I’m no longer in ZoomInfo so the following is not heavy on analysis, this just my condensed version of the Call:
Q2-GAAP revenue of $267 million, year-over-year growth of 54% and sequential quarterly growth of 9% when adjusted for the number of days in the quarter. And we did that efficiently and profitably with an adjusted operating income margin of 40%, ahead of expectations and our highest levels of margin performance since Q2 of last year, together, delivering a Rule of 94 quarter…we just crossed the $1 billion revenue run rate….Excluding the impact of products acquired within the last 12 months, our organic revenue growth for the quarter was 42%.
Operating cash flow in Q2 was $106 million, which included approximately $6 million of interest payments. Unlevered free cash flow was $108 million for the quarter or 101% of adjusted operating income. We continue to expect that on an annual basis, unlevered free cash flow conversion will be in the range of 100% to 110% as a percentage of adjusted operating income with unlevered free cash flow conversion trending down in this back half of the year consistent with seasonal patterns.
CFO opening remarks,
“the first half of 2021 got a real benefit from billings perspective because of the payment flexibility that we provided to customers in 2020. So I would be, again, careful with that and certainly focus much more on the sequential revenue growth”
“Turning to the balance sheet and cash flow. We ended the second quarter with $371 million in cash, cash equivalents and short-term investments. Operating cash flow in Q2 was $106 million, which included approximately $6 million of interest payments. Unlevered free cash flow was $108 million for the quarter or 101% of adjusted operating income. We continue to expect that on an annual basis, unlevered free cash flow conversion will be in the range of 100% to 110% as a percentage of adjusted operating income with unlevered free cash flow conversion trending down in this back half of the year consistent with seasonal patterns.
With respect to liabilities and future performance obligations, unearned revenue at the end of the quarter was $412 million and remaining performance obligations, or RPO, were $985 million, of which $764 million are expected to be delivered in the next 12 months. We believe that calculated billings and RPO are imprecise metrics to assess in-period activity and forward momentum. As a result, we focused on days adjusted sequential revenue growth, and we delivered 9% adjusted sequential revenue growth in the second quarter.
With respect to debt, at the end of Q2, we carried $1.25 billion in gross debt. With continued growth and profitability, we again drove an improvement in our leverage ratios with a net leverage ratio of 2.3x trailing 12 months adjusted EBITDA and 1.8x trailing 12 months cash EBITDA, which is defined as consolidated EBITDA in our credit agreements. This represents approximately a full turn improvement in leverage since Q3 2021.”
Me: RPO and CRPO really low YoY and QoQ, from QnA, seems due to elongated sell cycle, needing more executives to sign off on any spend currently.
QnA
Henry Schuck
“And Brad, I would add one thing there, too. What you’ve heard from other companies that have already reported is that they’re looking to rationalize and reprioritize spend, but the one place where they’re continuing to look to invest is within sales and within go-to-market. I mean we are the best, most enterprise-grade platform to help go-to-market teams get better and better outcomes. And so they’re not messing with this part of their business, the part of the business that drives demand and that closes that demand. Instead, what you’re hearing from them is they’ll continue to invest behind those areas.”
CameronHyzer
“Sure, Mark. Maybe I’ll jump into that. I think we’ve consistently focused on efficiency within all of our investments historically. And so I think we’re always looking for what are the best places to put incremental resources or invest incremental dollars. And so I don’t think that we have the same pressure to cut back on certain things that maybe weren’t performing in the way that they had.
I think as we continue to grow, we’re going to continue to invest in the business. And like we have historically, continued to focus our investments with respect to sales and marketing capacity as well as R&D innovation, but also continue to invest in all the underlying infrastructure to support growth as we move forward.”
?”45% of the business come from software companies, mostly larger ones, definitely not VC-backed ones. But we are seeing software companies putting on hiring freezes or at the very least slowing down hiring, including at the sales level. Can you maybe just help us understand as you think your growth algorithm, specifically – especially within that vertical, given the slowing down of hiring, how should we think about the impact there?…”
Henry Schuck
“The next thing that I would say is of any industry, software today is the one where go-to-market efficiency and better unit economics are more focused than they’ve ever been. And because we run arguably the most efficient go-to-market motion, more and more software companies are coming to us, asking us how we do it. That gives us a great opportunity to put RevOS front and center”.
Me:
Over all good quarter, IMO. Not enough to make me get back in just yet.