ZoomInfo Technologies Inc. (GTM) Earnings Call Transcript & Summary

Great. Great. Well, hey, welcome everybody to the conference. My name is Koji Ikeda, I'm one of the senior analysts on the software team. Super, super excited to have Cameron Hyzer from ZoomInfo for a little fireside chat. So I guess the way we run it is, I've got a set number of questions here, probably go through 15, 20 minutes of questions, definitely want it to open up to the floor to see if any investors out there have any questions too.

So I guess, to get it started, Cameron, from a very high level, what is ZoomInfo? Can you give a brief background on yourselves, what is the opportunity that you're addressing? How is ZoomInfo positioned to capitalize on this?

Yes. So ZoomInfo, we provide a platform to salespeople, marketing people and talent acquisition folks, to help them really find their next customer or candidate and provide workflow tools for them to be able to better execute against those opportunities. There are over 700,000 businesses that sell to other businesses. And so we view ourselves as less than 5% penetrated against that total universe. And we're really offering them the opportunity to sophisticate their go-to-market motions and to become more efficient and effective in how they go-to-market.

Got it. Got it. So what we were asking every management team is kind of 3 questions, kind of around the macro, the hiring environment and them compensation structure, all very topical questions we've been fielding over the past few months. So wanted to ask you those 3 questions. Let's start off with the macro. A lot of things going on in the world, Russia-Ukraine War, European macro, China slowdown, inflation, interest rate risk, all of these kind of things happen around the world today. So just maybe you can talk a little bit about on any sort of impacts that you may be seeing or maybe what the business is doing to be prepared for any sort of disruption in the future. How is ZoomInfo positioning for this?

Yes. So our real value proposition to customers is that we help them be more efficient. And so in any sort of environment, whether that's an expansionary environment or a more challenging one, being more efficient can be important. Particularly when companies are belt tightening, what they're really looking to do is do more with less and we very much provide them that opportunity. Six months ago, not to skip into the hiring question, but we have conversations with a VP of Sales or someone and say, I have 100 salespeople today. In order to hit my number, I need to hire 50 or 30 incremental salespeople, but I can't go and find those people. So we come in and say, look, you can still hit your number. You only need to hire 10 or 15 more people, but you make them more efficient, and they'll be able to go out and drive more sales. The converse of that conversation is equally true. If your CFO won't let you hire an incremental to 30 or 50 more salespeople, you need to be more efficient in order to continue to grow your number, and ZoomInfo's one of the primary ways to help people do that. We deliver high-quality data and insights as well as workflow and automation tools in order to help those sales teams be more effective and hit their number better.

Got it. Got it. And I guess moving on to that hiring question. You got -- you definitely see a lot of the external hiring environment. But what about ZoomInfo? I think it's kind of interesting, 6 months ago, everyone was like, oh, the hiring environment is terrible. How are people going to find? And might have -- how things have changed in the past 6 months. So how do you guys think about managing your human capital?

Yes. So we're focused on making those investments to continue to grow our sales and marketing capacity as well as our R&D innovation. We've historically tried to hire most of our new hires from early stages of their career and help them grow their careers within ZoomInfo, whether that's on the engineering side, on the research side, which moves into like admin capabilities or on the sales side where we hired SDRs at a young age and provide them with training and tools to make them really successful AEs over time. And that's been successful for us on a number of levels. A, we're able to actually make those people more efficient. And many of our most successful AEs are people that started as SDRs or lower positions at ZoomInfo and have worked their way up over time. And so I think at this point, there are some great things. A, it still is hard to hire people and hire the right people. So that motion for us provides a backlog of people that are able to move up into other positions. And B, it helps us get those people at a level where they're able to contribute at a higher level than their peers, which drives our really efficient go-to-market motion. I think we're -- and you can tell me out of your coverage universe, but I would posit that we're one of the most efficient go-to-market companies that you're going to find in the software universe.

Yes. No, that makes a lot of sense. And I wanted to follow up on that. You guys are based in Boston, but you have employees…

Technically in Vancouver.

Technically in Vancouver.

But more Washington.

But all over the world you have employees. But you guys are a fairly big company, your market cap size, you're profitable. Do -- how are you seeing kind of maybe the inbounds of employees coming to you? Are you becoming maybe a destination spot where volatility in the tech world, people look at you, bigger company, profitable? I mean, that must be helping you out or how do you think about that?

