Management Commentary

Read the Q2 2025 summary ↗
Jerry Sisitsky
VP of Investor Relations, ZoomInfo

Thanks, Michelle. Welcome to ZoomInfo's financial results conference call for the second quarter 2025. With me on the call today are Henry Schuck, Founder and CEO of ZoomInfo, and let me be one of the first to congratulate Graham O’Brien, who is also on this call, who is our newly named Chief Financial Officer. During this call, any forward-looking statements are made pursuant to the safe harbor provisions of U.S. securities laws. Expressions of future goals, including business outlook, expectations for future financial performance, and similar items including, without limitation, expressions using the terminology may, will, expect, anticipate, and believe, and expressions which reflect something other than historical facts, are intended to identify forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, including those discussed in the risk factors section of our SEC filings. Actual results may differ materially from any forward-looking statements.

The company undertakes no obligation to revise or update any forward-looking statements in order to reflect events that may arise after this conference call, except as required by law. For more information, please refer to the forward-looking statements in the slides posted to our investor relations website at ir.zoominfo.com. All metrics on this call are non-GAAP unless otherwise noted. A reconciliation can be found in the financial results press release or in the slides posted to our IR website. With that, I'll turn the call over to Henry.

Henry Schuck
CEO and Founder, ZoomInfo

Thank you, Jerry, and welcome, everyone. We executed well across our strategic priorities, delivered another quarter of strong financial results, accelerated upmarket growth, and raised our guidance for the year, which now calls for positive revenue growth in 2025. We're delighting our customers and feel closer to them than ever. We're positioned to play offense with accelerating product innovation, a strengthening competitive position across our solutions, and a team that is laser focused and has an ownership mentality. All these inputs should drive accelerating free cash flow per share growth over the next few years and beyond. During the quarter, Go-To-Market Studio went live and has a growing set of customers.

ZoomInfo Copilot continued on its strong growth trajectory, and our suite of operations solutions again grew more than 20% year-over-year, validating that our customers are increasingly recognizing that they must make an infrastructural investment in data if they want to win in an AI world. All three solutions are driving stickier workflows and more habituated engagement across our customer base. In Q2, GAAP revenue was $307 million, and adjusted operating income was $105 million, a margin of 34%, both above the high end of guidance. Q2 is a quarter that typically skews more upmarket, and we leveraged that opportunity with an increasing number of our largest customers embracing workflows, automation, and data as they expand their usage of our overall platform. We now have 1,884 customers with more than $100,000 in ACV, a sequential increase of 16 customers and a year-over-year increase of 87 customers.

ACV growth in the quarter from that cohort was materially higher than last Q2 as our largest customers continue to expand and embed more of our data and agents in their workflows. We added customers to our million dollar cohort, driving sequential and year over year growth in total ACV as well as the average ACV per million dollar customer. ACV for the million dollar cohort was up more than 25% year-over-year. Upmarket ACV accelerated from 3% year-over-year growth in Q1 to 4% year-over-year growth in Q2. 72% of our business is now upmarket. Net revenue retention improved to 89% in the quarter, up 4 percentage points in three quarters, with upmarket retention the highest it has been in several years. During the quarter, we closed upmarket opportunities with Avis, Open Exchange, Spectrum, Swift, and the Washington Commanders.

Additionally, a multinational provider of finance, HR, and payroll software doubled its spend with us and is now leveraging a wide swath of our data as a service product within their data science teams to build foundational data with company, firmographics, technographics, hierarchy data, and signals across funding announcements, intent topics, and project scoops. The customer expects this investment to have an immediate impact on market reactivity, win rates, and hard costs on FTEs across their go-to-market organization. At UKG, we identified and unlocked an opportunity to transform their territory planning, account scoring, and first-party data enrichment by improving data integrity across the organization using ZoomInfo data as a service and our AI-powered signals.

We expanded our relationship with a leading spend management platform to develop a custom data as a service solution that amplifies their go-to-market engine and accelerates their initiative to grow their customer base of companies with more than 10 employees by partnering with their business systems engineering and business intelligence teams. We analyzed company records and contacts against their ideal customer profile, identified white space opportunities, and delivered a new universe of data that integrates seamlessly into their existing go-to-market workflows. These accounts were all already in our 100k cohort of customers, and all three more than doubled their spend year over year. This is a trend that we expect to continue to see within our customer base.

Our go-to-market motion is now designed to drive increased platform adoption and expansion across our existing upmarket customers, and while not reflected in our Q2 financial results, shortly after the close of the quarter we signed the largest TCV deal in the history of ZoomInfo, reinforcing our upmarket growth potential. This is a nearly eight-figure annual contract across four years with an existing upmarket customer that materially extends their use of the ZoomInfo platform. This customer has been using ZoomInfo for over a decade, during which time they have increased annual spend by 40x. What started as a simple contact lookup contract has evolved into a long-term partnership that leverages our data signals and workflow activation layer, with custom DAS deliveries becoming embedded into their critical go-to-market workflows.

