Q4 2020 ZoomInfo Technologies Inc Earnings Call
Ladies and gentlemen, please standby.
<unk> zoom in flow fourth quarter.
And full year 2020 financial results conference call will begin momentarily. Thank you agree and patients and please standby.
[music].
A question and answer session to ask a question during the session you will need to press star one on your telephone please be advised and today's conference maybe recorded if you require any further assistance. Please press star zero and I would now like turn the conference over to your Speaker today Jerry Savitsky. Please go ahead Sir.
Great. Thanks, Josh.
And I appreciate it a welcome to zoom info as financial results conference call highlighting our results for the fourth quarter and the full year of 2020 with me on the call today are Henry shot CEO and founder of Zoom info and camera and Heizer, our Chief Financial officer. After their remarks, we'll open the call to Q&A.
During this call any forward.
Looking statements are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 expressions of future goals, including business outlook expectations for future financial performance and similar items, including without limitation expressions using the terminology may will and believe and expressions, which reflect something other.
Other than historical facts are intended to identify forward looking statements forward looking statements involve a number of risks and uncertainties, including those discussed and the risk factors section of our filings with the SEC actual results may differ materially from any forward looking statements. The company undertakes no obligation to revise or update any forward looking statements and order to reflect.
Reflect events that may arise after this conference call, except as required by law for more information. Please refer the cautionary statement included in the slides that we have just posted to our Investor relations website at IR Dot zoom info dot com.
All metrics discussed on this call are non-GAAP, unless otherwise noted a reconciliation.
<unk> can be found and the financial results press release or on the slides that we've posted to our IR website with that I'll turn the call over to our CEO Henry shock.
Thank you Gary and welcome everyone.
Good for many companies in 2020 presented a unique set of operating circumstances zoom info.
Our team.
Managed past headwind and tailwind.
And at home orders and virtual work mandates and through it all we adapted moved fast to find new possible and stepped up to deliver the strongest fourth quarter and the strongest year on our company's history.
During the quarter, we said company growth records for new sales.
<unk>, new customers added customers over $100000 and ACB efficiency metrics, such as the LTV to CAC and we saw broad based strength across all areas of the business are truly impressive and to our first year on the public market.
I assume and so we are building the modern go to.
Platform from the foundational level up starting with the market, leading robust and accurate data layer that fueled a suite of next generation workflow software.
This is delivered across a purpose built interface that powers go to market efforts for companies of all sizes and all industries all over the world.
Our vision to fully digitize go to market is resonating more today than ever before and is reflected and the momentum we see and every aspect of our business from new customer acquisition, the customer attention to and user engagement and new product adoption.
And Q4, we delivered GAAP revenue of 100.
$140 million up 53% year over year and sequential quarter growth of 13% our.
Our click and <unk> and <unk> acquisitions contributed $2 million to revenue and the quarter, implying organic sequential quarter growth of 12%.
We delivered strong organic revenue growth with an adjusted operating.
Operating income margin of 45% for the full year, we achieved GAAP revenue of $476 million up 62% and adjusted operating income of $226 million.
Our financial performance reflects our goal to not only build the best suite of go to market towards imaginable.
And ball, but.
And do that with a focus on operational excellence and best in class execution.
Q4 was a record for us on the new business side, both from a logo and dollars perspective.
We closed the year with more than 20000 tank customers, adding new users from marketing revenue and sales operations.
<unk> data analytics and data science talent acquisition and sales and executive leadership.
We added customers and industries across the globe from from the pharmaceutical industry to manufacturing from shipping and logistics to the construction industry from Chino, California to Lewiston, Maine and.
And from Auckland, New Zealand.
Paris, France.
And our continued focus on driving enterprise adoption delivered record growth from our largest customers. We now have more than 850 customers with <unk> over $100000, representing greater than 45% year over year growth and that cohort.
Contribution.
Growth and the number of $100000 customers was strong both on the new business side, where the contribution doubled versus Q3 and on the expand side where contribution into the growth into the cohort grew 71% sequentially.
We now work with over 50% of the Fortune 500 and over 30% of the.
<unk> and 1000 and there is so much opportunity and the enterprise just within our existing enterprise accounts, we see a $1 billion plus seat expansion opportunity on our core platform.
Our pipeline across the enterprise remains strong and I expect that we will continue to see strong growth across this segment.
Fortunately organization has also demonstrated itself to be incredibly nimble as we prove out our additional strategic growth vectors, our entrance into and into the international markets continued its strong start with 20% sequential quarter growth and 71% year over year growth as we see strong demand for our products in Europe.
The owned and English speaking regions and Asia Pacific.
Our sales automation platform and gauge is also accelerating posting 43% sequential quarter ACB growth, while growing the attach rate on new business transactions and renewals, 28% and 44% respectively.
While early.
We see customers that leverage engage have meaningfully higher renewal rates. This was one of the many contributing factors to the record retention activity, we saw on the fourth quarter.
We continue to see broad based momentum and positive feedback from customers and independent leading firm as we invest and our product for.
For example, and <unk> Winter 2021 grid report released in December Zoom and fill appeared on 37 grids are highest number ever while also receiving 22 number one placements, including new number one ranking and the enterprise category for account data management and lead capture.
This.
This shows and not only are we building products that span a wide spectrum of go to market pain points, we are doing it with best in class products.
We are also seeing new and increasing adoption of our platform across a broad range of industries.
From jazz Pharmaceuticals to marathon oil from Toyota to Honeywell.
Lamar to Pitney Bowes from Stanley Black <unk> Decker and SAP.
And <unk> science.
Blink Sciences, a creator of instant diagnostic testing tools and and innovative medical passport system, they're doing their part to help stop the pandemic Blink.
Blinks quick low cost Covid test can be used by everyone.