I do think that we are starting to see a change from 6 to 9 months ago where we measure it a little bit more on the attrition side, where you'd have employees that are looking to go to a small startup or another company. And I think there's a flight to quality among employees, particularly in the tech world, and we are a huge beneficiary of that. We've talked to our employees. And one of the stats that I've been rolling out recently is, if you look at all of the companies that have gone public in the last 2.5 years, since 2000, there are only 3 that are trading above their offer price or where they started trading. Obviously being the poster child for that is a great thing for our employees. And the nice thing, particularly on the sales side is that, if you're a sales guy and you have the opportunity to go sell to a CIO or your Head of Security at a company, that's all well and good. But if you have the opportunity to just spend your time with other salespeople and sell them tools that you use to actually make yourself more efficient, that you have real belief in the ROI in, it's actually a much better kind of opportunity and something that our sales guys get much more excited about, because they're selling to other sales guys, which is frankly more fun than selling to some other folks.

Thanks, Cameron. Last question, kind of the 3 questions that we're asking everybody out there, comp structure. This has definitely become more topical kind of within the last few months within the investor base. So how are you guys thinking about compensation structure, the kind of the balance between cash and stock comp? Is there any change in the way you guys are thinking about it? And if you could share if there was any change, how would that impact margins?

Yes. So we haven't made any changes in our kind of cash versus stock comp. Ultimately we're really focused on being efficient. So we pay our folks really well. We expect a lot from them as a result of that. And so that's what drives great margins at ZoomInfo. It's not that we're not paying people. We're paying them really well. We're just getting a lot out of them. And part of that is giving them the tools and the training. Part of it is just being an easy product to sell. It's like super obvious where the value comes from when you're selling it. And so wrapping all of that together makes us efficient from a cash perspective. The interesting thing is that also translates into stock comp. So I think if you look at ZoomInfo as a number of employees per revenue or number of employees per market cap, we're going to be -- we're going to screen really well in terms of a low number of employees generating a fair amount of market cap, which means that we can continue to offer people really good equity packages, align their interests with driving value in the company. And we don't need to really change that. The one thing that has changed is our articulation of that with employees. I think as people will become more conservative, it's really obvious that they're getting a better package at ZoomInfo versus illiquid stock that -- or even worse options that are underwater or whatever else. So our articulation of that with employees has definitely stepped up over the last 6 months or so.

Got it. Got it. Thanks, Cameron. Last week you had an Investor Day.

Yes.

Yes. I think it was last Thursday. So maybe you could talk a little bit about the recap there. What were the -- some of the high-level takeaways from the Investor Day for those on the audience that weren't able to attend?

Yes. So I think we're really excited about where we're going, and we view the Investor Day as an opportunity to kind of step back from the quarterly results and kind of paint the big picture, long-term vision. I think part of it was really focusing on the platform. So if you think about ZoomInfo, for those of you that are more knowledgeable with the history, 3 years ago or 4 years ago, we were largely offering just company and contact information to our customers. And at this point, we have a platform that has a variety of workflow tools and intent. We have a conversation intelligence product named Chorus, and we've expanded our operating systems to include marketing and operations and talent as well and hit those use cases. So at this point, over 75% of our revenue comes from customers that are using advanced functionality in some way. I think there's still a lot of room to grow, and for those customers to use more and more advanced functionality. But I think there's been a really good trend of getting our customers to a point where they're getting more value out of the system. And certainly, using that advanced functionality self-reinforces the value of high-quality data and insights that come within the platform as well. We had previously set a target of achieving $2 billion in revenue in 2025, and we pulled that target forward to $2 billion in run rate revenue by the end of 2024. So I think that's really exciting. And I think we really focused on articulating some of the tools that we use internally to continue sustainable growth over the long-term, explaining some of our methods for bringing in people at entry-level positions and moving them up and how that continues to drive efficient and sustainable growth over the long-term. Certainly I think the video from the Analyst Day is available on our IR website. So I encourage everyone to go and watch that as well.

Got it. Got it. And kind of thinking about that $2 billion target run rate exiting '24, one of the highlights I thought too from the Analyst Day was the TAM. The TAM expanded up to a $100 billion, yes, up from $70 billion last year. So kind of thinking about the $2 billion target, hey, if you hit that, we think you can, 2% penetration rate, right? So still a long way to go. So how do you think about TAM expansion from here? I mean you kind of got this big $100 billion TAM.

Yes.

Do you really need any more? Or how do you think about that expansion?

