ZOOMINFO TECHNOLOGIES : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and
related notes included in our 2020 Form 10-K, the information included under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Part II, Item 7 of our 2020 Form 10-K, and the unaudited
consolidated financial statements and related notes included in Part I, Item 1
of this Form 10-Q. In addition to historical data, the following discussion
contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those discussed in our
forward-looking statements as a result of various factors, including but not
limited to those discussed under "Cautionary Statement Regarding Forward-Looking
Statements" in this Form 10-Q and under "Risk Factors" in Part I, Item 1A of our
2020 Form 10-K.
References in this Form 10-Q to "ZoomInfo Technologies Inc." refer to ZoomInfo
Technologies Inc. and not to any of its subsidiaries unless the context
indicates otherwise. References in this Form 10-Q to "ZoomInfo," the "Company,"
"we," "us," and "our" refer (1) prior to the consummation of the Reorganization
Transactions, to ZoomInfo OpCo and its consolidated subsidiaries, and (2) after
the consummation of the Reorganization Transactions, to ZoomInfo Technologies
Inc. and its consolidated subsidiaries unless the context indicates otherwise.
Numerical figures included in this Form 10-Q have been subject to rounding
adjustments. Accordingly, numerical figures shown as totals in various tables
may not be arithmetic aggregations of the figures that precede them.
Overview
ZoomInfo is a leading go-to-market intelligence platform for sales and marketing
professionals. Our cloud-based platform provides highly accurate and
comprehensive information and insights on the organizations and professionals
they target, enabling sellers and marketers to shorten sales cycles and increase
win rates by delivering the right message, to the right person, at the right
time.
ZoomInfo, formerly known as DiscoverOrg, was co-founded in 2007 by our CEO,
Henry Schuck. Henry founded the Company to unlock actionable business
information and insights to make organizations more successful. Over time, we
developed new and innovative methods for gathering and cleansing data and
insights using automated processes to scale our capabilities. In February 2019,
we acquired Pre-Acquisition ZI and subsequently the combined business has been
re-branded as ZoomInfo. Pre-Acquisition ZI developed technologies to gather,
parse, and match data at massive scale. We combined Pre-Acquisition ZI's
technology with our technology to deliver more value to customers with our
combined platform that provides broader coverage and higher-quality insights.
We offer access to our platform on a subscription basis and we generate
substantially all of our revenue from sales of subscriptions. Our subscription
fees include the use of our platform and access to customer support.
Subscriptions generally range from one to three years in length with over 25% of
our ACV being under multi-year agreements. We typically bill our customers at
the beginning of each annual, semi-annual, or quarterly period and recognize
revenue ratably over the term of the subscription period.
We sell our ZoomInfo platform to both new and existing customers. Some existing
customers continue to renew their subscriptions to pre-acquisition versions of
the Pre-Acquisition ZI and DiscoverOrg solutions. We price our subscriptions
based on the functionality, users, and records under management that are
included in each product edition. Our paid product editions are Elite, Advanced,
and Professional, and we have a free Community Edition.


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Recent Developments
Senior Unsecured Notes Offering
In February 2021, ZoomInfo Technologies LLC and ZoomInfo Finance Corp., indirect
subsidiaries of ZoomInfo Technologies Inc., completed an offering of $350.0
million in aggregate principal amount of 3.875% senior notes due 2029. We used
all of the net proceeds, along with cash on hand, to prepay $356.4 million
aggregate principal amount of our first lien term loans outstanding under the
first lien credit agreement (the "Debt Prepayment"). Following the Debt
Prepayment, as of February 2, 2021, $400.0 million aggregate principal amount of
first lien term loans were outstanding under our first lien credit agreement.
First Lien Credit Agreement Amendment
In February 2021, ZoomInfo LLC entered into an amendment to our first lien
credit agreement, pursuant to which, among other things, there will be (i) an
increase in the aggregate commitments to $250.0 million under our first lien
revolving credit facility, (ii) the addition of the ZoomInfo Technologies LLC as
a co-borrower, (iii) the repricing of our first lien term loan facility maturing
in February 2026 and first lien revolving credit facility, and (iv) an extension
of the maturity date of our first lien revolving credit facility to November
2025.
COVID-19
In December 2019, a novel strain of Coronavirus disease ("COVID-19") was
reported, and in March 2020, the WHO characterized COVID-19 as a pandemic. The
ongoing COVID-19 pandemic has resulted in travel restrictions, prohibitions of
non-essential activities, disruption and shutdown of certain businesses, and
greater uncertainty in global financial markets. Such conditions have created
disruption in global supply chains, increasing rates of unemployment, and
adverse impacts for many industries. The outbreak could have a continued adverse
impact on economic and market conditions and has triggered a period of global
economic slowdown.
As a result of the COVID-19 pandemic, we experienced headwinds and tailwinds
that impacted our business. In early 2020, we experienced headwinds in some
sales cycles as business leaders adapted to the impacts of the pandemic.
Customers in heavily impacted industries represented less than 4% of ACV, and in
early 2020, we saw heightened cancellations and reductions in spend from this
subset of customers relative to pre-COVID time frames. We also experienced
longer sales cycles and more intense scrutiny, particularly for larger purchases
and upgrades as customers and prospects re-assessed their growth trajectory in
light of the changing economic environment. Our sales teams adjusted to the new
environment and drove improved sales and retention activity relative to prior
year results. These headwinds dissipated during the course of the year and were
partially offset by tailwinds we experienced relating to reduced spending on
travel, facilities, and marketing events. By the end of 2020, demand for our
platform normalized and returned to levels materially consistent with historical
trends. The extent and continued impact of the COVID-19 pandemic on our
operational and financial condition will depend on certain developments,
including: the duration and spread of the outbreak; government responses to the
pandemic including vaccine availability and deployment; its impact on the health
and welfare of our employees and their families; its impact on our customers and
our sales cycles; its impact on customer, industry, or employee events; delays
in hiring and onboarding new employees; and effects on our partners and vendors,
some of which are uncertain, difficult to predict, not within our control.
Furthermore, because of our largely subscription-based business model, the
effect of the COVID-19 pandemic may not be fully reflected in our results of
operations and overall financial condition until future periods.
To address the safety and health of our employees during the COVID-19 pandemic,
in the first quarter of 2020 we temporarily closed all of our offices and
enabled our entire workforce to work remotely. These changes remained largely in
effect throughout the first quarter of 2021 and could extend into future
quarters. The impact, if any, of these and any additional operational changes we
may implement is uncertain, but changes we have implemented to date have not
affected, and are not expected to materially, affect our ability to maintain
operations, including financial reporting systems, internal control over
financial reporting, and disclosure controls and procedures. See "Human Capital"
in Part I, Item 1 and "Risk Factors" in Part I, Item 1A of our 2020 Form 10-K.

