Summary
ZoomInfo opened fiscal 2021 with rapid top-line growth. Revenue for the first quarter ended March 31, 2021 was $153.3 million, up 50% year over year. Gross profit rose 53.1% to $125.2 million. Gross margin expanded 1.6 percentage points to 81.7%. Operating income increased 37.9% to $28.0 million. Operating margin contracted 1.6 percentage points to 18.3%. Net income attributable to ZoomInfo Technologies Inc. was $3.2 million, up from $0.0 million, and diluted earnings per share was $0.02. Management attributed the revenue increase primarily to new customers added over the last 12 months and net expansion with existing customers. CEO Henry Schuck said the first quarter was a strong start to the year that built on momentum from 2020, and he pointed to the growing market opportunity in the go-to-market intelligence space.
Cash generation was strong. Operating cash flow was $93.0 million, up 228.6% year over year. Capital expenditures were $4.7 million, up 14.6%. Unlevered free cash flow, a non-GAAP measure, was $97.5 million, up 77%. Deferred revenue at quarter end was $261.9 million, and remaining performance obligations were $591.6 million. On a non-GAAP basis, adjusted operating income was $66.1 million, up 35% from $49.1 million. Adjusted operating income margin was 43%, down from 47%. Adjusted net income was $50.7 million, adjusted net income per share was $0.13, and adjusted EBITDA was $68.8 million, an increase of 35%.
Operational highlights were broad. Forrester Research named ZoomInfo a Leader in The Forrester Wave B2B Marketing Data Providers, Q2 2021. The report evaluated 11 providers based on 24 criteria across three categories, and ZoomInfo received the highest possible scores in 18 criteria. The company expanded integration points between Engage and the ZoomInfo platform. It earned the TrustRadius top-rated award for sales intelligence software for the fourth consecutive year, with more than 800 verified ratings and reviews. It also attained 2021 TrustArc GDPR and CCPA Practices Validations. ZoomInfo ended the quarter with more than 950 customers with $100,000 or greater in annual contract value. The net annual retention rate for the year ended December 31, 2020 was 108%. The company says it serves more than 20,000 companies worldwide and derives 99% of revenue from subscription services. Subscriptions generally range from one to three years, and over 25% of ACV is under multi-year agreements. ZoomInfo also lowered interest expense by issuing $350 million of 3.875% senior notes due 2029 and repricing $400 million of Term Loan B at L+300 with a maturity of February 2026.
Guidance points to continued growth. For the second quarter of 2021, management guided to adjusted operating income of $68 million to $70 million and adjusted net income per share of $0.11 to $0.12. For full-year 2021, guidance calls for adjusted operating income of $290 million to $294 million, adjusted net income per share of $0.49 to $0.50, and unlevered free cash flow of $290 million to $295 million. Weighted average shares outstanding are guided at 405 million for both periods. The company does not guide unlevered free cash flow for the second quarter.
Risks remain familiar for a high-growth software company. The filing lists risks tied to the COVID-19 pandemic and the global economic uncertainty it created. Larger well-funded companies could shift their business models to compete more directly with ZoomInfo. Changes in data privacy laws and regulations, or public perception and enforcement, could affect the platform. Adverse economic and market conditions could reduce spending on sales and marketing, and demand for sales and marketing subscription platforms could decline. The company also cites reliance on third-party systems, the need to attract new customers and expand existing subscriptions, potential increases in contributory network opt-outs, brand protection, internal controls, integration of acquisitions, and substantial indebtedness. Being a controlled company under Nasdaq rules is another listed risk. Because the business is largely subscription-based, the company notes that the effect of the COVID-19 pandemic may not be fully reflected in results until future periods.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2021 | Q4 FY2020 | QoQ | Q1 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $153.3M | $139.7M | +9.7% | — | — |
| Gross profit | $125.2M | $113.1M | +10.7% | — | — |
| Gross margin | 81.7% | 81.0% | +0.7 pp | — | — |
| Research & development | $20.4M | $14.5M | +40.7% | — | — |
| Sales & marketing | $48.8M | $45.2M | +8.0% | — | — |
| General & administrative | $18.8M | $17.5M | +7.4% | — | — |
| Total operating expenses | $97.2M | $83.5M | +16.4% | — | — |
| Operating income (loss) | $28.0M | $29.6M | -5.4% | — | — |
| Operating margin | 18.3% | 21.2% | -2.9 pp | — | — |
| Net income (loss) | $3.2M | $25.5M | -87.5% | — | — |
| Net margin | 2.1% | 18.3% | -16.2 pp | — | — |
| Diluted EPS | $0.02 | — | — | — | — |
| Customers | 950 | — | — | — | — |
Risks
Tax receivable agreements require payment of 85% of realized cash tax benefits to Pre-IPO owners. Estimated obligation is approximately $320.5 million assuming all Pre-IPO OpCo Unitholders exchange on March 31, 2021, and payments are not conditioned on continued ownership. Accelerated payment could occur upon change of control or breach.
In Q1 2021, the company recognized $45.0 million of non-cash tax expense substantially allocable to noncontrolling interests, resulting in net income attributable to ZoomInfo Technologies Inc. of $3.2 million while consolidated net loss was $33.9 million and net loss attributable to noncontrolling interests was $37.1 million. This creates volatility in net income attributable to the company.
COVID-19 pandemic created headwinds in early 2020 including longer sales cycles and heightened cancellations from customers in heavily impacted industries, which represented less than 4% of ACV. Although demand normalized by end of 2020, the extent and duration of future impact remains uncertain.
First lien credit agreement contains restrictive covenants that limit dividends, distributions, debt prepayments, acquisitions, and asset sales. Failure to comply could result in acceleration of substantially all debt. First lien net leverage ratio was 1.2x as of March 31, 2021.
As a holding company, ZoomInfo Technologies Inc. has no independent means of generating revenue and relies on distributions from ZoomInfo OpCo, which may be limited by Delaware law and covenants in financing arrangements. Deterioration in OpCo's financial condition could impair ability to pay distributions.
Recent acquisitions of Clickagy and EverString, plus potential future acquisitions, require purchase accounting fair value adjustments to unearned revenue that reduce reported revenue. Integration costs and acquisition-related compensation were $3.4 million for Q1 2021, with future activity dependent on acquisition frequency.
Majority of revenue growth was from new customers added over the last 12 months. The company must continue to invest in go-to-market efforts to acquire new customers, and net annual retention rate was 108% for 2020. Longer sales cycles and more intense scrutiny for larger purchases were experienced during COVID-19.
SaaS KPIs
All quarters →Adjusted Operating Income Margin
Unlevered Free Cash Flow
Adjusted Operating Income
Adjusted EBITDA
Adjusted Net Income
Adjusted Net Income Per Share (Diluted)
Customers with $100K+ ACV
Summary, forecast, risks and KPIs are extracted from ZoomInfo Technologies Inc.'s SEC filings for Q1 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.