Okay. Hello, everyone. Thanks so much for attending the event and this session. My name's Taylor McGinnis, and I'm on the software team here at UBS. With us, we have ZoomInfo's Cameron Hyzer, who's the CFO. Cameron, thanks for taking the time. Yeah, thanks for having us. Just to let you guys know, there's QR codes in front of you, so if you have a question, just scan the QR code, type it in, and we can get to them at the end. Okay, so let's dive in. Cameron, I think a good place to start would be. I think a lot of the investor debate is how much of, like, the growth decel that we've seen is cyclical, right? Mm-hmm. -versus evidence of maybe hurdles down the line, right? So I know you've been getting a lot of questions on, you know, increased core competition. Where can sales intelligence rebound to? So I guess, what are you seeing... Like, what are the underlying drivers that you're seeing in the business that would tell you, "Hey, a lot of this is just cyclical, and, you know, when things normalize, there could be a better path going forward? Yeah. So, you know, I think particularly with respect to how, you know, our customers are doing, we tend to break out, you know, churn and gross retention from the net upsell. And so what we've seen is that, you know, churn and, you know, gross retention have held in, you know, reasonably well. Churn's up a little bit from where it had been in 2021, but I think that's natural, just given the environment that we're in. In terms of the decel, which has largely been generated from net retention coming down significantly, we see that, most of that is the result of a much smaller net upsell. And so, you know, our customers are staying with us. They're continuing to use the platform, but particularly where they have, you know, fewer salespeople or, you know, are really focused on reducing costs, that's the area where, we see, you know, that, that reduction. Realistically, our expectations for net retention this year is that it will be, you know, below, below 90%. And when we go and talk to a bunch of other sales tech vendors out there, you know, many of them have seen net retention reductions of, you know, greater than 30%, which frankly, you know, we're gonna do better than that. Mm. So, you know, I do think that that does point to because our customers are continuing to use the platform, just at lower levels for fewer numbers of employees, and the fact that, you know, many of the other, you know, vendors in our space, obviously many of them are private, but they've seen even worse, you know, kind of net retention shifts than we have, makes us feel fairly confident that it is largely, you know, macroeconomic. And I think ultimately we've figured out that, or hindsight would tell us that we're probably, you know, higher beta to the economy than maybe we would have expected. Mm-hmm. You know, in hindsight, looking at we're really helping people, you know, solve for growth and solve for, you know, continuing to grow their companies. When that growth goes away, that tends to be one of the places that they invest less in. Hopefully, that means that we're also a higher beta, you know, the other way when eventually when the economy stabilizes or improves. Yeah. And to touch on, the software tech exposure versus the non-software tech exposure- Mm-hmm. Could you comment, I guess, what you're seeing in terms of the demand impact in those different verticals? And then, I don't know if there's a way or even just to give high-level, high-level qualitative commentary, but in terms of the difference that you're seeing in NRR with that more challenged cohort versus some of your other ones, just so as we can kind of picture a 4Q, bigger software bookings quarter, right? But as we get into next year, in terms of how we think about the tailwinds from some of these other industries, it might just help provide a little bit more visibility there. Yeah. So certainly, you know, historically, software actually had a higher net retention level than than other industries. And, you know, part of that was that they were customers for longer, and certainly, you know, the kind of longer we have customers, they tend to have higher net retention than earlier cohorts. But also because, you know, that was a, you know, growth area, and people were continuing to drive more and more acceleration into that. What we've seen over the last couple of years is that software has gone from being, you know, meaningfully higher in terms of net retention to meaningfully lower. So, you know, the rest of the industries, while they have been impacted and net retention is down a little, it's kinda inverted, where the net retention from other industries is held in better than what we've seen from software. And I think, a big part of that when we, you know, talk to customers and, you know, talk to folks is a lot of companies are seeing, you know, less growth and therefore, you know, leaning into it more. But software, in particular, is going through a dynamic where, you know, most companies are rethinking their operating model and no longer thinking that growth at all costs is, you know, a long-term strategy for running their company. So they're really focusing on improving their margins, and a big part of improving margins, particularly when, you know, growth has slowed for a lot of those companies, is cutting costs, and therefore, you know, that's where we're seeing the bulk of the downsell in our customers- Mm-hmm ... is, you know, taking out costs that they perhaps had over-purchased previously or had higher expectations in terms of seat growth. And so, you know, I think resetting our, particularly software and high-growth customer base, back to a level where there's a better foundation that we can grow those customers going forward is really what