All right. I think we'll kick things off. I'm DJ Hynes. I'm the Senior Software Analyst here at Canaccord. This is the 46th year we've been doing this conference. We couldn't do it without the support of the corporates who come and bring all the great content. Thank you to ZoomInfo team for being here. We're going to do this as a fireside chat. I have questions that can get us probably more than a half hour, but I also want this to be collaborative. If there are questions from the audience as we get into things, just raise your hands. Happy to integrate them into the conversation. But we have CFO Graham O'Brien here with us today. I think with that, we can kind of kick things off. Graham, why don't we talk a little bit, just since it's top of mind, about Q2. We were just talking, you guys reported last week. Yep. What's top of mind coming out of the quarter? What do you want investors to know about where ZoomInfo's business stands today? Maybe if there's anything that feels different than it did three to six months ago, that's obviously interesting. Yeah. I think coming out of Q2, I feel like this was a quarter of rapid innovation for us. GTM Studio was one of our newest AI forward products. This was the first quarter of significant traction, where we were seeing the growth sequentially month-over-month. It was really promising, and we're hoping to continue that as we get into the back half of the year. We talked about rolling out hybrid consumption pricing later this year in a more unified application experience that provides more flexibility to customers and prospects for how and where they use ZoomInfo, both in our ecosystem and in a headless manner outside of ZoomInfo. I think that the product progress, and then the go-to-market and finance side of the pricing and the packaging was really promising coming out of the quarter. We continue to face headwinds in software, but we're taking advantage of that window to set us up in a better position as we get to the other end of that. Also, better profitability than I would've thought a few quarters ago. We restructured the business in the middle of the quarter. Our updated guidance reflects over 100 basis points of adjusted operating margin improvement year-over-year. There's a lot in there that we will unpack as we go through this. I think the takeaway is interesting things happening beneath the hood, but still some headwinds to the headline numbers. To that point, I think net revenue retention's just below 90%. Q3, you guided towards revenue declines. Maybe just talk about where you see genuine stability in the business and where there are still challenges. Outside of the software vertical, we're seeing stability, and we're actually seeing improvement in some areas. So we're seeing in our non-software verticals gross retentions actually improving year to date on a year-over-year basis. I also want to call out performance with our largest customers, not just from an employee size, but from a spend size. Those customers are performing better this year than they performed last year. On the new business front, we talk about our $100,000 cohort, so customers that spend at least $100,000 with us annually. We have about 1,900 of those customers. Our new business in that cohort, so basically landing customers at that $100,000 or higher entry point, we had I think it was our best quarter ever on that front. So enterprise new business, especially that $100,000 threshold, and gross retention improvements outside of software were really promising in the quarter. Maybe we could double-click on what's happening in software, just because it's a relevant area to everyone in this audience and a challenge part of the business. What's driving the headwinds there? Is it budget constraints? Is it prioritization? Is it as simple as just we're laying salespeople off? What do you think we need to see stabilization in software? Yeah. We called this out at the end of Q1, where we were starting to see specifically the lower end of our upmarket business. Customers that are in the software vertical, they are starting to have more, there is confusion or build versus buy conversations as it relates to AI and their tech stack. That led to some extended sales cycle thrust, that led to elevated levels of churn and down-sell at the lower end of our upmarket business. That continued in Q2. We are being proactive in that we are re-changing the way that we package and sell so that we are making sure we are still plugging in ZoomInfo's data and context layer wherever it fits for the customer, regardless of whether they are going to build something or not. Yeah. Separately, I would say that the bigger piece of the story now in software in Q2 is that it is just broadly pressured more so than it was six months ago. Yeah. You see this in the form of these software customers are also facing different growth environments and growth trajectories, which are informing budget constraints, headcount constraints. It is a tougher buying and selling environment than it was three to six months ago, and maybe that is cyclical. I do not know how or when that changes, but I do think that the changes we are making to the products that we are selling and how we sell those should help us longer term to improve retention in that vertical. Yeah. Look, the business is clearly shifting upmarket. You talked about some of the metrics that you are proud of in that segment. I think it is now 76% of the business. What makes that a structurally healthier cohort, and how should we think about the trade-off between a healthier mix of business, but slower growth here in the interim? Yeah. I think the slower growth here in the interim is, again, mostly software informed. Then we're going to essentially do things now, build things now that give us a better opportunity to accelerate growth in the future for the full segment. These customers generally have assigned a greater value to the data and applications that we sell. They're less transactional. They usually are more ahead of the curve when it comes to their data strategy in concert with their AI strategy. That generally leads to better retention outcomes for us upmarket. Yeah. Have you done the LTV to CAC analysis? Yeah. Up-market versus down-market? How divergent are we talking? Very divergent. When we looked at our down-market business, which was