Thumbs up. Okay, great. Welcome, everybody. Good afternoon. The 2026 version of the KeyBanc Capital Markets Technology Leadership Forum. My name is Jackson Ader, enterprise software analyst here at KeyBanc. Really happy to have Graham here from ZoomInfo. We are going to let him introduce himself and the company. I'll go through a bunch of questions that I have prepared, but I'll come to the audience a couple of times, hopefully in the 25 minutes or so that it's interactive. And I'll flag to you guys that I'm coming to the audience, so you can be thinking of questions. I think that covers it. Yeah, go ahead. Graham, you want to introduce yourself and the company, please? Thanks, Jackson. Really happy to be here. Thank you for hosting us. My name is Graham O'Brien. I'm the CFO of ZoomInfo. ZoomInfo provides and sells data and software to go-to-market professionals, sales reps, VPs of RevOps, anyone who sells products and services to other businesses. Our data asset starts with about 100 million-plus companies, 500 million-plus professionals, and then we're able to identify and harvest billions of signals that we layer on top of that data asset, and then surface those signals using AI to notify reps, managers as to what their next best customer might look like, how and when to engage with that customer, and give them all the information and the context they need to grow their business. Just reported last week. Yep. Last Wednesday night. You mind giving us the highlights and the takeaways from that quarter? Sure. It was a solid quarter. We reported results that were generally above expectations. I think some of the highlights in the quarter was strong unlevered free cash flow quarter. We were up 7% year-over-year, so we delivered $107 million of unlevered free cash flow in Q2. I'd also call out margin improvement. Improving margins year-over-year. We were able to restructure the business in Q2 and reduce the cost base while we continue to navigate a growth transition. I'd also highlight it was a very strong, large customer new business quarter. So we have our 100,000 cohort. These are customers that spend at least $100,000 with us annually. Net new lands into that cohort, so customers that are making new business purchases at or above $100,000. So it was one of our best quarters ever from an ACV perspective. What drove that? Really a focus on a purely focused enterprise account executive team. Okay. We started really segmenting the account executive team about two years ago, and that meant being okay with longer sales cycles, investing more in the creating a buying committee at the prospect, landing those at a higher price point, and then more importantly, having a path to grow those customers six months or a year down the road. So you're starting to see that. I think it started really catching, getting traction there about a year ago, but this was hit at full speed in Q2. What does that land-and-expand motion look like for enterprises? Is it we land in a certain region, we land with a certain product, and then we expand it to new products, new region, layering on AI? What does that look like maybe in 2026 compared to what your enterprise expansion model would have looked like before all of this? Yeah. I think we have better enterprise talent to start with up in that business team. These are folks that are used to deal, or essentially investing in the longer sales cycles, building the relationships, and they're a little less transactional. I do think we've done a good job of vertical specification or specialization, more so than we did before, where we might have an account executive who's selling into financial services and software. Now we're starting to specialize a little bit more. If someone is particularly adept at selling to financial services or to manufacturing, we're able to point that rep or that team to those verticals. Yeah. Okay. You guys took a, I don't know, I guess a different not route, but a different approach to AI monetization. It was pretty early on that you just embedded AI straight into the platform, and it is more of an AI platform than it is like, "Here's our AI product for $10 extra" Right? Yeah. What went in-- Actually, can you do a better job of please explaining what I just said, number one, and then number two, how are we hoping that that's going to turn into better revenue performance in the future? Yeah. I think we were one of the folks that were earliest to market with a legitimate AI product with ZoomInfo Copilot. That's been out in market for 2+ years now. There's hundreds of millions of dollars of ACV on that product, and I don't think there are many similar success stories in go-to-market or software around the kind of success and traction that we've been able to get with ZoomInfo Copilot. But you mentioned embedding AI into the platform. Yeah. I think the next phase there is really accelerating consumption in that platform and outside of that platform. We've talked about moving more towards a hybrid consumption model from a pricing perspective, building products that allow for that, and then driving consumption of our data credits and our ZoomInfo AI credits, both in our ecosystem but also outside of our ecosystem via APIs, MCPs into Claude or ChatGPT or Gemini. And then within our next gen product suite with Go-To-Market Studio. You mentioned right off the top, so there are a few headwinds that I want to hit on. One is, and we'll take these in reverse order, but downmarket, either