0001794515-26-000038
SEC filingZoomInfo's Q1 2026 revenue grew 1% YoY to $310.2M, with operating income up 15% to $57.9M, driven by cost discipline and upmarket mix shift.
ZoomInfo reported Q1 2026 revenue of $310.2 million, a 1% increase compared to $305.7 million in the same period last year. The modest growth was driven by the company's continued shift upmarket and an improvement in net revenue retention to 90% from 87% a year ago. Subscription revenue, which constitutes the vast majority of total revenue, grew to $303.5 million from $301.9 million, while usage-based revenue increased to $5.4 million from $3.2 million.
Gross profit was essentially flat at $259.2 million versus $258.4 million in the prior year, with gross margin declining slightly to 83.6% from 84.5%. The margin compression was driven by higher hosting and infrastructure costs and increased depreciation on capitalized software, partially offset by lower amortization of acquired technology.
Operating income improved significantly, rising 15% to $57.9 million from $50.3 million, reflecting an operating margin expansion of 220 basis points to 18.7%. This improvement was driven by lower employee compensation expenses, decreased equity-based compensation, and lower amortization, partially offset by lease impairment charges and higher technology costs.
Net income increased 9% to $29.3 million from $26.8 million, with diluted EPS of $0.10 compared to $0.08 in the prior year. The effective tax rate rose to 33.9% from 32.2%, primarily due to higher income from operations and increased interest expense.
As of March 31, 2026, ZoomInfo held $171.2 million in cash and cash equivalents and $4.0 million in short-term investments, compared to $175.9 million and $4.0 million respectively at year-end 2025. Total assets decreased to $6.37 billion from $6.44 billion, primarily driven by a reduction in accounts receivable and deferred tax assets.
The company's debt position remained stable, with total debt of $1.32 billion, including $578.0 million under the First Lien Term Loan, $100.0 million drawn on the revolving credit facility, and $645.1 million in Senior Notes. The effective interest rate on the term loan was 5.66%. The company's total net leverage ratio to Adjusted EBITDA stood at 2.4x, while the Consolidated First Lien Net Leverage Ratio was 1.0x, indicating ample financial flexibility.
Stockholders' equity decreased to $1.47 billion from $1.51 billion, primarily due to $91.2 million in share repurchases, partially offset by net income of $29.3 million.
Operating cash flow was $114.7 million for the quarter, compared to $119.2 million in the prior year. The decrease was primarily due to lower collections and higher cash outflows for restructuring and litigation settlements. Net income of $29.3 million was adjusted by $95.4 million in non-cash charges, including $25.5 million in equity-based compensation, $24.3 million in amortization of deferred commissions, and $21.4 million in depreciation and amortization.
Capital expenditures increased to $24.1 million from $14.8 million, driven by higher capitalization of internally developed software and new facility costs. Free cash flow (operating cash flow less capex) was $90.6 million, compared to $104.4 million in the prior year.
The company deployed $90.9 million toward share repurchases during the quarter, retiring 13.1 million shares at an average price of $6.91. Debt repayment was $1.5 million. As of March 31, 2026, $1.14 billion remained available under the share repurchase program.
Management attributed the revenue growth to the company's continued shift upmarket and improved net revenue retention. The net revenue retention rate improved to 90% from 87% a year ago, indicating better customer expansion trends despite macroeconomic headwinds. Customers with $100,000 or greater in annual contract value increased to 1,900 from 1,868, and now comprise over 50% of total company ACV.
On May 5, 2026, the Board approved a restructuring program (the "2026 Restructuring Program") aimed at reducing operating costs and driving stronger operating leverage. The program entails a global reduction in force impacting approximately 20% of the company's ending first-quarter headcount, with about one-fourth of impacted roles reallocated or offset by hiring in different locations. Estimated aggregate pre-tax charges are expected to be in the range of $45 million to $60 million, primarily consisting of one-time termination benefits.
The company continues to invest in AI-enabled products such as ZoomInfo Copilot and ZoomInfo GTM Studio, which are expected to drive future growth but also increase near-term cost of service due to rising AI consumption costs.
ZoomInfo operates as a single operating segment, with the CEO serving as the chief operating decision maker. Revenue from outside the United States accounted for approximately 11% of total revenue, down from 12% in the prior year.
Deferred revenue (unearned revenue) stood at $479.2 million, of which $476.1 million is current and expected to be recognized within the next 12 months. Total remaining performance obligations were $1.18 billion, with $860.9 million expected to be recognized within one year.
Equity-based compensation expense totaled $25.5 million, down from $29.6 million in the prior year, primarily due to lower weighted-average grant-date fair values. As of March 31, 2026, unamortized equity-based compensation costs were $167.7 million.
Goodwill remained unchanged at $1.69 billion, with no impairment indicators identified. Intangible assets, net, decreased to $204.6 million from $217.3 million, driven by $12.6 million in amortization expense.
The company recorded $4.0 million in asset impairments and lease abandonment charges during the quarter, primarily related to lease restructuring activities. The tax receivable agreement liability was $2.73 billion, with a $1.4 million remeasurement gain recognized during the quarter.