ZoomInfo Technologies Inc. (ZI) Q1 2021 Earnings Call Transcript

ZoomInfo Technologies Inc. (ZI 1.74%)
Q1 2021 Earnings Call
May 03, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the ZoomInfo first-quarter year 2021 financial results conference call. [Operator instructions] I would now like to hand the conference over to your speaker today, Jerry Sisitsky, investor relations. Please go ahead.

Jerry Sisitsky -- Investor Relations

Thanks, Carmen. Welcome to ZoomInfo's financial results conference call, highlighting our results for the first quarter of 2021. With me on the call today are Henry Schuck, CEO and founder of ZoomInfo; and Cameron Hyzer, our chief financial officer. After their remarks, we'll open the call to Q&A.

During this call, any forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Expressions of future goals, including business outlook, expectations for future financial performance, and similar items, including, without limitation, expressions using the terminology may, will, and believe and expressions which reflect something other than historical facts are intended to identify forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, including those discussed in the Risk Factors sections of our filings with the SEC. Actual results may differ materially from any forward-looking statements.

The company undertakes no obligation to revise or update any forward-looking statements in order to reflect events that may arise after this conference call, except as required by law. For more information, please refer to the cautionary statement included in the slides that we've posted to our Investor Relations website at ir.zoominfo.com. All metrics discussed on this call are non-GAAP unless otherwise noted. A reconciliation can be found in the financial results press release or in the slides that we have posted to our Investor Relations website.

Lastly, we plan to be at a number of conferences and investor events over the course of the quarter, including our inaugural Analyst Investor Day event, which we are hosting in a virtual format on Monday, June 14, beginning at 3 p.m. Eastern Time. This event coincides with our first-ever user conference that we're also hosting that week. Please save the date.

More details and registration information will be available through our Investor Relations website over the coming weeks. We look forward to your participation. With that, I'll turn the call over to our CEO, Henry Schuck.

Henry Schuck -- Chief Executive Officer and Founder

Great. Thank you, Jerry, and welcome, everyone. The first quarter was marked by strong accelerating growth across all of our business lines. We delivered GAAP revenue of $153 million, representing 50% year-over-year growth and 12% sequentially when adjusted for the number of days in the quarter.

Adjusted operating income was $66 million, representing an operating margin of 43%. These results were driven by dependable execution across the entire company from new business to product development to retention. Our focus on continuous improvement as a core cultural value and the execution we build on top of that has allowed us to deliver our near-term financial results consistently while setting us up for long-term durable growth. We had strong results across all areas of the business, and I want to specifically call out that we achieved our best-ever Q1 results this quarter on three dimensions: new business, new customer additions, and retention activity.

We doubled the number of new customers added this quarter compared to Q1 2020. We also had record renewals and upsells as a percentage of beginning ACV for a first quarter as we saw demand for our products continue to accelerate with companies looking to drive a digital data-driven go-to-market motion. While we continue to deliver on the near-term promise of this business, exceeding our quarterly financial guidance and raising our full-year guidance, it is the conversations I'm having with customers and prospects that makes me confident that our long-term opportunity is even bigger than what we had first envisioned. When we founded ZoomInfo, sellers and marketers desperately needed a better view of their potential customers.

And we were a world-class provider of company and contact data that could help them solve that problem. Our data was and still is today a mission-critical need for businesses. Since then, we've innovated and invested hundreds of millions of dollars behind that data asset, continuing to drive material improvements in the way we gather, normalize, match and cleanse that data with the use of AI and machine learning. And leveraging that is the foundation of our fully scalable platform that powers the digitization of how companies go to market, from sales to marketing, to account management, from the top of the funnel to the bottom of the funnel, and from new sales to upsells and cross-sells to renewals.

Our platform starts with our market-leading and highly accurate data layer; delivers critical sales insights and signals; automates best actions with our next-generation workflow software; and our tightly integrated activation layer, Engage. This integrated suite of data and software helps businesses of all sizes and across all industries activate targeted opportunities in an efficient, scalable, and repeatable way. As we continue to invest in automating workflow, expanding the coverage and quality of the data we publish, and leveraging that data asset across our platform's application stack, we are building a wider and wider moat around the company. As our data and platform grows, so does the addressable market where our solutions are making an impact.

Today, we not only help salespeople and marketers, but we also help recruiters and data operations, and technology teams. We not only work with small and midsized companies across the United States, but we also serve enterprise companies around the globe. At our Analyst Day later this quarter, we anticipate providing a more granular and detailed view into our plans to target this large and growing market. The quarter included new and expansion transactions from a diverse group of customers across a broad spectrum of industries: from clean energy companies like Dvinci Energy; to direct-to-consumer firms like Keurig, Uber, Varidesk, and the Carolina Panthers.

Even at a company that appears to be consumer only, if you look a little further, you'll almost always find a growing B2B motion there. We also brought on Experian, HireWorks, and IDC. And a great customer story comes from Modern Chemical, which shifted from a growing and successful cold brew distributor to a provider of hand sanitizers sold directly to businesses in the middle of the pandemic. We're lucky to work with firms of all sizes from all industries, but we're especially proud to provide our solutions to companies that are able to leverage our data, technology, and insights to drive growth in new and unknown markets with entrenched competitors.

Our platform leveled the playing field for how these companies are able to acquire their next customers. We also continue to successfully execute our large and growing enterprise opportunity, with a focus on driving more than -- with a focus on driving more from the greater than $1 billion of seed expansion opportunity we've identified within our existing enterprise customers. Increasingly, our platform is becoming the strategic imperative for large organizations looking to transform their CRMs from a system of record to a system of insights. This imperative and strategy is driven from the C-suite and has opened the door to meaningful conversations for us across the enterprise while also leading to larger, more transformational engagements.

