Can you break out upmarket ACV growth between software and other verticals, given the overall deceleration?

The significant software footprint, particularly in the lower half of the upmarket business, is creating a headwind. Non-software verticals in the upmarket business continue to grow at consistently healthy levels. “What I can say is that we do have a significant software footprint in the upmarket business, largely in the lower half of that upmarket business, and that is creating a headwind to upmarket growth. If you back that out, the non-software verticals in the upmarket business continue to grow at consistently healthy levels.”

What customer feedback are you seeing on GTM.AI, and how does it impact confidence in revenue growth accelerating in H2 2027?

Customers are plugging GTM.AI into key go-to-market workflows and internal applications, showing healthy consumption growth. The company is not baking any upside from new products or GTM.AI into current numbers, maintaining a conservative posture. “I think that what we're hearing from customers who are using the set of tools that we made available on GTM.AI is that, number one, they're plugging it into key go-to-market work and key go-to-market workflows. ... We've seen really healthy consumption growth within those channels that we're really happy about. And we are going to continue to get more and more of our customers leveraging our data and insights through our API, our MCP and our CLIs, which are available on GTM.AI.”

Are you seeing the tech vertical challenges spread to other verticals, and what is your confidence in capturing similar pricing with the new consumption-based model?

Outside of software, performance is consistent, with non-software verticals showing improved gross retention. The company assumes software challenges will persist near-term. The new pricing model is aimed at optimizing growth across all verticals, but it's too early to take credit for it. “Yes. Look, I think outside of software, we're seeing consistent performance from those verticals. And we're actually seeing improvement across a set of non-software verticals as well. Year-to-date, we've seen gross retention improve year-over-year in our non-software verticals.”

GTM

ZoomInfo (GTM) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 5, 2026

Source: earnings call transcript

Executive summary

ZoomInfo Q2 FY26 — Exceeds Guidance, Focuses on Profitability and AI-Driven Solutions

ZoomInfo exceeded its Q2 FY26 guidance, demonstrating continued focus on profitability and free cash flow generation amidst a challenging software market. The company is strategically shifting towards enterprise-grade, AI-driven solutions and flexible consumption models, aiming for durable long-term growth while maintaining a conservative financial posture. Capital allocation prioritizes shareholder returns and debt reduction, with a significant restructuring underway to enhance efficiency.

Highlights

Exceeded Q2 guidance, with GAAP revenue reaching $310 million, up 1.2% year-over-year.
Adjusted operating income margin improved to 35%, up 130 basis points year-over-year.
Unlevered free cash flow increased 7% year-over-year to $107 million.
Operations business (non-seat based) continued strong performance with 20% ACV growth year-over-year.
Successfully repurchased $28 million in stock and retired $58.5 million of senior notes at a discount, reducing future interest payments by $2.3 million annually.

Concerns

Net revenue retention declined to 89% in Q2, a step down from 90% in the prior three quarters.
Downmarket ACV declined 12% year-over-year, with resources intentionally shifted away from this segment.
Customers with at least $100,000 in ACV decreased by 9 sequentially, concentrated in the software vertical.
Incurred a non-cash goodwill impairment charge of $651 million due to market capitalization decline.
Incurred a $35 million charge for severance and employee benefits related to restructuring, with headcount reduced by 350 sequentially.

