Summary
ZoomInfo closed fiscal 2023 with fourth quarter revenue of $316.4 million, up 4.9% from the prior-year quarter. Gross profit rose 7.7% to $271.8 million, and gross margin climbed to 85.9% from 83.7%. Operating income of $70.5 million was up 35.3%, lifting operating margin to 22.3% from 17.3%. The bottom line did not follow. The quarter produced a net loss of $5.5 million, a swing to a loss from the prior-year quarter, driven by a heavy income tax provision.
Full-year results were stronger across the board. Revenue of $1,239.5 million rose 12.9%. Gross profit of $1,061.4 million was up 16.7%, and operating income of $259.5 million rose 47.6%. Net income of $107.3 million was up 69.8%, and diluted earnings per share of $0.27 for the year was up from the prior year. Operating cash flow for the year was $434.9 million, up 4.3%, while fourth quarter operating cash flow of $128.8 million rose 7.2%. Capital expenditures for the year fell 8.3% to $26.5 million, although fourth quarter capital expenditures of $8.9 million were up 39.1%. Unlevered free cash flow, a non-GAAP measure, reached $463.5 million for the year, up 2%, and $126.0 million in the quarter, up 3%.
The customer base and product pipeline carried the narrative. Net revenue retention was 87% as of December 31, 2023, and the company closed the quarter with 1,820 customers holding $100,000 or more in annual contract value. Deferred revenue of $441.9 million was up 5.2% year over year, and remaining performance obligations of $1.15 billion were up 4.2%. Adjusted operating income, a non-GAAP measure, was $126.5 million in the quarter and $498.6 million for the year, up 11%. Adjusted operating income margin held at 40% in both periods. Adjusted net income per diluted share was $0.26 for the quarter and $1.01 for the year. Management introduced ZoomInfo Copilot, a generative AI tool that unifies first-party CRM data with the company's own data. Its 2024 Customer Impact Report, based on surveys of more than 7,000 users, reports that customers bring in 32% more revenue, see win rates 1.5x higher, cut customer acquisition costs by 35%, and are 64% more productive.
Guidance for the first quarter of 2024 calls for adjusted operating income of $115 million to $117 million and adjusted net income per share of $0.23 to $0.24, with unlevered free cash flow not guided. For the full year 2024, the company guides to adjusted operating income of $492 million to $502 million, adjusted net income per share of $0.99 to $1.01, and unlevered free cash flow of $445 million to $465 million. Weighted average shares outstanding are expected to be 396 million in the first quarter and 399 million for the full year.
Several pressures sit under the headline growth. The company attributed the full-year revenue increase partly to the addition of new customers, offset by fewer upsells, reduced spend, and cancellations among existing customers, and it flagged adverse macroeconomic conditions as an ongoing factor. General and administrative expense grew sharply, driven in part by higher bad debt accruals. The effective tax rate for 2023 was 72.4%, up from 67.5%, reflecting remeasurement of deferred tax assets from state law changes, higher non-deductible equity compensation, and valuation allowances. The tax receivable agreement liability stood at $2,818.0 million as of December 31, 2023. Software slipped to 33% of annual contract value from 39% a year earlier. The company repurchased 22,627,664 shares during 2023 at an average price of $17.68 for $400.1 million, leaving $199.9 million authorized. Cash and cash equivalents were $447.1 million alongside $82.2 million of short-term investments, and the total net leverage ratio to Adjusted EBITDA was 1.4x.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $316.4M | $313.8M | +0.8% | $301.6M | +4.9% |
| Gross profit | $271.8M | $269.0M | +1.0% | $252.4M | +7.7% |
| Gross margin | 85.9% | 85.7% | +0.2 pp | 83.7% | +2.2 pp |
| Research & development | $48.2M | $47.3M | +1.9% | $55.9M | -13.8% |
| Sales & marketing | $98.3M | $102.3M | -3.9% | $103.6M | -5.1% |
| General & administrative | $49.0M | $45.8M | +7.0% | $35.0M | +40.0% |
| Total operating expenses | $201.3M | $205.9M | -2.2% | $200.3M | +0.5% |
| Operating income (loss) | $70.5M | $63.1M | +11.7% | $52.1M | +35.3% |
| Operating margin | 22.3% | 20.1% | +2.2 pp | 17.3% | +5.0 pp |
| Net income (loss) | -$5.5M | $30.2M | -118.2% | $23.2M | -123.7% |
| Net margin | -1.7% | 9.6% | -11.4 pp | 7.7% | -9.4 pp |
Risks
Weaker economic conditions may reduce customer spending on sales, marketing, and recruiting technology. MD&A states net revenue retention was 87% as of December 31, 2023 and expects near-term impact from macroeconomic conditions; revenue was up 12.9% year to date but growth was offset by fewer upsells, reduction in spend, and cancellations among existing customers.