And certainly we're constantly looking for ways to better serve our customers and to provide more value for them. So as we do that, I do think there will be additional TAM expansion. But our focus really on the kind of short and medium term is much more about execution, continuing to get out to all of the businesses out there that sell to other businesses, and helping them realize where they can make improvements to their go-to-market motions and become more efficient and drive more value. In our platform, we've identified over 700,000 businesses that sell to other businesses, and we're very lightly penetrated against them to begin with. But then, taking them on that journey of sophistication isn't just selling a customer to begin with, but then it's adding on incremental capabilities and functionality to take them on that journey of sophistication over time. One of the things that Chris Hays, our President and COO, likes to say, is that when I meet a customer, I don't want to show them like everything that ZoomInfo does with our platform because that would overwhelm anyone. What I'd like to show them is the next best version of themselves. So if they're not using any data or insights or whatever else, show them how you can identify your next best customer, figure out who they are and get contact information with them. If they're using that, show them how they can use intent to identify which customers are actually in market. If they're using that, show them how they can automate workflows through Engage to actually reach out in a succinct and automated way or how they can analyze their conversations or bring the voice of the customer into their analysis through Chorus. If they do that, then how they can further automate workflows or start to use MarketingOS or start to use OperationsOS. All of these things are incremental capabilities that, ultimately, giving people small bites of change and take them along that journey is something that's worked really well for us in terms of a land and expand strategy and that we'll continue to execute as we move forward.

No, that makes a lot of sense. Thanks, Cameron.

Yes.

At the Investor Day, you guys spent a lot of time on privacy.

Yes.

There's big -- I don't know, it was 15, 20 minutes section all about privacy. We've definitely had investor questions about privacy and how you guys think about it. So clearly it showed or -- at the Investor Day that you guys have a leadership position and how you think about privacy. So how do you think about maintaining that leadership position within your category for the next 5 to 10 years?

Yes. So yes, I do think that part of our competitive advantage in terms of being a scaled player in the space and really leaning in the privacy is that it gives us an advantage with large enterprises. So with customers like SAP or Adobe or Google, they obviously come in and spend a lot of time understanding the data that they're ingesting into their systems and how they're using it, because they need to be comfortable with their own privacy stances as well. And so that is -- a big part of our motion is continuing to focus on privacy. A big move that we made this year was hiring Simon McDougall, who talked at the Investor Day. He is a -- he was the #2 person at the ICO in the U.K., which is the entity responsible for enforcing the GDPR in Europe with respect to the U.K. And so he came in and basically said, well, there's not a whole lot of like problems here, but there are areas where perhaps we can continue to improve upon compliance and so forth. So a big part of it is bringing in someone like him who not only can continue to make our privacy better and better and improve with respect to the competition, but also to help customers, because he can articulate what best practices are with respect to privacy and using our data and insights in order to drive good outcomes for the customer. So that's certainly an area where we're continuing to invest. And realistically, if you're a Google or Adobe or Microsoft or whoever, probably not going to be comfortable with a small startup from Silicon Valley or Israel or whatever else in terms of bringing on new data. You are going to be comfortable if we can continue to articulate and improve how we can use the data and make sure that it's kind of compliant and meets all of the requirements that are out there. It's interesting because we've instituted things like our notice and choice program which really aren't required by most of the regulations that are out there. But on a purely voluntary basis, we're investing in those sort of things to continue to put ourselves at a point that a smaller player can't invest the amount of resources that we can in order to make that happen.

When in the sales cycle, maybe thinking about an enterprise, let's use an enterprise, for example. Sometimes you land big, sometimes you land small and expand. So let's use that land small and expand model. When does the privacy conversation really start to happen?

It depends on how small you land. If you land outside of kind of a formal procurement cycle, it often may not happen until you get bigger. If you're landing in a formal procurement cycle, it tends to happen at the same time that you get a security review. So I think a lot of software vendors end up having a security review of some sort. Privacy, I think, is more and more often being lumped into that. And some enterprises, the biggest enterprises are going to have a Chief Privacy Officer. They're going to have teams that will get involved in that. Smaller enterprises, it may be part of their security or IT kind of work. But I think, for us, one of the great things is, once you become a known vendor and get to that kind of formal procurement process, then it makes it even easier to continue to expand within those organizations because you're known vendor, security kind of taking care of. You have privacy, you have some master set of agreements. So all of those things end up being a good opportunity for us to continue that expansion motion.

Okay. One of the metrics that you guys featured at the Investor Day, make sure I got this right, ACV growth with advanced functionality.

Yes.

There's a very strong uplift in 2021, 48% uplift with advanced functionality. So could you talk a little bit about the products that are maybe driving that advanced functionality or how to think about this metric? Could it even go higher from here?