Customers like this one underscore how critical we are to organizations as they transform the way they go to market. Today, 72% of our ACV is coming from larger upmarket customers, an area where we see higher levels of profitability and accelerating revenue growth as we successfully execute on our transition upmarket. We continue to invest behind this strategic shift. During our last earnings call, we made clear our intention to build the Go-To-Market Intelligence platform. We continue to see great momentum on that journey throughout Q2 as enterprises move beyond accessing data to demanding AI-powered systems that can think, predict, and act on their behalf, positioning our solutions and platform as the intelligent backbone of their go-to-market operation.

First, with Copilot, our AI for frontline seller productivity in the quarter, the first set of customers who adopted Copilot a year ago came up for their first renewal on the product. Though it's still early, we're observing renewal rates that are materially better than on legacy ZoomInfo Sale and are performing better than expected. Since Q4 2024, active users have increased their number of monthly AI actions by more than 40%, showing increasing adoption and daily workflows. We also expect continued traction upmarket as upgraded Copilot features and agents launch later this year. Second, Go-To-Market Studio is our operational counterpart to Copilot, enabling sales leaders and revenue operations teams to architect campaigns and strategies. While Copilot executes against those strategies at the front line, they're designed to work together, driving expansion across different personas and new use cases within the same enterprise account.

Go-To-Market Studio went into early access in July with the first set of customers from our oversubscribed wait list. We will be GA-ing Go-To-Market Studio ahead of schedule, and as it continues to scale across our customer base, we have an unprecedented opportunity to enable go-to-market leaders to actually deliver results with AI and automation. Early customers are using Go-To-Market Studio to generate insights faster than ever with just a fraction of the effort. Account scoring and prioritization, automated research and enrichment, churn prediction modeling, and competitive intelligence are some of the first features that our early users are embedding into their AI-enabled workflows. We're eliminating data silos, automating manual tasks, and delivering real-time buyer intelligence, ensuring every seller is engaging with the right account at the right time with the right message.

With Go-To-Market Studio, Copilot, and DAS, our Go-To-Market Intelligence platform is creating the unified data foundation for Go-To-market AI. In Q2, we continue to automate the downmarket experience and where we're able to reduce and in some cases reallocate downmarket resources. In this rapidly changing technology landscape, we will continue to be ahead of the curve in our internal adoption of AI, resourcing smaller but more productive teams. In one instance, we were able to restructure a team from more than 25 employees to two, leveraging AI to support the automated creation of content and the workflow to connect that content across the business. We deployed some of that excess headcount into upmarket sales roles where we continue to add headcount.

We see these changes leading to better customer experiences while capturing efficiencies in the process and have a number of additional areas around the business where we believe we can reinvent our operating model powered by AI, resulting in better customer experiences, faster decisions, reduced headcount by leveraging AI, and improved margin performance in the quarter. We were also able to be aggressive against our share buyback program, retiring 15.9 million shares of common stock at an average price of $9.22. I'm committed to driving durable positive revenue growth, faster AOI growth, and even faster free cash flow per share growth via opportunistic and price-sensitive buybacks. Before I turn the call over to Graham, we announced today that we are naming him Chief Financial Officer.

Graham first joined us as part of the Ranking acquisition in 2017 and has had a great track record over his eight plus years at ZoomInfo. He has done a fantastic job serving as our interim Chief Financial Officer, a period of time when we consistently delivered on expectations, redoubled our focus on profitable growth, and continued our shift upmarket. He has been a great partner to me and to the investor community, and I'm confident he is perfect for the job. It has been a highlight of my career to watch him grow into this role. With that, I'll turn the call over to our Chief Financial Officer, Graham O’Brien.

Graham O'Brien
CFO, ZoomInfo

Thanks, Henry. I appreciate the kind words. I am excited about the opportunity, and I am confident that we will continue to accelerate along this promising trajectory as we focus on customer value and expanding upmarket. My philosophy as CFO is that the ultimate arbiter of the value of a business to its owners is the long-term free cash flow per share it generates, and I will be dedicated to effectively delivering that. I am committed to earning and keeping investor trust and recognize that we must compete for shareholders and their capital through superlative operating and financial performance. We have a real opportunity to reaccelerate revenue growth while prioritizing profitability and growing free cash flow per share, and I am confident that the path we are on will create meaningful shareholder value.

Shifting to the results for the quarter, Q2 GAAP revenue was $307 million, and adjusted operating income was $105 million, a margin of 34%, both above the guidance ranges we provided year to date. Revenue is up 2%, and largely due to the downmarket sales seasonality of Q1, annual live sequential revenue growth was negative 0.8%. We delivered strong results in the quarter, and as a result, we are raising our expectations for the full year. We are ahead of schedule in our shift upmarket, and we are increasingly confident in the trajectory of the company and our path to consistently delivering rule of 40 results. Coupled with attractive dilution rates and declining stock-based compensation expenses, we are now guiding to positive revenue growth for the full year. 2025 Copilot had another strong quarter, and operations continued to grow greater than 20% year-over-year.