Every organization and the world so they needed to narrow that universe to find and engage with the right contact person at the right target organization.
<unk> zoom and throw the ideal solution for them.
Today, they are successfully engaging with the right personas and at the largest health care distributors shipping companies and health care organizations.
Nations and the world to ensure rapid deployment of their device when it is EUA approved.
We remain and the very early stages of this market opportunity.
And our opportunity to drive the change and the way companies find prioritize and engage with prospects and customers from a manual.
Timed inefficient got driven approach to engaging and approach that has been around for over a century to and approach that drives and efficient intelligence, driven and automated approach to assessing market opportunities finding the right prospects and driving increased customer engagement.
This.
Poorly and it's a fundamental shift and how businesses will go to market and the future and we are still on the early adopter stage of the evolution with a market that is low single digits penetrated.
With this large addressable market in front of US, we see a great opportunity a great opportunity to increase our investment and our data platform.
Replication, our first step and doing that is announcing that <unk> will now serve exclusively as our chief product officer. So she can focus on driving innovation and product enhancements to capture the market opportunity ahead of us.
We've elevated Chris Hays to the role of Chief operating officer, unifying our sales and marketing.
And Apple Chris as our longtime revenue leader, who now takes on responsibility for the entire go to market organization, including marketing.
We also announced today that Shane Murphy Reuter has joined US as our new Chief marketing officer reporting into Chris Shane joins us from Entercom and San Francisco based conversational relationship platform.
Form where he was senior VP of marketing I am confident that this team sets us up for continued growth and success.
Our culture is driven by continuous improvement and winning we push ourselves to continuously improve we collaborate get things done and define new possibles we.
We do this all with a focus on diversity and inclusion we have taken actions to proactively foster collaboration drive engagement and grow our culture as we continue to work remotely and.
And as a testament to our great culture that we've been able to recruit and onboard more than 900 employees since the beginning of March 2020.
With those employees, representing roughly half of our entire worldwide organization.
Our customers are using our platform more than ever and not just for prospecting, but increasingly by fully integrating it into their business processes through their CRM marketing automation or internal applications.
And the fourth quarter, we saw unprecedented usage of those integrations with nearly 2 billion automated calls of our API that is roughly two times. The volume we saw just one year ago.
Across our user facing applications, we also experienced increasing rates of adoption throughout the quarter, culminating with January.
And we're a delivering record high engagement rates on our core platform as measured by daily active users of our monthly active users as well as significant increases and usage of additional functionality and a record high NPS score and January.
And we're also seeing more customers leverage zoom info for real time opportunity.
And advanced targeting jumping, 60% and Q4 compared to Q3.
This important metric demonstrates that customers are continuing to sophisticate their use cases with us and are taking advantage of our more advanced features and functionality and insight points.
Regardless of where or how.
How our platform is consumed the guiding principle for zoom and thorough customer is to turn insight into action.
And 2020, we shared a vision with our customers around being able to take a signal a funding event and new technology added to accompany stack are spending initiative and the works on a spike and a relevant and temp topic.
Signals and cross reference that signal against and ideal customer profile say companies with more than 100 employees, who use net suite and who are not current customers and mapping that to their ideal prospect profiles, and then instantly activate and the campaign targeting that audience our vision.
As a fully automated go to market motion from signal to action. This.
This capability and more than sales automation or marketing automation and it is true go to market automation and is now fully available with our workflow suite today, the workflow suite, which is available within our elite package includes.
And imagine to interface that turns and natural language statements and to go to market workflows that integrate with a broad range of CRM sales automation and marketing automation and advertising platforms. We've also added contextual access to create workflows throughout the zoom info platform and the ability to enable every user.
User with this automation capability.
On the enterprise side, we continue to build ways to deliver our data and insights in real time anywhere our newly launched data share push API and custom data flows allow our customers to consumer insights and new and innovative ways, including through.
Data warehouses custom applications and cloud databases and this arena, we are especially excited about our new agreement to list zoom info on a snowflake data marketplace, allowing while allowing us to deliver our data and insights directly into our customers' snowflake instances for consumption by their business intelligence data analytics.
And revenue operations team.
One of our newest offerings as our recruiting suite designed to help recruiting teams identify target and engage with top talent, even when that talent is and actively and market looking for a new role recruiting teams can uncover timely and accurate data such as work history.
Technologies used and departmental organizational charts to help them better understand managerial functional and technical experience.
We are and market with zoom info recruiter gathering feedback from customers, who are already actively using the product. We believe that the recruiting use cases, a powerful one and we expect <unk>.
And invest more here continuing to deliver more features and functionality and broadening our marketing efforts throughout the course of the year.
As Cameron will detail, we expect to continue delivering on our industry, leading combination of strong topline growth and profitability as we initiate 2021 guidance that calls for revenue.
<unk> of 37% at the midpoint with adjusted operating margins of 43%.
In closing 2020 was a great year for zoom and Phil and we're excited about the year ahead, we continue to invest and delivering success to our customers. We continue to invest behind the platform improving the quality of data.
<unk> functionality and usability and we continue to invest and our team. These investments set the stage for and even better 2021 and for us and deliver a durable combination of both revenue growth and profitability with that I'll hand, it over to our Chief Financial Officer Cameron Heizer.
Thanks Henry.
And we're very.
Growth is with our financial performance for both Q4 and the full year.
Our guidance for revenue profit and cash.
Based on market demand, our strong execution and our strategy of continuing to reinvest back in the business.
We expect to continue delivering a strong combination of revenue growth and.
And profitability in 2021.
Our full year guidance calls for revenue growth of 37% and continued investment and sales and marketing capacity and innovation to drive sustained growth going forward.
We expect this to yield operating margins of 43% with our long term within our long term target range.
