Q1 2022 ZoomInfo Technologies Inc Earnings Call
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Good day and thank you for standing by welcome to the Zoom Info first quarter year 2022 financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
If you require any further assistance. Please press Star then zero I would now like to turn the conference over to todays Speaker, Mr. Jerry said ski. Please go ahead.
Great. Thanks, so much.
Welcome to zoom into those financial results conference call highlighting our results for the first quarter of 2022.
With me on the call today are Henry shock founder and CEO of Zoom Info and Cameron Hiser, 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.
<unk> of future goals, including business outlook expectations for future financial performance and similar items, including without limitation expressions using the terminology may will expect anticipate believe and.
And expressions, which reflect something other than historical facts are intended to identify forward looking statements forward looking statements involve a number of risks and uncertainties, including those discussed in 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 in order to reflect events that may arise. After this conference call, except as required by law for more information. Please refer to the cautionary statement included in the slides that we have posted to our Investor relations website at IR docs human so dot com.
All metrics discussed on this call are non-GAAP unless otherwise noted a reconciliation can be found in our financial results press release or in the slides that we've posted to our Investor Relations website.
Last week, we hope that you can join us for the virtual Investor event, we are hosting on Thursday June 2nd beginning at three P. M. Eastern time more information is available through our Investor Relations website, and we look forward to your participation.
With that I'll turn the call over to our CEO Henry shocks.
Thank you Jeremy and welcome everyone. The.
First quarter was a great start to the year, we continue to successfully execute our strategy and drive growth across all of our major initiatives.
Our expanding <unk> platform, which deeply integrated with our world class data and insights layer is resonating with customers.
We're increasingly seeing customers embrace the integrated platform experience running more and more of their sales stack on zoom info in.
In the quarter, we drove a more than 100% increase in customers using the combined sales out west platform engage and course offerings.
Reinforcing the value of an integrated solution.
In the first quarter, we delivered GAAP revenue of $242 million year over year growth of 58% and sequential quarterly growth of 11% when adjusted for the number of days in the quarter adjust.
Adjusted operating income margin was 39% and we generated $126 million in free cash flow we.
We continue to deliver a leading combination of growth profitability and free cash flow generation at scale.
We closed the quarter with 623 customers with greater than $100000 ACB up more than 65% year over year, while the average revenue across these customers continues to grow.
And we saw incredibly strong growth in new business as the new customer team had their best Q1 ever on an ACB basis, and the best quarter ever on a TCE basis.
On the international side, we have maintained our investment in data quality and coverage, adding over $14 5 million non U S professional profile year to date and rolling out Euro currency supporting our platform, while quadrupling the head count in our London office.
As a result of our continued focus here, we set a record high for new business ACB added in EMEA and international year over year growth remained strong at 80% on a.
On a greater than 100 million dollar revenue run rate business.
Our international business is predominantly driven by Western Europe , and Canada, we have virtually zero exposure to eastern Europe .
We continue to see solid traction with our enterprise clients, we signed deals with a number of leading enterprises landing new firms and expanding more with existing customer.
Three customers I'll highlight have all been zoom info customers for at least a decade and as we've continued to build out our rubber west platform and offering. They have also continued to increase their relationships across those offerings with us.
We signed an eight figure deal with alphabet in the quarter. Our recently released modern user provisioning provisioning now allows for anyone at alphabet to quickly access the tremendous value of the zoom info platform with automated self provisioning.
And since we are publishing zoom info directly on alphabet to internet understanding and getting comfortable with our privacy security data collection and compliance practices was an important part of the sales process.
<unk> revenue acceleration team is also leveraging new Menthols operations Oss platform that team is just the company data and company insights to help inform the way they go to market.
By leveraging our enterprise API data is matched in normalized pulled into a data warehouse and consumed directly in their Salesforce instance, a.
Holiday do you have highly accurate data and insights streamlines their ability to provide data to their go to market team, while delivering success to their seller, allowing them to sell more effectively.
This type of deal structure served as a roadmap for future enterprise expansion opportunities at other large companies.
With Hitachi, we recently expanded our relationship into their marketing Department and grew at two $1 million plus ACB engagement that continues to leverage our sales the west platform across their sales team and AD operations Oss to leverage zoom info to enrich a pen and clean across the historically inaccurate database of lead.
And prospect data from marketing campaign.
While Hitachi Leverages next generation software across marketing automation data lakes and CRM the value promised by that software has been unrealized as a result of the lack of high quality data flowing through those systems, we intend to change that.
Finally, shopify signed a multiyear deal expanding ACB by more than five <unk> growing to one hundreds of users for the sale of the west platform and adding automated data enrichment from operations or <unk>.
Shopify is expansion enabled them to improve outbound prospecting effectiveness automatically and rich inbound lead information and build propensity to buy scores from that auto enrichment.
Customers are increasingly embracing functionality beyond just looking up a lead in the platform more than 75% of our active users are using more advanced functionality, including intent and website visitor identification analytics leveraging workflow rules are configuring safe searcher email alerts.
Following the close of the quarter, we completed two acquisitions want to bolster our capabilities in market share on the recently rebranded talent OS platform.