Upmarket is now 72% of the business, and upmarket growth is accelerating, growing 4% year-over-year. The downmarket business is now down to 28% of total ACV and contributes even less of total adjusted operating income. Downmarket declined 11% year- over-year in the quarter, and we remain confident that it will be a smaller and healthier version of itself over the long run. Our overall net revenue retention improved in the quarter to 89%, and upmarket retention is at its highest level in years. The growth in our $100,000 and million dollar customer cohorts was better than expected in Q2. Q2 is still a relatively noisy year-over-year comparison period, and as we transition into the second half of the year, the year-over-year comparisons will become much cleaner.

As we look to the back half of the year, we anticipate getting more insight that will help us better understand renewal trends. We for early tranches of Copilot customers as well as customers that transacted to the new business risk model last year. While still very early, the results to date have been promising and give us incremental confidence in our longer term growth algorithm. As more of the business comes from larger upmarket customers, we see continued opportunities for higher levels of profitability. We are confident in our ability to deliver improving levels of profitability with improving revenue growth with margin expansion materializing over time and not always in a linear manner to upmarket mix shift. Turning to cash, operating cash flow was $109 million in Q2 and unlevered free cash flow for the quarter was $100 million, a margin of 33%.

In Q2, the company repurchased 15.9 million shares of common stock at an average price of $9.22 for an aggregate $146 million. With the favorable market conditions, we accessed our revolving credit facility to meaningfully accelerate share repurchases during the quarter. Since inception, we have allocated more than $1 billion to share repurchases, retiring approximately 95 million shares while maintaining comfortable leverage ratios. We expect to continue to primarily use the cash flow we generate to retire shares of ZoomInfo, as we believe that will generate the best possible long term return for shareholders. We ended the quarter with $177 million in cash, cash equivalents and investments and we carried $1.3 billion in gross debt.

As a result, our net leverage ratio is 2.5x trailing twelve months adjusted EBITDA and 2.3x trailing twelve months cash EBITDA, which is defined as consolidated EBITDA in our credit agreements with respect to liabilities and future performance obligations. Unearned revenue at the end of the quarter was $473 million and remaining performance obligations or RPO were $1.15 billion, of which $842 million are expected to be recognized in the next 12 months. Turning to guidance for Q3, we expect GAAP revenue in the range of $302 million-$305 million. We expect adjusted operating income in the range of $110 million-$113 million and non-GAAP net income in the range of $0.24-$0.26 per share. We are raising our guidance for the year and we now expect to deliver positive revenue growth for 2025.

For the full year 2025, we now expect GAAP revenue in the range of $1.215 billion-$1.225 billion, representing positive 0.5% annual growth at the midpoint of guidance. Adjusted operating income in the range of $433 million-$437 million, representing a 36% margin. At the midpoint of guidance, we expect non-GAAP net income in the range of $0.99-$1.01 per share, based on 346 million weighted average diluted shares outstanding. We expect unlevered free cash flow in the range of $422 million-$442 million. Now I will turn it over to the operator to open the call for questions.

