Key Takeaways:
ZoomInfo Technologies (NASDAQ: ZI) reported first-quarter revenue above its guidance but lowered its full-year outlook and announced a major restructuring, accelerating a shift away from seat-based software pricing toward a data consumption model. The stock plunged 28.6 percent on the news.
"Despite the better-than-guided quarter, the company saw demand weaken late in March and into April, particularly among software customers," founder and Chief Executive Henry Schuck said. He cited "AI and agentic confusion" in the market, leading to a pause in purchasing decisions.
The company is repositioning to make its go-to-market data more widely available across AI tools and customer workflows, a move away from its traditional application model. The transition involves cutting 600 roles, or 20 percent of its workforce, and is expected to reduce annual operating expenses by about $60 million.
ZoomInfo lowered its full-year 2026 revenue guidance to a range of $1.185 billion to $1.205 billion, representing a 4 percent year-over-year decline at the midpoint. For the second quarter, the company expects revenue of $300 million to $303 million and adjusted operating income of $103 million to $106 million.
The restructuring will incur costs of $45 million to $60 million, primarily in the second and third quarters of 2026. Chief Financial Officer Graham O'Brien said about half of the affected roles are in research and development, with the rest mainly in downmarket sales and marketing.
The company's strategic pivot is a direct response to changes in how software is being bought and used, driven by AI. "Customers increasingly want ZoomInfo’s data outside of its traditional SaaS interface," Schuck said, pointing to demand for APIs and other data connections.
Starting in the third quarter, ZoomInfo will offer customers more flexibility to convert per-seat spending into consumption credits. The company aims to grow its non-seat-based business to a 50-50 mix of annual contract value over the next 18 to 24 months, up from approximately one-third currently. The non-seat-based Operations and Data as a Service offerings grew more than 20 percent year-over-year in the first quarter.
The lowered guidance and strategic shift introduce significant uncertainty, but management is focused on protecting and growing cash flow per share through the transition. Investors will be watching the company's execution on its new consumption-based model and whether it can achieve sustainably positive growth by the second half of 2027 as projected.
This article is for informational purposes only and does not constitute investment advice.