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Key Factors Affecting Our Performance
We believe that the growth and future success of our business depends on many
factors, including the following:
Continuing to Acquire New Customers
We are focused on continuing to grow the number of customers that use our
platform. The majority of revenue growth when comparing the three months ended
March 31, 2021 to the three months ended March 31, 2020 was the result of new
customers added over the last 12 months. Our operating results and growth
prospects will depend in part on our ability to continue to attract new
customers. Additionally, acquiring new customers strengthens the power of our
contributory network. We will need to continue to invest in our efficient
go-to-market effort to acquire new customers.
Delivering Additional High-Value Solutions to Our Existing Customers
Many of our customers purchase additional high-value solutions as they expand
their use of our platform. Customers add additional services and/or upgrade
their platform. We believe there is a significant opportunity for expansion with
our existing customers through additional solutions.
Expanding Relationships with Existing Customers
Many of our customers increase spending with us by adding users or integrating
incremental data as they increase their use of our platform. Several of our
largest customers have expanded the deployment of our platform across their
organizations following their initial deployment. We believe there is a
significant opportunity to add additional users and data integration within our
existing customers.
Our ability to expand relationships with existing customers and deliver
additional high-value solutions is demonstrated by our net annual retention
rate. We measure our retention rate on an annual basis and define annual net
revenue retention as the total ACV generated by our customers and customers of
Pre-Acquisition ZI at the end of the year divided by the ACV generated by the
same group of customers at the end of the prior year. Our net annual retention
rate for the year ended December 31, 2020 was 108%. We also measure our success
in expanding relationships with existing customers by the number of customers
that contract for more than $100,000 in ACV. As of March 31, 2021, we had more
than 950 customers with over $100,000 in ACV.
Non-GAAP Financial Measures
In addition to our results determined in accordance with U.S. GAAP, we believe
certain non-GAAP measures are useful in evaluating our operating performance.
These measures include, but are not limited to, Adjusted Operating Income,
Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted Net Income, and
Adjusted Net Income per diluted share which are used by management in making
operating decisions, allocating financial resources, internal planning and
forecasting, and for business strategy purposes. We believe that non-GAAP
financial information is useful to investors because it eliminates certain items
that affect period-over-period comparability, and it provides consistency with
past financial performance and additional information about our underlying
results and trends by excluding certain items that may not be indicative of our
business, results of operations, or outlook.
We view Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted
EBITDA, Adjusted Net Income and Adjusted Net Income per diluted share as
operating performance measures. We believe that the most directly comparable
U.S. GAAP financial measure to Adjusted Operating Income is U.S. GAAP operating
income. We believe that the most directly comparable U.S. GAAP financial measure
to Adjusted Operating Income Margin is U.S. GAAP operating income divided by
U.S. GAAP revenue. We believe that the most directly comparable U.S. GAAP
financial measure to Adjusted EBITDA and Adjusted Net Income is U.S. GAAP Net
Income, and the most directly comparable U.S. GAAP financial measure to Adjusted
Net Income per diluted share is U.S. GAAP net earnings per diluted share.

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Non-GAAP financial measures are not meant to be considered in isolation or as a
substitute for the comparable GAAP measures, but rather as supplemental
information to our business results. This information should be read only in
conjunction with our consolidated financial statements prepared in accordance
with GAAP. There are limitations to these non-GAAP financial measures because
they are not prepared in accordance with GAAP and may not be comparable to
similarly titled measures of other companies due to potential differences in
methods of calculation and items or events being adjusted. In addition, other
companies may use different measures to evaluate their performance, all of which
could reduce the usefulness of our non-GAAP financial measures as tools for
comparison. A reconciliation is provided below for each non-GAAP financial
measure to the most directly comparable financial measure stated in accordance
with GAAP.
Adjusted Operating Income, Adjusted Operating Income Margin, and Adjusted Net
Income
We define Adjusted Operating Income as income from operations plus (i) impact of
fair value adjustments to acquired unearned revenue, (ii) amortization of
acquired technology and other acquired intangibles, (iii) equity-based
compensation expense, (iv) restructuring and transaction-related expenses, and
(v) integration costs and acquisition-related compensation. We exclude the
impact of fair value adjustments to acquired unearned revenue and amortization
of acquired technology and other acquired intangibles, as well as equity-based
compensation, because these are non-cash expenses or non-cash fair value
adjustments and we believe that excluding these items provides meaningful
supplemental information regarding performance and ongoing cash-generation
potential. We exclude restructuring and transaction-related expenses, as well as
integration costs and acquisition-related compensation, because such expenses
are episodic in nature and have no direct correlation to the cost of operating
our business on an ongoing basis. Adjusted Operating Income is presented because
it is used by management to evaluate our financial performance and for planning
and forecasting purposes. Additionally, we believe that it and similar measures
are widely used by securities analysts and investors as a means of evaluating a
company's operating performance. Adjusted Operating Income should not be
considered as an alternative to operating income as an indicator of operating
performance.
We define Adjusted Net Income as Adjusted Operating Income less (i) interest
expense, net, (ii) other (income) expense, net, excluding TRA liability
remeasurement expense (benefit), and (iii) income tax expense (benefit)
including incremental tax effects of adjustments to arrive at Adjusted Operating
Income and current tax benefits related to the TRA. Adjusted Net Income is
presented because it is used by management to evaluate our financial performance
and for planning and forecasting purposes. Additionally, we believe that it and
similar measures are widely used by securities analysts and investors as a means
of evaluating a company's operating performance. Adjusted Net Income should not
be considered as an alternative to cash flows from operating activities as a
measure of liquidity or as an alternative to operating income or net income as
indicators of operating performance.

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The following table presents a reconciliation of Net income (loss) to Adjusted
Net Income and Income (loss) from operations to Adjusted Operating Income for
the periods presented:
                                                                          Three Months Ended March 31,
($ in millions)                                                             2021                   2020
Net income (loss)                                                    $          (33.9)         $     (5.9)
Add (less): Expense (benefit) from income taxes                                  49.7                (0.4)
Add: Interest expense, net                                                        6.5                24.5
Add: Loss on debt extinguishment                                                  5.9                 2.2
Add (less): Other expense (income), net(a)                                       (0.2)               (0.1)
Income (loss) from operations                                                    28.0                20.3

Add: Impact of fair value adjustments to acquired unearned revenue(b)

                                                                        0.6                 1.4
Add: Amortization of acquired technology                                          6.7                 5.6
Add: Amortization of other acquired intangibles                                   4.8                 4.6
Add: Equity-based compensation                                                   18.1                11.3
Add: Restructuring and transaction-related expenses(c)                            4.4                 2.9
Add: Integration costs and acquisition-related expenses(d)                        3.4                 3.0
Adjusted Operating Income                                            $           66.1          $     49.1
Less: Interest expense, net                                                      (6.5)              (24.5)

Less (add): Other expense (income), net, excluding TRA liability remeasurement (benefit) expense

                                                   0.2                 0.1
Add (less): Benefit (expense) from income taxes                                 (49.7)                0.4
Less: Tax impacts of adjustments to net income (loss)                            40.6                (4.9)
Adjusted Net Income                                                  $           50.7          $     20.2


__________________
(a)Primarily represents revaluations on tax receivable agreement liability and
foreign exchange remeasurement gains and losses.
(b)Represents the impact of fair value adjustments to acquired unearned revenue
relating to services billed by an acquired company, including Pre-Acquisition
ZI, prior to our acquisition of that company. These adjustments represent the
difference between the revenue recognized based on management's estimate of fair
value of acquired unearned revenue and the receipts billed prior to the
acquisition less revenue recognized prior to the acquisition.
(c)Represents costs directly associated with acquisition or disposal activities,
including employee severance and termination benefits, contract termination fees
and penalties, and other exit or disposal costs. For the three months ended
March 31, 2021, this expense related primarily to impairment and accelerated
depreciation related to the Company's anticipated Waltham office relocation. For
the three months ended March 31, 2020, this expense related primarily to
professional fees for the preparation for an initial public offering.
(d)Represents costs directly associated with integration activities for
acquisitions and acquisition-related compensation, which includes transaction
bonuses and retention awards. For the three months ended March 31, 2021, this
expense related primarily to cash vesting payments from the acquisition of
Pre-Acquisition ZI. For the three months ended March 31, 2020, this expense
related primarily to cash vesting payments from the acquisition of
Pre-Acquisition ZI. This expense is included in cost of service, sales and
marketing expense, research and development expense, and general and
administrative expense as follows:
                                                                        Three Months Ended March 31,
($ in millions)                                                           2021                  2020
Cost of service                                                    $           0.5          $      0.1
Sales and marketing                                                            0.6                 1.0
Research and development                                                       1.8                 1.6
General and administrative                                                     0.5                 0.2

