ZoomInfo shares fall after weak quarter, CFO departure

Brief description of the dive:

• Software and data provider ZoomInfo Chief Financial Officer Peter Cameron Hyzer will step down as CFO and chief financial officer, effective Sept. 6, the company said Monday in a securities filing. FP&A Vice President Michael Graham O’Brien has been named interim CFO, effective Oct. 7, and Hyzer will remain in an advisory role until Oct. 7 to ensure an orderly transition.
• In a separate statement on Monday, the software provider — which offers a commercial search engine and contact database aimed primarily at businesses — also announced changes to its board, appointing Domenic Maida and Owen Wurzbacher as independent directors, effective Tuesday.
• The management changes come as the Vancouver, Washington-based company continues to grapple with macroeconomic pressures, reporting a 6% year-over-year drop in revenue to $291.5 million for the second quarter on Monday, missing earlier expectations of $306 million to $309 million. Shares of the company fell about 16% after the earnings report and management’s announcement and continued to fall Tuesday.

Diving Insight:

ZoomInfo has begun a search for a permanent CFO, according to a press release Monday. In connection with Hyzer’s departure, the software company expects to enter into “a customary separation and release agreement, the terms of which will be disclosed if and when the parties agree,” according to a document filed with the Securities and Exchange Commission.

According to the company’s most recent proxy statement filed in March, Hyzer is entitled to a lump sum equal to 12 months of annual base salary, plus 100% of his annual cash bonus for the year, less any amounts paid, if his employment is terminated without cause or he resigns for cause. For the full year 2023, Hyzer received total compensation of $573,250, including an annual base salary of $562,000, and did not receive a bonus.

Hyzer was named CFO of ZoomInfo in 2018, just prior to its acquisition by DiscoverOrg in 2019. Hyzer retained his position as CFO of the combined company, which operates under the ZoomInfo banner.

His successor, O’Brien, a six-year veteran of the company, has served as vice president of FP&A since January of last year, according to his LinkedIn profile. His previous roles at the software provider include a stint as interim head of accounting in 2018. Before joining ZoomInfo in 2017, he held numerous executive positions at companies including Rain King Solutions and Kaseya.

O’Brien will take on the role of interim CFO as ZoomInfo looks to AI to help strengthen its finances and retain customers. The company reported a net loss of $24.4 million for the quarter ended June 30, down from a loss of $38.1 million in the same period a year earlier. ZoomInfo also lowered its full-year 2024 guidance, now expecting GAAP revenue of $1.190 billion to $1.205 billion, down from a range of $1.255 billion to $1.27 billion reported in the prior-year quarter.

The software vendor has taken a number of steps to improve its future financial position, including changing its estimates for collections during the quarter and changing its operating procedures to now require upfront payments for smaller customers.

As a result, ZoomInfo recorded additional charges of $33 million, primarily related to changes in estimates, with “$15 million recorded to revenue, $14 million recorded to bad debt expense, and $4 million related to other discrete items,” according to the financial results.

However, the company also saw 23% year-over-year growth in its operations and data-as-a-service offerings, which are “often used to support the company’s AI investments,” CEO Henry Schuck said Monday during a second-quarter earnings conference call. Those solutions now account for 13% of ZoomInfo’s annual contract volume, Shuck said.

The software provider also announced multiple AI initiatives over the past quarter, releasing an AI-based platform called ZoomInfo Copilot in May that introduces AI solutions to its business-to-business database, according to a press release. The company is also one of several third-party data providers that Google is relying on to help it eliminate hallucinations and better train its generative AI tools, according to a June report by VentureBeat.

ZoomInfo intends to use Copilot to strengthen customer relationships, Schuck said Monday. The company reported positive results after its first full month of offering the product in June.

“Early signs show that Copilot is extending our value beyond the top of the sales funnel, supporting go-to-market teams throughout the funnel,” he said, highlighting an “aggressive Copilot roadmap” to come.

“With the interest we are seeing in Copilot, our operations and our Data-as-a-Service products, we believe we will be able to continue to attract new customers and increase add-on sales to our existing base, which is a key driver of net retention,” Schuck said.

ZoomInfo declined to comment on the company’s leadership changes or quarterly results beyond details included in press releases.