Analyst Q&A

Brad Zelnick — Managing Director, Deutsche Bank
Excellent. Thanks so much for taking the questions. And congrats all around, especially to Graham and ZoomInfo on his appointment becoming official. Guys, I wanted to ask about the largest deal in history that you called out, which seems to be really strong validation of everything you've been telling us about the upmarket opportunity. What more is there to say about what actually drove it? At a time where, you know, we hear everybody's becoming more efficient, to see this kind of expansion is amazing. Just really quick, Graham, one for you, especially on your appointment as CFO, I don't want to leave you out. How should we think about the 6% RIF and its impact to next year? Thanks so much, guys.
Henry Schuck — CEO and Founder, ZoomInfo
Great. Thanks, Brad. The large deal that we talked about, it's a really nice win. It standardizes ZoomInfo as the enterprise foundation and sales intelligence platform at one of the world's most sophisticated Go-To-Market organizations. That company is retiring a number of legacy tools. We're embedding Copilot into a new CRM, and we're aligning sales, marketing, operations, and AI on a single Go-To-Market system that's powered by us. We're really today at the center of a few key strategic priorities for any forward-thinking company. Every company wants to consolidate data into a single source of truth and then enable real-time activation across their Go-To-Market teams. They want their sellers and their marketers to move with AI-driven insights and workflows, and they want to be able to drive better segmentation, better personalization, and better forecasting at enterprise scale. They're looking to us to be able to deliver that.
We're really proud of the new solutions that we've brought to market that enable us to be a key strategic partner in these large organizations. We're excited that this is a great large first step into telling the customer base that we can be that kind of enterprise upmarket partner.
Graham O'Brien — CFO, ZoomInfo
I can comment on the 6% reduction in force in June. I view this as a proactive measure as we continue to find pockets in the business where we can be more efficient. I would think about this as a step in our progression towards delivering meaningfully better margins in 2026.
Brad Zelnick — Managing Director, Deutsche Bank
Thanks so much for taking the questions, guys.
Mark Murphy — Executive Director, JPMorgan
Thank you very much. Graham, I will add my congrats on the news and very well deserved. I wanted to ask about Q2 in the month of June, which are big upmarket periods for you. Can you comment at all on the exit velocity there? Just in terms of close rates, also, how you think about pipeline build heading into the second half, and also within it, if you drill into the software vertical, is there any reason to think that that's turning the corner and maybe that that can, you know, become additive to your growth profile going forward rather than impairing it in the second half?
Graham O'Brien — CFO, ZoomInfo
Yeah, I think we can. We feel really good about the pipeline we have heading into the back half of the year. Q2 and Q4 are upmarket weighted quarters, and Q2, you know, in our view, certainly didn't disappoint. We feel good, really good about the upmarket pipeline in Q4. As we mentioned earlier in the call, we are starting to see early signs of better renewal outcomes upmarket and downmarket as we get into Q3. That's what makes us feel positive about the back half of the year. On the software vertical, Q2 was our fifth sequential quarter in a row where we saw improving net revenue retention in the software vertical. I can safely say that in Q2, software returned to being a contributor of growth to the business for the first time in a long time.
Mark Murphy — Executive Director, JPMorgan
Great to hear. Thank you very much.
Elizabeth Porter — Executive Director of Equity Research, Morgan Stanley
Great, thank you so much. I'll add my congratulations, Graham. My question on a recent CIO survey, we actually saw that sales was a top area where the adoption of AI was having an overall improvement in the cost base of the business unit. I just wanted to delve a little deeper on the conversations you're uncovering as it relates to that greater efficiency and if that is driven more on the lower headcount side, is there any sort of framework or view on how much savings that customers you think can ultimately be captured by ZoomInfo? Thank you.
Henry Schuck — CEO and Founder, ZoomInfo
Elizabeth, I think when we're talking to our customers, they are obviously leaned in on trying to find opportunities to drive efficiencies in their Go-To-Market organizations leveraging AI, but they actually lack first the data foundation to be able to do that. Data from go-to-market tools and conversations with customers lives in a number of different areas. Some of it's in Snowflake, some of it's in CRM, some of it is in your conversation intelligence vendor. There is this huge universe of third-party data that exists about your prospective customers or your existing customers that doesn't live in any of your first-party systems. When we're talking to our customers, particularly go-to-market operators, what they're telling us is yes, there's a lot we want to do, but we have no centralized way to get the data together.
We have a lot of creative ideas on the ways that we want to work with AI, but we can't execute on those ideas because we have to stand in line in a long IT queue to bring the data together, to pull it together for us to have a view of our customer base. What we've done with Go-To-Market Studio is first get that data foundation right. You're actually seeing that same desire to cleanse and enrich and have a strong data foundation show up in our growth numbers for our operations solutions, which are up 20% year-over-year, where customers are now more than ever leaning into us and saying, hey, I have some first-party data, but I also need to marry that to third-party data in order to be able to drive any of the AI initiatives internally at my company.
We are seeing customers lean in there. They're looking for the right data foundation and then the right partner from a data and insights perspective. We're building them workflow integration so that it's not just that data, but it's embedded inside of their workflow so they can take advantage of that data, take advantage of that insight. We're seeing really strong results from being able to do that, particularly in the upmarket.
Kash Rangan — Managing Director, Goldman Sachs
