ZoomInfo Technologies (ZI) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $303.6 million, down 3% year-over-year, with stable net revenue retention at 85% and growth in $100K+ and $1M+ customer cohorts.

• Adjusted operating income was $111.7 million (37% margin), unlevered free cash flow was $110.7 million, both up 17% year-over-year.

• Copilot adoption exceeded expectations, driving higher engagement and customer outcomes, especially in mid-market and enterprise segments.

• Share repurchases accelerated, with 24.5 million shares retired in Q3 and $542.6 million spent YTD, totaling 17% of outstanding shares since March 2023.

• Net income for Q3 2024 was $23.8 million, down 21% year-over-year, impacted by lease impairment, restructuring, and legal settlement costs.

Financial highlights

• GAAP revenue for Q3 was $303.6 million; GAAP operating income was $43.5 million (14% margin), down 31% year-over-year.

• Adjusted net income per share was $0.28; diluted EPS was $0.07.

• Cash flow from operations was $18.2 million, down 77% year-over-year; unlevered free cash flow margin was 36%.

• Gross margin for Q3 was 84%, down from 86% a year ago.

• Operations business grew 22% year-over-year; advanced functionality now 38% of business, up from 35% in Q2.

Outlook and guidance

• Q4 2024 revenue guidance: $296–$299 million; adjusted operating income: $103–$105 million.

• FY 2024 revenue guidance: $1.201–$1.204 billion; adjusted operating income: $416–$418 million; adjusted EPS: $0.92–$0.93.

• FY 2024 unlevered free cash flow guidance: $420–$430 million.

• Guidance remains conservative due to ongoing SMB transition and macroeconomic uncertainty.

• Management expects net revenue retention to remain pressured by macroeconomic conditions in the near term.