Guidance & targets

Category	Target	Timeline	Confidence
GAAP Revenue	$298 million to $301 million high materiality	Q3 · FY26	High
Adjusted Operating Income	$113 million to $115 million high materiality	Q3 · FY26	High
Non-GAAP Net Income per Share	$0.28 to $0.29 high materiality	Q3 · FY26	High
GAAP Revenue	$1.207 billion to $1.217 billion high materiality	Full Year FY26	High
Adjusted Operating Income	$446 million to $451 million high materiality	Full Year FY26	High
Non-GAAP Net Income per Share	$1.12 to $1.13 high materiality	Full Year FY26	High
Unlevered Free Cash Flow	$403 million to $423 million high materiality	Full Year FY26	High
Adjusted Levered Free Cash Flow per Share	at least $1.25 high materiality	FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Upmarket Upmarket mix of ACV is now 76%. Upmarket ACV grew 3% year-over-year. The sequential decline in $100k+ ACV customers was concentrated in software, while non-software cohorts posted solid growth. ACV Mix: 76%Customers with $100k+ ACV: 1,891 (YoY increase of 9, sequential decrease of 9)ACV from $1M+ customer cohort: up 16% YoY	—	3%	—	—
Downmarket Downmarket ACV declined 12% year-over-year in Q2. The company intentionally reduced sales resources in this segment, shifting to a PLG-led motion. Gross retention improvements helped mitigate further decline.	—	-12%	—	—
Operations Business The operations business, primarily data and not tied to seats, continued to perform well, delivering 20% ACV growth year-over-year.	—	20%	—	—

Product announcements

Product	Type	Timeline
GTM.AI	launch	Q2 FY26
Flexible Pricing and Packaging	update	starting later Q3 FY26
GTM Studio and Agent Teams	milestone	launched to GA in February

Deals & partnerships

Preeminent software customer Largest ACV deal ever, multiyear renewal and expansion multiyear

Closed the largest ACV deal ever, a multiyear renewal with a preeminent software customer. This deal expanded their ZoomInfo implementation to include both data and seats, integrating ZoomInfo's data natively inside their headless experience.

Legora Upmarket opportunity closed

Legora, an Agentic operating system for legal work, was mentioned as an upmarket opportunity closed during the quarter.

Cohere Upmarket opportunity closed

Cohere, a leading enterprise AI company developing foundation models, was mentioned as an upmarket opportunity closed during the quarter.

Bank of Montreal Upmarket opportunity closed

Bank of Montreal, one of North America's largest financial institutions, was mentioned as an upmarket opportunity closed during the quarter.

Korn Ferry Upmarket opportunity closed

Korn Ferry, a global organizational consulting firm, was mentioned as an upmarket opportunity closed during the quarter.

Leading financial services company (>$2T assets) Expansion beyond existing relationship

Expanded an existing relationship with a leading financial services company (with over $2 trillion in assets) from their commercial banking department into their investment banking division. The expansion was attributed to the strength of the relationship and consistent satisfaction with ZoomInfo's data and platform.

Leading cloud connectivity company Strengthened partnership after vendor review

After a data breach, a leading cloud connectivity company conducted a full vendor review. Due to ZoomInfo's investments in data governance, compliance, and security, they emerged as a stronger and more trusted partner.

Risks & headwinds

Challenged Software Vertical Near-term

Sequential decrease of 9 customers with $100k+ ACV concentrated in software; headwinds in the lower end of upmarket.

Mitigation:Maintaining a conservative posture in guidance; focusing on non-software verticals which show consistent performance.

Longer Sales Cycles Ongoing

Persisting trend, impacting upsells and net revenue retention.

Mitigation:Introducing flexible pricing and packaging options to help improve retention longer term.

Downmarket Business Decline Ongoing

Downmarket ACV declined 12% year-over-year.

Mitigation:Intentionally making downmarket a smaller piece of the overall business by reducing sales resources and shifting to a PLG-led motion; gross retention improvements are helping.

Net Revenue Retention Decline Q2 FY26

89% in Q2, down from 90% in prior three quarters.

Mitigation:Flexible pricing and packaging options are expected to provide retention improvements longer term; gross retention held well, supported by non-software improvements.

Goodwill Impairment Q2 FY26

Non-cash charge of $651 million.

Mitigation:This charge does not affect cash position, taxes payable, liquidity, debt covenants, or non-GAAP results.

Restructuring Costs and Headcount Reduction Q2 FY26, with remaining charges over next 6 months

$35 million charge for severance and benefits; headcount lower by 350 sequentially, down 15% YoY.

Mitigation:Aimed at driving efficiencies across the organization and prioritizing profitability and free cash flow generation; expected to lead to a more efficient business.