<unk> of adjusted operating margins on the mid to high Forty's.
With this performance, we expect to deliver $270 million to $280 million and Unlevered free cash flow.
And Q4, we delivered GAAP revenue of $140 million up 53% year over year and up 13% compared to Q3 of 2020.
Excluding the impact of the acquisitions completed in Q4, our organic sequential quarter growth was 12%.
And the fourth quarter, adjusted operating income was $63 million, yielding and margin of 45%.
Margins were modestly impacted by the acquisitions and the quarter and reflect a higher investment and R&D to.
And each of our leadership position and the market and drive longer term growth and Tam expansion.
For the full year, and we delivered GAAP revenue and $476 million of 62%.
And adjusted operating income of $226 million or 47% margin.
As we move through 2020 economic.
Take advanced certainty related to the global pandemic proved to be a headwind and the first half of the year, particularly impacting large upsell deals and seat expansion opportunities.
And the second half of the year, we call it more of a tailwind as the new virtual environment for sellers and accelerated the longer term trends towards digitization and customers acclimated.
And to the economic environment we.
And we saw record new customer additions and strong retention and up sell activity and the fourth quarter and.
As of December 31, we had more than 20 customers, representing greater than 35% growth relative to 2019 and more than 850 customers with 1000 or two.
<unk> thousand dollars on more on ACB, representing greater than 45% growth.
And early 2020, we had expected COVID-19 related headwinds to negatively impact our retention rates for the year as we move through the year, we realized improving activity and ended the year with annual net dollar retention at 108%.
Downloads and 100 basis points compared to 2019 and better than expected.
We were able to overcome most of the COVID-19 related headwinds for the first half of the year and the momentum of retention activity. We experienced in Q4 of 2020 was even better than what we experienced in Q4 of 2019, which gives us confidence going into 2000.
'twenty one.
Our international revenue growth was a particular bright spot and the quarter as we grew international revenue by more than 70% year over year, driven by 20% sequential growth relative to Q3 and.
And Europe in particular, where we have invested by dedicating specific teams to focus on European.
<unk>, we're seeing great traction.
Given the success and large opportunity we plan to continue investing and our international go to market and support capabilities.
We've also continued to make progress migrating customers to our new platform as of today, we have more than 70% of our ACB on the new platform and while it is still early.
Sales cycles, we continue to see better net expansion activity among customers renewing on the new platform and those on legacy platforms.
To evaluate and period activity and the current trajectory of the business. We focus on sequential revenue growth, which is the growth and total revenue divided by the days and the quarter compared to.
The prior quarter.
While Q4 is typically our strongest quarter each year with respect to any period activity. We're very pleased with our results this past quarter, delivering 13% sequential growth and an acceleration relative to Q3.
As a reminder, while sequential growth exhibit less volatility from extraneous factors compared.
Other metrics like calculated billings on <unk> growth seasonal selling patterns still matter.
The $2 million and revenue from the acquisitions of click and GE and ever strength also contributed to increased sequential growth.
For those looking at calculated billings and the mix of customers with annual billing improved relative to the third.
Third quarter to be back in line with Q4 of 2019 positively impacting both billings and cash flow and the fourth quarter.
As we move on to expenses.
Adjusted operating income adjusted operating margin in Q4 decreased by roughly 200 basis points relative to Q3 driven by increased investments.
<unk> and sales and marketing and R&D.
Sales and marketing increase as a percentage of revenue and as we expanded capacity and incurred higher commissions related to the strong sales.
R&D expenses increased as we continue to ramp investments to take advantage of our leadership position and the market.
We have plans to continue to build upon our significant platform and data advantage and expect to invest and an incremental $30 million and R&D in 2021 relative to 2020 loans.
Given the strength of our core platform this incremental investment and creates a meaningful opportunity to expand our target addressable market and.
And new and expanded functionality to our customers, we expect us to further distance us from other point solutions available today and drive more growth opportunities and the future.
Relative to Q4 2019, we also incurred greater G&A expenses due to public company costs and investments and our internal infrastructure to sustainment.
And continued growth.
Turning to the balance sheet and cash flow, we ended the quarter with $302 million and cash cash equivalents and short term investments and the.
And fourth quarter, we generated operating cash flows of $67 million, which were offset by our acquisitions of <unk> strength.
Operating cash flow also included approximately.
Slightly $10 million of interest payments and the quarter.
Unlevered free cash flow was $77 million for the fourth quarter and $244 million for the full year.
During the quarter, we booked a record amount of business outperformed in terms of operating income so on improvement in the mix of payment terms and had strong collections.
All of which combined to drive strong cash flow for the quarter and year.
Looking forward, we continue to model Unlevered free cash flow conversion rates and the 90 day as a percentage of adjusted operating income.
With respect to liabilities and future performance obligations unearned revenue at the end of the quarter was 223 million.
And the remaining performance obligations or <unk>.
Were $559 million of which $432 million are expected to be delivered and the next 12 months.
And the acquisitions of <unk> strength contributed combined contributed approximately 1% to total RPM.
As.
As of December 31, we carried $756 million and gross debt at a net leverage ratio of one nine times 2020, adjusted EBITDA or one six times 2020 credit agreement EBITDA.
And January we repaid part of our term loan and repriced the remainder in conjunction with issuing a.
Senior unsecured bonds.
We expect to reduce cash interest expense by approximately $3 million and 2021 as a result of this refinancing and increase our flexibility with respect to future potential capital needs.
Additionally, we upsized, our revolver from $100 million to $250 million.
New to providing incremental liquidity for our business.
With that I will provide our outlook for the first quarter and full year 2021.
For Q1, we expect GAAP revenue and the range of $144 million to $146 million and adjusted operating income and a range of 61 to 60.
<unk> million dollars.
