Note: This is an earnings call transcript. Content may contain errors.

Image source: The Motley Fool.

Date

Monday, Nov. 3, 2025, at 4:30 p.m. ET

Call participants

  • Founder and Chief Executive Officer — Henry Schuck
  • Chief Financial Officer — Graham O'Brien
  • Vice President of Investor Relations — Jerry Sisitsky

Need a quote from a Motley Fool analyst? Email [email protected]

Risks

  • CFO Graham O'Brien reported a 10% year-over-year decline in downmarket ACV (non-GAAP) for Q3 2025, flagging ongoing contraction in this customer segment.
  • Guidance implies full-year 2025 revenue growth of 2% and a 36% adjusted operating income margin, indicating that the company does not anticipate achieving Rule of 40 on a full-year basis for 2025.
  • Management noted that sequential revenue may fluctuate throughout the year due to seasonality and a growing upmarket mix, reducing predictability of quarter-over-quarter growth.
  • Gross debt stood at $1.3 billion with a net leverage ratio of two times trailing twelve months adjusted EBITDA.

Takeaways

  • GAAP Revenue -- Revenue was $318 million for Q3 2025, representing 5% year-over-year growth and a new company record, exceeding the high end of guidance.
  • Adjusted Operating Income -- Adjusted operating income was $118 million for Q3, with an adjusted operating income margin of 37% in Q3, the highest reported margin since 2024 and surpassing guidance.
  • Net Revenue Retention -- Net revenue retention (non-GAAP) improved to 90% in Q3, up five percentage points from the prior year (non-GAAP), with upmarket in-period retention exceeding 100%.
  • Upmarket Mix -- Upmarket business comprised 73% of total ACV (non-GAAP) in Q3, a 10-percentage-point increase in upmarket ACV mix over two years.
  • Downmarket Performance -- Downmarket ACV declined 10% year-over-year in Q3, a sequential improvement from an 11% decline in the prior quarter, both in year-over-year terms for Q2 and Q3, respectively.
  • Operations Suite Growth -- Operations suite revenue grew more than 20% year-over-year in Q3 (non-GAAP), maintaining its status as the fastest-growing product line.
  • Copilot Renewals -- Early Copilot renewals resulted in a mid- to high-single-digit percentage uplift compared to initial renewals on SalesOS, based on non-GAAP metrics.
  • $100,000+ Customer Cohort -- 1,887 customers with over $100,000 in ACV as of Q3, up 4% year-over-year in Q3, with ACV growth outpacing logo growth in this segment for Q3 (non-GAAP).
  • $1 Million+ Customer Cohort -- ACV in this top-tier cohort increased over 30% year-over-year in Q3.
  • Operating Cash Flow -- $94 million in operating cash flow in Q3, with unlevered free cash flow of $95 million for Q3, representing 81% conversion from adjusted operating income for Q3 and a 30% unlevered free cash flow margin in Q3.
  • Share Repurchases -- Repurchased 8.3 million shares for $87 million at an average price of $10.46 in Q3, reducing outstanding shares by approximately 80 million over the past two years.
  • Guidance for Q4 -- Expected revenue of $307 million to $310 million for Q4 2025 and adjusted operating income of $117 million to $120 million for Q4 2025.
  • Full-year 2025 guidance -- Projected revenue of $1.237 billion to $1.240 billion (2% growth at midpoint) for 2025 and adjusted operating income of $440 million to $443 million (36% margin at midpoint) for 2025.
  • Cash and leverage -- Ended Q3 with $135 million in cash, cash equivalents, and investments, and reported remaining performance obligations of $1.17 billion as of the end of Q3, with $824 million to be recognized in the next twelve months.
  • Longer-term contracts -- More than 50% of the book of business is now on contracts longer than one year as of Q3, contributing to greater renewal efficiency and improved retention.

Summary

ZoomInfo Technologies (NASDAQ: GTM) delivered record revenue of $318 million for Q3 2025, margin expansion, and consecutive improvements in net revenue retention, while accelerating its upmarket strategy and expanding product adoption across cohorts. Management raised full-year guidance and affirmed an ongoing shift in customer mix, resulting in quarter-specific margin achievement that returned the company to Rule of 40 status after six quarters for Q3 (non-GAAP). A pronounced move toward longer-term contracts and broader upmarket penetration, combined with aggressive share repurchases, underpin substantial changes in capital allocation and customer engagement dynamics.

  • Founder and CEO Henry Schuck said, "operations suite again grew more than 20% year over year in Q3 as our proprietary data asset continues to prove mission-critical to any AI-driven initiative that touches go-to-market."
  • O'Brien noted, "We have used 116% of the unlevered free cash generated since the start of 2024 to repurchase shares of stock, reducing our weighted average shares outstanding by approximately 80 million shares over the last two years."
  • Management cited Copilot and GTM Studio as central drivers for expanded use cases beyond traditional sales teams, reaching account executives, customer success managers, and revenue operations professionals.
  • The company reported that net revenue retention (non-GAAP) improved for the fifth straight quarter in Q3.

Industry glossary

  • ACV: Annual Contract Value; the annualized value of subscriptions or recurring contracts.
  • Rule of 40: A software industry performance benchmark where the sum of revenue growth rate and operating margin equals or exceeds 40%.
  • NRR (Net Revenue Retention): Measures how recurring revenue from existing customers grows or contracts over time, including expansion and churn.
  • Copilot: ZoomInfo's AI-powered workflow product designed to automate sales tasks and increase user engagement.
  • GTM Studio/Workspace: Platforms introduced by ZoomInfo to unify sales, marketing, and operations data for AI-ready go-to-market execution.
  • RPO (Remaining Performance Obligations): The contracted revenue yet to be recognized as of the reporting date.

