ZoomInfo Technologies Inc. (GTM) FY 2024 MD&A

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such difference include, but are not limited to, those identified below and those discussed in the sections titled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” included elsewhere in this Annual Report on Form 10-K.

Numerical figures included in this Annual Report on Form 10-K are subject to immaterial rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

Overview

ZoomInfo is a global leader in modern go-to-market software, data, and intelligence for sales, marketing, operations, and recruiting teams. Our go-to-market intelligence platform empowers businesses with AI-ready insights, trusted data, and advanced automation providing sales, marketing, operations, and recruiting professionals accurate information and insights on the organizations and professionals they target. This enables our customers to shorten sales cycles and increase win rates by empowering sellers, marketers, and recruiters to efficiently deliver the right message to the right person at the right time in the right way.

ZoomInfo is the modern go-to-market intelligence platform, consisting of three distinct layers that build upon each other:

•Our Intelligence Layer is the foundation of our data-driven strategy. Our best-in-class data, curated through first- and third-party sources, includes billions of data points about companies and contacts, such as intent, hierarchy, location, and financial information.

•Our Orchestration Layer integrates and enriches our data sources. At this stage, our products assign and route data, leads, and insights to the appropriate people. This creates a dataset that is continuously updated and can be used to power automated business workflows. Our services connect with major CRM system providers enabling sales operations professionals to access a suite of products, services, and solutions to ingest, match, enrich, and connect data feeds into multiple systems.

•Our Engagement Layer allows sales, marketing, operations, and recruiting professionals to put data-driven insights into action to identify and communicate with prospects and customers. Go-to-market professionals use our engagement layer for multi-touch and multi-channel sales engagement, web meeting recording, transcription, insight generation, and coaching. Marketers drive awareness, lead generation, and deal acceleration campaigns through account-based marketing, advertising, and onsite conversion optimization solutions including chat functionality. Recruiters and talent acquisition professionals can locate and reach more better suited candidates, use pipeline management tools to collaborate and organize the hiring process, and automate aspects of the candidate outreach process by more efficiently finding and engaging candidates.

We generate substantially all of our revenue from sales of subscriptions to our platform. Subscriptions include the use of our platform and access to customer support. Subscriptions generally range from one to three years in length. Over 49% of customer contracts (based on annualized value) are multi-year agreements. We typically bill our customers at the beginning of each annual, semi-annual, or quarterly period and recognize revenue ratably over the term of the subscription period.

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We sell access to our platform to both new and existing customers. We price our subscriptions based on the functionality, users, and records under management that are included in our contracts. Our core paid products are ZoomInfo Copilot, ZoomInfo Sales, ZoomInfo Marketing, ZoomInfo Operations, and ZoomInfo Talent (with add-on options for some products), and we have a free community edition, ZoomInfo Lite.

Our software, insights, and data enable over 35,000 companies to go-to-market more effectively and efficiently. Our customers are primarily businesses that sell to other businesses and operate in almost every industry vertical. They range from the largest global enterprises, to mid-market companies, down to small businesses. The top five industries that we serve, as measured by ACV, on December 31, 2024 are software, which comprised 32% of ACV (compared to 33% a year prior), non-IT business services, which comprised 20% of ACV (compared to 18% a year prior), IT business services, which comprised 8% of ACV (compared to 10% a year prior), financial, insurance & real estate, which comprised 8% of ACV (compared to 8% a year prior), and manufacturing, which comprised 6% of ACV (compared to 5% a year prior).

For the year ended December 31, 2024, no single customer contributed more than 10% of revenue. Revenues derived from customers and partners located outside the United States, as determined based on the address provided by our customers and partners, accounted for approximately 12%, 13%, and 12% of total revenue for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, 1,867 customers contracted for more than $100,000 in ACV for ZoomInfo services.

We generated revenue of $1,214.3 million for the year ended December 31, 2024, as compared to revenue for the year ended December 31, 2023 of $1,239.5 million, and GAAP income from operations of $97.4 million for the year ended December 31, 2024, as compared to GAAP income from operations of $259.5 million for the year ended December 31, 2023. GAAP operating income margin was 8% for the year ended December 31, 2024, as compared to 21% in 2023. GAAP net income for the year ended December 31, 2024 was $29.1 million, as compared to GAAP net income of $107.3 million for the year ended December 31, 2023. In addition to our consolidated U.S. GAAP financial measures, we review various non-GAAP financial measures, including Adjusted Operating Income, Adjusted Operating Income Margin, and Adjusted Net Income. See “Non-GAAP Financial Measures” below. Our Adjusted Operating Income was $428.5 million for the year ended December 31, 2024, as compared to $498.6 million for the year ended December 31, 2023. Our Adjusted Operating Income Margin was 35% for the year ended December 31, 2024, as compared to 40% in 2023. Adjusted net income was $363.8 million for the year ended December 31, 2024, as compared to $413.1 million for the year ended December 31, 2023. See “Non-GAAP Financial Measures” below for definitions.

The discussion of our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022, included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, can be found in the Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Developments

Impact of Macroeconomic Conditions

Our business and financial condition have and may continue to be impacted by adverse macroeconomic conditions. See “Risk Factors - Geopolitical Risks and Macroeconomic Factors” in Part I, Item 1A of this Annual Report on Form 10-K for further discussion of the possible impact of these issues on our business.

First Lien Term Loan

In June 2024, we entered into an amendment to our existing First Lien Credit Agreement (the "Seventh Amendment"), pursuant to which the Company completed a repricing of its First Lien Term Loan Facility, which decreased the applicable rate for both Base Rate loans and SOFR based loans by 50 basis points.

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Waltham Lease Restructurings

In July 2024, the Company executed an agreement to restructure its existing lease commitments in Waltham, Massachusetts (“Waltham Lease Restructuring”). Pursuant to the agreement, the Company made a payment of $59.1 million. The Company also executed a new lease agreement for separate office space in Waltham, Massachusetts with the same landlord, with rent payments expected to commence in the fourth quarter of 2025. The lease will terminate on December 31, 2038.

In November 2024, the Company executed two amendments to the Waltham Lease Restructuring agreement. Pursuant to the first amendment, the Company agreed to lease separate office space in Waltham, Massachusetts with the same landlord in place of certain remaining lease components, whereby the existing space terminated immediately upon execution. The associated derecognition of the right-of-use assets and liabilities resulted in a loss of $28.3 million which was allocated among the appropriate financial statement line items on the Consolidated Statements of Operations. The Company expects rent payments to commence in the first quarter of 2025. The lease ends on December 31, 2025, and undiscounted lease payments are $1.5 million. Additionally, in November 2024, the Company executed a second amendment to the Waltham Lease Restructuring agreement to extend the term for a portion of the remaining components, which were set to terminate on December 31, 2024, by three months and is set to terminate on March 31, 2025. The Company is not obligated to make any additional lease payments as a result of the extension. See Note 13 - Leases of our audited consolidated financial statement included in Part II, Item 8 of this Form 10-K for further information regarding the Waltham Lease Restructuring and amended agreements.

Share Repurchase Program

In August 2024, the Company entered into an accelerated share repurchase agreement (the “ASR Transaction”) with a financial institution to repurchase an aggregate $125.0 million of the Company’s common stock. The Company repurchased and retired in total 12,431,216 shares for $125.0 million at an average price of $10.06 per share as part of the ASR Transaction. See the section entitled “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Issuer Purchases of Equity Securities” for additional information.

