ZoomInfo (GTM) Q3 2026 earnings review
ZoomInfo lifts its profit margin, but large customers leave
ZoomInfo, a provider of business contact data and sales software, protected its operating margins through layoffs even as its customer contracts shrank. Third-quarter sales fell 3% from a year ago to $309 million, beating the company's own forecast, and chief executive Henry Schuck raised the full-year outlook. However, the fourth-quarter plan still calls for revenue to drop about 7%, matching what the prior full-year plan pointed to by our math.
| Revenue | $308.8M -2.9% from a year ago |
|---|---|
| Upmarket contract value growth | 0% +3% last quarter |
| Operating margin, excluding one-offs | 39% 37% a year ago |
| Full-year revenue outlook | Raised $13M middle of the range: -2.0% from a year ago |
⚖️ Verdict: 🔴 Bearish
The story got worse because growth in the upmarket enterprise business stalled completely. Contract value from larger businesses was flat from a year ago after growing 3% last quarter, existing customer retention slipped to 88%, and 40 customers spending at least $100,000 left. On the other side, cost cuts lifted operating margins excluding one-offs to 39%, and management used cash to buy back its own debt at a discount.
The question now is whether shifting customers from per-seat software licenses to data-usage credits will bring in new spending or just let clients pay less. If the credit model adds value, upmarket contract value and retention will rebound; if it cuts bills, revenue declines will deepen into 2027. Fourth-quarter retention and large-customer counts during the peak renewal season will tell.
🐂 Bull Case
Cost Controls Lifted Margins Despite Falling Sales
ZoomInfo sells business contact data and sales tools, and it has cut staff this year to protect profit while revenue shrinks. Those cuts worked in the third quarter: operating income excluding one-offs rose 1.2% from a year ago to $119.1 million, beating the $113 million to $115 million forecast even as revenue fell 2.9%.
Operating margin excluding one-offs reached 38.6%, up 1.6 percentage points from last year. The software provider kept sales and marketing spending nearly flat at $101.8 million, or 33.0% of revenue, while equity compensation across the business stayed near $31.1 million. Management also raised the full-year operating profit outlook by $5 million at the middle of the range.
What to watch: fourth-quarter operating margin excluding one-offs, which the outlook puts at 38.7% by our math. Holding near 39% while revenue drops 7.4% would show that the May layoffs can protect profit into 2027.
Cash Shifted From Stock Buybacks to Discounted Debt
Chief executive Henry Schuck said the group has "expanded our approach to capital allocation" to prioritize a disciplined balance sheet. While critics warn that $1.23 billion of carrying debt is a risk if earnings shrink, buying back bonds below face value directly cuts that burden.
During the third quarter, the data provider paid $31.1 million in cash to retire $34.8 million of its Senior Notes, booking a $3.4 million gain and saving $1.3 million in yearly cash interest. Over the last two quarters, it has retired $93.3 million of principal for $79.0 million in cash. At the same time, it slowed stock buybacks to $7.5 million, down from $28.2 million in the second quarter.
What to watch: fourth-quarter debt repayments against stock buybacks. Retiring more bonds below par would reduce the debt load before the 2028 credit facility matures.
🐻 Bear Case
Upmarket Contract Growth Stalled and Big Customers Left
"Our largest customers continue to invest and grow with us, with our million dollar customer cohort the strongest it has ever been from an ACV and a logo perspective," chief executive Henry Schuck said. Annual contract value (ACV) is the yearly value of customer subscriptions, and upmarket ACV covers customers with 100 or more employees.
Outside that top tier, the broader enterprise book weakened. Upmarket ACV reached 77% of the total book, but its growth from a year ago dropped to 0%, down from 3% in the second quarter and 6% a year earlier.
- Customers spending $100,000 or more: 1,851, down 40 from last quarter and down 2% from a year ago
- Total ACV from $100,000-plus customers: up 4% from a year ago
- Average spend per $100,000-plus customer: up about 6% from a year ago by our math
Because total upmarket ACV was flat while customers paying $100,000 or more grew 4%, mid-sized upmarket accounts are shrinking. Losing 40 large accounts in three months — after losing 21 in the first quarter and 9 in the second — shows that big-ticket upgrades are masking customer departures.
What to watch: the count of $100,000-plus customers in the fourth quarter, the company's biggest renewal period. Another drop would confirm that enterprise customer losses are speeding up.
Customer Retention Dropped to a Six-Quarter Low
Net revenue retention measures how much existing customers spend compared with a year earlier, and ZoomInfo has tried to stabilize it by shifting clients from per-seat licenses to usage credits. Chief executive Henry Schuck said "our headless context layer is now grounding AI agents across dozens of platforms our customers already use." That shift lets customers use the company's contact data inside outside tools without buying software seats.
The transition has not stopped existing accounts from spending less. Net revenue retention fell to 88% in the third quarter, down from 89% in the second quarter and 90% in the three quarters before that. That means the customer base from a year ago shrank its spending by 12%.
Because existing customers are cutting back and upmarket contract growth has stopped, total revenue turned negative, falling 2.9% from a year ago to $308.8 million. Management's fourth-quarter outlook calls for $294 million to $297 million, a 7.4% drop at the middle of the range.
What to watch: net revenue retention at year-end. A further drop toward 86% would show that moving customers from seat licenses to data credits is reducing total contract value.
Lawsuits and Severance Cut Operating Cash in Half
ZoomInfo focuses investors on unlevered free cash flow, a custom measure that adds back cash interest, severance and legal payouts. In the third quarter, that measure fell 8.5% from a year ago to $87.2 million. Standard operating cash flow dropped much faster, falling 49.5% to $47.4 million, and leaving $33.8 million after capital spending by our math.
