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What changed in ZoomInfo Technologies Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ZoomInfo Technologies Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+441 added−491 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-16)

Top changes in ZoomInfo Technologies Inc.'s 2023 10-K

441 paragraphs added · 491 removed · 310 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn recent years, there has been an increase in attention to and regulation of data protection and data privacy across the globe, including the FTC’s increasingly active approach to enforcing data privacy in the United States, as well as the enactment of European Union’s General Data Protection Regulation (“GDPR”), which took effect in May 2018, the United Kingdom’s transposition of GDPR into its domestic laws following the United Kingdom’s exit from the European Union (“Brexit”) in January 2021, China’s enactment of the Data Security Law (“DSL”) and the Personal Information Protection Law (“PIPL”), which took effect September 2021 and November 2021, respectively, the California Privacy Rights Act of 2020 (“CPRA”), which took effect January 1, 2023 and expanded the California Consumer Privacy Act (“CCPA”), and Virginia’s Consumer Data Protection Act.
Biggest changeIn recent years, there has been an increase in attention to and regulation of data protection and data privacy across the globe, including the Federal Trade Commission’s (“FTC”) increasingly active approach to enforcing data privacy in the United States, as well as the enactment of European Union’s General Data Protection Regulation (“GDPR”), the United Kingdom’s transposition of GDPR into its domestic laws in the United Kingdom’s exit from the European Union (“Brexit”) in January 2021, California’s Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act of 2020 (“CPRA”), and similar comprehensive privacy laws adopted in other states, including Colorado, Connecticut, Virginia, and Utah.
These laws are not uniform in the way they define and treat certain data types, including business-to-business data, biometric data or so called “sensitive” data and we must often update our consumer notices and adapt our compliance programs to account for the differences between applicable laws.
These laws are not always uniform in the way they define and treat certain data types, including business-to-business data, biometric data or so called “sensitive” data and we must often update our consumer notices and adapt our compliance programs to account for the differences between applicable laws.
We are able to provide measurable revenue improvement; accuracy, depth and coverage of data; unique data points to leverage insights; and a platform that can be integrated and automated with a variety of CRM, marketing, operations, or recruiting platforms.
We are able to provide revenue improvement; accuracy, depth and coverage of data; unique data points to leverage insights; and a platform that can be integrated and automated with a variety of CRM, marketing, operations, or recruiting platforms.
Our actual or alleged failure to comply with applicable privacy or data security laws, regulations, and policies, or to protect personal data, could result in enforcement actions and significant penalties against us, which could result in negative publicity or costs, subject us to claims or other remedies, and have a material adverse effect on our business, financial condition, and results of operations.
Our actual or alleged failure to comply with applicable privacy or data protection laws, regulations, and policies, or to protect personal data, could result in enforcement actions and significant penalties against us, which could result in negative publicity or costs, subject us to claims or other remedies, and have a material adverse effect on our business, financial condition, and results of operations.
The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only. 6 Table of Contents
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only.
All of this can be integrated directly into our customers’ CRM and sales and marketing automation systems. 1 Table of Contents This 360-degree view of key business insights provides detailed understanding, and coupled with our analytics, shortens sales cycles and increases win rates by enabling sellers, marketers, and recruiters to deliver the right message, to the right person, at the right time.
All of this can be integrated directly into our customers’ CRM and sales and marketing automation systems. This 360-degree view of key business insights provides detailed understanding, and coupled with our analytics, shortens sales cycles and increases win rates by enabling sellers, marketers, and recruiters to deliver the right message, to the right person, at the right time.
ITEM 1. BUSINESS Overview ZoomInfo is a global leader in modern go-to-market software, data, and intelligence for sales, marketing, operations, and recruiting teams. RevOS – our modern, cloud-based operating system for revenue professionals – delivers comprehensive and high-quality intelligence and analytics to provide sales, marketing, operations, and recruiting professionals accurate information and insights on the organizations and professionals they target.
Overview ZoomInfo is a global leader in modern go-to-market software, data, and intelligence for sales, marketing, operations, and recruiting teams. RevOS – our modern, cloud-based operating system for revenue professionals – delivers comprehensive and high-quality intelligence and analytics to provide sales, marketing, operations, and recruiting professionals accurate information and insights on the organizations and professionals they target.
We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective. Data Privacy and Protection The business contact information and other data we collect and process are an integral part of our products and services.
We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective. 3 Table of Contents Data Privacy and Protection The business contact information and other data we collect and process are an integral part of our products and services.
Use of other data transfer mechanisms now involves additional compliance steps and in the event any court blocks personal data transfers to or from a particular jurisdiction on the basis that certain or all such transfer mechanisms are not legally adequate, this could give rise to operational interruption in the performance of services for customers and internal processing of employee information, greater costs to implement alternative data transfer mechanisms that are still permitted, regulatory liabilities, or reputational harm.
In the event any court blocks personal data transfers to or from a particular jurisdiction on the basis that certain or all such transfer mechanisms are not legally adequate, this could give rise to operational interruption in the performance of services for customers and internal processing of employee information, greater costs to implement alternative data transfer mechanisms that are still permitted, regulatory liabilities, or reputational harm.
On June 8, 2020, ZoomInfo completed the IPO. On October 29, 2021, ZoomInfo implemented a holding company reorganization in which ZoomInfo NewCo Inc., which subsequently was renamed “ZoomInfo Technologies Inc.,” became the successor registrant to its subsidiary, ZoomInfo Technologies Inc., which subsequently changed its name to “ZoomInfo Intermediate Inc.” Our corporate headquarters are located in Vancouver, Washington.
On October 29, 2021, ZoomInfo implemented a holding company reorganization in which ZoomInfo NewCo Inc., which subsequently was renamed “ZoomInfo Technologies Inc.,” became the successor registrant to its subsidiary, ZoomInfo Technologies Inc., which subsequently changed its name to “ZoomInfo Intermediate Inc.”. Our corporate headquarters are located in Vancouver, Washington.
Our respect for laws and regulations regarding the collection and processing of personal data underlies our strategy to improve our customer experience and build trust. Our privacy team is devoted to processing and fulfilling any requests regarding access to and deletion of their contact information in our platform.
Our respect for laws and regulations regarding the collection and processing of personal data underlies our commitment to top-notch compliance as well as our strategy to improve our customer experience and build trust. Our privacy team is devoted to processing and fulfilling any requests regarding access to and deletion of their contact information in our platform.
In particular, we have developed a “Privacy Center” on our website as a one-stop-shop for any person to submit access requests, request opt-out, or delete his or her information from our database. We have implemented a program for providing direct notifications to individuals.
In particular, we have developed a “Privacy Center” on our website as a one-stop-shop for any person to submit access requests, request opt-out, or delete their information from our database. We have implemented a program for providing direct notifications to individuals. In addition, we endeavor to honor opt-out requests across our entire database.
Ethnically diverse is defined as individuals who self-identify in one or more of the following groups: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander or Two or More Races or Ethnicities. In addition, 34% of the Company’s U.S. workforce identified as female and 1% identified as non-binary gender.
Ethnically diverse is defined as individuals who self-identify in one or more of the following groups: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander or Two or More Races or Ethnicities. In addition, 33% of the Company’s U.S. workforce identified as female and less than 1% identified as not specified.
We believe the principal factors that drive competition between vendors in the market include: • comprehensive platform offering; • quality and accuracy of data; • breadth and depth of data; • ease of use and deployment; • tangible benefits and ROI for customers; • data privacy and security; • ability to integrate with customers’ CRM and sales and marketing automation systems; and • sophistication of solutions used to manage, maintain, and combine intelligence.
These potential competitors include LinkedIn Sales Navigator, D&B Hoovers, and TechTarget. 2 Table of Contents We believe the principal factors that drive competition between vendors in the market include: • comprehensive platform offering; • quality and accuracy of data; • breadth and depth of data; • ease of use and deployment; • tangible benefits relative to pricing and ROI for customers; • data privacy and security; • ability to integrate with customers’ CRM and sales and marketing automation systems; and • sophistication of solutions used to manage, maintain, and combine intelligence.
In limited circumstances, we will see other vendors that focus on specific use-cases, niche end-markets, or leveraging legacy and/or inaccurate data sets try to compete in potential deals. These potential competitors include LinkedIn Sales Navigator, D&B Hoovers, and TechTarget.
In limited circumstances, we will see other vendors that focus on specific use-cases, niche end-markets, or leveraging legacy and/or inaccurate data sets try to compete in potential deals.
In addition, we endeavor to honor opt-out requests across our entire database. 4 Table of Contents Our privacy and legal teams are focused on any applicable privacy laws and regulations and monitor changes to such laws and regulations with a view to implementing what we believe are best practices in the industry.
Our privacy and legal teams are focused on any applicable privacy laws and regulations and monitor changes to such laws and regulations with a view to implementing what we believe are best practices in the industry.
In some cases, it may impact our ability or our customers’ ability to offer our services in certain locations, to deploy our solutions, to reach current and prospective customers, or to derive insights from data globally.
In some cases, it may impact our ability or our customers’ ability to offer our services in certain locations, to deploy our solutions, to reach current and prospective customers, or to derive insights from data globally. One area of particular risk remains data transfers between the United States and the European Union.
For more information, please read “ Risk Factors – Privacy, Security, and Technology Risk Factors - Changes in laws, regulations, and public perception concerning data privacy, or changes in the patterns of enforcement of existing laws and regulations, could impact our ability to efficiently gather, process, update, and/or provide some or all of the information we currently provide or the ability of our customers and users to use some or all of our products or services” in Part I, Item 1A of this Annual Report on Form 10-K.
For more information, please read “ Risk Factors – Privacy, Technology, and Security - Changes in laws, regulations, and public perception concerning data privacy, or changes in the patterns of enforcement of existing laws and regulations, could impact our ability to efficiently gather, process, update, and/or provide some or all of the information we currently provide or the ability of our customers and users to use some or all of our products or services” in Part I, Item 1A of this Annual Report on Form 10-K. 5 Table of Contents Human Capital As of December 31, 2023, we had 3,516 employees, consisting of 666 in cost of service, 1,596 in sales and marketing, 837 in research and development, and 417 in general and administrative.
We have processes in place to use our research team to tag anomalies in data, review data pieces that require another manual verification, identify patterns to transform this understanding into algorithms, and identify methods to automate data gathering. We are able to provide a guarantee of at least 95% accuracy as a result of our focus on quality.
We have processes in place to use our research team to tag anomalies in data, review data pieces that require another manual verification, identify patterns to transform this understanding into algorithms, and identify methods to automate data gathering.
At the federal level, the American Data Privacy and Protection Act was introduced in 2022, which aims to establish a comprehensive privacy regime including many of the concepts found in other state and federal privacy bills and laws, such as consent requirements for entities providing services to the public that collect, store, process, use, or otherwise control sensitive personal information.
At the federal level, efforts have been made to establish a comprehensive privacy regime including many of the concepts found in other state and federal privacy bills and laws, such as consent requirements for entities providing services to the public that collect, store, process, use, or otherwise control sensitive personal information, and it is possible such a federal law could be enacted in the future.
The information on our website is not incorporated herein or otherwise a part of this Annual Report on Form 10-K. Our Platform Our modern, cloud-based operating system for revenue professionals delivers comprehensive and high-quality intelligence and analytics to provide sales, marketing, operations, and recruiting professionals accurate information and insights on the organizations and professionals they target.
Our Platform Our modern, cloud-based operating system for revenue professionals delivers comprehensive and high-quality intelligence and analytics to provide sales, marketing, operations, and recruiting professionals accurate information and insights on the organizations and professionals they target.
We are a signatory to the United Nations Global Compact, a global sustainability initiative that calls on companies to align their business practices with ten principles related to human rights, labor, environment, and anti-corruption. Benefits, Safety, and Wellness We aim to offer fair compensation and benefits that encourage employee well-being, as well as attract and retain top talent.
We are a signatory to the United Nations Global Compact, a global sustainability initiative that calls on companies to align their business practices with ten principles related to human rights, labor, environment, and anti-corruption.
As part of our efforts, we invest in a robust learning management system for employees, complete with online courses and live training on a variety of topics.
As part of our efforts, we invest in robust learning offerings for all employees, consisting of both online courses and live training on a variety of topics (with targeted learning programs for individual contributors and leaders).
We know that employees are our greatest asset, and we are proud of the diversity that we foster in our workplaces. As of December 31, 2022, our U.S. workforce was approximately 28% ethnically diverse.
We believe in the power of the team. Winning teams look for the best talent, regardless of background. We know that employees are our greatest asset, and we are proud of the diversity that we foster in our workplaces. As of December 31, 2023, our U.S. workforce was approximately 27% ethnically diverse.
We are able to deliver high-quality intelligence at scale by leveraging an artificial intelligence (“AI”) and machine learning (“ML”) powered engine that gathers data from millions of sources and standardizes, matches to entities, verifies, cleans, and applies the processed data to companies and people at scale.
In OperationsOS, our sales operations customers use a suite of products, services, and solutions to ingest, match, enrich, and connect data feeds into multiple systems. 1 Table of Contents We are able to deliver high-quality intelligence at scale by leveraging an artificial intelligence (“AI”) and machine learning (“ML”) powered engine that gathers data from millions of sources and standardizes, matches to entities, verifies, cleans, and applies the processed data to companies and people at scale.
To recognize and promote outstanding employees, we perform a comprehensive annual talent review process, through which we empower employees to drive their professional development in a way that also aligns with company objectives and values.
To enable continuous development, growth, and recognition, we also run a comprehensive annual performance and talent review process, which enables professional development of our employees to drive their professional development in a way that also aligns with our company objectives and values.
These and other legal requirements could reduce our ability to gather personal data used in our products and services. They could reduce demand for our services, require us to take on more onerous obligations in our contracts, restrict our ability to store, transfer and process personal data.
They could reduce demand for our services, require us to take on more onerous obligations in our contracts, add new provisions in data processing agreements (“DPA”) related to the processing of personal information, and restrict our ability to store, transfer and process personal data.
Our customers access insights directly in our platform and can also integrate our data and insights directly into their customer relationship management system (“CRM”) or sales and marketing automation systems, to improve their existing go-to-market processes. ZoomInfo, formerly known as DiscoverOrg, was co-founded in 2007 by our CEO, Henry Schuck.