And the other expanding our enterprise opportunity both areas, where we already see tremendous growth and are excited to invest behind.
On the talent side companies have never faced such a challenging environment for hiring and retaining talent.
Rolls that previously could've been filtered through traditional.
<unk> job Board now requires sophisticated direct sourcing candidates demand to work for companies with great cultures, and expect an understanding of employee benefits and experience it before it even applying to a job.
Employers that have negative reputations online massively lose out on hiring top talent.
In April we acquired comparably to empower every company to effectively identify source influence and higher for their most vital role.
Comparably adds a suite of popular SaaS solutions for employer branding and recruitment marketing combined with an employee review platform that reaches millions of candidates each month.
With comparably <unk> West gives companies the ability to engage and hire candidates with much more sophistication and influence.
<unk> plus compare plus comparably is a must have combination for any company recruiting in today's competitive work environment.
And enterprise go to market, we know that the best performing enterprise companies are leveraging data insights and software for their revenue operation and they are significantly outperforming go to market teams early on in their Digitization journey.
Access to high quality relevant data provide significant competitive advantages for all sales and marketing organization.
We've acquired Dogpatch advisers to launch Zoom Menthol labs, a new go to market thought leadership team driving go to market data analysis product enhancements and strategy for our enterprise customers.
Dogpatch as an in demand go to market consultancy with expertise and scaling revenue team and building modern sales and marketing system.
<unk> patch has a proven track record of significantly increasing revenue per organization by modernizing their go to market operations and workflows.
As part of the acquisition been Salzman Dogpatch as CEO will join zoom info will join zoom info to lead zoom info lap.
This will immediately expand our capabilities for enterprises and drive enhancements across our suite of products over time, we expect zoom info labs to put the modern go to market playbook within reach of every company.
We continue to innovate and deliver new and improved functionality across our <unk> platform.
In order to better reflect the evolving nature of our solutions for HR recruitment and talent management professional and the breadth of the capabilities. We offer we rebranded recruiting os's telenovela.
We are extremely pleased with the early success, we've seen with our <unk> offering both ACB and customer count grew more than 50% compared to Q4, and we doubled the percentage of our customers using talent from.
From just six months ago, adding workday, the Cheesecake factory, Stanford rows management recruiters redfin, and several leading financial institutions onto the talent on west platform to drive their hiring needs.
As our customer base continues to grow we have continued to make investments in a world class user experience, adding a guided onboarding journey to the platform and launching a new experience for quickly starting a user's first email automation campaign.
For our power users, we released advanced Boolean search capability as well as an entirely new experience that provides AI powered similar company recommendation to narrow in on companies to recruit candidates from.
Operations OS is powered by our leading data as a service offering and our really data orchestration platform and is a key lever as we expand within enterprise accounts.
In Q1, we expanded our support for enterprise scale data and intelligence needs with new large scale data products contact data breck hierarchy data brick and bulk search API customers can now build out a complete set of zoom info intelligence directly in the systems. They work in data.
Data bricks are accessible via Snowflake, Google Big query Amazon S, three or S FTP or bulk Apis, enabling integration to any system or workflow.
Finally, we announced a partnership with Google cloud to power business businesses with zoom into those data and intelligence and the systems, where they work through our integration with Google Big query joint customers can eliminate cumbersome BW data ingestion processes and get more mileage out of the data and Google cloud by seamlessly accessing zoom info data and intelligence.
Directly in big query.
In February after months of planning and building, we launched marketing O F. Our new account based marketing platform built on top of our shared data cloud and designed to give marketers new ways to reach target accounts and drive qualified leads for sales team.
Just as we revolutionize the future of selling our product teams have been working hard to imagine a new platform for marketers.
Marketing <unk> Leverages, a robust professional and company data.
To allow marketers to execute campaigns throughout the display AD network, social media network and through marketing and sales automation channel.
The zoom info data cloud enables marketers to identify and target their highest value audiences upload creative assets sequence relevant messaging across display and social ads and intelligently engage prospects both in their inboxes and beyond.
And by leveraging our form complete and chat solution. Both originally part of sales the west, but now natively configurable and deployable inside of marketing O S. Marketers increased conversion rates by instantly populating lead form with accurate professional data and by engaging visitors with the right account executives and account managers through real time chat.
Finally, our built in reporting allows for optimization of AD creative and nurture stream through platform supported a b testing and.
Because of the interoperability of our operating system marketing and sales teams work from the same data and platform Foundation, which tightens key handoff and unlocks cross departmental alignment.
We acquired porous in July of last year and since then we have nearly tripled the number of number of course customer.
We are seeing increasingly higher attach rates with both new and existing customers and are now reporting analyzing and surfacing insights on close to 500000 meeting each month with core.
Behind the scenes, but behind the success on the go to market front are the ongoing development efforts driving category leadership and conversation and revenue intelligence and.
In Q1, we introduced introduced deal signal to help sales teams monitor and manage their deal pipeline.
Youll signals surface at risk deals, allowing a salesperson in their manager to quickly scan what's in the pipeline and easily and easily identify factors that could slower derail deals for example, when a deal gets stuck in a certain opportunity stage or prospects are unusually slow to respond to wrap outreach.
