0001794515-25-000184
SEC filingZoomInfo reported strong Q3 2025 results with revenue up 5% to $318M and operating margin expanding to 21%, driven by upmarket shift and improved net revenue retention.
ZoomInfo's third quarter of 2025 demonstrated strong operational execution. Revenue reached $318.0 million, a 5% increase year-over-year from $303.6 million, driven by the strategic shift upmarket and improved customer retention. Gross profit rose 4% to $266.3 million, with gross margin remaining steady at 84%, reflecting stable cost of service despite higher hosting and infrastructure expenses.
Operating income surged 55% to $67.5 million, representing an operating margin of 21% versus 14% in the prior year. The improvement was primarily due to lower lease impairment charges (none in Q3 2025 vs $8.7 million in Q3 2024) and reduced equity-based compensation (down $6.7 million to $29.9 million). Net income increased to $38.7 million ($0.12 per diluted share) from $23.8 million ($0.07 per share) in the prior year quarter.
Adjusted EBITDA (non-GAAP) grew 7% to $125.9 million, maintaining a 37% margin. Adjusted Operating Income reached $117.7 million (37% margin), reflecting the benefits of revenue growth and cost discipline.
As of September 30, 2025, ZoomInfo held $124.8 million in cash and cash equivalents, down from $139.9 million at year-end 2024, primarily due to share repurchases and debt repayments. Total assets decreased to $6.37 billion from $6.47 billion, largely from reduced accounts receivable and deferred tax assets. Total liabilities increased to $4.84 billion from $4.77 billion, driven by a $100.0 million draw on the revolving credit facility and higher operating lease liabilities from new office space in Waltham, Massachusetts. Stockholders' equity fell to $1.53 billion from $1.69 billion, reflecting the impact of share repurchases.
The company's net leverage ratio to Adjusted EBITDA stood at 2.6x, while the Consolidated First Lien Net Leverage Ratio was 1.1x, well within covenant limits. Debt carries a mix of fixed (3.875% Senior Notes) and floating-rate (SOFR + margin) instruments, with interest rate swaps mitigating a portion of the variable exposure.
For the nine months ended September 30, 2025, cash from operations was $321.9 million, up from $260.4 million in the prior-year period, driven by higher net income and favorable working capital changes. Capital expenditures totaled $59.7 million (6.4% of revenue), primarily for internal-use software development and new facilities. Free cash flow for the nine-month period was $262.2 million, representing a healthy conversion of net income.
The company used $331.3 million for share repurchases, $23.1 million for tax receivable agreement payments, and $4.4 million for debt repayments. Financing cash outflows were partially offset by $100.0 million in proceeds from the revolver draw.
Management attributed the revenue growth to the successful upmarket shift, noting that net revenue retention improved to 90% from 85% in the prior year. The company's focus on larger customers, which exhibit higher retention, is a key strategic priority. Operating expenses benefited from lower restructuring and impairment charges, though bad debt expense increased to $17.4 million (nine months) from $39.3 million in the prior year, reflecting the deployment of a new risk model to reduce write-offs.
Looking ahead, management anticipates continued investment in AI-powered products (ZoomInfo Copilot, GTM Studio) to drive future growth, but expects near-term cost of service to increase slightly as a percentage of revenue due to rising AI consumption costs. Research and development spending is expected to modestly increase as a percentage of revenue in the short term, while general and administrative costs should trend lower. No specific numerical guidance was provided for revenue or earnings beyond these qualitative expectations.
ZoomInfo operates as a single reportable segment. Revenue is primarily subscription-based (98% in Q3), with the remainder from usage and other services. Unearned revenue (contract liabilities) was $431.9 million at quarter-end, down from $477.9 million at year-end 2024. Total remaining performance obligations stood at $1.165 billion, with $823.7 million expected to be recognized within one year.
Stock-based compensation totaled $29.9 million in Q3 (down 18% YoY), reflecting lower grant-date fair values of awards. The company repurchased 32.8 million shares year-to-date for $328.0 million, with $309.6 million remaining under the $1.6 billion buyback authorization. Subsequent to quarter-end, an additional 2.9 million shares were repurchased for $30.6 million.
Goodwill and intangible assets were $1.693 billion and $231.8 million, respectively, with no impairment charges recognized. The company maintains $3.662 billion in deferred tax assets, primarily related to historical restructuring events, partially offset by a valuation allowance on certain state-level attributes.
Legal proceedings include multiple class-action lawsuits related to privacy and securities claims. Management intends to vigorously defend these cases, and no material loss accruals have been recorded beyond an immaterial settlement for the Datanyze publicity litigation.