Thanks, Michelle. Welcome to ZoomInfo's Financial Results Conference Call for Q3 2025. With me on the call today are Henry Schuck, Founder and CEO of ZoomInfo, and Graham O'Brien, our Chief Financial Officer. During this call, any forward-looking statements are made pursuant to the Safe Harbor provisions of U.S. securities laws, expressions of future goals, including business outlook, expectations for future financial performance, and similar items, including without limitation, expressions using the terminology may, will, expect, anticipate, and believe, and expressions which reflect something other than historical facts are intended to identify forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, including those discussed in the risk factors section of our SEC filings. Actual results may differ materially from any forward-looking statements.
The company undertakes no obligation to revise or update any forward-looking statements in order to reflect events that may arise after this conference call, except as required by law. For more information, please refer to the forward-looking statements in the slides posted to our Investor Relations website at ir.zoominfo.com. All metrics on this call are non-GAAP unless otherwise noted. A reconciliation can be found in the financial results press release or in the slides posted to our IR website. With that, I'll turn the call over to Henry.
Great. Thank you, Jerry, and welcome, everyone. We are executing well and capitalizing on a rapidly growing AI opportunity and go-to-market. In Q3, we continue to improve the business across every metric. GAAP revenue was a record $318 million, up 5% year-over-year, and adjusted operating income was $118 million, a margin of 37%. Both were above the high end of our guidance, with the highest level of AOI margin we've reported since Q4 of 2024 and the first time we exceeded the rule of 40 since Q1 of 2024. During the quarter, we accelerated up-market growth, improved net revenue retention for the fifth straight quarter, delivered another quarter of strong profitability, and are again raising our financial guidance for the year. We are aggressively expanding the product portfolio with innovative go-to-market AI and workflow products as we continue our shift up-market.
I believe we are building and delivering the best solutions that we've ever put in front of customers, which is driving stronger daily engagement from a diverse set of go-to-market personas. Our Operations Suite again grew more than 20% year-over-year as our proprietary data asset continues to prove mission-critical to any AI-driven initiative that touches go-to-market. This is our fastest-growing product, and it is accelerating as it gets bigger. With the launch of Copilot last year, its expansion into GTM Workspace this quarter, and the evolution of our GTM Studio platform, we have begun to play offense again. Through the innovation we are driving, I believe it is only a matter of time before ZoomInfo will be synonymous with AI and go-to-market. We believe that our unique and proprietary data assets put us in the winners column as AI proliferates across go-to-market teams.
While LLMs can reliably deliver data points available through the second or third page of search results, it is unique data, not available on the public web, that go-to-market teams require in order to stand out in increasingly competitive markets. If a customer is looking for every residential or commercial roofer in the United States, or every company with at least three vehicles in their fleets, or every non-franchised quick-service restaurant in a certain zip code, or to identify the buyers visiting their website or researching their competitors, they come to us, not just for this unique data asset, but also for our ability to tie that data asset to our contact and signal data and put them in a position to execute a sales or marketing workflow around these go-to-market attributes.
By using Copilot and GTM Workspace, frontline go-to-market professionals get a single pane of glass to execute their daily workflows. GTM Studio is already generating strong interest from operations leaders and their counterparts in frontline sales leadership as they look to close the gap between idea and execution. We are also winning with our account-based marketing platform. ZoomInfo is recognized as the only vendor positioned in the customer's choice quadrant in the 2025 Gartner Voice of the Customer report for ABM platforms, and we added millions of ACV in the quarter as customers like EmployBridge, Sienna, and MasterControl migrated from legacy ABM providers to our integrated ABM platform. With our Salesforce partnership, ZoomInfo Revenue Agent is now bringing the industry's most comprehensive B2B data and agents directly into AgentForce.
Our data is enabling sales teams to use natural language queries to uncover hidden opportunities and engage the right contacts at the right time within their existing Salesforce workflows. Through our expanded platform, our unique and proprietary data asset, and through recently released partner integrations, our pace of innovation continues to accelerate. During the quarter, we closed up-market opportunities with insightsoftware, a fast-growing software provider to the Office of the CFO, Ryder System, a $12 billion transportation and logistics company, BrightView, a multi-billion dollar commercial landscaper, and Circle K, a multinational convenience store brand. These wins highlight our focused move up-market and the large total addressable market we have across a wide range of industries. Additionally, a global professional services firm expanded ZoomInfo enterprise-wide, adding sales seats, data, and our marketing and talent solutions.