competition from new AI startups in and around this space, or just competition for IT dollars from AI, and then this idea that maybe the data moat is not as wide as it once was. That was the first thing you said right off the bat. It's like data asset. Yeah. Why is the data moat today just as wide as it was when Pick a time in the past. Yeah, I'll start with downmarket. Our downmarket business is getting smaller, so it's 24% mix of the total business. We are intentionally making that a smaller version of itself. We took out a lot of downmarket sales resources in Q2, and I would expect that we can continue to make that segment decline to a place where we're closer to 80/20 longer term. Still a valuable business to us in that it helps with essentially the contribution into the proprietary data asset. We're just not going to rely on it as much for revenue contribution moving forward. Why de-emphasize it? Is this just like, "This is commodity stuff. People are trying to drive our prices down." Product-led growth wasn't a dirty word just a few years ago, right? I think that's the key. I think we want to move more and more to product-led in that space. Okay We're bringing customers in with less of a commitment, potentially even at lower price points, and that should lead to better retention outcomes. I think the retention outcomes in our space in that segment are kind of secularly limited, and that is one of the reasons that we want to shift away from a revenue focus out of downmarket. Okay. When I think about the moat, I believe that our data advantage in that moat is basically as strong as it's ever been. The idea that you can token your way to creating a data asset, I think is flawed. Most of our data asset comes from proprietary data. Beyond that, there's a lot of value that we bring when you actually take that proprietary third-party data and resolve it against and marry it to first-party data to create that context graph or that context layer that is pivotal for any kind of AI or go-to-market work that you're trying to do. How do you actually demonstrate the return on the investment that your customers get when you say, "Your salespeople are going to be x more productive. Your ramp time for quota-carrying reps is going to be shrunk. Yeah. What are some of the use cases that you actually go into customers and say, "This is how you will get money back on the money you're spending with us"? Yeah, the simplest way is just accuracy. If you can say that we are going to be more accurate and more insightful 95% of the time relative to the alternative or relative to nothing, then you can build an ROI calculator off of that based off of their ASP of who they sell to and start to really show what the monetization of this is- or the monetization of the value. Separately, it's an identification of opportunity. So, whether that's pipeline that we're able to identify using ZoomInfo that they otherwise would not have been able to identify, and essentially unlocking that. An example I think of is if you come in and use ZoomInfo and you haven't been using ZoomInfo, not only can we help you identify the pipeline that you're already identifying, we can go identify a similar level of lookalike pipeline that you missed by not using ZoomInfo, and that's a pretty easy ROI math path after that. Yeah. Competition. How has it changed? I know that there are a lot of startups in the space that, like you said, you can't necessarily token your way to getting the data asset. But in the AI, the layering on top, whether it's Salesforce, HubSpot, whomever, you hear a lot of competitors say that, "We can tell you what the next best action is. Here are the five customers you should be targeting this week." Right? So, what does competition look like today versus yesterday? Yeah. I think downmarket is pretty similar, where there are lower quality, lower price data providers, and that's been the story for a long time now. I don't think that's changed that much. The names change, but that dynamic's fairly similar. Yes, it is getting noisier at the lower end of upmarket, where you have a lot of players that are starting to talk about the application or the workflow side of this. What that kind of misses is that in that, yeah, we can help you identify your next five best prospects to go after or help you prep for a meeting with an existing client, you still need the data to do that. The data is kind of the key ingredient. There's a lot of folks that are talking about taking that data and providing or taking insight from it. We can do all of that. What I think our path forward is whether we're the full solution, from data to context to workflow and then application and execution, or if we're just plugging in at the different parts of that spectrum. We're kind of okay being the headless data context layer in addition to being the layer of execution where it makes sense. How do you make sure that if you become the data layer for a headless deployment, how do you make sure that being the data layer still gives ZoomInfo enough return on that revenue as you would have had you owned the data and the application layer? Yeah. It changes the economics a little bit on the balance of that. I think because the surface area expands, you get a volume advantage in that these are places that we weren't monetizing in the past. Your cost of service model might change some. Your sales and marketing might become less tip of the spear and more partnership oriented or, in