I think we'll kick things off. I'm David Hynes. I'm Canaccord's Senior Software Analyst. I focus on the applications sleeve of coverage in the universe. This is the 43rd year that we've done this conference. We wouldn't be able to do it with the, without the support of the companies that come and bring the content, the investors that ask the good questions, and host all the meetings for us. Thank you to everyone for being here, especially Cameron. Cameron Heiser is the CFO of ZoomInfo. We're gonna do this as a fireside chat. I got a, a bunch of questions that'll probably get us more than a half hour. If there are questions from folks in the audience, pop your hand up, we can work them into the conversation. I will repeat them for the, the webcast. Grab my attention. Get right into it. Sure. Cameron, I'm gonna assume everyone in the room knows ZoomInfo by now. We'll spare you- Sure. kind of the business intro. Talk about Q2, kind of what you saw in the quarter, how you feel coming out of the quarter, and kind of what's top of mind as you've been talking to investors since. Certainly, as we went through Q2, we did start to see some renewal characteristics that changed our view in the world. You know, first and foremost, we're just starting to lap those renewals that we saw take incremental scrutiny last year and not renew as well as we wanted to. That is, you know, becomes a much bigger cohort as we particularly as we get into September, and then even bigger still in Q4. What's happening is that we are seeing that those renewals that were, you know, painful or took more scrutiny last year, are performing worse, you know, this year than they did last year. You know, as a result, when we think about that dynamic moving through the remainder of the year, I think we need to prepare ourselves that this coming renewal cycle will be potentially a tough one, particularly as, you know, a big chunk of our business is still in software. Selling to software companies that have reduced their, you know, real focus on growing new business, which is the kind of most obvious use case for ZoomInfo. You know, we've also continued to see a fair amount of our business in small customers, and particularly in the, you know, one and two-year cohorts. Those customers that signed up, you know, at the end of 2020 through 2021 and beginning of 2022, those customers are performing, you know, worse than they, than kind of earlier first and second-year cohorts. This renewal cycle, as we get through the end of this year and into Q1, I think, you know, certainly has the potential to, to be tough. You know, as we get through that, and in my mind, you know, peak negativity, if we wanna think about that, probably occurred in Q1 of this year, in 2023, you know, call it February, March. As we get to the point where then we're lapping, people who have renewed kind of post that peak negativity, we do see the opportunity to, you know, re-accelerate, the growth from the, you know, levels that we're expecting through the end of the year. Yeah. I wanna make sure I understand the comment around kind of this second time through renewal cycle- Mm-hmm. appropriately. You said it's getting worse than the first time we saw. Yeah. Does that mean. For those, for those customers that have, that renewed less than we would have expected. Yeah were down last year. They down-sold a little bit the first time around. Now they're down-selling more than they did the first time- Yes from the second time? Yep. Okay. This is, we're kind of one quarter into this dynamic, would you say? Yeah. I I mean... Yeah, at the end of June, even less than one quarter, so not a huge N. you know, as we look at those customers, that, that cohort gets bigger and bigger as we move through Q3 and Q4. you know, realistically, I think one of the ways that I think about that is those are, you know, many of our more volatile customers. Those were the customers that were, you know, really quick to kind of change their buying patterns in 2022. you know, as we get through the year, there are more and more of those that, you know, are reevaluating their operating models. They're really looking for where they can, you know, become more profitable, particularly for software companies. frankly, like, not all of them are to a sustainable operating model. You know, if they were losing, I don't know, they had - 10% margins in, you know, 2022, they're looking to get to, you know, break even in 2023, that's still not what most investors are expecting. So particularly for those that are focusing on new business, is a place where they can take out costs, you know, that is our most obvious use case and a place where we're, you know, where we're, you know, being deprecated at some extent at a number of customers. You know, at some point, I do believe that, you know, software will become a, a, you know, at least a neutral to positive driver of growth within the economy. So many of those customers eventually do need to start thinking about where they're going to bring on new customers and how they're gonna do that. Certainly, you know, our tool is a very obvious one to help them do that more efficiently and effectively. Yeah. Yeah, I think, I think you're right about the