Full Conference Call Transcript

Jerry Sisitsky: Thanks, Michelle. Welcome to ZoomInfo's financial results conference call for the third quarter of 2025. With me on the call today are Henry Schuck, Founder and CEO of ZoomInfo, and Graham O'Brien, our Chief Financial Officer. During this call, any forward-looking statements are made pursuant to the Safe Harbor provisions of U.S. Securities laws. Expressions of future goals, including business outlook, expectations for future financial performance, and similar items, including, without limitation, expressions using the terminology may, will, expect, anticipate, 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 section of our SEC filings.

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 forward-looking statements in the slides posted to our Investor Relations website at ir.zoominfo.com. All metrics on this call are non-GAAP unless otherwise noted. A reconciliation can be found in the financial results press release or in slides posted to our IR website. With that, I'll turn the call over to Henry.

Henry Schuck: Great. Thank you, Jerry, and welcome, everyone. We are executing well and capitalizing on a rapidly growing AI in go-to-market. In Q3, we continued to improve the business across every metric. GAAP revenue was a record $318 million, up 5% year over year, and adjusted operating income was $118 million, a margin of 37%. Both were above the high end of our guidance, with the highest level of AOI margin we've reported since 2024 and the first time we exceeded the rule of 40 since 2024. During the quarter, we accelerated upmarket growth, improved net revenue retention for the fifth straight quarter, delivered another quarter of strong profitability, and are again raising our financial guidance for the year.

We are aggressively expanding the product portfolio with innovative go-to-market AI and workflow products as we continue our shift upmarket. I believe we are building and delivering the best solutions that we've ever put in front of customers, which is driving stronger daily engagement from a diverse set of go-to-market personas. Our operations suite again grew more than 20% year over year as our proprietary data asset continues to prove mission-critical to any AI-driven initiative that touches go-to-market. This is our fastest-growing product, and it's accelerating as it gets bigger. And with the launch of Copilot last year, its expansion into GTM Workspace this quarter, and the evolution of our GTM Studio platform, we've begun to play offense again.

Through the innovation we are driving, I believe it is only a matter of time before ZoomInfo will be synonymous with AI and go-to-market. We believe that our unique and proprietary data assets put us in the winners' column as AI proliferates across go-to-market teams. While LLMs can reliably deliver data points available through the second or third page of search results, it is unique data not available on the public web that go-to-market teams require in order to stand out in increasingly competitive markets.

If a customer is looking for every residential or commercial roofer in the United States, or every company with at least three vehicles in their fleets, or every non-franchised quick-service restaurant in a certain ZIP code, or to identify the buyers visiting their website or researching their competitors, they come to us. Not just for this unique data asset, but also for our ability to tie that data asset to our contact and signal data and put them in a position to execute a sales or marketing workflow around these go-to-market attributes. By using Copilot and GTM Workspace, frontline go-to-market professionals get a single pane of glass to execute their daily workflows.

GTM Studio is already generating strong interest from operations leaders and their counterparts in frontline sales leadership as they look to close the gap between idea and execution. We're also winning with our account-based marketing platform. ZoomInfo is recognized as the only vendor positioned in the customer's choice quadrant in the 2025 Gartner Voice of the Customer Report for ABM platforms, and we added millions of ACV in the quarter as customers like EmployBridge, Sienna, and MasterControl migrated from legacy ABM providers to our integrated ABM platform. With our Salesforce partnership, ZoomInfo Revenue Agent is now bringing the industry's most comprehensive B2B data and agents directly into AgentForce.

Our data is enabling sales teams to use natural language queries to uncover hidden opportunities and engage the right contacts at the right time within their existing Salesforce workflows. Through our expanded platform, our unique and proprietary data asset, and through recently released partner integrations, our pace of innovation continues to accelerate. During the quarter, we closed upmarket opportunities with Insight Software, a fast-growing software provider to the office of the CFO, Ryder System, a $12 billion transportation and logistics company, BrightView, a multibillion-dollar commercial landscaper, and Circle K, a multinational convenience store brand. These wins highlight our focused move upmarket and the large total addressable market we have across a wide range of industries.

Additionally, a global professional services firm expanded ZoomInfo enterprise-wide, adding sales seats, data, and our marketing and talent solution. Their CMO called it a no-brainer to improve sales pipeline generation, identify active buying signals, reduce wasted time on unproductive leads, and connect with the right decision-makers. A large private unified data and AI company is now leveraging our sales intelligence platform to power its land and expand sales motion across enterprise accounts while also using us to efficiently penetrate new verticals. We demonstrated to one of the largest companies in the world how our data provided a 25% improvement in coverage rates compared to their existing data provider, including far superior coverage in the SMB and startup space.

Through company data initiatives, we have increased match rates for customers by more than 20% over the last six months. This data advantage is increasingly creating upmarket displacement from organizations using legacy vendors that provide stale and low-quality data. And many of the world's fastest-growing and most innovative AI-native companies like LevelPath, Harvey, Pano.ai, and Tilt choose ZoomInfo as they scale their sales teams and need data signals and workflow to scale in the enterprise. To continue to win, we are providing our customers more than just another fragmented tool or another buzzy solution. We are providing the unified data foundation that connects CRM data, engagement signals, intent data, call transcripts, and market intelligence into one AI-ready system.