We also rolled out a new Microsoft dynamic CRM integration and strengthened our hub spot CRM integration.
Now include bidirectional sync with course, which allows our customers to pull information from their CRM intercourse as pipeline visibility tool momentum.
This allows course users to parse through everything from conversation transcripts. So how many contacts are engaged to the number of e-mails flowing between themselves and their prospects.
And they can use all of that information to drive better forecasting accuracy and next best actions in the sales cycle.
We continue to lead the way on privacy and compliance as it relates to all of our offerings and of course, we embedded our patented flow for GDP are compliant meeting recording into intergroup calendar Rep to know just need a single click to ensure their scheduled meetings, our fully compliant and recorded in Cora while.
Nations continue to have the tools to ensure compliance across all of their users and meeting.
Finally in a really busy quarter for chorus, we released of course mobile application on the iOS and Google play store, which now has thousands of downloads and a 100% five star rating.
At our upcoming analyst day, you'll hear even more about the persona driven approach to our <unk> platform, where we will share more about the expanding multi product adoption and traction in our emerging product portfolio. Additionally, we will share more about the durability of growth and the efficiency of our model and have a great lineup of humans.
Executives and key customer who will be joining us to share more about their experiences using our platform.
Before I wrap up I wanted to take a moment to acknowledge two of our departing board member, Patrick Mccarter and Jason Mirror not us.
As carlyle's and Tas ownership and zoom info has trended down since the IPO. The number of board seats represented by each firm has reduced as a result, Patrick and Jason have recently stepped off the board.
Jason joined US in 2014 as part of Ta Associates investment in the company and was the first investor to see promise in both zoom info and in me.
Over the last eight years I came to rely on him for an endless amount of advice and counsel, but mostly first friendship and loyalty.
As president at board meetings will be missed but I expect them to continue to be allowed to advocate for our success.
Patrick joined US in 2018 as part of Carlyle's investment and has served as an important mentor and an unrelenting advocate for our growth.
And Bob what every founder looks for in a sponsor he is smart strategic takes feedback and how the company's best interest is the focal point of all of his decision.
In closing we continued our strong momentum from 2021 and had a great start to the year. We're in the earliest stages of activating a large and growing market opportunity and the team continues to exemplify our strong and consistent execution.
We are extremely confident in the opportunity ahead and with that I'll hand, it over to our Chief Financial Officer Cameron Hydro.
Thanks, Henry Q.
Q1 was another terrific quarter in terms of execution and growth, we outperformed all areas of our guidance and executed well across our portfolio of growth initiatives, including enterprise International and emerging advanced functionality in the platform.
The demand environment remains strong companies continue to invest behind improving their go to market motions and the platform strategy is resonating with customers we.
We are confident that given the tremendous value, we provide to customers and our current narrow level of market penetration, we will be able to drive durable growth regardless of the economic environment.
As a result, we are raising our full year guidance for revenue to 1.16 to one point over $7 billion and.
And adjusted operating income to $418 million to $424 million.
At the midpoint. This represents revenue growth of 43% and an adjusted operating income margin of 40%.
For 2022, we expect to deliver more than a dollar per share and unlevered free cash flow.
In Q1, we delivered GAAP revenue of $242 million up 58% year over year, which implies 11% sequential growth compared to Q4 2021 as adjusted for days in the quarter.
Excluding the impact of products acquired within the last 12 months organic revenue growth for the quarter was 49%.
Adjusted operating income in Q1 was $96 million a margin of 39%.
With respect to our international business, we are driving strong growth and success for customers outside the U S.
We invested in growing our sales team in London, and also committed to further expanding in India and Israel.
Revenue from international customers was 12% of total revenue and grew over 80% in Q1 relative to last year.
Our investment in the enterprise motion and advanced functionality within our platform continue to drive engagement and growth with our customers.
This is reflected in the addition of more than 150 customers with more than $100000 in ACB and further penetration of our recently expanded marketing and talent or software.
Turning to the balance sheet and cash flow. We ended the first quarter with $407 million in cash cash equivalents and short term investments.
Operating cash flow in Q1 was $105 million, which included approximately $20 million of interest payments.
Levered free cash flow was $126 million for the quarter or 131% of adjusted operating income.
We continue to expect that on an annual basis Unlevered free cash flow conversion will be in the range of 100% to 110% as a percentage of adjusted operating income.
Following the end of the quarter, we acquired comparable Ian Dogpatch advisors for approximately $145 million in cash net of cash acquired.
We expect these acquisitions to contribute revenue in the low teens millions of dollars in 2022 and create a modest drag on margins of 1% to two points for the remaining quarters. This year.
While these acquisitions are small and we will have only a modest impact on our financials and 2022, we expect them to be accretive to growth and operating income in 2023 and forward.
With respect to liabilities and future performance obligations unearned revenue at the end of the quarter was $406 million and remaining performance obligations or RPE Oh, we're at $918 million of which $715 million are expected to be delivered in the next 12 months.