Macroeconomic and geopolitical downturns may delay prospective customers' purchasing decisions and elongate sales cycles. MD&A reports the company experienced longer sales cycles and more intense scrutiny, particularly for larger purchases and upgrades, as customers reassess growth trajectories.
The company's success depends on accurate, comprehensive data, and its standard contract includes a quality guarantee allowing customers to terminate and seek reimbursement if accuracy falls below a threshold. Participation in the contributory network, including ZoomInfo Lite users and paying customers, may decline, and CPRA and other 2024 state laws make opting out easier, with third-party opt-out intermediaries emerging.
Global privacy laws such as GDPR, CCPA as amended by CPRA, new 2024 state laws, India's DPDPA, and Saudi Arabia's PDPL impose complex compliance obligations and restrict data gathering. The FTC's commercial surveillance rulemaking and CFPB's planned data broker rule, plus uncertainty around the EU-US DPF and NOYB challenges, could interrupt data transfers and increase costs.
The EU AI Act, which achieved consensus on December 9, 2023, imposes prohibitions, transparency requirements, and penalties up to €35 million or 7% of global turnover. AI technologies may be flawed, biased, or infringe intellectual property, exposing the company to legal liability and reputational harm.
Larger and better funded companies such as Salesforce, Oracle, Google, and Microsoft/LinkedIn may enter B2B sales and marketing intelligence, with greater resources and AI/ML capabilities. Customers are increasingly allocating spending toward AI, ML, and generative AI, and the company may not adapt quickly enough to capture that spending.
As of December 31, 2023, the company had a $2,818.0 million liability related to projected obligations under the Tax Receivable Agreements. Payments are substantial, may exceed actual cash tax benefits, and can be accelerated in a change of control, potentially impairing liquidity or change-of-control transactions.
The market has low barriers to entry and many free or lower-cost alternatives, including LinkedIn, internal databases, and homegrown tools. Weakened macroeconomic conditions could disproportionately increase the likelihood that customers choose lower-price alternatives even if the company's products are superior.
The platform depends on integrations with third-party systems such as Salesforce, Marketo, HubSpot, Microsoft Dynamics, and Oracle Sales Cloud. If Salesforce or another operator refuses API access, the integration would not function and customer experience would be hampered.
The company depends on CEO and co-founder Henry Schuck and other key employees, and competition for technical and sales talent is intense. Remote and hybrid work arrangements have intensified and expanded competition, and failure to integrate or retain personnel could disrupt strategy and culture.
MD&A reports general and administrative expenses increased 41% for the year ended December 31, 2023, primarily due to additional bad debt accruals. Risk factors note that failure to collect accounts receivable or customer creditworthiness issues could harm revenue and cash flows.
The effective tax rate was 72.4% for 2023 compared to 67.5% for 2022, with provision for income taxes of $281.5 million. Changes in tax law, state apportionment, valuation allowances, and TRA remeasurements can materially affect results.
Global economic uncertainty and catastrophic events, including the Russia-Ukraine war, Israel-Hamas war, inflation, and bank failures, have disrupted and may continue to disrupt the business. International revenue was approximately 13% of total revenue for 2023, exposing the company to foreign regulatory, tax, and currency risks.
SaaS KPIs
All quarters →Adjusted Operating Income Margin
Unlevered Free Cash Flow
Adjusted Operating Income
Net Revenue Retention
Total customers
Customers with $100K+ ACV
Summary, forecast, risks and KPIs are extracted from ZoomInfo Technologies Inc.'s SEC filings for Q4 FY2023 (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.