we're focused on. And, you know, I think I've talked about this before, but my view is that peak negativity with respect to particularly software companies, both layoffs and sales seats and, you know, other things was probably in the, you know, February or March timeframe of 2023. So really, we wanna get to the point where we're lapping that peak negativity. Mm-hmm. All the renewals that we're, you know, renewing now, obviously, were, you know, previously signed before that. You know, work out some of that, you know, excess capacity that those folks have, so then we can get to that, better foundation for growth going forward. Yeah. And on that point, I think we've seen a little bit of an uptick in layoffs, particularly in software and tech, of late. Mm-hmm. I guess when you look at your customer base, would love to, you know, hear what you're seeing. I know you talked about, like you just said, thinking that you're gonna get through that peak negativity at the end of 2Q. If some of the activity that we're seeing today, is there any, you know, risk to that in terms of the renewal cycle there? Yeah. I mean, certainly, the magnitude of layoffs, while you know, they are continuing, are much, you know, more managed than what you had seen kind of at the end of last year and the beginning of 2023. Mm-hmm. Certainly, our expectation is that the world gets, you know, a little tougher, you know, as we continue to go through the year. So I think we've baked in some of that into our, you know, expectations generally. But certainly, you know, ultimately, I do believe that people will get back to positioning more for growth in the future. I just don't know exactly when that's going to be. Yeah. Well, let's maybe then focus on some of, like, the longer term growth drivers. So you guys have recently made a big shift on, on the sales side, right? Mm-hmm. So moving Chris to focus more on international, and there were some other changes as well, too. So could you just maybe comment on, like, why those changes were made, one, and then what that means in terms of, you know, your guys', priorities, focus areas, and how we should think about that in terms of the model? Yeah. So the real focus of, you know, the organizational changes that we've made has been to flatten the organization. And Henry really wanted to get closer to the customer, to make sure that that feedback loop of how we're managing customer expectations, how we're driving value for the customer, and what we're doing to continue to drive that value, is something that he's a little bit more in the weeds on. Mm-hmm. So that was really the focus of the organizational change that we executed against at the beginning of the fourth quarter. You know, realistically, I think we've recognized that we wanna continue to be much more customer-centric in terms of the value that we're delivering to those customers as we move forward, as opposed to... You know, I think if you look back at 2021, we were much more sales-centric. You know, showing up and selling the next thing in every conversation that we had versus, you know, if you look at the motions that we're running today and how the sales folks are operating, it's much more about having a conversation about where we can drive the most value for the customer. You know, that doesn't always have to show up as an incremental sale. It can show up as, you know, an improved renewal or, ultimately, just better satisfaction for those customers. Mm-hmm ... so that as we move forward, we can continue to build upon that relationship and grow with those customers as they grow in the future. Yeah. And on the international opportunity, and in particular, 'cause I know that's always been a smaller portion- Mm-hmm ... up for revenue for you guys. So it's a little bit different because there's GDPR, there's a little bit more stricter data privacy rules. So is that at all a hurdle? And I guess, how are you guys addressing that? And then two, is there any, like, changes that need to be made to, like, further penetrate the international market, or is it just a function of building out maybe a bigger sales force there? Yeah. So, particularly with respect to Europe, we've gotten to a point where we are the most privacy-centric vendor that you're going to find, and really tuned all of our, you know, offerings to be at a level that's, you know, above the requirements for GDPR. So I think we feel really good about the data that we're providing. What we've done this year is continued to expand the reach of that data so that, you know, at this point, I think you, you won't find another vendor out there that has more, you know, actionable data with respect to European, you know, companies and the people that work at those companies, whether that's email addresses or cell phone numbers. So we've put a lot of effort into really driving that actionability of the data and the quality in order to, you know, really be the best thing that anyone can find out there. So, you know, at the end of the day, Europe's actually more challenged from an economic perspective than, you know, what we've seen in the U.S. so far. So that has hampered, you know, the growth a little, but we actually see growth in Europe continuing to be, you know, in line with what we see in the U.S., despite an even tougher macro environment. So that's a place where, as things ultimately improve, that we'll ultimately lean into as well. All right. So that's really helpful. And then going back to some of the sales changes, when you made the leadership changes, is there any anticipated or, like, more organizational changes? I know you guys have been making a bigger push into the enterprise. You've talked about, you know, verticalizing the sales force. I guess, how big of an overhaul, you know, is that, and how should