Giving sellers AI to allow them to shift their focus away from the time-consuming, low-value tasks of building decks and account plans, filling out CRM fields, prioritizing prospecting lists, writing follow-ups, and onto the art of sales, building relationships, adding consultative value, and closing deals. For twenty years, ZoomInfo has been the trusted source of truth for company and contact data. That foundation isn't going away. It's becoming the launch pad for something much bigger. Today, our master data management capabilities unify fragmented go-to-market data across systems into a single intelligence layer. Clean, connected, constantly updated, and now we turn that intelligence into action. With GTM Studio and GTM Workspace, execution becomes automatic.

Sellers, operators, leaders, even their AI agents, know exactly where to focus, what to do next, and how to move the number. We're moving from powering decisions to powering outcomes. From informing go-to-market to executing it. As we innovate for our customers, we continue to be focused capital allocators for our shareholders. In the quarter, we delivered a nearly 300 basis point sequential improvement in margins and are raising our growth expectations for the year. We remain confident in our ability to sustainably deliver revenue growth and expanding margins. And we continue to be aggressive buyers of our stock.

We are increasingly confident in the trajectory of the business, which gives us even more conviction that our ongoing share repurchases will drive substantial shareholder value, and we will continue to put the majority of the cash we generate into repurchasing ZoomInfo shares for as long as that is the best and highest return use of our free cash flow. AI is giving us an opportunity to capitalize on our proprietary data assets. We are building stickier user engagement and customer relationships, and we have improved net revenue retention for the fifth straight quarter. With that, I'll turn the call over to Graham.

Graham O'Brien: Thanks, Henry. Q3 GAAP revenue was $318 million, up 5% year over year, and adjusted operating income was $118 million, a margin of 37%, above the guidance ranges we provided. Over the last few quarters, we have highlighted the stabilization we have seen in the business. And this quarter, I am excited to share several places where I now see signs of improvement. As you know, we have sharpened our focus on our upmarket business, which now represents 73% of our total ACV, up 10 percentage points in two years.

This continued focus drove a two-point acceleration upmarket, with 6% upmarket ACV growth, coupled with a sequential improvement downmarket, which declined 10% year over year as compared to 11% in the prior quarter. Net revenue retention improved to 90% in the quarter, up five percentage points in a year and the highest level of NRR we have seen since Q2 2023. In-period net revenue retention for upmarket customers is again over 100%, as we further entrench ZoomInfo as a mission-critical piece of the way scale businesses go to market.

We have always operated efficiently with disciplined investments driving high levels of profitability, and I am pleased to report a 37% adjusted operating income margin in the quarter, delivering year-over-year margin improvement, which, combined with our revenue growth, returned us to a Rule of 40 company for the first time in six quarters. We now have 1,887 customers with more than $100,000 in ACV, a 4% year-over-year increase in customers with ACV growth from that cohort materially outpacing customer growth. ACV growth in the quarter was particularly strong for this cohort, and next to Q4 last year, this is our best result in several years.

Adding 5x more ACV across our $100,000 logo cohort than we did in Q3 last year. ACV for the $1 million cohort accelerated in the quarter and was up more than 30% year over year. We delivered strong results this quarter, and we are again raising our expectations for the full year. Our upmarket strategy is working, our innovation engine is accelerating, and our execution has been consistent. We are now guiding to low single digits revenue growth for 2025 with an AOI margin of 36%, and we are confident in our opportunity to return to delivering Rule of 40 results on an annual basis as we drive a combination of revenue growth and expanding margins.

And as opposed to a dynamic where equity is deployed as a substitute for cash compensation, our stock compensation relative to revenue runs well below software industry norms and continues declining. With an increasing shift towards performance-based equity. And as a result, our rule of 40 reflects a high-quality mix of strong operating performance and financial discipline. Operations growth accelerated in the quarter, continuing to grow greater than 20% year over year. And Copilot had another strong quarter. While still early, Copilot renewals are very promising, with a mid to high single-digit improvement to uplift on initial renewal as compared to renewals on SalesOS.

As we focus on driving growth upmarket, we also remain steadfastly focused on making our downmarket business healthier. As we do more to make it easier for smaller customers to buy the packages they need while reducing our cost of selling to the right customers in this segment. Our internal teams have done an excellent job leveraging ZoomInfo's proprietary data asset to engineer this shift. We built models identifying payment risk among smaller customers using our data to underpin collection risk prediction and new business risk scoring models. These integrate directly with our Salesforce instance and are fueled by ZoomInfo data to provide real-time risk assessments. Leveraging these models, we successfully reduced invoice write-offs by 45% since launching in 2024.

In addition, the nature of our write-offs has changed, with most write-offs now stemming from installments later in the contract of downmarket customers, and the prevalence of write-offs where no payment was received is at all-time lows for the company. The quality of our customer base is improving, which is driving better conversion to revenue and improving collection trends. One item I would note is that as our business shifts upmarket, it is becoming more seasonal. And as such, year-over-year growth is becoming a more important lens through which to evaluate the business. While sequential growth is becoming less important.