Our customers access insights directly in our platform and can also integrate our data and insights directly into their CRM system or sales and marketing automation systems, to improve their existing go-to-market processes.
The FTC has also undertaken proposed rulemaking regarding commercial surveillance and data security, which is intended to address harms to consumers arising from lax data security or commercial surveillance practices.
The FTC has also undertaken proposed rulemaking regarding commercial surveillance and data security, which is intended to address harms to consumers arising from lax data security or commercial surveillance practices. In addition, the Consumer Financial Protection Bureau (“CFPB”) has announced plans to propose a rule in 2024 to regulate data brokers under its authority.
DiscoverOrg achieved significant organic growth since its founding and acquired Zoom Information, Inc. (“Pre-Acquisition ZI”) in February 2019 to further expand the breadth of our go-to-market intelligence, industry coverage, and addressable market opportunity. The combined business was incorporated as the former ZoomInfo Technologies Inc. (now ZoomInfo Intermediate Inc.) on November 14, 2019 for the purposes of facilitating the IPO.
ITEM 1. BUSINESS ZoomInfo, formerly known as DiscoverOrg, was co-founded in 2007 by our chief executive officer (“CEO”), Henry Schuck. DiscoverOrg achieved significant organic growth since its founding and acquired Zoom Information, Inc. (“Pre-Acquisition ZI”) in February 2019 to further expand the breadth of our go-to-market intelligence, industry coverage, and addressable market opportunity.
Laws such as these give rise to an increasingly complex set of compliance obligations on us, as well as on many of our customers.
There are also ongoing discussions about how best to revise and modernize existing laws in jurisdictions such as Canada and Australia. Laws such as these give rise to an increasingly complex set of compliance obligations on us, as well as on many of our customers.
The company has additional offices in Waltham, Massachusetts; Bellevue, Washington; Bethesda, Maryland; Conshohocken, Pennsylvania; Grand Rapids, Michigan; San Mateo, Santa Monica, and San Francisco, California; Melville, New York; Roswell, Georgia; Tel Aviv and Ra’anana, Israel; Toronto, Canada; Chennai, India; and London, England. Our primary website address is www.zoominfo.com.
The Company has additional offices in Waltham, Massachusetts; Bethesda, Maryland; Conshohocken, Pennsylvania; Grand Rapids, Michigan; San Francisco, California; Ra’anana, Israel; Toronto, Canada; Chennai, India; and London, England. Our primary website address is https://www.zoominfo.com. The information on our website is not incorporated herein or otherwise a part of this Annual Report on Form 10-K.
These laws impose restrictions on our ability to gather personal data and provide such personal data to our customers, provide individuals with additional rights around their personal data, and place downstream obligations on our customers relating to their use of the information we provide. 3 Table of Contents These complex laws may be implemented, interpreted, or enforced in a non-uniform or inconsistent way across jurisdictions and we may not be aware of every development that impacts our business.
These laws impose restrictions on our ability to gather personal data and provide such personal data to our customers, provide individuals with additional rights around their personal data, and place downstream obligations on our customers relating to their use of the information we provide.
Our Competition We believe there are currently no competitors who offer a sales, marketing, operations, and recruiting intelligence platform as comprehensive as ours.
We are able to provide a contractual guarantee of at least 95% accuracy with respect to certain data points as a result of our focus on quality. Our Competition We believe there are currently no competitors who offer a sales, marketing, operations, and recruiting intelligence platform as comprehensive as ours.
Regulators around the world have adopted or proposed requirements regarding the collection, use, transfer, security, storage, destruction, and other processing of personal data.
Our sales, privacy, and data practices teams are well versed in helping customers and prospective customers navigate relevant privacy concerns and requirements with respect to our platform. Regulators around the world have adopted or proposed requirements regarding the collection, use, transfer, security, storage, destruction, and other processing of personal data.
As ZoomInfo continues to grow, we want to empower all employees to excel in their professional objectives and feel proud to work for a company that celebrates their individuality while recognizing their differences. We believe in the power of the team. Winning teams look for the best talent, regardless of background.
These groups have dedicated funding to host events, bring in speakers, and develop programs to help create a sense of belonging for all ZoomInfo employees. As ZoomInfo continues to grow, we want to empower all employees to excel in their professional objectives and feel proud to work for a company that celebrates their individuality while recognizing their differences.
This enables our customers to shorten sales cycles and increase win rates by empowering sellers, marketers, and recruiters to deliver the right message to the right person at the right time.
This enables our customers to shorten sales cycles and increase win rates by empowering sellers, marketers, and recruiters to deliver the right message to the right person at the right time. ZoomInfo defines the modern go-to-market technology stack across three distinct layers that build upon each other: • Our Intelligence Layer is the foundation of our data-driven strategy.
We are proud of the great flexibility and engagement demonstrated by our employees during this time, allowing us to preserve business continuity without sacrificing our commitment to keeping our team and our communities safe. 5 Table of Contents Training and Development Ensuring our employees have access to development opportunities and understand how to grow their career at ZoomInfo is a key tenet of our talent and engagement practices.
This model allows employees who are assigned to an office to split their time between working at the office and at home. 6 Table of Contents Training and Development Ensuring our employees have access to development opportunities and understand how to grow their career at ZoomInfo is a key tenet of our talent and engagement practices.
We believe we compete favorably across these factors. We have achieved a median sales cycle of less than 30 days from opportunity creation to close.
We believe we compete favorably across these factors. We have achieved a median sales cycle of less than 30 days from opportunity creation to close. For additional information regarding the competitive business conditions we face, see “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.
Of these, 77% of our employees were located in North America, while 14%, 7%, 2%, and less than 1% were located in the Middle East, Asia, Europe, and Australia, respectively. Diversity and Inclusion We place a high value on diversity and inclusion and are committed to ensuring that our organization creates a sense of belonging for all employees.
Of these, 74% of our employees were located in North America, while 12%, 12%, 2%, and less than 1% were located in the Middle East, Asia, Europe, and Australia, respectively.
For additional information, see “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. 2 Table of Contents Our Customers Our large and diversified customer base spans a wide variety of industry verticals, including software, business services, manufacturing, telecommunications, financial services, media and internet, transportation, education, hospitality, and real estate.
Our Customers Our large and diversified customer base spans a wide variety of industry verticals, including software, business services, manufacturing, telecommunications, financial services, media and internet, transportation, education, hospitality, and real estate. Our customers range from the largest global enterprises, to mid-market companies, down to small businesses.
Understanding that representation matters, as part of our Global Inclusion and Diversity Initiative (GIDI), we take an active role in focusing on the equity, advancement, and empowerment of all communities, and strategize ways to increase diversity through recruitment, retention, professional development, diversity education, and community outreach.
Diversity and Inclusion We place a high value on diversity and inclusion and are committed to ensuring that our organization creates a sense of belonging for all employees. Understanding that representation matters, as part of our ZoomInclusion Employee Resource Groups, we take an active role in focusing on the equity, advancement, and empowerment of individuals from diverse backgrounds.
Our compensation packages provide a competitive salary and bonus, medical, dental, vision, retirement benefits, and generous paid time off. To address the safety and health of our employees during the COVID-19 pandemic, in the first quarter of 2020, we temporarily closed all of our offices and enabled our entire workforce to work remotely.
Benefits, Safety, and Wellness We aim to offer fair compensation and benefits that encourage employee well-being, as well as attract and retain top talent. Our compensation packages provide a competitive salary and bonus, medical, dental, vision, retirement benefits, and generous paid time off.
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Our customers range from the largest global enterprises, to mid-market companies, down to small businesses. No single customer contributed more than 1% of revenue for the year ended December 31, 2022. Intellectual Property Protecting our intellectual property and proprietary technology is an important aspect of our business.
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The combined business was incorporated as the former ZoomInfo Technologies Inc. (now ZoomInfo Intermediate Inc.) on November 14, 2019 for the purposes of facilitating an IPO. On June 8, 2020, ZoomInfo completed the IPO.
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Additionally, new state privacy laws will become effective in 2023, including the Colorado Privacy Act, the Utah Consumer Privacy Act, and the Connecticut Data Privacy Act.
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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, technographic, 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.
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Furthermore, other data privacy or data protection laws or regulations are under consideration in other jurisdictions, both in the form of entirely new laws such as in India, and in the form of updates to existing privacy laws, such as in Canada and Australia.
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This creates a dataset that is continuously updated and can be used to power automated business workflows. Our services connect with major customer relationship management (“CRM”) system providers. • 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.
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For example, in 2020 the European Union Court of Justice struck down a permitted personal data transfer mechanism between the European Union and the United States and introduced requirements to carry out transfer impact assessments in relation to the use of Standard Contractual Clauses, the most commonly used data transfer mechanism.
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In SalesOS, frontline teams, managers, and leaders use Engage for multi-touch and multi-channel sales engagement, as well as Chorus for call and web meeting recording, transcription, insight generation, and coaching.
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This has led to increased regulatory and compliance burdens and uncertainty about or interruptions of personal data transfers from Europe to the United States (and beyond), as most recently evidenced by the Austrian Data Protection Authority’s decision that the use of Google Analytics violates the GDPR’s personal data transfer provisions.
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In MarketingOS, marketers drive awareness, lead generation, and deal acceleration campaigns through account-based marketing, advertising, and onsite conversion optimization solutions, along with ZoomInfo Chat for intelligent onsite experiences through live conversation and chatbots. In TalentOS, recruiters and talent acquisition professionals access a database that helps them efficiently find candidates.
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For example, GDPR imposes sanctions for violations up to the greater of €20 million or 4% of worldwide gross annual revenue, PIPL violations may incur fines up to RMB 50 million or 5% of gross annual revenue, and the CCPA or its successor, the CPRA, allow for fines of up to $7,500 per violation (affected individual).
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Recruiters can filter and reach more good-fit candidates, use pipeline management tools to collaborate and organize the hiring process, and automate the candidate outreach process.
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Our sales, privacy, and data practices teams are well versed in helping customers and prospective customers navigate relevant privacy concerns and requirements with respect to our platform.
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No single customer contributed more than 1% of revenue for the year ended December 31, 2023. 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 of our contracts.
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Human Capital As of December 31, 2022, we had 3,540 employees, consisting of 692 in cost of service, 1,566 in sales and marketing, 918 in research and development, and 364 in general and administrative.
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Our paid products are SalesOS, MarketingOS, OperationsOS, and TalentOS (with add-on options for some products), and we have a free community edition, ZoomInfo Lite. Intellectual Property Protecting our intellectual property and proprietary technology is an important aspect of our business.
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Additionally, new state privacy laws are expected to become effective in 2024, including privacy laws in Oregon, Texas, and Montana, and additional states are expected to follow in future years.
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Meanwhile, around the world data privacy and protection laws continue to evolve, including new laws, such as India’s Digital Personal Data Protection Act passed in August 2023 and the Saudi Arabia Personal Data Protection Law, which became effective in September 2023.
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This development follows a request for information about business models that collect and sell consumer data, including data brokers and aggregators. 4 Table of Contents These complex laws may be implemented, interpreted, or enforced in a non-uniform or inconsistent way across jurisdictions and we may not be aware of every development that impacts our business.
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These and other legal requirements could reduce our ability to gather personal data used in our products and services.
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On July 10, 2023, the European Commission adopted its adequacy decision for the EU-US Data Privacy Framework (“DPF”), 18 months after its predecessor, the EU-US Privacy Shield, was invalidated.
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While this does, for the time, assert that entities operating in the United States who have certified to the DPF ensure an adequate level of protection for transferring personal data from the European Union to the United States, future challenges seem imminent.
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The privacy advocacy organization NOYB, which previously challenged and facilitated the demise of both the Safe Harbor (Schrems I) and Privacy Shield (Schrems II) has already criticized the DPF for not doing enough to provide non-US citizens with reasonable privacy protections afforded to US citizens under the Fourth Amendment of the U.S. Constitution.
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ZoomInfo is certified under the DPF, but still utilizes Standard Contractual Clauses as its cross-border transfer mechanism due to the uncertain future of the DPF.
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In 2023, we publicly committed to the California Equal Pay Pledge, ensuring that fair and equitable pay, regardless of race or gender is a normal business imperative. We also signed the Anti-Defamation League's Pledge to Fight Antisemitism in further expansion of our diversity and inclusion work.
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We believe that in-person connections are fundamental to cross-functional partnerships, driving innovation, facilitating professional growth, and establishing critical relationships. The COVID-19 pandemic has brought about unexpected changes to the global workforce, and we have adopted a hybrid model.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

109 edited+46 added−116 removed156 unchanged
Biggest changeThese laws also may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the features of our products and services and may require us to make additional changes to our services in order for us or our customers to comply with such legal requirements and may also increase our potential liability as a result of higher potential penalties for noncompliance. 15 Table of Contents The costs of complying with existing or new data privacy or data protection laws and regulations may limit our ability to gather personal data needed to provide our products and services, delay or impede the development of new products and services , negatively impact the use or adoption of our products and services, reduce overall demand for our products and services, make it more difficult for us to meet expectations from or commitments to customers and users, or slow the pace at which we close sales transactions, any of which could harm our business.
Biggest changeIt could negatively impact the use or adoption of our products and services or products and services similar to ours, reduce overall demand for our products and services, or products and services similar to ours, make it more difficult for us or competitive solutions to meet expectations from or commitments to customers and users, lead to significant fines, penalties, or liabilities for noncompliance, impact our reputation, or slow the pace at which we close sales transactions, any of which could harm our business.
