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Edited Transcript of ZI.OQ earnings conference call or presentation 9-Nov-20 9:30pm GMT

·56 min read

Q3 2020 ZoomInfo Technologies Inc Earnings Call Nov 10, 2020 (Thomson StreetEvents) -- Edited Transcript of ZoomInfo Technologies Inc earnings conference call or presentation Monday, November 9, 2020 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Henry L. Schuck ZoomInfo Technologies Inc. - Chairman of the Board & CEO * Jeremiah Sisitsky ZoomInfo Technologies Inc. - VP of IR * Peter Cameron Hyzer ZoomInfo Technologies Inc. - CFO ================================================================================ Conference Call Participants ================================================================================ * Aleksandr J. Zukin RBC Capital Markets, Research Division - MD of Software Equity Research & Analyst * Brad Alan Zelnick Crédit Suisse AG, Research Division - MD * Brent Alan Bracelin Piper Sandler & Co., Research Division - MD & Senior Research Analyst * David E. Hynes Canaccord Genuity Corp., Research Division - Analyst * Jennifer Alexandra Swanson Lowe UBS Investment Bank, Research Division - Analyst * Kevin J. Ruth Raymond James & Associates, Inc., Research Division - Senior Research Associate * Mark Ronald Murphy JPMorgan Chase & Co, Research Division - MD * Michael H. Berg Mizuho Securities USA LLC, Research Division - Associate * Michael James Turrin Wells Fargo Securities, LLC, Research Division - Senior Analyst * Nicholas Ivan Negulic Truist Securities, Inc., Research Division - Associate * Patrick D. Walravens JMP Securities LLC, Research Division - MD, Director of Technology Research and Equity Research Analyst * Raimo Lenschow Barclays Bank PLC, Research Division - MD & Analyst * Stan Zlotsky Morgan Stanley, Research Division - VP * Thomas Michael Roderick Stifel, Nicolaus & Company, Incorporated, Research Division - MD ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the ZoomInfo Third Quarter 2020 Financial Results Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Jerry Sisitsky. Thank you. Please go ahead, sir. -------------------------------------------------------------------------------- Jeremiah Sisitsky, ZoomInfo Technologies Inc. - VP of IR [2] -------------------------------------------------------------------------------- Thanks, Gigi. Welcome to ZoomInfo's financial results conference call, highlighting our results for the third quarter of 2020. With me on the call today are Henry Schuck, CEO and Founder of ZoomInfo; and Cam Hyzer, our Chief Financial Officer. After their remarks, we'll open the call up to a question-and-answer session. I'd like to remind all participants that during this conference 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 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 sections 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.zoominfo.com. All metrics discussed on this call are non-GAAP, unless otherwise noted. A reconciliation can be found in the financial results press release or in the slides that we have posted to our Investor Relations website. With that, I'll turn the call over to our CEO, Henry Schuck. -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [3] -------------------------------------------------------------------------------- Great. Thank you, Jerry, and welcome, everyone. This quarter, more customers than ever stepped up to modernize their go-to-market motions by adopting ZoomInfo's data and insights platform. In Q3, our teams delivered 41% organic growth over last year, up 40% from last quarter. Out of 47% adjusted operating margin, we achieved the most adjusted operating income ever in a quarter. And year-to-date, we have delivered $167 million in unlevered free cash flow. Because of the strength that we're seeing across all areas of the business, including record quarterly new sales, record engagement levels and a new high watermark for -- of customers spending over $100,000 a year with us, we are raising our financial guidance for the full year. As we've continued to enhance our offerings and capabilities, we saw customers of all types engage with our data and insights platform at record levels. In the quarter, we experienced record high engagement rates, including a 33% increase in adoption of our FormComplete product, a 67% increase in adoption of our Intent product and a 40% increase in adoption of our InboxAI product. The move from analog, single channel to digital multichannel motion that started in the last few years continues to transform business-to-business selling. Our teams are focused on consistently executing on our vision where ZoomInfo powers a closed-loop go-to-market cycle from data to decision and action, one that's less reliant on heroic unpredictable outlier performances and more dependent on a scalable, predictable platform approach with data-driven orchestration. The ZoomInfo platform seamlessly delivers data and insights that drive the day-to-day go-to-market activities of thousands of leading organizations. By using our platform, sellers and marketers are able to identify prospects, rent their target -- their best target companies, monitor in-market buying signals in realtime, get direct contact information for their prospects and directly engage with them. We are in the very early innings of what we now see as more than a $30 billion total market opportunity with meaningful corporate initiatives in-flight to increase that total addressable market. And we continue to see a long-term opportunity to drive a rare combination of both durable growth and profitability. During the quarter, we signed deals with companies from a diverse set of industries, from the Horton Group an insurance, employee benefits and risk advisory firm; to Total Plastics, a plastics distributor; to RoadRunner Recycling, a waste and recycling service; to Echo Global Logistics, a publicly-traded provider of transportation management services; ServiceMaster Restore, who does commercial and residential restoration services; and Be Green Packaging, the leader in molded fiber packaging solution. In the quarter, 40% of our new ACV was generated from industries outside of software and business services. B2B companies of any size and in any industry can and do use the ZoomInfo platform to grow their business. Q3 was also our best quarter on the land-and-expand side. Our teams added more customers in our greater than $100,000 ACV cohort than ever in our history, with more than 720 customers now spending $100,000 or more in ACV with us. To attract new customers and expand within our existing customers, we continue to reinforce our competitive moat by investing in our platform, our robust core data assets and by executing on M&A that fortifies our strength and increases our reach within sales and marketing organization. I'll touch on all of those areas next. To capitalize on our momentum within the enterprise, we released a host of new features designed to provide greater speed, scalability, transparency, security and administrative control to our enterprise customers. As part of those initiatives, we greatly enhanced our analytics layer by embedding business intelligence dashboards directly into our platform. These allow users to track real-time changes our APIs and enrichment solutions are making in a customer CRM or marketing automation platforms and to provide detailed usage analytics that give administrators clear views of platform engagement. This new analytics capability helps to clearly communicate the ongoing value and ROI provided by ZoomInfo. On the data side, last quarter, we talked about how we continue to invest in and differentiate our data products by using machine learning and AI to ensure our customers enjoy the industry's most accurate and comprehensive data. Those investments have grown our professional data set over 30% since the beginning of the year, from 100 million profiles at the end of 2019 to more than 132 million at the end of Q3. Over that period, we have also increased fill rates on direct phones by 29% and validated e-mail addresses by 24%, all while simultaneously increasing data quality. From a platform perspective, we have been extremely busy. In Q3, we launched Engage, a sales engagement offering designed to help sales teams maximize productivity through access to an automated sales dialer, built in e-mail automation and technologies to manage sales workflows. Engage users have a clear next step for activating their data and engaging with prospects and customers. Although we don't expect it to be a material portion of our revenue in 2020, the TAM associated with this market is estimated at around $9 billion by 2025, and we do believe it will help drive incremental growth in 2021 and beyond, leading to an increase in our total addressable market. In addition to launching Engage, we also released hundreds of new features and improvements in Q3 designed to make our platform easier to use, more scalable and able to process more data to meet the