Total integration costs and acquisition-related compensation $

   3.4          $      3.0



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We define Adjusted Operating Income Margin as Adjusted Operating Income divided
by the sum of revenue and the impact of fair value adjustments to acquired
unearned revenue.
                                                                   Three Months Ended March 31,
($ in millions)                                                      2021                  2020
Adjusted Operating Income                                      $        66.1           $     49.1

Revenue                                                                153.3                102.2
Impact of fair value adjustments to acquired unearned revenue            0.6                  1.4
Revenue for adjusted operating margin calculation              $       154.0           $    103.6
Adjusted Operating Income Margin                                          43   %               47  %


Adjusted Operating Income for the three months ended March 31, 2021 was
$66.1 million and represented an Adjusted Operating Income Margin of 43%.
Adjusted Operating Income for the three months ended March 31, 2020 was
$49.1 million and represented an Adjusted Operating Income Margin of 47%. The
increase of $17.0 million, or 35%, was driven primarily from the growth in
revenue driven by additional customers and increasing revenue from existing
customers. Adjusted Operating Income Margin decreased to 43% in the three months
ended March 31, 2021 from 47% in the three months ended March 31, 2020 due to
incremental sales and marketing expenses related to signing new customers and
retaining and upselling existing customers, and general and administration costs
to support incremental public company related requirements.
Adjusted EBITDA
EBITDA is defined as earnings before debt-related costs, including interest and
loss on debt extinguishment, provision for taxes, depreciation, and
amortization. Management further adjusts EBITDA to exclude certain items of a
significant or unusual nature, including other (income) expense, net, impact of
certain non-cash items, such as fair value adjustments to acquired unearned
revenue and equity-based compensation, restructuring and transaction-related
expenses, and integration costs and acquisition-related compensation. We exclude
these items because these are non-cash expenses or non-cash fair value
adjustments, which we do not consider indicative of performance and ongoing
cash-generation potential or are episodic in nature and have no direct
correlation to the cost of operating our business on an ongoing basis. Adjusted
EBITDA is presented because it is used by management to evaluate our financial
performance and for planning and forecasting purposes. Additionally, we believe
that it and similar measures are widely used by securities analysts and
investors as a means of evaluating a company's operating performance. Adjusted
EBITDA should not be considered as an alternative to cash flows from operating
activities as a measure of liquidity or as an alternative to operating income or
net income as indicators of operating performance.

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The following table presents a reconciliation of net income (loss) to Adjusted
EBITDA for the periods presented:
                                                                          Three Months Ended March 31,
($ in millions)                                                             2021                   2020
Net income (loss)                                                    $          (33.9)         $     (5.9)
Income tax expense (benefit)                                                     49.7                (0.4)
Interest expense, net                                                             6.5                24.5
Loss on debt extinguishment                                                       5.9                 2.2
Depreciation                                                                      3.9                 1.9
Amortization of acquired technology                                               6.7                 5.6
Amortization of other acquired intangibles                                        4.8                 4.6
EBITDA                                                                           43.6                32.6
Other (income) expense, net(a)                                                   (0.2)               (0.1)
Impact of fair value adjustments to acquired unearned revenue(b)                  0.6                 1.4
Equity-based compensation expense                                                18.1                11.3

Restructuring and transaction related expenses (excluding depreciation)(c)

                                                                  3.2                 2.9
Integration costs and acquisition-related expenses(d)                             3.4                 3.0
Adjusted EBITDA                                                      $           68.8          $     51.0


__________________
(a)Primarily represents revaluations on tax receivable agreement liability and
foreign exchange remeasurement gains and losses.
(b)Represents the impact of fair value adjustments to acquired unearned revenue
relating to services billed by an acquired company, including Pre-Acquisition
ZI, prior to our acquisition of that company. These adjustments represent the
difference between the revenue recognized based on management's estimate of fair
value of acquired unearned revenue and the receipts billed prior to the
acquisition less revenue recognized prior to the acquisition.
(c)Represents costs directly associated with acquisition or disposal activities,
including employee severance and termination benefits, contract termination fees
and penalties, and other exit or disposal costs. For the three months ended
March 31, 2021, this expense related primarily to impairment charges related to
the Company's anticipated Waltham office relocation. For the three months ended
March 31, 2020, this expense related primarily to professional fees for the
preparation for an initial public offering.
(d)Represents costs directly associated with integration activities for
acquisitions and acquisition-related compensation, which includes transaction
bonuses and retention awards. For the three months ended March 31, 2021, this
expense related primarily to cash vesting payments from the acquisition of
Pre-Acquisition ZI. For the three months ended March 31, 2020, this expense
related primarily to cash vesting payments from the acquisition of
Pre-Acquisition ZI. This expense is included in cost of service, sales and
marketing expense, research and development expense, and general and
administrative expense as follows:
                                                           Three Months Ended March 31,
($ in millions)                                                  2021                2020
Cost of service                                        $         0.5                $ 0.1
Sales and marketing                                              0.6                  1.0
Research and development                                         1.8                  1.6
General and administrative                                       0.5                  0.2
Total integration costs and acquisition-related
compensation                                           $         3.4        

$ 3.0

Adjusted EBITDA for the three months ended March 31, 2021 was $68.8 million, an
increase of $17.8 million, or 35%, relative to the three months ended March 31,
2020. This increase was driven primarily from the growth in revenue and
additional customers in 2021 and 2020.
Factors Affecting the Comparability of Our Results of Operations
As a result of a number of factors, our historical results of operations are not
comparable from period to period and may not be comparable to our financial
results of operations in future periods. Set forth below is a brief discussion
of the key factors impacting the comparability of our results of operations.

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Impact of the Reorganization Transactions
ZoomInfo Technologies Inc. is a corporation for U.S. federal and state income
tax purposes. Our accounting predecessor, ZoomInfo OpCo, was and is treated as a
flow-through entity for U.S. federal income tax purposes, and as such, only
certain subsidiaries that were organized as corporations for U.S. federal income
tax purposes have been subject to U.S. federal income tax at the entity level
historically. Accordingly, unless otherwise specified, the historical results of
operations and other financial information set forth in this Form 10-Q only
include a provision for U.S. federal income tax for income allocated to those
subsidiaries that were organized as corporations for U.S. federal income tax
purposes. Following the completion of the Reorganization Transactions, ZoomInfo
Technologies Inc. pays U.S. federal and state income taxes as a corporation on
its share of our taxable income.
ZoomInfo OpCo is the predecessor of ZoomInfo Technologies Inc. for financial
reporting purposes. As a result, the consolidated financial statements of
ZoomInfo Technologies Inc. recognize the assets and liabilities received in the
reorganization at their historical carrying amounts, as reflected in the
historical consolidated financial statements of ZoomInfo OpCo, the accounting
predecessor.
In addition, in connection with the Reorganization Transactions and the IPO, we
entered into the tax receivable agreements described in Note 17 to our unaudited
consolidated financial statements included in Part I, Item 1 of this Form 10-Q.
Initial Public Offering
On June 8, 2020, ZoomInfo Technologies Inc. completed the IPO, in which it sold
51,175,000 shares of Class A common stock (including shares issued pursuant to
the exercise in full of the underwriters' option to purchase additional shares)
at a public offering price of $21.00 per share for net proceeds of $1,019.6
million, after deducting underwriters' discounts (but excluding other offering
expenses and reimbursements). To date, ZoomInfo OpCo has used the proceeds it
received through ZoomInfo HoldCo from the IPO to (i) redeem and cancel all
outstanding Series A Preferred Units of ZoomInfo OpCo for approximately
$274.2 million, including accumulated but unpaid distributions and related
prepayment premiums; (ii) repay in full all outstanding indebtedness under our
second lien credit agreement, for approximately $380.6 million, including
related prepayment premiums and accrued interest; (iii) repay $35.0 million of
outstanding borrowings under the Company's first lien revolving credit facility;
(iv) pay certain expenses related to the IPO; and (v) prepay $100.0 million
aggregate principal amount of the first lien term loans outstanding under our
first lien credit agreement, including accrued interest thereon, using
approximately $101.2 million of the proceeds; with the remaining proceeds
intended to be used for general corporate purposes. We expect these debt
repayments to drive future reductions in our interest expense compared to
historical results.
Impact of Acquisitions
We seek to grow through both internal development and the acquisition of
businesses that broaden and strengthen our platform. Our recent acquisitions
include Clickagy in October 2020, and EverString in November 2020. Purchase
accounting requires that all assets acquired and liabilities assumed be recorded
at fair value on the acquisition date, including unearned revenue. Revenue from
contracts that are impacted by the estimate of fair value of the unearned
revenue upon acquisition will be recorded based on the fair value until such
contract is terminated or renewed, which will differ from the receipts received
by the acquired company allocated over the service period for the same reporting
periods.
Equity-Based Compensation
New awards and modifications that took place as part of the Reorganization
Transactions and the IPO contributed to elevated equity-based compensation
expense in 2020 relative to 2019 and expected equity-based compensation expense
for 2021. See Note 15 for unamortized equity-based compensation costs related to
each type of equity-based incentive award.