longer-term positioning of- Sure track and software. I mean, it's, it's kind of a no-brainer. Starting in kind of Q3 of last year to now, we've had kind of a series of cascading estimate revisions, right? It's, it's taken a while to get the numbers to where they are today. What leaves you confident that estimates are set in the right spot now, and kind of speak to the visibility level you have there? Yeah. Certainly, you know, we believe that we're more conservative in terms of our view of the world. If I think about, you know, at the beginning of this year, we had, you know, articulated our guidance and defined our guidance based on, you know, Q1 being a little bit worse than Q4, and then being relatively stable throughout the year. You know, at this point, we're assuming that the world and, you know, in effect, you know, the, how it impacts us, gets worse in Q3 and Q4, even worse than what we saw at the end of June. I think that, you know, our goal was really to, you know, set a baseline in terms of something that we can then build off of going forward, with a, you know, relatively negative set of assumptions that, yeah, a lot of things need to, to get worse in order for, you know, particularly the low end of the guidance to be met. Yeah. Okay. you've kind of quantified this software tech challenge segment of the business is 35% of, of ARR. Mm-hmm. When those customers are coming to you and, and having conversations around kind of renewing smaller down-selling, what are the levers you have? What are the plays you can, you can make with them to try and preserve contract value? Are they working, or is it just, "Hey, we need to get costs out of the model, so there's nothing ZoomInfo can do in those scenarios? Yeah. I mean, I think that, a bigger piece of, you know, many of, particularly the software customers, is that they are really focused on taking costs out of the model more than anything else. You know, for a lot of customers, when they're coming up for renewal, we do have plays where, you know, if they aren't utilizing all of the seats that they, you know, had, had contracted for, or aren't using all the data that, you know, they'd contracted for, that we'll identify those, you know, well ahead of the renewal, go in and offer to swap, you know, kind of unused seats or kind of data credits for, for other products or services that they would get value out of, whether that's adding intent capabilities or adding on, you know, Engage or Chorus or, you know, other integrations that they could use. I think for, for many customers that are in a, you know, stable spot in terms of how they're operating in that business, that historically has been a good motion for us. For customers that, you know, particularly if they've, I don't know, laid off 50% or more of their new sales, like, headcount and are, you know, really focusing on, you know, changing their operating model in terms of getting to a profit level, that offer often falls flat. Yeah. You know, they're, they're not looking at kind of driving more value out of the new sales part of their business. I think a refrain that we hear from a lot of our customers, and I think, you know, a lot of software analysts that I talk to, they hear this from a lot of public companies as well, is that: "You know, new business is tough right now. We're deprecating our focus on new business and focusing on, you know, retention, shifting resources to, you know, service our existing customers better. At some point, we'll rotate back to, you know, more of a growth-oriented model." I think for those customers that think of us as a, you know, more solidly new business, use case, you know, it's hard to convince someone to say: "Yeah, you should spend more- Yeah. For that, when you're taking out most of your new business headcount, when you're, you know, really not expecting new business to, you know, drive much of your growth in the short term. I think particularly in software, that's the, that's the challenge that we face. Yeah. The, the encouraging data point, and, and maybe that came out of the Q2 call is, is the non-tech piece of the business- Mm-hmm. -which is 65% of the mix, I think you said was growing 20%? Yeah. Plus. Well, well over 20%. Well over 20%. Yep. How do you feel about the durability of, of growth there? Yeah, certainly that is an area where, particularly in pockets, we see, you know, growth that's even more robust than that. I think that the, the biggest kind of piece of that is, A, many of those customers, you know, transportation and logistics is, I think, an example that Henry used in the call. You know, they run more stable businesses at the end of the day. They're not kind of focused on taking their margins from, I don't know, 15% to 40%, which would be an even bigger jump that... or is even less of a jump than someone going from -50%. Yeah ... 