growing years ago, but I think is secularly, it's a tough place for growth. I'd say the retention outcomes in the down-market business, even across vendors, are pretty consistently low. Yeah. The LTV to CAC there, when you look at it, could be in a place that doesn't make a lot of sense, low single-digit numbers. When you look at the LTV to CAC, when we estimate that for up-market business, you start to get very attractive double-digit figures. Yeah. Okay. That's good. Double digit in the upper end. Let's talk about the Operations business. That's another bright spot. It's kind of informing your strategy as to where the business is going over time. I think that segment grew 20% in the most recent quarter. So what's driving that, and what does it tell you about how your customers leverage and value the data? Yeah. I think a lot of what's driving that are the scale-up of AI initiatives at large companies. So our Operations business is growing 20%. It's about 20% of the total business as well. You want me to just describe what Operations is? Sure. In case someone doesn't know? Yeah. So it's basically our DaaS business. This is basically access to our data assets that we sell to customers on a data access subscription. So it's not seat-based. We're basically selling access to a part or all of the dataset on usually a multi-year contract. As folks start to roll out more and more of these AI initiatives, what becomes clear very quickly is they're only going to succeed if they have the correct data foundation, and then you take that and you marry it with the first-party data they have to create that context layer to really supercharge any of these go-to-market AI initiatives. We look at the performance of that business with, you can imagine, much better retention than the overall business, good economics. That has helped us think about how should we price and package the existing seat-based business today, which is a little less than two-thirds of the business, to mimic the financial performance of Operations across the rest of the business. Yeah. Okay. So the strategy then becomes, we detach the data from the seat, right? And you can avail the data to LLMs, agents, customer workflows. At a high level, what does that do to the opportunity? How do you think about the TAM now that we're repositioning the value prop? Yeah, I think we want to make it easier to use ZoomInfo across a much broader surface area. I think that expands the TAM when you start to say, whether it's in our application ecosystem, whether you're leveraging ZoomInfo via Copilot and Claude or ChatGPT or Gemini, or via API into whatever application you may be looking for. It's important to remember here that the preferences or the appetites from our existing customers are going to be diverse, and they're going to be diverse for a while. This is not going to be a flip-the-switch away from seats to consumption. There are going to be customers who want to stay on seats for a period of time, and we are going to meet the customers where they are on this. Yeah. That's a good segue probably to talk about hybrid pricing. You talked about plans to start to roll that out in Q3. I think you said maybe very end of the year, early next year, we'll start to go back into the installed base. What are you looking for in those initial, I don't know if pilots is the right word, but the exploration phase of the new pricing model. What are the signals here you're looking for that will inform the strategy going forward? Yeah. I'll say it again, like in the customer base, we want to meet the customer where they are. Two other things that inform this from my perspective is simplicity where possible from a pricing perspective. If we can have as much uniform pricing as possible, that's good. Two, reducing barriers to consumption. I want this to be designed in a way that customers can get into the platform or get into their credit pool and start seeing value quicker. We want to be tying how we price our products and services to the work being done and less to something like a seat. Yeah. I expect that we will start with the new business motion at the end of this quarter. That's usually a cleaner testing ground, and that's where I really want to look at the early consumption trends when customers are buying a, or lookalike customers are buying a credit pool instead of a seat allocation. There's incentives here for the prospects or the customers. They'll effectively have unlimited seats. They'll have access to the full application suites in one interface, and we really want to know what that expanded surface area does to the consumption side of it. In the customer base, I think there's going to be customers that are healthy and raise their hand and say, "We want to go to the next-gen platform." I expect that we'll be able to monetize uplift in those instances. And then there's going to be customers where they have fewer seats than they used to have, and we're able to migrate them onto the hybrid consumption model, and that should optimize for retention one and two and three years down the road. Is there an opportunity in that less healthy cohort to get more aggressive with price? How are you thinking about rolling that into the base as you start to have these conversations? Because I think one of the knocks has been like, oh, there's lower price alternatives out there. Maybe the data quality's not there, but good enough works in certain environments. As you look at that less healthy cohort, what's the strategy on price as you now are revisiting contracts? I think down market, we can be pretty flexible now that we've taken further resources out of that segment. I want to make that deliberately a smaller part of the business quicker, and that means accelerating the decline there over the next few quarters. One of the ways to do that is pricing and packaging, especially on the new business front. And then for a hypothetical, less healthy customer, at the lower end of up market, again, I want to do what's right to keep the logo and make sure that those customers are accreting the value that they should be for the price they're paying for ZoomInfo. That's not always going to show up in the pricing at migration, but I expect it would show up in the form of growth retention and eventually net retention years one, two, and three down the road. And then maybe