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Impact of Changes to Long-term Debt
In February 2021, ZoomInfo Technologies LLC and ZoomInfo Finance Corp., indirect
subsidiaries of ZoomInfo Technologies Inc., completed an offering of $350.0
million in aggregate principal amount of 3.875% senior notes due 2029. We used
all of the net proceeds, along with cash on hand, to make the Debt Prepayment.
Following the Debt Prepayment, as of February 2, 2021, $400.0 million aggregate
principal amount of first lien term loans were outstanding under our first lien
credit agreement. In February 2021, ZoomInfo LLC entered into an amendment to
our first lien credit agreement, pursuant to which, among other things, there
will be (i) an increase in the aggregate commitments to $250.0 million under our
first lien revolving credit facility, (ii) the addition of the ZoomInfo
Technologies LLC as a co-borrower, (iii) the repricing of our first lien term
loan facility maturing in February 2026 and first lien revolving credit
facility, and (iv) an extension of the maturity date of our first lien revolving
credit facility to November 2025. We expect the Debt Prepayment, repricing, and
issuance of Senior Notes to drive future reductions in our interest expense
compared to historical results.
In connection with the debt repricing, ZoomInfo Technologies LLC replaced
ZoomInfo LLC as the tax borrower on the 1st Lien Credit Agreements. To
facilitate the change in tax borrower, the Company executed a series of internal
equity transactions resulting in the recognition of $45.0 million of non-cash
tax expense, substantially all of which is allocable to the noncontrolling
interest.
Components of Our Results of Operations
Revenue
We derive 99% of our revenue from subscription services and the remainder from
recurring usage-based services. Our subscription services consist of our SaaS
applications. Pricing of our subscription contracts are generally based on the
functionality provided, the number of users that access our applications, the
amount of data that the customer integrates into their systems. Our subscription
contracts typically have a term ranging from one to three years and are
non-cancelable. We typically bill for services in advance either annually,
semi-annually, or quarterly, and we typically require payment at the beginning
of each annual, semi-annual, or quarterly period.
Subscription revenue is generally recognized ratably over the contract term
starting with when our service is made available to the customer. Recurring
usage-based revenue is recognized in the period services are utilized by our
customers. The amount of revenue recognized reflects the consideration we expect
to be entitled to receive in exchange for these services. We record a contract
asset when revenue recognized on a contract exceeds the billings to date for
that contract.
Unearned revenue results from cash received or amounts billed to customers in
advance of revenue recognized upon the satisfaction of performance obligations.
The unearned revenue balance is influenced by several factors, including
purchase accounting adjustments, seasonality, the compounding effects of
renewals, invoice duration, invoice timing, dollar size, and new business timing
within the period. The unearned revenue balance does not represent the total
contract value of annual or multi-year, non-cancelable subscription agreements.
Cost of Service
Cost of Service, excluding amortization of acquired technology. Cost of service,
excluding amortization of acquired technology includes direct expenses related
to the support and operations of our SaaS services and related to our research
teams, including salaries, benefits, equity-based compensation, and related
expenses, such as employer taxes, allocated overhead for facilities, IT,
third-party hosting fees, third-party data costs, and amortization of internally
developed capitalized software.
We anticipate that we will continue to invest in costs of service and that costs
of service as a percentage of revenue will stay consistent or modestly decrease
as we realize operating leverage in the business.
Amortization of acquired technology. Amortization of acquired technology
includes amortization expense for technology acquired in business combinations.

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We anticipate that amortization of acquired technology will increase if we make
additional acquisitions in the future.
Gross Profit and Gross Margin
Gross profit is revenue less cost of service, and gross margin is gross profit
as a percentage of revenue. Gross profit has been and will continue to be
affected by various factors, including leveraging economies of scale, the costs
associated with third-party hosting services and third-party data, the level of
amortization of acquired technology, and the extent to which we expand our
customer support and research organizations. We expect that our gross margin
will fluctuate from period to period depending on the interplay of these various
factors.
Operating Expenses
Our operating expenses consist of sales and marketing, research and development,
general and administrative, restructuring and transaction expenses, and
amortization of acquired intangibles. The most significant component of our
operating expenses is personnel costs, which consists of salaries, bonuses,
sales commissions, equity-based compensation, and other employee-related
benefits. Operating expenses also include overhead costs for facilities,
technology, professional fees, depreciation and amortization expense, and
marketing.
Sales and marketing. Sales and marketing expenses primarily consist of employee
compensation such as salaries, bonuses, sales commissions, equity-based
compensation, and other employee-related benefits for our sales and marketing
teams, as well as overhead costs, technology, and marketing programs. Sales
commissions and related payroll taxes directly related to contract acquisition
are capitalized and recognized as expenses over the estimated period of benefit.
We anticipate that we will continue to invest in sales and marketing capacity to
enable future growth, but that sales and marketing expense as a percentage of
revenue will decrease as equity-based compensation expense related to the
modification of HSKB awards and triggered by the IPO become a less significant
component of overall sales and marketing expense. We anticipate that sales and
marketing expense excluding equity-based compensation will fluctuate from period
to period depending on the interplay of our growing investments in sales and
marketing capacity excluding equity-based compensation, the recognition of
revenue, and the amortization of contract acquisition costs.
Research and development. Research and development expenses support our efforts
to enhance our existing platform and develop new software products. Research and
development expenses primarily consist of employee compensation such as
salaries, bonuses, equity-based compensation, and other employee-related
benefits for our engineering and product management teams, as well as overhead
costs. Research and development expenses do not reflect amortization of
internally developed capitalized software. We believe that our core technologies
and ongoing innovation represent a significant competitive advantage for us, and
we expect our research and development expenses to continue to increase as we
invest in research and development resources to further strengthen and enhance
our solutions.
We anticipate that we will continue to invest in research and development in
order to develop new features and functionality to drive incremental customer
value in the future and that research and development expense as a percentage of
revenue will modestly increase in the long term.
General and administrative. General and administrative expenses primarily
consist of employee-related costs such as salaries, bonuses, equity-based
compensation, and other employee related benefits for our executive, finance,
legal, human resources, IT, and business operations and administrative teams, as
well as overhead costs. Additionally, we incur expenses for professional fees
including legal services, accounting, and other consulting services, including
those associated with operating as a public company.
We expect general and administrative expenses as a percentage of revenue to stay
consistent or modestly decrease from 2020, as we realize operating leverage in
the business.