Hey, thank you very much. Congrats to Graham. We could see this coming when we hosted you guys. I told you, Henry, that Graham was doing a great job. Nice to see the promotion. For you, Henry, as you take a step back, look at the past three years of this gut-wrenching downturn we've all lived through. I guess as analysts, we learn from our mistakes and things that don't work more than things that work. As you look at your business, what are the things that you've learned from the past three years that you will put to work in the future and that arms you better to make better decisions on the business tiered forward that you couldn't know three years ago? Also, with respect to AI, it feels like the frontier models are truly magical, but everybody has access to these frontier models, everybody has the data.
It feels like the software community might have overestimated how much can charge for these AI products. You start to see some customer pushback, not on the value, not on what it does, but how much they are willing to pay for it. What is going to be enduring with the Go-To-Market AI solutions long term that you think you can be part of the permanent stack of AI solutions in the future? Thank you so much.
Henry Schuck — CEO and Founder, ZoomInfo
Great. Thank you. Kash. I'll try to hit all of these here. Look, I think from a learning perspective, you've heard us talk about this over the last year, but two things that really matter are the way we think about our customer base and the makeup of that customer base as well as product innovation. I think if I were around the clock three years, we weren't spending that much time thinking about where the next best customer should come from. For us, we were generating demand, we were closing that demand quickly, but a lot of that demand was coming in the far reaches of the downmarket. Those customers have the lowest lifetime value. As customers of ZoomInfo, they churn at the highest rates, they grow at the lowest rates.
When we took a look at the business and thought about what would drive durable growth for us for a decade to come, one of the big realizations was that in the upmarket, we have really sticky customers. We have great product market fit. Those customers are vastly more profitable for us than their downmarket counterparts. They grow faster, they have higher net retention. I would tell you the second thing is around product innovation and getting close to our customers. What we've been able to do over the last two years is really drive an innovation first product roadmap. We've rebuilt our product teams, we've rebuilt our engineering team. We're closer to the customer and understand what they really want, what they want to invest in, what they care about. We're building better software than we ever have before.
We leaned way in on leveraging AI to drive efficiencies in that organization and deliver more product, more software at a higher velocity than we ever had before. Our customers are getting better product from us. We're aligned to the right customer segments that drive long term durable growth. The third thing I would tell you is that our data advantage is way bigger than we ever imagined. We've invested even more behind our data advantage to make sure that our customers are getting the best third party data from us. When you think about your comments around the foundational models, yes, they've eaten up a lot of the publicly available information that exists or all of the publicly available information that exists.
We have a unique data asset that doesn't exist inside of the foundational models that is critical for customers to use to get in front of the right customers at the right time. It's not available in a foundational model. It's content context specific. Our customers are leveraging that to get ahead of their competition and have value beyond what they would get out of a ChatGPT wrapper.
Kash Rangan — Managing Director, Goldman Sachs
Like your answers. Thank you so much, Henry.
Koji Ikeda — Director of Enterprise Software Equity Research, Bank of America
Yeah. Hey guys, thanks so much for taking the questions, Henry and Graham, and I too will add my congrats to Graham on the CFO role. Well deserved there, Graham. Okay, I wanted to ask a question. Maybe this is geared towards Graham a little bit more forward looking here. I look at Bloomberg and the street growth estimates for 2026 and it's roughly close to 3%. I do appreciate the guide up. For the second half of this year. It does imply an exit growth rate of about -1.6% for that fourth quarter. I do understand there's a lot of nuances in the model here, but as the model begins to normalize in the second half. How do? We think about that exit rate mismatch to where the street's at currently for 2026. Is there anything that we should really be focusing on here?
Graham O'Brien — CFO, ZoomInfo
Yeah. Thanks, Koji. I'll start with the implied Q4 revenue figure that you're pointing out. I'll just say, you know, with this raise to guidance out of this quarter, my philosophy hasn't changed. What's driving the raise is performance of the business. You could look at the guidance philosophy as consistent. That kind of helps with some context around the implied Q4 number. You know, kind of more pointedly on 2026, look, we feel great about our progress in 2024, 2025 so far, but we still need to deliver Q3 and Q4. We feel great about doing that. Our success in doing so will really impact 2026 more than anything. We'll start talking about 2026 when we get closer to it. Thank you.
J. Parker Lane — Managing Director of Equity Research, Stifel
Hey guys, good afternoon and thanks for taking the question. Graham, I think it's been about a year since you installed the business risk model, PLG and self serve motion on the downmarket piece of the business. I was just wondering if you could comment on how that's improved the margins of that segment. As you march towards stabilization of that downmarket, how much of an opportunity is there to drive some additional leverage in that piece in particular?
Graham O'Brien — CFO, ZoomInfo
Yeah, you know, we continue to ship resources out of downmarket to drive upmarket growth. The downmarket result in Q2 was in line with our expectations. As a reminder, the upmarket business has significantly higher margins than the downmarket business. Our initial guidance model allowed for a pretty significant degradation in downmarket growth.