This quarter, we closed one of our largest-ever transactions, a multiyear eight-figure deal, while we also more than doubled the additions to the greater than $100,000 ACV cohort year over year. As of March 31, we had more than 950 customers with $100,000 or more in ACV, up from more than 850 last quarter. While others trying to target the enterprise opportunity are still using FTP sites to manually drop and enhance files, we released our new API Webhooks, allowing our customers to programmatically receive a continuous stream of our data and insights, technology that is a full generation ahead of FTP enrichment and a material improvement to the more modern request-and-response method. This new functionality allows us to deliver more value to enterprises and better target the Data as a Service opportunity that we are uniquely positioned to win in following our acquisition and integration of EverString.

Additionally, during the quarter, we added more resources to capitalize on the growing international opportunity, where we saw new customers join up Dubai, Sydney, Vienna, Rio de Janeiro, Helsinki, and Berlin, to name a few. March was our strongest month ever in our international segment with increasing win rates and demand across Europe and accelerating traction in the U.K., Ireland, Australia, New Zealand, and Canada. International revenue grew 14% on a days-adjusted, sequential-quarter basis as we continue to see international customers embrace data to drive efficiencies in their sales and marketing processes. On the product side, our investment to deepen our integration with Salesforce is paying off with rapidly increasing adoption of our new Salesforce sync capability.

This capability allows users to marry first-party Salesforce data directly into ZoomInfo filters from account data to lead and contact data and now opportunity data. We saw a more than eightfold increase in the number of accounts that have enabled this bidirectional sync. Our sales engagement and automation platform, Engage, also continues to accelerate. Engage ACV doubled compared to Q4 2020, and we're seeing a 25% increase in user adoption of the core ZoomInfo platform when customers combine the use of ZoomInfo and Engage.

We also see the benefits of this adoption within our retention and renewal numbers, where customers who are dual users of Engage and ZoomInfo have materially higher renewal and retention rates than those who are ZoomInfo-only customers. This is one of the most exciting things about the Engage platform. It has multi-area benefits. Customers buy Engage, which increases adoption of both Engage and ZoomInfo.

And investment behind Engage has material benefits across our recruiter and international packages where that product is a built-in offering. This quarter, we significantly expanded the integration points between Engage and the ZoomInfo platform, enhancing the ability to search and import contacts from ZoomInfo and Salesforce into Engage and allowing users to configure target market buyer personas to receive an automated feed of recommended contacts to pursue. More than 40% of active users have used these features just one month after release. We're also integrating our -- in our Salesforce sync capability, enabling customers to automatically synchronize Salesforce data and Engage while we're adding additional integrations into CRM and marketing tools like HubSpot and building out enhanced administrative and managerial controls within our platform.

Our customers also continue to adopt the broad spectrum of our market-leading solutions, including our B2B Intent data, which gets them closer to in-market buyers by building automated workflows around intense spikes, topics relevant to their products and services. These data-driven motions have fueled a significant increase across our Intent products, with Intent ACV doubling year over year. Our InboxAI product, which automates the creation and enrichment of contact lead and activity data from a seller's inbox directly into CRM, tripled year over year. And from an overall platform engagement perspective, we saw 12% sequential increases in monthly and daily active user adoption, demonstrating our ability to scale users while also increasing their usage and adoption of our platform.

The market reaction to our platform continues to be incredibly positive. Since our last earnings call, ZoomInfo was named a leader by Forrester Research in the Q2 2021 Forrester Wave for B2B marketing data providers, receiving the highest possible scores in 18 categories, including data security and privacy, data acquisition and processing, integrations, APIs and applications, sales support, solution packaging and pricing and product road map and vision. Forrester stated that ZoomInfo is a best fit for organizations looking for a comprehensive data solution with an expanding array of complementary applications built on a shared data foundation. On top of that, we also received 26 No.

1 placements from G2, and we earned the TrustRadius top-rated award for sales intelligence software for the fourth consecutive year. Finally, we attained GDPR and CCPA practices validation from TrustArc. The months-long process to achieve this validation included deep audits of our privacy practices and reinforces both our data privacy leadership and our focus on being privacy-forward to earn the trust of our customers. Over the last 12 months, we grew our team by nearly 50%.

While we have spent the last year working from home, our focus on improving ourselves 1% every day has continued to drive an incredible amount of internal mobility as our employees challenge themselves to master new skills. From promotions to cross-functional moves, the opportunities for career advancement at ZoomInfo far outpace the industry average. We encourage every member of our team to embrace new responsibilities to achieve both personal and professional growth. And our employees are looking forward to getting into the office, many for the first time ever, and meeting their teammates in person.

We plan to begin returning to the office in July, and I'm excited to be able to gather in person with colleagues again as we're preparing our offices around the world to accommodate our hybrid return-to-work model. I'm confident that this team will continue to define new possibles when we are all innovating, collaborating, and learning together in person again.With that, I'll hand it over to our chief financial officer, Cameron Hyzer.

Cameron Hyzer -- Chief Financial Officer

Thanks, Henry. Q1 was a great quarter with strong financial results that exceeded our guidance. We saw broad-based strength across the business. And as Henry indicated, we achieved our best-ever Q1 results for new business, new customer additions, and retention activity.

This quarter was also highlighted by our successful expansion with enterprise customers, growing sales of our newer products, and strong international growth. As a result, we are raising our outlook for the year and now expect to deliver revenue growth of 41% in 2021, up from our prior guidance of 36% at the midpoint. We're also guiding to adjusted operating income in the range of $290 million to $294 million, up from our prior guidance of $280 million to $285 million. In Q1, we delivered GAAP revenue of $153 million.

This exceeded our $144 million to $146 million revenue guidance range and represents 50% year-over-year growth and 12% sequential growth as adjusted for days in the quarter. In the first quarter, adjusted operating income was $66 million. This also exceeded our guidance range of $61 million to $63 million and represents a margin of 43%. During the first quarter, we continued to see strong new customer additions and positive momentum with respect to retention and upsell activity.

We also continued to successfully execute against the large and growing enterprise opportunity. We had strong enterprise renewals, and our enterprise upsell motion is really hitting its stride. In the quarter, we doubled the number of greater than $100,000 ACV customers added as compared to the year-ago period. As a result, as of March 31, we had more than 950 customers with $100,000 or more in ACV, up from more than 850 last quarter.

