ZoomInfo Technologies’ Strategic Workforce Reduction: Balancing Cost Savings and Upmarket Focus for Margin Expansion

Elizabeth Porter, an analyst from Morgan Stanley, maintained the Hold rating on ZoomInfo Technologies (GTM – Research Report). The associated price target was raised to $12.00.

Elizabeth Porter’s rating is based on ZoomInfo Technologies’ strategic decision to reduce its global workforce by approximately 6%, which aligns with its focus on targeting upmarket customers. This shift is expected to lead to significant cost savings, estimated at $28 million annually, by reallocating resources from down-market sales to more lucrative upmarket opportunities. Although this restructuring was anticipated in the company’s guidance, Porter sees potential for margin expansion in FY26 as the company benefits from these cost savings over a full year.
While the workforce reduction is not a response to macroeconomic demand, it does pose some risks to revenue, particularly in the down-market segment, which is expected to see further declines. Despite this, Porter is less concerned about downside risks to FY25 revenue, which is projected to decrease by 1% year-over-year. The potential for improved margins in the second half of the year, following the completion of the restructuring, supports the Hold rating, as the company is expected to achieve a more optimized operating margin of 37.5%-38%.