What to watch in Q3 FY26

Impact of Flexible Pricing & Packaging

Q3 FY26 and into 2027

Current Initial rollout for new business at end of Q3 FY26; no significant revenue impact expected in Q3.

Target Observe impact on new business and initial customer migrations, particularly on retention and growth.

Why it matters

This strategic shift is central to the company's long-term growth and retention strategy, moving from a per-seat to a consumption-based model.

When we think about the updated pricing and packaging and then some of the product changes, we'll largely be rolling that out starting with new business at the end of Q3 and then approaching the customer base kind of opportunistically and when those customers are ready to migrate later this year and into 2027. So we would not expect significant impact to revenue from that in Q3.

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Q&A highlights

What is driving the lower-than-expected deceleration in the second half and the confidence to raise full-year guidance?

The raised guidance reflects the overperformance in Q2. The company is maintaining conservative assumptions for downmarket growth and software headwinds, rolling the Q2 overperformance into the back half of the year without baking in significant upside from new products or GTM.AI.

“So really, we're just taking overperformance in Q2, maintaining kind of a consistent thought pattern as we develop that guidance and rolling that over into the back half of the year.”

asked by Jaiden Patel · answered by Michael O'Brien

2 min read 6 chapters

Detailed narrative

Strategic Shift to AI-Driven Solutions and Flexible Pricing

ZoomInfo is undergoing a significant strategic transition, focusing on building innovative enterprise-grade solutions that leverage AI. This includes the launch of GTM.AI, a headless GTM context layer for API and other connectors, enabling seamless embedding of data into Agentic workflows.

The company is also testing new flexible pricing and packaging models based on pre-bought consumption, moving away from the traditional per-seat model, with initial rollout for new business expected at the end of Q3 FY26.

Upmarket Focus and Customer Expansion

The company's strategy emphasizes an upmarket shift, with 76% of its business now derived from this segment, contributing to a healthier and more resilient customer base. ZoomInfo reported 1,891 customers with at least $100,000 in ACV, a year-over-year increase of 9.

ACV from the $1 million customer cohort grew 16%, indicating strong expansion among its largest clients, including a multiyear renewal with a preeminent software customer and new deals with Legora, Cohere, Bank of Montreal, and Korn Ferry.

Profitability and Free Cash Flow Generation

ZoomInfo continues to prioritize profitability and cash flow, achieving an adjusted operating income margin of 35%, up 130 basis points year-over-year, and $107 million in unlevered free cash flow, a 7% increase year-over-year. The company expects to run rate at least $1.25 of adjusted levered free cash flow per share as it enters 2027, driven by cost discipline and capital structure opportunities.

GAAP stock-based compensation expense decreased 13% year-over-year to $25.7 million, representing 8% of revenue.

Capital Allocation and Debt Management

In Q2, ZoomInfo actively managed its capital structure, repurchasing 6.3 million shares for $28 million at an average price of $4.51 per share. The company also retired $58.5 million in aggregate principal of senior notes for $48 million, resulting in an $11 million gain on debt extinguishment and an expected annual reduction of $2.3 million in future cash interest payments.

The net leverage ratio improved to 2.3x trailing 12 months adjusted EBITDA, down from 2.4x in Q1.

Workforce Restructuring and Efficiency Gains

The company incurred a $35 million charge for severance and employee benefits as part of a restructuring program announced in May. Headcount was reduced by approximately 350 people sequentially and 15% year-over-year, with further reductions expected. This initiative aims to enhance operational efficiency and contribute to the company's path back to sustained growth, with the remaining charges and cash outflows associated with the restructuring expected over the next six months.

Competitive Landscape and Product Differentiation

Management acknowledges a noisy competitive environment but expresses confidence in ZoomInfo's differentiated product offerings, particularly GTM Studio and Agent Teams. These solutions enable customers to build unique audiences with specific data attributes, integrate with 300 data sources, and leverage AI agents.

The company emphasizes its proprietary data assets, which allow for meaningfully lower pricing for enrichment and Agentic workflows compared to competitors, aiming to be at the center of all go-to-market work.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.