We believe that calculated billings and our P. O are imprecise metrics to assess in period activity and forward momentum as a result, we focus on days adjusted sequential revenue growth.
We delivered 11% days adjusted sequential revenue growth in the first quarter.
At the end of Q1, we carried $1 billion to $5 billion and gross debt.
With continued growth we saw an improvement in leverage in the quarter with a net leverage ratio of two four times trailing 12 months adjusted EBITDA and one eight times trailing 12 months cash EBITDA, which is defined as consolidated EBITDA in our credit agreements.
We also recently received upgrades from both Moody's and S&P to be a three and double b, respectively for our corporate ratings.
Following the launch of our inaugural ESG report. We also received an upgrade from MSCI with our ESG rating upgraded to <unk>.
With that I will provide our outlook for the second quarter and increased outlook for full year 2022 results.
For Q2, we expect GAAP revenue in the range of $253 million to $255 million and adjusted operating income in the range of $98 million to $100 million.
non-GAAP net income is expected to be in the range of 17 to 18 per share.
Our Q2 guidance implies year over year, GAAP revenue growth of 46% at the midpoint and.
And in an adjusted operating income margin of 39%.
We are providing updated full year 2022 guidance as follows we expect GAAP revenue in the range of one point or six to one point it was $7 billion up $50 million from our prior guidance and.
And adjusted operating income in the range of $418 million to $424 million up from $410 million at the midpoint of our prior guidance.
We expect non-GAAP income in the range of 75 to 77 per share based on 411 million diluted weighted average shares outstanding up from 72 points at the midpoint previously.
For Unlevered free cash flow, we expect to generate between 435 $445 million up from $430 million at the midpoint previously.
Our full year guidance implies 43% GAAP revenue growth at the midpoint up from 36 at the midpoint of our prior guidance and our full year guidance also implies an adjusted operating income margin of 40%.
And an unlevered free cash flow margin of 41%.
With that let me turn it over to the operator to open the call for questions.
Certainly.
As a reminder to ask a question you will need to press star one on your telephone to with.
Your question. Please press the pound key please limit yourself to one question again, please limit yourself to one question.
And our first question comes from Phil Winslow of Credit Suisse. Your line is open.
Hey, guys. Thanks for taking my question and congrats on another great quarter. I mean, obviously you saw a strong organic growth again at 49%, but one of the metrics that jumped out at me was the <unk>.
Revenue from acquired products for the past 12 months 13 million versus 10 four.
Underscoring some of the comments you made about originally and of course, AI, but I guess two questions follow up on that what are customers, telling you now that you've had ringleader cores inside of <unk> for a couple of quarters now sort of why they're choosing zoom info on how you can kind of differentiate yourself versus the point solutions out there that Cameron one of the questions I get as you continue to expand up the stack.
The new persona is how do you think about just sort of unit economics and sales efficiency.
Sure.
Thanks, Phil I think first customers are out there trying to modernize their go to market stacks and so they are out looking for solutions that do lead routing and lead scoring in real time, they're out there looking for a beta be chat for their website, they're out there looking for conversation intelligence to improve the insights that they have on their <unk>.
<unk> teams to hear the voice of the customer and so what and they are already customers of zoom in to us and so when we have the conversation with them, where we're able to tell them look you're out there.
About cobbling together a number of these point solutions that don't talk together that don't work off of a common data foundation that have no synergies in between these solutions and when you think about the solutions that we provide they all get better when you when you embed our data foundation into them check gets better.
Does it can route to the right account manager and account executives. So that it can surround that account executive with insights on their account that's coming.
That's that's coming into chat conversation intelligence gets better because we can identify one P. Buyers are missing in the sales cycle and offer them up for a go to market motion lead routing gets better because we can do better assignment and enrichment of leads and accounts as they come in and so it's really easy to see a future where the data foundation creates that strategic.
Differentiator across all of these different solutions in the platform and customers are seeing that more and more of them and customers of all sizes are seeing that more and more of them are working to digitize their go to market motions and we're having these really robust conversations with them about taking a platform approach to that.
And so with respect to our <unk>.
Sales efficiency naturally as you're selling more complex solutions the sales cycles at times can be a little longer but what we found is that by integrating the car.
Conversations with.
The solution that our customers are already taken advantage of and getting real value out of that we're able to compress those sales cycles versus what you might see otherwise.
While sales efficiency might move around or what all is we are continuing to invest in different initiatives, whether thats international or enterprise or more complex products et cetera, we expect to be able to maintain an industry leading level of sales efficiency going forward and to continue to grow our sales in <unk>.
Capacities, so that we can grow sales and marketing for our new revenues as well.
Okay.
Great. Thanks named keep up the great work.
Yes.
Yes.
Our next question comes from Mark Murphy of Jpmorgan. Your line is open.
Yes. Thank you I'll add my congrats on just a great quarter.
Cameron I was wondering can you just confirm dogpatch advisers is that an aqua hire of something like one to two people. It looks like it's something kind of small and then comparably.
Sure Henry.
Think of comparably as competing against Glassdoor.
What kind of the best places to work awards.
Is is any of their data applicable to generating sales leads or is that a 100% design.
