP operating loss was $20 million.

• Unlevered free cash flow for Q2 was $120 million; operating cash flow was $126.3 million.

• Adjusted net income for Q2 was $66 million, down 38% year-over-year; adjusted net income per share was $0.17.

• Gross margin for Q2 2024 was 84%, down from 86% in Q2 2023.

• Net leverage ratio at 1.8x trailing 12 months adjusted EBITDA.

Outlook and guidance

• Q3 2024 guidance: GAAP revenue $298–$301 million, adjusted operating income $107–$109 million, adjusted net income per share $0.21–$0.22.

• Full-year 2024 guidance: GAAP revenue $1.19–$1.205 billion, adjusted operating income $412–$418 million, adjusted net income per share $0.86–$0.88, unlevered free cash flow $420–$430 million.

• Guidance assumes continued elevated write-off rates and increased conservatism due to market uncertainty.

• Liquidity is expected to be sufficient for at least the next 12 months, with $250 million available under the revolving credit facility.

• Implied -3% revenue growth and 35% adjusted operating margin at midpoint for 2024.