We also continue to expand beyond software and business services with particular strength in finance, insurance, real estate, and manufacturing verticals. Additionally, during the quarter, we added more resources to capitalize on the growing international opportunity, which resulted in days-adjusted sequential-quarter international revenue growth of 14%. With international revenue growing faster than the overall business, we now have over 10% of our revenue coming from international markets. As we invest in additional growth vectors, our focus remains on delivering durable revenue growth and absolute levels of adjusted operating income.

As a result, as we drive elevated levels of growth, there's the potential that margins may be impacted. As we have outlined in the past, calculated billings and RPO can be imprecise metrics with noise, obscuring the signal of in-period activity. As a result, we focus on days-adjusted sequential revenue growth, which is the growth in total revenue divided by the days in the quarter compared to the prior quarter. We delivered 12% days-adjusted sequential revenue growth in the first quarter, strong results relative to our expectations, and great momentum for the remainder of the year.

This performance provides further confidence in our ability to raise our guidance for 2021. As we move on to expenses, we increased our investment in research and development in the quarter as planned, investing to expand our data advantage and further extend the workflow and activation capabilities of our platform. We also continued to increase sales and marketing capacity to go after the large and expanding market opportunity. As a result, in Q1, we delivered adjusted operating income margins of 43%, in line with guidance.

Turning to the balance sheet and cash flow. We ended the quarter with $356 million in cash, cash equivalents, and short-term investments. In the first quarter, we generated operating cash flows of $93 million, which included approximately $7 million of interest payments in the quarter. As I indicated on our last call, we repaid part of our term loan and repriced the remainder while issuing a new senior unsecured bond in the first quarter, contributing to the $34 million in cash used for financing activities.

We expect those transactions will reduce our cash interest expense by approximately $3 million in 2021. Unlevered free cash flow was $98 million for the quarter, almost 150% of adjusted operating income as both billings and collections were strong in the quarter. Looking forward, we anticipate unlevered free cash flow conversion rates in the high 90s or 100s as a percentage of adjusted operating income on an annual basis. With respect to liabilities and future performance obligations, unearned revenue at the end of the quarter was $262 million.

And remaining performance obligations or RPO were $592 million, of which $461 million are expected to be delivered in the next 12 months. As of March 31, we carried $750 million in gross debt at a net leverage ratio of 1.6 times trailing 12 months adjusted EBITDA or 1.2 times trailing 12 months credit agreement EBITDA. Lastly, before we turn to guidance, I would like to welcome Prasadh Cadambi to the team. We announced that Prasadh was joining the company as chief accounting officer in October.

And since then, he's helped his clients at KPMG get through year-end before joining us in March. He's led engagements with some of the largest software and subscription companies in the world, including Adobe and Salesforce. With that, I'll provide our outlook for the second quarter and updated outlook for the full-year 2021. For Q2, we expect GAAP revenue in the range of $161 million to $163 million and adjusted operating income in the range of $68 million to $70 million.

Non-GAAP net income is expected to be in the range of $0.11 to $0.12 per share. Our guidance implies year-over-year revenue growth of 46% at the midpoint and an adjusted operating income margin of 43%. We are updating our full-year 2022 guidance as follows. We now expect GAAP revenue in the range of $670 million to $676 million, an increase from our prior guidance of $645 million to $655 million; and adjusted operating income of $290 million to $294 million, an increase from our prior guidance of $280 million to $285 million.

Non-GAAP net income for the year is expected to be $0.49 to $0.50 per share, an increase from our prior guidance of $0.47 to $0.49 per share, both amounts based on 405 million diluted weighted average shares outstanding. And we anticipate unlevered free cash flow to be in the range of $290 million to $295 million, an increase from our prior guidance of $270 million to $280 million. Our full-year guidance implies 41% revenue growth. With that, let me turn it over to the operator to open up the call for questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question is from Siti Panigrahi with Mizuho. Please go ahead.

Siti Panigrahi -- Mizuho Securities -- Analyst

Thanks for taking my question. Henry, you talked about a strong upsell and renewal. I'm wondering, what percentage of your customer, mainly enterprise customer, now using Engage platform? And also could you talk about Clickagy and EverString? You said last quarter, completed the integration. What sort of adoption or cross-selling you saw in the base?

Henry Schuck -- Chief Executive Officer and Founder

Yeah. Great. I think first, a very -- Engage is still very, very new. And so it's a tiny, tiny percentage of our customer base that use Engage today.

And so we feel really good about the upside opportunity there. We're getting great feedback from the customers who are on it. Like I mentioned, we're seeing higher renewal and retention rates from the customers who are using both ZoomInfo and Engage. And then every investment dollar in Engage doesn't just go to enhance Engage, but it also goes to enhance our offerings internationally and our recruiter offering where Engage is built into those packages.

And so we feel really good about the investments there, but it's still really early innings for that. On Clickagy and EverString, what we did with the Clickagy asset is that we built it into the industry's first Streaming Intent product, and that product is growing tremendously across our base. It's also built into our Elite package, and so we're driving more prospects and customers from our Advanced and Professional versions of our platform into the Elite version of our platform, where they get Intent and Streaming Intent within that platform. And that asset, from a data perspective, is feeding our Intent offering, which we think is one of the offerings that we'll be here for years and years to come.

Our customers want to be in front of their prospective customers when they're in market for their products and services, and Intent gives them visibility into what their prospective customers and prospects are doing and researching online. And so we feel really good about that offering, and the Clickagy asset is being leveraged for that.

Siti Panigrahi -- Mizuho Securities -- Analyst

Thank you.

Henry Schuck -- Chief Executive Officer and Founder

On the EverString side -- sorry, Siti. On the EverString side, we fully integrated the EverString data asset into our Data as a Service offering, and that's a key offering within our enterprise customers. And in the large -- in the very large deal that I talked about in the prepared remarks, that customer is also taking advantage of enrichment that's being fed through the combination of the EverString and ZoomInfo data assets.

Siti Panigrahi -- Mizuho Securities -- Analyst

Henry, thanks for the color.

