Cameron Hyzer: Yes. So certainly the acceleration in the second half of the year is largely based on the fact that our expirations that we’re going to see in Q2 and Q3 are much smaller than they were in Q1 and frankly Q4 before that. So a lower number of expirations obviously provides less opportunity for downsell among our customers, and therefore the upsells in the new business that we’re continuing to drive will have a bigger impact on the revenue number as we go through. And so that’s kind of true across the board. And as we look at the retention mix, we see that. Frankly, April very much was on trend for those comments. So we feel that the smaller expiration and the success that we continue to see with upselling and new sales is already on course for that.
Tyler Radke: Thank you.
Operator: Go ahead, sir.
Tyler Radke: I was just going to sneak in a follow-up for you, Cameron. Thank you. As we look at the trajectory for the rest of the year, can you also just remind us how you’re thinking about the 100K customer ad? Should that bottom and start to grow again at a certain point? And similar question on NRR. When do we expect to see the bottom there?
Cameron Hyzer: So I think from the 100K perspective, the real pressure that we feel in terms of the number of customers are among smaller customers. So mid-market customers and maybe even some small businesses that are spending just above the 100K level and have downsell pressure, whether that’s internal budget pressure or layoffs or changes in their operating model, that continues to be there. We haven’t fully gotten through all of those customers, but certainly we’ve gotten through some very big cohorts that had peaked in terms of layoffs and call it early 2023. So we do think that there’s the opportunity for that to eventually grow, or at least not go down by as much. But certainly, overall in that cohort, we actually see the ACV levels being pretty stable because the larger customers continue to grow more significantly and make up for losing some of those smaller customers.
From a retention perspective, we very much see retention among the enterprise and mid-market stabilizing, and certainly as we see a little bit of mix shift, that also helps the overall numbers. So it does feel like that’s a place where we can build off of as we move forward into the second half of the year. And frankly, the multi-year customers also continue to grow, which is obviously helpful for retention as well, which is a reflection of the fact that we are shifting the mix towards larger customers, and those larger customers do tend to be multi-year customers as well. So our guidance assumes that retention does not improve, but we do see a number of trends underlying where we think that that opportunity for improvement is there.
Operator: One moment for our next question. Our next question comes from Joshua Reilly with Needham & Company. Your line is open.
Joshua Reilly: I got two quick questions here. We talked about the PLG motion. I was curious how broadly is this now rolled out to both new and existing customers? I know that was a point of discussion before. And then just quick, on sales and marketing, that was above my estimate by a healthy amount for the quarter here, while R&D was below. Curious how you’re thinking about sales and marketing spend for the balance of the year relative to the updated operating income guidance. Thanks, guys.
Henry Schuck: The PLG one, and then, Cameron can take the second part. On PLG, it depends on how you define PLG. If we think about PLG as purely self-service, I come in, I get a free trial, I turn into a customer, that part of PLG is limited to a cohort of leads that come through our website, so it’s not open to any user. If we’re talking about it as the ability to manage your invoices, pay for upgraded users, add ad spend in marketing OS, pay for a renewal, that capability is available to all of our customers.
Cameron Hyzer: And then from an operating expense perspective, sales and marketing, we are continuing to invest in sales and marketing. There are also some one-off things around payroll taxes and how we pay taxes on stock comp that created a little bit of a blip in Q1 related to sales and marketing that won’t necessarily recur as we go forward. But certainly, we’re going to be really focused on marketing around and selling Copilot as we move into the second half of the year, so that’ll be something that we want to continue to invest in. R&D, we have been really focusing the R&D team on the Copilot initiative, and based on the new functionality that’s being developed, there is a bit more capitalization that happens there. So I think that capitalization probably may not have been incorporated in everyone’s model if you’re just looking at the prior trends.
Operator: One moment for our next question. Our next question comes from Raimo Lenschow with Barclays. Your line is open.
