Yahoo Finance’s Myles Udland, Julie Hyman, and Brian Sozzi speak with ZoomInfo CEO Henry Schuck about how the company is faring during the coronavirus pandemic.
BRIAN SOZZI: The appetite for actionable data right now among businesses remains very strong, and ZoomInfo is smacked in the middle of this data land grab. Let's bring in the company's co-founder and CEO Henry Schuck for more on this. Henry, good to speak with you this morning. So you had the IPO earlier this year, and you know what? Since then, you've been making money. You are a profitable tech company unlike a lot of other companies we've been looking at over the past few months here at Yahoo Finance. Why is this model profitable during a pandemic?
HENRY SCHUCK: Yeah, thanks Brian, for having me. We've been profitable from our lineage. I actually founded the company when I was 23 years old in my law school dorm. I put $25,000 on my credit card to start the business, and the only way you can run a business when all you have is your credit card is to make it profitable, and so the business was started profitably. We're super disciplined about the way we make investments.
We're disciplined about making sure that we're growing the top line, but we're doing it in a durable and profitable way. And our customers see incredible value from our platform of data and insights, and they see quick time to value, so we have incredibly short sales cycles, sub 30 days. We've built an incredibly efficient go to market engine that produces a 10x LTV to CAC, and we see that efficiency continuing.
MYLES UDLAND: You know, Henry, a lot of questions in there, but maybe we could just back up. Brian Sozzi uses ZoomInfo. I do not, though I was informed by Sozzi today I have a profile on ZoomInfo, so maybe the highest level, most basically, how would you describe kind of the service that you guys offer?
HENRY SCHUCK: Yeah, absolutely. So what ZoomInfo does is it provides B2B sellers and B2B marketers with the data, the insights and the technologies that they need to reach their next best customer. And so that's everything from profiles on over 15 million companies and 130 million business professionals surrounded by insights on those companies, which ones are growing, which ones are shrinking, which ones are doing M&A, getting funding, adding new technologies, opening new locations, launching new products, which ones have a new CEO or a CIO, which ones have projects and initiatives on cybersecurity or HR and benefits. And so we're surrounding the world of companies with insights on those companies and insights on the buying professional at those companies, and our customers are using that to go to market.
JULIE HYMAN: Hey, Henry. It's Julie. We spoke I believe on the day that you guys started trading.
HENRY SCHUCK: Yes.
JULIE HYMAN: Got to back up for a minute. What the heck is LTV to CAC? You've got to translate that one for me.
HENRY SCHUCK: Sorry, it's lifetime value to customer acquisition cost.
JULIE HYMAN: Ah, OK.
HENRY SCHUCK: And so it cost us, for every $1 we spend to acquire a customer, over the lifetime of that customer, we get back $10.
JULIE HYMAN: Gotcha, so this is basically a lead generation tool for a lot of different types of companies. What are your clients like? And I know you've talked, given some anecdotal examples about your different clients. We talked when you guys went public about it, a tent maker that had pivoted and found some new leads during the pandemic. Do your clients tend to be small businesses, large businesses, what's the range here?
HENRY SCHUCK: Yes, so all the way through. So our companies, the one unique thing all of our customers have in common is they sell to other businesses. And so if you're a company that sells to another business, it doesn't matter if you're a Fortune 10 or a pallet manufacturer in Alabama and everything in between, if you're selling to another business, we have the data, the insights and the technology to help you do that. And it really is everything from air products manufacturers to HR benefits providers to payroll processors to technology companies to logistics firms and really everything in between.
And actually, Julie, two other things that we announced in our last earnings call is today we now have over 720 customers spending over $100,000 a year with us. We kind of think of that as our enterprise cohort. That grew 60% year over year on the quarter. We continue to have really great momentum in that enterprise space as well.
BRIAN SOZZI: Henry, we actually do our homework here on companies on Yahoo Finance, and another metric that you follow or post clearly is ACV, your average contract value, I believe. That has been accelerating. Has that continued to accelerate as the economy has slowed down over the past few weeks?
HENRY SCHUCK: Yeah, absolutely. I mean, our ACVs has continued to accelerate across our customer base. Really, the reason for that is we continue to build new products. We continue to build new software. We made two acquisitions in the quarter, one of an intent data provider and one of an account from a graphics provider named EverString and Clickagy. Those two acquisitions create new products that we can sell to our customers that our customers see incredible value from. And so as we continue to innovate from a software perspective and innovate in the M&A landscape, we continue to acquire new products that we marry with our platform and provide incredible value to our customers, and we're able to sell an upgrade to them, and then that increases our ACV across the customer base.
BRIAN SOZZI: Henry, I'm sure you saw S&P Global's $44 billion deal for IH Market. What are your thoughts? As a founder of a company, what are your thoughts when you see a deal like that go through? Are you getting calls? Are you making calls? Do you want to be part of a bigger brand? What's your longer term thinking on the company?
HENRY SCHUCK: And so I think it was great for, you know, IHS Market's been an incredibly successful data and insights company. We're really happy for them and happy for Lance over there. I think what we're focused on, we went public in June, and the goal was not to get acquired six months later or a year later or two years later. We see an incredible opportunity in front of us. We sit in the middle of a $30 billion total addressable market. That's up from $24 billion just went we IPOed because of the new products and software we're building, and we're less than 2% penetrated inside of that market.
So we see this huge opportunity in front of us. We spent the last year building a really great leadership team, a really great employee base that we can really go after that opportunity with. We made a lot of investments in product and sales and go to market and marketing, and so we're excited about the opportunity in front of us and the investments we've made to go after it. So right now, we're just focused on continuing to grow, continuing to grow profitably and continuing to provide really great value to our customers.
MYLES UDLAND: You know, Henry, you just mentioned your TAM shifting because of the products you're rolling out. I would just finish by asking, has your TAM changed because of the pandemic at all, or do you think that your business was kind of riding trends that were going to be evergreen? And maybe there's been some change here, but did the pandemic materially change that trajectory, or do you think that, you know, it's kind of a something that will come and go for your business?
HENRY SCHUCK: Yes, so we were riding a secular tailwind in the space, and it was around companies trying to digitize the way they went to market, giving their sellers, the front line sellers and front line marketer the tools that they needed to be successful in the digital world. Now, that is-- pre-pandemic, that's an aspirational goal. And then in the midst of the pandemic, that's something that everybody has to execute on and take seriously.
And so I think that what we saw as the pandemic hit, at first, people kind of paused and said, OK, I don't know what's going to happen, so I'm not going to do anything. And as the pandemic moved on, people said, OK, if this is going to be the new normal, how am I going to make sure my sellers can still sell when they're sitting at home, and they're not at ballgames and fancy dinners and conferences? And so we saw a lot of companies come to us in the midst of the pandemic and say, how do I make my sellers more productive from home? Because their productivity tends to be as they go from city to city and meet with decision maker to decision maker, how can I give them tools to be more productive at home?
And so we saw, you know, a good number of clients come to us as they started to rethink the way they were going to go to market, and we think that that's just accelerating and will continue to accelerate. In the history of companies or motions that have gone from analog to digital, I've never seen one move back from digital to analog. And so we're excited about the acceleration that we saw through the pandemic and are pretty confident it's going to continue.
BRIAN SOZZI: I'll say this too real quickly, I ZoomInfoed Myles this morning, and I know more about him now than I did yesterday. I just don't know what he had for dinner last night, but maybe you can get that on the platform soon too.
All right, we'll leave it there. Henry Schuck, ZoomInfo founder and CEO, we'll talk to you soon.
HENRY SCHUCK: Thank you.