With our updated guidance update this quarter, we're now expecting, we're looking forward to a stabilization in the rate of the decline of the downmarket business in the back half of the year. We're seeing good renewal outcomes from customers who have gone through the business risk model. We didn't actually optimize that new business risk model until Q3 last year, which is when we also restructured our packaging and pricing downmarket and segmented our new business account executives. We have a little further to go to lap all of those operational changes, but we still feel as good as ever about the resource shift and the revenue shift upmarket and the opportunity for improving margins that will deliver.
J. Parker Lane — Managing Director of Equity Research, Stifel
Appreciate the feedback. Thank you.
Michael Turrin — Analyst, Wells Fargo
Hey, great. Thanks very much. Appreciate you taking the questions. Graham, just on the segmentation commentary, did you say upmarket 4% growth and downmarket down 11%? I'm just, we're working on the fly, but hoping you could help bridge how that translates to the 5% growth reported for the quarter. As a second part, you touched on it a bit, but with the revenue increase running a bit ahead of the updates to the bottom line, are there certain areas of the business you're planning to invest back into a bit more, given the upmarket motion you're seeing? Thanks.
Graham O'Brien — CFO, ZoomInfo
Yeah, sure. Yes, it was 4% upmarket growth Q2 year-over-year and -11% downmarket. The 5% revenue growth in Q2, bit of a noisy comparison there. We had some change in estimates in Q2 last year. That's kind of the bridging item to get to that plus five year-over-year. On the margins, as we move upmarket, as we reaccelerate revenue, we do not view margin expansion and accelerating revenue growth as conflicting. If we do the math here, the upmarket business has significantly higher margins than our downmarket business by several thousand basis points.
That implies that around 80% or more of our adjusted operating income can be attributed to the upmarket business. That's why we continue to feel so confident in improving margins as we return to growth. That margin expansion won't be perfectly linear to upmarket shift, but we do have visibility to that as we exit 2025 and into 2026. Our headcount is significantly lower than it was at the beginning of the year. It's essentially at levels where it was several years ago. We also have some fixed costs that came on in 2025 that should flatten out in 2026, and we should get some operating leverage related to those as well.
Alex Zukin — Analyst, Wolfe Research
Hey guys, thanks for taking the question. Graham, again, a huge congrats, I think from everybody in the community on the promotion, maybe on NRR. Again, you guys have mentioned this a few times. The improvement that you've seen over the past few quarters has been pretty substantial, I guess. What gives you the confidence that that can continue? Is there a way to think about the pacing of that improvement as we get through the rest of the year? On profitability, we hear you on the reinvestment makes sense given the accelerating upmarket activity. You talk about it, operating margin leverage not being in conflict with that. Maybe help give us a little bit of a flavor of that, because the full year raise on operating income a little bit less obviously than the pass through on the top line. How should we think about that trending? Over the course of the next year?
Graham O'Brien — CFO, ZoomInfo
Yeah, thanks Alex. I'll start on the retention side. 89% in Q2, up 2 points sequentially, up 4 points from 3/4 ago. We're still really focused on getting retention back into the 90s. You know, we have the upmarket business where retention is improving. Within that segment, the upmarket business is also becoming more and more of a mix of the business. You almost get kind of that inorganic revenue or retention benefit from that. We also have a lot of opportunities within our current customers from a Persona expansion perspective. Copilot, Go-To-Market Studio, that's going to allow us to sell to teams and seats in the existing customer base that we haven't previously sold to before.
With that mostly upmarket retention opportunity, stabilization downmarket, that 2 point retention improvement in Q2, again, that's before closing the largest TCV deal in our history in Q3. We feel like we continue to have increasing momentum on this path back to 90% and above 90%. On the margins, I think it's, I wouldn't really call it reinvestment. I think this is mostly timing, the margin benefit from some of the costs that come out from the points of mix shift of market that we're getting from a revenue perspective almost every quarter. It doesn't immediately fall down to adjusted operating income. There are step functions of improvement here and we view this largely as a kind of a timing progression rather than a reinvestment.
With kind of our resourcing plans, with some of the costs that should level out as we get into 2026, we see good opportunity for margin improvement that kind of comes along with that upmarket shift as we accelerate revenue growth.
Alex Zukin — Analyst, Wolfe Research
Perfect. Thank you, guys.
Raimo Lenschow — Managing Director, Barclays
Thanks, Henry. On for you on Copilot. Obviously in the industry there's a lot of AI noise. A lot of people are trying to come up with their own AI agent, Copilot type offerings. What are you seeing in terms of your Copilot offering perception in the market? How does it stack up with the other guys? Can you speak to that a little bit more? Graham, congrats for me as well.
Henry Schuck — CEO and Founder, ZoomInfo
Thank you for the question. Actually, last quarter went through number of our customers on Copilot, tested this question with them directly wanting to understand where they saw advantages of Copilot, if they were seeing anything else in the market that rivaled it. Those meetings came out incredibly positive. We are ahead on the innovation curve from a product perspective. We were the first ones to really get out there and go to market and offer a Copilot product. We've since significantly expanded that product, and later this year we're going to be releasing a really big product release around Copilot. We're calling it Copilot 2.0 internally at ZoomInfo. It'll have significantly enhanced functionality, new agents that go to market organizations.
Can leverage, can use for research. Prospecting and account planning and the creation of PDFs for their customers. We’re really excited about the fact that we got out, we got ahead, and now we have an opportunity to continue to expand the lead that we have with Copilot.
Jackson Ader — Managing Director, KeyBank
Great. Good evening guys. Thanks for taking the questions. My questions are both on that large deal, the largest TCV deal. I guess number one, how can you characterize maybe the ACV of that deal. Compared to the prior contract, and then.
