At a time when other software executives are announcing cutbacks and layoffs, ZoomInfo CEO Henry Schuck reported to Wall Street that his company beat expectations for the top and bottom line and was raising its guidance for the full year.
Also, he is hiring.
“(Other software companies) are releasing financials, they are reprioritizing initiatives and making sure to invest in areas that have the highest return. (Cuts) aren’t effecting what can close deals and boost demand,” said Schuck. “That’s why we can be successful.”
Vancouver-based ZoomInfo Technologies Inc. (Nasdaq: ZI) sells business intelligence software to sales organizations. Its huge data set and software integrates with other business technology like customer relationship management and email tools. It went public in 2020 and has 3,000 global employees.
For the second quarter, the company reported revenue of $267.1 million, up 54% year over year. It reported earnings per share of 4 cents. It raised full-year revenue guidance to between $1.08 billion to $1.09 billion.
Because ZoomInfo helps sales teams become more effective and efficient, Schuck says any cuts made by companies typically aren’t hitting tools that can drive revenue like ZoomInfo.
What has changed, he noted, is that sales cycles have increased for some companies as uncertainty about the macroeconomic environment grows. He likened it to the elongated sales cycles first seen when the Covid-19 pandemic emerged in 2020.
To deal with this uncertainty, Schuck's team has shifted its own go-to-market strategy and sales pitch to help customers understand how to get the most out of the resources in which they have already invested.
ZoomInfo, he explained, is more than just the organizational and contact data programs it initially developed. It now has applications built on top of that data, built through the company’s own product development and a raft of acquisitions. Schuck noted that over the last 18 months, the company has done about $1 billion in acquisitions.
“With that we can go to customers and say, you have 13 vendors in a sales tech stack and we are best in class in areas those vendor operate in. Consolidate to one vender,” he said.
Schuck is one of those rare founders who has taken a company from start (in his law school dorm room) to IPO. He started the company just before the Great Recession and economic turmoil of 2008-09. With that insight, he has some advice for founders who are building companies in the current uncertainty and recession fears.
No. 1: Understand your customer acquisition costs and make it as efficient as possible.
“That is how you fund your business. You need the unit economics to make sense. I have always believed in that and now investors do too,” he said. “Between 2007 and 2021 no on talked to me about profitability. That was a knock on our business. Why are you profitable? Now, all of a sudden everyone wants to talk about profitability.”
No. 2: Evaluate your total addressable market.
“If you have a large total addressable market, and I would hope most startups think about starting a company in a large total addressable market, you can start segmenting that market into affected and non-affected industries,” he said. “Focus your efforts in the short term on those industries that aren’t affected.”