some cases, nonexistent in a true headless manner. Your R&D shape changes. We changed the shape of our R&D and our sales and marketing functions in Q2, and I think we have the opportunity to continue to do that as our revenue base evolves. I want to touch on the restructuring after just one thing on the Go-To-Market Studio and the Workplace new products adoption, excitement. Also, is there any kind of a difference in terms of how you price those relative to some of the other AI products that have been in the market for many years? Yeah. Studio, I think it was a really solid quarter in Q2. We really started bringing Go-To-Market Studio to markets at the end of Q1 and into Q2. I would say Q2 is a story of traction with Studio. We started to see very promising month-over-month growth results, and I'm really excited about that kind of being the core hub for our products as we move forward. As we start to roll out the new pricing and packaging models at the end of this quarter from a new business perspective, and then with the customer migration later this year into 2027, you're going to see a lot of our applications come together into a unified front end. You'll be able to access Studio, Copilot, ZoomInfo Marketing, all in the same pane and have these credits that you've purchased where you can use across that broader set. A little more flexible. Right. Yeah. Since I am someone who's never run a business, when I hear that we're going with a new pricing model and we got to migrate people, it's like, why don't you just do it now, right? Rip the Band-Aid off. If it is eventually going to be good for ZoomInfo, why not make eventually tomorrow? Tell me why when it's actually running a business that that's not the right thing Yeah to do or maybe even possible. There's a few things that inform this for us. One is we want to meet the customer where they are. Our customers have a very diverse set of preferences. I want to make the pricing as simple as possible, wherever possible. Then two, I want to tear down barriers for consumption. We want to price our products and deliver on our products in a way that ties into the go-to-market work being done, and less so to the actual just seats. I can give you an example. Yeah. There's a well-known AI native firm that's growing very fast, and they're ZoomInfo customers. They spend a lot of money with us. They buy more and more. But they use us in a headless manner. We're their data foundation. They built application on top of it. They like a consumption model. Separately, there's a well-known AI company that just made a large purchase with us when they bought seats, and they wanted out-of-the-box software, and they wanted all the application. We have customers in the base today that are going to want to stay on seats, that are going to want to stay on specific products. This will not be a forced migration, but we will have the opportunity to migrate customers where it makes sense and to monetize that migration in many cases. Okay. The restructuring, I want to touch on the restructuring, and then I'll come to the audience after some of these questions. What areas were impacted? Why did you do it? ZoomInfo already has very high margins relative to software peers. What was the impetus and what are the changing priorities? Yeah. We're still at the beginning of a path back to durable growth. I think our path there is a little bit different than what we thought it might be three or four quarters ago. These changes, in my mind, help us accelerate down that path. One is make down-market smaller, faster. We right-size the down-market sales resourcing as part of that. Separately, I think the way we invest in R&D is changing, too. We streamlined our R&D global operations as part of this. I still think we're investing the amount that we need to on our product roadmap, but often that's in the form of getting higher talent, fewer employees, and essentially just a higher compensation rate for highly talented R&D folks. Okay. Are you finding it relatively easier or more difficult to hire those people, given just where we are in the cycle of SaaS? Yeah, I think R&D, so product managers, software developers, is a pretty competitive environment right now. That kind of informed some of these changes in that we want to be a competitive hirer in these markets, and this allows us to offer more on a per capita basis than we otherwise would have. Okay. All right. And retain talent as well. It's not just hiring. First check in on the audience in case anybody has any questions before we move on to the next subject. All right. You guys have a view into the sales environment, right? And one of your big verticals is, or one of your larger verticals is software- Yep and tech. You guys have talked about it. We've picked it up in our surveys that there is, I don't know, like a crowding effect, right? Of a bunch of different things in the IT budget. How is that impacting ZoomInfo, and then also how do you see some of those impacts in your customer base that tends to be pretty heavy tech? Yeah. I'll start outside of software and just say outside of, software's about 30% of our total ACV, down from 40% at peak five years ago. Outside of software, specifically up-market, our non-software customers are doing very well. They're growing at a healthy clip, and actually, the gross retention year-to-date outside of software up-market has improved year-over-year. In software, what we saw, we flagged this at the end of Q1, we