Separately, in February 2025, our board of directors authorized an additional $500.0 million in repurchases under the Share Repurchase Program.

See Note 11 - Stockholders' Equity of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

Key Factors Affecting Our Performance

We believe that the growth and future success of our business depends on many factors, including the following:

Acquiring New Customers

We are focused on continuing to grow the number of customers using our platform in the United States and around the world, and efficiently transacting with those customers. Acquiring new customers while optimizing the profile of those customers and the go-to-market channels we use to attract these customers will play a part in determining our operating results and growth prospects in the future. Acquiring new customers also strengthens the power of our contributory networks. We plan to continue to invest in our efficient go-to-market effort to expand our customer base. As of December 31, 2024, 2023 and 2022, we had over 35,000, 35,000, and 30,000 customers, respectively. We define a customer as a company that maintains one or more active paid subscriptions to our platform.

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Increasing Usage of Our Platform

We believe that expanding the value that we provide to our customers and the corresponding revenue generated as a result is an important measure of the health of our business. We monitor net revenue retention to measure that growth. Net revenue retention is a metric that we calculate based on customers of ZoomInfo at the beginning of the twelve-month period, and is calculated as: (a) the total ACV for those customers at the end of the twelve-month period, divided by (b) the total ACV for those customers at the beginning of the twelve-month period. Our net annual retention rate was 87% and 87% as of December 31, 2024 and 2023, respectively. In the near term, we expect our net retention rate to be impacted by macroeconomic conditions. See the caption above entitled “—Recent Developments — Impact of Macroeconomic Conditions.” Over the long term, we expect our net revenue retention rate to be influenced by our ability to move upmarket, as larger customers have historically exhibited higher net revenue retention. We also measure our success in expanding relationships with existing customers by the number of customers that contract for more than $100,000 in ACV. As of December 31, 2024, 2023 and 2022, our customers with over $100,000 in ACV was 1,867, 1,820, and 1,926, respectively.

Factors Affecting the Comparability of Our Results of Operations

Our historical results of operations are not comparable from period to period and may not be comparable to our financial results of operations in future periods. Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.

Changing the Mix of Our Customer Base and Reducing Write-offs and Bad Debts

During the second quarter of 2024, we deployed a new business risk model to flag and require upfront pre-payment from prospects at the greatest risk of non-payment. This process was incorporated to mitigate the risk of future write-offs and invest in the long-term health of the Company. Concurrently, our efforts have shifted to customers more likely to pay, renew, and grow with us over time.

As a result, we recorded an incremental charge during the second quarter of 2024 impacting our reported Revenue and General and administrative expenses. The charge represents a revision to our reserves for uncollectible accounts receivable, made up primarily of historical transactions with our SMB customers.

Impact of Acquisitions

We seek to grow through both internal development and the acquisition of businesses that broaden and strengthen our platform. Our recent acquisitions include Comparably, Inc. and Dogpatch Advisors, LLC in April 2022. These acquisitions have been a driver of our revenue, cost of service, operating expense, and interest expense growth when comparing the results for the years ended December 31, 2023 and 2022.

Components of Our Results of Operations

Revenue

We derive primarily all of our revenue from subscription services and the remainder from recurring usage-based services and other revenue. Our subscription services consist of our SaaS applications. Pricing of our subscription contracts are generally based on the functionality provided, the number of users that access our applications, and the amount of data that the customer integrates into their systems. Our subscription contracts typically have a term ranging from one to three years and are non-cancelable. We typically bill for services in advance either annually, semi-annually, or quarterly, and we typically require payment at the beginning of each annual, semi-annual, or quarterly period.

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Subscription revenue is generally recognized ratably over the contract term starting with when our service is made available to the customer. Recurring usage-based revenue is recognized in the period services are utilized by our customers. Other revenue, comprised largely of implementation and professional services fees, is recognized as services are delivered. The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for these services. We record a contract asset when revenue recognized on a contract exceeds the billings to date for that contract.

Unearned revenue results from cash received or amounts billed to customers in advance of revenue recognized upon the satisfaction of performance obligations. The unearned revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, dollar size, and contract timing within the period. The unearned revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements.

Cost of revenue

Cost of service. Cost of service includes direct expenses related to the support and operations of our services and research teams including salaries, benefits, equity-based compensation, and related expenses, such as employer taxes, allocated overhead for facilities, technology, third-party hosting fees, third-party data costs, and amortization of internally developed capitalized software.

We anticipate continued investment in cost of service, with cost of service as a percentage of revenue expected to remain consistent or modestly increase. This is driven by rising AI consumption costs and customer onboarding expenses as we migrate existing customers to Copilot and acquire and onboard new Copilot customers.

Amortization of acquired technology. Amortization of acquired technology includes amortization expense for technology acquired in business combinations.

We anticipate that amortization of acquired technology will increase if we make additional acquisitions in the future.

Gross profit and Gross margin

Gross profit is revenue less cost of revenue, and gross margin is gross profit as a percentage of revenue. Gross profit has been and will continue to be affected by various factors, including leveraging economies of scale, the costs associated with third-party hosting services and third-party data, the level of amortization of acquired technology, and the extent to which we expand our customer support and research organizations. We expect that our gross margin will fluctuate from period to period depending on the interplay of these various factors.

Operating expenses

Our operating expenses consist of sales and marketing, research and development, general and administrative, and amortization of other acquired intangibles. The most significant component of our operating expenses is personnel costs, which consists of salaries, bonuses, sales commissions, equity-based compensation, and other employee-related benefits. Operating expenses also include overhead costs for facilities, technology, professional fees, depreciation and amortization expense, marketing, and restructuring and transaction-related expenses. We anticipate that restructuring and transaction-related expenses, including potential impairments, will be influenced by future acquisition activity, strategic restructuring activities, and the commencement of new leases. Specifically, as new leases commence, we may face increased impairment expenses for spaces that we do not intend to occupy and/or that we plan to sublease, which could cause these costs to vary, potentially significantly, from our historic levels. Refer to Note 13 - Leases of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

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Sales and marketing. Sales and marketing expenses primarily consist of employee compensation such as salaries, bonuses, sales commissions, equity-based compensation, and other employee-related benefits for our sales and marketing teams, as well as overhead costs, technology, and marketing programs. Sales commissions and related payroll taxes directly related to contract acquisition are capitalized and recognized as expenses over the estimated period of benefit.

We anticipate that we will continue to invest in sales and marketing capacity to enable future growth. We anticipate that sales and marketing expense excluding equity-based compensation as a percentage of revenue will fluctuate from period to period depending on the interplay of our growing investments in sales and marketing capacity excluding equity-based compensation, the recognition of revenue, and the amortization of deferred commissions costs.

Research and development. Research and development expenses support our efforts to enhance our existing platform and develop new software products. Research and development expenses primarily consist of employee compensation such as salaries, bonuses, equity-based compensation, and other employee-related benefits for our engineering and product management teams, as well as overhead costs, and technology. Research and development expenses do not reflect amortization of internally developed capitalized software. We believe that our core technologies and ongoing innovation represent a significant competitive advantage for us.

We anticipate that we will continue to invest in research and development in order to develop new features and functionality to drive incremental customer value in the future and that research and development expense as a percentage of revenue will modestly increase in the short-term, but will modestly decrease in the long-term as we drive efficiencies in that organization.