Among other things, these provisions: • provide that our board of directors is divided into three classes, as nearly equal in size as possible, with directors in each class serving three-year terms and with terms of the directors of only one class expiring in any given year; • provide for the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66⅔% in voting power of the outstanding shares of our capital stock entitled to vote if the parties to our stockholders agreement beneficially own less than 50% of the total voting power of all then-outstanding shares of our capital stock entitled to vote generally in the election of directors; • allow us to authorize the issuance of shares of one or more series of preferred stock, including in connection with a stockholder rights plan, financing transactions, or otherwise, the terms of which series may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of our common stock; • prohibit stockholder action by written consent by holders of our common stock from and after the date on which the parties to our stockholders agreement cease to beneficially own at least 50% of the total voting power of all then-outstanding shares of our capital stock entitled to vote generally in the election of directors unless such action is recommended by all directors then in office; • provide for certain limitations on convening special stockholder meetings; • provide (i) that the board of directors is expressly authorized to make, alter, or repeal our bylaws and (ii) that our stockholders may only amend our bylaws with the approval of 66⅔% or more of all of then-outstanding shares of our capital stock entitled to vote if the parties to our stockholders agreement beneficially own less than 50% of the total voting power of all then-outstanding shares of our capital stock entitled to vote generally in the election of directors; • provide that certain provisions of our second amended and restated certificate of incorporation may be amended only by the affirmative vote of the holders of at least 66⅔% in voting power of then-outstanding shares of our capital stock entitled to vote if the parties to our stockholders agreement beneficially own less than 50% of the total voting power of all then-outstanding shares of our capital stock entitled to vote generally in the election of directors; and • establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
Among other things, these provisions: • provide that our Board of Directors is divided into three classes, as nearly equal in size as possible, with directors in each class serving three-year terms and with terms of the directors of only one class expiring in any given year; 30 Table of Contents • provide for the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66⅔% in voting power of the outstanding shares of our capital stock entitled to vote if the parties to our stockholders agreement beneficially own less than 50% of the total voting power of all then-outstanding shares of our capital stock entitled to vote generally in the election of directors; • allow us to authorize the issuance of shares of one or more series of preferred stock, including in connection with a stockholder rights plan, financing transactions, or otherwise, the terms of which series may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of our common stock; • prohibit stockholder action by written consent by holders of our common stock from and after the date on which the parties to our stockholders agreement cease to beneficially own at least 50% of the total voting power of all then-outstanding shares of our capital stock entitled to vote generally in the election of directors unless such action is recommended by all directors then in office; • provide for certain limitations on convening special stockholder meetings; • provide (i) that the Board of Directors is expressly authorized to make, alter, or repeal our bylaws and (ii) that our stockholders may only amend our bylaws with the approval of 66⅔% or more of all of then-outstanding shares of our capital stock entitled to vote if the parties to our stockholders agreement beneficially own less than 50% of the total voting power of all then-outstanding shares of our capital stock entitled to vote generally in the election of directors; • provide that certain provisions of our second amended and restated certificate of incorporation may be amended only by the affirmative vote of the holders of at least 66⅔% in voting power of then-outstanding shares of our capital stock entitled to vote if the parties to our stockholders agreement beneficially own less than 50% of the total voting power of all then-outstanding shares of our capital stock entitled to vote generally in the election of directors; and • establish advance notice requirements for nominations for elections to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
We expect our operating expenses to significantly increase over the next several years as we continue to hire additional personnel, particularly in sales and marketing and research and development, expand our partnerships, operations and infrastructure, both domestically and internationally, continue to enhance our platform and develop and expand its features, integrations, and capabilities, and expand and improve our platform.
We expect our operating expenses to increase over the next several years as we continue to hire additional personnel, particularly in sales and marketing and research and development, expand our partnerships, operations and infrastructure, both domestically and internationally, continue to enhance our platform and develop and expand its features, integrations, and capabilities, and expand and improve our platform.
Companies in related industries, such as CRM, business software, or advertising, including Salesforce.com, Oracle, Google, or Microsoft/LinkedIn, may choose to compete with us in the B2B sales and marketing intelligence space and would immediately have access to greater resources and brand recognition.
Companies in related industries, such as CRM, business software, or advertising, including Salesforce, Oracle, Google, or Microsoft/LinkedIn, may choose to compete with us in the B2B sales and marketing intelligence space and would immediately have access to greater resources and brand recognition.
Many of our customers use our integrations to access our data from within, or send data to, CRM, marketing automation, applicant tracking, sales enablement, and other systems, including Salesforce.com, Marketo, HubSpot, Microsoft Dynamics, Oracle Sales Cloud, and a variety of other commonly used tools.
Many of our customers use our integrations to access our data from within, or send data to, CRM, marketing automation, applicant tracking, sales enablement, and other systems, including Salesforce, Marketo, HubSpot, Microsoft Dynamics, Oracle Sales Cloud, and a variety of other commonly used tools.
Because we recognize subscription revenue over the subscription term, downturns or upturns in new sales and renewals are not immediately reflected in full in our results of operations.
Because we recognize subscription revenue over the subscription term, downturns or upturns in new sales and renewals are not immediately reflected in full within our results of operations.
Acquisitions and other transactions, arrangements, and investments also involve numerous risks and could create unforeseen operating difficulties and expenditures, including, but not limited to: • potential failure to achieve the expected benefits on a timely basis or at all; • difficulties in, and the cost of, integrating operations, technologies, services, and platforms; • diversion of financial and managerial resources from existing operations; • the potential entry into new markets in which we have little or no experience or where competitors may have stronger market positions; • potential write-offs of acquired assets or investments and potential financial and credit risks associated with acquired customers; • increasing or maintaining the security standards for acquired technology consistent with our other services; • currency and regulatory risks associated with foreign countries and potential additional cybersecurity and compliance risks resulting from entry into new markets; • tax effects and costs of any such acquisitions, including the related integration into our tax structure and assessment of the impact on the realizability of our future tax assets or liabilities; and 11 Table of Contents • potential challenges by governmental authorities, including the Department of Justice, for anti-competitive or other reasons.
Acquisitions and other transactions, arrangements, and investments also involve numerous risks and could create unforeseen operating difficulties and expenditures, including, but not limited to: • potential failure to achieve the expected benefits on a timely basis or at all; • difficulties in, and the cost of, integrating operations, technologies, services, and platforms; • diversion of financial and managerial resources from existing operations; • the potential entry into new markets in which we have little or no experience or where competitors may have stronger market positions; • potential write-offs of acquired assets or investments and potential financial and credit risks associated with acquired customers; • increasing or maintaining the security standards for acquired technology consistent with our other services; • currency and regulatory risks associated with foreign countries and potential additional cybersecurity and compliance risks resulting from entry into new markets; • tax effects and costs of any such acquisitions, including the related integration into our tax structure and assessment of the impact on the realizability of our future tax assets or liabilities; and • potential challenges by governmental authorities, including the Department of Justice, for anti-competitive or other reasons. 13 Table of Contents Any of these risks could harm our business.
Market volatility, decreased consumer confidence, and diminished growth expectations in the U.S. economy and abroad as a result of the foregoing events may affect the rate of information technology (“IT”) spending and adversely affect our current and potential customers’ ability or willingness to renew or expand subscriptions or purchase our services, delay prospective customers’ purchasing decisions and thereby elongate our sales cycles, reduce the value or duration of their subscription contracts, or affect attrition rates, all of which could adversely affect our future sales and operating results.
Market volatility, decreased consumer confidence, and diminished growth expectations in both the U.S. and global economy as a result of the foregoing events may affect the rate of information technology (“IT”) spending and adversely affect our current and potential customers’ ability or willingness to renew or expand subscriptions or purchase our services, delay prospective customers’ purchasing decisions and thereby elongate our sales cycles, reduce the value or duration of their subscription contracts, or affect attrition rates, all of which could adversely affect our future sales and operating results.
New income, sales, use, or other tax laws, statutes, rules, regulations, or ordinances could be enacted at any time. Those enactments could harm our domestic and international business operations and our business, results of operations, and financial condition. For example, the Inflation Reduction Act was enacted into law.
New income, sales, use, or other tax laws, statutes, rules, regulations, or ordinances could be enacted at any time. Those enactments could harm our domestic and international business operations and our business, results of operations, and financial condition. For example, the Inflation Reduction Act was enacted into law in 2022.
Additionally, certain unauthorized use of our intellectual property may go undetected, or we may face legal or practical barriers to enforcing our legal rights even where unauthorized use is detected. 18 Table of Contents Current laws may not provide for adequate protection of our platform or data.
Additionally, certain unauthorized use of our intellectual property may go undetected, or we may face legal or practical barriers to enforcing our legal rights even where unauthorized use is detected. 17 Table of Contents Current laws may not provide for adequate protection of our platform or data.
Additionally, the CPRA, other state laws coming into effect in 2023, and other legal and regulatory changes are making, or will make, it easier for individuals to opt-out of having their personal data collected. Although we already honor opt-our requests globally, such legal and regulatory changes could increase public awareness of this option, resulting in higher rates of opting out.
Additionally, the CPRA, other state laws coming into effect in 2024, and other legal and regulatory changes are making, or will make, it easier for individuals to opt-out of having their personal data collected. Although we already honor opt-out requests globally, such legal and regulatory changes could increase public awareness of this option, resulting in higher rates of opting out.
In addition, we seek to expand existing customer subscriptions by adding new users, additional data entitlements, or additional products or services, including through expanding the adoption of our platform into other departments within customers.
In addition, we seek to renew existing subscriptions and expand existing customer subscriptions by adding new users, additional data entitlements, or additional products or services, including through expanding the adoption of our platform into other departments within customers.
Business and Industry Risks Other companies, including larger and better funded companies with access to significant resources, large amounts of data or data collection methods, and sophisticated technologies may shift their business model to become competitive with us.
Other companies, including larger and better funded companies with access to significant resources, large amounts of data or data collection methods, and sophisticated technologies may shift their business model to become competitive with us.
Any successful action by state, foreign, or other authorities to compel us to collect and remit sales tax, use tax, or other taxes, either retroactively, prospectively, or both, could harm our business, results of operations, and financial condition. Geopolitical Risks Operations and sales outside the United States expose us to risks inherent in international operations.
Any successful action by state, foreign, or other authorities to compel us to collect and remit sales tax, use tax, or other taxes, either retroactively, prospectively, or both, could harm our business, results of operations, and financial condition. 26 Table of Contents Geopolitical Risks Operations and sales outside the United States expose us to risks inherent in international operations.
Any resulting increase in our tax obligation or cash taxes paid could adversely affect our cash flows and financial results. Changes in tax laws or regulations in the various tax jurisdictions we are subject to that are applied adversely to us or our paying customers could increase the costs of our products and services and harm our business.
Any resulting increase in our tax obligation or cash taxes paid could adversely affect our cash flows and financial results. 25 Table of Contents Changes in tax laws or regulations in the various tax jurisdictions we are subject to that are applied adversely to us or our paying customers could increase the costs of our products and services and harm our business.
For the year ended December 31, 2022 we derived substantially all of our revenue from subscription services and expect to continue to generate revenue from the sale of subscriptions to our platform and data.
For the year ended December 31, 2023 we derived substantially all of our revenue from subscription services and expect to continue to generate revenue from the sale of subscriptions to our platform and data.
Additionally, increasing our sales to large organizations (both existing and prospective customers) requires increasingly sophisticated and costly sales and account management efforts targeted at senior management and other personnel. If our efforts to sell to organizations are not successful or do not generate additional revenue, our business will suffer.
Additionally, increasing our sales to large organizations (both existing and prospective customers) across various industries requires increasingly sophisticated and costly sales and account management efforts targeted at senior management and other personnel. If our efforts to sell to organizations are not successful or do not generate additional revenue, our business will suffer.
Further, we may fail to respond expeditiously or appropriately to any of the foregoing misuses, or to otherwise address customer and individual concerns, which could erode confidence in our business. 19 Table of Contents Cyber-attacks and security vulnerabilities could result in serious harm to our reputation, business, and financial condition.
Further, we may fail to respond expeditiously or appropriately to any of the foregoing misuses, or to otherwise address customer and individual concerns, which could erode confidence in our business. Cyber-attacks and security vulnerabilities could result in serious harm to our reputation, business, and financial condition.
Our revenue, results of operations, and cash flows depend on the overall demand for and use of technology and information for sales, marketing, and recruiting, which depends in part on the amount of spending allocated by our customers or potential customers on sales, marketing, and recruiting technology and information. This spending depends on worldwide economic and geopolitical conditions.
Our revenue, results of operations, and cash flows depend on the overall demand for and use of technology and information for sales, marketing, and recruiting, which depends in part on the amount of spending allocated by our customers or potential customers on sales, marketing, and recruiting technology and information. This spending depends on macroeconomic and geopolitical conditions.
Such impairment charges could materially and adversely affect our business, results of operations, and financial condition. 26 Table of Contents We have a substantial amount of debt, which could adversely affect our financial position and our ability to raise additional capital and prevent us from fulfilling our obligations.
Such impairment charges could materially and adversely affect our business, results of operations, and financial condition. We have a substantial amount of debt, which could adversely affect our financial position and our ability to raise additional capital and prevent us from fulfilling our obligations.
The concentration of ownership or the rights provided under the terms of the stockholders agreement could deprive you of an opportunity to receive a premium for your shares of our common stock as part of a sale of our Company and ultimately might affect the market price of our common stock.
The rights provided under the terms of the stockholders agreement could deprive you of an opportunity to receive a premium for your shares of our common stock as part of a sale of our Company and ultimately might affect the market price of our common stock.
Acquired intangible assets with definite lives are amortized on a straight-line basis over the estimated period over which we expect to realize economic value related to the intangible asset. In addition, we review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset might not be recoverable.
Acquired intangible assets with definite lives are amortized on a straight-line basis over the estimated period over which we expect to realize economic value related to the intangible asset. In addition, we review long-lived assets, including operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset might not be recoverable.
Any of these risks could harm our business. In addition, to facilitate these acquisitions or investments, we may seek additional equity or debt financing, which may not be available on terms favorable to us or at all, may affect our ability to complete subsequent acquisitions or investments and may affect the risks of owning our common stock.
In addition, to facilitate these acquisitions or investments we may seek additional equity or debt financing, which may not be available on terms favorable to us or at all, which may affect our ability to complete subsequent acquisitions or investments and may affect the risks of owning our common stock.
Changes in laws, regulations, and public perception concerning data privacy, or changes in the patterns of enforcement of existing laws and regulations, could impact our ability to efficiently gather, process, update, and/or provide some or all of the information we currently provide or the ability of our customers and users to use some or all of our products or services.
Privacy, Technology, and Security Risk Factors Changes in laws, regulations, and public perception concerning data privacy, or changes in the patterns of enforcement of existing laws and regulations, could impact our ability to efficiently gather, process, update, and/or provide some or all of the information we currently provide or the ability of our customers and users to use some or all of our products or services.
