ZoomInfo Technologies Inc Common Stock Canaccord Genuity's 46th Annual Growth Conference

Yeah. I think coming out of Q2, I feel like this was a quarter of rapid innovation for us. GTM Studio was one of our newest AI forward products. This was the first quarter of significant traction, where we were seeing the growth sequentially month-over-month. It was really promising, and we're hoping to continue that as we get into the back half of the year. We talked about rolling out hybrid consumption pricing later this year in a more unified application experience that provides more flexibility to customers and prospects for how and where they use ZoomInfo, both in our ecosystem and in a headless manner outside of ZoomInfo. I think that the product progress, and then the go-to-market and finance side of the pricing and the packaging was really promising coming out of the quarter.

We continue to face headwinds in software, but we're taking advantage of that window to set us up in a better position as we get to the other end of that. Also, better profitability than I would've thought a few quarters ago. We restructured the business in the middle of the quarter. Our updated guidance reflects over 100 basis points of adjusted operating margin improvement year-over-year.

Outside of the software vertical, we're seeing stability, and we're actually seeing improvement in some areas. So we're seeing in our non-software verticals gross retentions actually improving year to date on a year-over-year basis. I also want to call out performance with our largest customers, not just from an employee size, but from a spend size. Those customers are performing better this year than they performed last year. On the new business front, we talk about our 100K cohort, so customers that spend at least $100,000 with us annually. We have about 1,900 of those customers. Our new business in that cohort, so basically landing customers at that 100K or higher entry point, we had I think it was our best quarter ever on that front. So enterprise new business, especially that 100K threshold, and gross retention improvements outside of software were really promising in the quarter.

Yeah. We called this out at the end of Q1, where we were starting to see specifically the lower end of our upmarket business. Customers that are in the software vertical, they are starting to have more, there is confusion or build versus buy conversations as it relates to AI and their tech stack. That led to some extended sales cycle thrust, that led to elevated levels of churn and down-sell at the lower end of our upmarket business. That continued in Q2. We are being proactive in that we are re-changing the way that we package and sell so that we are making sure we are still plugging in ZoomInfo's data and context layer wherever it fits for the customer, regardless of whether they are going to build something or not.

Yeah. Separately, I would say that the bigger piece of the story now in software in Q2 is that it is just broadly pressured more so than it was six months ago.

Yeah. You see this in the form of these software customers are also facing different growth environments and growth trajectories, which are informing budget constraints, headcount constraints.

It is a tougher buying and selling environment than it was three to six months ago, and maybe that is cyclical. I do not know how or when that changes, but I do think that the changes we are making to the products that we are selling and how we sell those should help us longer term to improve retention in that vertical.