General and administrative. General and administrative expenses primarily consist of employee-related costs such as salaries, bonuses, equity-based compensation, and other employee related benefits for our executive, finance, legal, human resources, IT, and business operations and administrative teams, as well as overhead costs. Additionally, we incur expenses related to bad debt and collections, as well as for professional fees including legal services, accounting, banking, and other consulting services. General and administrative expenses also include restructuring and transaction-related expenses, such as impairment charges associated with our leasing activity. Refer to Note 13 - Leases of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information. We also incur charges associated with litigation settlements, such as the Class Action settlement previously disclosed, which are presented within General and administrative on the Consolidated Statements of Operations.

General and administrative expenses as a percentage of revenue may fluctuate during periods when we incur non-recurring restructuring and transaction-related expenses, such as those associated with acquisitions or impairments. Excluding these non-recurring items, we expect a more stable or declining trend over time.

Amortization of other acquired intangibles. Amortization of acquired intangibles consists of amortization of customer relationships and brand portfolios.

We anticipate that amortization of other acquired intangibles will increase if we make additional acquisitions in the future.

Interest expense, net

Interest expense, net represents the interest payable on our debt obligations and the amortization of debt discounts and debt issuance costs, less interest income.

We anticipate that interest expense could be impacted by changes in variable interest rates, the issuance of additional debt, or changes in our interest rate hedging strategies, such as entering into new hedging arrangements or the expiration of existing interest rate swaps.

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Loss on debt modification and extinguishment

Loss on debt modification and extinguishment consists of prepayment penalties and impairment of deferred financing costs associated with the modification or extinguishment of debt, as well as new fees incurred with third parties in connection with debt modifications.

We anticipate that losses related to debt modification and extinguishment will only occur if we extinguish indebtedness before the contractual repayment dates or amend our existing financing arrangements.

Other loss (income), net

Other loss (income), net consists primarily of the remeasurement of TRA liabilities, investment income, and realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency.

Changes to existing tax law, including changes to the corporate income tax rates or the Company’s state tax footprint could lead to substantial remeasurement of the TRA liability recorded through Other loss (income), net. Additionally, the magnitude of Other loss (income), net may increase as we expand operations internationally and add complexity to our operations. Refer to the Provision for income taxes section below for further information.

Provision (Benefit) for income taxes

The Company recognizes deferred tax assets and liabilities based on temporary differences between the financial statement and tax basis of assets and liabilities, as well as from net operating loss and tax credit carryforwards. We evaluate the recoverability of these future deductible temporary differences, net operating losses and credits by assessing the carryforward period and adequacy of future expected taxable income from all sources, including reversing taxable temporary differences, future growth, and forecasted earnings, as well as historical earnings, taxable income in prior years, whether carryback is permitted under the law, and prudent and feasible tax planning strategies. A valuation allowance is established only if it is more likely than not that all or a portion of the deferred tax asset will not be realized.

The Company has significant U.S. federal and state deferred tax assets, including deferred tax assets created by various historical restructuring events. The preponderance of our deferred tax assets have long lives or are otherwise indefinite. We regularly review whether it is more likely than not that our deferred tax assets will be realizable. As of December 31, 2024, a valuation allowance continues to be recorded against certain state-level attributes.

The value of our deferred tax assets are regularly remeasured to consider the impact of statutory changes and other guidance, as well as changes in our state income apportionment factors. Given the amount of our deferred tax assets, minor changes can materially affect our Provision for income taxes. A significant portion of our deferred tax assets are associated with our TRA, and upon a remeasurement of our deferred tax assets, the TRA liability is typically concurrently remeasured with a partially offsetting impact within Other loss (income), net on the Consolidated Statements of Operations.

We have regularly taken tax positions, including with respect to our various corporate events and restructurings, in the ordinary course of determining our Provision for income taxes. We recognize the tax benefit of an uncertain tax position only if it is more likely than not the position will be sustainable upon examination by the taxing authority based on the technical merits. We regularly review our tax positions with consideration of a number of factors, including changes in facts or circumstances, changes in tax law or guidance, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in our Provision for income taxes in the period in which we make the change, which could have a material impact on our effective tax rate and operating results.

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Results of Operations

The following table presents our results of operations for the years ended December 31, 2024, 2023, and 2022:

__________________

(1)Includes equity-based compensation expense as follows:

Year Ended December 31, 2024 versus Year Ended December 31, 2023

Revenue. Revenue was $1,214.3 million for the year ended December 31, 2024, a decrease of $25.2 million, or 2%, as compared to $1,239.5 million for the year ended December 31, 2023. The decrease was primarily due to elevated write-off levels resulting from the operational changes implemented during the second quarter of 2024. Refer to the Factors Affecting the Comparability of Our Results of Operations section above.

Cost of revenue. Cost of revenue was $189.8 million for the year ended December 31, 2024, an increase of $11.3 million, or 6%, as compared to $178.5 million for the year ended December 31, 2023. Excluding equity-based compensation expense, cost of revenue was $179.3 million for the year ended December 31, 2024, an increase of $16.5 million, or 10%, as compared to $162.8 million for the year end December 31, 2023. The increase was primarily due to charges incurred related to lease restructuring activities, depreciation expense on internally developed capitalized software, and hosting fees.

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Gross profit. Gross profit for the year ended December 31, 2024 was $1,024.5 million and represented a gross margin of 84%. Gross profit for the year ended December 31, 2023 was $1,061.0 million and represented a gross margin of 86%. The decrease in gross profit in the year ended December 31, 2024 relative to the year ended December 31, 2023 was a decrease of $36.5 million, or 3%. The gross profit and gross margin decline in the year ended December 31, 2024 was primarily due to lower revenues, as described above, and charges incurred related to lease restructuring activities, increased amortization expense on internally developed capitalized software, and hosting fees.

Operating expenses. Operating expenses were $927.1 million for the year ended December 31, 2024, an increase of $125.6 million, or 16%, as compared to $801.5 million for the year ended December 31, 2023. Excluding equity-based compensation expense, operating expenses were $799.6 million for the year ended December 31, 2024, an increase of $150.0 million, or 23%, as compared to $649.6 million for the year ended December 31, 2023.

•Sales and marketing for the year ended December 31, 2024 was $414.1 million representing an increase of $5.6 million, or 1%, as compared to $408.5 million for the year ended December 31, 2023. Sales and marketing, excluding equity-based compensation expense, for the year ended December 31, 2024 was $363.8 million representing an increase of $26.6 million, or 8%, as compared to $337.2 million for the year ended December 31, 2023 primarily due to charges incurred related to lease restructuring activities, and increased expenses relating to marketing, facilities, and employee-related benefits, offset by decreased compensation costs.

•Research and development for the year ended December 31, 2024 was $196.1 million representing an increase of $4.6 million, or 2%, as compared to $191.5 million for the year ended December 31, 2023. Research and development, excluding equity-based compensation expense, for the year ended December 31, 2024 was $155.6 million representing an increase of $9.2 million, or 6%, as compared to $146.4 million for the year ended December 31, 2023 primarily due to charges incurred related to lease restructuring activities, and increased employee-related benefits, offset by decreased compensation costs.

•General and administrative for the year ended December 31, 2024 was $295.3 million representing an increase of $115.7 million, or 64%, as compared to $179.6 million for the year ended December 31, 2023. General and administrative, excluding equity-based compensation expense, for the year ended December 31, 2024 was $258.6 million representing an increase of $114.5 million, or 79%, as compared to $144.1 million for the year ended December 31, 2023 primarily due to lease impairment and abandonment charges, lease restructuring activities, charges incurred related to the Class Actions (See Note 10 - Commitments and Contingencies of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information), incremental bad debt expense resulting from the change in accounting estimate, and increased compensation costs.