Designed to kind of solidify what youre doing with the HR and recruiter and talent.
<unk> product lines.
So it's all her dogpatch first.
Dogpatch and comparable are both reasonably small dogpatch as a small company, but it was definitely more than aqua hire where they have relationships and a history of really delivering great go to market.
Solvay engagements for large clients so.
It's a handful of people, but I think that they very much box.
Box outside of the class in terms of.
In terms of the value they are able to deliver and we think that by bringing that on and being able to deliver those engagements that will be able to further.
Further accelerate the.
The solutions that we're offering as well.
And I am comparably.
Look we are very focused on comparable <unk>, adding value to our talent platform, that's where we're focused without acquisition now comparably does a lot more than just the employee reviews that you see online behind that is a suite of SaaS tools that allow the HR and recruiting professionals to easily create content.
For their careers pages for their recruiters that allow them to quickly solicit feedback from their employees through slack and email and easy to use survey solutions that they're able to quickly deploy and so what we see in the marketplace. Today is the most challenging hiring hiring environment in history and what we hear.
From our recruiting Klein and.
Our our talent Oss platform clients is that they are struggling to find the right candidates to fill their job role where historically they can post something on a job board and instantly get candidate that's not the case anymore. They are out their direct sourcing the candidates they need to be able to reach their goal and we think the.
One of the recruitment marketing an employer branding suite that comparably adds combined with the sourcing and engagement and Digitization tools that we provide inside of <unk> makes for us.
Really important solution at a really important time.
And our hiring history.
Thank you.
Thanks Mark.
And our next question comes from Raimo <unk> of Barclays. Your line's open.
Thanks for taking my question and congrats from me as well.
Can I talk a little bit more higher level.
Obviously this year it.
Was the year, where you have more focused on Europe .
You've kind of talked about the opening of the offices in London et cetera.
What's the is there any impact on the pace of.
Push into Europe from Vince here are you seeing anything can do you see anything on the U S side.
Your solution is helping people to get to their clients better, but like any impact from macro on Europe and the U S. Thank you and congrats.
Yes. Thanks, Raimo. So so we really don't see any impact on Europe at this point or in the U S are our customers are almost entirely selling to other businesses and are in most cases looking for ways to.
Do so more effectively and efficiently and I think if anything in times of stress historically, you look when you see their businesses.
Looking to either take out efficiencies or invest in things that have a faster time to value than other solutions and I think in all cases, our solution helps our customers be more effective more efficient and it's also something that whenever they are adding additional functionality are coming on for the first time, it's something that they see immediate time to value.
<unk>, which makes it.
A great solution when you see times of stress, whether thats, Europe or potentially a broader economic downturn in the U S.
Thank you.
And our next question comes from DJ Hynes of Canaccord. Your line is open.
Hey, Thank you guys great set of numbers.
Henry So you added a very experienced chief compliance officer back in January .
I know, we had the kind of expertise, particularly in the U K.
Now that Simon has had a quarter plus under his belt any can you share any observations or recommendations. He has made around <unk>.
Privacy practices.
Yeah look I think.
The big thing that.
That we've seen with Simon is.
Number one I think access to a network of privacy professional that we're looking to recruit and bring in to zoom info as well as a real understanding of the compliance and regulatory environment that is helping us think through how we continue to innovate our privacy posture.
And I think the other thing we see is the complicated regulatory environment is not just complicated for us it's complicated for all of our customers and so we've been able to leverage diamond expertise in front of our enterprise customers as they look to navigate the regulatory construct and he has more experience in that.
Just about anybody else in the world and so we're seeing an ability to unlock opportunities internationally because of Simon's expertise and the regulatory environment.
Perfect. Thank you.
Our next question comes from the city and a <unk> of Mizuho. Your line is open.
Missoula. Thank you. Thanks for taking my question I, just wanted to ask about the customer Nathan.
More than 100000, K, that's pretty impressive.
How is the cross sell going within installed base versus getting new customer.
Customer getting multiple product.
So Citi. Thanks for joining if you cut out just a little on the in the middle there, but I think your question was that for those customers that we added that are over 100 K how much of that is.
Existing customers that are upselling versus customers that are coming on and buying.
Number of different parts of the platform.
As has been historically the case, we tend to land.
Customers with the kind of smaller offering or sometimes a trial and then expand and grow them over time. So that continues to be the case that we have.
That most of the customers that we add in the 100 K cohort are customers that.
Started at a smaller level with us and we've upheld but there does continue to be momentum in customers coming on over 100 K.
I think last year, we started to see a little bit more momentum and that's continued in Q1 were.
A growing number of customers are coming in.
200, K or 500, K and then continuing to grow from there as well.
Thank you.
And our next question comes from Michael <unk>.
As Fargo. Your line is open hey.
Thanks, Good afternoon.
Yeah.
Op margin is holding in at the high Thirty's again.
Here in Q1 guide suggests margins remained somewhere around those levels for the rest of the year Cameron is that a level you're comfortable suggesting you would expect margins to stabilize around and then it sounded like the margin delta versus prior guidance most entirely attributable to some of the M&A you called out but that the growth guide still suggests meaningful increase on an organic basis is that.
