Summary
ZoomInfo closed the second quarter of fiscal 2022 with revenue of $267.1 million, up 53.5% from $174.0 million in the prior-year quarter. Year-to-date revenue reached $508.8 million, up 55.5% from $327.3 million. Gross profit of $220.1 million rose 53.2%, while gross margin slipped to 82.4% from 82.6%, a decline of 0.2 percentage points. The forward-looking parts of the model kept pace. Deferred revenue stood at $411.8 million, up 49.2% year over year, and remaining performance obligations were $984.7 million, up 51.9%. Management attributed the top-line gain to new customers added over the past 12 months and net expansion with existing accounts. Products acquired within the last 12 months contributed $19.9 million of revenue in the quarter.
Profitability told a different story. Operating income fell 3.4% to $39.5 million from $40.9 million, and operating margin dropped to 14.8% from 23.5%, a decline of 8.7 percentage points. The gap came from spending. Operating expenses climbed 76% to $180.6 million, and equity-based compensation alone reached $47.0 million, up from $17.1 million. Sales and marketing expense rose to $95.2 million from $49.9 million, and research and development rose to $49.5 million from $24.0 million. Net income attributable to ZoomInfo still improved, rising 71.0% to $15.9 million from $9.3 million. Diluted EPS of $0.04 was down $0.01 from $0.05. For the six months, operating income was $71.9 million, up 4.4%, net income attributable to ZoomInfo was $22.1 million, up 76.8%, and diluted EPS was $0.05, down $0.02. On a non-GAAP basis, adjusted operating income was $106.9 million and adjusted operating income margin was 40%, down from 43%.
Cash generation remained a bright spot. Operating cash flow was $106.2 million in the quarter, up 19.9% from $88.6 million, and $211.2 million for the six months, up 16.3% from $181.6 million. Capital expenditures were $8.2 million in the quarter, up 30.2% from $6.3 million. Unlevered free cash flow, a non-GAAP measure, was $108.3 million, up 18%. The balance sheet held $352.7 million in cash and cash equivalents and $12.9 million in short-term investments at June 30, 2022, with $250.0 million available under the first lien revolving credit facility. Debt included $600.0 million of first lien term loans due February 1, 2026 and $650.0 million of 3.875% senior notes due February 1, 2029. Total net leverage to adjusted EBITDA was 2.3x. The tax receivable agreement liability stood at $3,052.2 million.
Guidance for the third quarter of 2022 and the full year 2022 was revised. For the third quarter, the company guided to non-GAAP adjusted operating income of $111 million to $113 million and non-GAAP adjusted net income per share of $0.19 to $0.20. For the full year 2022, it guided to non-GAAP adjusted operating income of $418 million to $424 million, compared with the prior outlook of $433 million to $437 million, and non-GAAP adjusted net income per share of $0.75 to $0.77, compared with the prior $0.78 to $0.80. Full-year non-GAAP unlevered free cash flow is guided to $435 million to $445 million, compared with the prior $438 million to $446 million. The company expects weighted average shares outstanding of 412 million in the third quarter and 411 million for the full year.
Operationally, ZoomInfo ended the quarter with more than 30,000 customers and 1,763 customers with $100,000 or greater in annual contract value. Net revenue retention was 116% for the year ended December 31, 2021. The company closed the April 1, 2022 acquisitions of Comparably and Dogpatch for total purchase consideration of $150.5 million in cash and $10.0 million in a convertible note receivable. It also added pipeline management and forecasting within Chorus.ai and earned ISO 27701 privacy certification. Risks remain. The company cites the ongoing COVID-19 pandemic, the integration of acquired businesses, and competitive and regulatory conditions as factors that could change results. Its credit agreement carries restrictive covenants that limit dividends, distributions, and acquisitions, and the tax receivable agreement payments are expected to be substantial. Interest expense, net, rose 16% to $11.7 million in the quarter, and the effective tax rate was 39.8%, up from 20.2%.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $267.1M | $241.7M | +10.5% | $174.0M | +53.5% |
| Gross profit | $220.1M | $197.7M | +11.3% | $143.7M | +53.2% |
| Gross margin | 82.4% | 81.8% | +0.6 pp | 82.6% | -0.2 pp |
| Research & development | $49.5M | $45.6M | +8.6% | $24.0M | +106.3% |
| Sales & marketing | $95.2M | $84.1M | +13.2% | $49.9M | +90.8% |
| General & administrative | $29.2M | $27.8M | +5.0% | $21.9M | +33.3% |
| Total operating expenses | $180.6M | $165.3M | +9.3% | $102.8M | +75.7% |
| Operating income (loss) | $39.5M | $32.4M | +21.9% | $40.9M | -3.4% |
| Operating margin | 14.8% | 13.4% | +1.4 pp | 23.5% | -8.7 pp |
| Net income (loss) | $15.9M | $6.2M | +156.5% | $9.3M | +71.0% |
| Net margin | 6.0% | 2.6% | +3.4 pp | 5.3% | +0.6 pp |
| Diluted EPS | $0.04 | $0.02 | +$0.02 | $0.05 | -$0.01 |
| Customers | 1,763 | 1,623 | +8.6% | 1,100 | +60.3% |
Risks
As of June 30, 2022, total contractual maturity of outstanding indebtedness was $1,250.0 million, with a total net leverage ratio to Adjusted EBITDA of 2.3x. The first lien term debt and revolver carry variable interest rates, and the credit agreement contains restrictive covenants that could limit dividends, acquisitions, and other activities, with failure to comply potentially accelerating substantially all debt.
As of June 30, 2022, the company had a $3,052.2 million liability related to projected obligations under its Tax Receivable Agreements, and it paid $5.0 million under those agreements in the six months ended June 30, 2022. Payments are expected to be substantial and are not conditioned on continued ownership by exchanging holders.
The ongoing COVID-19 pandemic continues to have unpredictable and rapidly shifting impacts on global financial markets, economies, and business practices, and could affect the company's customers, sales cycles, hiring, and supply chains. Because of the largely subscription-based model, effects may not be fully reflected in results until future periods.
In April 2022 the company acquired Comparably and Dogpatch for $150.5 million in cash and a $10.0 million convertible note receivable, and purchase accounting is not finalized. Acquisitions have driven growth in revenue, cost of service, operating expense, and interest expense, and integration or accounting adjustments could disrupt results.
Interest expense, net was $11.7 million for the three months ended June 30, 2022, an increase of 16% compared to the prior-year quarter, and $23.5 million for the six months ended June 30, 2022, an increase of 42% year over year, primarily due to increases in total debt from July 2021 Senior Notes and additional First Lien principal. Variable-rate debt exposes the company to further interest expense increases.
Operating margin declined to 14.8% in the three months ended June 30, 2022 from 23.5% in the prior-year quarter, and Adjusted Operating Income Margin decreased to 40% from 43%, due to incremental research and development, sales and marketing, and public company costs. Equity-based compensation rose to $47.0 million in the quarter from $17.1 million in the prior-year quarter.
SaaS KPIs
All quarters →Adjusted Operating Income Margin
Unlevered Free Cash Flow
Adjusted Operating Income
Total customers
Adjusted EBITDA
Customers > $100K ACV
Summary, forecast, risks and KPIs are extracted from ZoomInfo Technologies Inc.'s SEC filings for Q2 FY2022 (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 1, 2026.