We expect the pattern of sequential revenue growth to fluctuate throughout the year, and you should not be surprised to see periods where the sequential trend steps up or down due to the amount of upmarket or downmarket activity and the linearity of ACV added in the current or prior quarter. With Operations Acceleration, positive Copilot renewal outcomes, a smaller downmarket business, and improved upmarket NRR, overall net revenue retention continues to be on a positive trajectory, up five percentage points in a year. We also continue to shift customers to longer-term contracts, with more than 50% of our overall book of business on a contract length greater than one year.

This enables reps to be more consultative with customers and drives efficiency across the renewal process, which we expect will continue driving better renewal outcomes and improving NRR over time. Turning to cash. Operating cash flow was $94 million in Q3, Unlevered free cash flow for the quarter was $95 million, an 81% conversion from adjusted operating income, consistent with seasonality from prior years and representing a margin of 30%. In Q3, we repurchased 8.3 million shares of common stock at an average price of $10.46 for an aggregate $87 million.

Weighted average diluted shares outstanding for the quarter used in calculating non-GAAP diluted earnings per share was 334 million, and the non-GAAP share count exiting the quarter was 330 million. We have used 116% of the unlevered free cash generated since the start of 2024 to repurchase shares of stock, reducing our weighted average shares outstanding by approximately 80 million shares over the last two years. We expect to continue to use the cash flow we generate each quarter primarily to retire shares of ZoomInfo, and we are committed to opportunistically taking advantage of dislocations in share price.

As we remain resolute that share repurchases will generate the best possible long-term return for shareholders when done at a deep discount to intrinsic value like we see today. We ended the quarter with $135 million in cash, cash equivalents, and investments, and we carried $1.3 billion in gross debt. As a result, our net leverage ratio is two times trailing twelve months adjusted EBITDA and 2.4 times trailing twelve months cash EBITDA, which is defined as consolidated EBITDA in our credit agreements.

With respect to liabilities and future performance obligations, unearned revenue at the end of the quarter was $432 million, and remaining performance obligations, or RPO, were $1.17 billion, of which $824 million are expected to be recognized in the next twelve months. For those looking at calculated billings, the mix of our balance sheet reserve estimates and the changes in practices that we made relative to higher-risk businesses requiring prepayment in advance drove higher than normalized growth in calculated billings in Q3 last year. And as a result, I would caution you from extrapolating too much from the calculated billings growth trajectory in Q3 this year. In summary, we delivered strong results for the quarter with meaningful signs of improvement.

Shifting to guidance. For Q4, expect GAAP revenue in the range of $307 million to $310 million, adjusted operating income in the range of $117 to $120 million, and non-GAAP net income in the range of $0.27 to $0.29 per share. We are again raising guidance for the full year. For 2025, we now expect GAAP revenue in the range of $1.237 to $1.24 billion, representing positive 2% annual revenue growth for the year at the midpoint of guidance, and adjusted operating income in the range of $440 million to $443 million, representing a 36% margin at the midpoint of guidance.

We expect non-GAAP net income in the range of $1.04 to $1.06 per share based on 341 million weighted average diluted shares outstanding, and we expect unlevered free cash flow in the range of $424 to $444 million. In closing, we remain committed to properly managing expectations using a guidance framework consistent with prior quarters and are committed to delivering revenue growth, margin expansion, and aggressive share repurchases in 2026. Which, when combined, support our expectation of accelerating free cash flow per share growth in 2026 relative to 2025. Now I will turn it over to the operator to open the call for questions.

Operator: Thank you. And wait for your name to be announced. And to withdraw your question, please press 11 again. Again, we do ask that you limit to one question. Please stand by for our first question. And the first question will come from Mark Murphy with JPMorgan. And your line is open.

Mark Murphy: Thank you so much, and congratulations on a great performance. The magnitude of revenue upside is just noticeably larger for Q3 than it has been in the recent past. I think we're seeing the same on RPO. I'm wondering if you can drill down into what do you think might have fueled that extra strength there in the quarter, for instance. Should we say that it's Copilot ramping into more materiality, boomerang customers coming back onto the platform? Or could it be Google's AI overviews even maybe causing some companies to lean back into their outbound SDR hiring?

Henry Schuck: Yes. Thanks, Mark. Look, by every metric, Q3 was a really strong quarter. We executed well across the business. I'd say that the products that we're delivering are delivering better renewal outcomes. That mid to high single-digit uplift on initial renewal from Copilot is certainly above our internal expectation that's contributing to revenue upside in the quarter. We talked about the largest TCV deal in history that we closed early in Q3. That contributed to revenue upside. Shifting the business upmarket is also contributing. So if you think about the five points that we've shifted away from downmarket to upmarket over the past year, the upmarket business is now 73% of total ACV.

Those five points are effectively five points of revenue, whereas when that was downmarket, we would write off or churn through 20 to 30% of that. So when you look at the upmarket ACV growth of 6%, downmarket showing a sign of stabilization with the negative 10% year over year, you weight that and you start to get another kind of point or two of revenue growth just from a better, higher quality revenue base. The last kind of part of that bridge is if you look at usage-based and other revenue, we generally don't include in our ACV disclosures, that was up $3 million year over year as well.

And that's another point of growth kind of contributing to that outsized revenue beat in Q3.

Mark Murphy: Wonderful. Great to hear. I will abide by your one-question limit. Thank you for taking my questions.

Operator: And our next question comes from Elizabeth Porter with Morgan Stanley. Your line is open.

Elizabeth Porter: Great. Thank you so much. I wanted to follow-up on the GTM Studio that just recently went live. Could you share some of the early customer feedback on the solution and specifically the breakdown that you're seeing, greenfield adoption versus existing customers replacing legacy tools or workflows? And what kind of leverage do you expect to see in some of those upsells with the new solution? Thank you.