20% margins. Yeah, I don't think that they feel that pressure, either internally or from their investors or whatever else. You know, frankly, we're far less penetrated into many of those markets. You know, many of those brick-and-mortar industries that are still outselling to other, other businesses, you know, they've developed motions over decades. You know, if you take a freight forwarder, they may have, you know, started to develop their business in the, you know, 50s or 60s. They developed motions to go out and find companies to sell to, and, you know, they've obviously worked because those businesses are still around, and so forth. You know, as, as sometimes it's a generational shift, so the owner hands the business over to his kids, or they bring in new salespeople, or, you know, they start to see competitors, you know, grow in different ways. Those are opportunities where we can come in and, you know, change that inertia to a point where, you know, they'll look at the system, and they'll say, "Oh, I never knew something like this existed. This is really interesting for me to be able to supplement the motions that I use today." That growth continues there. We're really lightly penetrated into those sorts of markets, and there's a huge opportunity for us to continue to grow. Yeah. I, you know, I think our, our guidance is set to a point where, you know, we think everything's gonna get a lot harder, so our guidance doesn't necessarily contemplate that, you know, that would hang in at, at those levels. I think that there's a lot of opportunity for us to continue to grow, you know, in those other brick-and-mortar type industries. Yeah. Look, I don't think the macro headwinds are unique to ZoomInfo, right? We're so, you know, we had Outreach here presenting yesterday, and they didn't quantify but, you know, certainly qualified that they're seeing many of the same challenges... Mm-hmm. -that, that you are, particularly in the tech vertical. How do you think about kind of benchmarking ZoomInfo versus others in the industry? What gives you confidence that this isn't, you know, a share loss- Yeah ...scenario? Certainly in, in our industry, when I think you talk to other companies that are selling into front office capabilities, I kind of take out the system of record, you know, CRM systems, so the HubSpots and Salesforces of the world, you know, I don't think there's a CFO out there that says, "Oh, yeah, I can just take out Salesforce, and I don't, I don't need it anymore." You know, we do have that argument with a number of our customers, and I think we end up retaining those customers but at, you know, different levels. You look at other, call it, you know, advanced technology in the sales and marketing tech stack, and I actually think we're faring better than most. One of the most public examples would be LinkedIn. You know, LinkedIn basically has two businesses. They have their recruiting business, and then they have their marketing, services. Overall, they grew 5%, you know, year-over-year, and I think 7% on a constant currency basis. You know, they talked about how that was all driven by their, recruiting part and that the marketing services part of their business was actually down year-over-year. You look at other public companies in our space, they're also, you know, down or flat, you know, year to year, if you're just looking at that... You're just looking at that kind of sales and marketing tech kind of oriented space. I've heard that many of the public companies or many of the private companies are, you know, flattish. Mm-hmm ... if you look at it. You know, growing 16% year-over-year, while certainly below the, below the standards that we set for ourselves, and, you know, I think still actually, fairly robust compared to, you know, many other of the data points that you'll find for- Yeah ... you know, other companies in our space. And doing so massively profitably. Yeah. Well, that is, that is a big part of what we've always focused on, is certainly cash flow generation and profitability, and so, you know, doing it on a profitable basis, and frankly, doing it at a scale that none of the other, you know, companies in our space, with the exception of LinkedIn... Yeah ... have. You know, I think we're, we're still focused on doing better, but, you know, I wouldn't say that, if you look at, you know, the competitive set or, you know, the people that we compete with, you know, I think it's a tough world for everyone out there. Yeah. How much is price coming up in conversations? I mean, you know, I think of you guys, look, with the, the, the breadth, the accuracy, the intelligence, I mean, you, you are a premium price product. Yep ... in the space. Are customers opting for good enough at a cheaper price in this environment? Like, what is? We certainly don't- Is that- We don't see that in a material way. That's always been the case in some of the pressure that we felt at the low end of the market. I think we continue to see that there's this kind of merry-go-round of number two players that, you know, have kind of come through, and it is always a, we're gonna be 50% or 30% or, you know, whatever the price of, of ZoomInfo, and, yeah, it's not as good of a service, but it's good enough. I think we've frankly, in the low end of the market where we do see those players, we continue to see better win rates than we have historically. You know, they're a little better, which tells us that, you know, that dynamic is not changing in any way. Mm. You know, we are focused on continuing to offer, you know, value to customers, and, we've started