needs of the largest enterprises. This started with, but is not limited to, a significant redesign of our mobile experience, improvements to our quick search, redesigns of our company and contact profiles, alerts and the home page. We also added a real-time intelligence feed to give our users a place to consume proprietary and actionable content on their target prospects and customers. We believe these types of investments in our core offerings pay dividends by providing a better customer experience that delivers greater value, making the product stickier and leading to higher retention rates and upsells from our customers. We also talked -- we also tackled a big common challenge for all go-to-market teams: the need to unify first- and third-party data sources. To help solve that, we released a new bidirectional Salesforce integration capability, allowing users to unify data from their Salesforce CRM systems with ZoomInfo's platform search. Today, more than 65% of our customers have activated some form of ZoomInfo integration with their go-to-market systems. All of that platform work has not gone unnoticed. In Q3, G2 Crowd released its fall grids, where ZoomInfo was listed for the first time in the account data management, AI sale resistance, e-mail verification, lead mining and visitor identification grids. In the last 3 years, we have gone from appearing on 5 G2 grids to appearing on 32 grids and placing #1 on 19 of them. This is a testament to our ability to innovate, release products to the market that are rapidly consumed and best-in-class and expand the platform to drive more value for our customers. These platform enhancements have helped support our legacy platform migration efforts, where today, we have over 60% of our ACV on our new platform. We have consistently seen a modest uplift when migrating customers to the new platform on a like-for-like functionality basis, but once on the new platform, our customers embrace the new depth of coverage and improved features and functionality, with more than half of migrating customers adding additional users. And while very early in the renewal cycles, initial indications are that expansion activity from the first cohort of customers on the new platform are even better than what we've seen historically. Within our accounts, we still see a tremendous white space. Our data indicates that our existing enterprise customers represented an opportunity to grow by more than $1 billion in incremental annual spend, even taking into account that we have almost doubled our upsell into that cohort so far this year. In terms of data privacy, we continue to make progress on notifying every mailable professional on our database by the end of the year and recently eclipsed the 88% mark. We also recently announced that we have received the TRUSTe Enterprise Privacy Certification seal, demonstrating our commitment to data privacy and to the security needs and growing expectations of our customers. Finally, from a product perspective, in Q3, we continued to execute on our acquisition strategy, enabling us to close the acquisitions of Clickagee and EverString in early Q4. Given our successful M&A track record and our plan to continue to pursue acquisitions, I'll briefly discuss our philosophy and approach to M&A before speaking to each of these acquisitions. First, we target high-value adjacencies where we can leverage our leading go-to-market organization to drive significant growth. With an LTV-to-CAC well above 10x across our scaled go-to-market team touching tens of thousands of customers and prospects, we have a proven, highly-efficient go-to-market engine with a track record of bringing solutions to market. Second, the sales and marketing ecosystem has a flurry of solutions that drive go-to-market effectiveness. Nearly all of these solutions, much like their CRM and marketing automation predecessors, are empty boxes without the data and insights that ZoomInfo fills them with. So we look for products that integrate with our data and insights to create a differentiated value proposition to customers that competition cannot match with narrow automation alone. Third, we look for technologies that are near to what we do and adjacent to our current offerings. We stay close to home, but look for assets that provide immediate and long-term value to our customers, while expanding our total addressable market. We believe that there is a real opportunity to become the de facto operating system for all go-to-market teams. And finally, from a financial perspective, we look for transactions that are accretive to our adjusted operating income within the near term. With the Clickagee acquisition, we improved our Intent offerings by providing the first Streaming Intent offering for B2B sellers. The core of what ZoomInfo does is help companies know that companies they should be engaging with and the professionals that those companies who make buying decisions for their products and services. What Streaming Intent data unlocks is the when around target buyers being in market, doing research and poised to make a purchasing decision. This allows sales and marketing teams to tailor messages, offers and resources to increase win rates. We are confident that over the next 3 to 5 years, B2B Intent data will become a central ingredient to how companies target and segment potential customers and drive their go-to-market motion. And just the last year, we have seen the number of forward-leaning customers that subscribe to our Intent offerings more than triple. And announced last week, EverString provides account and thermographic Data-as-a-Service for the enterprise market. EverString's proprietary AI and machine learning has mastered sourcing and tracking of information on the long tail of SMB companies that are notoriously hard to detect and maintain. And they do it at scale with an incredibly high degree of accuracy, allowing them to take share from much larger legacy data providers. EverString's 100 million company records and 70 million professional profiles will be integrated into ZoomInfo's data engine of 15 million company records and 132 million professional profiles. I continue to be impressed and thankful for the great team that we've put together to go after the opportunity in our market. We continue to virtually onboard hundreds of new employees each quarter, and we're doing it in a way that truly connects them to our culture. Our commitment to providing a great place to work was recently recognized with Comparably naming us one of the top 25 workplaces in the country for happiest employees. We have also made a company commitment to diversity and inclusion, sharing our progress across the company and regularly discussing it at the Board level. We are proud that we have meaningfully increased the percentage of diverse employees at ZoomInfo over the last 12 months and expect to continue our progress here. With that, I'll hand it over to our Chief Financial Officer, Cameron Hyzer. -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [4] -------------------------------------------------------------------------------- Thanks, Henry. We are driving a high-growth subscription business at scale, and we operate profitably, which allows us to reinvest operating leverage to drive durable long-term growth. In Q3, we posted organic growth of 41%, an acceleration relative to what we achieved in Q2, and we did so with an adjusted operating margin of 47%. GAAP revenue in Q3 was $123 million, up 56% year-over-year. Our organic growth based on allocated combined receipts was 41% compared to Q3 '19, driven by strength in new customer additions and expansions at existing customers. While GAAP revenue and allocated combined receipts have converged in 2020, the difference in growth rates is due to the fair value adjustments of acquired unearned revenue that impacted the comparative figure in 2019. Both new sales activity and existing client net expansion improved relative to Q2 and last year. We continue to build momentum and increase win rates throughout the quarter, and this combination of strength in new sales and expansion activity helped drive sequential revenue growth of 10%, adjusted for the relative days in each quarter. Our land-and-expand motion continues to underpin our success, particularly in the enterprise. Customer spending $100,000 or greater in ACV increased by about 70 to more than 720, which is our strongest quarterly increase ever. As we move to expenses, adjusted gross profit in the quarter was $109 million, yielding an adjusted gross margin of 88%, in line with the margin we delivered in Q3 2019. Adjusted sales and marketing expense was $30 million or 24% of revenue, up from 22% a year ago. We continue to drive an LTV-to-CAC that is well above 10x, reflecting our go-to-market efficiency and success this quarter. And we will continue to invest in expanding capacity to drive sustainable growth. Adjusted R&D expense was $8 million or 7% of revenue in Q3, up from 6% a year ago. We continue to invest in R&D