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Amortization of other acquired intangibles. Amortization of acquired intangibles
primarily consists of amortization of customer relationships, trade names, and
brand portfolios.
We anticipate that amortization of other acquired intangibles will increase if
we make additional acquisitions in the future.
Restructuring and transaction expenses. Restructuring and transaction expenses
primarily consist of various restructuring and acquisition activities we have
undertaken to achieve strategic or financial objectives. Restructuring and
acquisition activities include, but are not limited to, consolidation of offices
and responsibilities, office relocation, administrative cost structure
realignment, and acquisition-related professional services fees.
We anticipate that restructuring and transaction expenses will be correlated
with future acquisition activity or strategic restructuring activities, which
could be greater than or less than our historic levels.
Interest Expense, Net
Interest expense represents the interest payable on our debt obligations and the
amortization of debt discounts and debt issuance costs, less interest income.
We anticipate that our interest expense will be substantially lower after having
repaid a portion of our outstanding indebtedness with the proceeds from the IPO.
Interest expense could increase in the future based on changes in variable
interest rates or the issuance of additional debt.
Loss on Debt Extinguishment
Loss on debt extinguishment consists of prepayment penalties and impairment of
deferred financing costs associated with the extinguishment of debt.
We anticipate that losses related to debt extinguishment will only occur if we
extinguish indebtedness before the contractual repayment dates.
Other (Income) Expense, Net
Other (income) expense, net consists primarily of the revaluation of tax
receivable agreement liabilities and foreign currency realized and unrealized
gains and losses related to the impact of transactions denominated in a foreign
currency.
We anticipate that the magnitude of other income and expenses may increase as
tax receivable agreement liabilities increase, or we expand operations
internationally and add complexity to our operations.
Income Tax Expense (Benefit)
ZoomInfo OpCo is currently treated as a pass-through entity for U.S. federal
income tax purposes and most applicable state and local income tax purposes.
Income tax expense (benefit), Deferred tax assets, Deferred tax liabilities, and
liabilities for unrecognized tax benefits reflect management's best assessment
of estimated current and future taxes to be paid by our corporate subsidiaries
and, to the extent paid directly by our limited liability companies and
partnerships that are treated as partnerships for tax purposes, our
partnerships. Our corporate subsidiary, RKSI Acquisition Corporation, is subject
to income taxes in the United States and holds noncontrolling interests in our
subsidiary, ZoomInfo Technologies LLC. ZoomInfo Technologies LLC is treated as a
partnership for U.S. federal and most applicable state and local income tax
purposes. Any taxable income or loss generated by ZoomInfo Technologies LLC is
passed through to and included in the taxable income or loss of its partners,
including ZoomInfo LLC and RKSI Acquisition Corporation. However, because RKSI
Acquisition Corporation is subject to income taxes in both the United States,
income allocated to such corporate subsidiaries for tax purposes reduces the
taxable income allocated to and distributions made to ZoomInfo OpCo. Significant
judgments and estimates are required in determining our consolidated income tax
expense. See Note 2 to our unaudited consolidated financial statements included
in Part I, Item 1 of this Form 10-Q for additional information.

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Results of Operations
The following table presents our results of operations for the three months
ended March 31, 2021 and 2020:
                                                                Three Months Ended March 31,
($ in millions)                                                2021                      2020
Revenue                                                $           153.3          $          102.2

Cost of service:
Cost of service(1)                                                  21.4                      14.8
Amortization of acquired technology                                  6.7                       5.6
Gross profit                                                       125.2                      81.8

Operating expenses:
Sales and marketing(1)                                              48.8                      34.1
Research and development(1)                                         20.4                       9.9
General and administrative(1)                                       18.8                      10.0
Amortization of other acquired intangibles                           4.8                       4.6
Restructuring and transaction related expenses                       4.4                       2.9
Total operating expenses                                            97.2                      61.5
Income (loss) from operations                                       28.0                      20.3

Interest expense, net                                                6.5                      24.5
Loss on debt extinguishment                                          5.9                       2.2
Other (income) expense, net                                         (0.2)                     (0.1)
Income (loss) before income taxes                                   15.8                      (6.3)
Income tax expense (benefit)                                        49.7                      (0.4)
Net income (loss)                                                  (33.9)                     (5.9)

Less: Net income (loss) attributable to ZoomInfo OpCo prior to the Reorganization Transactions

                               -                      (5.9)

Less: Net income (loss) attributable to noncontrolling interests

                                                          (37.1)                        -
Net income (loss) attributable to ZoomInfo
Technologies Inc.                                      $             3.2          $              -


__________________

(1)Includes equity-based compensation expense as follows:

                                                   Three Months Ended March 31,
($ in millions)                                          2021                     2020
Cost of service                            $           3.5                      $  1.7
Sales and marketing                                    8.4                         6.4
Research and development                               2.6                         1.6
General and administrative                             3.6                         1.6
Total equity-based compensation expense    $          18.1                      $ 11.3



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Three Months Ended March 31, 2021 and Three Months Ended March 31, 2020
Revenue. Revenue was $153.3 million for the three months ended March 31, 2021,
an increase of $51.1 million, or 50%, as compared to $102.2 million for the
three months ended March 31, 2020. This increase was primarily due to the
addition of new customers over the past 12 months and net expansion with
existing customers.
Cost of Service. Cost of service was $28.1 million for the three months ended
March 31, 2021, an increase of $7.7 million, or 38%, as compared to
$20.4 million for the three months ended March 31, 2020. The increase was
primarily due to increased payroll and equity-based compensation costs
associated with additional headcount, increased amortization of acquired
technology related to prior year acquisitions, and increased hosting expense to
support new and growing customers.
Operating Expenses. Operating expenses were $97.2 million for the three months
ended March 31, 2021, an increase of $35.7 million, or 58%, as compared to
$61.5 million for the three months ended March 31, 2020. Excluding equity-based
compensation expenses, operating expenses were $82.6 million for the three
months ended March 31, 2021, an increase of $30.7 million, or 59%, as compared
to $51.9 million for the three months ended March 31, 2020. The increase was
primarily due to:
•an increase in sales and marketing expense (excluding equity-based
compensation) of $12.7 million, or 46%, to $40.4 million for the three months
ended March 31, 2021, due primarily to additional headcount and related salaries
and benefits expenses added to drive continued incremental sales, as well as
additional commission expense and amortization of deferred commissions related
to obtaining contracts with customers;
•an increase in research and development expense (excluding equity-based
compensation) of $9.5 million, or 114%, to $17.8 million for the three months
ended March 31, 2021, due primarily to additional headcount and related salaries
and benefits expenses added to support continued innovation of our services, as
well as higher costs driven by related technology investments;
•an increase in general and administrative expense (excluding equity-based
compensation) of $6.8 million, or 81%, to $15.2 million for the three months
ended March 31, 2021, due primarily to additional headcount and related salaries
and benefits expenses to support the larger organization, as well as additional
professional services and corporate insurance costs related to operating as a
public company; and
•restructuring and transaction-related expense of $4.4 million for the three
months ended March 31, 2021, primarily due to impairment and accelerated
depreciation related to the Company's anticipated Waltham office relocation.
This represented an increase of $1.5 million, or 52%, as compared to expense of
$2.9 million for the three months ended March 31, 2020, which largely
represented Komiko contingent consideration remeasurement and IPO costs.
Interest Expense, Net. Interest expense, net was $6.5 million for the three
months ended March 31, 2021, a decrease of $18.0 million, or 73%, as compared to
$24.5 million for the three months ended March 31, 2020. The decrease was
primarily due to interest savings as a result of repayment of the second lien
debt and $100.0 million first lien debt principal repayment in June 2020, and
the debt repricing in February 2021.
Income Tax Expense (Benefit). Expense from income taxes for the three months
ended March 31, 2021 was $49.7 million, representing an effective tax rate of
314.5%, as compared to a benefit from income taxes of $0.4 million for the three
months ended March 31, 2020, representing an effective tax rate of 7.0%. The
increase in the effective tax rate was primarily due to the recognition of
non-cash tax expense in Q1 2021 primarily allocable to non-controlling interests
resulting from a shift in GAAP basis from a non-taxable entity to a taxable
entity.

