ZoomInfo CEO on outlook: We expect 'a lot of growth' in coming years

ZoomInfo CEO Co-Founder and CEO Henry Schuck joins Yahoo Finance Live to discuss the company’s latest financial results and outlook for the tech industry in a post-pandemic world.

Video Transcript

BRIAN SOZZI: Data intelligence platform ZoomInfo is out with a better than expected first quarter earnings, as it continues to gain new customers at an impressive clip. Wall Street is staying upbeat on the stock. This morning, four analysts reiterated their buy ratings on ZoomInfo. ZoomInfo founder and CEO Henry Schuck is here with more. Henry, always good to see you. I mean, I feel bad. You know, Myles is not here. I know you wanted to wish him a happy birthday. He just put out that tweet. Nonetheless, my question to you is, how is the enterprise business going for you, considering we are seeing a comeback in the US economy?

HENRY SCHUCK: Yeah, the enterprise business is going really well for us today. We announced in the quarter of one of our largest deals, which was a multi-year eight-figure deal that encompassed our data, technology, and software solutions. We grew our customers who spend over $100,000 a year with us to over 950 customers. We're getting real momentum in the enterprise as those companies are looking to digitize the way that they sell and market their services, and so, an incredibly exciting space for us. And we expect a lot of growth from it in the coming years.

BRIAN SOZZI: What services are they specifically signing up for, Henry? There's a lot of optimism on your stock, in your company, especially this morning here. What's-- why that optimism, you think?

HENRY SCHUCK: Yeah, I mean, I think it's-- there's an amazing shift happening today where if you go ask anybody who's been in software sales for the last decade or two decades, they will tell you that the way that they've sold their enterprise contracts is by taking executives out to fancy dinners and ball games. And they were flying all across the country to do that. And I think what the pandemic proved is that that is a heavy, inefficient way to sell your products and services.

And it's not required that every interaction you have with somebody be at the front row of a Boston Red Sox game. That you can do that digitally, you can identify opportunity to engage with decision makers and drive sales processes forward without being in person. And what ZoomInfo does is it helps companies get a view of their total addressable market. It helps them prioritize who their next best customer is. And it gives them software and technology to actually engage with those new customers.

And so, what we're seeing those enterprise customers do is they buy data, they buy our software to engage, they buy our insights suite to be able to know when companies are growing, when they're shrinking, when they're hiring new executives, when they're opening new locations or getting funding, or when they're in market for their products and services. And so, they're driving that top and middle of the funnel in a digital way, where, historically, all of that has been physical interaction.

JULIE HYMAN: Henry, it's Julie here. It's good to see you. Enlighten me.

HENRY SCHUCK: Good to see you, Julie.

JULIE HYMAN: You know, when you're talking about your data and your software, are chips part of that equation? Do you guys use chips? And how is the whole chip shortage thing affecting your business, if at all?

HENRY SCHUCK: Actually, we don't use chips. So I assume that all of our servers and all of our computing power is hosted on the cloud. And so, they are probably dealing with chip shortages. But we don't see it come through on the other end to us.

JULIE HYMAN: And so--

BRIAN SOZZI: And a little bit of--

JULIE HYMAN: --if I could--

BRIAN SOZZI: Go ahead, Julie.

JULIE HYMAN: Well, I was just going to ask about cost then, Henry. You know, if-- are you seeing then any of your cloud service providers raise costs to you, raise prices for you? You know, we've been talking about cost pressures everywhere throughout a lot of different industries-- for labor, too. Are you guys seeing any of that?

HENRY SCHUCK: Yeah, we do see some cost increases from our cloud partners. You know, interestingly, our business, although a fast-growing software business-- we grew revenue 50% in the quarter-- we also did that with a 43% operating margin. This has always been a company that's been focused on best in class execution. And that means being super efficient with all of our resources, whether that be on the go-to-market side or the engineering side or the product side.

And so we're pretty focused on running a lean and well-executed business. And you're seeing that in our operating margin, so not a company that we're not going to need to go raise more equity to put money on the balance sheet. We do a really good job of growing the business profitably and growing it durably.

BRIAN SOZZI: Henry, a little bit of a flex by you on the earnings call last night regarding M&A. You said, you're open to more M&A. And the size doesn't really matter.

HENRY SCHUCK: Yeah I said it doesn't really matter because the way that we evaluate M&A is, we look for opportunities where, number one, our data makes a big impact from a competitive differentiation perspective. And number two, which goes to the valuation piece, because we are seeing incredibly high valuations on M&A targets today.

But on that piece, we're always looking to see, hey, if we buy this company and we integrate it into ZoomInfo, and we have all of our sellers selling that product or service and it's integrated and it's gotten better with the data asset that we have, how fast can we grow the business? It's always much faster than that business is going to grow on its own.

And so, when we're doing the analysis on what to buy and what to build, the buy equation has a lot to do with how much faster we can grow the business. And so while a valuation today might feel like a lot, when we look at what we're going to be able to do with that asset over the next year and two years, we look for those assets to be accretive in the short term. And it really becomes a go-to-market exercise for us.

BRIAN SOZZI: Henry, we've talked a good bit throughout the pandemic. We've gotten to know one another. But, you know, I just realized, having done-- doing this interview right now, not a lot of people are familiar with you personally and the company. So they're waking up this morning and realize, wow, this company put up another good quarter. The stock's up 42% over the year. And I'm not invested in it. So in under a minute, who's Henry Schuck?

HENRY SCHUCK: So I am the founder and CEO of ZoomInfo. I founded ZoomInfo when I was 23 years old. I founded it in my law school dorm by putting $25,000 on my credit card and my co-founder's credit card. We went out to build a platform that helped business-to-business sellers and marketers identify their next best customer. We started by doing that with building a best-in-class data product. And since then we've continued to build on top of that data asset with software and technology that helps business-to-business sellers and business-to-business marketers find their next best customer and engage with them.

The businesses is growing incredibly fast. We've had three quarters of accelerating growth. We're firing on all cylinders. We spent the last two years building up an incredibly talented executive and senior management team, bringing in new talent in the organization. And the business is set up for incredible success in the future. And I'm really proud to be the CEO of this company, proud to be the founder of this company, and see an incredible future ahead of us.

BRIAN SOZZI: Well said. I think that was under a minute. We'll leave it there. ZoomInfo founder and CEO Henry Schuck, always good to see you.