as well as innovation in data accuracy and coverage to further deliver value to our customers and extend our competitive advantage as well as expand our addressable market and create a pipeline for new revenue sources in the future. Adjusted G&A expense was $13 million or 10% of revenue as compared to 7% a year ago as we have added capacity to operate as a public company and incurred public company costs, including increased corporate insurance and professional services. Adjusted operating income in Q3 was $59 million, yielding a 47% margin, which compares to $47 million and a 54% margin in Q3 2019. Operating margins were consistent with our guidance, which called for higher public company costs, as Q3 was our first full quarter of being a publicly-traded company. Adjusted net income for the quarter was $43 million or $0.11 per share based on 403 million weighted average diluted shares outstanding. Turning to the balance sheet and cash flow. We ended the quarter with $306 million in cash and restricted cash and used approximately $70 million of that to fund the acquisitions of Clickagee and EverString after the close of the quarter. In the third quarter, we generated operating cash flows of $49 million, which included $10 million of interest payments. Unlevered free cash flow was $60 million for the quarter and $167 million year-to-date. With respect to liabilities and future performance obligations, unearned revenue at the end of the quarter was $176 million. And remaining performance obligations were $458 million, of which $349 million are expected to be delivered in the next 12 months. In Q3, we did experience an improvement in the mix of annually paid contracts relative to Q2, and we're still below what we experienced in 2019. I know that some analysts look at calculated billings to approximate in-quarter activity, but I would caution you from placing too much weight on this calculation. Our dynamic mix of billing terms and lack of consistent seasonality of contract expirations cause a significant level of variability with respect to unearned revenue, calculated billings and RPO, as evidenced by comparing the last 2 quarters. As such, given the fully subscription nature of our business, we focus on sequential growth in revenue adjusted for the days in the quarter to more accurately assess the signal through the noise. As of September 30, we carried -- we continued to carry $756 million in gross debt. And our Q3 net leverage ratio on an LTM basis is down to 2.1x. I also want to speak to the disclosure we made this afternoon with regard to our plan to restate our Q2 financial statements. This is a restatement of tax benefits that we recorded in Q2 related to our Up-C structure and the IPO transactions. Our internal team identified it as part of our preparation and review of Q3 financials and determined that it should not have been recorded. This difference is driven by certain calculations and estimates regarding the impact of the IPO on long-dated deferred tax assets derived from the difference between the GAAP basis and tax basis of partnership interest held by corporations within our structure, which were impacted by the restructuring of sponsor-owned entities, stock compensation expense and carryover tax basis from prior transactions. We will be filing an amended 10-Q for our previously reported Q2 results. The year-to-date figures in our Q3 financial results press release and presentation materials properly reflect this change, which is detailed in our press release, increases GAAP net loss in Q2 by $22 million and principally impacts the balance sheet by reducing noncurrent deferred tax assets of $62 million. The adjustment did not impact any of our key performance metrics, including revenue, adjusted operating income, cash flow or adjusted net income. The Up-C structure delivers significant value to our shareholders, but requires extremely technical and specialized accounting knowledge. We have expanded our team over the last 3 months and are confident in our ability to effectively manage these complexities moving forward. Before we turn to guidance, we have noted that GAAP revenue and allocated combined receipts have converged in 2020. And to simplify comparisons and avoid confusion, we have consistently guided to GAAP revenue. As such, this will be the last quarter where we provide allocated combined receipts as a supplemental metric. As a helpful addition, please note that we have included historical RPO balances for Q2 2019 forward in the financial slides to provide incremental transparency for investors as it pertains to trends in remaining performance obligations. As we move to guidance, please note that our -- that reflected in our guidance is the expectation that Clickagee and EverString will contribute a couple of million dollars in revenue and will be mildly -- modestly dilutive to adjusted operating income in Q4. We expect them to be accretive to AOI in the first half of 2021. With that, I will provide our outlook for the fourth quarter and our revised guidance for the full year 2020. We expect to generate GAAP revenue in Q4 between $129 million and $131 million and adjusted operating income between $58 million and $60 million. This guidance implies 43% annual revenue growth or 35% growth relative to the previously reported allocated combined receipts figure for Q4 2019 and a 45% adjusted operating margin at the midpoint of the range. Non-GAAP net income is expected to be $0.09 to $0.10 per share based on 404 million diluted shares outstanding. For the full year, we now expect GAAP revenue to be between $465 million and $467 million, up $13 million at the midpoint relative to our prior guidance; and adjusted operating income of $220 million to $222 million, up $6 million at the midpoint. Our [upwardly] revised guidance for the full year implies 39% organic revenue growth and 47% margin at the midpoint of the range. Non-GAAP net income for the year is expected to be $0.31 to $0.32 per share, up $0.02 per share at the midpoint. And we now anticipate unlevered free cash flow to be $213 million to $215 million, up $6 million at the midpoint. To summarize, Q3 was another quarter where we delivered strong revenue growth, profitability and free cash flow. We continue building our teams, developing and acquiring technology, increasing the value we provide to customers, further differentiating ourselves from competitors and expanding our sales and marketing capacity to drive future growth. All of this enables us to confidently execute against our plan. Now let me turn it over to the operator for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question comes from the line of Brad Zelnick from Credit Suisse. -------------------------------------------------------------------------------- Brad Alan Zelnick, Crédit Suisse AG, Research Division - MD [2] -------------------------------------------------------------------------------- Congrats on a great quarter. Henry, I listened very carefully to some of what you said today. You talked about becoming the de facto operating system for go-to-market teams. And as I contemplate what you said around ZoomInfo Engage, and totally appreciate that this expands your market opportunity. Just trying to understand, was this something that customers were asking for versus your vision of where this market is heading? And how should we think about the lines blurring between ZoomInfo and core CRM platforms? -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [3] -------------------------------------------------------------------------------- Brad, thanks for the question. I think first with Engage, what we saw is an opportunity to have a closed-loop system where customers can live inside of ZoomInfo. They have an opportunity to find data on their customers and prospects and then actually have a method to engage with those prospects. So we heard from a lot of customers that having the data and insights was incredibly powerful, but activating it was a struggle for them. And so building Engage into the core part of our platform allows our customers not only to have access to our best-in-class data and insights, but also to be able to engage and activate that insight -- that data and that insight, against their customers and process specs. And I actually think that theme, the idea of having access to data and actually activating it and having access to insights and actually activating it, is the same theme we see with the Clickagee acquisition, where TOPO, who is the sales and marketing arm of Gartner, talked about how companies are continuing to invest in Intent data, but they don't have a way to activate it. And so bringing that underneath the umbrella of ZoomInfo and then creating automated ways for customers to activate against that data, I think, is going to be a core focus of ours going forward. -------------------------------------------------------------------------------- Brad Alan Zelnick, Crédit Suisse AG, Research Division - MD [4] -------------------------------------------------------------------------------- Excellent. And if I could just ask one follow-up. Clearly, there is tremendous opportunity for you here -- right here at home in the U.S., but any update on international investments that you're making? -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [5] -------------------------------------------------------------------------------- Yes. Absolutely, Brad. So international was -- this quarter, we spent a lot of time on international. It was actually -- Q3 was very strong internationally. We grew revenue 60% year-over-year against that segment of customers. The pandemic did make us rework our strategy to open local offices in the short term. And we adjusted by aligning a segment of our East Coast sales, account management and customer support teams to European hours. That shift in alignment is working very well for us. And then on -- and then we spent some time on the current data set internationally. We focus on increasing our coverage on companies and contacts in the U.K. and Ireland, where we're beginning our international focus. And in the quarter, we increased contact coverage over 50% in those countries. We increased contact coverage across Europe, 168% year-to-date. Direct our numbers across Europe, 35% in the quarter. And then our acquisition of EverString also significantly expands our company coverage internationally. That data asset includes over 5 million companies in the U.K. and Ireland and 13 million companies across Europe. So we feel like we're in a stronger position than ever to be the single source of truth for company and contact information for any multinational enterprise. -------------------------------------------------------------------------------- Brad Alan Zelnick, Crédit Suisse AG, Research Division - MD [6] -------------------------------------------------------------------------------- That's awesome. And congrats to the entire team. -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [7] -------------------------------------------------------------------------------- Thanks, Brad. -------------------------------------------------------------------------------- Operator [8] -------------------------------------------------------------------------------- Our next question comes from the line of Raimo Lenschow from Barclays. -------------------------------------------------------------------------------- Raimo Lenschow, Barclays Bank PLC, Research Division - MD & Analyst [9] -------------------------------------------------------------------------------- Congrats from me as well. Henry, on EverString, just kind of curious, you are not public that long. Just how difficult is it to bring these 2 data sets together and just kind of get like one coherent AI on it and just kind of combine like how you clean it, how they clean it and just have like one integrated set? And then kind of what does it mean, like from a customer -- actually, you touched already on it, but it seems like it's changing your B2B quite a lot in theory. -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [10] -------------------------------------------------------------------------------- Yes. Raimo, thanks for the question. We -- the good news is we have a lot of experience with this, starting with our acquisition of iProfile in 2015, where we went through that same motion; the acquisition of Ranking, where we combined data sets; and then the acquisition of ZoomInfo, where we combined our data sets and processes and systems together. So we've seen the movie a few times. We have learnings from those experiences that we're bringing to bear. In the run-up to -- and during diligence in the run-up to announcing the acquisition, our teams go through a pretty rigorous planning and integration process, where we're identifying exactly where the merging of those data sets is going to happen, how it's going to happen in the short term, how that evolves to the medium and long term. And so we're already integrating that data today. We're already in a place where we can deliver to customers a super set of that data that will continue to refine over time. -------------------------------------------------------------------------------- Operator [11] -------------------------------------------------------------------------------- Our next question comes from the line of Jennifer Lowe from UBS. -------------------------------------------------------------------------------- Jennifer Alexandra Swanson Lowe, UBS Investment Bank, Research Division - Analyst [12] -------------------------------------------------------------------------------- And maybe just following up on Brad's question a bit. You've mentioned some of the challenges that your customers have had, kind of figuring out how to take action on things like Intent data. And maybe just even asking a level higher, how many of your customers are really of the level that they understand the Intent data and the AI insights and are taking advantage of those at this point versus customers who maybe are still a bit earlier in the adoption curve and really more focused on contact data at this point? -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [13] -------------------------------------------------------------------------------- Yes. Thanks, Jen. It's a super interesting question. Our customers come from a variety of different places when it comes to sophistication in using our data, sophistication in going to market. There are some customers, large and small today, who just -- who use our platform as a prospecting tool. As you move up the sophistication curve, we find clients who use our data and insights to drive complicated propensity to buy models, to drive territory mapping for thousands of sellers. I think the thing that we realized is, regardless of where our customer is on that maturity curve, our solutions can drive quick value in their customer acquisition efforts. And then an interesting thing that we're seeing -- that I've seen, in every customer call that I've had this quarter, we found companies asking us how they turn their CRM system from a system of record to a system of insights. Literally every single customer is having this conversation with us today. And they're getting value from CRM as a hub. They're just not seeing their users adopt it or get real value out of those systems because on their own, they just provide no insights. And so they're looking to us to help them make that transformation. And so, Jen, those are companies really early in their go-to-market maturity to companies that are really sophisticated about the way they go to market. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- Our next question comes from the line of David Hynes from Canaccord. -------------------------------------------------------------------------------- David E. Hynes, Canaccord Genuity Corp., Research Division - Analyst [15] -------------------------------------------------------------------------------- Henry, you made an interesting comment in your prepared remarks that expansion dynamics are even better on the new platform. And I realize it's early cohort data, but maybe you could talk about why you think that's the case and if there's any way to quantify it? -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [16] -------------------------------------------------------------------------------- Yes. I think it's a couple of things, DJ. First, their coverage is broader. So our customers who are migrating from legacy DiscoverOrg to ZoomInfo, find somewhere in the neighborhood of 10x the amount of data in our new platform than what they were accustomed to. And so they're coming into our platform, they're seeing significantly more coverage. And so they're adding additional seats with their sellers who couldn't get the value out of our legacy platform because they didn't have enough coverage. And then in the last year, 1.5 years, we've spent all of our R&D efforts on the new platform. So we've built new functionality, new features from things like FormComplete to InboxAI to invest Intent products. And so you see customers stepping up and adding new features and functionality that they didn't have before inside of the new platform as well. -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [17] -------------------------------------------------------------------------------- Yes. And DJ, it's worth noting, it is still early days on those cohorts. But based on our analysis, we are really excited about the fact that not only are new customers that signed up with the new platform expanding at a higher rate than kind of new customers have historically, but also customers that migrated over to the new platform are expanding at higher rate than when they migrated. -------------------------------------------------------------------------------- David E. Hynes, Canaccord Genuity Corp., Research Division - Analyst [18] -------------------------------------------------------------------------------- Yes. Yes. Okay. And then one very quick