Operator

Our next question comes from Mark Murphy with JPMorgan.

Mark Murphy -- JPMorgan Chase & Co. -- Analyst

Yes, thank you. Congrats on a terrific start to the year. I wanted to ask you the -- I think mathematically, Cameron, there's $8 million of revenue upside in Q1, but the fiscal-year guidance is moving higher, I think, by about $23 million. So are you seeing something different in the pipeline that's driving greater confidence in the rest of the year? In other words, maybe this international strength is -- you see that flowing through.

Or is it more Engage and recruiter offering starting to feather in, in the back half?

Cameron Hyzer -- Chief Financial Officer

So, yeah, I think -- first off, certainly, the ACV that was generated in Q1 above our kind of initial model and guidance is more than the $8 million revenue that was recognized. So that certainly contributes that we'll continue to see that revenue kind of throughout the year. And I do think that from an execution standpoint, we're firing on all cylinders with respect to many of the expansion opportunities that we have, both internationally and with Engage and the other new products. So it does provide us with a healthy baseline to bring up our growth assumptions.

Mark Murphy -- JPMorgan Chase & Co. -- Analyst

OK. If I could sneak in just a very quick second one. Henry, can you just explain why is international growing faster than domestic just given there's a stronger economic rebound domestically than we have more of the COVID flare-ups that are still happening internationally?

Henry Schuck -- Chief Executive Officer and Founder

Yeah. Mark, I think a couple of things. First, internationally, there's obviously lower penetration there than there is domestically, I think, is the first thing. I think the second thing is there really isn't an offering internationally that can bring together data coverage and technology for go-to-market team the way that we can.

And so when we're going there, it's largely evangelistic. But the customers are really excited about the opportunity to use data, oftentimes for the first time, to impact their go-to-market efforts. And so the market is ready for this type of solution internationally. They haven't seen a packaged solution the way that we can bring it before.

And so when we're able to show them how they can actually truly digitize the way they go to market, the response has been overwhelmingly positive.

Mark Murphy -- JPMorgan Chase & Co. -- Analyst

Excellent. Thank you very much.

Operator

Our next question comes from Alex Zukin with Wolfe Research.

Alex Zukin -- Wolfe Research -- Analyst

Hey, guys. Thanks for taking my question and congrats on the quarter. So maybe just the first one for Henry. Obviously, the standout numbers with a 50-plus percent growth in $100,000 customers, and you called out an eight-figure deal.

So can you maybe talk about the pipeline for the rest of the year? Comment on if the pandemic is actually driving some shortening of sales cycles for you given the pull from the demand environment and even the push from your brand equity really coming together post-IPO as well.

Henry Schuck -- Chief Executive Officer and Founder

Yeah. I think actually -- and thanks, Alex. I think actually one of the things to think about with that eight-figure deployment is really how it came together. And this was a company that four years ago had come to us with just 300 users.

They were on one of our legacy platforms. They continue to add seats over time. And then in 2019, they migrated to our combined platform. So the new platform is what they were on.

And really, once they got there, much like many of our other customers, that really started an acceleration of what was possible with all of the other data assets and technology and software tools we had built into the new platform. And so this was a customer that then started adding new seats because the legacy platform didn't have as much data coverage as the new platform. So they started adding new users to the platform, and then they baked us into their CRM system. And then they added Intent data.

And then they upgraded to the Elite edition, where they were able to get Intent and workflows and lead scoring and routing and account enrichment. And then they added InboxAI to their -- to the offering. And so this is a customer that has been a customer with us for years, but once they've gone on to the new platform and migrated over there, still, we're able to really open the opus to all of these other features and functionality and data sets that we could offer them. And so we're seeing more and more customers in the enterprise but also across our customer base come to that same realization and start taking us up on all of the enhanced offerings that we're able to provide them.

And in the enterprise, really the other sort of tailwind for us there is the acquisition of EverString significantly broadened the data coverage we're able to provide for enterprise clients, which means we're enriching more data for them. When we plug into CRM, we're resolving back to an entity and contact records within ZoomInfo more often than we ever were. And so we're seeing enhanced opportunity within the enterprise, really to finish that transformation from CRM being that system of record to CRM being a system of insight. And then we've invested really for the last year behind the go-to-market motion in the enterprise as well.

And that comes from a product perspective where we continue to enhance the offerings that we offer in the enterprise, but also from a go-to-market, headcount, and talent perspective where we brought in new enterprise leaders and reorganized the segmentation of accounts in the enterprise so that we can make sure that we're really articulating the value we can provide across an organization. And so you're seeing a lot of that come to fruition now.

Alex Zukin -- Wolfe Research -- Analyst

Got it. That's super helpful. And then, Cameron, just maybe one for you. I know you love these questions.

But if I look at the delta and kind of the patterns around calculated billings versus current RPO, you're seeing sequential trends improve in calculated billings for Q1 versus Q4. But if I look at the sequential change in current RPO, it's about the same roughly on a dollar basis in terms of the amount of current RPO added from Q4 to Q1. So just walk -- can you walk us through -- was there anything different in the billings calc that made that bigger versus depressed the CRPO calc? Or any help there would be appreciated.

Cameron Hyzer -- Chief Financial Officer

So I'll start with billings as an imprecise metric, as well as RPO as you kind of think through just based on the amount of noise you get from timing of billings, duration of billings, expiration of contracts, etc. And that occurs within the RPO-based metrics as well. One of the things to consider is that Q4 just seasonally is our strongest quarter from an in-period activity perspective. So the number of -- or the amount of bookings that you get in terms of RPO tends to be largest in Q4, and that kind of pull-forward as you think about the expiration of contracts in Q1 tends to warp that comparison a little.

But again, I think if you're looking at in-period activity and how to best gauge that, the cleanest metric there's always going to be sequential growth in revenue as you adjust for days. And if you look at that, the Q1 sequential growth relative to Q4, once you get out the acquisitions, was actually a modest improvement.

Alex Zukin -- Wolfe Research -- Analyst

Understood. Thank you, guys.

Operator

Thank you. Our next question is from Michael Turrin with Wells Fargo Securities.