Henry Schuck: Thank you, Elizabeth. The early feedback on GTM Studio has been really positive. We're really excited about bringing that to market. It's one of the most innovative solutions we've built at ZoomInfo and has the opportunity to be the biggest product we've ever released. At its core, GTM Studio is a data management platform that gives rev ops professionals and frontline sales leadership the ability to organize and then architect a go-to-market strategy.

First, go-to-market studio brings together and unifies all of your data, whether that be CRM data, call transcript data, email data, ZoomInfo data, unique data that you have about product usage that lives in your data warehouse, brings that all together in one dynamic workspace to build a complete AI-ready view of your target market. That allows revenue operations professionals and leadership to build really unique audiences. And then with GTM Workspace and Copilot, to directly execute those campaigns and those audiences with their frontline sellers.

We view this as an incredibly white space opportunity that we have the opportunity to really execute against as we complete this year and into 2026 and see an incredible upside from what we're hearing from our customers and the innovative nature of the solution.

Elizabeth Porter: Great. Thank you.

Operator: And the next question will come from Siti Panigrahi with Mizuho. Your line is open.

Siti Panigrahi: Great. Thanks for taking my question. Great quarter. You talked about NRR up one point, Graham, could you talk about off-market retention, how has that been trending? And especially when you're seeing this NRR growth, how much of that is driven by seat count versus cross-selling of your different other modules?

Graham O'Brien: Yeah. Sure. The upmarket net retention was again above 100% in period in Q3. We're definitely getting improving retention in that upmarket business. As the mix becomes a greater part of the business, so we kinda get a compounding effect. It's coming from a lot of different places. We started building products a couple of years ago that were aimed at optimizing retention outcomes. And we're starting to benefit from that as these customers renew at much higher rates. We have upsell opportunities with Copilot now with GTM Workspace. We have upsell opportunities with go-to-market studio. Our operations business is our fastest-growing business, accelerated in Q3.

So we have a multitude of vectors that are contributing to specifically upmarket net retention improvements. And then downmarket net retention improved sequentially in the quarter too. So that was something that we wanted to see now that we're a year into the more rigorous qualification of new sales into that downmarket business, into the pricing and changes that we made at the beginning of Q3. You can also see this kind of as a sample in our 100k cohort. Our 100k cohort had one of its best ACV quarters ever.

And what you're seeing there is, historically, we were very focused on taking a customer that was spending 50k or 70k or 80k and getting them up into that cohort. Above that 100k threshold, still focused on that. We're still delivering positive logo growth there. But what's really promising is taking those customers that are already spending 150k or 200k with us and getting them up to 500k or up into our million-dollar cohort. That's where the lion's share of growth is coming from upmarket now and in that cohort. We are pleased to see another really strong quarter there for 100k logos, and what is usually seasonally a little bit of a slower quarter.

Henry Schuck: And, Siti, also on retention and engagement, with Copilot, as we release Copilot out to our customers, we anticipated because it was a better solution that our customers would engage more with it, and then that higher engagement would then turn into higher net retention rates. Obviously, we're just now sort of passing the first year of customers being on Copilot, and that is coming to fruition. Our customers who are on Copilot have higher engagement and are now showing higher net retention outcomes than their counterparts who are not on our Copilot solution.

And as we continue to release product that's more central to the workflow and more critical to mission-critical for go-to-market teams, we expect that trend to continue.

Siti Panigrahi: I appreciate the color. Thank you.

Operator: And the next question will come from Brad Zelnick with Deutsche Bank. Your line is open.

Brad Zelnick: Great. Thanks so much for taking the question and congrats, a lot of good signal in these results. Henry, can you expand on the AgentForce integration opportunity? What exactly is the use case? And how do you size that opportunity in the interest level that you're seeing? I know it's early, but whatever it is that you're seeing out there. Thank you.

Henry Schuck: Definitely. So at Dreamforce, Salesforce showcased a set of AgentForce agents. And we're really excited about this partnership because it's yet another proof point that AI and go-to-market should be grounded by ZoomInfo. Whether that's in our products or agents running in other platforms like AgentForce, we grow when our intelligence gets consumed. And AgentForce is a great partnership for that reason. You can now find the revenue agent in Salesforce's marketplace. It's featured, promoted, and has co-selling incentives for the Salesforce team. And there are more products and collaboration plans, including an upcoming prospect agent that we'll announce with extended press coverage.

We feel really good about the signal that says, if you want to build AI in go-to-market, that AI needs to be grounded in ZoomInfo intelligence. And we're seeing that across the enterprise. We're seeing that in our customer base. And with go-to-market studio, we're providing that to our customers as well.

Brad Zelnick: Exciting stuff. I'll stick to the one question. Thank you.

Operator: And the next question will come from Alex Zukin with Wolfe Research. Your line is open.

Alex Zukin: Hey, guys. Maybe just again, addressing I think you did this in the script, but maybe putting a finer point on the delta between, like, really strong CRPO bookings growth of 18% versus billings growth, which seemed a bit weaker? And more broadly, right, if I think about the exit rate implied by the guide for Q4 for next year, anything we should note about how to think about that with respect to what looks to be an improving demand environment as well as kind of increasing, competitive product functionality that you guys are demonstrating?