•Amortization of other acquired intangibles was $21.6 million, representing a decrease of $0.3 million, or 1%, for the year ended December 31, 2024 as compared to $21.9 million for the year ended December 31, 2023.

Equity-based compensation expense. Equity-based compensation expense was $138.0 million for the year ended December 31, 2024, a decrease of $29.6 million, or 18%, as compared to $167.6 million for the year ended December 31, 2023, due to lower weighted average grant date fair values of grants being amortized in the current period compared to those that were amortized in the prior year and higher capitalization of equity-based compensation, partially offset by decreased termination expense reversals.

Income from operations. Income from operations was $97.4 million for the year ended December 31, 2024, a decrease of $162.1 million, or 62%, as compared to $259.5 million for the year ended December 31, 2023. The decrease was primarily due to lease impairment and abandonment charges, lease restructuring activities, and costs incurred related to the Class Actions, as well as the change in accounting estimate of collectability of accounts receivable. Operating income margin was 8% for the year ended December 31, 2024 as compared to 21% for the year ended December 31, 2023.

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Interest expense, net. Interest expense, net was $39.3 million for the year ended December 31, 2024, a decrease of $5.9 million, or 13%, as compared to $45.2 million for the year ended December 31, 2023. The decrease was primarily due to the completion of a debt repricing, which resulted in a lower margin on our variable rate debt, as well as reduced principal debt outstanding from repayments during the year and higher interest income.

Other loss (income), net. Other loss, net was $26.1 million for the year ended December 31, 2024 which primarily consists of the TRA remeasurement loss of $38.5 million, partially offset by investment income of $9.5 million, as compared to other income, net of $178.8 million for the year ended December 31, 2023 which primarily consists of the TRA remeasurement gain of $160.7 million and investment income of $22.0 million, partially offset by a loss on foreign currency transactions of $3.9 million.

Provision for income taxes. The Company is subject to income taxes in the United States and various foreign jurisdictions. Provision for income taxes for the year ended December 31, 2024 was $2.2 million, representing an effective tax rate of 7.2%, as compared to provision for income taxes of $281.5 million, representing an effective tax rate of 72.4%, for the year ended December 31, 2023. The decrease in income tax expense was primarily due to remeasurement of the deferred tax assets resulting from state tax law and apportionment changes and reduction in income before income taxes. The effective tax rate differed from the U.S. statutory rate of 21% due to the remeasurement of deferred tax assets for the effect of state tax law and apportionment changes and research and development tax credits, partially offset by non-deductible equity-based compensation expense, shortfalls in tax-deductible equity compensation compared to amounts recognized in our financial accounts, U.S. state taxes and valuation allowance established over certain state tax attributes. Refer to Note 17 - Income Taxes of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

Net income. Net income was $29.1 million for the year ended December 31, 2024, a decrease of $78.2 million or 73%, as compared to $107.3 million for the year ended December 31, 2023. The decrease was primarily due to lease impairment and abandonment charges, lease restructuring activities, charges incurred related to the Class Actions, and impacts resulting from revising our estimates of collectability of accounts receivable.

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe certain non-GAAP measures are useful in evaluating our operating performance. These measures include, but are not limited to, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, and Adjusted Net Income and are used by management in making operating decisions, allocating financial resources, internal planning and forecasting, and for business strategy purposes. We believe that non-GAAP financial information is useful to investors because it eliminates certain items that affect period-over-period comparability, and it provides consistency with past financial performance and additional information about our underlying results and trends by excluding certain items that may not be indicative of our business, results of operations, or outlook.

We view Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, and Adjusted Net Income as operating performance measures. We believe that the most directly comparable U.S. GAAP financial measure to Adjusted Operating Income is U.S. GAAP operating income. We believe that the most directly comparable U.S. GAAP financial measure to Adjusted Operating Income Margin is U.S. GAAP operating income divided by U.S. GAAP revenue. We believe that the most directly comparable U.S. GAAP financial measure to Adjusted EBITDA and Adjusted Net Income is U.S. GAAP Net Income.

Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable GAAP measures, but rather as supplemental information to our business results. This information should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. There are limitations to these non-GAAP financial measures because they are not prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures of other companies due to potential differences in methods of calculation and items or events being adjusted. In addition, other companies may use different measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP.

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Adjusted Operating Income, Adjusted Operating Income Margin, and Adjusted Net Income

We define Adjusted Operating Income as income (loss) from operations adjusted for, as applicable, (i) the impact of fair value adjustments to acquired unearned revenue, (ii) amortization of acquired technology and other acquired intangibles, (iii) equity-based compensation expense, (iv) restructuring and transaction-related expenses, (v) integration costs and acquisition-related expenses, and (vi) legal settlement. We exclude the impact of fair value adjustments to acquired unearned revenue and amortization of acquired technology and other acquired intangibles, as well as equity-based compensation expense, because these are non-cash expenses or non-cash fair value adjustments and we believe that excluding these items provides meaningful supplemental information regarding performance and ongoing cash-generation potential. We exclude restructuring and transaction-related expenses, as well as integration costs and acquisition-related compensation, because such expenses are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis. We have also excluded charges associated with litigation settlements related to class actions because we believe it represents an extraordinary litigation expense outside of our ordinary course of business and is not indicative of our operative performance. Adjusted Operating Income is presented because it is used by management to evaluate our financial performance and for planning and forecasting purposes. Additionally, we believe that it and similar measures are widely used by securities analysts and investors as a means of evaluating a company’s operating performance. We define Adjusted Operating Income Margin as Adjusted Operating Income divided by the sum of revenue and the impact of fair value adjustments to acquired unearned revenue.

We define Adjusted Net Income as net income (loss) adjusted for, as applicable, (i) the impact of fair value adjustments to acquired unearned revenue, (ii) loss on debt modification and extinguishment, (iii) amortization of acquired technology and other acquired intangibles, (iv) equity-based compensation expense, (v) restructuring and transaction-related expenses, (vi) integration costs and acquisition-related expenses, (vii) legal settlement, (viii) TRA liability remeasurement (benefit) expense, (ix) other (income) loss, net and (x) tax impacts of adjustments to net income (loss). Adjusted Net Income is presented because it is used by management to evaluate our financial performance and for planning and forecasting purposes. Additionally, we believe that it and similar measures are widely used by securities analysts and investors as a means of evaluating a company’s operating performance. Adjusted Net Income should not be considered as an alternative to cash flows from operating activities as a measure of liquidity or as an alternative to operating income or net income as indicators of operating performance.

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The following table presents a reconciliation of Income from operations to Adjusted Operating Income for the periods presented:

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(1)Represents the impact of fair value adjustments to acquired unearned revenue relating to services billed by an acquired company prior to our acquisition of that company. These adjustments represent the difference between the revenue recognized based on management’s estimate of fair value of acquired unearned revenue and the receipts billed prior to the acquisition less revenue recognized prior to the acquisition.