flipping that question on its head and looking at the healthy cohort where the customers are getting a lot of value out of the data and growing with you guys. Pick a number, right? Say, a customer's spending, and I know it's early to ask these questions given we haven't really pressed on this lever, but if a customer's spending $100,000 with you today, and we cut them over to some sort of hybrid seats plus consumption, what could that $100,000 turn into? How do you think about that? Yeah. Look, I think we've had a version of this experiment or motion in the past with our ELA motion, where a customer is spending, in your example, $100,000 with us. Maybe they're a Copilot customer, and they're about to become a Copilot and an Operations customer, or a Copilot and a Studio or a ZoomInfo Marketing customer. We say, "All right. Let's take all these disparate transactions. Let's get them under one enterprise license agreement. It's a 20% increase, and you sign up for three years." That informs our thinking here of instead of just having point solutions and restrictions around seats, let's make this simpler. You get credits that you can use across the landscape, and it opens up our ability to monetize that consumption in an upside way over time. Yeah. Okay. Look, you guys own the underlying data asset, right? I think from a breadth and quality perspective, there's really no one else in this space that can match you guys. The sales enablement and the workflow tooling space has become pretty crowded, right? There's a lot of vendors there, and some are doing well, some aren't. I'm curious what you think the underlying data asset does for competitive differentiation, and how does that position your right to win on the sales enablement and the workflow side of things? Yeah. I think the competitive differentiation is as clear as ever. I think how we win is what is going to change and what we are changing, and that we are going to be less prescriptive in that we need to win the application layer and the data layer and the orchestration layer. If there are cases, and we have good, big customers that use us in a headless manner, where we are just the data asset, and they're using us in other applications and other surface areas. That is really one of the most compelling paths that we have moving forward, is making sure that we are going to market and building products in a way that allows for that flexibility, because I think that's where the upside starts to come in. Yeah. Another good segue. It's almost like you have my questions. You've talked about the second half being your most ambitious product roadmap or initiatives in a while, right? I don't know how much specificity you can speak to, but what should investors be watching from you guys from a product perspective? And obviously, how does that feed into your thoughts around retention and growth opportunities? Yeah, look, there's going to be a gap between product adoption and consumption trends and financial outcomes. Sure. I'm very focused on tracking and effectuating that leading indicator set. When I think about this, I look at the consumption trends in, one, our new products, and then two, headless or different expanded surface areas. I look at GTM Studio. What are the data and AI consumption trends there? I look at consumption trends via MCP. I look at the consumption trends via API. And I see pretty promising sequential growth in this pool of headless and next-gen products. But it's also coming from a very low number. Right. That basically was close to zero last year because it didn't exist. As that scales up, I believe that will be the important leading indicator for financial outcomes, and I'm hoping we get to a place in the next few quarters where it's material enough that we can start to share that and translate what we think it means for retention, for revenue, and everything else. Yeah. You talked about one of the bright spots in Q2 was the profitability, right? Being able to maintain what have historically been best-in-class margins while seeing some top-line headwinds. Maybe just talk a little bit around capital allocation strategy. You've been buying back stock. Your debt's pretty cheap. How are you thinking about things from here? You also just talked about a desire to invest in product. What's the commitment to keeping margins up during this transitional period of growth? Yeah. We restructured the business in Q2. I think that sets us up well to continue to deliver positive profitability outcomes consistent with the past and improving margins because we navigate this path to a more durable growth framework. Look, I think our R&D team is smaller but more talented, and I think that the changes we made informed our ability to retain and attract top talent. Sales and marketing, we're well-resourced up market, and we'll continue to rightsize, or we have continued to rightsize the downmarket business. I expect that we'll continue to generate a lot of free cash flow, and I expect to efficiently deploy that free cash flow. In Q2, we did expand that, as you mentioned, beyond just share repurchases to buying back our debt at a discount. I think you should expect that expanded approach to continue in the back half of the year. Okay. I'll ask one more, and then I'll open it up to folks if there's any questions in the audience. I asked Henry this a while ago, I'm curious your perspective. Has AI made it any easier to collect, maybe not the contact data that you guys have, but any of the intent signals? I'm thinking about if companies want to embark on this initiative on their own, is the tooling now there that they can do this? Or what separates what ZoomInfo does versus what somebody tries to do on their own? Yeah. Not at scale. I think the idea that you can token your way to recreating the data asset is misguided. There is publicly available information that is in our data asset, but the ability to actually curate that, resolve it, match it, dedupe it, rank it with all of our proprietary data asset is where a lot of the value actually comes from. So again, I do think that the clarity around the value of our data asset, especially with up-market customers, is becoming clearer the further along we go on the AI adoption curve. Yeah. Okay. Any questions in the room that we can address, or I keep going? Maybe I'd love to get your sense