Graham O'Brien: Yes. Thanks. I can take that. I'd say about around the guidance and the exit rate, you know, the approach there is consistent with prior quarters. We're really focused on delivering an upside Q4 here. And then, you know, we'll start talking about what that means for 2026 on the next call. On the billings growth, revenue growth, bookings growth, I think what you see in the current RPO being up 6% year over year, implied current calculated bookings growth of 18%, is that there's some noise in that bookings just from the nature of how bookings is calculated.

But I think that the RPO growth, the current RPO growth is, you know, a good proxy for performance in the quarter. And then bridging that to billings, Q3 was largely the first clean year-over-year comparison we've had for a few quarters. Except for billings. As I called out on the Q3 call last year, the mix of our balance sheet reserves and the changes that we talked about drove higher than normalized billings growth in Q3 last year. Which makes that Q3 number this year look worse by comparison. When I look about the scale here, we're talking about an impact of about high single-digit millions year over year.

Alex Zukin: Perfect. Thank you, guys.

Operator: And the next question comes from Taylor McGinnis with UBS. Your line is open.

Taylor McGinnis: Yes. Thanks so much for taking my question. Maybe just ask one off the last question. So you talked, I think, a little bit earlier about this shift with more business upmarket and causing more seasonality. But I guess when you look at the 4Q revs guide, it doesn't seem to imply that greater seasonality. So could you just talk through some of the assumptions embedded in the guide? And if there's still some headwinds that you're still working through on the revenue side as we get into 4Q? And I guess, keeping in mind that seasonality as we think about 2026, anything to keep in mind about sequential growth and how we're modeling it there?

Graham O'Brien: Yes. When I think about the Q4 guide, I'd say that the guidance philosophy has not changed. We're continued to manage expectations in a consistent manner as we have in past several quarters. I think it's best to measure the growth on a year-over-year basis moving forward. With the sequential trends continuing to fluctuate. Q3 performance was more front-end loaded than usual. We expect Q4 to be increasingly back-end loaded. Which can influence that trend generally, that doesn't matter as much year over year. I would just add, Taylor, that the momentum in our business feels better than it has in years. But we're going to continue to manage expectations to earn and keep our investors' trust.

Taylor McGinnis: Perfect. That makes sense. Thanks so much.

Operator: And our next question will come from Raimo Lenschow with Barclays. Your line is open.

Raimo Lenschow: Thank you. Congrats from me as well. Can we talk a little bit about, like, it does sound like the world is getting out better there. Can you talk a little bit about more nuance in terms of geographies, verticals, etcetera, where you see things getting really better versus kind of stable or still weak? Thank you.

Henry Schuck: I mean, I think there was a lot in the better column this quarter. Upmarket ACV acceleration, our upmarket retention improvements, company-wide retention improving for the fifth straight quarter, the accelerating operations growth, Copilot growth, all the product innovation and the positive feedback that we're hearing on go-to-market studio. And then we've continued to operate with discipline and improving our profitability. We reached rule of 40 again this quarter. I think when we think about what's happening in the world with AI and the AI transformations that are happening at companies across our customer base, we're getting more and more confident that those transformations can't be successful without a valid data foundation, which we think of as context.

Context for the AI that's gonna be deployed. And so we feel really good about the fact that as those transformations continue here, that we're gonna be a necessary component to any go-to-market AI transformation across our customer base and across the universe of prospects that we sell to. So we feel really good about that. I think, you know, we saw improvement in downmarket. And downmarket retention sequentially as well, and we feel good about the new products driving better retention. And so I think there's just a lot in the positive column that gives us a lot of confidence in the business going forward.

Graham O'Brien: Perspective. We saw software have improved retention sequentially for the sixth quarter in a row. And we also have really solid quarters in telecom, manufacturing, business services.

Raimo Lenschow: Okay. That helps. Thank you.

Operator: And the next question will come from DJ Hynes with Canaccord. Your line is open.

DJ Hynes: Hey. Thank you, guys. I'll share my congrats as well. Graham, for you, how much of the upmarket segment is on Copilot today? And then, Henry, the follow-up to that question is, do you feel like you have pricing right for Copilot now? Or are there still opportunities to potentially extract more value in the future?

Graham O'Brien: Yeah. We haven't disclosed what percentage of upmarket is on Copilot, but I, you know, it's a significant portion. You gotta think about upmarket as well. You think about operations, which is more than 15% of our overall ACV, which is growing high twenties. That's almost exclusively an upmarket product or an upmarket user. So we've got a good kind of diverse mix of products and pricing models for that upmarket business.

Henry Schuck: When we think about pricing for GTM Workspace for GTM Studio, we're designing pricing to optimize for customer simplicity. And to remove barriers for customer adoption. By providing a frictionless path to value, we want to balance the value we're delivering with monetization. So, generally, we're thinking about these products as having a platform fee, and then a prepaid AI action credit allotment. And, really, what we're focused on in these next few months is driving early adoption, learning as much as we can about customer usage trends, as we head into 2026. And we feel great about the value we're delivering for our customers.

We think with our new products, GTM Studio and GTM Workspace, there are many more opportunities for our customers to consume our data, to consume our AI within their organizations, with their frontline sellers. But right now, we're focused on delighting our customers and making them feel like they're getting an enormous value from our partnership. And we're gonna monetize where there are opportunities, but we want our customers to really be using our products in a mission-critical way. We'll see that benefit in net retention, and we'll see that benefit as they continue to consume our products throughout the organization.