Non-GAAP net income is expected to be and the range of 10% to 11 per share.
And our guidance.
Implies sequential growth rate at 6% at the midpoint as adjusted for the days and each quarter and and adjusted operating income margin of 43%.
We are initiating.
On a full year of 2021 guidance with GAAP revenue of 400.
645 million to $655 million.
And adjusted operating income of $280 million to $285 million.
Non-GAAP net income for the year is expected to be 47 to 40.
Three <unk> per share based on 405 million diluted weighted shares outstanding and.
And we anticipate unlevered free cash flow to be $270 million to $280 million.
Our full year guidance implies 37% revenue growth and and adjusted operating income margin of 43% at the midpoint of the range.
As you adjust your models please keep in mind the following.
Given our increased investments and sales and marketing capacity and R&D, we expect to maintain and year over year topline growth in excess of 30% per every quarter and 2021.
We expect Q1 operating adjusted operating margins to be the.
Nice quarter of the year due to fewer days of revenue recognition and seasonal expense increases.
With margins ramping steadily through the third quarter before level leveling off in Q4.
We expect a reduction of stock based compensation expense for the year of roughly 40% compared to 2020.
The lowest we anniversary of the IPO, which triggered increased stock based compensation charges.
We expect depreciation and amortization, excluding amortization of acquired intangibles to increased approximately 45% year over year and cash.
Capital expenditures to increase in line with revenue growth.
We also expect.
And non-GAAP tax rate of 20% and our cash tax rate of 10% per the year.
Q4 was a strong finish to our first year as a publicly traded company. We are very confident as we enter 2021 and we can continue to deliver a leading combination of revenue growth and profitability.
Now.
And over to the operator for questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone.
So on your question press the pound key please standby, while we compile the Q&A roster.
Our first question comes from Raimo <unk>.
Let me turn on please you May proceed with your question.
Congrats that was it very strong and to the year and then a great outlook.
Henry I just wanted to talk about the H R.
Routing opportunity that sounds very very exciting things like how do you think about framing that in terms of size like you said like NOI.
A small fraction of what you see on the on the sales side, if I think about like linked in.
Obviously doing some of that already like it seems like a very very big opportunity, but I am just trying to see like how you would frame it and then I have one follow up.
Yes, I think much first we do view the recruiting opportunity the very big.
Big opportunity for US, we're obviously really early stages, just coming out of a beta launch and into a soft.
<unk> launch, but that launch has gone really well for us I think what we're most excited about there is the opportunity the opportunity to bring real software technology and workflow tools to HR and talent acquisition professionals.
<unk> largely found candidates through and incredibly manual bespoke process and so on the recruiter product really where this our robust company and contact data asset with workflow and technology tools that allow talent acquisition professional tech.
<unk> identified the university of candidates and build and automated set of email.
E Mail and call communications to them and then integrate those activities back to their ATF system and so on a lot of ways, we feel like we're bringing on.
Real enterprise scale technology to the HR and talent acquisition space and so we view that as an incredibly large opportunity, especially of hiring ramps.
As we come out of the pandemic.
Okay, Yes, it makes sense and then once camera and like if I think about the international expansion and especially Europe sounds really interesting like how do you think about net investment cadence that you will have to or is that kind of a lot of upfront investment. This year that we need to see or like how do you kind of bridge that gap.
Sure.
Thanks for the question, we don't see a ton of.
And last one I think.
And we look at our sales and marketing teams in particular, but also our support teams.
Continuing to make short term returns on the incremental investments that we're making so in Europe in particular.
Segmented out specific teams, but.
Due to travel restrictions and so forth.
And our east coast offices and specifically.
Take inbound leads or prospect on on outbound basis into Europe, and Thats shown really strong.
Momentum and will continue to invest behind those.
But that momentum tends to be generated within the months and quarters, it's not a.
It's not a long term and payback.
Okay, perfect Hey, congrats both on.
Thank you. Thank you very much.
Thank you. Our next question comes from Stanislawski with Morgan Stanley and then proceed with your question.
<unk>.
Thank you so much guys and congratulations on a very strong quarter.
A couple of questions from my end first one the international growth number that was that was actually very impressive.
And where which geographies are you looking to really focus on.
In 2021, and then I have a quick follow up.
Correct, Yes, great Hey, Stan.
I think first we saw our biggest strength and Europe, particularly English speaking Europe, we saw strong demand and UK and Germany, and we're seeing strong demand across Australia, and New Zealand.
We're going to continue to invest dedicated sales resources to.
To go after this opportunity and capture.
International opportunity, obviously strong growth.
And there, but we see and incredibly nascent market. There's a lack of good cohesive products to solve the same go to market problems at U S companies are struggling with Theres, a confusing regulatory environment to navigate and Theres a lack of a vision for how to go to market digitally that's being presented there.
So we bring this evangelistic vision for digital go to market internationally, we help customers navigate the regulatory environment and we believe that international is going to continue to increase as a percentage of revenue as we continue to invest there.
Perfect. That's great and then a quick follow up for Cameron.
Brian.
The overall net net when you net revenue retention and 108%.
Obviously very strong results given everything that we've been through this year, but.
Underneath the covers right. If you were to look at the.
Cohorts of enterprise mid market SMB.
Did those do through the year and how did those finish up versus where you finish.
<unk> thousand 19.
Yeah. Thanks, Tim so on so two.
2020 was really a tale of two halves and the.
In the first half we saw headwinds and those.
And as headwinds largely impacted our.
Our.
Upsell opportunities and seat expansion opportunities naturally.
<unk> and <unk>.
More concentrated within larger customers and and the second half we saw improvements across the board. So if you breakdown. The 108. It is very similar to what we saw and in 2019 in terms of the net retention with a little bit more pressure and the.
