All right, I think we're ready to get going. Yep. Thumbs up, one spot, thumbs down, the other. All right. I'm D.J. Hynes. I'm the Senior Software Analyst here at Canaccord. This is the 44th year Canaccord's had this conference. We couldn't do it without companies like ZoomInfo being here, without the investor clients. So thank you all for being here. We have CEO Henry Schuck, CFO Graham O'Brien. We're gonna do this as a fireside chat. If at any point there are questions in the audience, don't be bashful, raise your hand, I'll work them into the conversation. I have stuff that should get us through a half hour. So we'll start with me, and then please, don't be shy. Henry, I'm gonna skip over the business intro part of the conversation. We have a full room here. I assume most folks are familiar with the business at this point. Let's just talk a little bit about kind of Q2, what's top of mind for you coming out of the quarter, and kind of how that sets you up for the back half of the year in terms of, you know, business fundamentals. Sure. So the quarter was a tale of kind of two worlds. On one side, we finished the quarter at the end of June. I'll let Graham talk a little bit about the write-offs and how they affected the quarter and also the go-forward guidance, but we finished the quarter. We were very happy with our operational results. We had our best net new ARR quarter in the last year. We increased the customer cohort, the $100,000 customer cohort for the first time since Q4 of 2022. We had our best enterprise and mid-market quarter ever. That's been a strategic goal of ours to move upmarket. We introduced Copilot, our new AI platform, and we sold and monetized it into our base, and on a new basis and with our new business customers, it was solidly above expectations. We stabilized net retention in the business for the first time since Q4 of 2022, 2021? 2021. 2021. We stabilized software net retention for the first time since Q4 of 2021. So we walked away operationally, you know, really happy with the quarter that we put together. And then at the end of June, we saw a level of write-offs related to contracts we had signed in past periods escalate, and we knew at that moment that that was gonna cloud all of this operational improvement that we saw in the business that we were pretty proud of. And Graham could talk a little bit about what that write-off did in the quarter and what it does going forward. Sure. So in 2023, we saw the risk of non-payment, specifically in our SMB customer cohort, start to increase. At that time, we increased our reserve rates and contra revenue and bad debt to account for that, and then we saw it actually start to stabilize in Q1 and into Q2. In June, the receivable cohort that began to progress through actually had a higher risk of non-payment than we had previously estimated. What you do there is you, you need to reserve for that, you know, higher risk of non-payment, and we applied that increased estimate to all the other cohorts that were progressing through the aging at that time. That's what led to the revenue and bad debt charges you saw on our results in Q2. In April, we rolled out a risk model for our SMB clients, where we risk-rated everybody who came through the funnel, and then we required the riskier customers to pay us upfront before they gained access to ZoomInfo. And look, I think that, you know, our problem here was that we extended credit historically to customers who weren't creditworthy, and the change that we made in April requires those customers to pay us upfront before they get access to ZoomInfo. We put $11 million through that motion in the quarter. That's up 10x from any other prior period, and we continue to drive that motion through the business, which effectively turns away lower-quality customers, and then requires any risky customer to pay us upfront. Yeah. So if I hear the message right there, it was like Q2, we took our lumps for maybe past sins, right? We've put better risk and controls in place now that, in theory, this shouldn't be an issue going forward. And then, in terms of risk of potential future write-offs with what's in the installed base, how would you characterize any issues or, or possible concerns there going forward? Yeah, I think so first, there's no write-off issue outside of SMB. Mid-market and enterprise are totally fine, and then even in SMB, it's the lower end of the SMB. What our guidance anticipates for the back half of the year is that the escalated level of write-offs continues through the back half of the year, so we accounted for that. And the operational change we made in the quarter, where in April we started requiring these upfront payments, we're not gonna see the benefit of that really until Q4 of this year and Q1 of next year, as those contracts, the period of time when those contracts would've gotten written off, are not gonna be written off anymore. Yep. Yep, understood. Let's talk about mid-market and enterprise, which I think there were a lot of really good data points in the quarter, and maybe you could juxtapose what you're seeing, kind of new business versus cross-sell, and then tech versus non-tech. Sure. New business, in the beginning of the year, we broke out a separate team to be focused on enterprise and upmarket business. And then in the quarter, new business had its high watermark for business sold to mid-market and enterprise clients. We also had our largest new business deal in history. It was a $1.4 million annual deal over three years. So we felt really good about the progress and the momentum we've made from a new business perspective in mid-market and enterprise, and the mix of mid-market and enterprise compared to SMB business was the best I think we've ever seen as well. In the customer base, we're selling Copilot and monetizing it in the customer