This could have a material impact to our future cash flows or operating results. 28 Table of Contents In addition, recent global tax developments applicable to multinational businesses, including certain approaches of addressing taxation of digital economy recently proposed or enacted by the Organisation for Economic Co-operation and Development, the European Commission or certain major jurisdictions where we operate or might in the future operate, might have a material impact to our business and future cash flow from operating activities, or future financial results.
In addition, recent global tax developments applicable to multinational businesses, including certain approaches of addressing taxation of digital economy recently proposed or enacted by the Organisation for Economic Co-operation and Development, the European Commission or certain major jurisdictions where we operate or might in the future operate, might have a material impact to our business and future cash flow from operating activities, or future financial results.
Further, many of our subscription agreements require us to indemnify our customers for third-party intellectual property infringement claims, so any alleged infringement by us resulting in claims against such customers would increase our liability. Our exposure to risks associated with various claims, including the use of intellectual property, may be greater if we acquire other companies or technologies.
In addition, many of our subscription agreements require us to indemnify our customers for third-party intellectual property infringement claims, so any alleged infringement by us resulting in claims against such customers would increase our liability. Our exposure to risks associated with various claims may be greater if we acquire other companies or technologies.
Delays in integration or disruptions to our business from implementation of new or upgraded systems could have a material adverse impact on our financial condition, operating results, and our ability to accurately report our financial condition, operating results or cash flows. 12 Table of Contents If the information we rely upon to run our businesses were to be found to be inaccurate or unreliable, if we fail to maintain or protect our IT systems and data integrity effectively, if we fail to develop and implement new or upgraded systems to meet our business needs in a timely manner, or if we fail to anticipate, plan for or manage significant disruptions to these systems, our competitive position could be harmed, we could have operational disruptions, we could lose existing customers, have difficulty preventing, detecting, and controlling fraud, have disputes with customers, have regulatory sanctions or penalties imposed or other legal problems, incur increased operating and administrative expenses, lose revenues as a result of a data privacy breach or theft of intellectual property or suffer other adverse consequences, any of which could have a material adverse effect on our business, results of operations, financial condition or cash flows.
If the information we rely upon to run our businesses were to be found to be inaccurate or unreliable, if we fail to maintain or protect our IT systems and data integrity effectively, if we fail to develop and implement new or upgraded systems to meet our business needs in a timely manner, or if we fail to anticipate, plan for or manage significant disruptions to these systems, our competitive position could be harmed, we could have operational disruptions, we could lose existing customers, have difficulty preventing, detecting, and controlling fraud, have disputes with customers, have regulatory sanctions or penalties imposed or other legal problems, incur increased operating and administrative expenses, lose revenues as a result of a data privacy breach or theft of intellectual property or suffer other adverse consequences, any of which could have a material adverse effect on our business, results of operations, financial condition or cash flows.
Our paying customers, including those who have migrated from the Community Edition, may elect not to participate for various reasons, including their sensitivity to sharing information within our contributory network or their determination that the benefits from sharing do not outweigh the potential harm from sharing.
Our paying customers, including those who have migrated from ZoomInfo Lite, may elect not to participate for various reasons, including their sensitivity to sharing information within our contributory network or their determination that the benefits from sharing do not outweigh the potential harm from sharing.
Litigation has been and may be necessary in the future to enforce such rights. Such litigation could be costly, time consuming, and distracting to management and could result in the impairment or loss of our rights. Furthermore, our efforts to enforce our rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of such rights.
Such litigation could be costly, time consuming, and distracting to management and could result in the impairment or loss of our rights. Furthermore, our efforts to enforce our rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of such rights.
This legislation made a number of changes to the Internal Revenue Code, including the addition of a 1% excise tax on repurchases of stock by publicly traded corporations. As a result, if our Board were to approve a share repurchase program, the imposition of this excise tax may increase the cost to us of making repurchases.
This legislation made a number of changes to the Internal Revenue Code, including the addition of a 1% excise tax on repurchases of stock by publicly traded corporations. As a result, the imposition of this excise tax may increase the cost to us of making repurchases under our share repurchase program.
We cannot anticipate how rapidly such a potential competitor could create products or services that would take significant market share from us or even surpass our products or services in quality, in at least some respect.
We cannot anticipate how rapidly such a potential competitor could create products or services that would take significant market share from us or even surpass our products or services in quality.
Cross-border data transfers and the use of data transfer mechanisms now involve additional compliance steps and in the event any court blocks personal data transfers to or from a particular jurisdiction on the basis that certain or all such transfer mechanisms are not legally adequate, this could give rise to operational interruption in the performance of services for customers and internal processing of employee information, greater costs to implement alternative data transfer mechanisms that are still permitted, regulatory liabilities, or reputational harm.
In the event any court blocks personal data transfers to or from a particular jurisdiction on the basis that certain or all such transfer mechanisms are not legally adequate, this could give rise to operational interruption in the performance of services for customers and internal processing of employee information, greater costs to implement alternative data transfer mechanisms that are still permitted, regulatory liabilities, or reputational harm.
A significant increase in international customers or an expansion of our operations into other countries could create additional risks and challenges, including: • a need to localize our products and services, including translation into foreign languages and associated expenses; • competition from local incumbents that better understand the local market, customs, and culture, may market and operate more effectively, and may enjoy greater local affinity or awareness; • a need to comply with foreign regulatory frameworks or business practices (including with respect to data privacy and security), which among other things may favor local competitors; • evolving domestic and international tax environments; • foreign currency fluctuations and controls, which may make our products and services more expensive for international customers and could add volatility to our operating results; • vetting and monitoring internal or external sales or customer experience resources in new and evolving markets to confirm they maintain standards consistent with our brand and reputation; • different pricing environments; • different or lesser protection of our intellectual property; • potential or actual violations of domestic and international anti-corruption laws, export controls, and sanctions regulations, which likelihood may increase with an increase of sales and operations in foreign jurisdictions; 30 Table of Contents • changes in diplomatic and trade relationships, including the imposition of new trade restrictions, trade protection measures, import or export requirements, trade embargoes, and other trade barriers; and • other factors beyond our control, such as terrorism, war, natural disasters, climate change and pandemics, including the COVID-19 pandemic, could result in restrictions on business activity, which may vary significantly by region.
A significant increase in international customers or an expansion of our operations into other countries, either directly or through third parties, could create additional risks and challenges, including: • a need to localize our products and services, including translation into foreign languages and associated expenses; • competition from local incumbents that better understand the local market, customs, and culture, may market and operate more effectively, and may enjoy greater local affinity or awareness; • a need to comply with foreign regulatory frameworks or business practices (including with respect to data privacy and security), which among other things may favor local competitors; • evolving domestic and international tax environments; • foreign currency fluctuations and controls, which may make our products and services more expensive for international customers and could add volatility to our operating results; • vetting and monitoring internal or external sales or customer experience resources in new and evolving markets to confirm they maintain standards consistent with our brand and reputation; • different pricing environments; • different or lesser protection of our intellectual property; • potential or actual violations of domestic and international anti-corruption laws, export controls, anti-bribery laws, and sanctions regulations, which likelihood may increase with an increase of sales and operations in foreign jurisdictions; • changes in diplomatic and trade relationships, including the imposition of new trade restrictions, trade protection measures, import or export requirements, trade embargoes, and other trade barriers; and • other factors beyond our control, such as terrorism, war, natural disasters, climate change and pandemics, could result in restrictions on business activity, or materially affect our targeted return to operations timeline after one of these declared incidents, which may vary significantly by region.
In addition, we may be sued by third parties for breach of contract, defamation, negligence, unfair competition, or copyright or trademark infringement or claims based on other theories.
In addition, we may be sued by third parties for breach of contract, defamation, negligence, unfair competition, data breaches, privacy compliance, or copyright or trademark infringement or claims based on other theories.
Our substantial indebtedness may: • make it difficult for us to satisfy our financial obligations, including with respect to our indebtedness; • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, or other general business purposes; • require us to use a substantial portion of our cash flow from operations to make debt service payments instead of other purposes, thereby reducing the amount of cash flow available for future working capital, capital expenditures, acquisitions, or other general business purposes; • expose us to the risk of increased interest rates as certain of our borrowings, including under our secured credit facilities, are at variable rates of interest; • limit our ability to pay dividends; • limit our flexibility to plan for, or react to, changes in our business and industry; • place us at a competitive disadvantage compared with our less-leveraged competitors; • increase our vulnerability to the impact of adverse economic, competitive, and industry conditions; and • increase our cost of borrowing.
Our substantial indebtedness may: • make it difficult for us to satisfy our financial obligations, including with respect to our indebtedness; • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, or other general business purposes; • require us to use a substantial portion of our cash flow from operations to make debt service payments instead of other purposes, thereby reducing the amount of cash flow available for future working capital, capital expenditures, acquisitions, or other general business purposes; • expose us to the risk of increased interest rates as certain of our borrowings, including under our secured credit facilities, are at variable rates of interest; • limit our ability to pay dividends; • limit our flexibility to plan for, or react to, changes in our business and industry; • place us at a competitive disadvantage compared with our less-leveraged competitors; • increase our vulnerability to the impact of adverse economic, competitive, and industry conditions; and • increase our cost of borrowing. 23 Table of Contents In addition, the credit agreement governing our secured credit facilities contains, and the agreements governing our future indebtedness may contain, restrictive covenants that may limit our ability to engage in activities that may be in our long-term best interest.
Pursuant to the terms of our stockholders agreement, each of TA Associates, Carlyle, and our Founders have the right to designate at least one of our directors for so long as they beneficially own at least 5% of the voting power of all shares of our outstanding capital stock entitled to vote generally in the election of our directors.
Carlyle and our Founders have the right to designate at least one of our directors for so long as they beneficially own at least 5% of the voting power of all shares of our outstanding capital stock entitled to vote generally in the election of our directors.
Any of these factors could negatively impact our business and results of operations. Global economic uncertainty and catastrophic events, including global pandemics such as the COVID-19 pandemic, have and may disrupt our business and adversely impact our business and future results of operations and financial condition.
Any of these factors could negatively impact our business and results of operations. Global economic uncertainty and catastrophic events, including global pandemics such as the COVID-19 pandemic, continued hostilities between Russia and Ukraine, and Israel and Hamas, have and may disrupt our business and adversely impact our business and future results of operations and financial condition.
If we fail to manage our anticipated growth and change in a manner that preserves the key aspects of our corporate culture, the quality of our products and services may suffer, which could negatively affect our brand and reputation and harm our ability to attract users, employees, and organizations.
If we fail to hire and retain highly skilled employees or fail to manage organizational change in a manner that preserves the key aspects of our corporate culture, the quality of our products and services may suffer, which could negatively affect our brand and reputation and harm our ability to attract users, employees, and organizations.
By contrast, a majority of our costs are expensed as incurred, which could result in our recognition of more costs than revenue in the earlier portion of the subscription term, and we may not attain profitability in any given period. 25 Table of Contents We have a history of net losses, we anticipate increasing operating expenses in the future, and we may not be able to achieve and, if achieved, maintain profitability.
By contrast, a majority of our costs are expensed as incurred, which could result in our recognition of more costs than revenue in the earlier portion of the subscription term, and we may not attain profitability in any given period. We anticipate increasing operating expenses in the future, and we may not be able to maintain profitability.
GAAP, goodwill and intangible assets with an indefinite life are not amortized but are subject to a periodic impairment evaluation. Goodwill and acquired intangible assets with an indefinite life are tested for impairment at least annually or when events and circumstances indicate that fair value of a reporting unit may be below their carrying value.
Goodwill and acquired intangible assets with an indefinite life are tested for impairment at least annually or when events and circumstances indicate that fair value of a reporting unit may be below their carrying value.
Further, there can be no assurance that the United States Federal Reserve will not raise rates in the future, and any such increase in interest costs could have a material adverse impact on our financial condition and the levels of cash we maintain for working capital.
Further, there can be no assurance that the United States Federal Reserve will not raise rates in the future, and any such increase in interest costs could have a material adverse impact on our financial condition and the levels of cash we maintain for working capital. 24 Table of Contents Changes in our credit and other ratings could adversely impact our operations and lower our profitability.
Many current or prospective customers may find competing products or services more attractive, and many may choose or switch to competing products even if we do our best to innovate and provide superior products and services. 7 Table of Contents Our current competitors include: • free online and offline sources of information on companies and business professionals, including government records, telephone books, company websites, and open online databases of business professionals, such as LinkedIn; • our current and potential customers’ internal and homegrown business contact databases; • when used in conjunction with the foregoing or when additionally providing third-party sales and marketing data, (i) predictive analytics and customer data platform technologies or (ii) sales and marketing vendors, which may specialize in appointment setting, online ad targeting, email marketing, or other outsource go-to-market functions; • other vendors of sales automation, conversation intelligence, and chat software; • other providers of third-party company attributes, technology attributes, and business contact information; • other providers of online content consumption data for predictive sales and marketing analytics; and • user-based networks of companies and/or business professionals.
Our current competitors include: • free online and offline sources of information on companies and business professionals, including government records, telephone books, company websites, and open online databases of business professionals, such as LinkedIn; • our current and potential customers’ internal and homegrown business contact databases; • when used in conjunction with the foregoing or when additionally providing third-party sales and marketing data, (i) predictive analytics and customer data platform technologies or (ii) sales and marketing vendors, which may specialize in appointment setting, online ad targeting, email marketing, or other outsource go-to-market functions; • other vendors of sales automation, conversation or other artificial intelligence, and chat software; • other providers of third-party company attributes, technology attributes, and business contact information; • other providers of online content consumption data for predictive sales and marketing analytics; and • user-based networks of companies and/or business professionals.
In addition, we may be required to license additional technology from third parties to develop and market new features, integrations, and capabilities, if available on commercially reasonable terms or at all; our inability to license this technology could harm our ability to compete.
In addition, we may be required to license additional technology from third parties to develop and market new features, integrations, and capabilities, if available on commercially reasonable terms or at all; our inability to license this technology could harm our ability to compete. Investing in our AI capability introduces risks, which, if realized, could adversely impact our business.
As of December 31, 2022, we had total outstanding indebtedness of approximately $1,250.0 million consisting of outstanding borrowings under our first lien credit facilities. Additionally, we had $250.0 million of availability under our first lien revolving credit facility as of December 31, 2022.