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Liquidity and Capital Resources
As of March 31, 2021, we had $229.1 million of cash and cash equivalents, $124.6
million of short-term investments, $0.1 million of current restricted cash, and
$250.0 million available under our first lien revolving credit facility. We have
financed our operations primarily through cash generated from operations and
financed various acquisitions through cash generated from operations
supplemented with debt offerings.
We believe that our cash flows from operations and existing available cash and
cash equivalents, together with our other available external financing sources,
will be adequate to fund our operating and capital needs for at least the next
12 months. We are currently in compliance with the covenants under the credit
agreements governing our secured credit facilities and we expect to remain in
compliance with our covenants.
We generally invoice our subscription customers annually, semi-annually, or
quarterly in advance of our subscription services. Therefore, a substantial
source of our cash is from such prepayments, which are included in the Condensed
Consolidated Balance Sheets as unearned revenue. Unearned revenue consists of
billed fees for our subscriptions, prior to satisfying the criteria for revenue
recognition, which are subsequently recognized as revenue in accordance with our
revenue recognition policy. As of March 31, 2021, we had unearned revenue of
$261.9 million, of which $260.6 million was recorded as a current liability and
is expected to be recorded as revenue in the next 12 months, provided all other
revenue recognition criteria have been met.
After the consummation of the Reorganization Transactions, ZoomInfo Technologies
Inc. became a holding company with no material assets other than its ownership
of HoldCo Units, and ZoomInfo HoldCo became a holding company with no material
assets other than its ownership of OpCo Units. ZoomInfo Technologies Inc. has no
independent means of generating revenue. The limited liability company agreement
of ZoomInfo OpCo provides that certain distributions to cover the taxes of the
ZoomInfo Tax Group and ZoomInfo Technologies Inc.'s obligations under the tax
receivable agreements will be made. The manager of ZoomInfo HoldCo has broad
discretion to make distributions out of ZoomInfo HoldCo. In the event ZoomInfo
Technologies Inc. declares any cash dividend, we expect that the manager of
ZoomInfo HoldCo would cause ZoomInfo HoldCo to cause ZoomInfo OpCo to make
distributions to ZoomInfo HoldCo, which in turn will make distributions to
ZoomInfo Technologies Inc., in an amount sufficient to cover such cash dividends
declared by us. Deterioration in the financial condition, earnings, or cash flow
of ZoomInfo OpCo and its subsidiaries for any reason could limit or impair their
ability to pay such distributions. In addition, the terms of our financing
arrangements contain covenants that may restrict ZoomInfo OpCo and its
subsidiaries from paying such distributions, subject to certain exceptions.
Further, ZoomInfo HoldCo and ZoomInfo OpCo are generally prohibited under
Delaware law from making a distribution to a member to the extent that, at the
time of the distribution, after giving effect to the distribution, liabilities
of ZoomInfo HoldCo or ZoomInfo OpCo (with certain exceptions), as applicable,
exceed the fair value of its assets. Subsidiaries of ZoomInfo OpCo are generally
subject to similar legal limitations on their ability to make distributions to
ZoomInfo OpCo. See "Risk Factors - Risks Related to Our Organizational
Structure" in Part I, Item 1A of our 2020 Form 10-K.
Our cash flows from operations, borrowing availability, and overall liquidity
are subject to risks and uncertainties. We may not be able to obtain additional
liquidity on reasonable terms, or at all. In addition, our liquidity and our
ability to meet our obligations and to fund our capital requirements are
dependent on our future financial performance, which is subject to general
economic, financial, and other factors that are beyond our control. Accordingly,
our business may not generate sufficient cash flow from operations and future
borrowings may not be available from additional indebtedness or otherwise to
meet our liquidity needs. If we decide to pursue one or more significant
acquisitions, we may incur additional debt or sell additional equity to finance
such acquisitions, which would result in additional expenses or dilution. See
"Risk Factors" in Part I, Item 1A of our 2020 Form 10-K.

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Historical Cash Flows
The following table summarizes our cash flows for the periods presented:
                                                                      Three Months Ended
                                                                           March 31,
($ in millions)                                                                 2021                2020
Net cash provided by (used in) operating activities                         $     93.0          $     28.3
Net cash provided by (used in) investing activities                              (99.0)               (4.1)
Net cash provided by (used in) financing activities                              (33.8)               (2.6)

Net increase (decrease) in cash and cash equivalents and restricted cash

$ (39.8) $ 21.6

Cash Flows from (used in) Operating Activities
Net cash provided by operations was $93.0 million for the three months ended
March 31, 2021 as a result of a net loss of $33.9 million, adjusted by non-cash
charges of $99.3 million and partially offset by the change in our operating
assets net of operating liabilities of $27.6 million. The non-cash charges are
primarily comprised of a decrease in deferred tax assets net of deferred tax
liabilities of $47.0 million, equity-based compensation of $18.1 million,
depreciation and amortization of $15.5 million, amortization of deferred
commission costs of $8.7 million, and loss on early extinguishment of debt of
$5.9 million. The change in operating assets net of operating liabilities was
primarily the result of an increase in unearned revenue of $39.2 million, an
increase in accounts payable of $5.2 million, and a decrease in accounts
receivable of $5.1 million, partially offset by a decrease in accrued expenses
and other liabilities of $12.6 million and an increase in deferred costs and
other assets of $9.8 million.
Net cash provided by operations was $28.3 million for the three months ended
March 31, 2020 as a result of a net loss of $5.9 million, adjusted by non-cash
charges of $33.9 million and an increase of $0.3 million in our operating assets
net of operating liabilities. The non-cash charges were primarily comprised of
depreciation and amortization of $12.2 million, equity-based compensation of
$11.3 million, and amortization of deferred commission costs of $5.4 million.
The change in operating assets net of operating liabilities was primarily the
result of an increase in unearned revenue of $14.0 million, partially offset by
a decrease in accrued expenses and other liabilities of $10.0 million and an
increase in deferred costs and other assets of $6.3 million.
Restructuring and transaction-related cash costs for the three months ended
March 31, 2021 primarily related to the settlement of accrued accretion on the
Pre-Acquisition ZI deferred consideration balance, which is not expected to
recur. However, we may continue to make future acquisitions as part of our
business strategy which may require the use of capital resources and drive
additional future restructuring and transaction-related cash expenditures as
well as integration and acquisition-related compensation cash costs. During the
three months ended March 31, 2021, and 2020, we incurred the following cash
expenditures:

                                                                          Three Months Ended March 31,
($ in millions)                                                             2021                  2020
Cash interest expense                                                 $          6.8          $     23.3
Restructuring and transaction-related expenses paid in cash(a)        $          1.1          $      3.9
Integration costs and acquisition-related compensation paid in
cash(b)                                                               $          1.3          $      3.6


$6.8
(a)Represents cash payments directly associated with acquisition or disposal
activities, including employee severance and termination benefits, contract
termination fees and penalties, and other exit or disposal costs. For the three
months ended March 31, 2021, these payments related primarily to settlement of
accrued accretion on the Pre-Acquisition ZI deferred consideration balance. For
the three months ended March 31, 2020, these payments related primarily to
professional fees for the preparation for an initial public offering.
(b)Represents cash payments directly associated with integration activities for
acquisitions and acquisition-related compensation, which includes transaction
bonuses and retention awards. For the three months ended March 31, 2021, these
payments related primarily to cash vesting payments from the acquisition of
Pre-Acquisition ZI. For the three months ended March 31, 2020, these payments
related primarily to cash vesting payments from the acquisition of
Pre-Acquisition ZI.