base. 75% of the customers who bought Copilot were in the mid-market and enterprise. To me, that's a, you know, a sign of... It's a real validation of the product. Mid-market and enterprise customers are scrutinize products the most, and so the fact that 75% of our Copilot upsells came from that universe and the customer base is great. Our OperationsOS product, which is designed to give customers access to a broad set of our data inside of Snowflake, Databricks, CRM systems, and help them cleanse, and append, and enrich that data for a bunch of downstream workflows like territory planning, business segmentation, prospect scoring. That business grew 23% year-over-year. It's primarily upmarket. It's primarily in the enterprise and the higher end of the mid-market, and so that area of the business we feel good about. And our enterprise business grew 9% year-over-year. Mid-market is where there's been a large tech concentration, and our technology customers, who are historically our fastest-growing customers over the last two years, have gotten much more pressured than outside of tech. The pressure continues there, but like Graham mentioned, this was the first quarter since Q4 of 2021, where we actually saw stabilization across software businesses, net retention stabilization. Then the SMB, at the lower ends of the SMB, those continue to be a more challenged segment of our customer base. Yeah. Yeah, makes sense. You guys are a very data-driven company. You talked about stabilization and software, net revenue retention. What are the other metrics you track that might inform your view on kind of where we are in this pressure of downsell, and do you feel like we're nearing a trough? Yeah, let me start, and if Graham has anything to add. Look, we look at... Fundamentally, we're looking at health of the customer as it relates to their usage and utilization of ZoomInfo, and we're tracking that usage and utilization across the customer base, and then have a number of programs from a product perspective, to drive usage into the customer base. We have seen that level of usage both, you know, stabilize and improve over the year, and with Copilot, we actually see a meaningful uplift in usage of ZoomInfo, when you compare Copilot users versus non-Copilot users. And usage directly correlates to retention rates or has historically directly correlated to retention rates. And so we feel good about improvements in usage, improvements in utilization, and we're tracking that very closely to understand the health of the customer base. And then we're seeing higher levels of usage from Copilot users that, you know, as we continue to migrate a larger and larger portion of the base onto Copilot, should be a tailwind to our net retention numbers going forward. Yep. Do you add anything? Yeah, usage and engagement as the leading indicators to retention, and we were happy to see retention stabilize sequentially in Q2. Yeah, good. Let's spend some time on Copilot. We've alluded to it several times, but maybe haven't explicitly talked about what the product does for folks who may not have seen it yet or be familiar with that. So talk a little bit about kind of the fundamental problem you're solving, and then how ZoomInfo is uniquely positioned to leverage Copilot. I mean, Copilot's become a term that we're hearing often now, but how it- you guys are differentiated from the Copilots that we might get from a CRM vendor- Sure ... for instance? Yep. So in go-to-market land, the number one thing every go-to-market organization is trying to drive for their teams is: Can I get you in front of the right accounts at the right time? If I'm gonna allocate my resources, obviously, I wanna allocate them to the companies that are gonna make a buying decision about my product within the next, call it three to six months. That's the holy grail for every go-to-market organization, and that is what we're building and what we've released with Copilot. Number one, we look through all your CRM system. We understand what accounts you're winning, what accounts you're losing, what accounts are your ICP are in your ideal customer profile. We take those. We then look at ZoomInfo for signals that were related to those accounts. So when those accounts became opportunities, was something happening from a signal perspective that we can look backwards to and then apply to the future? And so maybe your accounts became opportunities always within 60 days of a new CFO arriving. Maybe they became opportunities when we saw those customers increasing research on your brand or the solution that you use or your competitors within the 60 days prior to them becoming an opportunity. Maybe they all had great earnings calls right before, if they were public companies. And so we're looking at this tremendous amount of signal that we've created. We're looking at the accounts that were opportunities, and then we're taking signals that associated to when they became opportunities, and telling you the next set of accounts that look just like those accounts. Yeah. Then we're layering in our people data, our company data, and then we're building out what your communication plan should be with that account. So with one click, we're creating the messaging. That messaging is leveraging all the information about your account that ZoomInfo has. So it knows what company you are, who you sell to, we've read all of your case studies, all of your press releases, all of your earnings calls if you're public, we've ingested podcasts your CEO or CFO has done, and we're taking all of that information to, on the fly, write you a very compelling message that you would use to reach out to your buyer, write you a compelling call script if you're an account executive, that you can use to engage with the potential buyer. So we're finding your best accounts, we're