Summary
ZoomInfo Technologies reported third quarter fiscal 2021 revenue of $197.6 million, up 60% from the prior-year quarter. Gross profit was $159.7 million, up 65.1%, and gross margin reached 80.8%, up 2.5 percentage points. Operating income rose 9.8% to $20.2 million, but operating margin fell 4.7 percentage points to 10.2%. The company swung to a net loss attributable to ZoomInfo Technologies of $40.6 million from net income of $4.9 million in the prior-year quarter. Diluted earnings per share was -$0.15, down from $0.02. The GAAP loss reflects acquisition-related charges and tax items, while non-GAAP adjusted operating income was $78.4 million and adjusted operating income margin was 39%. Revenue growth came from new customers added over the past 12 months and net expansion with existing customers. Products acquired within the last 12 months contributed $8.1 million.
Cash generation remained solid. Operating cash flow was $46.5 million, down 5.3% year over year. Capital expenditures were $4.8 million, up 33.3%. Unlevered free cash flow, a non-GAAP measure, was $73.3 million, up 23%. Deferred revenue ended the quarter at $287.9 million, up 63.6%, and remaining performance obligations were $712.3 million, up 55.7%. For the first nine months of fiscal 2021, revenue was $524.9 million, up 56%. Year-to-date gross profit was $428.6 million, up 67.7%, and year-to-date operating income was $89.1 million, up 1088%. The year-to-date net loss was $28.1 million, a narrowed loss from -$29.5 million, and year-to-date diluted EPS was -$0.13, a narrowed loss from -$0.26. Year-to-date gross margin was 81.7%, up 5.7 percentage points, and year-to-date operating margin was 17.0%, up 14.7 percentage points. Year-to-date operating cash flow was $228.1 million, up 122.1%, and year-to-date capital expenditures were $15.8 million, up 33.9%.
Operationally, ZoomInfo closed the quarter with more than 25,000 customers and more than 1,250 customers with $100,000 or greater in annual contract value. The company's net annual retention rate was 108% for the year ended December 31, 2020. Adjusted EBITDA, a non-GAAP measure, was $81.3 million, up 33%. Subscription contracts generally range from one to three years, with over 30% of contracts based on annualized value under multi-year agreements. ZoomInfo completed three acquisitions in 2021: Insent in June for $34.0 million, Chorus.ai in July for $547.5 million, and RingLead in September for $118.4 million. The Chorus.ai integration produced its first platform integrations in September. The company also moved to eliminate its UP-C structure and multi-class voting structure, with the conversion to a single class of common stock completed in the fourth quarter of 2021. Financing activity included $300.0 million of additional 3.875% senior notes due 2029 and a $200.0 million increase in term loans.
Guidance points to continued growth. For the fourth quarter of 2021, ZoomInfo expects non-GAAP adjusted operating income of $79 million to $81 million. For the full fiscal year 2021, the company expects non-GAAP adjusted operating income of $299 million to $301 million. Non-GAAP adjusted net income per share guidance is $0.12 to $0.13 for the fourth quarter and $0.51 to $0.52 for the full year. The company guides full-year non-GAAP unlevered free cash flow of $320 million to $325 million, and it did not guide unlevered free cash flow for the fourth quarter. It also issued GAAP revenue guidance for both periods.
