ZoomInfo Technologies (US:ZI)2023-04-30 16:00Financial Performance - Net income for the three months ended March 31, 2023, was $44.5 million, a significant increase from $6.2 million in the same period of 2022 [222]. - Adjusted Operating Income for Q1 2023 was $120.3 million, representing a 26% increase from $95.7 million in Q1 2022, with an Adjusted Operating Income Margin of 40% [227]. - Revenue for the three months ended March 31, 2023, was $300.7 million, up from $241.7 million in Q1 2022, driven by additional customers and increased revenue from existing customers [227]. - Adjusted Net Income for Q1 2023 was $99.5 million, compared to $73.8 million in Q1 2022, resulting in an Adjusted Net Income Per Share of $0.24, up from $0.18 [222]. - Adjusted EBITDA for the three months ended March 31, 2023, was $125.1 million, an increase of $26.0 million, or 26%, compared to $99.1 million in Q1 2022 [230]. - Gross profit for the three months ended March 31, 2023, was $255.2 million, up from $197.7 million in the same period of 2022, reflecting strong operational performance [258]. - Operating expenses increased to $188.9 million for the three months ended March 31, 2023, a rise of $23.6 million, or 14%, compared to $165.3 million in 2022 [261]. - Interest expense, net decreased to $9.9 million for the three months ended March 31, 2023, down $1.9 million, or 16%, from $11.8 million in 2022 [264]. - Other income was $14.0 million for the three months ended March 31, 2023, an increase of $15.4 million compared to an expense of $1.4 million in 2022, primarily due to a TRA remeasurement gain [263]. Customer Metrics - ZoomInfo's net annual retention rate was 104% for the year ended December 31, 2022, indicating strong customer retention and expansion [213]. - Over 40% of customer contracts are multi-year agreements, contributing to stable revenue streams [203]. - As of March 31, 2023, ZoomInfo had 1,905 customers with over $100,000 in annual contract value (ACV), reflecting a focus on high-value customer relationships [213]. Revenue Sources - The company generated substantially all of its revenue from subscription sales, with contracts typically ranging from one to three years in length [203]. - The company derives 99% of its revenue from subscription services, with contracts typically ranging from one to three years and billed in advance [234]. - Unearned revenue as of March 31, 2023, was $451.4 million, with $449.0 million expected to be recognized as revenue in the next 12 months [268]. Financial Flexibility and Debt Management - The company extended the maturity date of $213.0 million of its revolving credit facility to February 28, 2028, enhancing financial flexibility [208]. - ZoomInfo's First Lien Term Loan maturity was extended to February 28, 2030, with a decrease in the applicable margin rate by 0.25% [207]. - As of March 31, 2023, the company has a remaining balance of $598.5 million in first lien term loans, with principal payments of 0.25% due quarterly until maturity on February 28, 2030 [281]. - The total contractual maturity of outstanding indebtedness is $1,248.5 million, with net debt of $622.9 million as of March 31, 2023 [284]. - The effective interest rate on the first lien debt was 7.36% as of March 31, 2023 [282]. Investments and Acquisitions - Recent acquisitions include Comparably, Inc. and Dogpatch Advisors, LLC, aimed at broadening and strengthening the platform [215]. - The company expects to continue investing in property and equipment and pursue acquisitions opportunistically [277]. - The company continues to invest in its go-to-market strategy to attract new customers and expand its user base [212]. - Research and development expenses are anticipated to increase in the short term to enhance existing platforms and develop new software products [245]. - The company plans to continue investing in sales and marketing capacity to support future growth, with expenses fluctuating based on revenue recognition [243]. Cash Flow and Liquidity - Cash and cash equivalents as of March 31, 2023, totaled $474.0 million, with $141.8 million in short-term investments and $250.0 million available under the revolving credit facility [266]. - Net cash provided by operating activities was $108.6 million for the three months ended March 31, 2023, compared to $105.0 million in 2022 [270]. - Cash used in investing activities for Q1 2023 was $19.6 million, including $63.6 million in short-term investments and $6.4 million in property and equipment purchases, partially offset by $50.4 million in maturities of short-term investments [275]. - Cash used in financing activities for Q1 2023 was $29.3 million, primarily due to $21.9 million for common stock repurchase and $4.1 million for taxes related to equity awards [278]. Shareholder Actions - The company repurchased 1,058,291 shares of Common Stock at an average price of $22.99, totaling $24.3 million, with $75.7 million remaining authorized for repurchases as of March 31, 2023 [210]. - The Board of Directors authorized a Share Repurchase Program to buy back up to $100.0 million of the Company's Common Stock [298]. Risk Management and Controls - The Company has implemented a hedging strategy to mitigate interest rate risk through certain derivative instruments [307]. - The Company manages credit risk by concentrating cash deposits with multiple high-quality financial institutions and evaluating their credit quality periodically [310]. - There were no material changes in the Company's critical accounting policies and estimates compared to the previous year [302]. - The Company concluded that its disclosure controls and procedures were effective as of March 31, 2023, providing reasonable assurance for timely reporting [311]. - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2023, that materially affected the Company's controls [312]. - The Company does not expect its disclosure controls or internal control over financial reporting to prevent all errors and fraud, acknowledging inherent limitations [313].