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 from higher-than-expected write-offs, mainly from SMB customers, and a change in accounting estimate affecting revenue and bad debt expense.

• Operational changes included a new risk model requiring prepayment from high-risk customers, a strategic shift upmarket, and the launch of Copilot, the AI-powered platform, which exceeded expectations with $18 million in ACV across 1,000+ customers.

• Record new business was achieved in mid-market and enterprise segments, with the $100K+ ACV customer cohort growing sequentially to 1,797 as of June 30, 2024.

• Board and executive changes were announced, including a CFO transition and new board members with data and capital markets expertise.

• The company repurchased 10.8 million shares for $147.4 million in Q2, 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 per share was $0.17; GAAP net loss per share was $(0.07).

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

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

Outlook and guidance

• Q3 2024 GAAP revenue expected between $298–$301 million; adjusted operating income $107–$109 million.

• Full-year 2024 GAAP revenue expected at $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 reflects -3% revenue growth and 35% adjusted operating margin at midpoint, inclusive of Q2 charges.

• Sequential revenue growth in Q4 is expected to be flat to down 1%.

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