The other follow up? Henry, you kind of hinted that this might be like this deal might be a signal to other potential upmarket customers. I'm curious whether you have any particular industries or other companies that have a similar look and feel that you can just kind of line up and then take this reference customer and go knock those down. Thank you.
Graham O'Brien — CFO, ZoomInfo
Yeah, I can cover the first part. You know, the ACV of that deal after the deal was done is just below eight figures, and that represented significant growth off of the prior ACV. You could think of significant growth as millions of dollars.
Henry Schuck — CEO and Founder, ZoomInfo
Yes, I think that is exactly what we expect to be able to do. There are dozens of customers who look like this customer within our account base who are already doing some business with us that we really have an opportunity to go in and show them how they can standardize on ZoomInfo from a data insights and AI agents perspective as they modernize their go-to-market organizations. I think the trend that we're seeing is our customers are leaning in more with us today than maybe they ever have. You can see that in the three customers I talked about. All of them doubled their spend with ZoomInfo year-over-year.
We see a lot of opportunity to continue to do that both in big monumental ways like we did with this customer, and also in blocking and tackling and hitting doubles along the way where we can grow a customer from $250,000 to $500,000 or a $500,000 customer to a $1 million customer. We have a tremendous customer base in the upmarket where we're now executing against.
Taylor McGinnis — Analyst, UBS
Yeah, and congrats Graham and thank you guys for taking my question. Graham, for you, you made comments earlier that upmarket retention has been the highest in years. What does NRR of the upmarket business look like today? As we think about the path to get back to the 90s and higher, could you just provide a bit more color on what the guide assumes and any early thoughts as we think about 2026?
Graham O'Brien — CFO, ZoomInfo
Yeah, thanks Taylor. I think previously I had said that upmarket retention was in the mid-90%. We're above that now on a trailing look back, the high 90%, and I think if you look at it from an in-period activity perspective, it's above that. We are executing and delivering significant improvement across 72% of our business with our largest customers. As it relates to the guidance, the guidance for the upmarket business is that we get to mid single-digit growth in 2025. We're really focused on getting to the top end of that range, if not above that range. I think with retention where it is right now at upmarket, we would have an opportunity to exceed that assumption. As you start to think about 2026, I mentioned it earlier, it's too early for us to talk about the specifics there. We've got a really big opportunity in Q3 and Q4 to continue this momentum, and then we'll be able to start talking about 2026.
Tyler Radke — Analyst, Citi
Yeah, thank you very much for taking my questions. Graham, congrats again from me in terms of the couple questions just on kind of the emerging parts of the business. Copilot, encouraging to hear the continued momentum there. I'm curious, as you start to approach some of the Copilot renewals, which I think will be in the back half of this year, would you expect those contracts to grow faster than the initial point of sale? Obviously, customers have been using Copilot in those situations for over a year. Do you think that could be a catalyst to reaccelerate NRR for folks that are using Copilot? Secondly, just on the operations hub, I think you said growth there was above 20%. Did that accelerate versus last quarter or was that pretty consistent versus last quarter? Thank you.
Graham O'Brien — CFO, ZoomInfo
Yeah, to answer the question on the Copilot part of it, when we rolled out Copilot in May of last year and in Q2 of last year, the initial transactions, they are either new business transactions or they're migrations from existing customers onto Copilot. We were very successful, I think, in getting uplifts on those transactions as we migrated the existing customer base onto Copilot. What we've always said is that Copilot and our other products are being designed and being built for customer success and to optimize for retention. How does that customer renew one year, in two years, in three years? In everything we're building, the approach we're taking to pricing is meant to optimize for adoption and stickiness.
Now we're basically approaching this transition where we're going to start having material cohorts of Copilot customers that have been using Copilot for six months or a year start to renew. We got an early view on that at the end of Q2 for some of those initial cohorts, and the early signs were good. We were getting meaningfully better renewal outcomes. Again, that's a small population, but getting meaningfully better renewal outcomes across a product that is a significant part of our business now certainly could be an incremental tailwind to retention, even more so than, or I guess in line with, the tailwind we got from the initial migration. On operations, it's still 20%+ growth year-over-year. We had a really strong Q2 and we have not seen signs of deceleration in that number.
Brian Peterson — Financial Advisor, Raymond James
Thanks, gentlemen, and congrats, Graham, on the new role. I wanted to hit on net new. I'm curious how that's gone this year versus your expectations. Henry, as we think about these upmarket customers, looking at how they're treating data, do you think they'll make more standardized investments, that is, bigger deal sizes versus what you've seen historically? Maybe where they're taking a little bit smaller bites of the apple. Thanks, guys.
Graham O'Brien — CFO, ZoomInfo
I'll touch on the net new business first of all. Look at this upmarket versus downmarket. Our upmarket customer acquisition from an ACV perspective continues to grow year-over-year, and then downmarket, we're basically a year into the new business risk model where we were qualifying customers with more rigor, and by doing that, we are even disqualifying a not insignificant amount of new business ACV that we would have historically sold. As we start to fully get through that complete lap in Q3, I think we're going to be in a place where we are back to a steady state new business acquisition engine, downmarket.
Henry Schuck — CEO and Founder, ZoomInfo