follow-up for you, Cameron, while I have you. So current RPO is up 60%. Thanks for the year-over-year disclosure there in the slides. Is there anything in there that muddies that year-over-year comp? Or is that a pretty good leading indicator of growth? -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [19] -------------------------------------------------------------------------------- Thanks for including me on the questions. I appreciate that. I do think that those are metrics that we need to be careful with and I would advise investors to be careful with. It does depend on a number of factors. And we do have less consistency in the seasonality of when contracts expire. A big part of that is, as part of our land-and-expand motion, a lot of our upsells are done off cycle, which creates a little bit of noise with respect to that RPO metric. So I very much focus on the sequential revenue growth, which obviously you could annualize out and does show that we're continuing to do very well, and be somewhat careful with those bookings and billings metrics. -------------------------------------------------------------------------------- Operator [20] -------------------------------------------------------------------------------- Our next question comes from the line of Mark Murphy from JPMorgan. -------------------------------------------------------------------------------- Mark Ronald Murphy, JPMorgan Chase & Co, Research Division - MD [21] -------------------------------------------------------------------------------- I'll add my congrats on a very strong performance. So Cameron, I also had a question for you. As we kind of think through the 40%-ish trajectory for ZoomInfo right now and if we try to overlay the effects of the pandemic and the recession for Q3, would you say that that's a net headwind now? Would you say it's neutral? Would you say it's become a net tailwind? And just given your reporting on the day, coincidentally, that the Pfizer vaccine news came out, how do you see the imprint of the pandemic going forward in terms of ZoomInfo's ability to kind of benefit from reopenings next year and the year after? -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [22] -------------------------------------------------------------------------------- Yes. So I think we've always said that the pandemic and the resulting economic uncertainty presents both headwinds and tailwinds for us. I think from a headwind perspective, we continue to have customers that are always partially impacted by the pandemic and also, just buying patterns obviously changed. I think over the course of the year, as customers and particularly larger customers became more acclimated to the environment, I think we have seen kind of benefits as people are looking to improve their sales and marketing activities. Overall, with respect to where we are, the trend of people looking to improve their market activities to achieve better efficiency and effectiveness started well before the pandemic, and we have seen that it's become more important. But post-pandemic, we expect that, that trend will continue for a very long period of time. And that secular trend will actually help us as economic uncertainty continues to wane. -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [23] -------------------------------------------------------------------------------- And I would add, Mark, there's a study by McKinsey that came out in the quarter that's found that only 20% of B2B buyers say they hope to return to in-person sales. And they're getting that even in sectors where field sales models have traditionally dominated like pharma and medical products. And once you make a shift from analog to digital, I can't think of an example where you go back. -------------------------------------------------------------------------------- Mark Ronald Murphy, JPMorgan Chase & Co, Research Division - MD [24] -------------------------------------------------------------------------------- Yes. That's a very good point, I think, we can all relate to. And so Henry, one other question I had for you. If you think through your typical customer that's maybe been with you for a couple of years and if you go back and try to look at their own headcount trend for their sales teams and for their marketing teams, I think where that's a lever that can drive some dollar retention for you through seat expansion. Do you have any feel for how that's trending in recent weeks? Or have you seen any indication that your customer base is kind of beginning to reengage and start to just kind of expand their sales teams more rapidly? -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [25] -------------------------------------------------------------------------------- Yes. Mark, maybe I'll jump in and then Henry can add color. But we certainly see within our enterprise cohort that, that has improved in terms of our net expansion and upsell capabilities. While there has been some volatility in terms of overall headcount, we are still so materially under-penetrated that there's a lot of opportunity for us to continue to grow. And as we've looked through our customer base, while we do have some customers where we operate wall-to-wall or provide real benefits to them wall-to-wall, the vast majority of our customers were very under-penetrated. And within the -- in the enterprise cohort, we believe we have at least $1 billion of incremental revenue just from the customers we have today. -------------------------------------------------------------------------------- Operator [26] -------------------------------------------------------------------------------- Our next question comes from the line of Michael Turrin from Wells Fargo Securities. -------------------------------------------------------------------------------- Michael James Turrin, Wells Fargo Securities, LLC, Research Division - Senior Analyst [27] -------------------------------------------------------------------------------- Cameron, maybe going back to those points on the macro you just laid out and the mix of potential impacts. Can you just spend some time following up there on some of the assumptions that went into Q4 guidance? And is there anything else, given this is your -- just your second quarter as a public company, for us to be aware of from a seasonal perspective as we head towards the end of the year? -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [28] -------------------------------------------------------------------------------- Sure. That's a great question. We look at our business, and we're still very positive on the secular trends that are impacting us and continue to see great execution. That being said, this has been a year where a lot of things have happened, whether it's economic uncertainty, there's potential for election fallout. At the end of the day, we really don't know what we don't know. So we've taken a prudent approach to how we've set our guidance to make sure that we're providing guidance that's achievable and realistic. From a seasonal perspective, I think we've -- as a kind of completely subscription-based company, obviously, the revenue and expenses, the only seasonality that you really get is based on our revenue recognition where you get days in the quarter. And obviously, Q4 has a similar number as Q3. You will see, as you move into Q1, which has fewer days, that could have an impact. And we adjust for that in our sequential growth thought process, but also have a small impact on margins as well. And so overall, I think those are the kind of seasonal aspects that we tend to focus on when looking at our reported results. -------------------------------------------------------------------------------- Michael James Turrin, Wells Fargo Securities, LLC, Research Division - Senior Analyst [29] -------------------------------------------------------------------------------- Got it. Nice job on the results. -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [30] -------------------------------------------------------------------------------- Thanks. -------------------------------------------------------------------------------- Operator [31] -------------------------------------------------------------------------------- Our next question comes from the line of Alex Zukin from RBC Capital Markets. -------------------------------------------------------------------------------- Aleksandr J. Zukin, RBC Capital Markets, Research Division - MD of Software Equity Research & Analyst [32] -------------------------------------------------------------------------------- So maybe Henry, first for you. When we look at your early-stage pipelines, your late-stage pipelines, the sales cycles, the close rates, how do they look and compare to maybe earlier this year to your expectations during the pandemic? To Mark's question, around the pandemic serving as this forcing function or a change agent for you, where are we today? And kind of how does that look on a go-forward basis? And I got a quick follow-up