DJ Hynes: Yep. Makes sense. Thank you, guys.

Operator: And the next question will come from Koji Ikeda with Bank of America. Your line is open.

Koji Ikeda: Yes. Hey, guys. Thanks so much for taking the question. I wanted to ask about the private unified data and AI company mentioned in the prepared remarks. You know, win there. And clearly shows that they do it themselves. And so maybe can you talk a little bit about how that sales process went? Was it a bunch of back and forth with many proof of concepts? Or, you know, was it a pretty typically easy and smooth sale for you guys with this company? Thank you.

Henry Schuck: Yeah. This was a customer who's actually been a customer of ZoomInfo for a number of years, and we've continued to grow that account through merit across the organization. And as we continue, as that company continues to move their business upmarket to target new personas, and to bring on new sales, we're well-positioned as we've already cleared security, data privacy review. We've built trust with our stakeholders there. We're uniquely positioned to continue to grow the account there, and we were. And then executed against that. There's still a tremendous amount of opportunity within that account. And across our enterprise clients, there are very few enterprise clients where we're wall to wall with an ELA of some sort.

And so we see a lot of opportunity to continue to leverage our relationship with our customer base with the new products that we're releasing. Some of those products, you know, when we're in the enterprise and we're selling large deals, those sales cycles are longer. You're in the quarter, our sales cycles overall were a little bit shorter than historically. But as we continue to shift the business upmarket, those sales cycles will extend a bit. But they come with a much larger price tag with them.

Koji Ikeda: Thanks, Henry.

Operator: And the next question will come from Parker Lane with Stifel. Your line is open.

Parker Lane: Yes. Hi. Good afternoon. Thanks for taking the question. Henry, earlier in the call, you mentioned you've begun to play offense again. Wondering if you could talk about the current level of resourcing in your own go-to-market organization, that's at a level that can support you going on offense. And if it all changed the way you're thinking about inorganic contributions to the business, perhaps to accelerate the AI roadmap? Thanks.

Henry Schuck: Great. Yeah. Thank you for the question. Look. We feel like we have the right capacity within our sales organization to grow much faster than we've grown the last number of years. We feel like what we've been missing are kinda two things. One that we rebuilt over the last number of years, which is a really strong relationship with our customers. And we've spent the last number of years building strong consultative relationships with our customers to put us in a position to bring new products to them and new innovation to them that they are excited to receive from us.

And so we've done a lot in the way that we've rebuilt the mentality of our go-to-market teams and the way that we serve our customers over the last few years. To put us in a position where once we have products that we believe are best in class, that are innovative, that will change the way customers go to market, that we'd have an audience that was excited to receive them. And we think we're in that position now as we release GTM Workspace and GTM Studio to our customer base, we're excited about leveraging those relationships and the trust that we built. From a capacity perspective, we feel really good.

From a demand perspective, you know, one of the things that we're seeing today, Mark mentioned it in his question, is that customers are leaning back into their outbound SDR motions. Where, historically, they were looking for inbound opportunities to shift in AIO and using LLMs to answer questions. Has had an effect at the top of the funnel for our customers. And it's had a demand effect. And how do you fill demand when inbound is not filling that demand anymore? You have to go outbound.

And so we're seeing our customers now hire more sales development reps, hire more full-cycle account executives, require self-sourcing from a prospecting perspective, and we're the partner that they trust to be able to arm those teams with the right data and signals and insights and now AI. To be able to do that efficiently.

Parker Lane: Thanks, Hunter.

Operator: And the next question will come from Tyler Radke with Citi. Your line is open.

Tyler Radke: Yeah. Thank you very much for taking the question. Earlier, you referenced kind of the rule of 40 and, you know, certainly, seeing good progress on that this quarter. But is that something that we should expect for next year? And how do you kinda think about the building blocks to get there? Is the 2% kinda exit rate a good proxy for next year? Thank you.

Graham O'Brien: Yeah. I'm happy that on a quarterly basis, we achieved rule of 40. You know, this year, we're guiding to 2% revenue growth and 36% margins. So it's less likely that we would get there on a full-year basis for 2025. And, you know, we're not guiding to 2026 today, but I will say we remain committed to properly managing expectations and then delivering revenue growth, margin expansion, aggressive share repurchases in 2026. And I kinda think of it through the prism of accelerating free cash flow per share growth in 2026 relative to 2025.

Tyler Radke: Great. Thank you.

Operator: And the next question will come from Brian Peterson with Raymond James.

Jonathan McCary: Thank you. This is Jonathan McCary on for Brian. Good to see the retention tick up, but I also wanted to ask on the net new business side. Sales productivity there and how that's performed against your expectations. And then in some of those new Copilot lands, can you talk about any green shoots of evangelizing some of those new personas that you felt were a key unlock for Zoom as well. Thanks, guys.

Henry Schuck: Piece, and then pass it to Graham. You know, when we released Copilot, the idea behind it was to take this massive data asset and signal universe that ZoomInfo provides go-to-market professionals and then use AI to make their prospecting journey more productive. And it moved us from users having to manually sift through our data asset to using AI to tap into the full potential of our offering and then provide better go-to-market results. We were incredibly excited about the success that had for us. And, particularly, it gave us this opportunity to go from what was historically top-of-the-funnel prospecting use cases many times with SDRs.