to, you know, ramp up a PLG motion where perhaps we can, you know, be even more successful at that lower end of the market. We still don't see even middle market or large enterprises want to opt for something that is lower quality, that it doesn't have the same sort of privacy, kind of capabilities or protections, and, you know, doesn't have the same kind of integration and, you know, just breadth overall. You know, for those larger customers that do care about where the data came from, what sort of privacy protections do you have in place? How well can I integrate this in with, with my other systems and so forth? Frankly, they're scaling quality over a broader number of people, so... you know, a little bit of quality, you know, goes a long way if you're spreading it across hundreds or thousands of people. Yeah. A lot better quality just makes it a no-brainer. At the middle market, and in particular, at the enterprise, we continue to, to not see any of those lower-end competitors even really enter the conversation. Yeah. Okay. I kind of think of ZoomInfo as, you know, this data foundation or backbone that you've now kind of built or acquired software pillars on top of, right? Mm-hmm. With Engage and Chorus and the like. You know, platform consolidation is a big theme that we're hearing in the public markets today. I think ZoomInfo will stand to benefit from that over time. Maybe just talk about why having that data and intelligence, the sales workflow, the sales recorder intelligence piece of it, kind of all in a single platform, is better than going out and trying to kind of get best-of-breed point solutions from other vendors, right? I think there's a question of just, you know, as these other companies continue to scale, like, why, why will ZoomInfo win versus an Outreach or a Gong or whoever? You know, I think most software over time tends to consolidate across multiple niche spaces. I think you've seen that in a, in a number of other, call it, software verticals. You know, I think a big part of that is, A, you know, I don't think that most people want their users to be logging into 10 or 15 different systems. You tend to lose productivity by doing that. You tend to, you know, that swivel chair, you know, kind of doesn't get you as good of an outcome over time. You know, I think our real view is that we wanna deliver the best kind of quality experience for our users and ultimately help drive more effective and more efficient go-to-market motions. You know, I, I think that there are likely, and I think a lot of people say, "I'm going to have multiple platforms, but I don't necessarily need, like, point solutions for every task that a salesperson or a marketing person is undertaking." You know, our real goal is to ensure that, you know, as we're delivering more and more of these capabilities, that we're doing so in a way that, you know, really connects the systems so that you're able to run a single motion or a single play without having it drop between the cracks of different, different things. Yeah, A, we wanna deliver a better experience overall across the entire go-to-market motion for customers. Then, B, you know, I think most people, you know, look and, look at and analyze software companies, like, there are a lot of software companies where the majority of their operating costs, or at least the plurality of their operating costs, are sales and marketing. Which means if you're buying software, you're really paying for the salesperson just as much as you are for the software. So if I can deliver, you know, a broader set of capabilities with one salesperson versus you getting it from four different salespeople, not only can I give you that better experience where you're able to run your motion, you don't have as much integrations and other things between them, but I can do it at a lower cost... Mm-hmm ... you know, frankly, be more profitable as a result of it. Yeah. I think that combination of lower cost and better experience is a natural kind of place for people to end up landing, particularly as they start thinking about the, you know, accelerating their new business motions. I think when you're pulling back on that new business, you're not necessarily thinking about, well, how can I, you know, invest in this to make it better? Right. You're thinking about: Where can I just cut things? As we're thinking about, you know, that re-acceleration, I do feel that we have that opportunity to deliver a better experience for our customers and do so at a lower cost. You know, frankly, why is, why is ZoomInfo, like, the right kind of place for that? The one thing that I think we have that no one else has, is really high-quality data and insights into businesses, and all of these functionality, you know, run off a baseline of, you know, insights. If you're gonna take the insights anyways, you might as well, you know, have that integrated in with the rest of your, you know, functionality in a tighter and more cohesive way. Yeah, I think that's fair. Can I ask you the, the AI question? Sure. I'm sure you've answered it 100 times before. Sure. How, how are you thinking about kind of incorporating the advancements in AI into your platform? I mean, I know there's been an