Yes. I think you can totally go higher. When we think about advanced functionality, it includes things like intent, which are signals for companies that are in market for your particular product or service. It includes workflows, which has the ability to route different capabilities or sets of information between the platform and other platforms that includes Engage, which allows you to automate sales functionality. It includes Chorus, which is a conversation intelligence, so actually analyze the calls that your sales teams are making. It includes our ABM product, which is MarketingOS, a newer functionality. It includes our TalentOS, which is a recruiting capability, for recruiters to automate their workflows, and includes our OperationsOS, which is APIs and other advanced data integrations. When I think about this, and I think about a, say, an average customer that's going to come in with 25 to 50 seats, that's probably a $50,000 initial ticket if you're just buying our advanced platform, which is basically all of the company and contact information within the platform. If you add -- if you move up to our lead platform that includes Elite or includes intent and our workflows, that's probably another $15,000 to $25,000. If you add Engage, that's probably another $10,000. If you add Chorus, it's another $15,000 to $25,000. So just within the SalesOS, you can see that customer growing to be twice as large. It could be a 6-figure deal by the time they take all of that functionality. And then MarketingOS is probably another $100,000 for that particular customer, maybe more if they're driving a lot of advertising or engagement through that. The OperationsOS could be another 6-figure deal, and recruiting could be another, I don't know, $10,000, $20,000, depending on how quickly that company is growing. So you can see a customer that started off with $50,000 could be a $300,000 plus customer without adding any incremental seats. That's all just functionality capabilities that would continue to grow within that customer.

Wow! Truly an incredible upsell opportunity you got there. Yes, yes. I wanted to ask you one more question and then open it up to the floor to see if any investors have any questions out there. And the question is, it's actually about stock sales. We've been kind of fielding some questions about this recently. Hopefully maybe you could help us understand kind of the stock sales recently. I think it has something to do tied with the single-class stock conversion and the tax liability. I mean, is that the right way to think about it? Or could you provide a little bit more color with that?

Yes. So last year we collapsed our structure. We had a subsea structure which has super voting rights and some other pieces. We decided to collapse that into a single class of stock, essentially kind of a better shareholder capability there. As part of that conversion, our sponsors and many of our executives, Henry probably being the largest, incurred tax liabilities at $65 a share or something like that. So, in order to satisfy those tax liabilities, Henry and other executives sold a fair amount of stock in order to pay that off. Obviously, those sales, I think they all happened in the '60s for people. So I think it's a good indication that all of us believe, because we reset our tax basis at that level. All of us believe that over time, the stock has a lot of room for upside. And our expectation is that we'll continue to reap the value of that through the remaining sales that we have. The great thing is, if you take Henry's example, on an after-tax basis, is a very similar level to -- of -- and still, obviously, the vast majority of his net worth. But on an after-tax basis, a very high percentage of his net worth is still in ZoomInfo and will continue to be, going forward.

Got it. Got it. At this time, if there's any questions from the field, happy to take any questions from you guys out there. Any questions? We've got one over here. They're going to bring the microphone over to you. Thanks for that.

I just wanted to quickly follow up on that collapse of the Up-C structure. Does that enable you for incremental index inclusion at all? And if so, have you targeted or are in conversations with certain index providers?

Sure. So it does actually help us fit the requirements for basically any index that's out there. I believe that this month, we're actually going to be included in the Russell 1000. And I think if you -- I think the other really big index is obviously the S&P 500. They have a committee that makes all those decisions. It's relatively opaque. I think we'd be roughly #400 in the S&P 500 right now. But I don't -- they don't rebalance like everyone out and everyone in. Certainly, there's the opportunity over time that we could be included.

When you put out the $2 billion kind of guide going forward, what would the breakdown be between the different buckets? Are you able to provide any color on to how much of that growth comes from marketing or operations or?

Yes. So we haven't disclosed what's going to come from those different pieces. Obviously, the flagship product being the SalesOS, continues to see really great growth and uptakes. So I'd imagine that, that's -- yes, it's certainly going to be the majority of our revenue for the foreseeable future. Many of these other pieces of functionality are growing faster than the overall base. So I'd expect those to become a bigger and bigger portion over time, but we're not going to disclose the kind of specific pieces.

Maybe just to follow-up on that. I mean, in order to get there, how much do you see an improvement in the productivity of your own sales force versus bringing new sales people on-board? And is that the biggest constraint do you think to hitting that target, finding all those people to sell a product?