Michael Turrin -- Wells Fargo Securities -- Analyst

Hi, there. Thanks. Good afternoon. Cameron, the unlevered free cash flow number certainly stands out as well.

I think more than 60% margin is certainly impressive. You mentioned just in the prepared remarks some billings and collections-related commentary. But is there anything else from a seasonal profile perspective for us to be mindful of as we model that line out through the course of the year given the upside, I think, was more pronounced than we were modeling? Thank you.

Cameron Hyzer -- Chief Financial Officer

Yes, sure. Great question. Look, Q1 is always strong from an unlevered free cash flow perspective just based on the normal seasonal strength of sales activity in Q4. So we collected on what was a great quarter in Q4, plus we have continued to implement operational improvements around collections that have yielded really strong results.

And if you think about -- in a SaaS business, I always think about it as days billings outstanding as opposed to days sales outstanding. If you take days billing as outstanding, we've actually improved to a level that's even better than our pre-pandemic levels had been, which helped to drive cash flow in Q1. And then certainly, we did have a really great quarter from a sales and billings perspective in Q2 as well that also helped to drive incremental cash flow. So overall, as a result of the operational improvements and improving growth, we do expect that our free cash flow conversion will be improved in 2021 and that, as I mentioned in my prepared remarks, that we expect to be in the high 90s or 100s as a percentage of adjusted operating income for the year.

Michael Turrin -- Wells Fargo Securities -- Analyst

Helpful. Thanks. Nice start to you.

Cameron Hyzer -- Chief Financial Officer

Thanks.

Operator

Our next question is from Stan Zlotsky with Morgan Stanley.

Stan Zlotsky -- Morgan Stanley -- Analyst

Perfect. Thank you so much, guys. I wanted to go back to the question on international opportunity. The -- certainly a very impressive start to the year in that part of the business.

How are you thinking about it for the remainder of the year? What are some of your initiatives that you're hoping to implement as we go forward?

Cameron Hyzer -- Chief Financial Officer

Sure. I'll jump in, and Henry can add color if he wants to. But we're really excited about the momentum and success from the early investments we've made in international markets, and we expect to put more wood behind that effort. One of the exciting things is that the effectiveness and efficiency and scalability of our international teams has been similar to that that we've seen in the U.S.

And so I think the -- from our perspective, the hardest part is really the travel restrictions and so forth that we've experienced. If -- we would have had an office open in Europe and probably Australia already if it weren't for COVID. But as the world opens up to foreign visitors and landing teams to seed a team in those regions, we do plan to often -- open offices internationally to further pursue the strength that we're seeing there.

Stan Zlotsky -- Morgan Stanley -- Analyst

So just to piggyback on that, Cameron. So as we think about the back half of the year, are you figuring in a greater amount of T&E just between returning to the offices domestically and potentially also other international locations opening up?

Cameron Hyzer -- Chief Financial Officer

It will be modest at best. Realistically, our sales motion doesn't rely on a heavy amount of in-person visits. There will be some training, but our expectation is that we'll, yes, send some experienced folks that are deeply ingrained in the culture over there to start offices and then ramp with local hires and the success that would follow.

Stan Zlotsky -- Morgan Stanley -- Analyst

Got it. Thanks, guys.

Cameron Hyzer -- Chief Financial Officer

Thanks, Stan.

Operator

Thank you. Our next question is from Terry Tillman with Truist.

Terry Tillman -- Truist Securities -- Analyst

Yes, thanks for taking my question, and congrats as well, Henry, Cameron, and Jerry. Maybe in terms of, Henry, the Salesforce sync, the innovation of the bidirectional data feed, what kind of revenue do you actually get from that? And whether it's Salesforce or other ISVs? The second part of this is, I would think, as you're starting to get these seven-figure and eight-figure transactions, people are going to take notice. So I'm curious what you're seeing now in the ecosystem development side. Thank you.

Henry Schuck -- Chief Executive Officer and Founder

Yes. Thanks, Terry. I think on Salesforce sync, that's a capability that we've opened up in our Advanced and Elite packages. And so customers will need to migrate from the Professional edition, which is kind of our Starter edition to Advanced and Elite to take advantage of the Salesforce sync capability.

We obviously believe this is an incredibly valuable feature because it allows you to take your first-party Salesforce data and then marry it to ZoomInfo data to get tighter filters and better views on where your opportunities are, what accounts you should be engaging with, which contacts, and leads are no longer at their firms. And you can see that with a couple of clicks inside of the ZoomInfo platform. And so really powerful technology, and we're using it as a lever to migrate people to the more advanced solution packages. I think from an ecosystem perspective, last quarter, we announced a partnership with Snowflake in their Data Marketplace.

Next quarter, you'll see us announce a couple of new partnerships with customers where our data and our platform can be embedded in a number of different go-to-market platforms and systems. We really do believe that not only should our customers be engaging with our platform on ZoomInfo's application, but that we should also be embedding those solutions inside of the systems that they're going to market with, whether that's sales automation or CRM, or marketing automation. And so really expanding that ecosystem has always been a goal of ours. And you'll see us continue to do that over the next quarters.

Terry Tillman -- Truist Securities -- Analyst

Thank you.

Operator

Our next question is from Raimo Lenschow with Barclays. Please go ahead.

Raimo Lenschow -- Barclays -- Analyst

Henry, can you talk a little bit about the -- on the evolution on the recruiting side? So where are you in terms of like your ability to cross-sell/upsell in terms of sales engineering, etc.? And what momentum are you seeing there? Thank you.

Henry Schuck -- Chief Executive Officer and Founder

Hi, Raimo. Thank you for the question. What I would tell you is we're still really early with the recruiter platform. We are in market.

We do have paid users of the platform. We expect to do a much larger launch in June, and we expect that launch to start with focus on existing customers, particularly with the -- in the enterprise in the upper mid-market. And ultimately, what we're building throughout this quarter and throughout the rest of the year is really a digital motion from candidate sourcing to candidate engagement, to interview. And so the ability to give recruiters a suite of not just data but technology and tool that let them interact with that data and then feed that interaction and activity into their ATS systems.