Their CMO called it a no-brainer to improve sales pipeline generation, identify active buying signals, reduce wasted time on unproductive leads, and connect with the right decision-makers. A large private unified data and AI company is now leveraging our sales intelligence platform to power its land and expand sales motion across enterprise accounts while also using us to efficiently penetrate new verticals. We demonstrated to one of the largest companies in the world how our data provided a 25% improvement in coverage rates compared to their existing data provider, including far superior coverage in the SMB and startup space. Through company data initiatives, we have increased match rates for customers by more than 20% over the last six months. This data advantage is increasingly creating up-market displacement opportunities from organizations using legacy vendors that provide stale and low-quality data.
Many of the world's fastest-growing and most innovative AI-native companies like Levelpath, Harvey, Pano.ai, and Tilts choose ZoomInfo as they scale their sales teams and need data, signals, and workflow to scale in the enterprise. To continue to win, we are providing our customers more than just another fragmented tool or another buzzy solution. We are providing the unified data foundation that connects CRM data, engagement signals, intent data, call transcripts, and market intelligence into one AI-ready system, giving sellers AI to allow them to shift their focus away from the time-consuming, low-value tasks of building decks and account plans, filling out CRM fields, prioritizing prospecting lists, writing follow-ups, and onto the art of sales, building relationships, adding consultative value, and closing deals. For 20 years, ZoomInfo has been the trusted source of truth for company and contact data. That foundation isn't going away.
It's becoming the launchpad for something much bigger. Today, our master data management capabilities unify fragmented go-to-market data across systems into a single intelligence layer: clean, connected, constantly updated. Now we turn that intelligence into action. With GTM Studio and GTM Workspace, execution becomes automatic. Sellers, operators, leaders, even their AI agents know exactly where to focus, what to do next, and how to move the number. We're moving from powering decisions to powering outcomes, from informing go-to-market to executing it. As we innovate for our customers, we continue to be focused capital allocators for our shareholders. In the quarter, we delivered a nearly 300 basis points sequential improvement in margins and are raising our growth expectations for the year. We remain confident in our ability to sustainably deliver revenue growth and expanding margins. We continue to be aggressive buyers of our stock.
We are increasingly confident in the trajectory of the business, which gives us even more conviction that our ongoing share repurchases will drive substantial shareholder value, and we will continue to put the majority of the cash we generate into repurchasing ZoomInfo shares for as long as that is the best and highest return use of our free cash flow. AI is giving us an opportunity to capitalize on our proprietary data assets. We are building stickier user engagement and customer relationships, and we have improved net revenue retention for the fifth straight quarter. With that, I'll turn the call over to Graham.
Thanks, Henry. Q3 GAAP revenue was $318 million, up 5% year-over-year, and adjusted operating income was $118 million, a margin of 37% above the guidance ranges we provided. Over the last few quarters, we have highlighted the stabilization we have seen in the business. In this quarter, I'm excited to share several places where I now see signs of improvement. As you know, we have sharpened our focus on our up-market business, which now represents 73% of our total ACV, up 10 percentage points in two years. This continued focus drove a two-point acceleration up-market with 6% up-market ACV growth, coupled with a sequential improvement down-market, which declined 10% year-over-year as compared to 11% in the prior quarter. Net revenue retention improved to 90% in the quarter, up 5 percentage points in a year, and the highest level of NRR we have seen since Q2 2023.
In-period net revenue retention for up-market customers is again over 100% as we further entrench ZoomInfo as a mission-critical piece of the way scaled businesses go to market. We have always operated efficiently with disciplined investments driving high levels of profitability, and I am pleased to report a 37% adjusted operating income margin in the quarter, delivering year-over-year margin improvement, which, combined with our revenue growth, returned us to a rule of 40 company for the first time in six quarters. We now have 1,887 customers with more than $100,000 in ACV, a 4% year-over-year increase in customers, with ACV growth from that cohort materially outpacing customer growth. ACV growth in the quarter was particularly strong for this cohort, and next to Q4 last year, this was our best result in several years. Adding 5X more ACV across our 100K logo cohort than we did in Q3 last year.
ACV for the million-dollar cohort accelerated in the quarter and was up more than 30% year-over-year. We delivered strong results this quarter, and we are again raising our expectations for the full year. Our up-market strategy is working, our innovation engine is accelerating, and our execution has been consistent. We are now guiding to low single-digit revenue growth for 2025 with an AOI margin of 36%, and we are confident in our opportunity to return to delivering rule of 40 results on an annual basis as we drive a combination of revenue growth and expanding margins. As opposed to a dynamic where equity is deployed as a substitute for cash compensation, our stock compensation relative to revenue runs well below software industry norms and continues declining, with an increasing shift towards performance-based equity.