As of December 31, 2023, we had total outstanding indebtedness of $1,244.0 million consisting of outstanding borrowings under our first lien credit facilities and senior notes. Additionally, we had $250.0 million of availability under our first lien revolving credit facility as of December 31, 2023.
Subsidiaries of ZoomInfo MidCo LLC are generally subject to similar legal limitations on their ability to make distributions to ZoomInfo MidCo LLC. 31 Table of Contents ZoomInfo Intermediate Inc. is required to pay our Pre-IPO Owners for most of the benefits relating to any additional tax depreciation or amortization deductions that we may claim as a result of the ZoomInfo Tax Group’s allocable share of existing tax basis acquired in the IPO, the ZoomInfo Tax Group’s increase in its allocable share of existing tax basis, and anticipated tax basis adjustments the ZoomInfo Tax Group receives in connection with sales or exchanges of OpCo Units after the IPO, and certain other tax attributes.
ZoomInfo Intermediate Inc. is required to pay our Pre-IPO Owners for most of the benefits relating to any additional tax depreciation or amortization deductions that we may claim as a result of the ZoomInfo Tax Group’s allocable share of existing tax basis acquired in the IPO, the ZoomInfo Tax Group’s increase in its allocable share of existing tax basis, and anticipated tax basis adjustments the ZoomInfo Tax Group receives in connection with sales or exchanges of OpCo Units after the IPO, and certain other tax attributes.
Our products and services, as well as our servers and computer systems and those of third parties that we rely on in our operations could be vulnerable to cybersecurity risks and threats or other events that could disrupt our IT systems and/or subject us to liability such as manmade or natural disasters (including those as a result of climate change) or software vulnerabilities like Apache “Log4j,” which was identified in December 2021 and has affected thousands of businesses worldwide.
Our products and services, as well as our servers and computer systems and those of third parties that we rely on in our operations could be vulnerable to cybersecurity risks and threats or other events that could disrupt our IT systems and/or subject us to liability such as manmade or natural disasters (including those as a result of climate change) or software vulnerabilities.
Our success depends on our customers’ confidence in the depth, breadth, and accuracy of our data. The task of establishing and maintaining accurate data is challenging and expensive. The depth, breadth, and accuracy of our data differentiates us from our competitors.
The task of establishing and maintaining accurate data is challenging and expensive. The depth, breadth, and accuracy of our data differentiates us from our competitors.
Our actual or alleged failure to comply with applicable privacy or data security laws, regulations, and policies, or to protect personal data, could result in enforcement actions and significant penalties against us, which could result in negative publicity or costs, subject us to claims or other remedies, and have a material adverse effect on our business, financial condition, and results of operations.
Our actual or alleged failure to comply with applicable privacy or data protection laws, regulations, and policies, or to protect personal data, could result in enforcement actions and significant penalties against us, which could result in negative publicity or costs, subject us to claims or other remedies, and have a material adverse effect on our business, financial condition, and results of operations. 15 Table of Contents We may be subject to litigation for any of a variety of claims, which could harm our reputation and adversely affect our business, results of operations, and financial condition.
If our existing tax credits and net operating loss carry-forwards become fully utilized, we may be unable to offset or otherwise mitigate our tax obligations to the same extent as in prior years.
If our existing tax credits and net operating loss carry-forwards become fully utilized, we may be unable to offset or otherwise mitigate our tax obligations to the same extent as in prior years. This could have a material impact on our future cash flows or operating results.
Similarly, many of our paying customers participate in our contributory network to improve the quality of the data within their CRM and similar systems. Community Edition users may cease to participate in our contributory network after deciding not to continue using our Community Edition.
Similarly, many of our paying customers participate in our contributory network to improve the quality of the data within their CRM and similar systems. ZoomInfo Lite users may cease to participate in our contributory network.
These rating agencies also evaluate our industry as a whole and may change their credit and other ratings for us based on their overall view of our industry.
Credit rating and other rating agencies continually revise their ratings and ratings methodologies for the companies that they follow, including us. These rating agencies also evaluate our industry as a whole and may change their credit and other ratings for us based on their overall view of our industry.
To increase our revenue and achieve and maintain profitability, we must attract new customers and grow the subscriptions of existing customers. Our go-to-market efforts are intended to identify and attract prospective customers and convert them into paying customers, including the conversion of users of our Community Edition product to paying customers.
To increase our revenue and cash flows, and to achieve and maintain profitability, we must attract new customers, renew existing subscriptions, grow the subscriptions of existing customers, and collect revenue from our customers. Our go-to-market efforts are intended to identify and attract prospective customers and convert them into paying customers.
Because the market for our platform is rapidly evolving, it is difficult for us to predict our future results of operations or the limits of our market opportunity.
We may not continue to achieve or maintain profitability in the future. Because the market for our platform is rapidly evolving, it is difficult for us to predict our future results of operations or the limits of our market opportunity.
These types of unpredictable events have adversely affected and could adversely affect our business and future results of operations and financial condition due to cancellations and reductions in spend from customers in impacted industries.
These types of unpredictable events have adversely affected and could adversely affect our business and future results of operations, our ability to access funds from financial institutions and capital markets, and our financial condition due to cancellations and reductions in spend from customers in impacted industries, increases in our costs, or other disruption to our business.
If customers do not renew their subscriptions or renew on less favorable terms or fail to add more users, or if we fail to expand subscriptions of existing customers, our revenue may decline or grow less quickly than anticipated, which would harm our business, results of operations, and financial condition. 10 Table of Contents Additionally, some of our customers may have multiple subscription plans simultaneously.
If customers do not renew their subscriptions or renew on less favorable terms or fail to add more users, if we fail to expand subscriptions of existing customers, or if we fail to collect on our accounts receivable, our revenue and cash flows may decline or grow less quickly than anticipated, which would harm our business, results of operations, and financial condition.
Our technologies that allow our platform to interoperate with various third-party applications (which we call “integrations”) are critically important to our business.
Our platform integrates or otherwise works with third-party systems that we do not control. Our technologies that allow our platform to interoperate with various third-party applications (which we call “integrations”) are critically important to our business.
We may not be able to adequately protect or enforce our proprietary and intellectual property rights in our data or technology. Our success is dependent, in part, upon our ability to protect and enforce our intellectual property rights, including in our proprietary information and technology.
Our success is dependent, in part, upon our ability to protect and enforce our intellectual property rights, including in our proprietary information and technology.
Therefore, for so long as any such party beneficially owns at least 5% of the voting power of all shares of our outstanding capital stock entitled to vote generally in the election of our directors, or has a designee continuing to serve on our board of directors, they will still be able to significantly influence our management, business plans, and policies, including the appointment and removal of our officers, the composition of our board of directors, and decisions about whether to enter or not enter into significant transactions.
For so long as any such party has a designee continuing to serve on our Board of Directors, they will be able to significantly influence our management, business plans, and policies, including the appointment and removal of our officers, the composition of our Board of Directors, and decisions about whether to enter or not enter into significant transactions.
It is highly competitive, rapidly evolving, and fragmented. There are low barriers to entry, shifting customer needs and strategies, and frequent introductions of new technologies and of new products and services.
The market for sales, marketing, and recruiting technology and data requires continuous innovation. It is highly competitive, rapidly evolving, and fragmented. There are low barriers to entry, shifting customer needs and strategies, and frequent introductions of new technologies and of new products and services.
We do not know whether we will continue to achieve similar client acquisition and customer subscription growth rates in the future as we have in the past.
We cannot predict with any certainty whether we will continue to achieve similar client acquisition and customer subscription renewal and growth rates in the future as we have in the past.
Recent events, including the ongoing COVID-19 pandemic, significant inflation, supply chain disruption, and the Russia-Ukraine war, have adversely impacted and may continue to adversely impact global financial markets, economies, and business practices.
Recent events, including significant global inflation, bank failures and other liquidity events affecting financial institutions, supply chain disruption, the Russia-Ukraine war, the Israel-Hamas war, have adversely impacted and may continue to adversely impact global financial markets, economies, and business practices.
In addition, if we are no longer able to maintain our high level of accuracy, we may face legal claims by our customers which could have an adverse effect on our business, results of operations, and financial condition.
In addition, if we are no longer able to maintain our high level of accuracy, we may face legal claims by our customers which could have an adverse effect on our business, results of operations, and financial condition. 8 Table of Contents We also have a number of sources contributing to the depth, breadth, and accuracy of the data on our platform including our contributory network.
We may be unable to maintain a level of cash flow sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. 27 Table of Contents If our cash flow and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness.
If our cash flow and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness.
Accordingly, it is possible that the actual cash tax benefits realized by the ZoomInfo Tax Group may be significantly less than the corresponding tax receivable agreement payments or that payments under the tax receivable agreements may be made years in advance of the actual realization, if any, of the anticipated future tax benefits.
As a result, even in the absence of a change of control or an election to terminate the tax receivable agreements, payments under the tax receivable agreements could be in excess of 85% of the ZoomInfo Tax Group’s actual cash tax benefits. 29 Table of Contents Accordingly, it is possible that the actual cash tax benefits realized by the ZoomInfo Tax Group may be significantly less than the corresponding tax receivable agreement payments or that payments under the tax receivable agreements may be made years in advance of the actual realization, if any, of the anticipated future tax benefits.
Unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Exchange Act or the Securities Act.
In addition, our second amended and restated certificate of incorporation provides that the Delaware Court of Chancery will be the exclusive forum for certain types of legal action and, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Exchange Act or the Securities Act of 1933.
For example, we may have a lower level of visibility into the development process with respect to intellectual property or the care taken to safeguard against infringement risks with respect to the acquired company or technology.
For example, we may have a lower level of visibility into the development process with respect to intellectual property or the care taken to safeguard against infringement risks with respect to the acquired company or technology. In addition, third parties may make claims after we have acquired a company or technology that had not been asserted prior to our acquisition.
We may experience breaches of our security measures due to human error, malfeasance, system errors or vulnerabilities, or other irregularities including attempts by former, current or future employees to misuse their authorized access and/or gain unauthorized access to our systems.
We may experience breaches of our security measures due to human error, malfeasance, system errors or vulnerabilities, or other irregularities including attempts by former, current or future employees to misuse their authorized access and/or gain unauthorized access to our systems. 19 Table of Contents Such events could result in the release to the public of confidential information about our operations and financial condition and performance.
Furthermore at the federal level, the American Data Privacy and Protection Act was introduced in 2022, which seeks to establish a comprehensive privacy regime including many of the concepts found in other state and federal privacy bills and laws, such as consent requirements for entities providing services to the public that collect, store, process, use, or otherwise control sensitive personal information.
At the federal level, efforts have been made to establish a comprehensive privacy regime including many of the concepts found in other state and federal privacy bills and laws, such as consent requirements for entities providing services to the public that collect, store, process, use, or otherwise control sensitive personal information, and it is possible such a federal law could be enacted in the future.
The Reorganization Tax Receivable Agreement provides for the payment by ZoomInfo Intermediate Inc. to Pre-IPO Blocker Holders and certain Pre-IPO HoldCo Unitholders of 85% of the benefits, if any, that the ZoomInfo Tax Group is deemed to realize (calculated using certain assumptions) as a result of the ZoomInfo Tax Group’s utilization of 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, including tax benefits attributable to payments under the Reorganization Tax Receivable Agreement.
The Reorganization Tax Receivable Agreement provides for the payment by ZoomInfo Intermediate Inc. to Pre-IPO Blocker Holders and certain Pre-IPO HoldCo Unitholders of 85% of the benefits, if any, that the ZoomInfo Tax Group is deemed to realize (calculated using certain assumptions) as a result of the ZoomInfo Tax Group’s utilization of 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, including tax benefits attributable to payments under the Reorganization Tax Receivable Agreement. 28 Table of Contents In each case, these increases in existing tax basis and tax basis adjustments generated over time may increase (for tax purposes) depreciation and amortization deductions and, therefore, may reduce the amount of tax that the ZoomInfo Tax Group would otherwise be required to pay in the future, although the U.S.
If a major search engine changes its algorithms or results in a manner that negatively affects the search engine ranking, paid or unpaid, of our website, or if competitive dynamics impact the costs or effectiveness of search engine optimization, search engine marketing or other traffic-generating arrangements in a negative manner, our business and financial performance would be adversely affected.
If a major search engine changes its algorithms or results in a manner that negatively affects the search engine ranking, paid or unpaid, of our website, or if competitive dynamics impact the costs or effectiveness of search engine optimization, search engine marketing or other traffic-generating arrangements in a negative manner, our business and financial performance would be adversely affected. 11 Table of Contents We depend on our executive officers and other key employees, and the loss of one or more of these employees or an inability to attract, integrate and retain these and other highly skilled employees could harm our business.
These complex laws may be implemented, interpreted, or enforced in a non-uniform or inconsistent way across jurisdictions and we may not be aware of every development that impacts our business.
These complex laws may be implemented, interpreted, or enforced in a non-uniform or inconsistent way across jurisdictions and we may not be aware of every development that impacts our business. These laws may also require us to make additional changes to our services in order for us or our customers to comply with such legal requirements.
As a result, our accelerated payment obligations and/or the assumptions adopted under the tax receivable agreements in the case of a change of control may impair our ability to consummate change of control transactions or negatively impact the value received by owners of our common stock in a change of control transaction. 33 Table of Contents Ownership of Our Common Stock Risk Factors The parties to our stockholders agreement continue to have influence over us, and their interests may conflict with ours or yours in the future.
As a result, our accelerated payment obligations and/or the assumptions adopted under the tax receivable agreements in the case of a change of control may impair our ability to consummate change of control transactions or negatively impact the value received by owners of our common stock in a change of control transaction.
We have a significant amount of goodwill and intangible assets on our balance sheet, and our results of operations may be adversely affected if we fail to realize the full value of our goodwill and intangible assets.
Any failure by us to sustain profitability on a consistent basis could cause the value of our common stock to decline. 22 Table of Contents We have a significant amount of goodwill and intangible assets on our balance sheet, and our results of operations may be adversely affected if we fail to realize the full value of our goodwill and intangible assets.
Our second amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make a merger with or acquisition of our Company more difficult without the approval of our board of directors.
Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable. Our second amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make a merger with or acquisition of our Company more difficult without the approval of our Board of Directors.
We rely on our leadership team in the areas of research and development, operations, security, analytics, marketing, sales, customer experience, and general and administrative functions and on individual contributors in our research and development and operations.
Our success depends largely upon the continued services of our executive officers and other key employees, including newly hired personnel. We rely on our leadership team in the areas of research and development, operations, security, analytics, marketing, sales, customer experience, and general and administrative functions and on individual contributors in our research and development and operations.
Because a substantial portion of our debt is variable-rate debt, fluctuations in interest rates could have a material effect on our business. Prior to 2022, interest rates had been at historic lows for several years. During 2022, however, the United States Federal Reserve raised interest rates significantly in an attempt to combat historically high inflation.
Because a substantial portion of our debt is variable-rate debt, fluctuations in interest rates could have a material effect on our business. During 2022 and 2023, the United States Federal Reserve raised interest rates significantly in an attempt to combat historically high inflation. As a result, we may incur higher interest costs if interest rates continue to increase.
Problems faced or caused by our IT service providers, including content distribution service providers, private network providers, internet providers, third-party web-hosting providers, third-party data center hosting facilities, and cloud computing platform providers. or with the systems by which they allocate capacity among their customers (as applicable), could adversely affect the experience of our users.
In addition, problems faced or caused by our IT service providers, including content distribution service providers, private network providers, internet providers, third-party web-hosting providers, third-party data center hosting facilities, and cloud computing platform providers. or with the systems by which they allocate capacity among their customers (as applicable), could adversely affect the experience of our users. 20 Table of Contents Credit and Financial Risks We generate revenue from sales of subscriptions to our platform and data, and any decline in demand for the types of products and services we offer would negatively impact our business.
In addition, the authorities in these jurisdictions could review our tax returns and impose additional tax, interest, and penalties, and the authorities could claim that various withholding requirements apply to us or assert that benefits of tax treaties are not available to us, any of which could harm us and our results of operations. 29 Table of Contents Our results of operations may be harmed if we are required to collect sales or other related taxes for subscriptions to our products and services in jurisdictions where we have not historically done so.
In addition, the authorities in these jurisdictions could review our tax returns and impose additional tax, interest, and penalties, and the authorities could claim that various withholding requirements apply to us or assert that benefits of tax treaties are not available to us, any of which could harm us and our results of operations.
Our customers or unauthorized parties could use our products and services in a manner that is contrary to our values or applicable law, which could harm our relationships with consumers, customers, or employees or expose us to litigation or harm our reputation.
The use of AI technologies presents emerging ethical and social issues that may result in brand or reputational harm, competitive harm, and/or legal liability. 18 Table of Contents Our customers or unauthorized parties could use our products and services in a manner that is contrary to our values or applicable law, which could harm our relationships with consumers, customers, or employees or expose us to litigation or harm our reputation.
To the extent the quality of that access is diminished, for whatever reason, demand for our platform could also be diminished. 17 Table of Contents If we are not able to obtain and maintain accurate, comprehensive, or reliable data, we could experience reduced demand for our products and services and have an adverse effect on our business, results of operations, and financial condition.
If we are not able to obtain and maintain accurate, comprehensive, or reliable data, we could experience reduced demand for our products and services and have an adverse effect on our business, results of operations, and financial condition. Our success depends on our customers’ confidence in the depth, breadth, and accuracy of our data.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe maintain additional offices in Waltham, Massachusetts; Bellevue, Washington; Bethesda, Maryland; Conshohocken, Pennsylvania; Grand Rapids, Michigan; San Mateo, Santa Monica, and San Francisco, California; Melville, New York; Roswell, Georgia; Tel Aviv and Ra’anana, Israel; Toronto, Canada; Chennai, India; and London, England. We lease all of our facilities and do not own any real property.
Biggest changeWe maintain additional offices in Waltham, Massachusetts; Bethesda, Maryland; Conshohocken, Pennsylvania; Grand Rapids, Michigan; San Francisco, California; Ra’anana, Israel; Toronto, Canada; Chennai, India; and London, England. We lease all of our facilities and do not own any real property. Our infrastructure operates out of third-party data centers hosted by Google and Amazon Web Services.
We intend to add new facilities or expand existing facilities as we continue to add employees and expand geographically, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations. 36 Table of Contents
We believe our facilities are adequate and suitable for our current needs. We intend to add new facilities or expand existing facilities as we continue to add employees and expand geographically, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations.
We plan to take possession of various spaces within our new headquarters in phases as sections of the property are ready for occupancy, with the first phase expected to commence at the earliest in January 2025.
We plan to take possession of various spaces within our new headquarters in phases as sections of the property are made available by the landlord with lease commencement for certain spaces beginning in the second quarter of 2024 and occupancy beginning in 2025.
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Our infrastructure operates out of third-party data centers hosted by Google and Amazon Web Services. We believe our facilities are adequate and suitable for our current needs.
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In certain geographies, we anticipate that we will endeavor to sublease some of our committed space where the lease provides more space than we will require during certain periods of the lease.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 3. LEGAL PROCEEDINGS We are subject to various legal proceedings, claims, and governmental inspections, audits, or investigations that arise in the ordinary course of our business. There are inherent uncertainties in these matters, some of which are beyond management’s control, making the ultimate outcomes difficult to predict.
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ITEM 3. LEGAL PROCEEDINGS For a description of certain legal and regulatory proceedings, please read “Legal Matters” in Note 11 - Commitments and Contingencies to our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K, which is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 35 Table of Contents PART II
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Moreover, management’s views and estimates related to these matters may change in the future, as new events and circumstances arise and the matters continue to develop.
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Although the outcomes of these claims cannot be predicted with certainty, in the opinion of management, the ultimate resolution of these matters would not be expected to have a material adverse effect on our financial position, results of operations, or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 37 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 37 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 38 Item 6. [Reserved] 39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 40 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 65 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 35 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 36 Item 6. [Reserved] 37 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 38 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 62 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table sets forth information with respect to shares of Common Stock purchased by the Company during the periods indicated: Period Total Number of Shares Purchased (1) Weighted Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plan or Programs October 1 through October 31, 2022 — $ — — — November 1 through November 30, 2022 6,186 $ 30.81 — — December 1 through December 31, 2022 8,164 $ 28.60 — — Total 14,350 — — ________________ (1) All of these shares were acquired through the withholding of shares to satisfy tax withholding obligations incurred upon the vesting of HSKB Phantom Units awarded under the HSKB Funds, LLC 2019 Phantom Unit Plan.
Biggest changeIssuer Purchases of Equity Securities The following table sets forth information with respect to shares of Common Stock purchased by the Company during the periods indicated: Period Total Number of Shares Purchased (1) Weighted Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plan or Programs October 2023 5,902,722 $ 16.61 5,898,653 $ 255.0 November 2023 3,325,528 13.37 3,324,547 210.6 December 2023 704,434 15.30 699,052 199.9 Total 9,932,684 9,922,252 ________________ (1) Shares that were not purchased as part of publicly announced plans or programs were acquired through the withholding of shares to satisfy tax withholding obligations incurred upon the vesting of HSKB Phantom Units awarded under the HSKB Funds, LLC 2019 Phantom Unit Plan.
Stock Performance Graph The following shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our other filings under the Securities Act or the Exchange Act.
Stock Performance Graph The following shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any of our other filings under the Securities Act of 1933 or the Exchange Act.
Data for the S&P 500 Index and the Nasdaq Computer Index assume reinvestment of dividends. 38 Table of Contents The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock.
Data for the S&P 500 Index and the Nasdaq Computer Index assume reinvestment of dividends. 36 Table of Contents The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is listed and traded on the Nasdaq Global Select Market under the trading symbol “ZI.” Stockholders As of February 1, 2023, there were 26 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is listed and traded on the Nasdaq Global Select Market under the trading symbol “ZI”. Stockholders As of January 31, 2024, there were 12 holders of record of our common stock.
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These shares were not acquired pursuant to any repurchase plan or program.
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(2) In March 2023, the Board of Directors authorized a program to repurchase up to $100.0 million of the Company’s Common Stock, and in July 2023, the Board approved an additional $500.0 million of share repurchase authorization (collectively, the “Share Repurchase Program”). The Share Repurchase Program was announced on March 14, 2023 and July 31, 2023.
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The Share Repurchase Program has no time limits and could be suspended or discontinued completely at any time.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe increase excluding equity-based compensation was primarily due to: • an increase in sales and marketing expense (excluding equity-based compensation) of $96.0 million, or 47%, to $298.9 million for the year ended December 31, 2022, due primarily to additional headcount and related salaries and benefits expenses added to drive continued incremental sales and support acquired products, additional commission expense and amortization of deferred commissions related to obtaining contracts with customers, and advertising expense; • an increase in research and development expense (excluding equity-based compensation) of $44.1 million, or 46%, to $139.5 million for the year ended December 31, 2022, due primarily to additional headcount and related salaries and benefits expenses to support continued innovation of our services and acquired products; • an increase in general and administrative expense (excluding equity-based compensation) of $22.0 million, or 29%, to $97.2 million for the year ended December 31, 2022, due primarily to additional headcount and related salaries and benefits expenses to support the larger organization; • an increase in amortization of acquired intangibles expense of $1.7 million, or 9%, to $22.0 million for the year ended December 31, 2022, due to amortization expense related to intangible assets from 2021 and 2022 acquisitions; and • restructuring and transaction-related expense of $4.1 million for the year ended December 31, 2022, primary due to transition and retention payments and other costs incurred related to 2021 and 2022 acquisitions.
Biggest changeSales and marketing, excluding equity-based compensation, for the year ended December 31, 2023 was $335.1 million representing an increase of $36.2 million, or 12%, as compared to $298.9 million for the year ended December 31, 2022 primarily due to additional salary, benefit, facilities, and technology expenses related to headcount added to drive continued incremental sales, as well as additional commission expense and amortization of deferred commissions related to obtaining contracts with customers. • Research and development for the year ended December 31, 2023 was $189.8 million representing a decrease of $15.4 million, or 8%, as compared to $205.2 million for the year ended December 31, 2022.
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 “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K.
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.
(b) 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.
(b) 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.
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.
For the year ended December 31, 2021, this expense related primarily to retention awards from the acquisitions of Clickagy and Everstring, cash vesting payments from the acquisition of Pre-Acquisition ZI, and professional fees incurred to integrate acquired businesses.
For the year ended December 31, 2021, this expense related primarily to retention awards from the acquisitions of Clickagy and Everstring, cash vesting payments from the acquisition of Pre-Acquisition ZI, and professional fees incurred to integrate acquired businesses.
Refer to Note 4 - Business Combinations to our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.
Refer to Note 4 - Business Combinations to our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for additional information.
Cost of service, excluding amortization of acquired technology includes direct expenses related to the support and operations of our SaaS services and related to our research teams, including salaries, benefits, equity-based compensation, and related expenses, such as employer taxes, allocated overhead for facilities, IT, third-party hosting fees, third-party data costs, and amortization of internally developed capitalized software.
Cost of service, excluding amortization of acquired technology, includes direct expenses related to the support and operations of our SaaS services and research teams including salaries, benefits, equity-based compensation, and related expenses, such as employer taxes, allocated overhead for facilities, IT, third-party hosting fees, third-party data costs, and amortization of internally developed capitalized software.
Interest Expense, Net Interest expense 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 or the issuance of additional debt.
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 or the issuance of additional debt.
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.
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.
In each case, these increases in existing tax basis and tax basis adjustments generated over time may increase (for tax purposes) the ZoomInfo Tax Group’s depreciation and amortization deductions 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.
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.
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. Adjusted Operating Income is presented because it is used by management to evaluate our financial performance and for planning and forecasting purposes.
We exclude restructuring and transaction-related expenses, as well as integration costs and acquisition-related expenses, because such expenses are episodic in nature and have no direct correlation to the cost of operating our business on an ongoing basis. Adjusted Operating Income is presented because it is used by management to evaluate our financial performance and for planning and forecasting purposes.
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.
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.
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, 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 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.
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 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.
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.
However, 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 compensation cash costs.
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 compensation cash costs.
Refer to Note 2 - Basis of Presentation and Summary of Significant Accounting Policies to our consolidated financial statements included in Part II, Item 8 of this Form 10-K for further discussion.
Refer to Note 2 - Basis of Presentation and Summary of Significant Accounting Policies to our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further discussion.
The term of each tax receivable agreement will continue until all such tax benefits have been utilized or expired, unless (i) ZoomInfo Intermediate Inc. 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 Intermediate Inc. 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 Intermediate Inc. had exercised its right to terminate the tax receivable agreements, or (iii) there is a change of control of ZoomInfo Intermediate Inc., 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).
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).
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. 63 Table of Contents 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.
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. 60 Table of Contents 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.
In MarketingOS, marketers drive awareness, lead generation, and deal acceleration campaigns through account-based marketing, advertising, and onsite conversion optimization solutions, along with ZoomInfo Chat for intelligent onsite experiences through live conversation and chatbots. In TalentOS, recruiters and talent acquisition professionals access a database that helps them efficiently find candidates.
In MarketingOS, marketers drive awareness, lead generation, and deal acceleration campaigns through account-based marketing, advertising, and website conversion optimization solutions, along with ZoomInfo Chat for intelligent website experiences through live conversation and chatbots. In TalentOS, recruiters and talent acquisition professionals access a database that helps them efficiently find candidates.
We re-evaluate these items based upon the facts and circumstances that existed as of the acquisition date, with any adjustments 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.
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.
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 GAAP.
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.
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 professionals.
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.
The majority of revenue growth when comparing the year ended December 31, 2022 to the year ended December 31, 2021 was the result of new customers added over the last 24 months. Our operating results and growth prospects will depend, in part, on our ability to continue to attract new customers.
The majority of revenue growth when comparing the year ended December 31, 2023 to the year ended December 31, 2022 was the result of new customers added over the last 24 months. Our operating results and growth prospects will depend, in part, on our ability to continue to attract new customers.
There are limitations to these non-GAAP financial measures because they are not prepared in accordance with 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.
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.
GAAP requires us to make certain estimates, judgments, and assumptions that effect 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.
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.