we think about that in the context of, you know, margins and things like that? Yeah. So certainly, a big push of what we have been doing is focusing more on the enterprise and starting to roll out those vertical teams. That'll be something that we continue to do and, you know, really focus on driving, you know, some of the areas where we have seen more success. So, you know, for instance, the $1 million-plus cohort continues to grow really nicely. And, you know, those are customers that are more sophisticated. They're layering in more advanced tools and taking more data to ultimately drive kind of a centralized motion as opposed to a single salesperson. Sometimes that's focused on improved automation, sometimes it's improved action against specific signals. A lot of times it's based on an investment in, you know, the data foundation on which they can build AI tools. So those are areas that we're continuing to lean into and continuing to, you know, push the sales team in that direction, where it's more of a consultative sale. It's more focused on integrating DaaS and Operations OS tools, versus just selling incremental seats in order to drive that value for the customer. Yeah. And when we think about what that means for the trajectory of margins- Mm-hmm. Is as you move more and more upmarket, is there incremental costs that you're gonna have to incur, you know, upfront? And, you know, maybe there's some offsets within the organization. So maybe you could talk a little bit about, like, those levers, 'cause ZoomInfo, your 40% margins, you're already very efficient. Yep. So, I guess, how do we think about the puts and takes of that? Yeah. When I look at those, you know, enterprise clients and, you know, realistically, the, you know, LTV to CAC for those clients is actually higher than- Mm-hmm ... what we'd see at, you know, smaller clients. So ultimately, at least from a kinda sales perspective, we should actually get leverage out of that move. Certainly, there are some, you know, upfront costs just in terms of shifting people to a longer sales cycle versus, you know, the quick-hit sales cycles we've had in the past. But we've, you know, managed through a bunch of that, and ultimately, really driven the team to be more focused on those already. So we don't anticipate that there'll be some short-term kind of hit to margins as a result of that focus. And then, you know, as we move forward, what we've really developed is, you know, we're testing kind of PLG capabilities, where at the low end of the market, we can sell folks in a self-service way. You know, those will roll out more as we kind of get through the end of the year and into next year, so that we can continue to shift resources or, you know, the cost around those resources upmarket, you know, get a more efficient kind of PLG-driven motion for the smallest customers. Mm-hmm. And then continue to focus some of our sales resources and support resources at those larger customers that ultimately, you know, can be more profitable over time. Got it. That's helpful. And then, as we think about what that means for cash flow- Mm-hmm ... Can you maybe comment a little bit about how to think about some of the near-term cash flow trends? So I know you point people a lot to looking at, you know, the EBIT to free cash flow ratio, and I think that's been hovering around the low 90s. So as we look into, you know, next year, specifically, is it fair to assume, you know, that, like, similar ratio could hold? Or maybe you can talk through the potential, like, headwinds or tailwinds to, you know, free, free cash flow as we look going forward. Yeah. So, you know, when you think about the conversion of free cash flow, realistically, obviously, a lot of it just has to do with profitability. Mm-hmm. That's where you get to that comparison to EBIT. Certainly, there is a dynamic where the faster we grow, the more kinda upfront payments we're gonna get. Mm-hmm. That's relative to, you know, the revenue that we're generating. So that balance sheet, kind of tailwind to free cash flow is correlated to growth. So at the growth levels that we're at today, I think seeing something in the low 90s% on an annual basis is, you know, a reasonable expectation. At some point, when we see, you know, a re-acceleration of growth based on the economy, you know, stabilizing a little, I'd actually expect that we could see an improvement of that ratio or conversion rate to get more into the mid-90s% or even higher over time. That's helpful. And then maybe turning a little bit. So shifting gears to the HubSpot Clearbit acquisition. Sure. I'd love to, you know, get your thoughts on the competitive landscape, you know, what that means for the space. It seems like, to some degree, you know, HubSpot acquiring that company validates, you know, the opportunity that you guys are going after. But maybe you can, you know, give the audience a little bit more information on how you guys differentiate, and you know, what that means going forward for this industry. Yeah. So obviously, you know, we have a number of competitors just because the offering that we have is, you know, very broad and, you know, services a lot of folks. You know, Clearbit plays at the very low end of the spectrum, and frankly, we don't even see them that often. Mm-hmm. From a competitive perspective, you know, the mentions of competitors or even our win rates at that low end of the market have been pretty stable or even improved over the course of the year. What we have seen is that there are, you know, some competitors that are, you know, getting a little bit more traction, largely at the expense of others. Mm-hmm. You know, Clearbit's like so far down at the end that, you know, it doesn't even necessarily show up from that perspective. I think what many of our