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ZoomInfo CEO addresses digitization shift amid pandemic

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Henry Schuck, CEO & founder of ZoomInfo, joins Yahoo Finance to discuss the company’s latest quarterly results — which topped analysts’ estimates on the top and bottoms lines — as well as how companies are going from analog to digital amid the pandemic.

Video Transcript

MYLES UDLAND: But we are still at the tail end of earnings season here, so let's talk about some results that have rolled in over the last 18 hours or so. Last night after the close, Zoominfo out with its latest quarterly report. Company beating on the top and bottom lines. Company also coming out and raising its full year outlook. CEO and founder, Henry Schuck joins us now to discuss the latest quarter. Henry, great to talk with you once again.

I'd like to start the conversation by talking about was that impulse that you guys have seen throughout the second half of last year, do you think that's really driven by a digital transformation of business? Or are you guys also kind of riding this expanding economic cycle, and as more business gets done, there is more demand for the product you guys are offering?

HENRY SCHUCK: Hey, Myles, thanks for having me. Hey, Brian. I think what we saw going into 2020 was strong secular tailwinds around digitization. And for us, we've always been focused on digitization of the go to market motion. And so how sellers and marketers go to market and find their next best clients. I think what we saw in the first half, and really 2020 for us was a tale of two halves.

In the first half of 2020, what we saw was kind of a slowdown and people were shocked and put their hands up and said, I don't really know what's going to happen, so I'm going to do nothing. And as you came into the back half of 2020, I think companies realized doing nothing is not going to get us through this pandemic, and it's not going to set us up for the future.

And so we saw in the back half of 2020 is companies coming to the table and saying, look, the ways that we've identified new customers, the way we've grown our businesses have been largely in an analog world, and we want to make that shift into a digital world. And I think the biggest thing that we know about that, is it's a one way door. You don't go from analog to digital and then go back to analog. And so we really see this as a trend that's going to stick. And you're going to see companies do more and more around digitally transforming the way they go to market.

BRIAN SOZZI: Henry, talk to us about your pipeline. And looking at the stock here pre-market, up about 7%, the market likes the quarter. But I think a large part of that might also reflect your pipeline for deals. What does that look like for the second half?

HENRY SCHUCK: Yeah, so first for Q4, we announced we now have over 20,000 customers. We grew our customers who are spending over $100,000 a year over 45% in the quarter and year over year. We're pretty excited about the momentum we're seeing across the customer base. And I think the thing about our space is, today we sit in the middle of a $30 billion total addressable market. And we're single digits penetrated in that market. And so there's this huge open field for us to go after from a new customer acquisition perspective.

But on the enterprise as well, we've identified just in our existing enterprise customers that we have an over $1 billion seed expansion opportunity inside of those customers already. And so our motion going into next year is going to be a mix of gathering those new logos and new customer acquisition, and then growing those enterprise customers that we already have, because we see a lot of upside in that as well.

BRIAN SOZZI: You're testing a new recruiting platform or service or tool, however you would like to call it. Are you targeting LinkedIn users? Who's the customer there?

HENRY SCHUCK: Yeah, so our customers are recruiters and talent acquisition professionals who have had a lot of success on LinkedIn and are looking for ways to augment that and go find candidates in a more automated technology-driven way. I think one of the things we've been so surprised about as we go in and start having conversations with recruiting and talent acquisition departments either in big companies or as standalone boutiques, is that we've learned that technology and workflow automation hasn't quite made its way into the recruiter and talent acquisition person's hand.

And so we're pretty excited about leveraging our contact and company data asset as a candidate searching tool, and then merging that with workflow automation tools that will allow talent acquisition and recruiting professionals to find their next candidates faster than they've ever been able to before. And when you think about next year, I think most talent acquisition firms are looking at 2021 or this year, I'm sorry, and saying, hey, at some point, hiring is going to tick up this year. And we're going to start bringing that staff back that we furloughed or laid off in 2020. We're going to start hiring again in a real way. And we're a great tool to help them do that.

MYLES UDLAND: And related to that, Henry, thinking about where you guys sit within kind of getting a lead look perhaps, you can think of it that way, on how your customers are thinking about their own business, there was a comment on the call about the mix of monthly to annual billings and how that has started to right size. Is that something that you are thinking about in terms of just gauging confidence in the broader economic cycle?

And is that sort of how you're also thinking about being able to offer full year guidance, because we're still seeing tons of companies; I mean, Home Depot comes out today, and they're like, we don't know what's going to happen. And you're out raising your full year view. Is that part of that calculation?

HENRY SCHUCK: Yeah, I think what we saw, it's a really interesting statistic to look at. What we saw is as the pandemic hit, our customers wanted more flexibility with their payment terms. And so what we had historically saw was annual payments that were made up front. But customers were asking for more quarterly or semi-annual or even monthly payments. And in the midst of, in March in Q1 and Q2 of last year, we were really flexible with those payment terms.

But what you saw is that coming back in the back half of 2020 and in Q4, almost completely back to what we saw in early Q1 of 2020. And so you're seeing confidence build in our customers and confidence build in how they see the future. And so they're more at the table, willing to do an annual upfront commitment than they were in March and April, May and June time frames.

MYLES UDLAND: All right, Henry Schuck, CEO and founder of Zoominfo. Henry, always great to get your thoughts. Thanks so much for joining the program. I know we'll talk soon.