Fair characterization or anything else.
Can you just help us compare and contrast, the full year outlook with what you last provided thank you.
Yes, absolutely.
No.
From a margin perspective, certainly we are focused on the construct that we laid out last year in our analyst day, where margins.
Or someone inversely correlated to growth so the faster we grow the more investment we have upfront into bringing customers on implementing those customers.
And so at the the levels of growth, where we're at today growing organically around 50% I think.
The margins that we've laid out and certainly within the guidance or what we would expect to continue to operate at if we were you know.
If we're able to accelerate that growth then it is possible that margins would come down somewhat and certainly as we grow off of a larger and larger base and that growth moderates a little we would expect the margins to drift up.
Thank you.
Yes.
Thanks, and our next question comes from Parker Lane at Stifel.
Your line is open.
Yeah, Hi, Thanks for taking the question Henry wanted to talk about talent or a little bit here would it be fair to say that the majority of the success you've had there. So far has been with customers that have used something like sales OS in the past and are you beginning to see it.
Uptick in the number of organizations that are attracted to zoom info specifically for talent recruiter on a standalone basis. Thanks.
I think our focus from a go to market perspective partner has been focused on the customer base, where we already have relationships with the customers, we're already through procurement and privacy and security.
We review, where we can accelerate time to the sales cycle within those accounts.
That being said, we're also seeing demand from new customers come in as well and so we feel really good about the way that we're positioned to have those conversations.
And when you think about the.
The breadth of people who are using the solution from everything from the Cheesecake factory to Red spin.
There's a broad assortment of companies, who get value out of that platform now the user.
<unk> is obviously not the same user as the sales OS platform. It is a different area in the business. So I wouldn't say that.
The actual end user was also a user of sales oes, but the customers. Our focus has been on the customer base today.
Very helpful. Thank you.
And our next question comes from Kash Rangan of Goldman Sachs. Your line is open.
Hey, guys congratulations on the quarter Henry strategically when I look at the different pieces of the puzzle if I put together a talented marketing sales operations et cetera.
The company is getting.
Getting a piece of other categories budgets delivers in marketing talent operation sales previously when you're doing that in a way that is synergistic with your core data platform can you talk about how.
How far you can go and who are the categories that you are gaining share from in each of these domains as you put the pieces of the puzzle together and if that is successful how much more upside do you see with your core group of our.
Data platform customers, how much can that lead to in terms of HCV multiples relative to where you are with the core product if a customer were to completely buy into.
Layers of your Rev ops.
Thank you so much and congrats.
Great. Thanks Kash.
It's an interesting question when we first founded zoom info that we often got the question on the core sort of data and sales Oss platform, where are you taking market who are you taking market from in reality, we were creating a new market.
Where this wasn't a solution that was embedded inside of.
Our sales team or our marketing team our demand generation team, we were evangelizing that that a digital way to go to market has to start with data and insights that came from that data and so we see we continue to see a tremendous greenfield opportunity in the <unk> platform.
If you think about conversation intelligence.
You can take a look at that that space.
Nearly tripled the number of customers in that space, we're not displacing somebody we're making the go to market motion more efficient and people are willing to make an investment essentially a small investment to get a high return on that investment by optimizing the way that they go to market you see that same thing in talent O S. Recruiters when you go inside.
Of our corporation, the recruiting department tends to reach out the candidates and the same way today as they did a decade ago, where a decade before that its accretive incredibly bespoke they use job board theyre not directly sourcing, they're not engaging with candidates and digital ways theyre, not using SMS and E mail and call.
<unk>.
Website chat to bring customers in and our candidate didn't give them a personalized experience and so when we go into our recruiting department, we're not displacing another budget, where significant we're making that motion significantly more efficient you can spend $45000 on in outplacement recruiter to find an exec.
<unk> talent for you our senior director of manager talent for you.
You can you can spend a fraction of that with zoom info to get your team up in online and running after that opportunity and so you're making that motion more efficient and so our customers are much more willing to invest in these solutions to make their ultimate motion more efficient without having to displace something.
That exists today.
And I think when we think about the.
The ACD or.
The potential for growth within our customers certainly it's early days with the marketing O us and even with the operations of loss at this point, but we have customers where the value proposition that we're able to provide in marketing and operations in some cases can be greater than even what they're <unk>.
<unk> from the sale of <unk>. So we have customers that are actually spending more on those particular parts of the platform.
Then they are just on sales. So I think when we look at the opportunity to expand within our customers that we could expand by multiples of what were currently earning for just the sales I'll ask where that's the only thing thats.
Port.
And retention would improve to a arguably right. So that's the good news and then retention definitely improves as our customers are using more advanced functionality.
We already see that there is a significant level of retention.
Improvement for those customers as well thanks.
Gentlemen.
Thanks, Andy.
And our next question comes from Keith Weiss of Morgan Stanley . Your line is open.
Hi, This is always the best quarter on for Keith Weiss. Thank you. So much I was hoping to get an update on that the government opportunity.
What has been the uptake of being able to purchase agreement with them in terms of the GSA schedule and how should we think about monetizing that opportunity. Thanks.