To a broader base of account executives, account managers, customer success managers who got Copilot to be able to see risk in their business, to prioritize their accounts, to know their next best action. And so that gave us an opportunity to expand seats and personas from SDRs and top-of-the-funnel prospectors to account executives, account managers, CSMs, sales operations professionals. With the addition of go-to-market studio and GTM workspace, we feel like that's gonna be an extension of our investment in Copilot. It'll bring us even further into the use cases in account executives, account managers, SDRs, now rev ops and frontline sales leadership who can leverage Workspace and go-to-market studio to drive execution in their go-to-market organizations.

So we feel really good about not only the success we had in expanding personas with Copilot, but the opportunity in front of us to continue to expand personas with GTM Studio and GTM Workspace.

Graham O'Brien: And then I can touch on the new business productivity. I'd say the trends there are what you would expect as we've deliberately shifted a lot of the resources upmarket. So downmarket, we've had fewer sellers. We've also right-sized packaging. We've qualified business at a more rigorous level. So on a per rep basis, the productivity has been fairly consistent. Then if you think about the upmarket, new business, that's still a dollar ACV number that's growing year over year. And as we've shifted kind of those reps into the more segmented into more focused on specifically upmarket customers, that was like a nine to twelve-month kind of ramp. To get fully into that motion.

And this quarter, Q2, Q3, really was the first time where we've gotten to the place where we feel like we're fully ramped and we're fully set up to run an upmarket versus downmarket new business notion.

Operator: And the next question comes from Rishi Jaluria with RBC. Your line is open.

Rishi Jaluria: Oh, wonderful. Thanks so much, and great to see some positive underlying trends in the business. I wanted to go back to, you know, Henry, you talked about how there's been a little bit of a shift in some of your customer base. In doing more outbound versus inbound. Maybe I wanna ask about, you know, ZoomInfo as a company. Right? You talked in the past about wanting to invest in a little bit more of a PLG motion while simultaneously going after this enterprise opportunity, which you clearly see some good signs of success in.

Maybe can you walk us through what are you seeing now with the changing search landscape with your becoming maybe a little bit less relevant and an AI search kind of coming to the forefront? And what sort of impact that's directly had on your business? Thanks.

Henry Schuck: Great. Thank you for the question. Look, we're seeing similar trends as others. And there's definitely an impact on the business from the AIO shift. Now one of the positives here is that we have been in the process of shifting our focus upmarket to upmarket customers. Where the impact of AIO and the changes in the SEO landscape is very mitigated. And so we feel really good about the fact that we made these shifts that the business is less exposed to these shifts in AIO and SEO. And our PLG Motion continues to perform in line with our expectations for this year. And then our focus from a sales organization perspective is on our upmarket business.

And so we want significantly more of our new business mix to be in the upmarket. We're focused on growing our customers and our customer base. You saw that in our 100k cohort ACV growth and our million-dollar cohort. ACV growth and customer count growth, and you see that in our net retention numbers. We have a great customer base. They're hungry for new solutions. Particularly around AI. They don't have a trusted partner there. And we feel like we have a really good opportunity now to provide them with innovative solutions. And drive value for them. And then the business is much more upmarket today than it was a year ago or two years ago.

And that's given us a lot of protection from these SEO and AIO changes.

Rishi Jaluria: Very helpful. Thank you.

Operator: And the next question will come from Clark Wright with D. A. Davidson. Your line is open.

Clark Wright: Thank you. The operations suite continues to be a key growth driver and Henry made the point that the proprietary data assets that ZoomInfo has enhances enterprises AI initiatives. How are you investing in leveraging AI to maintain and improve the stat advantage?

Henry Schuck: Yeah. We are really proud of how we're using AI internally at ZoomInfo. We are customer zero on all of the AI solutions that we're releasing to customers. We have thousands of salespeople on these products before we release them to our customers. They're leaned in. It's driving efficiency in their ability to engage with customers in insightful ways. It helps them create decks and QVR plans and account plans. It writes back to the CRM for them. It flags risk in their account base. So we feel really good about the way that we're leveraging AI across ZoomInfo.

I would venture to guess that we are in the top decile of companies leveraging AI to drive efficiency and not just in our go-to-market organization. Graham talked about ways that we're using it in our finance organization. We're leveraging AI across our product organization. We've been able to drive efficiencies and lower headcount because we're leveraging AI to generate content for us to drive our product marketing motion. I think when we show other customers, our peer groups, or our clients the way that we use AI internally, they all walk away incredibly impressed. By the way that we're leveraging it and wanting best practices tear sheets that they can take back to their own organization.

We're gonna continue to invest in AI to drive meaningful efficiency in our business.

Clark Wright: Thank you.

Operator: The next question comes from Jackson Ader with KeyBanc. Your line is open.

Jackson Ader: Graham, the commentary on 2026 free cash flow per share acceleration, I'm just curious if you think about splitting that between operational improvement versus I think the word you used was aggressive repurchases next year, like, how should we think about the contribution from each of those sources as we head into next year? Thank you.

Graham O'Brien: Yeah. I think about all three of them as contributors. And I know that hasn't necessarily been the case over the last couple of years. So I do think that we view this as we are committing to growing the top line. We are committing to improving margins. And we are committed to continue to be aggressive with buybacks. And, you know, we're really excited about the compounding effect that hitting all three of those levers will meaningfully contribute to that acceleration of free cash flow per share in 2026.

Jackson Ader: Okay. Alright. Great. Thank you.

Operator: I show no further questions in the queue at this time. This will conclude today's question and answer session. And also the conference call. Thank you for participating, and you may now disconnect.