Summary
ZoomInfo's second quarter of fiscal 2024 showed the strain of a deliberate reset in how the company books risky customer accounts. Revenue fell 5.5% year over year to $291.5 million, and gross profit slipped 7.3% to $245.6 million. Gross margin narrowed to 84.3% from 85.9%. The bottom line swung hard. The company posted an operating loss of $20.0 million against operating income of $59.6 million a year earlier, and a net loss of $24.4 million against net income of $38.1 million. Diluted EPS came in at -$0.07 versus $0.09. Operating margin fell to -6.9% from 19.3%.
Management tied much of the damage to a change in estimate for the collectibility of receivables and new procedures requiring upfront prepayment from certain smaller customers. The company recorded $33 million in incremental charges related to the change in estimates, affecting both revenue and general and administrative expense. General and administrative expense rose sharply on lease impairment and abandonment charges plus the added bad debt. The six-month picture is similar but milder on the top line: revenue of $601.6 million, down 1.3%, and a net loss of $9.3 million against net income of $82.6 million. Adjusted operating income, a non-GAAP measure, was $81.6 million, down 35%.
Cash generation held up. Operating cash flow rose 8.3% to $126.3 million in the quarter and 7.5% to $242.2 million for the six months. Capital expenditures climbed 79% to $11.1 million in the quarter and 89.7% to $23.9 million year to date, reflecting new facilities and more capitalized development. Unlevered free cash flow, another non-GAAP measure, was $120.0 million, down 1%. Deferred revenue was $440.4 million, down 0.6%, while remaining performance obligations rose 1.3% to $1.13 billion. The company ended June 30, 2024 with $385.9 million in cash and cash equivalents, $13.4 million in short-term investments, and $250.0 million available under its revolver. Total net leverage stood at 1.8x.
ZoomInfo repurchased 10,799,791 shares during the quarter at an average price of $13.65, for $147.4 million. It also repriced its First Lien Credit Agreement to S+175, a 50 basis point cut that should trim interest expense by roughly $3 million a year. For the third quarter of fiscal 2024, management guided to revenue of $298 million to $301 million and non-GAAP adjusted operating income of $107 million to $109 million. For the full fiscal year 2024, management now expects revenue of $1.190 billion to $1.205 billion, down from a prior range of $1.255 billion to $1.27 billion, and adjusted operating income of $412 million to $418 million, down from $488 million to $495 million. Full-year unlevered free cash flow guidance moved to $420 million to $430 million from $440 million to $455 million.
Operationally, the company closed the quarter with 1,797 customers holding $100,000 or more in annual contract value, up 37 from the prior quarter. Net revenue retention was 85% as of June 30, 2024. Management said it stabilized that metric and had its best new business quarter in the mid-market and enterprise, helped by the launch of ZoomInfo Copilot. Risks remain. Macroeconomic conditions could keep pressuring retention, the shift upmarket and prepayment requirements could cost near-term revenue, and lease impairment charges tied to unused office space may recur as new leases commence. The company also faces the Class Actions litigation and a $59.1 million payment in July 2024 to terminate its Waltham, Massachusetts lease. Leadership is in flux: Graham O'Brien becomes interim CFO on September 6, 2024, Cameron Hyzer moves to an advisory role through October 7, 2024, and the board added Domenic Maida and Owen Wurzbacher after Todd Crockett's resignation.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $291.5M | $310.1M | -6.0% | $308.6M | -5.5% |
| Gross profit | $245.6M | $266.7M | -7.9% | $265.4M | -7.5% |
| Gross margin | 84.3% | 86.0% | -1.8 pp | 86.0% | -1.8 pp |
| Research & development | $48.3M | $43.7M | +10.5% | $52.0M | -7.1% |
| Sales & marketing | $100.5M | $99.4M | +1.1% | $102.6M | -2.0% |
| General & administrative | $111.3M | $75.1M | +48.2% | $41.0M | +171.5% |
| Total operating expenses | $265.6M | $223.7M | +18.7% | $205.8M | +29.1% |
| Operating income (loss) | -$20.0M | $43.0M | -146.5% | $59.6M | -133.6% |
| Operating margin | -6.9% | 13.9% | -20.7 pp | 19.3% | -26.2 pp |
| Net income (loss) | -$24.4M | $15.1M | -261.6% | $38.1M | -164.0% |
| Net margin | -8.4% | 4.9% | -13.2 pp | 12.3% | -20.7 pp |
| Diluted EPS | -$0.07 | $0.04 | -$0.11 | $0.09 | -$0.16 |
Risks
MD&A states the business and financial condition have and may continue to be impacted by adverse macroeconomic conditions, and the company expects net revenue retention to be impacted in the near term. Net revenue retention was 85% as of June 30, 2024, while revenue decreased 5.5% in Q2 2024 versus the prior-year quarter and 1.3% year to date.
During Q2 2024, ZoomInfo deployed a new business risk model requiring upfront prepayment from prospects at greatest risk of non-payment and shifted focus to customers more likely to pay, renew, and grow. The related change in accounting estimate reduced revenue by $15.3 million for the three and six months ended June 30, 2024 and drove incremental bad debt expense.
Total revenues decreased period over period primarily due to the change in accounting estimate, with revenue down 5.5% in Q2 2024 and down 1.3% for the six months ended June 30, 2024. The company had 1,797 customers with over $100,000 in ACV as of June 30, 2024, and net revenue retention was 85%.
Operating income swung to a loss of $20.0 million in Q2 2024, down 133.6% from income of $59.6 million in Q2 2023, and net loss was $24.4 million, down 164.0% from net income of $38.1 million. The decrease was primarily due to lease impairment and abandonment charges and the change in accounting estimate of collectibility of accounts receivable.
General and administrative expense increased 164% in Q2 2024 versus the prior-year quarter, primarily due to lease impairment and abandonment charges, and restructuring and transaction-related expenses were $50.0 million in Q2 2024. As of June 30, 2024, additional operating leases not yet commenced had anticipated undiscounted future lease payments of $71.2 million, and in July 2024 the company made a $59.1 million payment to terminate the Waltham, Massachusetts lease.
General and administrative expense for the six months ended June 30, 2024 increased 133% versus the prior-year period, primarily due to charges related to the Class Actions, and the company recorded a $30.2 million litigation settlement charge for the six months ended June 30, 2024. The company also made $0.7 million of litigation settlement payments in the six months ended June 30, 2024.
As of June 30, 2024, the company had a $2,795.5 million liability related to its projected obligations under its Tax Receivable Agreements, and it paid $31.6 million to TRA holders during the six months ended June 30, 2024. TRA remeasurement loss was $9.2 million for the six months ended June 30, 2024, compared to an $11.2 million TRA remeasurement gain in the prior-year period.
SaaS KPIs
All quarters →Adjusted Operating Income Margin
Unlevered Free Cash Flow
Adjusted Operating Income
Net Revenue Retention
Adjusted EBITDA
Adjusted Net Income
Customers with $100,000 or greater in annual contract value
Adjusted Net Income Per Share (Diluted)
Summary, forecast, risks and KPIs are extracted from ZoomInfo Technologies Inc.'s SEC filings for Q2 FY2024 (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.