And though the mid size and enterprise markets, but as we got to the end of the year across all of those groups, we saw better momentum than we had in 2019.
Okay.
Got it very helpful. Thank you.
Thank you. Our next question comes from city pen and gratitude.
Mizuho you May proceed with your question.
Hey, Thanks for taking my question and very impressive quarter.
Congratulation.
I wanted to ask you about the acquisition you did couple of recognition on any update on that and then when you think about the investment going forward.
No.
Rajiv tunnel development versus acquisition. So what are the areas you could potentially expand through this kind of tuck in acquisitions.
Great Hi city. Thank you.
Look I think the two acquisitions click and G and administering and I'll talk about both of them at this point, we have completed much of the heavy lifting from an integration perspective.
And so really good about where we're at there.
On the click and you side, we had already we already launched and our end market with our streaming and Kent offering.
The average free acquisition is already opening doors to substantially larger opportunities on the enterprise, where the combination of our contact company tech and the graphic and intent.
Dave with that make us incredibly uniquely positioned to win and it's an area that we're just starting to really focus on I will share a couple of interesting and anecdotes there.
And once we were fully integrated with <unk> and <unk> asset into our platform. We saw intense signals attached accompanies increased three <unk>.
And our customers are now seeing intense signals on significantly more of their targets across their total addressable market.
And then on the upstream side one of the things we were especially excited about what the acquisition was the opportunity to take the average on data asset and to a much larger swath of our enterprise customers by leveraging on our go to market.
So our Cushing and in our sales and account management teams. So and just the first month post acquisition, we've more than quadrupled the number of opportunities average string was Apache.
As compared to the stand alone entity and you can see that within our $100000 customers, we've significantly grown that space.
Mark and Mayo and average strength has been a driver for that so both of those acquisitions are performing really well I think if you think about where the opportunities are and the future.
Number one we have the capacity and the bandwidth and feel really comfortable that if the right value creating deal came along that we'd be in a position to execute.
<unk> against it but.
But philosophically, we're looking for software our data assets that play and that go to market our recruiting spaces.
On platforms that sales and marketing and talent acquisition professionals are leveraging every day to hit their numbers and we look for that software to be something that can be meaningfully enhanced by our data asset.
And that we can sell across our go to market team and that will be accretive and the short term. So you should expect us to be acquisitive, but we're not going to do M&A for M&A stake. We have this framework and our philosophy around M&A and you should expect us to adhere to that.
That's great color Henry Thank you.
Thanks Cindy.
<unk>. Thank you. Our next question comes from Brad Zelnick with Credit Suisse. You May proceed with your question.
Hi, guys, its Bob and on for Brad Congratulations on a strong and to an impressive year, one for Henry and one for Cameron Henry I just wanted to dive further into the enterprise expansion opportunity where are you in terms of having the proper product and go to market strategy in place to many.
So the capture of that $1 billion up $1 billion opportunity that you talk about and.
Any insights you can give in terms of the pipeline and how that's expanded since you've made this more of a priority.
Yes. So thanks for the question, we spent a lot of 2020 and making sure that our that we were making the right investments both from a talent prospect.
And a product perspective.
Really be able to get as much on at the enterprise opportunity as we could and.
And so we feel really good about the team we've put together on the re segmenting of the customer base that puts the right and counts into the hands of the right the right people on our team.
The product changes that we've made.
And to really hard and our API and make our solution enterprise ready and so we feel like we're very well positioned to go after that opportunity and a really big way.
Thanks, and then a camera and just in terms of guidance can you insight into the assumptions, you're making regarding the macro and then and any potential for reopening and thank you.
Sure.
Our guidance is really less about COVID-19 being a headwind or tailwind and more about the secular trends around digitization. So we did see some headwinds and the first half of the year, but we.
<unk> seen those headwinds really dissipated and the second half of the year.
We're much more focused when we.
<unk> guidance on a broad range of potential outcomes.
And but our base cases.
Secular trends towards Digitization.
Continues and that the economic environment is relatively consistent with what we see today.
Henry highlighted.
And health safety services, which is the leading provide.
We think of workplace safety and training solutions and.
And in the middle of this pandemic they needed to focus on accounts that were still in market with their solutions for their solutions and.
And by leveraging our intent data that they were able to see and increase to their marketing qualified leads by 200% and the first month or so.
And what sort of time to value really enables us to quickly change to a changing.
Environment and also allows us to continue to push forward with our go to market motion.
Got it and congrats again.
Thank you.
Thank you. Our next question comes from Mark <unk>.
JP Morgan you May proceed with your question.
Thank you I'll add my congrats on a very robust finish to the year.
Henry.
Interested in what you believe your most forward looking and most sophisticated customers are doing today with zoom and so that's helping them generate better leads and grow faster.
Where you'd say your customers, who are kind of lower on the sophistication curve.
And could see a leap forward as they get deeper into the platform this year and sort of move up that curve.
Yeah, Hey, Mark Thank you.
So a couple of different ways, if we think about some of our most sophisticated customers.
They are often moving our workflow solution or.
Architect and a motion that mimics that functionality. So what they're doing is they're identifying a set of key moments are signals that means something to their business and thats different for all of our customers that might be a funding round.
It might be the addition of a technology and might be and new executive that's come on board and might be a new location opening or a new product launch on new partnership that's announced so they're articulating a set of signals and then theyre loading into menthol, we're using our salesforce think product to identify their target.
The target companies.
And that they want to see those signals from once they marry those two together then they are building the ideal prospects at those companies for our customers. It can be everything from a CIO chief financial officer to integrations engineer or cyber security architect and then they're Architected and assistant.
And when you see the signal at these company captured these specific professional and then run this go to market motion and then that go to market motion can be everything from a marketing automation campaign to a display AD campaign, two and SDR collyn campaigns behind it but the key part of this is it's fully automated so that.