Raimo Lenschow: Since I’m at the back of the call, maybe more like a high-level question. Henry, if you look, obviously, what’s happening to you guys at the moment, there’s nothing ZoomInfo-specific. It’s kind of like where the market is at the moment and where customers are, so that’s kind of impacting you, but it’s impacting the whole industry that you’re playing in. What do you see in terms of how do you think that your industry will reemerge? Because a lot of your competitors are private, so you’re kind of well-funded, very highly profitable. So how do you think that’s playing out, and what do you see in competitive situations there already, has that started already? Thank you.
Henry Schuck: Look, I think, first of all, we’re taking a very durable approach to our future, and the products that we’re building today and bringing to market, we believe build a foundation on top of which we can continue to build on. Is Copilot going to be the last AI product we build? No, it’s going to be the first, and it’s going to build a great foundation for the future. I think if I look around the space, it’s much easier to look at the core of our solution and understand why it’s important to every go-to-market team today and five years from now and 10 years from now, and it’s a lot easier to look at our solution and understand why, in a generative AI world, our data, our insights, our proprietary data asset becomes more and more valuable while application layer software becomes less and less important because it’ll be much easier to build with AI in the future, but that our data asset and what we’re building around it becomes core to every generative AI go-to-market use case in the future.
And so I think in that respect, I can see a universe where the software layer, the application providers, are much more easily disrupted by AI than the core data providers who built flywheels and networks to gather the data and have incredibly high-quality data that every company can build a generative AI solution on top of. And so we have a lot of confidence around what we’re building and the future there and think the application layer is more disruptable.
Operator: One moment for our next question. Our next question comes from Rishi Jaluria with RBC Capital Markets. Your line is open.
Rishi Jaluria: I’ll keep it to one, just given that we’re past time. Henry, I wanted to follow back on the conversation around the PLG motion. I guess help us understand, number one, how is traction, and in this case, I’m talking purely the self-service customers, where someone can become a paying customer of ZoomInfo without having to engage with a salesperson. I guess help me understand, A, how is that motion kind of going? How is it being received? And I guess, B, why not go even deeper down that path, especially given that, at least in a lot of conversations we’ve had, there is a certain amount of friction to adopting ZoomInfo that isn’t necessarily there at some of your competitors, and I’d have to imagine without dedicated sales resources, it comes in at very, very high contribution margin. Maybe you could help us bridge that. That’d be great. Thank you.
Henry Schuck: To increase the number of customers and accounts that have access that we bring in from a PLG motion. Now, we also believe that we’ve built an incredible sales-led motion at ZoomInfo that is far more efficient than just about anything you’d see out there in the broader software marketplace. And so when there are leads that we think are most optimized to come through a sales-led motion, we’re going to push that to the sales-led motion. When we think there are leads that will be best served through the PLG motion, we’re going to push those leads through the PLG motion. And so I think we’re always going to have two ways that we go-to-market from a new business perspective, and we’re going to leverage each where we think, where our internal models actually tell us that we’re going to get more if one goes to PLG, or we’re going to be better optimized if a lead goes into our sales-led motion.
But over time, what we’ve seen internally and what we’ll continue to deliver on is more and more going into the PLG motion.
Operator: One moment for our next question. Our next question comes from Pat Walravens with Citizens JMP. Your line is open.
Pat Walravens: Shifting to other notes in SMB. So, Henry, I was delighted to see you settled the right-of-publicity class actions. Kudos to Anthony and your legal team. Two questions. So it resolves the claims in four states. Are there any others in other states, or is that it? And then, the second question is, are you making any changes to the community edition or the directory pages as a result, and does any of that impact your plans for sort of new PLG motions for SMB?
Henry Schuck: Yes. Thank you, Pat. These will handle all of the states where there are claims, so we feel really good about putting that behind us. There are minor changes to our community pages in those states, but we don’t anticipate those causing any issues for us from a community perspective or from a PLG perspective either.
Operator: And I’m not showing any further questions at this time, and this does also conclude today’s conference. Thank you for your participation. You may now disconnect and have a wonderful day.