ranking them by signal that indicates they're in market, and then we're using AI to draft the messaging that you should be using to engage with them. Yeah. Yeah. Doing all the homework that a sales guy needs. Yeah. So ideally, getting you in front of exactly the right accounts at the right time. Yep. Let's talk about how it impacts the economics of the business. Maybe you could hit a little bit on kind of realized price uplift, and then as part of that, my sense is you're starting with the customers that have the highest propensity to buy, right? Are going to get the most value from it. Yep. In theory, your realized price uplift, uplift with those customers is probably more than maybe as you go deeper into the base. Curious on realized price uplift and then, like, durability, or how you're thinking about that longer term. Yeah. So, first, on the price uplift, we are monetizing Copilot in the base, and we're getting a solid double-digit upgrade per seat when we're doing that monetization. We anticipate that over the next three years, we're gonna migrate our entire customer base onto the Copilot AI-enabled version of ZoomInfo. We are phasing our way into that and starting with customers—like, we first started with customers who had a CRM connected and used Chorus, our conversation intelligence tool, because if you're using conversation intelligence of any kind, we're getting tremendous insights from all of the calls that you're having. Then, we've expanded that now to customers who use Gong as a conversation intelligence tool. We'll expand that to customers who use Zoom Video and Teams as a conversation intelligence solution. So while the phasing right now is designed to get the customers who have all of this today, as we expand the product functionality into these other areas from a conversation intelligence perspective, from a sales automation perspective, that next cohort isn't gonna have less value than the first cohort because the functionality is catching up- Yeah ... in that way. And so we anticipate moving the whole customer base. We anticipate continuing to get double-digit uplift when they move to Copilot, and as we're releasing new features and functionality, we're expanding the phasing and making sure that the customers who come on are gonna get real value out of this solution. Yeah. Yeah. One more product question. Talk a little bit about the Data as a Service business, how that's been performing, kind of how it differentiates from your core offering, and then are opportunities for Copilot in Data as a Service, as in other parts of the organization or the product that you've built for, you know, the different personas inside the organization? Yep. So Data as a Service is our solution that helps customers cleanse, enrich, and append the data that they have on their prospects and their customers. That can live in a number of areas. It could live in a data lake like Snowflake or Databricks or Google Cloud. It could live in their CRM systems, it could live in their marketing automation systems, wherever it lives. What's been interesting about go-to-market organizations over the last decade is they put all this data inside their CRM, all this data about customers or prospects inside of their data lakes, and then they started building applications and workflow on top of that data. If you go out and talk to any of your friends who use a CRM system, and you ask them: "How do you think about the data inside of your CRM?" 100% of them will tell you, "The data is bad in my CRM. I can't use it for anything." And so we skipped over this infrastructural element that's required if you're building applications on top of data, that requires that the data be cleansed, that the data be complete, that the data be usable for that workflow and whatever you're doing with the data downstream. And so that's always been an opportunity for us. I think one thing that's happening today, or two things that are happening today in go-to-market: number one, every go-to-market organization is being pressured to drive efficiency within their go-to-market motions. The days of growth at all costs are long behind us, and there is a initiative inside of every go-to-market organization to drive efficiencies in the way that they acquire new customers or grow their existing customers. To do that, a lot of these customers are figuring out centralized data management that brings all of their customer data together, tries to rank them, make better resource allocation decisions, segment the customer base better, create a better territory assignment plan. And so as they're driving productivity, they're doing it through a centralized data management motion, where we come in and help make sure that the data that they're making the decisions off of is accurate, and complete, and enriched. Then there are AI projects where the C-suite is saying: "Hey, listen, we wanna see AI being delivered through our go-to-market organizations, and we want you to go do that. Build a virtual SDR or drive more efficiencies using AI." Well, to do that, again, the input of data is critical to the output of- Yeah ... any sort of productivity-enhancing AI. And so we're seeing more customers show up and say: "We're running these initiatives, and we need cleansed and accurate data to do that. Yeah. Yeah, makes sense. I wanna end with a few on the numbers, but before we go there, I wanna ask just like a culture question at ZoomInfo. Like, what's employee morale like? It's been a couple, you know, challenging years, not for ZoomInfo. ZoomInfo, too. ZoomInfo's been challenged, but software's been broadly challenging. Yep. Right? So some of the headwinds you guys are facing are not unique. What are you seeing in terms of employee turnover? What are you doing to keep morale high? Like, how does it feel internally? Yeah. So first, I'll