The sad workflow from signal to action is being automated by our most sophisticated customers and so theyre marrying that first party data their best customer accounts that they don't have already with our third party data the data from zoom and fail to automate that go to market motion. So our most sophisticated customers are taking advantage of our platform.
And that way on the.
Lisa on the lower sophisticated side more on the least sophisticated side you can see them using the platform by identifying and target audience. So, saying Hey look every company with over 100 employees Thats based on these five metro areas I want to run a campaign against the bps.
<unk> formation technology, and so it's giving that level of acceptance screening to their sales rep that would be on the on a lesser.
Sophisticated side of the of our customer base and we.
Have a really strong customer success team that we've made a lot of investments and in 2020 to really increase the level of sophistication across the cut.
And it's because we want our customers doing more with the platform.
Okay pretty fascinating.
As a follow up I wanted to ask you the guidance for 2021 is really materially above what we were thinking and consensus was thinking I'm. Just curious if you think youre.
Some are being any noticeable improvement in the seat expansion plans.
For your customers in other words their own sales and marketing teams as they reinvest into the recovery. So in other words is it more expansions or.
Do you feel like Thats, yet to come and the upside driver here is really more of the traction with the new logos.
See enterprise logos, I think Henry had mentioned Toyota and Honeywell sort of industry as we might think of first and what to what extent.
Is that being driven.
And so currently we're seeing real strength on both sides, both from new logos and customers coming on and as well as.
And the and the expansion opportunity within our existing customer base and if you look at.
Our largest customers we had a record quarter in terms of the addition of new customers.
Our above 100 K at this point.
Our guidance is more focused on.
And from continuing to reinvest and the platform and seeing both of those areas move.
We have not seen.
Particularly outside of this kind of seat expansion opportunity, yet, but certainly that creates some upsides for us and 2021 as the economy opens up more.
Okay very good thank you very.
Thanks Mark.
Thank you. Our next question comes from Michael <unk> with Wells Fargo. You May proceed with your question.
Michael you might be on mute.
Josh why do we go ahead and take the next question.
Thank you and our next question comes from Jennifer Lowe with UBS. You May proceed with your question.
Great. Thank you.
Maybe just to start Henry on the.
And.
On the recruiting side, if I look at the evolution of what Youre doing on the sales side, it's gone from being just a way to find the right.
The call on to having all of these additional and arguably more valuable capabilities around and turn and figuring out the right time to call the right person to call. It at a given point in time based on a dynamic set of circumstances do you see similar opportunities and recruiting over time to not just offer sort of who might be like.
Person comes and what Youre looking to hire but also maybe for whatever reason more inclined to pursue other opportunities and just curious how you see that and 10 piece. If there is an intent opportunity and recruiting like you've observed on the sales side.
Yes, absolutely.
We are we are thinking about how to incorporate better.
For like for them for identifying when someone who is most likely to leave we have a data science team, who is engaged and building that out today I think the other thing that we're we're pretty confident about is that this is an industry that is hungry for workflow automation and so one of the key elements of the platform.
Our goal is not just to have the data asset available, but also to have that data asset tightly integrated into our engage solution.
And building that engage solution and our purpose per.
It's built way for recruiters and so not only do I have that contact data asset and company data asset.
And my fingertips, but I can also now automate the way that I engage with potential candidates and then feed that activity data back into my ATF system.
Something that recruiters and talent acquisition professionals don't have at their fingertips today and so we're excited about not just bringing that sort of raw data and marrying that.
With insight driven algorithms and data we layer on top of that and then building workflow automation around those assets.
Great and just a quick one for Cameron and I know you called out the $2 million impact from the acquisition in Q4, and a modest impact on margins and assuming that they modestly negative.
Impact on margins given how high your margins are is.
Are there any sort of color that you can give us on the calendar 'twenty, one guidance and what the assumptions there might be in terms of the acquisitions from a revenue or margin impact.
Sure Thanks, Jim and.
Yes, and Q4 is where a modestly negative impact.
Negative margin realists.
And so acquisitions are pretty small do you expect that by the end of the year that there will be neutral to our to our margins overall, but certainly on the.
And this quarter or two.
Thank you.
And that's it.
We need to be on modest strength.
Thank you.
Thank you. Our next question comes from Brian <unk>.
Raymond with Piper Sandler you May proceed with your question.
Thank you and good afternoon, and I guess Henry I'll start with you and then one quick follow up for Cameron.
On the number of new customer adds in Q.
Here I think nearly exceeded all of the new customer ads and all of 2019 and I guess my question here is some momentum and Q4 from a customer perspective, the bullish outlook for 2021 at least from the outside in looks like there is some sort of infer.
Inflection here happening so help.
For <unk> and how broad based was the number of new customer adds in Q4 was strong across the enterprise looks like a a strong process and be it sounded like it was strong across all verticals, but just trying to understand why youre seeing somewhat more much momentum now or was it just a little bit of a.
And up from the prior year feels like a big change, but love to get your view on what's driving just a number of customers coming to the platform right now.
Thanks Brent.
And what Youre seeing is.
US getting momentum from all of the investments we made post the acquisition of zoom.
Cash flow in February 2019, we made that acquisition and we don't have long and to combining two sales forces two marketing teams and.
And really building out and next generation platform for sales and marketers and so that platform was just released in October of 2019 and so.
<unk> is the organization really getting its feet under itself around how to sell that that platform around the broadness of opportunity, we have and the marketplace and so you see customers from all sorts of industries now coming to us and we have a solution that can serve all of their needs and it doesn't matter if you sell into and it decision maker.
And what are our medical director, if youre, selling and France, or you're selling and California. The solution can serve up better and.