Yes, I think the way to think about it today is that we're in really early days of that opportunity.
We are seeing good momentum as we come out as we've come out with an offering for the for the government and through the GSA schedule, but it's really early days in that opportunity lots of promise and we've stopped the team to go after that opportunity.
But it's still really early days.
Got it thank you.
Yes.
And our next question comes from Alex Zukin of Wolfe Research. Your line is open.
Hey, guys. Thanks for taking the question congrats on a great quarter I guess, maybe just at a high level you talked about the demand environment, not really seeing much of an impact from <unk>.
All the macro factors.
Isolate that to the large deal environment.
I know you called out that deal with alphabet. There was eight figures how should we think about the pipeline for those types of engagements not necessarily eight figure, but just large deals how do you think about that pipeline. This year given the demand and then.
Maybe for Cameron for the last I want to say four quarters I think I know they are imperfect metrics, but I believe that calculated billings has run ahead of.
For an IPO and current Rps bookings and that flip this quarter, we're kind of IPO and current RVO bookings are growing faster than than the billings on the the P&L any any sense for why that would be or any anything to call out there would be helpful.
Yes.
So if we start on the pipeline.
I'll just jump in real quick realistically the macro factors if you isolated into two kind of areas one being obviously the conflicts in eastern Europe , and the second being a.
Fears of potential recession.
We don't see any impact on our large deals.
Realistically, we don't do much business in <unk>.
Europe , historically, and that's not kind of one of the primary areas, where we're focusing right now so large deals or an impact it by that and certainly in terms of the.
Any potential recession or recession.
<unk>.
I think for larger deals those are customers that are leaning in even harder to being more efficient and more effective. So I think that those sorts of customers are more likely to focus on where they can get quick time to value and that's something that.
I can imagine even accelerating sales cycles around that as opposed to decelerating because our system is so so focused on that quick time to value and generating efficiency and effectiveness for go to market motions.
On the on the billings and bookings discussion.
It's worth pointing out that if you look at the ratio of billings to bookings.
Q1 of last year. So Q1 of 2021 was actually by far the highest ratio of bookings to billings.
The ratio of billings to bookings sorry.
And that largely related to when we came out of Covid there was.
Like a deferral of some of our bookings and certainly more of our bookings were done quarterly in late Q2, and Q3 of 2020 than they had been historically so that's just another one of those levels of noise where.
Bookings and billings can be imperfect metrics, when you're looking at growth and certainly the compare in Q1 of 2000.
'twenty, one I think distorts.
The kind of growth figures that you'd otherwise be looking at.
Perfect. Thank you guys.
Thanks Tyler.
And our next question comes from Rishi Galeria of RBC. Your line is open.
Wonderful. Thanks, so much for taking my questions and nice to see continued strength in the business.
One in terms of geography, so youre expanding your presence in Europe , you opened up your first office in India I wanted to get a sense for how do you think about the opportunity, especially in emerging markets because it seems pretty obvious.
Seven is a natural adjacency, but opening up in India. It seems like a completely different base, maybe can you walk us through how you're thinking about that that international opportunity and specifically in emerging markets.
Yes, I think as it relates to India. The bulk of the talent. We have there is around customer success support product management and engineering.
So the India opportunity, we see is one that can help us.
More managed time zones across the world.
With customer success, and support and product, which interfaces the product engineering teams interfaced with our Israel R&D operation than it is from a go to market perspective today from a go to market perspective.
We think the London office as well as in the future potentially Australia, New Zealand times on geography makes sense for us.
Great. Thank you.
Thanks.
Thank you our next question comes from.
Koji Ikeda of Bank of America. Your line is open.
Hey, Henry Hey, Cameron Thanks for taking my question.
I wanted to build upon the prior question about talent OS with its potential for being a primary land and actually kind of shifting it over to marketing OS here.
So Clinton clearly a new product I understand that but it has some unique features in their house account based marketing and AD Tech DSP.
Are you also seeing inbound demand for marketing OS as a stand alone basis.
And if you are maybe you could share what are some of the pain points that those customers are looking to try and solve it the zoom until marketing OS.
Yeah, Great. Great question, we are seeing inbound demand for marketing no loss from <unk>.
From an outbound perspective, we are still focused on our existing customer base for that where we have existing relationships with sales and often marketing many of our customers on the sales or less platform are using it for marketing related audience building or marketing automation campaign form completion enrichment and so we already.
Have a bulk of a big amount of our customers who are from the marketing department and so what we've done is go out to them show them the expanded capability that the marketing OS platform.
And we're getting more and more of them to sign up for that we do believe when we have these conversations you know one of the first things. We hear is look we spend a lot of time building high value audiences to deploy through marketing automation to deploy through our sales team and our outbound efforts and we'd love to have a way to build an audience and deployed through the display AD network.
And to deploy through the social media networks and our solution because it's built on this $150 million professional profiles across $150 million company profile, we're able to let market or build a beta be audience inside of zoom info and then deploy that.
Audience.
Display AD network across our social media network in South So now youre getting business and buyer persona targeting within the display AD networks. We think that's new we think that's differentiated.