tell you, morale at ZoomInfo is very good right now, and despite our quarter, I think because of the operational improvements that are happening in the business, there's a lot of buy-in into the future of the company. And had those operational improvements not been there, I'd probably, you know, I'd probably be telling you something very different. Yeah. But my ability to go in front of the company and say, "Listen, when you look at what we delivered this quarter, these things that I said last quarter were most important to deliver from an operational perspective, we hit on all of these things." We launched Copilot. We sold it in the base. We increased the $100,000 cohort. We increased the million-dollar cohort. We had our highest net new ARR quarter in the last four quarters. We finally stabilized net retention. You can see all of that, and I've been really transparent with the team about that. While also it's gonna be a cloudy quarter because this write-off issue is not only it's complex. Wall Street doesn't like complex, and it hides that. Yeah. But the team's morale around what we're building, the improvements we're making in the future, our move-up market, they're all bought in to that at ZoomInfo, and I've been extra transparent about, you know, what are the challenges in the business, and how are we addressing those challenges, and what is our progress against those challenges. So I feel like morale, morale is objectively good at ZoomInfo today. Yeah. You mentioned employee buy-in. Maybe that's a good segue to talk about personal buy-in. You also made some comments on the Q2 call that you were gonna be actively buying stock. I don't know if there's anything you want to say to that or... Sure make us aware. I bought $13 million of ZoomInfo in, on Wednesday. I have an open window till the middle of September to continue buying, and look, you know, a big chunk of my net worth is tied up in the success of ZoomInfo or is connected to the success of ZoomInfo. So, and I'm committed to delivering growth at the company, and while I recognize it's difficult to see those operational improvements, I can see them, the team has bought in behind them, and I'm confident that you'll see them in the financial results soon. Yeah. Maybe on the numbers, and I don't know if this is you, Henry or Graham, but you guided for Q4 days-adjusted sequential growth that was flat to slightly negative, and I felt like it was somewhat intentionally flagged or called out for investors as a potential proxy for thinking about 2025. What was the message you were trying to get across there? Sure. I mean, if you look back at the last several quarters, you see roughly flat growth. And we, you know, we developed the guidance to, you know, accomplish or start accomplishing our goal of rebuilding investor trust. We wanted to set guidance that we felt comfortable that we could meet and exceed, and we were cognizant of 2025 when we did that. Yeah, yeah, yeah. So setting reasonable expectations that you guys feel like we won't have to revisit in the future? Yeah, that's right. Yeah. Henry, maybe we can just finish with some parting thoughts. Like, what do you want investors leaving this room here today to be thinking, in terms of, you know, the setup for the business going forward? Yeah, look, I think, you know, we took an approach, from a guidance perspective that included myself, the finance team, the go-to-market organization, to make sure that we set guidance in a way that we could meet and exceed going forward. We have a lot of confidence in the operational improvements that we're seeing in the business. That's giving us a lot of confidence in the, in the forward opportunity in the company. We think Copilot is a real opportunity to migrate the entire customer base and get real uplift as we do that. We're very clearly ahead of anybody in our space from an innovation perspective with Copilot, and the Copilot that we monetized in June was the worst version of Copilots, Copilot we're ever gonna sell to with the worst enabled sales team that's gonna sell it. Since then, we've released hundreds of additional features. We continue to enable our sales team. We think that that's a foundation that we can build on and that it's not anomalistic, and we have a lot of confidence in the future of the business. Yeah, that's a great spot to leave it. It's nice to see you buying more stock. It speaks to your confidence in the business, and, Graham, congrats to you on the, the new CFO role. Look forward to working with you, and, thank you guys for being here. Do you want to take questions, D.J.? Oh, were there, were there questions in the room? I'm sorry. Yeah, there were. Just, any additional comments on your relative competitive position and how that's, how you see that changing? Sure, maybe I'll just repeat it, for the webcast. The question was around relative competitive positioning and any changes that they're seeing in the market. Yep. So largely, our competitive set lives in the lowest end of the SMB. If you go upmarket to the upper end of mid-market, you know, and the enterprise, we see next to no competition there. There are some legacy vendors from a firmographic perspective that you might see way in the upmarket, but in the low end of the SMB, there are a number of competitive players who are price competitive, but not quality competitive. And so what we're seeing is some customers in that low end of SMB will go to a low-end competitor, but over the last several quarters, we've had our best win-back quarters in history. Last quarter was our best one on record, where customers who left us came back to us. I think we'll see a lot more of that, and that'll be a trend that continues, and ultimately, between Copilot and the much higher quality data and analytics that we provide, we are distanced from those-