Better go to market efficiencies for your sales teams, regardless and what kind of company and you are and I think what youre seeing is companies one making the realization that digitization of their go to market.
<unk> is a must and two you see really the investments that we made over the last two years and our go to market teams and our product really paying off and so we saw broad based momentum again from all industries across the world across sizes and.
That's the momentum that we don't.
That effort is a blip or something.
And that's short wind or a short term we think that's here to stay.
And Brian and I think you've got it right.
And Super fast, but the numbers that you see our net customers. So not only did we have strong new sales.
Sales and new logos coming on board.
Think of US saw an improvement throughout the year in terms of retention activity.
We also saw less customers facing financial issues and Q4, and we did earlier in the years, where they might have cancer.
Totally makes sense and Kamran, obviously internationally has called out the last couple of quarters can you just remind.
What percentage of revenue is from international and then maybe just talk through that the number of countries, where you have inside sales reps coverage of today, just a little level set there would be helpful. Thanks.
Sure.
International revenue as well.
For the year is going to be true tried and 10%.
Reminder.
Overall, all of our reps are.
And right now.
We do segment out parts of our sales team to focus on.
At this point largely.
Focused on Europe and then.
Other other markets, they call and whether Thats from Asia.
On for <unk>.
Australia or somewhere else, they get routed into our kind of normal.
Right.
So sales still pretty early but good momentum so far thank you.
Okay.
Thank you. Our next question comes from Tom Roderick with Stifel. You May proceed with your.
Question.
Great. Thank you for taking my questions. Congratulations on a fantastic finish to what was a pretty crazy year, so well done on that.
Henry you've gotten a number of questions on this call just regarding sort of new customer additions and a number of people remarking on what a remarkable finished the year wasn't that front I'd love to.
Or kind of your thinking and strategy relative to getting customers moving along that upgrade path a little faster I think you might have mentioned that 70% of new ACB is on that is on the new platform now and yet it seems like youre, putting more and more tools in place and maybe like health scan and additional modules that might move people on this upgrade path a.
Here, a little sooner than perhaps they previously would have can you talk a little bit about your strategy and moving people along that curve.
Or perhaps more quickly than historically they have.
Yeah, absolutely thanks, Tom.
I think I think first we never really viewed the per.
Product as a mechanism to.
And to drive further sales for us and I think and the last year one of the evolutions you've seen us do from a product perspective, and really think about how the product can drive more upgrades more seat expansion and more purchases of enrichment.
Enrichment functionality. So then rich help scan is a really interesting one that.
Little hardware customers and our platform can click a button and immediately see what impact our data and insights can have on their existing.
<unk> marketing automation instances, and so and an instant they click a button. We can tell them look you have this much bad information and side of your CRM all of these accounts have.
We built employee side and they are and the wrong industry. These thousands of people have already left their position and your sellers are still.
Still calling on them and your marketers are still selling campaigns to them and not as an entry point into a larger and enrichment discussion for our customers, we think about automated user provisioning provisioning.
And the rate of trials and another way to take and enterprise customer or a group of users that an enterprise customer and get them limited access to zoom info and then use that momentum we build across those users to have a larger conversation at the enterprise level, we've made significant investments and our customers.
And on and access team and our account management team over the last year to make sure that they are in front of their customers when an opportunity presents itself, but also making sure that they're capable of having conversation about about all of our solutions and saw a big investment behind sales enablement and menthol and ensuring.
Customers that our sales teams and our account management teams are best in class when Theyre, having consultative conversation with our customers and we really do rely on that expand motion and.
Upsell motion and within the account management and customer success teams to drive the growth of the company and so youll continue to see us making investments.
During that era as well.
Excellent and Henry one quick sort of follow on question relative to go to market.
Nicely deserved promotions across our executive ranks and adds today specific to <unk>.
Chris this role taking on any other changes to the sales organization that are worth pointing out or any need to backfill.
His CFO responsibilities or is this just yet another day, Chris gets to where here.
I think a couple of things, we did sort of organize the management team underneath Chris.
And a couple of different ways to make sure that we were optimizing the organizational structure, there, but nothing material.
Really we're excited about the opportunity to marry both sales and marketing underneath on.
<unk> one leader, we think you get all sorts of alignment and synergies by having everything under under Chris and we're excited about the momentum we will see from that alignment.
Outstanding that's great that's it for me.
And I appreciate it and I'll jump back in the queue Congrats Tom.
Thank you. Our next question comes from Patrick <unk> with Deutsche Bank and proceed with your question.
Hey, guys. This is Dan <unk> on for Patrick Thanks for taking my call I thought it was pretty interesting that disclosure you made about a $1 billion upsell opportunity.
Attunity and your existing customers and I'd be curious if you could kind of talk about the assumptions built into that and you guys kind of talked about sometimes having seven figure customers and I'm just curious.
And kind of where you see customers I guess kind of reaching and maxing out when they kind of reach maturity on the platform. Thanks.
Yes.
And the analysis that went into that.
Plus opportunity is looking at the total seats available within our enterprise customers and where we are today in terms of where we Max out and we continue to see our largest customers pushed the balance.
Earlier in the year, our largest customer and was two $2 million and something like three and a half at this point and it.
Continues to growth. So we think that there are significant opportunities to ultimately get.
All about where we are today with some of the largest customers that are fully integrating our capabilities to really drive more sophisticated go to market approaches.
Got it thanks.
Thank you. Our next question comes from Pat <unk> with JMP Securities and proceed with your question.
Great. Thank you and this is getting ready to take on for Pat.
I just wanted to dig in on the adoption, you're seeing with engaged and maybe how you're seeing that play out in 2021.
Thank you.
Yes, so it's still really early on the engage solution, but we believe there continues to be a ton of white space and the sales engagement space.
And we are most often we're evangelizing our solution to customers.