- General and administrative expenses: 23.5% of revenue, up 8.5 percentage points from a year ago
- Research and development expenses: 17.3% of revenue, up 3.5 percentage points
- Cash paid for restructuring, legal settlements and interest: $53.4 million in the quarter by our math
Cash flow diverged from adjusted profit because real cash left the business for the 2026 layoffs ($26.8 million), class-action legal fees ($5.8 million) and interest ($20.8 million). Reported operating income also fell 65% to $23.6 million after a $27.3 million charge for the proposed settlement of the 2024 securities lawsuit.
What to watch: cash restructuring and legal payouts in the fourth quarter. If those payments stay near $30 million, actual cash available to pay down debt will keep trailing the headline cash metric.
Risks this quarter didn't answer
Several standing concerns about customer contracts, product mix and share dilution cannot be checked from the earnings release alone and await the conference call or quarterly filing.
- Remaining performance obligations (contracted backlog): disclosed only in the quarterly filing, where a drop below $1.17 billion would show contract lengths are still shortening.
- Diluted share count: guided up to 321 million for the fourth quarter despite buybacks; the filing's stock-grant footnote will show how many new employee awards were issued.
- Software customer renewals and non-seat contract share: not in the release; management commentary on the call will show if software clients are still cutting spend.
- Search-engine traffic and Tax Receivable Agreement payouts: not updated in the release; the filing will show if future tax-sharing liabilities changed.
👓 Other Themes
New AI Agent Tools Aim to Coordinate Sales Work
ZoomInfo launched Agent Teams, a feature inside its GTM Studio software that "coordinates teams of agents across a company’s systems and signals, to execute complex GTM motions." The software provider also earned an international security certification (ISO/IEC 42001:2023) for its artificial intelligence management system. Management did not disclose customer adoption or revenue from Agent Teams, so the launch remains a product update rather than a financial driver.
💲 Other KPIs
Total unearned revenue — cash billed to customers for subscriptions not yet delivered — fell 2.6% from a year ago and 9.4% from the second quarter by our math. The balance has shrunk from $477.8 million at year-end 2025, reducing the cash ZoomInfo collects upfront as fewer customers sign or renew upfront contracts.
Money owed by customers for billed subscriptions dropped 4.1% from a year ago by our math and fell 25.4% from $225.6 million at the end of 2025. Collecting those bills brought in $40.4 million of operating cash over the first nine months, though a smaller receivable balance leaves less cash to collect next quarter.
Spending on property, equipment and capitalized software fell 40.6% from $22.9 million a year ago, dropping to 4.4% of revenue by our math. Over the first three quarters, capital spending declined 7.4% from last year to $55.3 million, helping preserve cash while operating cash flow fell.
🔮 Guidance
Held against the prior implied range. The plan points to a 7.4% revenue drop from a year ago at the middle of the range, steeper than the 2.9% decline in the third quarter. It laps last year's $319.1 million fourth quarter. ZoomInfo has beaten its quarterly revenue outlook four times in a row by an average of 2.6%; if that pattern holds, fourth-quarter revenue would land near $303 million by our math.
Raised. Management lifted the middle of the full-year outlook by $13 million, leaving full-year sales down 2.0% from 2025 by our math. Across four quarters of forecasts for 2026, the middle of the range was cut by $62 million in the first quarter, then raised by $17 million in the second and $13 million in the third. Because the fourth-quarter outlook sits inside what the old plan implied, the raise simply passes through the third-quarter beat.
New. The forecast calls for operating profit excluding one-offs to fall 6.6% from a year ago at the middle of the range, though the implied margin holds at 38.7% by our math, matching the third quarter's 38.6%.
Raised. The company lifted the middle of the range by $5 million, pointing to 1.7% growth over 2025 by our math. That matches the $5.1 million third-quarter beat. Across four quarters, the full-year midpoint moved by -$19.0 million, +$6.5 million and +$5.0 million.
New. Profit per share excluding one-offs is set to stay flat with the third quarter's $0.29 at the middle of the range, and down 9.4% from $0.32 a year ago by our math.
Raised. The middle of the range moved up half a cent, representing 3.7% growth from $1.09 in 2025 by our math.
Raised. The middle of the range rose $2 million to $415 million, an 8.8% drop from 2025 by our math. With $314.2 million generated in the first nine months, the full-year outlook leaves $100.8 million for the fourth quarter by our math, down 25.4% from $135.2 million a year earlier. Across four quarters, the midpoint moved by -$40 million, +$3 million and +$2 million.
New. The fourth-quarter share count forecast steps up by 4 million from the 317 million shares recorded in the third quarter, showing that employee stock grants are outpacing the slowed buyback program.
Unchanged. The full-year share count forecast remains at 318 million, down from 340 million in 2025.
❓ Key Questions
Why did 40 large customers leave in the third quarter?
Customers spending $100,000 or more fell by 40 to 1,851, the biggest quarterly drop this year, even as million-dollar accounts grew. Management needs to explain whether those departures came from outright cancellations or accounts downgrading below $100,000.
Why does the fourth-quarter share count rise to 321 million?
ZoomInfo retired 2.5 million shares in the third quarter and ended with 317 million diluted shares, yet the fourth-quarter outlook assumes 321 million. Investors need to know how much of the increase comes from new employee stock grants.
What are the contract length and backlog numbers in the filing?
Total remaining performance obligations fell 6.4% in the first half of 2026 as multi-year contracts shortened, and the figure is omitted from the earnings release. The third-quarter backlog total will show if contract durations compressed further.
How are customers spending after switching from seats to credits?
Net revenue retention fell to 88% and upmarket contract growth stopped at 0%. Management has not disclosed what share of contracts now run on usage credits or whether customers spend more or less after converting.