customers are doing, particularly if you get outside of that kind of single-seat market or at the low end of the market, is they're really looking for depth of capabilities and breadth of capabilities. So, you know, where, you know, whether it's company attributes or contact data or intent data or other signals- Mm-hmm ... that's really where we're going to, you know, shine, A, because the accuracy levels are so much higher, and B, because the breadth and capability set is so much broader, that we're able to drive a much higher kind of ROI for our customers and a better, you know, experience overall. So, you know, I think that's the real differentiation. Mm-hmm. At the end of the day, that's a big part of why, you know, most of our customers are gonna be mid-market and, you know, enterprise customers, whereas all of those smaller competitors compete much more at the, at the low end of the market. Mm-hmm. The other thing that continues to be a moat and something that we really focus on a lot is the privacy aspect- Mm. Of the data that we're providing. So we are very focused, as I mentioned before, on making sure that every company that we or every kind of data point that we're providing, gets the same level of privacy scrutiny as they would if they were in Europe and under GDPR. And that's something that no other, you know, company does in terms of notifying their, you know, all of the folks that are in there. Making sure that we have an easy and kind of straightforward opt-out, you know, capability within the platform, and providing tools to our customers, so that they can turn the dials on where they wanna, you know, run with privacy. So the interesting thing about Clearbit, just to bring it back to the answer, is, you know, most of their data is on a limited set, you know, hundreds of attributes for, you know, company information, but a small part of their data is contact information. Mm. There's, you know, kind of at the spectrum of privacy. It'll be interesting what HubSpot does, just given that they're historically touted themselves to be at one end of the spectrum- Mm-hmm. And Clearbit is clearly, you know, way on the other end of the spectrum in terms of how they deal with privacy and. Yeah ... what they're doing with data. Yeah. I wanna dive into what you were talking about earlier, with all the different data points that you guys have, and intent, and things like that. One of the things that HubSpot alluded to is that, you know, there's a generative AI play here, right? Like, it's gonna give them more insights out of activity outside of just HubSpot that can help with personalization. Just curious, like, as you know, generative AI is you know, getting talked about more and more and more every day, when you speak with your customers, are you starting to get pulled into those conversations? Are you starting to hear companies come to you and say, "Hey, you know, data enrichment and that part of the story, you know, is an important, like, first step into getting, you know, deeper, into some of the model work and things like that? Yeah, absolutely. That's why, you know, our largest customers, so the $1 million-plus cohort of customers, continues to grow really well, and why they're ingesting more and more data in a centralized way, whether that's taking Data as a Service or the Operations OS to drive more of their motions. A lot of that is building a data foundation where they can take literally tens of thousands of, you know, company attributes and the people that are within those companies, the movements around those people, you know, intent data, all of those signals into a real engine that can ultimately drive a productivity increase and an effectiveness increase for their sales folks. Mm-hmm. That is a big part of, you know, a lot of our kind of larger customer conversations that we have with folks, to get them that value. Got it. And then maybe going back to, back to the top line, but when we think about next year, I know you made the comment that, "Okay, we're gonna get through, you know, a lot of the tougher renewals- Mm-hmm -by the end of 2Q, and then maybe you could potentially start to see, you know, like, quarter-over-quarter growth start to trend up, from, from there." So one question that, like, we often get from investors is: If NRR ends up, you know, staying flat, let's say, then that would require a lot of new business activity on top of that for you guys to grow next year. Yeah. So when you think about the growth algorithm there, it might just be as simple as, you know, once you get through a lot of the tougher renewals, then you could start to see retention drift back up again. But, maybe you could just talk through the puts and takes there, and how you think about those different levers next year. Yeah, absolutely. So I think of the growth algorithm largely as there's a churn aspect of that, and given the, you know, composition of our customer base, you know, I think a good churn level is around the ninety or the, you know, 10% level, which gets you to that 90% gross retention. And even in today's environment, you know, gross retention has kind of continued in that. It's a little lower than 90%, but given the economic environment, feels like a good spot. So gross retention held in pretty well, you know, a little below 90%. The net upsell is the next piece of that, and certainly we've been working through with our customers a fair amount of, you know, working through the weeds of, like, overbuying that's happened in the past, and frankly, you know, layoffs that they've gone through. So yeah, historically, we've seen, you know, that net upsell in the, you know, teens to 25% range. If you look at 2021, it was, you know, pretty close to 25%. Last year, it was more in the kind of, you know, teens, 14% range. Even