for Cameron. -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [33] -------------------------------------------------------------------------------- Yes. I think if you look at this kind of every month coming out of March, all of those metrics, conversion rates, demos, opportunities, close rates, sales cycles, everything has improved coming out of March. And it's come -- and every month, we've seen improvement against the month before. And so we're getting very close to our pre-COVID time period. -------------------------------------------------------------------------------- Aleksandr J. Zukin, RBC Capital Markets, Research Division - MD of Software Equity Research & Analyst [34] -------------------------------------------------------------------------------- Got it. And then I guess, Cameron, if I look at some of the metrics pretty much across the board, whether it's in revenue growth, whether it's in billings growth, whether it's in current RPO or even current RPO bookings, on a year-over-year basis, sequentially, you're seeing acceleration. Are there any adjustments that you would -- particularly on the billings number -- yes, on the one hand, your billings number is also very different, and you talked about why it's not a good number to look at. But across all 3 of those numbers, is there any adjustment that kind of sticks out that we should keep in mind or pay attention to take us away from that acceleration narrative? -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [35] -------------------------------------------------------------------------------- I mean, once again, I think that particularly those bookings and billings numbers do tend to have a lot of variability in them. So you look at billings in Q2, that was a 17% growth. You look at billings in Q3. That's a 55% growth. It's going to go back and forth. I think when you look forward, it will likely be in the middle of those numbers. I wouldn't expect it to kind of continue to grow because there is variability. And realistically, when you look back at Q3 of last year, there's always adjustments that you could consider. Overall, it's just there are so many adjustments in terms of whether it's payment terms or the seasonality of when we've sold in prior periods that are -- that caused that variability and the reasons why I'd be careful with it. -------------------------------------------------------------------------------- Operator [36] -------------------------------------------------------------------------------- Our next question comes from the line of Terry Tillman from Truist Securities. -------------------------------------------------------------------------------- Nicholas Ivan Negulic, Truist Securities, Inc., Research Division - Associate [37] -------------------------------------------------------------------------------- This is Nick on for Terry. So I just wanted to talk about Intent data a little bit. So it certainly it seems like your Intent data solutions are seeing a nice uptick in terms of adoption. And again you mentioned a 67% increase in adoption of the Intent product. Just wanted to know if you guys could talk about the importance of Intent data when selling the overall platform? And this has led to an increasing number of enterprise customer wins are potentially larger lands. And just as a follow-up, how is the recently introduced streaming Intent solution resonating with customers so far? -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [38] -------------------------------------------------------------------------------- I didn't catch the last part, Nick. What did you say at the end? -------------------------------------------------------------------------------- Nicholas Ivan Negulic, Truist Securities, Inc., Research Division - Associate [39] -------------------------------------------------------------------------------- Oh, just as a follow-up, I wanted to know how the streaming Intent solution has resonated with customers so far. Sorry about that. -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [40] -------------------------------------------------------------------------------- Got it. No, no problem. Yes. So look, we think customers -- well, I think 2 things. One, companies want to engage with their potential buyers at the time that they're interested in their products and services. And the B2C world has done an incredible job from a digital advertising and marketing perspective of being in front of their buyers when they're thinking about the products and services that they provide and sell. And the B2B world has been far, far behind B2C sophistication around this. And we believe the biggest reason for that is the fact that these -- that the B2B companies have not had a way to take off-line Intent data and then activate it through their go-to-market system. And so there were 2 things -- there are 2 kind of important things when we think about Intent. One, we want to have the best Intent solution on the market. We want to be able to predict when customers and prospects are in market to buy any number of different products or services. We want to deliver that in realtime to our customers so they can take advantage of that data immediately, moments after their customers are crossing thresholds for engagement on certain topics or product. And then we want to make it seamless for them to activate that data across their go-to-market system. And so that the activation of that buying Intent happens simultaneously with us giving them the signal. And I think bringing that together gives B2B companies the opportunity to be truly as sophisticated as B2C companies are in their go-to-market efforts. -------------------------------------------------------------------------------- Operator [41] -------------------------------------------------------------------------------- Our next question comes from the line of Brent Bracelin from Piper Sandler. -------------------------------------------------------------------------------- Brent Alan Bracelin, Piper Sandler & Co., Research Division - MD & Senior Research Analyst [42] -------------------------------------------------------------------------------- I had one for Cameron and a quick follow-up for Henry. Cameron, I wanted to drill down to the growth metrics. I appreciate the caution reading in RPO and billing metrics here given the volatility. But if I look at just like sequential growth, 11% was the highest in 3 years. Year-over-year growth accelerated. As you think about just the quarter in what drove the momentum, was it broad-based? Was it all in enterprise? Just help us -- give us a little more color on why yet you reported the highest sequential revenue growth rate in 3 years. And was there kind of a onetime benefit in there as well? -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [43] -------------------------------------------------------------------------------- Yes. Thanks. That's a great question, Brent. It was broad-based across the board. We saw really strong new business sales, and that's with enterprises and mid-market and SMB customers. I think one thing to make sure to think about is that all of our customers are selling to other businesses. So at the end of the day, they are probably less impacted by some of the COVID headwinds that you might see than, say, restaurant or other folks. And many of them are pivoting and finding ways to succeed. These happen to be many of the more agile and forward-leaning go-to-market teams in the world. So I think our system really helped people to continue to perform. And I think one of the things that we continue to see throughout was that the retention or expansion among our customers continued to accelerate month-over-month throughout the year. So again, broad-based on both new sales and retention and across all of the different segments of customers that we serve. -------------------------------------------------------------------------------- Brent Alan Bracelin, Piper Sandler & Co., Research Division - MD & Senior Research Analyst [44] -------------------------------------------------------------------------------- Good to hear. And then, Henry, just a quick follow-up with the recovery you're seeing in the mid-market and SMB. How should we think about the EverString acquisition? I know it adds a broad swath of SMB contact data. Does this strengthen your share gain capability in the mid-market and SMB? Or is this more of a product play? Just trying to understand the logic of EverString. Is it really shoring up SMB mid-market, an opportunity for you there to gain share? Or is it more of a product extension? -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [45] -------------------------------------------------------------------------------- Yes. So first, EverString expands the firmographic information we provide on small businesses. That ends up being a key need for our enterprise customers, our sophisticated mid-market clients and our SMB clients who sell to other SMBs. And we talked about every client fit somewhere