Cash Flows from (used in) Investing Activities Cash used in investing activities for the year ended December 31, 2022 was $281.1 million, consisting of cash paid for acquisitions of $143.7 million, purchases of short-term investments of $139.3 million, and purchases of property and equipment and other assets of $28.9 million, partially offset by maturities of short-term investments of $30.8 million.
Net cash used in investing activities for the year ended December 31, 2022 was $281.1 million, consisting of cash paid for acquisitions of $143.7 million, purchases of short-term investments of $139.3 million, and purchases of property and equipment and other assets of $28.9 million, partially offset by maturities of short-term investments of $30.8 million.
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 contract acquisition costs. Research and development.
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 contract acquisition costs. 43 Table of Contents Research and development.
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, restructuring and transaction expenses, and amortization of acquired intangibles (other than acquired technology).
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, amortization of other acquired intangibles, and restructuring and transaction-related expenses.
Following the completion of the Reorganization Transactions, ZoomInfo Technologies Inc. pays U.S. federal and state income taxes as a corporation on its share of our taxable income. 43 Table of Contents ZoomInfo OpCo is the predecessor of ZoomInfo Technologies Inc. for financial reporting purposes.
Following the completion of the Reorganization Transactions, ZoomInfo Technologies Inc. pays U.S. federal and state income taxes as a corporation on its share of our taxable income. ZoomInfo OpCo is the predecessor of ZoomInfo Technologies Inc. for financial reporting purposes.
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.
We record a contract asset when revenue recognized on a contract exceeds the billings to date for that contract. 42 Table of Contents Unearned revenue results from cash received or amounts billed to customers in advance of revenue recognized upon the satisfaction of performance obligations.
Recently Issued Accounting Pronouncements Refer to Note 2 - Basis of Presentation and Summary of Significant Accounting Policies to our consolidated financial statements included in Part II, Item 8 of this Form 10-K regarding recently issued accounting pronouncements. 64 Table of Contents
Recently Issued Accounting Pronouncements Refer to Note 2 - Basis of Presentation and Summary of Significant Accounting Policies to our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K regarding recently issued accounting pronouncements. 61 Table of Contents
This creates a dataset that is continuously updated and can be used to power automated business workflows. Our services connect with major CRM providers. 40 Table of Contents • 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.
This creates a dataset that is continuously updated and can be used to power automated business workflows. Our services connect with major CRM providers. • 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.
These measures include, but are not limited to, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share and are used by management in making operating decisions, allocating financial resources, internal planning and forecasting, and for business strategy purposes.
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.
Adjusted Operating Income, Adjusted Operating Income Margin, and Adjusted Net Income We define Adjusted Operating Income as income from operations plus (i) 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, and (v) integration costs and acquisition-related compensation.
Adjusted Operating Income, Adjusted Operating Income Margin, and Adjusted Net Income We define Adjusted Operating Income as income (loss) from operations adjusted for (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, and (v) integration costs and acquisition-related expenses.
We entered into (i) the Exchange Tax Receivable Agreement with certain of our Pre-IPO OpCo Unitholders and (ii) the Reorganization Tax Receivable Agreement with the Pre-IPO Blocker Holders.
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.
During the years ended December 31, 2022, 2021, and 2020, we incurred the following cash expenditures: Year Ended December 31, (in millions) 2022 2021 2020 Cash interest expense $ 50.0 $ 33.3 $ 66.5 Restructuring and transaction-related expenses paid in cash (a) $ 14.6 $ 24.2 $ 13.1 Integration costs and acquisition-related compensation paid in cash (b) $ 3.7 $ 13.7 $ 11.3 __________________ (a) 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.
During the years ended December 31, 2023 2022, and 2021 we incurred the following cash expenditures: Year Ended December 31, (in millions) 2023 2022 2021 Cash interest expense $ 48.5 $ 50.0 $ 33.3 Restructuring and transaction-related expenses paid in cash (a) 6.1 14.6 24.2 Integration costs and acquisition-related expenses paid in cash (b) 0.5 3.7 13.7 __________________ (a) 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, 2021, this expense related primarily to costs incurred related to 2021 acquisitions and impairment charges related to the Company’s Waltham office relocation. 46 Table of Contents (d) Represents costs directly associated with integration activities for acquisitions and acquisition-related compensation, which includes transaction bonuses and retention awards.
For the year ended December 31, 2021, this expense related primarily to costs incurred related to 2021 acquisitions and impairment charges related to the Company’s Waltham office relocation. 52 Table of Contents (d) Represents costs directly associated with integration activities for acquisitions and acquisition-related expenses, which includes transaction bonuses and retention awards.
(formerly known as ZoomInfo Technologies Inc.) and its consolidated subsidiaries and (3) after the consummation of the Holding Company Reorganization, to ZoomInfo Technologies Inc. (formerly known as ZoomInfo NewCo Inc.) and its consolidated subsidiaries unless the context indicates otherwise. Numerical figures included in this Annual Report on Form 10-K have been subject to rounding adjustments.
(formerly known as ZoomInfo Technologies Inc.) and its consolidated subsidiaries, and (3) after the consummation of the Holding Company Reorganization, to ZoomInfo Technologies Inc. (formerly known as ZoomInfo NewCo Inc.) and its consolidated subsidiaries unless the context indicates otherwise. Numerical figures included in this Annual Report on Form 10-K are subject to immaterial rounding adjustments.
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 through the scheduled expiration dates thereof. This amount excludes executed lease agreements that commence after December 31, 2022.
As such, we are unable to quantify our future obligations relating to interest and therefore no amounts have been included in the above table. 59 Table of Contents (2) Represents future payments on existing operating leases through the scheduled expiration dates thereof. This amount excludes executed lease agreements that commence after December 31, 2023.
As of December 31, 2022, 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.
Debt Obligations As of December 31, 2023, 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.
We regularly evaluate the valuation allowances established for deferred tax assets for which future realization is uncertain. In assessing the realizability of deferred tax assets, we consider both positive and negative evidence, including scheduled reversals of deferred tax assets and liabilities, projected future taxable income, tax planning strategies and results of recent operations.
The need for valuation allowances is regularly evaluated for deferred tax assets for which future realization is uncertain. In assessing the realizability of deferred tax assets, we consider both positive and negative evidence, including scheduled reversals of deferred tax assets and liabilities, projected future taxable income, tax planning strategies and results of recent operations.
Today, our company defines the modern go-to-market technology stack across three distinct layers that build upon each other: • Our Intelligence Layer is the foundation of our data-driven strategy.
ZoomInfo defines the modern go-to-market technology stack across three distinct layers that build upon each other: • Our Intelligence Layer is the foundation of our data-driven strategy.
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%, 11%, and 9% of total revenue for the years ended December 31, 2022, 2021, and 2020, respectively.
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 13%, 12%, and 11% of total revenue for the years ended December 31, 2023, 2022, and 2021, respectively.
Additionally, acquiring new customers strengthens the power of our contributory networks. We plan to continue to invest in our efficient go-to-market effort to acquire new customers. As of December 31, 2022, 2021 and 2020, we had over 30,000, 25,000, and 20,000 customers, respectively.
Additionally, acquiring new customers strengthens the power of our contributory networks. We plan to continue to invest in our efficient go-to-market effort to acquire new customers. As of December 31, 2023, 2022 and 2021, we had over 35,000, 30,000, and 25,000 customers, respectively.
We view Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share 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.
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.
Management further adjusts EBITDA to exclude certain items of a significant or unusual nature, including other (income) expense, net, impact of certain non-cash items, such as fair value adjustments to acquired unearned revenue and equity-based compensation, restructuring and transaction-related expenses, and integration costs and acquisition-related compensation.
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, restructuring and transaction-related expenses, and integration costs and acquisition-related compensation.
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 12 months ended December 31, 2022 was $519.1 million. Our consolidated first lien net leverage ratio as of December 31, 2022 was 0.1x.
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 12 months ended December 31, 2023 was $542.3 million. Our consolidated first lien net leverage ratio as of December 31, 2023 was 0.1x.
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, divided by trailing twelve months Adjusted EBITDA. Adjusted EBITDA for the 12 months ended December 31, 2022 was $465.4 million.
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, divided by trailing twelve months Adjusted EBITDA. Adjusted EBITDA for the 12 months ended December 31, 2023 was $518.2 million.
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 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), and had ZoomInfo Intermediate Inc. not entered into the tax receivable agreements.
The ZoomInfo Tax Group expects to benefit from the remaining 15% of realized cash tax benefits. 58 Table of Contents 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).
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, and the most directly comparable U.S. GAAP financial measure to Adjusted Net Income per diluted share 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.
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.
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.
The estimates are inherently uncertain and subject to refinement 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.
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.
We anticipate that we will continue to invest in costs of service and that costs of service as a percentage of revenue will modestly decrease as we realize operating leverage in the business. 49 Table of Contents Amortization of acquired technology. Amortization of acquired technology includes amortization expense for technology acquired in business combinations.
We anticipate that we will continue to invest in costs of service and that costs of service as a percentage of revenue will remain consistent or modestly decrease as we realize operating leverage in the business. Amortization of acquired technology. Amortization of acquired technology includes amortization expense for technology acquired in business combinations.
This expense is included in cost of service, sales and marketing expense, research and development expense, and general and administrative expense as follows: Year Ended December 31, ($ in millions) 2022 2021 2020 Cost of service $ 0.2 $ 2.1 $ 0.4 Sales and marketing 0.5 6.1 3.5 Research and development 2.3 5.8 4.1 General and administrative 0.3 2.4 1.1 Total integration costs and acquisition-related compensation $ 3.3 $ 16.4 $ 9.0 Adjusted EBITDA for the year ended December 31, 2022 was $465.4 million, an increase of $147.2 million, or 46%, relative to the year ended December 31, 2021.
This expense is included in cost of service, sales and marketing expense, research and development expense, and general and administrative expense as follows: Year Ended December 31, (in millions) 2023 2022 2021 Cost of service $ — $ 0.2 $ 2.1 Sales and marketing — 0.5 6.1 Research and development — 2.3 5.8 General and administrative — 0.3 2.4 Total integration costs and acquisition-related expenses $ — $ 3.3 $ 16.4 Adjusted EBITDA for the year ended December 31, 2023 was $518.2 million, an increase of $52.8 million, or 11%, relative to the year ended December 31, 2022.
Liquidity and Capital Resources As of December 31, 2022, we had $418.0 million of cash and cash equivalents, $127.7 million of short-term investments, 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.
Liquidity and Capital Resources As of December 31, 2023, we had $447.1 million of cash and cash equivalents, $82.2 million of short-term investments, 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.
Cash EBITDA for the 12 months ended December 31, 2022 was $519.1 million. Our total net leverage ratio to Cash EBITDA as of December 31, 2022 was 1.3x.
Cash EBITDA for the 12 months ended December 31, 2023 was $542.3 million. Our total net leverage ratio to Cash EBITDA as of December 31, 2023 was 1.3x.
Net revenue retention is an annual metric that we calculate based on customers of ZoomInfo at the beginning of the year, and is calculated as: (a) the total ACV for those customers at the end of the year, divided by (b) the total ACV for those customers at the beginning of the year.
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 annual contract value ("ACV") for those customers at the end of the end of the twelve-month period, divided by (b) the total ACV for those customers at the beginning of the twelve-month period.
As of December 31, 2022, we had unearned revenue of $419.9 million, of which $416.8 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. After the consummation of the Reorganization Transactions, ZoomInfo Intermediate Inc.
As of December 31, 2023, we had unearned revenue of $441.9 million, of which $439.6 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met. 53 Table of Contents After the consummation of the Reorganization Transactions, ZoomInfo Intermediate Inc.
Refer to Note 4 - Business Combinations for additional information. 42 Table of Contents Key Factors Affecting Our Performance We believe that the growth and future success of our business depends on many factors, including the following: Continuing to Acquire New Customers We are focused on continuing to grow the number of customers that use our platform in the United States and around the world.
Key Factors Affecting Our Performance We believe that the growth and future success of our business depends on many factors, including the following: Continuing to Acquire New Customers We are focused on continuing to grow the number of customers that use our platform in the United States and around the world.
($ in millions, except leverage ratios) Total contractual maturity of First Lien indebtedness $ 600.0 Less: Cash and cash equivalents, and short-term investments 545.7 Net Debt $ 54.3 Trailing Twelve Months (TTM) Cash EBITDA $ 519.1 Consolidated first lien net leverage ratio 0.1x 58 Table of Contents 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, divided by trailing twelve months Cash EBITDA.
(in millions, except leverage ratios) Total contractual maturity of First Lien indebtedness $ 594.0 Less: Cash and cash equivalents, and short-term investments 529.3 Net Debt $ 64.7 Trailing Twelve Months (TTM) Cash EBITDA $ 542.3 Consolidated first lien net leverage ratio 0.1x 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, divided by trailing twelve months Cash EBITDA.
Our total net leverage ratio to Adjusted EBITDA as of December 31, 2022 was 1.5x.
Our total net leverage ratio to Adjusted EBITDA as of December 31, 2023 was 1.4x.
(b) Represents cash payments directly associated with integration activities for acquisitions and acquisition-related compensation, which includes transaction bonuses and retention awards. 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.
(b) Represents cash payments directly associated with integration activities for acquisitions and acquisition-related compensation, which includes transaction bonuses and retention awards. For the year ended December 31, 2023, these payments related to deferred compensation from the acquisition of Insent.
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.
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.
($ in millions, except leverage ratios) Total contractual maturity of outstanding indebtedness $ 1,250.0 Less: Cash and cash equivalents, restricted cash, and short-term investments 551.8 Net Debt $ 698.2 Trailing Twelve Months (TTM) Adjusted EBITDA $ 465.4 Total net leverage ratio to Adjusted EBITDA 1.5x 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, divided by trailing twelve months Cash EBITDA (defined as Consolidated EBITDA in our Credit Agreements).
(in millions, except leverage ratios) Total contractual maturity of outstanding indebtedness $ 1,244.0 Less: Cash and cash equivalents, restricted cash, and short-term investments 538.4 Net Debt $ 705.6 Trailing Twelve Months (TTM) Adjusted EBITDA $ 518.2 Total net leverage ratio to Adjusted EBITDA 1.4x 56 Table of Contents 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, divided by trailing twelve months Cash EBITDA (defined as Consolidated EBITDA in our Credit Agreements).
