BTIG Downgrades ZoomInfo Technologies (GTM) to Neutral

BTIG analyst Allan Verkhovski downgraded ZoomInfo Technologies (NASDAQ: GTM) from Buy to Neutral.

The analyst comments "When we initiated coverage on GTM last December (initiation here), we were constructive on the company's differentiated data asset and the potential for accelerating upmarket ACV growth, coupled with an AI-driven product cycle to transition the business into a mid-single-digit grower over the next several years. Following the Q1 print, however, we are left with materially higher conviction that questions now extend across the broader business. Most notably, GTM's seatbased pricing contribution has been declining since 2022, and management is now accelerating that transition with the rollout of a hybrid pricing model in Q3 that combines a low annual platform fee with prepaid credits. The new structure will provide greater pricing flexibility and create a near-term headwind as a number of customers renew at lower price points. As a result, GTM's updated FY26 revenue guidance now calls for a 4.4% decline vs. prior guidance for +0.6% growth, suggesting a high-single-digit decline exiting 2026. In the prepared remarks, management noted elevated downsell and churn in the software vertical, a reversal from the improving trends seen through 2025. During our callback (full notes inside), we also learned that upmarket NRR, which had been running at 100% for several quarters, has now fallen into the 90s. At the same time, we did not receive additional detail on the underlying trends in downsell and churn, with management instead framing the shift in customer behavior primarily around weaker upsell. Other forward indicators also weakened meaningfully in Q1. Both cRPO and RPO declined sequentially by more than twice the magnitude seen in 1Q25, while customers with ACV above $100K reversed a multi-year pattern of sequential growth. We are also puzzled by management noting that software customers are experiencing agentic confusion and therefore pausing purchasing decisions, as we would have expected these technically sophisticated buyers to be leaning more aggressively into AI-enabled offerings that demonstrate significant productivity improvements. Meanwhile, the competitive backdrop appears to be strengthening. Apollo (Private) is approaching $200M in ARR as of March 2026 vs. crossing $150M in May 2025, with weekly active users growing 500% Y/Y to 50,000+. Clay (Private), in just two years, scaled from $1M of ARR to more than $100M by December 2025, with enterprise NRR above 200%. Taken together, we are increasingly questioning the health of the upmarket business, which is now expected to decelerate by a few points this year on ACV growth, while the downmarket business declines by more than 20%. We are also now more than a year from 2H27, when management expects growth to become sustainably positive, driven by upmarket ACV growth reaching high single digits. GTM also announced a RIF affecting 600 employees, or ~20% of 1Q26 headcount, with approximately 1/4 of those roles expected to be reallocated or offset through hiring in different locations. Our takeaway is that management is increasingly focused on profitability, with an objective of operating at 40% margins upon a return to durable growth, supported by operating efficiencies intended to offset expected gross margin pressure as gross margins move toward ~85%. In our view, GTM is unlikely to receive the benefit of the doubt on a return to durable growth while signs of competitive pressure and AI-related disruption risk continue to mount. We downgrade shares to Neutral."

For an analyst ratings summary and ratings history on ZoomInfo Technologies click here. For more ratings news on ZoomInfo Technologies click here.

Shares of ZoomInfo Technologies closed at $6.04 yesterday.

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