on the go-to-market maturity curve. And this type of data and insights that are delivered -- this type of data and the insights that are delivered from it is used for everything from simple prospecting activities to complex lead and predictive analytics scoring. But one of the places we're especially excited is that EverString helps us accelerate the success we're seeing in the enterprise. It allows us to provide the data and insights to solve go-to-market challenges that exist across an organization. And EverString has been largely focused on that enterprise space with customers like FedEx and iHeartMedia and Snowflake that they call their own. And so we're excited about integrating it because we think it helps us solve complex problems across the enterprise, but also adds value to our sophisticated mid-market clients and our SMB clients who sell to other SMBs. -------------------------------------------------------------------------------- Operator [46] -------------------------------------------------------------------------------- Our next question comes from the line of Stan Zlotsky from Morgan Stanley. -------------------------------------------------------------------------------- Stan Zlotsky, Morgan Stanley, Research Division - VP [47] -------------------------------------------------------------------------------- Congratulations on a good quarter. From my end, Henry, maybe one for you. Obviously, a very strong quarter of what it seems like new customer acquisition. Maybe just qualitatively, right, who are these customers who are coming on board now and adopting ZoomInfo to really help their go-to-market activities? And how did they, frankly, survive through the first 7 months of the pandemic? And then a quick follow-up for Cameron. On the metrics, thank you for giving us current RPO. And as much as current RPO, obviously, controls for some of the billing term issues, that also inflected very, very strongly versus the momentum that we were seeing in Q2. Was CRPO simply a function of very, very strong customer acquisition that you guys saw in Q3? That's it for me. -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [48] -------------------------------------------------------------------------------- Great. Thanks, Stan. I'll start. Look, I think what we're seeing on the new business side is really strength across industries and across customer cohorts. And everything from a plastics distributor to commercial and residential restoration services company came on in the quarter. And so we see continued strength across industries. I think what you really see is companies are looking for digital ways to go to market, some of them because they're just coming up to sort of making this transition and some of them because they've been forced to make necessary changes because of the pandemic. What you see often is companies that have historically had a field sales force and have gone to market through expensive sort of field sale sellers coming to us and saying, "How do I make these -- this sales team productive from home? How do I give them the insights that they would otherwise be getting by walking the floors inside of companies and shaking hands with their decision-makers and warning that way? How do I provide them a set of insights and data that they can use to continue to be productive when they're not in a customer's office." And so we hear that often. We hear companies accelerating their motion to digitally transform. And then again, we see a lot of companies who are making transitions from Salesforce instances or doing deployments of Salesforce. And as they're making those deployments, they're coming to us and saying, "Look, our sellers don't adopt and they don't love Salesforce. It tends to be it tends to be a tool that they feel like they're obligated to go into to enter data into. And we want to transform that into a system of insights for them, a tool that they're excited to go into because they know they're going to get a unique piece of insight from logging in and going into the tool. Can you help us drive that insights-driven motion?" And so that's what we're seeing. I'll pass it to Cameron. -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [49] -------------------------------------------------------------------------------- Yes. And then in terms of the RPO question and current RPO question, certainly, as Brent pointed out, we did have probably the best quarter that we've seen in years in terms of sequential revenue growth. And that certainly is driven by both angles: one, the new sales that we were able to execute against in the quarter; and also the net expansion that we drove with existing customers as well. And certainly, that plays into an inflection point around billings and calculated bookings as well. But again, I would caution people from putting too much weight on the bookings and calculated billings metrics just because those do have other variables that will drive different answers at different times than just looking at sequential growth. -------------------------------------------------------------------------------- Operator [50] -------------------------------------------------------------------------------- Our next question comes from the line of Tom Roderick from Stifel. -------------------------------------------------------------------------------- Thomas Michael Roderick, Stifel, Nicolaus & Company, Incorporated, Research Division - MD [51] -------------------------------------------------------------------------------- So Henry, you noted in one of your remarks that there's potentially a $1 billion opportunity -- or addressable opportunity, I think, just in the customers that you have and the ability to expand their footprint. I look at that number of customers over $100,000 -- that spend over $100,000 with you, that jumped up pretty meaningfully this quarter. But still against the overall installed base, still pretty low percentage. So I guess it's kind of a 2-part question. And Cameron, perhaps you could jump in with some of the financial metrics behind it. The first part of this is, how are you getting these customers to make that jump? In other words, of that 720, when you landed another 70 this quarter, was that predominantly back to the installed base? Are you seeing net new customers come in at that level? And then the second more functional part of that is what are you doing with the go-to-market motion, either hiring new sales reps or changing the way that you go to market to attract more enterprise customers? That's it for me. Nice job. -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [52] -------------------------------------------------------------------------------- Yes. Got it. So first, we run a pretty sophisticated land-and-expand motion. And so we are driving existing customers from sort of low-entry points in the enterprise to much larger subscriptions with us. And I think you're seeing sort of most of the growth in that customer cohort -- in the $100,000 customer cohort coming from that expansion motion. And again, really because the way we sell is we can go into a large enterprise so sell a $50,000 contract to some -- to a small division there or a small set of sellers there and then grow from there by showing value against that group of sellers by expanding to other divisions at the company. And that is a motion that we're running and investing into. We do continue to invest in and refine the go-to-market approach in the enterprise as well. One of the things that we released in the quarter is auto provisioning of free trials. That allows us to target specific users within our enterprise customer base, give them free access to ZoomInfo for a period of time, gather in product feedback and then take that feedback up to senior executives at those companies to increase seats. And that capability, we've deployed now across more than 2,300 of our accounts. We expect that to continue to drive incremental growth within the enterprise. And we've continued to hire reps in the enterprise space as well. One of our key hires in the quarter is the Vice President of Enterprise Sales that we hired from Salesforce, who's running that enterprise sales team. And so we continue to put -- make investments behind that team. -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [53] -------------------------------------------------------------------------------- And I guess, Tom, just to follow up on the numbers super fast. Henry is right that most of the customers are expansions, but Q3 was one of our best quarters ever in terms of landing new customers over $100,000. So we are starting to see some good traction in customers coming in at slightly higher levels to begin with. -------------------------------------------------------------------------------- Operator [54] -------------------------------------------------------------------------------- Our next question comes from the line of Siti Panigrahi from Mizuho. -------------------------------------------------------------------------------- Michael