Yes. So certainly, there's a huge market out there. So I do think the biggest constraint is execution. In Q1 we added roughly $100 million in kind of net new revenue if you take it on a days adjusted basis. So this quarter, we're going to be over $1 billion in run rate revenue, which just with the capacity we have at the efficiency that we had in Q1, we should get there in 10 quarters, which is by the end of 2024. We will naturally continue to add capacity going forward, which is why we feel really comfortable that we'll be able to do even better than the end of '24 in terms of that run rate target.

So your total sales force will be roughly the same as it is today to get to the $2 billion?

I'd say that we don't need to add people in order to hit it, but we are going to continue to add to our sales team in order to attack the much bigger opportunity that's out there.

Cameron, I wanted to ask you a question on the competitive landscape out there. How has it evolved over the past 12 to 24 months? Are you seeing the same players out there? Is it beginning to change a little bit? I mean the customer data opportunity, even sales engagement, sales enablement. It seems to be kind of picking up steam out there. I mean how do you view the competitive landscape?

I would say that we've changed the competitive landscape because we've expanded what we offer in terms of the platform relatively significantly. And therefore, customer -- or other companies that we didn't necessarily compete with before -- if you take conversation intelligence, as an example, we would have never really competed with Gong or other people in that space before acquiring Chorus. Now that is one of the companies that we compete with. I'd say that the thing that hasn't changed and the thing that's been true historically is there have been a number of smaller companies that compete in one area of functionality that we offer. There are companies out there that provide just contact data or there are companies that have company data and thermographics, there're technographics providers, there are intent providers, there is conversation intelligence or sales automation. There's all these little pockets of niche players that at some level we compete against. There's no one that has the kind of full breadth of platform and is able to integrate all these different capabilities together. So I think where we are able to win in the market is either by landing with a small bit of functionality. I think we're best-in-class in each of these areas. Where we tend to land is in the SalesOS where we have the highest quality data and insights that no one else can match. And then by offering additional functionality on top of that to activate that data seamlessly is where we continue to grow our customers in addition to expanding, obviously, the reach within those customers as well. So I don't think that -- I think we've added more niche players by adding more functionality. But certainly, we're getting further and further away from competition in terms of anyone else's ability to kind of get to the same value proposition that we're able to offer to our customers.

I wanted to expand on this topic a little bit. Kind of -- you're talking about the platform versus the basket of best-of-breed approach. And mostly, for the largest customers that you're talking with out there, how are they thinking about this category with the platform approach to just managing a bucket or basket of different tools out there? I mean how do you guys think about that?

Yes. And I think that over time in most software kind of verticals or whatever you want to call it, people tend towards consolidating vendors. I think the sales tech stack space is still super early in that. So there are plenty of opportunities where if someone really wants to use certain sales automation or a certain data set, we'll encourage that and we'll integrate with them. But we're able to offer a platform that ultimately drives better value for customers. The interesting thing is, if you're buying software, most of the cost structure of most software companies is in sales and marketing. So you're buying from 4 different vendors, you're paying for 4 different salespeople. I think when you buy from a single vendor, you're able to actually compress that, get a better value vendor, actually drives more margin and it ends up being a win-win for everyone. So I think over time, that will be the case. I think in this particular part of the world, it's still early to see like really strong consolidation.

Okay. Okay. Okay. I wanted to ask you a question kind of on how to think about your levers for growth? You definitely have a platform now. You have your core products that you've been very successful in, since ZoomInfo has been around. I mean, what are the key levers for growth? Is it land and expand enterprise motion? I mean, how are you driving all that great growth?

So how we thought -- think about it is, enterprise motion is a big part of it. We continue to invest in the enterprise motion. We've gotten to over 1,600 customers with more than $100,000 in ACV, that continues to grow really well, faster than our overall revenue. And second lever that we tend to focus on is international growth. So our international revenue is now a little over 12% of our total revenue. There's a lot of room for that to continue to grow. And -- but it's growing 80-plus percent in terms of year-over-year growth. And then the third lever that we think about is the advanced functionality in the platform capabilities. So from an R&D perspective, that's one of our biggest initiatives for this year, is to continue to drive a better experience for our customers and to make sure that they're really getting a platform experience and not having to -- Historically, we have had either the ones that we've brought on through acquisition, or even in some cases where we've built internally, you have this like swivel chair of motion. We're alleviating that for customers and really helping them get a single experience where they can get all of the data and insights, whether it's internally generated from Chorus or from first-party information integrated into their CRM systems, whether it's insights from automation, so kind of the feedback that you're getting from your automated motions. All of those landing in a single platform where you can drive motions and not have things fall through the cracks when you're moving between different applications.