element of AI from the get-go in terms of how you manage your data and. Yep ... keep it clean. The, the advancements, how do they apply to your slice of the market? How are you thinking about monetizing them? Sure. you know, look, we've invested in AI and frankly, have patents going back to the early 2000s on, you know, how to leverage AI across large data sets to drive better quality and, you know, frankly, leverage the research motions that we have in order to continue to, you know, enhance a much larger database than you can just research. AI has been a core part of everything that we've done, you know, to date, in terms of generating really high-quality data and being able to provide that to our customers. The, you know, current advancements of AI with respect to large language models and is really a, an interesting addition to, you know, kind of already having high-quality data. I think there are a number of areas in the platform where we can use those large language models to, you know, effectively. speed the time to value for a user, whether that's natural language search to make our insights kind of easier to get to, to folks, whether it's, you know, summaries on transcripts that we're already generating, you know, whether it's, you know, the ability to create emails within, within Engage. You know, I think many of those kind of LLM-based things will probably be, you know, somewhat commoditized over time. Mm-hmm. What they are going to allow us to do is to increase the time to value on the core data and the, you know, high-quality data that's there, which ultimately, you know, is, in our mind, gonna help drive, you know, better engagement with our customers and, you know, frankly, higher retention as a result. You know, many of those things that we're rolling out, we're rolling into the higher tier aspects of, of our platform, which obviously drives some incremental costs. I think with respect to just incorporating LLM into our platform, it's more about improving the user experience. I actually think that, you know, that's probably not the biggest advantage that AI will have for ZoomInfo, though. Like, in reality, our incorporating those models will help improve the user experience, but ultimately, people are gonna try and, you know, automate that last mile of their go-to-market motions in an even a bigger way with other tools as well. Yeah. Those other tools, where they automate that last mile, it's become way more obvious that they need to, you know, really create a more solid foundation of the data that they're working with. I think you go to any, you know, C-level person, and you ask them, "Is the data in your CRM, like, good?" They're just gonna say, "No." Not even, like, really good, just good. They're gonna say, "No. You know, for years, we've let anyone put anything in there. There's never been any cleansing. We know that that data, you know, kind of erodes or atrophies. Like, every year, people move companies, they change positions, companies grow, they shrink, they acquire other companies. Like, we know that that data is not good." Then you say, "Okay, you wanna automate the last mile of reaching out to customers with AI, and you're gonna base that on a crumbling foundation... Yeah ... of atrophying data," like, immediately shines a light on, like, that problem. That's an area where we continue to see, you know, real demand from our customers to drive, you know, a better foundation of data, better insights, better quality, you know, the, you know, frankly, contact information and, you know, insights that are completely proprietary to ZoomInfo. Like, that's an area where by investing into AI to, you know, kind of get better outcomes, it's naturally gonna be a tailwind for us to provide better enrichment and foundational data capabilities for our customers. Yeah. Yeah, it's like ZoomInfo is an input in many ways to AI strategies, right? Yeah, absolutely. Yeah. You know, I think there are a lot of people, whether it's... You know, Accenture's talked about this, like, you know, Microsoft has talked about this, that AI is not just about having a model that can, like, write an email, but the data that goes into it is, you know, really important... Yeah ... to getting the best outcome and, frankly, doing that in a cheaper way. Yeah. You know, a kind of smaller data set of high-quality data is gonna get you a better outcome and a cheaper outcome than, you know, importing the world into an AI model. Yeah. All right, we are out of time. I didn't get through all my questions, but maybe just a parting thought for investors as we, as we get out of here. What's the message you want to leave folks with? I think the message that we're largely focused on is that, you know, we do anticipate that it'll be a tough kind of few quarters as we work through this renewal cycle, but there are a lot of opportunities to, you know, re-accelerate growth post that. I think there are a lot of exciting things, you know, in the business, whether we're looking at, you know, non-techie industries or million-dollar cohorts that we still continue to see, you know, solid growth and opportunity. Perfect. Cameron, thank you very much for being here. Absolutely. We appreciate it. Thank you.