And so we're working on a number of new ATS integrations for the recruiter package. And we expect to have a dedicated go-to-market motion on a recruiter product this quarter, and then we expect to accelerate that in the back half of the year as well.

Raimo Lenschow -- Barclays -- Analyst

OK. Perfect. And then one follow-up for Cameron. So I saw the debt refinance.

Could you just maybe remind us like the benefit you get from that? And what's the next step, including the next steps going forward? Thank you.

Cameron Hyzer -- Chief Financial Officer

Sure. There are a couple of benefits that we get from that. One is we did take advantage of a really strong rate environment in February. So we lowered our rate across the board between both the term loan and the new bond.

Additionally, it gives us added flexibility going forward. So the unsecured bond obviously has fewer covenants and whatever else. It also enables us to take on more term loan debt if we needed it going forward for potential acquisitions or other growth initiatives. And then finally, we also increased the size of our revolver to $250 million, again, to give us more flexibility going forward until we find good opportunities for continued investment.

Raimo Lenschow -- Barclays -- Analyst

Perfect. Thank you. Congratulations.

Cameron Hyzer -- Chief Financial Officer

Thanks.

Operator

Thank you. Our next question is from Brent Bracelin with Piper Sandler.

Brent Bracelin -- Piper Sandler -- Analyst

Good afternoon. Henry, I wanted to follow up on a common thread that's being asked here just around the amazing strength of the business. I vividly recall a conversation with an investor just nine months ago, where we had this heated debate around whether or not you could sustain 30% in 2021. Q1 marks, I think, the third straight quarter of accelerating growth, 48.5%, I think the highest in more than two years.

My question here, what's changed over the last six to nine months where the expected growth rate of your business would improve from, what, 27% consensus to now 41%? That is a material change. Last time I checked, I think we're still in a global pandemic. So it feels like a lot of small things seem to be working. Maybe it's just the power of the platform that's resonating.

I don't know. But any additional color you can give us here because the magnitude of the pace of change in the growth rate certainly seems much, much stronger than anyone was thinking just nine months ago.

Henry Schuck -- Chief Executive Officer and Founder

Brent, thank you for the question. I think -- I wish I could tell you there was like a one silver bullet here. There really isn't. I think the thing that I see in this business every day goes back to that cultural focus on best-in-class execution, getting 1% better every year.

And what you see in every department over the last nine months is that they don't even look like they looked nine months ago. We've advanced in every area of the business. We've sophisticated in every area of the business. We brought in new talent and stronger talent in every area of the business.

We pushed our employees to improve in every area of the business. And this is going to be a business that consistently executes for the long term. We're building a durable growth business that's focused on best-in-class execution, and you're just seeing that come through.

Brent Bracelin -- Piper Sandler -- Analyst

Certainly in awe here, for sure. Cameron, just quickly on the non-tech vertical. You called out finance, insurance, real estate, and manufacturing. Are you seeing those as incremental kind of helping drive the logo strength here on top of a really strong adoption in tech? Or are those new areas kind of helping offset maybe a slowdown and just the traditional tech market where you're really strong? Thanks.

Cameron Hyzer -- Chief Financial Officer

Yes. No, it really does is incremental, and they're coming off of a relatively small base. But even within those software and business services segments that we traditionally then the early adopters for our business, we continue to see really strong growth -- really strong enterprise growth. And yes, those parts of our businesses are still growing in the -- in this quarter in the 40s as a percent.

So they continue to do really well. And then we're picking up incremental growth from some of those newer verticals that have traditionally been a little slower in terms of adoption.

Brent Bracelin -- Piper Sandler -- Analyst

Great. Well, impressive. Thank you.

Operator

Our next question is from Tom Roderick with Stifel.

Tom Roderick -- Stifel Financial Corp. -- Analyst

Great. Hi, gentlemen. Thank you for taking my questions. Henry, as this business continues to scale, and I think we've all sort of -- many people on this call hit on the eight-figure deal you talked about and certainly a big lift in $100,000-plus deals.

It certainly seems like there's a lot of things you need to be adding and investing and supporting in the go-to-market function. Can you talk a little bit more about what functions you put in place in sales to support larger deals, to support the nurturing of those relationships as they continue to get bigger, and ultimately, how you know the intent of your own customers on when they're ready to pull the trigger on much bigger deals? And then secondarily, how is the competitive landscape changing as you're finding your way into those seven- and even eight-figure deals?

Henry Schuck -- Chief Executive Officer and Founder

Tom, thanks for the question. I think what you -- if you look today at the way our go-to-market organization is organized and you compare that with two years ago, we really have sophisticated the way we go to market, especially in the enterprise. And so today, we have a really robust solution sales team. This is a team that comes in for more sophisticated engagements, more sophisticated solutions that we're selling into.

When we bring that team into deals, we see material upside on the size of the deals we're able to close. And the sales cycles, we're able to shrink when we bring that team in. We inherited a very strong sales engineering team with our acquisition of EverString. That's being led by the former COO of EverString is now running that full motion for us here at ZoomInfo.

It's an incredibly strong motion. They're integrated into our sales motion. So again, when we get into the enterprise, it's not just an account executive on that deal or an account manager. You have an account executive, an account manager, a solution salesperson, and then someone from sales engineering who's focused on the data aspect of the business.

And we're really able to do consultative selling in those situations. And that -- all of those things that I just outlined, they just weren't here two years ago. And so we've been really thoughtful about where we hire, how we support our enterprise sellers with the right resources that not only make them successful, but that make the enterprise customers excited to engage with us in consultative ways. And we're seeing that pay off across the enterprise.

And then do you want to remind me the second part of that question?

Tom Roderick -- Stifel Financial Corp. -- Analyst

Yes. Just the follow-up is just, is the competitive landscape changing as these deal opportunities get larger?

Henry Schuck -- Chief Executive Officer and Founder

Not really. The competitive landscape as the deals get larger is still pretty unchanged.