(2)Represents costs directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For the year ended December 31, 2024, this expense is primarily related to lease impairment and abandonment charges as well as lease restructuring activities. For the year ended December 31, 2023, this expense is primarily related to costs associated with a June 2023 reduction in force, and impairment charges related to the Ra’anana office and other offices. For the year ended December 31, 2022, this expense is primarily related to transition and retention payments related to 2021 and 2022 acquisitions. This expense is included in cost of service, sales and marketing, research and development, and general and administrative as follows:

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(3)Represents costs directly associated with integration activities for acquisitions and acquisition-related expenses, which includes transaction bonuses and retention awards. For the year ended December 31, 2022, this expense related to retention awards from the acquisitions of Clickagy, Everstring, and Insent, and professional fees relating to integration projects. This expense is included in cost of service, sales and marketing, research and development, and general and administrative as follows:

(4)Represents charges associated with certain legal settlements. For the year ended December 31, 2024, these charges are primarily related to costs incurred due to the Class Actions. See Note 10 - Commitments and Contingencies of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

Adjusted Operating Income for the year ended December 31, 2024 was $428.5 million and represented an Adjusted Operating Income Margin of 35%. Adjusted Operating Income for the year ended December 31, 2023 was $498.6 million and represented an Adjusted Operating Income Margin of 40%. The change in Adjusted Operating Income in the year ended December 31, 2024 relative to the year ended December 31, 2023 was a decrease of $70.1 million, or 14%, and primarily due to the change in accounting estimate of collectability of accounts receivable resulting in both reduced revenues as well as incremental bad debt expense combined with increased employee benefit and facility expenses.

The following table presents a reconciliation of Net income to Adjusted Net Income for the periods presented:

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(1)Represents the impact of fair value adjustments to acquired unearned revenue relating to services billed by an acquired company prior to our acquisition of that company. These adjustments represent the difference between the revenue recognized based on management’s estimate of fair value of acquired unearned revenue and the receipts billed prior to the acquisition less revenue recognized prior to the acquisition.

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(2)Represents costs directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For the year ended December 31, 2024, this expense is primarily related to lease impairment and abandonment charges as well as lease restructuring activities. For the year ended December 31, 2023, this expense is primarily related to costs associated with a June 2023 reduction in force, and impairment charges related to the Ra’anana office and other offices. For the year ended December 31, 2022, this expense is primarily related to transition and retention payments related to 2021 and 2022 acquisitions. This expense is included in cost of service, sales and marketing, research and development, and general and administrative as follows:

(3)Represents costs directly associated with integration activities for acquisitions and acquisition-related expenses, which includes transaction bonuses and retention awards. For the year ended December 31, 2022, this expense related to retention awards from the acquisitions of Clickagy, Everstring, and Insent, and professional fees relating to integration projects. This expense is included in cost of service, sales and marketing, research and development, and general and administrative as follows:

(4)Represents charges associated with certain legal settlements. For the year ended December 31, 2024, these charges are primarily related to costs incurred due to the Class Actions. See Note 10 - Commitments and Contingencies of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

(5)Represents tax expense associated with Net income (GAAP) excluded from Adjusted Net Income (Non-GAAP). The Company calculates the tax impacts of adjustments to net income (loss) by taking the total gross value of the adjustments and multiplying it by the Company’s U.S. federal and state statutory tax rate. We then recalculate the tax impact of book-tax differences related to equity compensation, the tax receivable agreements, restructuring and transaction-related expenses, and items that are deemed to be unrelated to current year operating income or are one-time in nature, such as provision to return true-ups. For the year ended December 31, 2024, these primarily relate to adjusting out $30.1 million of tax benefit from the effects of changes in state tax law and apportionment, recognizing $63.6 million of tax benefit related to the amortization of costs associated with corporate structure simplification, and adjusting out $17.5 million of tax expense from non-deductible stock-based compensation. For the year ended December 31, 2023, these primarily relate to adjusting out $138.4 million of tax expense from the effects of changes in state tax law and apportionment, recognizing $60.0 million of tax benefit related to the amortization of costs associated with corporate structure simplification, and adjusting out $23.4 million of tax expense from non-deductible stock-based compensation. For the year ended December 31, 2022, these primarily relate to adjusting out $71.1 million of tax expense from the effects of changes in state tax law and apportionment, recognizing $59.1 million of tax benefit related to the amortization of costs associated with corporate structure simplification, and adjusting out $12.4 million of tax expense from non-deductible stock-based compensation. We believe the exclusion of these adjustments provides investors with useful information about the Company’s underlying results and trends, allowing them to better understand and compare net income (loss) related to ongoing operations and the related current and deferred income tax expense.

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Adjusted EBITDA

EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. Management further adjusts EBITDA to exclude certain items of a significant or unusual nature, including other (income) expense, net, loss on debt modification and extinguishment, impact of certain non-cash items, such as fair value adjustments to acquired unearned revenue and equity-based compensation expense, restructuring and transaction-related expenses, integration costs and acquisition-related expenses, and litigation settlement. We exclude these items because these are non-cash expenses or non-cash fair value adjustments, which we do not consider indicative of performance and ongoing cash-generation potential or are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis. Adjusted EBITDA is presented because it is used by management to evaluate our financial performance and for planning and forecasting purposes. Additionally, we believe that it and similar measures are widely used by securities analysts and investors as a means of evaluating a company’s operating performance. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity or as an alternative to operating income or net income as indicators of operating performance.

The following table presents a reconciliation of Net income to Adjusted EBITDA for the periods presented:

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(1)Amounts for the year ended December 31, 2024 exclude the accelerated depreciation associated with the Waltham Lease Restructuring. Refer to Note 5 - Property and Equipment and Note 13 - Leases of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

(2)Primarily represents revaluations on tax receivable agreement liability and foreign exchange remeasurement gains and losses.

(3)Represents the impact of fair value adjustments to acquired unearned revenue relating to services billed by an acquired company prior to our acquisition of that company. These adjustments represent the difference between the revenue recognized based on management’s estimate of fair value of acquired unearned revenue and the receipts billed prior to the acquisition less revenue recognized prior to the acquisition.

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(4)Represents costs directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For the year ended December 31, 2024, this expense is primarily related to lease impairment and abandonment charges as well as lease restructuring activities. For the year ended December 31, 2023, this expense is primarily related to costs associated with a June 2023 reduction in force, and impairment charges related to the Ra’anana office and other offices. For the year ended December 31, 2022, this expense is primarily related to transition and retention payments related to 2021 and 2022 acquisitions. This expense is included in cost of service, sales and marketing, research and development, and general and administrative as follows:

(5)Represents costs directly associated with integration activities for acquisitions and acquisition-related expenses, which includes transaction bonuses and retention awards. For the year ended December 31, 2022, this expense related to retention awards from the acquisitions of Clickagy, Everstring, and Insent, and professional fees relating to integration projects. This expense is included in cost of service, sales and marketing, research and development, and general and administrative as follows:

(6)Represents charges associated with certain legal settlements. For the year ended December 31, 2024, these charges are primarily related to costs incurred due to the Class Actions. See Note 10 - Commitments and Contingencies of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

Adjusted EBITDA for the year ended December 31, 2024 was $452.4 million, a decrease of $65.8 million, or 13%, relative to $518.2 million for the year ended December 31, 2023. This decrease was primarily due to the change in accounting estimate of collectability of accounts receivable resulting in both reduced revenues as well as increased bad debt expense.

Liquidity and Capital Resources

As of December 31, 2024, we had $139.9 million of cash and cash equivalents, and $250.0 million available under our first lien revolving credit facility. We have financed our operations primarily through cash generated from operations and financed various acquisitions through cash generated from operations supplemented with debt offerings.