And we know that the reason why we're able to provide that in a significantly.
Differentiated way is because of the data asset that we're leveraging again. So now every marketer can easily build an audience say.
The piece of ITT at health care.
Companies within California, Nevada, and Oregon, and start putting ads against that specific persona across the display AD networks across the social media network, that's incredibly powerful it's turnkey and marketers haven't had the ability to do that because.
Because no one has built a platform like this on top of the data foundation that we have.
Got it thanks, Henry Thanks, so much.
Our next question comes from Taylor Mcginnis of UBS. Your line is open.
Yeah, hi, thanks for them.
My question. So a question on the margin outlook. It seems like a good portion of the outperformance is coming from chorus engaged calendar loss and some of the some of the newer opportunities. So as these pieces become a bigger portion of the next Cameron is there anything to keep in mind from potential impact or differences in the margin structure of <unk>.
Some of these are at the early stage.
Yes.
And certainly one of the.
Theses around the acquisitions that we've done is taking companies that have.
Less of a focus on sales efficiency and putting them into our model, where we're able to generate incremental sales on a much more efficient basis. So I think that what we see if you think about the margin kind of outlook going forward is that from.
From some of those earlier acquisitions they'll continue to become.
Little bit more.
Efficient is there more deeply integrated into the model, but then we have newer acquisitions, where we need to again go through that process of realizing some of that synergy and kind of integrating into the platform, where we're able to get those faster.
Sales cycles running as well.
So I think that.
The the construct that we've laid out before we're at a 40 ish kind of type of growth rate.
Which is where we were around when we went public we would be able to deliver margins in those kind of mid forties.
<unk> of the acquisitions I think we're very comfortable with that obviously at the levels that we're growing now stepped up levels.
We expect margins to continue in the kind of high <unk> low <unk> and as we grow off that larger and larger base.
Growth rates start to moderate a little that will see those margins to drift back up over time.
Hey, thanks.
Thank you.
Yeah.
And our next question comes from Brent Brakeman Piper Sandler Your line is open.
Good afternoon, I guess, Henry camera and great great to hear.
It is like alphabet shopify, leading into the platform I guess at a high level the division to move up into apps for.
Just the core data layer seems to be resonating. My question here is as you just think about this quarter biggest dollar beat to operating.
Profits that you've seen since the IPO really strong cash flows.
What is the appetite to do more on M&A, particularly given valuations in the cloud software are much lower today are you seeing more M&A opportunities or are there bigger M&A opportunities clearly.
The strategy is resonating love to get any thoughts on what the appetite here is given the momentum you have thanks.
Yes. Thank you for the question.
Thanks.
Layering onto what Cameron just understanding we feel really good about our ability to take various technology.
Integrate them with our data.
And then take them to market as a proven way to grow today, we have a really clear vision for how we want our platform to evolve we're doing content analysis around that bit around that vision around build buy or partner to achieve that vision, we understand the ecosystems across our four persona and if we see something that matches our <unk>.
And the criteria that we've laid out around M&A youll see us take a closer look.
And Brett I'd, probably layer on to that.
One of the secrets about being really good at M&A is being disciplined in making sure that it meets the criteria that we've that we've set up historically and so we plan to continue that I think.
Valuations I think in the public markets have certainly come down, but sometimes it takes a little while for private valuations to <unk>.
Fully mirror the reality, that's kind of come to being so while there are opportunities out there. We're more focused on just meeting our kind of core criteria. Then we are on where valuations are moving or anything.
Got it makes sense. Thanks, thanks helpful color.
Now the last question comes from Brian Peterson of Raymond James Your line is open.
Hey, guys. This is Jason on for Brian . Thanks for taking the question just one for our side can you guys elaborate on the yes.
Does it mean for labs to understand kind of what the acquisition integration, but just help us think about the target customer there and then how you guys see.
Ramping operations to meet the broader demand in the market. Thanks.
Yes, I think so.
The launch of zoom into labs is coming off of the acquisition of Dogpatch advisors and.
And Dogpatch advisors is.
Professional services and consultancy firm that helps enterprises build out their go to market efforts using data and insights and software to make those go to market efforts incredibly effective and efficient.
And so when we talk with our customers and our <unk>.
Prospects, what they're telling us it.
They want a world where their go to market motions are driven by data, where our software interconnected seamlessly where they have the ability to run innovative sales playbook, but they don't have a pathway to get there and so were hopeful to do with zoom info lab is to provide a mechanism to help our customer.
Our CF future, that's innovative data driven where systems are integrated and talk to each other where our data cloud sits at the foundation of that and our application layer drives the interconnectivity of that motion.
And so the Dogpatch advisors acquisition, which turns into zoom into the labs.
<unk> zoom info is designed to help our customers not only see that vision, but then also achieve that.
Thanks.
I would now like to turn the conference back to Mr. Henry shock for closing remarks.
Great. Thank you everyone. We hope that you can join us virtually for the analyst day on June 2nd at three PM. Eastern we're excited to share more with you about our platform approach and our leading combination of both growth and profitability. Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Sure.
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Yes.
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