H. Berg, Mizuho Securities USA LLC, Research Division - Associate [55] -------------------------------------------------------------------------------- This is Michael Berg on for Siti Panigrahi. Congrats on a great quarter. I wanted to quickly follow-up on Clickagee and EverString. And I guess where are you in terms of integration? And how much longer do you have to go? And have you had any early customer feedback, whether it's from their existing customers using your platform or from existing [domain] customers using some of the new feature sets? And any commentary and color around that? -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [56] -------------------------------------------------------------------------------- Right. So EverString, we closed on Thursday. So we've had 72-ish hour -- work hours of customer conversations. Now I will tell you, what EverString has done for us in a big way is we were involved in enterprise conversation where enterprises are looking to us to solve their go-to-market data needs across the organization. And a lot of that comes down to our ability to enhance and enrich the data that already exist across their enterprise and our ability to match and fill and enrich a broad set of that data -- the broadest set of that data with the go-to-market-focused data asset. We're already having those conversations. We're already seeing traction from the enterprise and excitement around our ability to do more with them. We really are in a position from an EverString perspective where we don't need to create demand within the customer environment for these data enrichment solutions. Thousands of our customers today use our data enrichment solutions, and the integration of the asset is going to instantly provide them value as we'll be able to enrich more records and monetize for those records across what they're already enriching from us. And then on the Clickagee side, which there's been a little bit more room between the acquisition and now, we're releasing our streaming Intent data -- our streaming Intent product this month. We've already had customers signed up and ready to go on that. Lots of excited customers who want to get access to that as soon as it comes out. And we continue to build an enterprise-grade product that will allow us to pipe Intent-level data directly into the enterprise, into data science and machine learning organizations in the enterprise as well. And so we're working towards those outcomes right now. -------------------------------------------------------------------------------- Michael H. Berg, Mizuho Securities USA LLC, Research Division - Associate [57] -------------------------------------------------------------------------------- Perfect. And a quick follow-up. You noted that was about $2 million of impact to Q4? Is that correct? -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [58] -------------------------------------------------------------------------------- Yes. That's our expected revenue from the 2 acquisitions combined. -------------------------------------------------------------------------------- Michael H. Berg, Mizuho Securities USA LLC, Research Division - Associate [59] -------------------------------------------------------------------------------- So it's about -- if my math is correct, about $10 million run rate or so? If you include write-offs. -------------------------------------------------------------------------------- Peter Cameron Hyzer, ZoomInfo Technologies Inc. - CFO [60] -------------------------------------------------------------------------------- Yes. Certainly, it's not going to be material to our financials next year as well, but that would be the math. -------------------------------------------------------------------------------- Operator [61] -------------------------------------------------------------------------------- Our next question comes from the line of Brian Peterson from Raymond James. -------------------------------------------------------------------------------- Kevin J. Ruth, Raymond James & Associates, Inc., Research Division - Senior Research Associate [62] -------------------------------------------------------------------------------- It's Kevin here on for Brian. You've mentioned before seeing an uptick in leads and brand awareness surrounding the IPO. And I'm curious if there's anything specific you'd point to indicating that, that is sustained? And how do you think that maybe impacting pipeline generation or that 40% new ACV mix across some of your verticals with lower penetration rates? -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [63] -------------------------------------------------------------------------------- Yes. I mean I think that the best thing to look at there is what our marketing teams look at. And the step that they track most closely is marketing-qualified leads, and those are leads that marketing generates primarily from the website. Those leads reached an all-time record, both in number of MQLs as well as ACV over MQL. Q3 was 65% higher than Q3 of 2019. And so that's a metric we track very closely, and it is really what drives the overall conversion rate to close more opportunities. And so we continue to see really great momentum across that metric from a website and marketing perspective. -------------------------------------------------------------------------------- Operator [64] -------------------------------------------------------------------------------- Our next question comes from the line of Pat Walravens from JMP. -------------------------------------------------------------------------------- Patrick D. Walravens, JMP Securities LLC, Research Division - MD, Director of Technology Research and Equity Research Analyst [65] -------------------------------------------------------------------------------- Let me add my congratulations. So Henry, if I'm dividing this up wrong, let me know, but it seems to me we kind of have firmographic, technographic and Intent data is your big areas. I'm just wondering, where do you see the most white space for you guys in terms of more organic product development or more acquisitions? -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [66] -------------------------------------------------------------------------------- Yes. So that's a great question. I think, Pat, it's more like firmographic and you could put technographic as an element of firmographic. And firmographic is like account data, then professional data or contact data and then Intent data. I think those are all in like unique places from an adoption perspective. Firmographic data is the type of data that every enterprise knows that they need, and we often find them kind of using a BPO solution to fill in some blanks. It's a pretty broken process inside of the enterprise to gather and maintain and keep that data up to date, but it has been around the longest. Then professional data, I think we're actually still in a really early stage of companies leveraging professional data for ideal buyer profile to engage the right buyers at the right time. I think we're pretty early there. And then on the Intent data side, that's still like a pretty -- like a largely evangelistic sale. And you're seeing customers totally understand the value of it because they've seen its use in the B2C world. And so they're familiar with why this would work for them in a B2B context as well. But we're probably in the earliest stages of that from a data perspective in the go-to-market. -------------------------------------------------------------------------------- Operator [67] -------------------------------------------------------------------------------- At this time, I'm showing no further questions. I would like to turn the call back over to Henry Schuck for closing remarks. -------------------------------------------------------------------------------- Henry L. Schuck, ZoomInfo Technologies Inc. - Chairman of the Board & CEO [68] -------------------------------------------------------------------------------- Great. Thank you. Look, we continue to be extremely excited about the near- and long-term growth prospects for the company. We're focused on delivering value to our customers, increasing engagement with our platform, investing in technology to further expand our competitive moat, building out a world-class team and executing against value-creating M&A opportunities. As I said last quarter, this is the starting line for us. We have a very active calendar for the fourth quarter, and I invite you to join us at one of the many conferences or events that we'll be participating in. For more information on where we'll be and when, please reach out or visit our Investor Relations website. I appreciate you all joining us today. Thank you. Good afternoon or good evening. -------------------------------------------------------------------------------- Operator [69] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thanks for participating. You may now disconnect.