We believe that our cash flows from operations and existing available cash and cash equivalents, together with our other available external financing sources, will be adequate to fund our operating and capital needs for at least the next 12 months and for the foreseeable future. We are currently in compliance with the covenants under the credit agreements governing our secured credit facilities, and we expect to remain in compliance with our covenants.

We generally invoice our subscription customers for services annually, semi-annually, or quarterly in advance of delivery. Therefore, a substantial source of our cash is from such prepayments, which are included on our Consolidated Balance Sheets as unearned revenue. Unearned revenue consists of billed fees for our subscriptions, prior to satisfying the criteria for revenue recognition, which are subsequently recognized as revenue in accordance with our revenue recognition policy. As of December 31, 2024, we had unearned revenue of $477.9 million, of which $473.8 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

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ZoomInfo Technologies Inc. is a holding company with no material assets other than its ownership of common stock of ZoomInfo Intermediate Inc. and Holdings LLC Units and has no independent means of generating revenue. Although we have no current plans to pay cash dividends on our common stock, in the event ZoomInfo Technologies Inc. were to declare any cash dividend, ZoomInfo Technologies Inc. may have to cause ZoomInfo Intermediate Inc. and ZoomInfo Holdings and their subsidiaries to make distributions to ZoomInfo Technologies Inc. in part through distributions to ZoomInfo Intermediate Inc. and ZoomInfo Holdings, in an amount sufficient to cover such cash dividends declared by us. Deterioration in the financial condition, earnings, or cash flow of ZoomInfo Intermediate and its subsidiaries for any reason could limit or impair their ability to pay such distributions. In addition, the terms of our financing arrangements contain covenants that may restrict ZoomInfo Intermediate Inc., ZoomInfo Holdings and their subsidiaries from paying such distributions, subject to certain exceptions. Further, ZoomInfo Midco LLC is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of ZoomInfo Midco LLC (with certain exceptions), as applicable, exceed the fair value of its assets. Subsidiaries of ZoomInfo Midco LLC are generally subject to similar legal limitations on their ability to make distributions to ZoomInfo Midco LLC. See “Risk Factors - Organizational Structure Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

Our cash flows from operations, borrowing availability, and overall liquidity are subject to risks and uncertainties. We may not be able to obtain additional liquidity on reasonable terms, or at all. In addition, our liquidity and our ability to meet our obligations and to fund our capital requirements are dependent on our future financial performance, which is subject to general economic, financial, and other factors that are beyond our control. Accordingly, our business may not generate sufficient cash flow from operations and future borrowings may not be available from additional indebtedness or otherwise to meet our liquidity needs. If we decide to pursue one or more significant acquisitions, we may incur additional debt or sell additional equity to finance such acquisitions, which would result in additional expenses or dilution. See “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

Historical Cash Flows

The following table summarizes our cash flows for the periods presented:

Cash flows from operating activities

Net cash provided by operating activities was $369.4 million for the year ended December 31, 2024 as a result of net income of $29.1 million and non-cash adjustments of $425.3 million, partially offset by the net change in our operating assets and liabilities of $85.0 million. The non-cash adjustments are primarily comprised of equity-based compensation expense of $138.0 million, depreciation and amortization of $85.7 million, amortization of deferred commission costs of $67.6 million, asset impairments of $57.4 million, provision for bad debt expense of $42.8 million, and tax receivable agreement remeasurement of $38.5 million. The net change in operating assets and liabilities was primarily the result of a decrease in accrued expenses and other liabilities of $43.4 million, an increase in deferred costs and other assets of $35.5 million, a decrease in accounts payable of $17.7 million, and an increase in accounts receivable of $16.9 million, offset by an increase in unearned revenue of $36.1 million.

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Net cash provided by operating activities was $434.9 million for the year ended December 31, 2023 as a result of net income of $107.3 million, adjusted by non-cash charges of $485.2 million and the change in our operating assets net of operating liabilities of $157.6 million. The non-cash charges are primarily comprised of deferred tax assets net of deferred tax liabilities of $276.7 million, equity-based compensation expense of $167.6 million, depreciation and amortization of $80.6 million, and amortization of deferred commission costs of $75.3 million, partially offset by tax receivable agreement remeasurement of $160.7 million. The net change in operating assets and liabilities was primarily the result of an increase in accounts receivable of $82.8 million, an increase in deferred costs and other assets of $78.2 million, and a decrease in accrued expenses and other liabilities of $11.2 million, partially offset by an increase in unearned revenue of $22.0 million.

We may continue to make future acquisitions as part of our business strategy which may require the use of capital resources and drive additional future restructuring and transaction-related cash expenditures as well as integration and acquisition-related cash costs. During the years ended December 31, 2024, 2023, and 2022 we incurred the following cash expenditures:

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(1)Represents cash payments directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For the year ended December 31, 2024, these payments related primarily to the Waltham Lease Restructuring. See Note 13 - Leases of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information. For the year ended December 31, 2023, these payments related primarily to a June 2023 reduction in force, legal costs paid related to 2021 and 2022 acquisitions, and Waltham sublease costs. For the year ended December 31, 2022, these payments related primarily to transition bonuses paid related to 2022 acquisitions offset by payment received for the Waltham sublease termination.

(2)Represents cash payments directly associated with integration activities for acquisitions and acquisition-related compensation, which includes transaction bonuses and retention awards. For the years ended December 31, 2024 and 2023, these payments related to deferred compensation from the acquisition of Insent. For the year ended December 31, 2022, these payments related to retention awards from the acquisitions of Clickagy, Everstring, and Insent, and professional fees relating to integration projects.

(3)Represents charges associated with certain legal settlements. For the year ended December 31, 2024, these charges are primarily related to costs incurred due to the Class Actions. See Note 10 - Commitments and Contingencies of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

Future demands on our capital resources associated with our debt facilities may also be impacted by changes in reference interest rates and the potential that we incur additional debt in order to fund additional acquisitions or for other corporate purposes. Future demands on our capital resources associated with transaction expenses and restructuring activities and integration costs and transaction-related compensation will be dependent on the frequency and magnitude of future acquisitions and restructuring and integration activities that we pursue. As part of our business strategy, we expect to continue to pursue acquisitions of, or investments in, complementary businesses from time to time; however, we cannot predict the magnitude or frequency of such acquisitions or investments.

Cash flows from investing activities

Net cash provided by investing activities for the year ended December 31, 2024 was $13.4 million, primarily consisting of maturities of short-term investments of $82.2 million, partially offset by purchases of property and equipment and other assets of $64.9 million, and payments of initial direct costs of $3.4 million.

Net cash provided by investing activities for the year ended December 31, 2023 was $24.4 million, consisting of maturities of short-term investments of $194.5 million, partially offset by purchases of short-term investments of $145.0 million, and purchases of property and equipment and other assets of $26.5 million.

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As we continue to grow and invest in our business, we expect to continue to invest in property and equipment and opportunistically pursue acquisitions.

Cash flows from financing activities

Net cash used in financing activities for the year ended December 31, 2024 was $690.0 million which was primarily comprised of payments relating to the repurchase of common stock of $565.6 million, TRA payments of $94.0 million, and payment of taxes related to net share settlement of equity awards of $22.8 million.

Net cash used in financing activities for the year ended December 31, 2023 was $427.2 million which was primarily comprised of payments relating to the repurchase of common stock of $400.1 million and payment of taxes related to net share settlement of equity awards of $24.5 million, partially offset by proceeds from issuance of common stock under the employee stock purchase plan of $7.2 million.