And I think what we're especially excited about is the difference.
And that our data asset makes from a value perspective, and the engaged solution and so really early but we're seeing good traction of the product and we're also seeing as I mentioned meaningfully higher renewal rates for customers, who are using the engage product. So we think it will add.
And you and a number of different ways for the company.
Okay.
Thank you so much congrats guys.
Thank you. Our next question comes from David Hynes with Canaccord. You May proceed with your question.
Hey, guys. This is Luke on for DJ.
So you guys recently launched targeted audiences, which hasnt gotten much love on the call, but it seems like a strong step forward in terms of expanding the scope of the platform.
And the marketing and advertising now thinking long term with incremental solutions like that is it fair to imagine.
And the marketing and advertising teams and budgets could leverage your platform to the same extent that sales org are today.
Alright, I guess in other words, and what could be the ratio of spend between sales teams and marketing teams longer term as it is at one to one or how how can we think about.
That.
Hey, Luke. Thank you for the question look we are very excited about it.
The about the targeted audiences product, we've known for a while that our business and contact data has the ability to make a difference per marketers and the advertising space.
And so with that product.
Marketers can now use zoom info to target business professionals using data points that were that were not available before we can't we brought this product to market I think much like all of the other areas that we think about expanding to either internally or from an M&A perspective, we look for opportunities where our.
Our data on <unk> can significantly.
Change the game for sellers or marketers or recruiters.
And within advertising, we think that we have a big opportunity to leverage that contact and company data asset to provide and incredibly differentiated solution to the market.
We've spent a lot of time and energy.
Energy on the marketing use case, whether it's our enriched product our websites product our intent product. Those are all solutions are formed complete product. Those are all solutions that are leveraged by marketers I think what youll see us do.
As we evolve is get better at speaking of marketers language.
Which build more products that are tied together with what a marketer and and advertiser are looking to do and really wedge our way into and to that share of wallet within our customer base and within new customers as well and so we see getting more entrenched and the marketing use case as a meaningful.
<unk> growth opportunity for us.
Awesome, that's really helpful. Thanks, a lot Henry.
Thank you. Our next question comes from Robert Simmons with RBC Capital markets. You May proceed with your question.
Terry Tillman with true.
You May proceed with your question.
Hey, folks this is David and I'm gonna filling in for Terry Tillman and whereas on the great quarter and thank you for taking the time. So just a big picture question for you guys to your revenue customer growth has been a true Testament to all of your products and demand for these actionable insights per sales folks to go out there some more than they would have without the product.
So I'm just curious if youre seeing.
New entrants coming into the market lately that's it for me. Thank you.
Great. Thank you for the question the competitive environment is largely unchanged.
We have our call recording software that we use and we flag customer mentioned Im sorry competitor mentioned across.
Seeing any of the calls are stellar than our account managers take and competitors are still on average mentioned less than 1% of the time and competitor mentioned were actually down Q4 versus Q3.
So to the extent that there are market alternatives.
And the marketplace, we are pulling away from everybody.
All makes sense thanks, guys.
Thank you. Our next question comes from Brian Peterson with Raymond James You May proceed with your question.
Hey, Thanks, guys, Kevin here on for Brian Just a quick one for me can you talk about some of the trends you've seen for new ACD mix or pipeline generation.
And maybe specific to some of your smaller verticals and I'm curious if you have any thoughts on how that could trend as you look out over the next few years.
So.
When we think about our verticals.
A big portion of our business comes from software and business services.
And you heard Henry and talk about wins and Pharmaceuticals manufacturing finance insurance real estate with transportation and logistics.
All of these verticals are important to us bottom line is that any business, that's selling to and other business can and should drive real value from using high quality data like ours to drive their go to market motions.
<unk>, we're just in the early stages of addressing what is a really big Tam.
Software and business services, where we had initial innovators, but now we're seeing and continued growth on a broader set of early adopters and the early majority across.
The whole industry.
Got it thanks Karen.
Thank you. Our next question comes from Michael <unk> with Wells Fargo. You May proceed with your question.
Hey, there thanks, and good afternoon, some useful commentary around the switch from headwinds to tailwind you saw throughout the course of the year is there anything you can add around what's assumed in the initial outlook you're providing for next year is that somewhat similar levels on on.
Customer adds and retention and and those trends persist.
And and then maybe on on margin to just looks like you're expecting those to maybe walk back and touch, which certainly makes sense given the demand environment, you're seeing is that a fair characterization or a bit more of a tilt towards growth given the opportunity and now see in front of you or.
On things just any additional context you can provide there is helpful. Thanks guys.
Sure.
I guess I just wanted to take away from this call.
We are seeing positive momentum across all areas of the business and.
And we're coming off.
This quarter and the strongest year, we've ever had.
Our initial guidance.
Well no higher than consensus.
It is our expectation that these guidance levels taken account.
A wide range of potential outcomes and certainly.
2020 has taught us anything it's that we need to plan for that broad range of potential and macroeconomic outcomes.
And.
And I'm not the <unk> consistent with what we've done and the Paas and <unk>.
Are margins, we do feel that there's a real opportunity here and the market for us and to build upon our competitive advantage and build the moat that we have.
Continuing to invest heavily into R&D as well as our sales and marketing and capacity to.
To continue to take advantage of that and if you.
And you think about some of the successes that we've had with products like engage we're continuing to a significantly.
Additional wood behind those investments so that we can continue to attack those markets and.
And drive additional growth and competitive advantage and the future.
Got it great close to the year. Thank you.
Thanks.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Henry for any further remarks.
Great. Thanks, again, everyone. We remain really excited by the opportunity out there.
There and we're excited to continue to successfully execute against our plan.
So thank you very much thank you for joining the call.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
Goodbye.
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