Tom Roderick -- Stifel Financial Corp. -- Analyst

Got it. And then this is a little bit of a follow-on to that very question, and you sort of answered it with the EverString example. But you've had some really nice success making tuck-in acquisitions that are becoming sort of critical components of the product offering. As I ask the question about go to market, how are you, again, supporting the corporate development function as you make these acquisitions and making great effectively? Is that team getting larger? Are you prepared to do larger deals here going forward? Just give us your sense on that going forward as well.

Henry Schuck -- Chief Executive Officer and Founder

Yes. We think -- we continue to believe that M&A is going to be a strong growth driver for us, particularly where we can find a solution that gets remarkably better with our data asset at the shared foundation that we can sell across all of our go-to-market teams. And so we do view M&A as a strategic differentiator for our business. So we are going to continue to grow that corporate development team.

I think you will see us continue to do M&A deals throughout 2021. I think the way we look at deals is -- and we don't tend to get fixated on size. I think what we get -- what we stay focused on is, is this an asset that all of our sellers can sell? Can we quota it out to our quota-carrying representatives? Can we enable them to sell those solutions? Can they become core parts of our offering? And can they become strategically differentiated because of our data? And so if we can line those things up and we can see M&A transactions that are accretive in the short term, I think those are acquisitions we're going to be really excited to do. And we're going to be, to the extent that we can be, we're going to be size-agnostic to them.

Tom Roderick -- Stifel Financial Corp. -- Analyst

Wonderful. Congratulations on the results. Thank you.

Henry Schuck -- Chief Executive Officer and Founder

Thank you.

Operator

Thank you. Our next question is from David Hynes with Canaccord.

David Hynes -- Canaccord Genuity -- Analyst

Hi, guys. Congrats on the results. So Tom was just asking about the quality of adds as you go upmarket. I'll ask about the quantity.

If you had to characterize the record number of new customers that you're adding, I guess, would you attribute it more to top-of-funnel strength or improving win rates? And I guess I'll ask a follow-up while I'm at it. So if you don't win, which I'm sure happens on occasion, what's typically the top reason that a lost deal would cite?

Cameron Hyzer -- Chief Financial Officer

So I'll hit the first question, and then I'll let Henry talk about why we don't potentially win. But at the top of the funnel, we are seeing more leads and more qualified leads than we've ever seen before. We are also -- we do continue to see our win rates inch up over time as well. So again, I think a lot of that is we are focused on being just 1% better every day.

When you apply that across multiple layers within that funnel, it really starts to compound upon itself for real success across the board. And I think that's what we're seeing in Q1 and have really strong momentum there.

Henry Schuck -- Chief Executive Officer and Founder

And look, DJ, I think when we lose, in most -- in almost all cases, we're not losing to a competitor or a different solution. We're really losing to no decision. And so what we're focused on doing internally from an enablement perspective is to ensure that when we're engaged with a company that we're engaged with all the right decision-makers who can make a purchase so that we get all the right people to the table and we're best able to articulate the value of what our solution brings to the entire spend marketing organization. But we're not seeing anything specific around when we're losing or a lack of a certain product feature or data coverage.

I think we're just -- we're losing today to no decision.

David Hynes -- Canaccord Genuity -- Analyst

Yes. Makes sense. Thanks, guys.

Operator

Thank you. Our next question is from Kash Rangan with Goldman Sachs.

Kash Rangan -- Goldman Sachs -- Analyst

Thank you very much. Congratulations on the quarter, and congrats on hiring Prasadh as well. I have two questions for you, Henry. One is as we get past the vaccination phase, and hopefully, we open up, is there a possibility that you're contemplating that a fair amount of selling activity will actually shift to in-person meetings, and therefore, digital engagement, as source of getting leads, etc., that probably takes a bit of a backseat as people go out to meet clients in person? And secondly, as you look at Engage if you can talk about how much more white space there is for Engage before you bump into other established categories in the CRM space? Thank you so much.

Henry Schuck -- Chief Executive Officer and Founder

Yes. Thanks, Kash. I think, look, first, we really do believe that digitization of the go-to-market motion is a one-way door and really is a durable change. That's not going to go back.

And so we don't view this as like a temporary reallocation of T&E or conference spend or anything like that. There are strong secular tailwinds that are at work across companies of all sizes, that were at work before the pandemic hit and were really strong secular tailwinds for us there, too. And so we feel this tailwind, we feel like the market is growing, that more and more people are raising their hands to want to go to market in a data-driven way. And really that's happening with customers of all sizes, from the largest enterprises to the smallest, small businesses, and that we play a critical part in their ability to go to market in an efficient and scalable way.

I think there will be more travel, hopefully, in the back half of this year, but that's not going to change our position from a growth perspective. We don't believe that that's going to impact our customers' and prospects' desire to really begin their digital transformation from a go-to-market perspective. And on Engage, lots of white space. I think we're super early in that category.

So a lot of white space around sales automation and getting the most out of your sellers and automating their daily tasks and integrating that back into their CRM systems and their systems of record. And I don't view that as a product that's bumping into CRM or that will run out of white space and start bumping into CRM. We see a really big market there that we're really, really early in and see no signs of real penetration across our customer base.

Kash Rangan -- Goldman Sachs -- Analyst

Thank you very much.

Operator

Thank you. Our next question is from Koji Ikeda with Bank of America.

Koji Ikeda -- Bank of America Merrill Lynch -- Analyst

Hi, guys. Really nice quarter. A question for Henry or Cameron, big-picture question here. I guess how much of the Q1 bookings outperformance and the pipeline build during the quarter, especially with the bigger deals, is coming from organizations that are still operating with the pandemic mindset versus organizations that are now really ramping up for the post-pandemic world? Thank you.

Henry Schuck -- Chief Executive Officer and Founder

Yes. I think we -- I think it's a pretty -- I don't think we see organizations sort of correcting for the pandemic world anymore. We think that's largely behind us. And so what we're seeing mostly is organizations trying to bring to life, especially in the enterprise, their CRM systems, their marketing automation systems, their sales automation system.