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Future demands on our capital resources associated with our debt facilities may
also be impacted by changes in reference interest rates and the potential that
we incur additional debt in order to fund additional acquisitions or for other
corporate purposes. Future demands on our capital resources associated with
transaction expenses and restructuring activities and integration costs and
transaction-related compensation will be dependent on the frequency and
magnitude of future acquisitions and restructuring and integration activities
that we pursue. As part of our business strategy, we expect to continue to
pursue acquisitions of, or investments in, complementary businesses from time to
time; however, we cannot predict the magnitude or frequency of such acquisitions
or investments.
Cash Flows from (used in) Investing Activities
Cash used in investing activities for the three months ended March 31, 2021 was
$99.0 million, consisting of purchases of short-term investments of $103.6
million and purchases of property and equipment and other assets of $4.7
million, partially offset by maturities of short-term investments of $9.5
million.
Cash used in investing activities for the three months ended March 31, 2020 was
$4.1 million, consisting of purchases of property and equipment and other
assets.
As we continue to grow and invest in our business, we expect to continue to
invest in property and equipment and opportunistically pursue acquisitions.
Cash Flows from (used in) Financing Activities
Cash used in financing activities for the three months ended March 31, 2021 was
$33.8 million, consisting of payments on long-term debt of $356.4 million, tax
distributions to equity partners of $10.8 million, and payments of deferred
consideration of $9.2 million, partially offset by proceeds from debt of $350.0
million.
Cash used in financing activities for the three months ended March 31, 2020 was
$2.6 million, primarily as a result of payments of deferred consideration of
$24.0 million, payments to repurchase outstanding member equity of $5.5 million,
distributions to equity partners of $5.0 million, and principal payments on
long-term debt of $2.2 million, largely offset by proceeds from a draw down on
our first lien revolving credit facility of $35.0 million.
Refer to Note 8 of our consolidated financial statements for additional
information related to each of our borrowings.
Debt Obligations
As of March 31, 2021, the aggregate remaining balance of $400.0 million of first
lien term loans is due, in its entirety, at the contractual maturity date of
February 1, 2026. As of March 31, 2021, the aggregate remaining balance of
$350.0 million of 3.875% Senior Notes is due, in its entirety, at the
contractual maturity date of February 1, 2029. Interest on the Senior Notes is
payable semi-annually in arrears beginning on August 1, 2021. The foregoing
represent the only existing required future debt principal repayment obligations
that will require future uses of the Company's cash.
The first lien term debt has a variable interest rate whereby the Company can
elect to use a Base Rate or the London Interbank Offer Rate ("LIBOR") plus an
applicable rate. The applicable rate is 2.00% for Base Rate loans or 3.00% for
LIBOR Based Loans. The first lien revolving debt has a variable interest rate
whereby the Company can elect to use a Base Rate or the London Interbank Offer
Rate ("LIBOR") plus an applicable rate. The applicable margin is 1.00% to 1.25%
for Base Rate loans or 2.00% to 2.25% for LIBOR Based Loans, depending on the
Company's leverage. The effective interest rate on the first lien debt was 3.5%
and 4.3% as of March 31, 2021 and December 31, 2020, respectively.
Our consolidated first lien net leverage ratio is defined in our first lien
credit agreement, and the EBITDA used for that ratio ("Credit Agreement EBITDA")
differs from Adjusted EBITDA due to certain defined add-backs, including pro
forma cost savings from synergies and cash generated from changes in unearned
revenue; see table below for reconciliation. Credit Agreement EBITDA for the 12
months ended March 31, 2021 was $335.7 million. Our consolidated first lien net
leverage ratio as of March 31, 2021 was 1.2x.

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                                                                         Trailing Twelve Months as of
(in millions)                                                                   March 31, 2021
Net income (loss)                                                       $                      (64.4)
Benefit (expense) from income taxes                                                             54.8
Interest expense, net                                                                           51.2
Loss on debt extinguishment                                                                     18.6
Depreciation                                                                                    10.9
Amortization of acquired technology                                                             24.4
Amortization of other acquired intangibles                                                      18.9
EBITDA                                                                                         114.5
Other (income) expense, net(a)                                                                 (15.5)
Impact of fair value adjustments to acquired unearned revenue(b)                                 1.9
Equity-based compensation expense                                                              128.4
Restructuring and transaction related expenses(c)                                               14.0
Integration costs and acquisition-related expenses(d)                                            9.4
Adjusted EBITDA                                                                                252.6
Unearned revenue adjustment                                                                     83.3
Pro forma cost savings                                                                             -
Cash rent adjustment                                                                             1.0
Other lender adjustments                                                                        (1.1)
Credit Agreement EBITDA                                                 $                      335.7


__________________
(a)Primarily represents revaluations on tax receivable agreement liability and
foreign exchange remeasurement gains and losses.
(b)Represents the impact of fair value adjustments to acquired unearned revenue
relating to services billed by an acquired company prior to our acquisition of
that company. These adjustments represent the difference between the revenue
recognized based on management's estimate of fair value of acquired unearned
revenue and the receipts billed prior to the acquisition less revenue recognized
prior to the acquisition.
(c)Represents costs directly associated with acquisition or disposal activities,
including employee severance and termination benefits, contract termination fees
and penalties, and other exit or disposal costs. For the trailing twelve months
ended March 31, 2021, this expense related primarily to professional fees for
the preparation for an initial public offering and deferred acquisition cost
revaluations.
(d)Represents costs directly associated with integration activities for
acquisitions and acquisition-related compensation, which includes transaction
bonuses and retention awards. For the trailing twelve months ended March 31,
2021, this expense related primarily to cash vesting payments from the
acquisition of Pre-Acquisition ZI. This expense is included in cost of service,
sales and marketing expense, research and development expense, and general and
administrative expense as follows:
                                                                            Trailing Twelve Months
                                                                                     as of
(in millions)                                                                   March 31, 2021
Cost of service                                                             $                0.8
Sales and marketing                                                                          3.0
Research and development                                                                     4.3
General and administrative                                                                   1.3
Total integration costs and acquisition-related compensation                $                9.4



