Financial Performance Overview

ZoomInfo, a global leader in modern go-to-market software and intelligence, reported its financial results for the three months ended March 31, 2025. The company generated revenue of $305.7 million, a 1% decrease compared to the same period in 2024. This decline was primarily due to the operational changes implemented in the second quarter of 2024 to focus on customers more likely to pay, renew, and grow over time.

Despite the lower revenue, ZoomInfo’s profitability remained strong. Gross profit was $258.4 million, representing a gross margin of 85%. Operating income increased 17% year-over-year to $50.3 million, with an operating margin of 16%. Net income grew 77% to $26.8 million.

The company’s Adjusted Operating Income, a non-GAAP metric that excludes certain one-time and non-cash items, was $100.9 million, representing a 33% Adjusted Operating Income Margin. Adjusted EBITDA, another non-GAAP measure, was $107.7 million. Adjusted Net Income, which further adjusts net income for non-recurring and non-cash items, was $81.9 million.

Revenue and Profit Trends

ZoomInfo’s revenue decline in the first quarter of 2025 was primarily due to the operational changes implemented in the prior year to focus on higher-quality customers. This shift resulted in lower revenue but improved the company’s overall customer profile and reduced write-offs and bad debt expenses.

The company’s gross margin remained strong at 85%, despite the revenue decline, as ZoomInfo was able to leverage its scale and optimize costs. Operating expenses decreased 7% year-over-year, driven by lower bad debt expense and reduced litigation-related costs, partially offset by higher employee compensation and technology expenses to support the business.

These factors led to a 17% increase in operating income and a 77% increase in net income compared to the first quarter of 2024. ZoomInfo’s profitability metrics, including Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, and Adjusted Net Income, all declined year-over-year but remained at healthy levels.

Strengths and Weaknesses

Strengths:

• Dominant position in the go-to-market intelligence market, with a differentiated data-driven platform
• Strong profitability, with high gross margins and operating leverage
• Efficient go-to-market strategy, focused on acquiring and retaining high-quality customers
• Recurring revenue model with a high percentage of multi-year contracts
• Ongoing investment in product innovation and data capabilities to maintain competitive advantage

Weaknesses:

• Temporary revenue decline due to operational changes to improve customer quality
• Potential exposure to macroeconomic conditions that could impact customer demand
• Reliance on acquisitions and integrations to drive growth, which can be operationally complex
• Significant tax receivable agreement liability that could impact future cash flows

Outlook and Future Considerations

Looking ahead, ZoomInfo’s management remains focused on driving long-term growth and profitability. The company’s investments in product development, data capabilities, and go-to-market efficiency are expected to position it well to capitalize on the growing demand for go-to-market intelligence solutions.

However, the company’s performance may continue to be impacted by macroeconomic factors, such as changes in customer spending and potential recessionary pressures. ZoomInfo’s reliance on acquisitions to fuel growth also introduces integration risks and the potential for one-time expenses.

Additionally, the company’s significant tax receivable agreement liability, which stood at $2.8 billion as of March 31, 2025, could impact future cash flows as these obligations become due. Management will need to carefully manage this liability to ensure it does not become a drag on the company’s financial flexibility.

Overall, ZoomInfo remains a market leader in the go-to-market intelligence space, with a strong financial profile and a clear strategic vision. However, the company will need to navigate various operational and financial challenges to maintain its momentum and deliver consistent long-term growth and profitability for shareholders.