Sales intelligence platform ZoomInfo missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 1.4% year on year to $305.7 million. Its non-GAAP profit of $0.23 per share was in line with analysts’ consensus estimates.
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ZoomInfo (ZI) Q1 CY2025 Highlights:
- Revenue: $305.7 million (1.4% year-on-year decline)
- Adjusted EPS: $0.23 vs analyst estimates of $0.22 (in line)
- Adjusted Operating Income: $100.9 million vs analyst estimates of $97.77 million (33% margin, 3.2% beat)
- Revenue Guidance for Q2 CY2025 is $296.5 million at the midpoint, above analyst estimates of $292.1 million
- Management raised its full-year Adjusted EPS guidance to $0.97 at the midpoint, a 1% increase
- Operating Margin: 16.5%, up from 13.9% in the same quarter last year
- Customers: 1,868 customers paying more than $100,000 annually
- Annual Recurring Revenue: $1.21 billion at quarter end, down 1.6% year on year
- Billings: $312.2 million at quarter end, in line with the same quarter last year
- Market Capitalization: $3.29 billion
StockStory’s Take
ZoomInfo’s first quarter results reflected ongoing progress in shifting its business toward larger enterprise customers, following a period of down-market contraction. Management attributed the quarter’s performance to continued upmarket momentum, highlighted by the addition of 108 new customers spending over $100,000 annually and sequential improvements in net revenue retention. CEO Henry Schuck noted that the company’s Go-To-Market Intelligence platform is now supporting a broader set of sales roles and functions, with the successful rollout of Copilot driving greater adoption beyond traditional sales development users. The team also highlighted improved retention trends in key verticals, particularly software, and cited specific enterprise wins with clients such as Stripe and Intuit as evidence of expanding use cases and deeper customer relationships.
Looking ahead, ZoomInfo’s outlook is shaped by its ongoing transition to upmarket clients, the adoption of new AI-powered solutions, and a more cautious approach to guidance amidst macroeconomic uncertainty. Management emphasized that the newly launched Go-To-Market Studio and continued expansion of Copilot are expected to drive additional opportunities across enterprise segments. CFO Graham O’Brien signaled that while the company is optimistic about upmarket growth and improved retention, guidance includes an "incremental layer of caution" due to the unique economic environment. Schuck explained, "We’re increasingly confident in our longer-term growth aspiration, but we recognize that the down-market will remain more reactive to a macro slowdown than our upmarket business."
Key Insights from Management’s Remarks
Management linked Q1 performance to the success of its upmarket expansion, product innovation, and tighter integration of AI-driven tools, while noting deliberate steps to address ongoing down-market challenges.
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Upmarket focus accelerates: ZoomInfo continued reallocating resources to larger clients, achieving four consecutive quarters of sequential improvement in customers spending over $100,000 annually. Upmarket now represents 71% of total business, with this segment delivering year-over-year revenue growth and better profitability compared to the down-market.
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AI-driven product adoption: The rollout of Copilot, an AI-powered application, has expanded usage beyond sales development representatives to account executives and account managers. This broader adoption is seen as a key driver for increased customer engagement and upsell opportunities, particularly in enterprise accounts.
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Go-To-Market Studio debut: The company launched Go-To-Market Studio, a platform that enables revenue leaders to integrate first- and third-party data, orchestrate campaigns, and apply AI-driven insights across sales and marketing teams. Management believes this product creates new opportunities for deeper integration with client operations and unlocks additional budgets within customer organizations.
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Down-market contraction managed: The down-market business continued to decline, but management described this as an intentional strategy to focus on healthier, more profitable segments. The transition to digital self-service for small customers and stricter qualification processes are expected to stabilize this part of the business over time.
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Vertical recovery observed: Retention rates improved in the software vertical for the fourth consecutive quarter. Management noted that this segment, previously a headwind due to down-sell pressure, is now stabilizing and may soon contribute positively to overall growth.
Drivers of Future Performance
ZoomInfo’s future performance will depend on execution in upmarket segments, adoption of new AI products, and its ability to manage risks in a shifting macroeconomic landscape.
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Enterprise customer expansion: Management is prioritizing further penetration into large enterprise accounts, aiming to increase seat adoption among account executives, account managers, and rev ops professionals. The company cited low current penetration rates as an opportunity for significant growth if execution remains strong.
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AI platform scaling: The success of Copilot and Go-To-Market Studio is expected to drive additional revenue streams by expanding use cases and integrating deeper into customer workflows. Management highlighted the potential for these products to address broader go-to-market functions, which could lead to higher recurring revenue and improved customer retention.
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Cautious guidance amid uncertainty: Despite positive trends in upmarket growth and retention, the company’s outlook remains conservative due to macroeconomic uncertainty and the anticipated continued decline in the down-market segment. Management indicated that further economic headwinds would disproportionately affect smaller customers, while upmarket is expected to be more resilient.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will track (1) the pace of Copilot and Go-To-Market Studio adoption among large enterprise customers, (2) continued improvements in net revenue retention, especially in key verticals like software, and (3) progress in managing the intentional down-market contraction. Execution on expanding seat penetration and integrating AI-driven workflows will also be critical indicators of ZoomInfo’s ability to reaccelerate overall growth.
ZoomInfo currently trades at a forward price-to-sales ratio of 2.9×. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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