Risks remain. The COVID-19 pandemic could still disrupt sales cycles and customer spending. Data privacy laws and public perception create compliance risk. Larger, well-funded competitors could pressure pricing and product differentiation. ZoomInfo must integrate Insent, Chorus.ai, and RingLead successfully. The company carries substantial indebtedness and has restrictive covenants under its credit agreements. Its tax receivable agreement obligations are significant. Management also flagged the effects of declining demand for sales and marketing subscription platforms, reliance on third-party systems, the need to attract and expand subscriptions, and the risk of a decrease in participation in its contributory network.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $197.6M | $174.0M | +13.6% | $123.4M | +60.1% |
| Gross profit | $159.7M | $143.7M | +11.1% | $96.7M | +65.1% |
| Gross margin | 80.8% | 82.6% | -1.8 pp | 78.4% | +2.5 pp |
| Research & development | $34.4M | $24.0M | +43.3% | $10.6M | +224.5% |
| Sales & marketing | $65.3M | $49.9M | +30.9% | $46.1M | +41.6% |
| General & administrative | $23.4M | $21.9M | +6.8% | $17.1M | +36.8% |
| Total operating expenses | $139.5M | $102.8M | +35.7% | $78.3M | +78.2% |
| Operating income (loss) | $20.2M | $40.9M | -50.6% | $18.4M | +9.8% |
| Operating margin | 10.2% | 23.5% | -13.3 pp | 14.9% | -4.7 pp |
| Net income (loss) | -$40.6M | $9.3M | -536.6% | $4.9M | -928.6% |
| Net margin | -20.6% | 5.3% | -25.9 pp | 4.0% | -24.5 pp |
| Diluted EPS | -$0.15 | $0.05 | -$0.20 | $0.02 | -$0.17 |
| Customers | 1,250 | 1,100 | +13.6% | 720 | +73.6% |
Risks
ZoomInfo completed three acquisitions in 2021, including Chorus.ai for $547.5 million in July 2021 and RingLead for $118.4 million in September 2021, and purchase accounting for both is not yet finalized. Integrating these businesses and the associated technology, retention awards, and headcount drove restructuring and transaction-related expenses of $11.0 million in the quarter and $17.6 million year to date, and integration costs and acquisition-related compensation of $5.1 million in the quarter.
The company issued $300.0 million of additional 3.875% senior notes due 2029 and incurred $200.0 million of additional term loans in July 2021, bringing total net leverage to 3.4x Adjusted EBITDA as of September 30, 2021. Interest expense, net rose 43% to $13.9 million in the quarter versus the prior-year quarter, and the credit agreement contains restrictive covenants limiting dividends, distributions, and additional indebtedness.
As of September 30, 2021 the company had a $3,065.8 million liability related to projected obligations under its two tax receivable agreements, requiring payment of 85% of realized tax benefits to Pre-IPO owners. These payments are not conditioned on continued ownership and could be accelerated on a change of control or breach, making the obligation a substantial and long-dated claim on future cash.
Adjusted Operating Income Margin decreased to 39% in the quarter ended September 30, 2021 from 47% in the prior-year quarter, and GAAP operating margin fell 4.7 percentage points to 10.2%, driven by incremental research and development and sales and marketing investment. Research and development expense excluding equity-based compensation rose 207% to $27.0 million in the quarter.
The corporate structure simplification and UP-C elimination triggered non-cash tax expense, including $41.9 million recorded in the quarter from a shift of GAAP basis from a non-taxable to a taxable entity, producing an effective tax rate of 989.1% for the quarter. The company also recognized $45.0 million of non-cash tax expense earlier in 2021 related to a change in tax borrower, and further changes to tax law or its state tax footprint could cause substantial revaluations of the tax receivable agreement liability.
The majority of revenue growth in the quarter ended September 30, 2021 versus the prior-year quarter came from new customers added over the last 12 months, and products acquired within the last 12 months contributed only $8.1 million of the $197.6 million quarterly revenue. Growth therefore depends on continued efficient customer acquisition and net expansion, with net annual retention rate of 108% for the year ended December 31, 2020.
The company states the ongoing COVID-19 pandemic could have a continued adverse impact on economic and market conditions, and that because of its largely subscription-based model the effect may not be fully reflected in results until future periods. Offices remained largely closed through the third quarter of 2021, and the company also has $351.2 million of anticipated undiscounted future lease payments for office space that has not yet commenced.
SaaS KPIs
All quarters →Adjusted Operating Income Margin
Unlevered Free Cash Flow
Total customers
Customers > $100K ACV
Summary, forecast, risks and KPIs are extracted from ZoomInfo Technologies Inc.'s SEC filings for Q3 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 1, 2026.