Refer to Note 7 - Financing Arrangements of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information related to each of our borrowings.

Debt Obligations

As of December 31, 2024, the aggregate remaining balance of $650.0 million of 3.875% Senior Notes is due, in its entirety, at the contractual maturity date of February 1, 2029. Interest on the Senior Notes is payable semi-annually in arrears beginning on August 1, 2021. As of December 31, 2024, the Company has a remaining balance of $588.1 million with respect to its first lien term loans. The Company is obligated to make principal payments each quarter in the amount of 0.25% of the aggregate initial outstanding amount, with the remaining balance due at the contractual maturity date of February 28, 2030. The foregoing currently represent the only existing required future debt principal repayment obligations that will require future uses of the Company’s cash.

The first lien term debt has a variable interest rate whereby the Company can elect to use a Base Rate or SOFR plus an applicable rate. The applicable rate is 0.75% for Base Rate loans or 1.75% for SOFR loans. The effective interest rate on the first lien debt was 6.56% and 7.83% as of December 31, 2024 and December 31, 2023, respectively.

The first lien revolving credit facility, which had no amount outstanding as of December 31, 2024, has a variable interest rate whereby the Company can elect to use a Base Rate or SOFR plus an applicable rate. The applicable margin is 1.00% to 1.25% for Base Rate loans. The applicable margin for SOFR loans is 2.10% to 2.35%, which includes the credit spread adjustment of 0.1%, depending on the Company’s Consolidated First Lien Net Leverage Ratio.

Our total net leverage ratio to Adjusted EBITDA is defined as total contractual maturity of outstanding indebtedness less cash and cash equivalents, restricted cash, and short-term investments (as applicable), divided by trailing twelve months Adjusted EBITDA. Adjusted EBITDA for the twelve months ended December 31, 2024 was $452.4 million. Our total net leverage ratio to Adjusted EBITDA as of December 31, 2024 was 2.4x.

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Our consolidated first lien net leverage ratio is defined in the agreement governing our existing first lien credit facilities (the “First Lien Credit Agreement”) as total contractual maturity of outstanding First Lien indebtedness less cash and cash equivalents and short-term investments (as applicable), divided by trailing twelve months Cash EBITDA (defined as Consolidated EBITDA in our Credit Agreements). Cash EBITDA differs from Adjusted EBITDA due to certain defined add-backs, including cash generated from changes in unearned revenue; see table below for reconciliation. Cash EBITDA for the twelve months ended December 31, 2024 was $495.2 million. Our consolidated first lien net leverage ratio as of December 31, 2024 was 0.9x.

Our total net leverage ratio to Cash EBITDA (defined as Consolidated EBITDA in our Credit Agreements) is defined as total contractual maturity of outstanding indebtedness less cash and cash equivalents, restricted cash, and short-term investments (as applicable), divided by trailing twelve months Cash EBITDA. Cash EBITDA for the twelve months ended December 31, 2024 was $495.2 million. Our total net leverage ratio to Cash EBITDA as of December 31, 2024 was 2.2x.

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(1)Amounts for the year ended December 31, 2024 exclude the accelerated depreciation associated with the Waltham Lease Restructuring. Refer to Note 5 - Property and Equipment and Note 13 - Leases of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

(2)Primarily represents revaluations on tax receivable agreement liability and foreign exchange remeasurement gains and losses.

(3)Represents costs directly associated with acquisition or disposal activities, including employee severance and termination benefits, contract termination fees and penalties, and other exit or disposal costs. For the year ended December 31, 2024, this expense is primarily related to lease impairment and abandonment charges as well as lease restructuring activities.

(4)Represents charges associated with certain legal settlements. For the year ended December 31, 2024, these charges are primarily related to costs incurred due to the Class Actions. See Note 10 - Commitments and Contingencies of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further information.

In addition, the credit agreement governing our first lien term loan contains restrictive covenants that may limit our ability to engage in activities that may be in our long-term best interest. These restrictive covenants include, among others, limitations on our ability to pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock, prepay, redeem, or repurchase certain debt, make acquisitions, investments, loans, and advances, or sell or otherwise dispose of assets. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of substantially all of our debt. The Company may be able to incur substantial additional indebtedness in the future. The terms of the credit agreements governing our first lien term loan limit, but do not prohibit, the Company from incurring additional indebtedness, and the additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions will also not prevent the Company from incurring obligations that do not constitute “Indebtedness” as defined in the agreements governing our indebtedness.

Capital Expenditures

Capital expenditures increased by $38.4 million, or 145%, to $64.9 million in the year ended December 31, 2024 compared to the year ended December 31, 2023, as a result of increased expenditures related to new facilities and increased capitalization of development expenses.

Tax Receivable Agreements

We have entered into two Tax Receivable Agreements. We entered into (i) the Exchange Tax Receivable Agreement with certain Pre-IPO OpCo Unitholders and (ii) the Reorganization Tax Receivable Agreement with the Pre-IPO Blocker Holders. These Tax Receivable Agreements provide for the payment by members of the ZoomInfo Tax Group to such Pre-IPO Owners and certain Pre-IPO HoldCo Unitholders of 85% of the benefits, if any, that the ZoomInfo Tax Group actually realizes, or is deemed to realize in certain circumstances, as a result of utilization or deemed utilization of certain tax attributes and benefits covered by the Tax Receivable Agreements.

The tax attributes and benefits covered by the Exchange Tax Receivable Agreement include (i) the ZoomInfo Tax Group’s allocable share of existing tax basis acquired in the IPO and (ii) increases in the ZoomInfo Tax Group’s allocable share of existing tax basis and tax basis adjustments that increased the tax basis of the tangible and intangible assets of the ZoomInfo Tax Group as a result of sales or exchanges of Holdings LLC Units for shares of common stock after the IPO, as well as certain other tax benefits, including tax benefits attributable to payments under the Exchange Tax Receivable Agreement.

The tax attributes and benefits covered by the Reorganization Tax Receivable Agreement include certain tax attributes of the Blocker Companies (including the ZoomInfo Tax Group’s allocable share of existing tax basis acquired in the Reorganization Transactions), and certain other tax benefits.

In each case, these increases in existing tax basis and tax basis adjustments generated over time may increase the ZoomInfo Tax Group’s depreciation and amortization deductions for tax purposes and, therefore, may reduce the amount of tax that the ZoomInfo Tax Group would otherwise be required to pay in the future, although the IRS may challenge all or part of the validity of that tax basis, and a court could sustain such a challenge.

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The ZoomInfo Tax Group’s allocable share of existing tax basis acquired in the IPO and the increase in the ZoomInfo Tax Group’s allocable share of existing tax basis and the tax basis adjustments upon exchanges of Holdings LLC Units for shares of common stock may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. The ZoomInfo Tax Group expects to benefit from the remaining 15% of realized cash tax benefits.