started seeing more build versus buy conversations, like can I go rebuild my tech stack internally? What do I need to go reconcile? That led to some, specifically at the bottom half of up-market, that led to some delayed purchases, some down-sells. We said it was like an AI confusion or elongation of discussions. That's still happening. I think what's happening beyond that now is that software is just broadly challenged. Yeah. It's not just large public software companies that are doing, in some cases, okay. A lot of this is VC-funded and PE-backed software companies that are facing their own growth challenges. That's bleeding into budget constraints, profitability initiatives, and then even financing challenges. So I think software is back in a different place, a worse place than it was six months ago, and that potentially is just more of a cyclical challenge that we're going to have to navigate. Is it just the build versus buy conversation, your perception is that this is proliferating to other parts of software beyond just some of the narrow things that maybe we would've seen? We haven't seen that. Last year? Okay. I think we're developing our products in a way now that we think will help address what's happening in software over time. I don't expect software to get better anytime soon here. Okay. I do think some of the build versus buy, like the way that we're going to market now is more open to like, yeah, if you're going to build We've seen some companies actually build good applications internally for a variety of use cases. You still need our data and our context, so making sure that we're showing up and plugging in where it makes the most sense for customers, and we have opportunity to do that with every customer. Yeah. Okay. With the time we have left, I want to focus more on the financials. You're the CFO. Free cash flow per share is the metric that you and we and investors, you're telling people to focus on. Why is that the right metric? How will that trend now that you've got some restructuring? Then, if we can connect the dots on capital allocation and what you're going to do with the cash flow that you actually generate. Yeah, look, I think it's very evident when you look at the free cash flow per share. We did $1.20 last year of adjusted free cash flow per share, and the yield of that against where the shares are trading today. It kind of helps paint a picture of the economic health, or at least from an operating perspective, of the business. When I think about the overall big numbers here, we're a $1.2 billion run rate revenue company today. We have, after the restructuring, about $740 million of annualized adjusted expenses and between $55 million and $60 million of debt service every year. So when you do that math on a little over 300 fully diluted shares outstanding, you get into that $1.20, $1.25 free cash flow range that we're pretty comfortable about continuing to deliver. We talked about run rating $1.25 of free cash flow exiting this year. We're still really pleased about the path we're on relative to that. Then from a capital allocation perspective, we expanded our capital allocation approach in Q2, so not only were we buying back shares, we started buying back our own debt. Our debt was trading at a pretty significant discount to par. With the free cash flow that we could generate and that we continue to generate, we've got a lot of options, and we would expect to continue to have an expanded capital allocation approach going forward. Do you have a preference? Debt, equity? No reinvestment in the business? I feel like we are, from an operating perspective, that we have everything we need invested back into the business. With that excess cash flow, no clear preference. The margin dynamic, if we think about the incremental margin that you can generate on the business, do you see any gross margin, like incremental gross margin headwinds from the use of AI? Yeah and you have to pay tokens, you need to pass those costs on to customers. As the hope is that AI usage and consumption goes up and up and up, would you expect to see any gross margin degradation? Because that's one of the best parts about the business, is that the gross margins are so high. Yeah. We're comfortable with some gross margin degradation. Right now, we have adjusted gross margins of about 87%. I think getting that going down to 85%, if it's coming with gross profit upside from better consumption- Right would be an acceptable outcome. Sure. I also think that we've proven our cost discipline in Q2, and continue to, that we can offset some of that gross margin degradation with accretive outcomes across the rest of the business. Okay. Last check from the audience before we move to wrap here. I want to talk a little bit about the guidance philosophy. You've been handedly beating your guidance, right? I just want to hear, what is the current guidance philosophy on either a quarterly and an annual basis, and what should investors think when they see revenue is x, and guidance for next quarter is y, and y being below x? Yeah. Look, I think my philosophy hasn't changed from last quarter, so it's consistent with how we approached Q2 and the full year. I want to lay out figures and guidance targets that we can meet and exceed, while we continue on this path towards our next gen product suite, hybrid, blended pricing model, and eventually a return to growth. Okay. All right. Fair enough. Thank you, everybody. Appreciate it. Thanks, guys.