As a result, our rule of 40 reflects a high-quality mix of strong operating performance and financial discipline. Operations growth accelerated in the quarter, continuing to grow greater than 20% year-over-year, and Copilot had another strong quarter. While still early, Copilot renewals are very promising, with a mid to high single-digit improvement to uplift on initial renewal as compared to renewals on Sales OS. As we focus on driving growth up-market, we also remain steadfastly focused on making our down-market business healthier, as we do more to make it easier for smaller customers to buy the packages they need while reducing our cost of selling to the right customers in this segment. Our internal teams have done an excellent job leveraging ZoomInfo's proprietary data asset to engineer this shift.
We built models identifying payment risk among smaller customers using our data to underpin collection risk prediction and new business risk scoring models. These integrate directly with our Salesforce instance and are fueled by ZoomInfo data to provide real-time risk assessments. Leveraging these models, we successfully reduced invoice write-offs by 45% since launching in 2024. In addition, the nature of our write-offs has changed, with most write-offs now stemming from installments later in the contract of down-market customers, and the prevalence of write-offs where no payment was received is at all-time lows for the company. The quality of our customer base is improving, which is driving better conversion to revenue and improving collection trends. One item I would note is that as our business shifts up-market, it is becoming more seasonal, and as such, year-over-year growth is becoming a more important lens through which to evaluate the business.
While sequential growth is becoming less important. We expect a pattern of sequential revenue growth to fluctuate throughout the year, and you should not be surprised to see periods where the sequential trend steps up or down due to the amount of up-market or down-market activity and the linearity of ACV added in the current or prior quarter. With operations acceleration, positive Copilot renewal outcomes, a smaller down-market business, and improved up-market NRR, overall net revenue retention continues to be on a positive trajectory, up 5 percentage points in a year. We also continue to shift customers to longer-term contracts with more than 50% of our overall book of business on a contract length greater than one year. This enables reps to be more consultative with customers and drives efficiency across the renewal process, which we expect will continue driving better renewal outcomes and improving NRR over time.
Turning to cash. Operating cash flow was $94 million in Q3. Unlevered free cash flow for the quarter was $95 million, an 81% conversion from adjusted operating income, consistent with seasonality from prior years and representing a margin of 30%. In Q3, we repurchased 8.3 million shares of common stock at an average price of $10.46 for an aggregate $87 million. Weighted average diluted shares outstanding for the quarter used in calculating non-GAAP diluted earnings per share was 334 million, and the non-GAAP share count exiting the quarter was 330 million. We have used 116% of the unlevered free cash generated since the start of 2024 to repurchase shares of stock, reducing our weighted average shares outstanding by approximately 80 million shares over the last two years.
We expect to continue to use the cash flow we generate each quarter primarily to retire shares of ZoomInfo, and we are committed to opportunistically taking advantage of dislocations in share price as we remain resolute that share repurchases will generate the best possible long-term return for shareholders when done at a deep discount to intrinsic value like we see today. We ended the quarter with $135 million in cash, cash equivalents, and investments, and we carried $1.3 billion in gross debt. As a result, our net leverage ratio is 2.6 times trailing 12 months adjusted EBITDA and 2.4 times trailing 12 months cash EBITDA, which is defined as consolidated EBITDA in our credit agreements.
With respect to liabilities and future performance obligations, unearned revenue at the end of the quarter was $432 million, and remaining performance obligations, or RPO, were $1.17 billion, of which $824 million are expected to be recognized in the next 12 months. For those looking at calculated billings, the mix of our balance sheet reserve estimates and the changes in practices that we made relative to higher-risk businesses requiring prepayment in advance drove higher than normalized growth in calculated billings in Q3 last year. As a result, I would caution you from extrapolating too much from the calculated billings growth trajectory in Q3 this year. In summary, we delivered strong results for the quarter with meaningful signs of improvement.
Shifting to guidance, for Q4, we expect GAAP revenue in the range of $307 million-$310 million, adjusted operating income in the range of $117 million-$120 million, and non-GAAP net income in the range of $0.27-$0.29 per share. We are again raising guidance for the full year, and for 2025, we now expect GAAP revenue in the range of $1.237 billion-$1.240 billion, representing positive 2% annual revenue growth for the year at the midpoint of guidance, and adjusted operating income in the range of $440 million-$443 million, representing a 36% margin at the midpoint of guidance. We expect non-GAAP net income in the range of $1.04-$1.06 per share based on $341 million weighted average diluted shares outstanding, and we expect unlevered free cash flow in the range of $424 million-$444 million.
In closing, we remain committed to properly managing expectations using a guidance framework consistent with prior quarters and are committed to delivering revenue growth, margin expansion, and aggressive share repurchases in 2026, which when combined support our expectation of accelerating free cash flow per share growth in 2026 relative to 2025. Now, I will turn it over to the operator to open the call for questions.