GAAP net earnings per diluted share. 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 GAAP.
GAAP Net Income. 48 Table of Contents 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.
The unearned revenue balance is influenced by several factors, including purchase accounting adjustments, seasonality, the compounding effects of renewals, invoice duration, invoice timing, dollar size, and new business timing within the period. The unearned revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements.
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 Service Cost of service, excluding amortization of acquired technology.
The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for the periods presented: Year Ended December 31, ($ in millions) 2022 2021 2020 Net income (loss) $ 63.2 $ 94.9 $ (36.4) Add (less): Expense (benefit) from income taxes 131.4 6.1 4.7 Add: Interest expense, net 47.6 43.9 69.3 Add: Loss on debt modification and extinguishment — 7.7 14.9 Add: Depreciation 17.6 13.7 8.9 Add: Amortization of acquired technology 48.2 35.3 23.3 Add: Amortization of other acquired intangibles 22.0 20.3 18.7 EBITDA $ 330.0 $ 222.0 $ 103.4 Add (less): Other expense (income), net (a) (66.4) (39.3) (15.4) Add: Impact of fair value adjustments to acquired unearned revenue (b) 2.1 4.6 2.6 Add: Equity-based compensation expense 192.3 93.0 121.6 Add: Restructuring and transaction related expenses (excluding depreciation) (c) 4.1 21.6 13.8 Add: Integration costs and acquisition-related expenses (d) 3.3 16.4 9.0 Adjusted EBITDA $ 465.4 $ 318.2 $ 234.8 __________________ (a) Primarily represents revaluations on tax receivable agreement liability and foreign exchange remeasurement gains and losses.
The following table presents a reconciliation of Net income (loss) to Adjusted EBITDA for the periods presented: Year Ended December 31, (in millions; unaudited) 2023 2022 2021 Net income (loss) (GAAP) $ 107.3 $ 63.2 $ 94.9 Provision (Benefit) for income taxes 281.5 131.4 6.1 Interest expense, net 45.2 47.6 43.9 Depreciation expense 19.6 17.6 13.7 Amortization of acquired technology 39.1 48.2 35.3 Amortization of other acquired intangibles 21.9 22.0 20.3 Other (income) loss, net (a) (178.8) (66.4) (39.3) Loss on debt modification and extinguishment 4.3 — 7.7 Impact of fair value adjustments to acquired unearned revenue (b) 0.2 2.1 4.6 Equity-based compensation expense 167.6 192.3 93.0 Restructuring and transaction related expenses (c) 10.3 4.1 21.6 Integration costs and acquisition-related expenses (d) — 3.3 16.4 Adjusted EBITDA (Non-GAAP) $ 518.2 $ 465.4 $ 318.2 __________________ (a) Primarily represents revaluations on tax receivable agreement liability and foreign exchange remeasurement gains and losses.
We anticipate that losses related to debt extinguishment will only occur if we extinguish indebtedness before the contractual repayment dates. Other (Income) Expense, Net Other (income) expense, net consists primarily of the revaluation of tax receivable agreement liabilities and foreign currency realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency.
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. 44 Table of Contents Other (Income) Loss, Net Other (income) loss, net consists primarily of the revaluation of tax receivable agreement liabilities, investment income, and foreign currency realized and unrealized gains and losses related to the impact of transactions denominated in a foreign currency.
References in this Form 10-K to “ZoomInfo,” the “Company,” “we,” “us,” and “our” refer (1) prior to the consummation of the Reorganization Transactions, to ZoomInfo OpCo and its consolidated subsidiaries, (2) after the consummation of the Reorganization Transactions and prior to the consummation of the Holding Company Reorganization, to ZoomInfo Intermediate Inc.
References in this Form 10-K to “ZoomInfo”, the “Company”, “we”, “us”, and “our” refer (1) prior to the consummation of the Reorganization Transactions, to ZoomInfo OpCo and its consolidated subsidiaries, (2) after the consummation of the Reorganization Transactions and prior to the consummation of the Holding Company Reorganization, to ZoomInfo Intermediate Inc.
Adjusted Operating Income for the year ended December 31, 2021 was $306.6 million and represented an Adjusted Operating Income Margin of 41%.
Adjusted Operating Income for the year ended December 31, 2022 was $447.8 million and represented an Adjusted Operating Income Margin of 41%.
Expense from income taxes for the year ended December 31, 2022 was $131.4 million, representing an effective tax rate of 67.5%, as compared to expense from income taxes of $6.1 million, representing an effective tax rate of 6.1% for the year ended December 31, 2021.
Provision for income taxes for the year ended December 31, 2023 was $281.5 million, representing an effective tax rate of 72.4%, as compared to provision for income taxes of $131.4 million, representing an effective tax rate of 67.5%, for the year ended December 31, 2022.
Cash Flows from (used in) Financing Activities Cash used in financing activities for the year ended December 31, 2022 was $25.9 million, primarily comprised of taxes paid related to net share settlement of equity awards of $17.4 million, payments related to our tax receivable agreements of $12.2 million, payments of deferred consideration of $1.1 million, payments of issuance fees from prior transactions of $0.7 million, partially offset by proceeds from issuance of common stock under the employee purchase plan of $4.2 million, and proceeds from exercise of stock options of $1.3 million. 57 Table of Contents Cash provided by financing activities for the year ended December 31, 2021 was $439.5 million, primarily comprised of proceeds from debt of $1,071.8 million, partially offset by payments on long-term debt of $581.4 million, tax distributions to equity partners of $19.9 million, payments of debt issuance and modification costs of $11.6 million, and taxes paid related to net share settlement of equity awards of $10.4 million.
Net cash used in financing activities for the year ended December 31, 2022 was $25.9 million primarily comprised of taxes paid related to net share settlement of equity awards of $17.4 million, payments related to our tax receivable agreements of $12.2 million, payments of deferred consideration of $1.1 million, and payments of issuance fees from prior transactions of $0.7 million, partially offset by proceeds from issuance of common stock under the employee purchase plan of $4.2 million, and proceeds from exercise of stock options of $1.3 million.
Historical Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, ($ in millions) 2022 2021 2020 Net cash provided by (used in) operating activities $ 417.0 $ 299.4 $ 169.6 Net cash provided by (used in) investing activities (281.1) (695.8) (113.3) Net cash provided by (used in) financing activities (25.9) 439.5 172.2 Net increase (decrease) in cash and cash equivalents and restricted cash $ 110.0 $ 43.1 $ 228.5 Cash Flows from (used in) Operating Activities Net cash provided by operations was $417.0 million for the year ended December 31, 2022 as a result of net income of $63.2 million, adjusted by non-cash charges of $412.6 million and the change in our operating assets net of operating liabilities of $58.8 million.
Historical Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, (in millions) 2023 2022 2021 Net cash provided by (used in) operating activities $ 434.9 $ 417.0 $ 299.4 Net cash provided by (used in) investing activities 24.4 (281.1) (695.8) Net cash provided by (used in) financing activities (427.2) (25.9) 439.5 Net increase in cash, cash equivalents, and restricted cash $ 32.1 $ 110.0 $ 43.1 Cash flows from operating activities 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 and non-cash adjustments of $485.2 million, partially offset by the net change in our operating assets and liabilities of $157.6 million.
The Exchange Tax Receivable Agreement provides for the payment by members of the ZoomInfo Tax Group to certain Pre-IPO OpCo Unitholders and certain Pre-IPO HoldCo Unitholders of 85% of the benefits, if any, that the ZoomInfo Tax Group is deemed to realize (calculated using certain assumptions) as a result of (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 will increase the tax basis of the tangible and intangible assets of the ZoomInfo Tax Group as a result of sales or exchanges of OpCo Units for shares of Common Stock after the IPO, and certain other tax benefits, including tax benefits attributable to payments under the Exchange Tax Receivable Agreement.
The tax attributes and benefits covered by the Exchange Tax Receivable Agreements 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 will increase the tax basis of the tangible and intangible assets of the ZoomInfo Tax Group as a result of sales or exchanges of OpCo Units for shares of Common Stock after the IPO, and certain other tax benefits, including tax benefits attributable to payments under the Exchange Tax Receivable Agreement.
We generated revenue of $1,098.0 million for the year ended December 31, 2022, as compared to revenue for the year ended December 31, 2021 of $747.2 million, and income from operations of $175.8 million for the year ended December 31, 2022, as compared to income from operations of $113.3 million for the year ended December 31, 2021.
We generated revenue of $1,239.5 million for the year ended December 31, 2023, as compared to revenue for the year ended December 31, 2022 of $1,098.0 million, and GAAP income from operations of $259.5 million for the year ended December 31, 2023, as compared to GAAP income from operations of $175.8 million for the year ended December 31, 2022.
Additionally, we incur expenses for professional fees including legal services, accounting, and other consulting services, including those associated with operating as a public company. We expect general and administrative expenses as a percentage of revenue to modestly decrease as we realize operating leverage in the business. 50 Table of Contents Amortization of other acquired intangibles .
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, including those associated with operating as a public company. We expect general and administrative expenses as a percentage of revenue to remain consistent or modestly decrease as we realize operating leverage in the business.
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.
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.
The applicable margin is 1.00% to 1.25% for Base Rate loans or 2.00% to 2.25% for SOFR Based Loans, depending on the Company’s leverage. The effective interest rate on the first lien debt was 7.38% and 3.41% as of December 31, 2022 and December 31, 2021, respectively.
The applicable rate is 1.25% for Base Rate loans or 2.25% for SOFR loans. The effective interest rate on the first lien debt was 7.83% and 7.38% as of December 31, 2023 and December 31, 2022, respectively.
Refer to Note 18 - Tax Receivable Agreements to our audited consolidated financial statements included in Part II, Item 8 of this Form 10-K for further details on the TRA liability.
Refer to Note 17 - Tax Receivable Agreements to our audited consolidated financial statements included in Part II Item 8 of this Form 10-K for additional information.
As of December 31, 2022, the Company had a liability of $2,978.7 million related to its projected obligations under the Tax Receivable Agreements in connection with the Reorganization Transactions and OpCo Units. During the year ended December 31, 2022, we paid a total of $12.2 million pursuant to the Tax Receivable Agreements.
As of December 31, 2023, the Company had a liability of $2,818.0 million related to its projected obligations under the Tax Receivable Agreements in connection with the Reorganization Transactions and OpCo Units. During the year ended December 31, 2023, no payment was made pursuant to the Tax Receivable Agreements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+3 added−2 removed6 unchanged
Biggest changeWe manage our credit risk by concentrating our cash deposits with high-quality financial institutions and periodically evaluating the credit quality of those institutions. The carrying value of cash approximates fair value.
Biggest changeWe hold cash with reputable financial institutions that often exceed federally insured limits. We manage our credit risk by concentrating our cash deposits with multiple high-quality financial institutions and periodically evaluating the credit quality of those institutions. The carrying value of cash approximates fair value.
Based on the outstanding balances and interest rates of our debt as of December 31, 2022, a hypothetical relative increase or decrease in our effective interest rate by 100 basis points or 1% would have caused an immaterial corresponding change over the next 12 months.
Based on the outstanding balances and interest rates of our debt as of December 31, 2023, a hypothetical relative increase or decrease in our effective interest rate by 100 basis points or 1% would have caused an immaterial corresponding change over the next 12 months.
Additionally, from time to time, we have dedesignated certain cash flow hedging relationships due to repricing of the terms and partial prepayment of the outstanding principal of our first lien term loan since loan inception. As of December 31, 2022, all cash flow hedging relationships are designated as accounting hedges.
Additionally, from time to time, we have dedesignated certain cash flow hedging relationships due to repricing of the terms and partial prepayment of the outstanding principal of our first lien term loan since loan inception. As of December 31, 2023, all cash flow hedging relationships are designated as accounting hedges.
Our investment portfolio is comprised of highly rated securities with a weighted-average maturity of less than 12 months in accordance with our investment policy which seeks to preserve principal and maintain a high degree of liquidity. 65 Table of Contents
Our investment portfolio is comprised of highly rated securities with a weighted-average maturity of less than 12 months in accordance with our investment policy which seeks to preserve principal and maintain a high degree of liquidity. 63 Table of Contents
Interest Rate Risk Our operating results are subject to market risk from interest rate fluctuations on our first lien term loan, which bears a variable interest rate based on SOFR. As of December 31, 2022, the total principal balance outstanding was $600.0 million.
Interest Rate Risk Our operating results are subject to market risk from interest rate fluctuations on our first lien term loan, which bears a variable interest rate based on SOFR. As of December 31, 2023, the total principal balance outstanding was $594.0 million.
Monetary assets and liabilities of the foreign subsidiaries are re-measured into U.S. dollars at the exchange rates in effect at the reporting date, non-monetary assets and liabilities are re-measured at historical rates, and revenue and expenses are re-measured at average exchange rates in effect during each reporting period. Foreign currency transaction gains and losses are recorded to non-operating income (loss).
Monetary assets and liabilities of the foreign subsidiaries are re-measured into U.S. dollars at the exchange rates in effect at the reporting date, non-monetary assets and liabilities are re-measured at historical rates, and revenue and expenses are re-measured at average exchange rates in effect during each reporting period.
Removed
As the impact of foreign currency exchange rates has not been material to our historical results of operations, we have not entered into derivative or hedging transactions, but we may do so in the future if our exposure to foreign currency becomes more significant.
Added
To manage the foreign currency exchange rate risk and to reduce the volatility associated with the fluctuation of foreign currencies, we initiated a foreign currency hedging program during the third quarter of 2023, which subsequently settled during the fourth quarter of 2023. This program aimed to mitigate potential adverse effects on our financial results from significant currency movements.
Removed
Credit Risk Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, and trade and other receivables. We hold cash with reputable financial institutions that often exceed federally insured limits.
Added
Foreign currency transaction gains and losses are recorded to Other (income) loss, net .
Added
Although the impact of currency fluctuations on our financial results has been immaterial in the past and we believe that for the reasons cited above, currency fluctuations will not be significant in the future, there can be no guarantee that the impact of currency fluctuations or our hedging activities will not be material in the future. 62 Table of Contents Credit Risk Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and trade and other receivables.

Other GTM 10-K year-over-year comparisons