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In addition, our credit agreement governing our first lien term loan contains
restrictive covenants that may limit our ability to engage in activities that
may be in our long-term best interest. These restrictive covenants include,
among others, limitations on our ability to pay dividends or make other
distributions in respect of, or repurchase or redeem, capital stock, prepay,
redeem, or repurchase certain debt, make acquisitions, investments, loans, and
advances, or sell or otherwise dispose of assets. Our failure to comply with
those covenants could result in an event of default which, if not cured or
waived, could result in the acceleration of substantially all of our debt. The
Company may be able to incur substantial additional indebtedness in the future.
The terms of the credit agreements governing our first lien term loan limit, but
do not prohibit, the Company from incurring additional indebtedness, and the
additional indebtedness incurred in compliance with these restrictions could be
substantial. These restrictions will also not prevent the Company from incurring
obligations that do not constitute "Indebtedness" as defined in the agreements
governing our indebtedness.
Tax Receivable Agreements
We have entered into two tax receivable agreements. We entered into (i) the
Exchange Tax Receivable Agreement with certain of our Pre-IPO OpCo Unitholders
and (ii) the Reorganization Tax Receivable Agreement with the Pre-IPO Blocker
Holders. These tax receivable agreements provide for the payment by members of
the ZoomInfo Tax Group to such Pre-IPO Owners and certain Pre-IPO HoldCo
Unitholders of 85% of the benefits, if any, that the ZoomInfo Tax Group is
deemed to realize (calculated using certain assumptions) as a result of certain
tax attributes and benefits covered by the tax receivable agreements.
The Exchange Tax Receivable Agreement provides for the payment by members of the
ZoomInfo Tax Group to certain Pre-IPO OpCo Unitholders and certain Pre-IPO
HoldCo Unitholders of 85% of the benefits, if any, that the ZoomInfo Tax Group
is deemed to realize (calculated using certain assumptions) as a result of (i)
the ZoomInfo Tax Group's allocable share of existing tax basis acquired in the
IPO and (ii) increases in the ZoomInfo Tax Group's allocable share of existing
tax basis and tax basis adjustments that will increase the tax basis of the
tangible and intangible assets of the ZoomInfo Tax Group as a result of sales or
exchanges of OpCo Units for shares of Class A common stock after the IPO, and
certain other tax benefits, including tax benefits attributable to payments
under the Exchange Tax Receivable Agreement. The Reorganization Tax Receivable
Agreement provides for the payment by ZoomInfo Technologies Inc. to Pre-IPO
Blocker Holders and certain Pre-IPO HoldCo Unitholders of 85% of the benefits,
if any, that the ZoomInfo Tax Group is deemed to realize (calculated using
certain assumptions) as a result of the ZoomInfo Tax Group's utilization of
certain tax attributes of the Blocker Companies (including the ZoomInfo Tax
Group's allocable share of existing tax basis acquired in the Reorganization
Transactions), and certain other tax benefits, including tax benefits
attributable to payments under the Reorganization Tax Receivable Agreement. In
each case, these increases in existing tax basis and tax basis adjustments
generated over time may increase (for tax purposes) the ZoomInfo Tax Group's
depreciation and amortization deductions and, therefore, may reduce the amount
of tax that the ZoomInfo Tax Group would otherwise be required to pay in the
future, although the IRS may challenge all or part of the validity of that tax
basis, and a court could sustain such a challenge. The ZoomInfo Tax Group's
allocable share of existing tax basis acquired in the IPO and the increase in
the ZoomInfo Tax Group's allocable share of existing tax basis and the
anticipated tax basis adjustments upon exchanges of OpCo Units for shares of
Class A common stock may also decrease gains (or increase losses) on future
dispositions of certain capital assets to the extent tax basis is allocated to
those capital assets. The payment obligations under the tax receivable
agreements are an obligation of members of the ZoomInfo Tax group, but not of
ZoomInfo OpCo. The ZoomInfo Tax Group expects to benefit from the remaining 15%
of realized cash tax benefits.
For purposes of the tax receivable agreements, the realized cash tax benefits
will be computed by comparing the actual income tax liability of the ZoomInfo
Tax Group (calculated with certain assumptions) to the amount of such taxes that
the ZoomInfo Tax Group would have been required to pay had there been no
existing tax basis, no anticipated tax basis adjustments of the assets of the
ZoomInfo Tax Group as a result of exchanges and no utilization of certain tax
attributes of the Blocker Companies (including the Blocker Companies' allocable
share of existing tax basis), and had ZoomInfo Technologies Inc. not entered
into the tax receivable agreements. The term of each tax receivable agreement
will continue until all such tax benefits have been utilized or expired, unless
(i) ZoomInfo Technologies Inc. exercises its right to terminate one or both tax
receivable agreements for an amount based on the agreed payments remaining to be
made under the agreement, (ii) ZoomInfo Technologies Inc. breaches any of its
material obligations under one or both tax receivable agreements in which case
all obligations (including any

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additional interest due relating to any deferred payments) generally will be
accelerated and due as if ZoomInfo Technologies Inc. had exercised its right to
terminate the tax receivable agreements, or (iii) there is a change of control
of ZoomInfo Technologies Inc., in which case the Pre-IPO Owners may elect to
receive an amount based on the agreed payments remaining to be made under the
agreement determined as described above in clause (i). Estimating the amount of
payments that may be made under the tax receivable agreements is by its nature
imprecise, insofar as the calculation of amounts payable depends on a variety of
factors. The amount of existing tax basis and the anticipated tax basis
adjustments, as well as the amount and timing of any payments under the tax
receivable agreements, will vary depending upon a number of factors, including
the timing of exchanges, the price of shares of our Class A common stock at the
time of the exchange, the extent to which such exchanges are taxable, the amount
of tax attributes, and the amount and timing of our income.
We expect that as a result of the size of the ZoomInfo Tax Group's allocable
share of existing tax basis acquired in the IPO, the increase in the ZoomInfo
Tax Group's allocable share of existing tax basis and the anticipated tax basis
adjustment of the tangible and intangible assets of the ZoomInfo Tax Group upon
the exchange of OpCo Units for shares of Class A common stock and our possible
utilization of certain tax attributes, the payments that ZoomInfo Technologies
Inc. may make under the tax receivable agreements will be substantial. We
estimate the amount of existing tax basis with respect to which our Pre-IPO
Owners will be entitled to receive payments under the tax receivable agreements
(assuming all Pre-IPO OpCo Unitholders exchange their outstanding OpCo Units
(together with a corresponding number of shares of Class B common stock) for
shares of Class A common stock on March 31, 2021) is approximately
$320.5 million (assuming a price of $48.90 per share of Class A common stock,
which is the last reported sale price of our Class A common stock on the Nasdaq
on March 31, 2021). The payments under the tax receivable agreements are not
conditioned upon continued ownership of us by the exchanging holders of OpCo
Units. See Note 16 in our unaudited consolidated financial statements included
in Part I, Item 1 of this Form 10-Q.
Contractual Obligations and Commitments
As of March 31, 2021, we had additional operating leases for office space that
have not yet commenced with undiscounted future lease payments of
$129.2 million. These operating leases will commence in the second quarter of
fiscal year 2021.
Except as set forth above and in Note 11 - Commitments and Contingencies of the
notes to our unaudited consolidated financial statements included elsewhere in
this Quarterly Report on Form 10-Q, there have been no material changes outside
of the ordinary course of business in the contractual obligations and
commitments disclosed in our Annual Report on 10-K for the year ended December
31, 2020.
Off-Balance Sheet Arrangements
As of March 31, 2021, there were no "off-balance sheet arrangements," as defined
in Item 303(a)(4)(ii) of Regulation S-K.
Critical Accounting Policies and Estimates
Critical accounting policies and estimates are those accounting policies and
estimates that are both the most important to the portrayal of our net assets
and results of operations and require the most difficult, subjective or complex
judgments, often as a result of the need to make estimates about the effect of
matters that are inherently uncertain. These estimates are developed based on
historical experience and various other assumptions that we believe to be
reasonable under the circumstances. Critical accounting estimates are accounting
estimates where the nature of the estimates are material due to the levels of
subjectivity and judgment necessary to account for highly uncertain matters or
the susceptibility of such matters to change and the impact of the estimates on
financial condition or operating performance is material.
There have been no material changes to our critical accounting policies and
estimates as compared to the critical accounting policies and estimates
described under "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Part II, Item 7 of our 2020 Form 10-K.

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JOBS Act Accounting Election
We are an emerging growth company, as defined in the JOBS Act. Under the JOBS
Act, emerging growth companies can delay adopting new or revised accounting
standards issued subsequent to the enactment of the JOBS Act until such time as
those standards apply to private companies. We have elected to use this extended
transition period for complying with new or revised accounting standards that
have different effective dates for public and private companies until the
earlier of the date we (i) are no longer an emerging growth company or
(ii) affirmatively and irrevocably opt out of the extended transition period
provided in the JOBS Act. As a result, our financial statements may not be
comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.
Recently Issued Accounting Pronouncements
Refer to Note 2 - Basis of Presentation and Summary of Significant Accounting
Policies of our consolidated financial statements included in Part I, Item 1 of
this Form 10-Q regarding recently issued accounting pronouncements.

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