They're trying to get high ROI and real engagement out of those systems, and they view us as a strategic partner to be able to fill those systems with insights and really drive adoption and engagement from their frontline sellers and their marketing teams through those systems. And so I don't really -- I don't think anyone is focused on the pandemic mindset. Everybody is focused today on really digitizing their motion.

Koji Ikeda -- Bank of America Merrill Lynch -- Analyst

Got it. Thank you for taking my questions and congrats on a great quarter. Thank you.

Henry Schuck -- Chief Executive Officer and Founder

Thank you.

Operator

Our next question is from Robert Simmons with RBC Capital Markets.

Robert Simmons -- RBC Capital Markets -- Analyst

Hi, thanks for taking our question. I was wondering, could you talk about what you're seeing from the more impacted industries?

Cameron Hyzer -- Chief Financial Officer

Sure. So historically, those more impacted industries are a smaller kind of portion of our business. So pre-pandemic, it was only 4%. But we are seeing that in certain areas that they're starting to come back a little more strongly.

So if you think about retail, there are a number of retail customers that are coming on. Even in industries like sports and hotels, we're starting to see an uptick. We signed the New York Giants and Carolina Panthers in the quarter, and we also signed some larger hotel chains as well. So I think we're starting to see those come back.

But again, a very small part of the business, and it's not a material driver to growth at this point.

Robert Simmons -- RBC Capital Markets -- Analyst

Got it. Great. Thank you very much.

Operator

Our next question is from Brian Peterson with Raymond James.

Alex Sklar -- Raymond James -- Analyst

Great. Thanks. This is Alex Sklar on for Brian. Henry, just one for you, and this actually follows up in your answer to Kash and Koji's questions.

But I wanted to ask about the time to value of your platform for customers. Obviously, go-to-market models have clearly changed during the pandemic. And I'm curious if the time to value has changed in the last year with that and if there's certain verticals that are getting faster ROI. Thank you.

Henry Schuck -- Chief Executive Officer and Founder

Yes. I think we've always been really proud of our really quick time to value of the ZoomInfo solution. This is a solution that you can buy on a Monday, be onboarded on a Wednesday, and really be seeing value on a Friday. Now, there are different types of implementations.

Getting this in your sales team's hands and having that sales team really seeing value and return on that investment, that happens in a really short period of time. If we want to do a deeper implementation, potentially with a data science team that's building complicated models for a territory planning exercise or an account prioritization motion, that might take six to eight weeks. But even there, we feel like we're adding value across those six to eight weeks, and we're getting to a full deployment by the end of that eight weeks. But mostly in that process, we're also getting sales teams ramped up on the product and they're seeing value right away.

So really quick time to value with our solution across companies of all sizes.

Alex Sklar -- Raymond James -- Analyst

Great. Thank you.

Operator

Thank you. And our last question will be from Pat Walravens with JMP.

Pat Walravens -- JMP Securities -- Analyst

Great. Thank you. Let me add my congratulations. So Henry, can you give us an example of something that you would like your platform to be able to do in the future that it can't do today?

Henry Schuck -- Chief Executive Officer and Founder

Sure. I think one of the areas where we have a lot of opportunity is something that you've heard in the sales and marketing tech space for the last decade, which is the concept of aligning sales and marketing together. And today, we have a number of solutions that serve both marketers and salespeople. And in the future -- I think in the future, tying together those use cases and aligning them in our platform is an area of huge opportunity.

And so if you think about our Websites tool or our FormComplete tool, these are tools that are helping the marketer drive top-of-funnel conversions. Having that top-of-funnel conversion feed into an SDR view and notification inside of the ZoomInfo platform that drives the next best action based on automated workflow motion that the marketer has set up that a lead comes in, it automatically assigns to an SDR. The SDR is in a view inside of ZoomInfo, where they see the leads that are assigned to them. They're one click to a motion to drive an outbound call or an automated email flow.

And then analytics are provided underneath that so that marketers and sellers are fully aligned from the top of the funnel to the bottom of the funnel. I think that's a really big alignment that we're best positioned to do because we already have the eyes of marketers and sellers within our platform. And so really aligning those two sides of the house, I think, is a big opportunity for us in the future, where today, we have a lot of the pieces to do that, and we need to tie them all together.

Pat Walravens -- JMP Securities -- Analyst

That's cool. So would that get rid of this problem of the marketing-qualified lead versus the sales-qualified lead?

Henry Schuck -- Chief Executive Officer and Founder

Yes. It would certainly align those two stakeholders under one umbrella for sure.

Pat Walravens -- JMP Securities -- Analyst

Yes. That would be all. Thank you.

Henry Schuck -- Chief Executive Officer and Founder

Great. Well, thank you, everybody. We're excited to be hosting our first-ever Analyst Day on June 14 and really hope that you'll join us as we do a deeper dive on the business and the durability of our growth and profitability model. I'm confident that it'll be a fun and engaging event.

We hope to see you all there at June 14th. Thank you.

Operator

[Operator signoff]

Duration: 64 minutes

Call participants:

Jerry Sisitsky -- Investor Relations

Henry Schuck -- Chief Executive Officer and Founder

Cameron Hyzer -- Chief Financial Officer

Siti Panigrahi -- Mizuho Securities -- Analyst

Mark Murphy -- JPMorgan Chase & Co. -- Analyst

Alex Zukin -- Wolfe Research -- Analyst

Michael Turrin -- Wells Fargo Securities -- Analyst

Stan Zlotsky -- Morgan Stanley -- Analyst

Terry Tillman -- Truist Securities -- Analyst

Raimo Lenschow -- Barclays -- Analyst

Brent Bracelin -- Piper Sandler -- Analyst

Tom Roderick -- Stifel Financial Corp. -- Analyst

David Hynes -- Canaccord Genuity -- Analyst

Kash Rangan -- Goldman Sachs -- Analyst

Koji Ikeda -- Bank of America Merrill Lynch -- Analyst

Robert Simmons -- RBC Capital Markets -- Analyst

Alex Sklar -- Raymond James -- Analyst

Pat Walravens -- JMP Securities -- Analyst

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