I wanted to dig in a little bit about the international side. You mentioned 80% growth there. Could you remind us maybe the mix of the revenue coming from international and where you might be targeting specifically, like maybe region-wise or language-wise? How do you think about kind of the expansion -- international expansion from here?

Yes. So our biggest geographies in terms of international revenue are Western Europe and Canada. We see really strong growth in both of those areas. We did open an office and fully committed to an office in London, where we're able to sell both in the U.K. and Ireland as well as to other Western European countries, whether that's Scandinavia, Germany, France, et cetera. So I think we're continuing to lean into that. Certainly, we're thinking about other geographies as well, whether -- probably the next logical one would be something in Australia or Asia. And I think that opportunity continues to exist kind of for the -- 2 years ago, we really started focusing on expanding the data coverage that we had internationally. We kind of collected data from a number of international sources, but our algorithms were really tuned towards accuracy in the U.S. by adding translation capabilities and kind of cultural differences. So if you think about like a director in France is somewhat different than a director in Italy, is different than a director in the United States. Kind of getting that accuracy together was something that we really focused on, and now we're leveraging that largely in Western Europe, and we're using that playbook to expand our data coverage in other parts of the globe as well.

When you think about the enterprise opportunity internationally, you've mentioned just now about kind of tailoring your solutions to international. Is there any key or core differences from an international enterprise strategy that you're kind of going through right now?

Not really. I mean I think if you think about where we started internationally, it was largely because our multinational customers came to us and said, we'd really like information in Germany and Italy in addition to the information that we got in the U.S. So that was really the initial driver of pushing us internationally, now where we have people on the ground internationally. It's actually more focused on mid-sized businesses and smaller businesses that are in Europe, selling to Europe. So I'd say that the international motions that we've put together, they leverage more of that international capability. But I wouldn't say that it's different selling to, say, an SAP versus selling to an Oracle.

Okay. We've got a couple more minutes here. I wanted to ask you kind of 2 big picture questions, one on M&A and kind of the last one on profitability. So on the M&A side, you guys are not afraid to go out there and acquire businesses, been very successful at it. How do you think about your M&A strategy from here? Does it change at all? I mean, with everything going on out there in the public and private markets, how do you think about M&A from here?

Yes. So we've always had a very tight lens in terms of what we see as attractive for M&A opportunities. I think that's part of the calculus for actually making M&A successful, is to make sure you're acquiring the right things at the beginning. We're very much focused on companies that either make our data better or that can be much better with data. So that integration into the platform is super important. We focus on companies that have a kind of value proposition that's very obvious and similar to ours, that we're selling to the same personas, whether that's salespeople, marketing folks, operations people or talent management people. So that value proposition and quick time to value is super important. And certainly, that feeds our ability to accelerate the go-to-market motion with respect to that target. So Chorus is a great example where we acquired a company that was doubling year-over-year, and very unprofitable, and we were able to take that to more than tripling year-over-year to accelerate the growth on a bigger base for that company and make it a positive contributor from a cash flow and profitability perspective. So I think that capability to really push it through our best-in-class go-to-market engine is super important. And then obviously, finally, that all feeds into it being accretive, both from a growth perspective and a profit perspective in the short to medium term. So I don't think that, that lens is going to change. As valuations adjust a little, maybe there are some companies that fall into that. But certainly, we got to be really big believers that we're going to be able to accelerate the revenue growth for a particular target and make it profitable in the kind of short to medium term.

Got it. Last question for you. Last week you mentioned at the Analyst Day, 37% operating margins on an annual basis. That's kind of as low as it will ever be.

It's as low as it could ever be.

How are you guys able to do that? It's an amazing number with your growth and scale.

And it is all about focusing on efficiency. I think the more time that you spend with us and kind of listen to Henry and other executives, we are very focused on not just being good but being better every day, every week. And that focus on efficiency is what drives the company. It actually drives our value proposition for our customers, but also is reflected in the margins that we're able to generate. A big part of it is the fact that we use our own system to really drive efficiency and effectiveness in sales. So I'd say the part where we're most differentiated versus almost any other software company is, we spend mid-20s in terms of -- as a percentage of revenue and we're able to grow 50% roughly. Like that's just a reflection of efficiency and the fact that we have a product that is relatively easy to sell.

Got it. Cameron, we're out of time. Thank you so much. Appreciate it.

Thank you all. Yes.

Thank you.