For purposes of the tax receivable agreements, the realized cash tax benefits will be computed by comparing the actual income tax liability of the ZoomInfo Tax Group (calculated with certain assumptions) to the amount of such taxes that the ZoomInfo Tax Group would have been required to pay had the tax receivable agreements not been entered into and had there been no existing tax basis, no anticipated tax basis adjustments of the assets of the ZoomInfo Tax Group as a result of exchanges, and no utilization of certain tax attributes of the Blocker Companies (including the Blocker Companies’ allocable share of existing tax basis). The term of each tax receivable agreement will continue until all such tax benefits have been utilized or expired, unless (i) ZoomInfo Tax Group exercises its right to terminate one or both tax receivable agreements for an amount based on the agreed payments remaining to be made under the agreement, (ii) ZoomInfo Tax Group breaches any of its material obligations under one or both tax receivable agreements in which case all obligations (including any additional interest due relating to any deferred payments) generally will be accelerated and due as if ZoomInfo Tax Group had exercised its right to terminate the tax receivable agreements, or (iii) there is a change of control of ZoomInfo Tax Group, in which case the Pre-IPO Owners may elect to receive an amount based on the agreed payments remaining to be made under the agreement determined as described above in clause (i). Estimating the amount of payments that may be made under the tax receivable agreements is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors. The amount of existing tax basis and the anticipated tax basis adjustments, as well as the amount and timing of any payments under the tax receivable agreements, will vary depending upon a number of factors, including our blended federal and state tax rate, the amount and timing of our income and deductions, and situations where no net benefit is received from the tax attributes.

We expect that as a result of the size of the ZoomInfo Tax Group’s allocable share of existing tax basis acquired in the IPO, the increase in the ZoomInfo Tax Group’s allocable share of existing tax basis and the tax basis adjustment of the tangible and intangible assets of the ZoomInfo Tax Group upon the exchange of Holdings LLC Units for shares of common stock and our expected utilization of certain tax attributes, the payments that ZoomInfo Tax Group may make under the tax receivable agreements will be substantial. As of December 31, 2024, the Company had a liability of $2,762.5 million related to its projected obligations under the Tax Receivable Agreements in connection with the Reorganization Transactions and Holdings LLC Units. During the year ended December 31, 2024, $94.0 million was paid to TRA holders pursuant to the Tax Receivable Agreements. There were no payments made pursuant to the Tax Receivable Agreements during the years ended December 31, 2023. The payments under the tax receivable agreements are not conditioned upon continued ownership of us by the exchanging holders of Holdings LLC Units. Refer to Note 16 - Tax Receivable Agreements of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

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Contractual Obligations and Commitments

The following table summarizes our material contractual obligations as of December 31, 2024 and the years in which these obligations are due:

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(1)Includes future principal payments on long-term indebtedness through the scheduled maturity dates thereof. Indebtedness is discussed in Note 7 - Financing Arrangements of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K. Interest incurred on amounts we borrow is based on relative borrowing levels, fluctuations in the variable interest rates, and the spread we pay over those interest rates. As such, we are unable to quantify our future obligations relating to interest and therefore no amounts have been included in the above table.

(2)Represents future payments on existing operating leases, including future tenant improvement allowance reimbursements through the scheduled expiration dates thereof. This amount excludes executed lease agreements that commence after December 31, 2024.

(3)Includes deferred consideration and employee compensation related to the Dogpatch acquisitions at the currently estimated payout amounts, undiscounted. Acquisitions and related deferred consideration are discussed in Note 10 - Commitments and Contingencies of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K. Estimated contingent consideration is subject to change depending on results of factors each arrangement is based on.

(4)Primarily relates to third-party cloud hosting and software as a service arrangements.

The amounts included in the table above represent agreements that are enforceable and legally binding. Any obligations under contracts that we can cancel without significant penalty are not included here, because the ultimate timing of these liabilities cannot be determined; therefore, we have excluded these amounts from the contractual obligations table above. Purchase orders issued in the ordinary course of business are not included in the table above as they represent authorizations to purchase the items rather than binding agreements. However, if such claims arise in the future, they could have a material effect on our financial position, results of operations, and cash flows.

The payments that we may be required to make under the tax receivable agreements that we entered into may be significant and are not reflected in the contractual obligations tables set forth above, as we are currently unable to estimate the amounts and timing of the payments that may be due thereunder.

Critical Accounting Policies and Estimates

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Our critical accounting policies are those that we believe have the most significant impact to the presentation of our financial position and results of operations and that require the most difficult, subjective, or complex judgments. In many cases, the accounting treatment of a transaction is specifically dictated by U.S. GAAP with no need for the application of judgment.

In certain circumstances, however, the preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period.

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While our significant accounting policies are more fully described in Note 1 - Business, Basis of Presentation, and Summary of Significant Accounting Policies of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K, we believe the following topics reflect our critical accounting policies and our more significant judgment and estimates used in the preparation of our financial statements.

Business Combinations

We allocate the purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The purchase price is determined based on the fair value of the assets transferred, liabilities assumed, and equity interests issued, after considering any transactions that are separate from the business combination. The fair value of equity issued as part of a business combination is determined based on grant date stock price of the Company. The excess of fair value of purchase consideration over the fair values of the identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets and contingent liabilities. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer bases, acquired technology and acquired trade names, useful lives, royalty rates, and discount rates.

The estimates are inherently uncertain and subject to revision as additional information is obtained during the measurement period for an acquisition, which may last up to one year from the acquisition date. During the measurement period, we may record adjustments to the fair value of tangible and intangible assets acquired and liabilities assumed, with a corresponding offset to goodwill. After the conclusion of the measurement period or the final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to earnings.

In addition, uncertain tax positions and tax-related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We re-evaluate these items based upon the facts and circumstances that existed as of the acquisition date, with any revisions to our preliminary estimates being recorded to goodwill, provided that the timing is within the measurement period. Subsequent to the measurement period, changes to uncertain tax positions and tax-related valuation allowances will be recorded to earnings.

Tax Receivable Agreements

In connection with our IPO, we entered into two Tax Receivable Agreements with certain non-controlling interest holders (the “TRA Holders”). The TRAs generally provide for payment by the Company to the TRA Holders of 85% of the net cash savings, if any, in U.S. federal, state and local income tax or franchise tax based on income that the Company actually realizes or is deemed to realize in certain circumstances. The Company will retain the benefit of the remaining 15% of these net cash savings.

We account for amounts payable under the TRA in accordance with Accounting Standards Codification (“ASC”) Topic 450, Contingencies. Amounts payable under the TRA are accrued by a charge to income when it is probable that a liability has been incurred and the amount is estimable. As such, subsequent changes to the measurement of the TRA liability are recognized in the statements of income as a component of Other loss (income), net. Refer to Note 16 - Tax Receivable Agreements of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

Income Taxes

ZoomInfo Technologies Inc. is a corporation, and it and its U.S. affiliates are subject to U.S. federal and state income tax. Additionally, our operations in Canada, India, Israel, and the U.K. are subject to local country income taxes.

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The Company recognizes deferred tax assets and liabilities based on temporary differences between the financial statement and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax law is recognized in the Consolidated Statements of Operations in the period that includes the enactment date.

The Company reviews all available evidence to evaluate the realizability of its deferred tax assets, including consideration of both positive and negative evidence, scheduled reversals of deferred tax assets and liabilities, projected future taxable income, tax planning strategies and results of recent operations. If, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized, a valuation allowance is recorded. Our judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute our business plans and tax planning strategies. If there is a change in our ability to recover certain deferred tax assets, our income tax provision would increase or decrease in the period in which the assessment is changed.

The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not that the position is sustainable upon examination by the taxing authority, based solely on its technical merits. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority. The Company recognizes interest and penalties within Provision for income taxes on the Consolidated Statements of Operations. Refer to Note 17 - Income Taxes of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.

Recently Issued and Adopted Accounting Pronouncements

Refer to Note 1 - Business, Basis of Presentation, and Summary of Significant Accounting Policies of our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K regarding recently issued accounting pronouncements.

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