of competitive set and what's changed out there. Maybe you can break it into two parts. You have the data competitors, and then you have the sales enablement workflow folks. I'm curious if anyone stands out to you as trends are getting better, trends are getting worse. What are you seeing in competitive situations, et cetera? Yeah, I think downmarket, which I think is more the kind of data version of this, it's more the same. It's kind of the lower cost, lower quality providers, and customers down there are very sensitive, hence kind of our deprioritization of revenue downmarket. That actually unlocks our ability to compete more from a PLG perspective. I think at the highest end of upmarket, it's also more similar in that we don't have a lot of competition there. Then at the lower end of upmarket, it's noisier. You're getting a lot more startups that have built an application quickly, and it's usually application or workflow focused. We still, whether those are competitive or viable products either way, position ourselves as yep, you still need the data, the plugin, the context for that, I think is where we've started to evolve our thinking in some ways. But that's just like, especially in software, that's for now, a very noisy space. Yeah. We talked about the revenue impacts maybe lagging some of the product initiatives and the pricing and packaging changes. In that interim period, what are the KPIs that investors should be paying the most attention to that signal to us, hey, they're onto something, that the revamped strategy's working? Yeah, I think our assumption around the challenges we see in software is that it's not getting better. I mentioned consumption trends to the extent that we're able to share them would be the milestones that I would look at. As those scale up, I'll be more comfortable sharing the trends there. Ultimately, that should inform better upmarket net retention and eventually overall net retention. I think those are probably and continue to be the core metrics that are going to drive a re-acceleration in this business. Yeah. When we think about consumption, how's that going to work? Is it going to be a rate card where different data is more valuable? I can imagine logging in and getting someone's email is one thing, but then getting intent signals around, hey, whatever, they just hired a new CFO, and they're maybe in the market for an ERP replacement. That's far more valuable to me as a salesperson. Yeah. How do you think about pricing that stuff? Yeah, you're right. It basically is a grid, which lends itself to some complexity. We want to make sure, and I mentioned earlier, I want to err on the side of simplicity when we're thinking about for customers. I think in the first year or so, we want to basically design this in a way where customers aren't too worried about doing all of the math there, and that we can give them the comfort that they're spending for what they're getting. As we think about the AI action credit part of this where we actually have some cost as we have the data side of this, yeah, there's basically going to be a grid of this action costs this. Customers generally are going to pre-commit to a set of credits at the beginning of a year, and then we can help them track that. Again, in the first year, I want to take a flexible approach so that customers are not going to be super concerned about overages or underages, and we can give them the comfort as we essentially learn on this. I want to learn a lot in the first, not just year, probably the first month that we have this out in market. Yeah. Okay. Maybe in the last minute here that we have left, we're probably going to do this conversation again in a year at this event, hopefully, God willing. What would you hope would have changed the most between today and a year from now that we'll be talking about at that point? Yeah, two things. I want the business to be much more upmarket. It's 76/24, I want that to keep moving to 80/20. I want those consumption trends that I talked about earlier in the new product world and the headless surface area, I want that to be significant enough from a growth perspective that we're talking about that. Yep. In the interim, we'll continue to generate a ton of cash and return it to shareholders? Yep. Yep. Okay. Maybe that's a good spot to leave it if there's no other questions. Graham, we got one. One of the questions is you have an inventory or portfolio capabilities that your customers have, and then the organic growth capacity of the actual customers to buy them. Where are you on that? You generally have on average how many products with a client, and what do you view as the realistic install base opportunity on average? Yeah, maybe I'll just repeat for the webcast. I think the question was getting at where are you from a wallet share perspective with your customers? You have a whole portfolio of products. You're not wall to wall with many of your customers. What's the install base opportunity? Yeah, I still think there's a lot of wallet share opportunity there. I think in the past, we've been a little bit more rigid on an all or nothing application and data sale. I think as we open up the avenues to be a little bit more à la carte, that's a pretty good opportunity for us to go and capture a lot more of that wallet share. Yeah, sure. The shift in the pricing model from seat-based to usage, is that driven by just the market shifting and that's needed to survive? Or is it something that you think new customers would be excited to attempt ZoomInfo with? Yeah, and again, I'll paraphrase. I think it was kind of a push versus pull question. Are the changes you're making in the business reactive to what you're seeing in the market, or is this proactive because you think you can grow faster? It's reactive to a pocket of customers. This is not a broad taste thing yet, but there are customers that are saying, "We prefer this," and there's going to be customers who say, "We don't want this. We want to stay on this model." It's really informing the hybrid side of this and the idea that we need to be able to design and sell and build our products in a way that essentially serves both purposes and everything in between. Awesome. That's a great spot to leave it. Graham, thank you very much for being here, and look forward to the conversation in a year. Yeah, me too.