if you get back into, you know, 2018 and 2019, you saw similar levels of, you know, net upsell in that kind of teens level. So I think that once we've worked through the kind of overbuying that we've seen with a lot of customers, kind of taking away that boat anchor of down sells will actually naturally help that net upsell number- Yeah ... and ultimately get Net Retention back into, you know, our goal would be to get Net Retention back into the single digits above 100% or, you know, that range. You know, over time. And then, you know, the new business side of that equation, you know, continues to work fairly well. There's been a little bit of pressure on, you know, efficiency around that, but it's down a little from where it was last year, despite, you know, an even tougher economic environment. So when you put all those together, the real shift when we see the macroeconomic, you know, kind of situation either stabilize or, you know, maybe improve, in my mind, is more around that net upsell and getting net retention back into the, you know, call it single digits above 100%, versus anything else. That's really helpful. Now we'll turn over to some of the questions from the audience. There's two here. So the first one is that: given the nature of your business and presumably the ability of ZoomInfo to use its own tools most effectively, can you provide any commentary around ZoomInfo's sales force productivity relative to similar B2B SaaS companies? Yeah. So, you know, I think our sales force productivity and sales efficiency continues to be one of the best that you're gonna find out there. If you look at the new business part of the equation, you know, it continues to do really well. I think of it as like, you know, in the—it's a 1.something x, where the ACV that we're bringing on is, you know, well in excess of the cost, fully loaded cost of everything that we put into it. On the existing customer side, it actually continues to do pretty well, but obviously is impacted by the downsells that are out there. So, you know, I view this as we're still, you know, on a... We're still in the, I don't know, top decile or, you know, maybe even better than that in terms of what the comparative sales efficiency would be. Obviously, I think everyone in B2B SaaS, you know, is a little challenged in terms of top line, you know, right now versus where they had been previously. So I think all of the efficiency levels have come down at some level, but it, it would be hard-pressed for me to name very many that, you know, are spending, whatever, 28% of their revenue on, on, you know, sales and marketing and are still, you know, growing. Whatever, last quarter it was 9%. Yeah, makes sense. And then the second question is: can you talk about the growth in different cohorts? How is million-dollar cohort growth trending? So the million-dollar cohort is, you know, well in excess of the, you know, 9% that we did last cohort, last quarter, and, you know, continues to do really well. I think a big part of that is that the net retention is meaningfully higher than, you know, the overall business, and obviously, that cohort includes, you know, software companies and telecommunications companies and transportation logistics companies- Mm. and financial services companies, so it is a mix. But, you know, that larger, you know, cohort frankly is more stable in terms of companies, and therefore, you know, there's a little bit less downsell pressure. But even the, you know, the larger deal that we did in Q3, you know, that's a top five client who's a software company. Like, they've laid a bunch of people off over the last year or two, and as a result, the renewal that we did with them was not, "Okay, we're just gonna grow more seats." It was actually a reduction in the level of seats, and then they took on additional functionality in terms of DaaS and Operations OS, so that they can centralize more of their motions, drive more of that kind of signal into a centralized place, and then use their routing technologies to, you know, kind of create actions off the back of that. So the overall upsell was actually, you know, a good upsell, but off of fewer seats with more DaaS and Operations OS to really drive that. Yeah. And I know that you've talked about, and this is a good segue into, some of the add-ons, 'cause I know you've talked about that Operations OS, and DaaS, and some of those areas are actually, you know, still growing pretty fast, despite a lot of the macro headwinds. So can you talk about what are the underlying demand trends behind those products that, you know, despite everything that we're seeing, they're still holding up pretty well? Yeah. I think the common thread for a lot of those is, A, more sophisticated clients that have the capability and resources to invest into those things. Mm. And obviously, there's a big swath of our customer base that are smaller customers and don't have the same set of capabilities. But also that they're focused on automation, they're focused on AI, and they're focused on centralizing, you know, more of their motions, as opposed to just giving a salesperson a tool and saying, "Go have at it. Mm-hmm. They're looking for ways where they can leverage the best of their potential motions and really driving that across the entire sales, team. And so that common thread, where it happens, tends to be larger customers, tends to be folks that really wanna focus on data and really wanna focus on where they can drive efficiency and effectiveness of their team in a really scalable way. Perfect. Well, I think that's all we have time for. Out of time. Thank you, everyone, for joining in the audience, and thanks so much, Cameron, for the time. Yeah. Appreciate it. Thanks for having me. Thanks, everyone. Thanks for having me. Thanks, everyone.