ZoomInfo Earnings Call Maps Profit-First Transition

ZoomInfo Technologies, Inc. ((GTM)) has held its Q1 earnings call. Read on for the main highlights of the call.

ZoomInfo Technologies, Inc. delivered a mixed earnings call that balanced near-term caution with long-term ambition. Management highlighted a solid beat on quarterly guidance, strong margins, and robust cash generation, especially in its higher-margin data and operations offerings. But full-year revenue expectations were cut, demand is soft in key segments, and a sizable restructuring underscores that the shift to a new model will not be painless.

Q1 Beat Underscored by Strong Profitability

ZoomInfo reported Q1 revenue of $310 million, up 1.5% year over year and above the high end of guidance. Adjusted operating income reached $110 million, translating into a 35% margin that expanded by more than two percentage points from a year ago.

Cash Generation and Conversion Remain a Core Strength

The company turned that profitability into impressive cash, with unlevered free cash flow of $120 million in Q1, equal to 109% of adjusted operating income and a 39% margin. GAAP operating cash flow came in at $115 million, giving ZoomInfo ample flexibility to fund its transition.

Data & Operations Segment Drives High-Margin Growth

Non-seat-based operations and Data-as-a-Service offerings grew more than 20% year over year and now account for just under one-fifth of total business. Operations annual contract value grew more than 20% and is now ZoomInfo’s fastest-growing and highest-margin segment, central to its strategic pivot.

Upmarket Customers Provide a Stable Anchor

Upmarket annual contract value rose 5% year over year and now represents about 75% of total business, offering a relatively resilient base. Within that, customers generating over $100,000 in ACV saw their cohort ACV increase 10% and the company added 32 such customers over the past year.

RPO and Unearned Revenue Bolster Visibility

Remaining performance obligations totaled $1.18 billion, with $861 million expected to convert into revenue over the next 12 months. Unearned revenue of $479 million further supports near-term visibility, providing some cushion as the business endures a transition phase.

Partnerships and AI Integrations Deepen Market Position

ZoomInfo emphasized its ecosystem, noting it was named number one in 142 G2 Spring 2026 reports and described as “entrenched” by Forrester. Major partners including Salesforce and HubSpot are now shipping prospecting agents that rely on ZoomInfo as a primary external data provider, alongside connectors to leading AI platforms.

Capital Returns and Balance Sheet Management

The company repurchased 13.1 million shares for $90 million in Q1 at an average price of $6.91, leaving over $1 billion of repurchase capacity. It ended the quarter with $175 million in cash, $1.3 billion of gross debt, net leverage of about 2.4 times EBITDA and completed $425 million of interest rate swaps at a blended fixed rate of 3.28 percent.

Efficiency Gains Support Margin Expansion

ZoomInfo highlighted operational discipline, with GAAP stock-based compensation down 14% year over year to $25.5 million, or 8% of revenue. Combined adjusted expenses plus stock-based compensation improved by roughly five percentage points of revenue, and guidance now implies a 37% adjusted operating margin at the full-year midpoint.

Product Adoption and Notable Commercial Wins

The company expanded GTM Studio trials to more than a quarter of its customers, signaling growing interest in newer offerings. It also cited fresh enterprise wins with names such as Sierra, Lyft and Wyndham, plus a multiyear seven-figure deal with an AI-native managed service provider client.

Revenue Guidance Cut Signals a Reset

Despite the Q1 beat, management reduced full-year 2026 revenue guidance to a range of $1.185 billion to $1.205 billion, implying about a 4 percent decline at the midpoint. Q2 revenue is forecast between $300 million and $303 million, which would also mark a year-over-year decline as growth stalls during the transition.

Downmarket Weakness and Seat Compression Pressure Growth

The downmarket segment remains a drag, with annual contract value down 11% year over year in Q1, worse than performance in the upmarket. Management pointed to ongoing seat compression and customer uncertainty over what AI tools can be built in-house versus bought, leading to delayed or reduced purchases.

Software Sector Buyers Are Pausing Spend

ZoomInfo reported elevated downsell and churn among software customers late in Q1 and into April, pointing to a challenging vertical. Executives described buyer confusion around AI capabilities as a driver of delayed incremental purchases and softer upsell, which has weighed on expansion activity.

Workforce Reduction Marks a Major Restructuring

The company announced a significant restructuring that will affect about 20% of its workforce, or roughly 600 roles, including the closure of operations in Israel. The plan is expected to generate $60 million in annual operating expense savings but will incur $45 million to $60 million in mostly cash restructuring charges through Q3 2026.

Shift to Consumption Pricing Adds Near-Term Volatility

ZoomInfo plans to move more revenue away from seat-based subscriptions toward consumption models, which introduces accounting complexity. Management cautioned that breakage assumptions and the pace of credit usage could create quarter-to-quarter variability in revenue recognition as the model scales.

Net Revenue Retention Stagnant, With More Pressure Ahead

Net revenue retention held at 90% for the third straight quarter, a level that signals stability but not strong expansion-led growth. The company signaled that NRR may temporarily dip below that mark as it executes the transition and right-sizes certain customer segments.

Lower Growth Expectations and Transition Risks

Management framed the coming periods as a multi-quarter reset, with lower near-term growth as it rightsizes the downmarket and leans into product-led growth. The goal is to exit this transition with sustainable growth by the second half of 2027, but leadership acknowledged execution and timing risks as roles and investments are reshaped.

Guidance Highlights a Profit-Focused Transition

Looking ahead, ZoomInfo guided Q2 revenue to $300 million to $303 million, adjusted operating income to $103 million to $106 million and non-GAAP EPS of $0.26 to $0.28. For full-year 2026, it expects revenue of $1.185 billion to $1.205 billion, AOI of $437 million to $447 million with a 37% margin, unlevered free cash flow of $400 million to $420 million and around $60 million in restructuring charges to unlock roughly equivalent annual cost savings.

ZoomInfo’s earnings call painted a company leaning heavily into its data and operations strengths while accepting near-term revenue declines and volatility. For investors, the story hinges on whether the pivot to consumption and upmarket, data-led growth can offset downmarket weakness and AI-driven buyer hesitation, and ultimately reignite sustainable top-line expansion by the back half of the decade.