On the data deals, Brian, I think there are probably two things to think about here. One is what we're seeing from our customers is that the rhythm to buy data, to power their internal systems, to power their AI initiatives, to cleanse and enrich their CRM systems is much different than I've ever seen it before. What we're seeing from our customers is a recognition of the requirements to buy data, to marry with their often out, almost always out of date, inaccurate, incomplete data that they have internally that they're trying to use to drive an AI initiative. We're seeing bigger, bigger deals and more customers prepared to transact around leveraging data to cleanse, enrich, and enhance their own internal first party data in order to drive AI efficiencies in their business. That is a new motion.
We spent 20 years telling customers how important it was to make sure that the data in their CRM systems and their data warehouses were accurate and up to date and enriched and had signals associated with it. That felt like a second or third order problem for many years. This is a first order problem in enterprises today, far different than it's been in years past. That is leading to larger deals. The second thing that I would point you to is in the strategic enterprise, the highest end of the upmarket, they are sophisticated enough and know how to buy data. They buy data, they plug it into a workflow that goes into their CRM or their data warehouse. They're sophisticated operators when it comes to leverage.
They have data science teams and data engineering teams and they can buy raw data and plug it into their systems and their workflows. The minute you move out of that highest end of the strategic enterprise, you get into companies that have far less sophistication. They're not used to buying data, they don't buy data files, they don't have data engineering teams or data science teams to help them with anything. We would show up and not have a great solution that articulates the value of that data inside of their enterprises. With Go-To-Market Studio, that gives us the software layer over what has historically been data as a service files or integrations into data warehouses or CRM systems through APIs.
We now have a software interface that gives us the opportunity to go articulate the solution to revenue operations and sales operations and go-to-market leaders all across the upmarket, not just in the super strategic enterprise segment of our business. We're really excited about that opportunity to bring that solution, which is again our fastest growing solution in our portfolio, to a much broader set of customers with Go-To-Market Studio.
Brian Peterson — Financial Advisor, Raymond James
Thanks, Henry.
Austin Cole — Software Equity Research Associate, Citizens
Great. Thanks for taking the question. This is Austin Cole on for Pat. Henry, a question for you. At this point, anyone who is visiting San Francisco is going to see billboards for AI SDRs, and there's a bunch of small players in that space popping up. I'm just wondering, is that something that's coming up in any of your conversations with customers? Do you kind of buy into that vision or why not? How does maybe an AI SBR stack up against Copilot from a product perspective?
Henry Schuck — CEO and Founder, ZoomInfo
Thanks. Yep, lot of billboard. Not a lot of productivity or revenue being generated for companies that have invested behind AI SDRs. I think a lot of pilots that don't turn into longer term contracts. What we're hearing from our customers, again, is that what they've seen across AI SDRs are a flash in the pan. There are a number of regulatory hurdles to using an AI SDR to go outbound. That makes it in many cases not a good use of technology. I think there are probably opportunities from an inbound perspective when someone fills out an inbound form to be able to correspond with that person using an AI SDR. I think the promise of the AI SDR has been largely overblown. The other thing that we're seeing from our Copilot solution is that it's not just SDRs who are leveraging that.
We're seeing account executives, account managers, customer success managers who are leveraging Copilot to understand their customers better, to plan for meetings more thoroughly, to know what insights to bring to their customers, to know which customers to focus on because of signals that we're layering in and delivering to them. While SDRs are and will continue to be a meaningful part of our user base, we are seeing real expansion opportunity outside of that persona as well.
Austin Cole — Software Equity Research Associate, Citizens
Great, thanks and congrats to Graham.
Surinder Thind — Analyst, Jefferies
Thank you, Henry. Just as we look at some of the wins that you've had, especially the bigger ones, it seems like there's a theme of consolidation there where you're displacing some competitors. Given the current environment, it seems like there's enough data points for clients to make bigger decisions at this point. There's enough comfort with the technology and the track records of products. Can you talk a little bit about that theme? If consolidation is where we think the next year or two is going to be in terms of growth, maybe we get the growth in headcount within sales after that period, how should we maybe think about those dynamics?
Henry Schuck — CEO and Founder, ZoomInfo
Yep. I think the first thing I would tell you is we are seeing increased opportunities for consolidation across the Go-To-Market tech stack. I would tell you, two years ago we were not in a position to take advantage or be a beneficiary of that consolidation push. Today our product innovation has put us in a position to be a beneficiary there. We are seeing customers now consolidate on ZoomInfo. Their sales teams are on it. They want their marketing teams on it. They want their rev ops teams on ZoomInfo as well. We have a real opportunity and have seen it across our customer base. We are winning on consolidation across the Go-To-Market organization. I don't know if that's going to be the biggest driver of growth in the next 12 months.
I think there are big drivers of growth in DAS, Go-To-Market Studio, and continuing expansion of Copilot. I do think it will be a contributor to growth as we go forward.
Surinder Thind — Analyst, Jefferies
Thank you.
Henry Schuck — CEO and Founder, ZoomInfo
Great. Thank you, everybody, for joining us on this journey. We're confident about the balance of the year as we continue to move the business upmarket. We're releasing some really exciting new solutions to our customer base over the back half of the year and look forward to briefing you on them. Thank you.
Source: ZoomInfo Technologies Inc. earnings call transcript (2025-08-04). Management commentary and analyst Q&A are reproduced as delivered; speaker roles as stated on the call.

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