Business Context and Reporting Period
ZoomInfo Technologies Inc. filed this Form 8-K on November 9, 2020, reporting events dated November 5, 2020. The filing references financial results for the three and nine months ended September 30, 2020, but the submitted text does not include the detailed third-quarter results from Exhibit 99.1.
Financial Metrics and Material Accounting Adjustment
- The previously reported June 30, 2020 net loss is expected to increase from $56.2 million to $77.9 million.
- Basic and diluted net loss per share for Class A and Class C common stock is expected to change from $0.21 and $0.22, respectively, to $0.30 and $0.30, respectively.
- The company determined that it should not have recorded an approximately $21.6 million tax benefit related to the difference between the GAAP and tax bases of partnerships owned by corporations in its structure.
- Deferred tax assets are expected to decrease by $62.3 million; deferred tax liabilities are expected to increase by $10.9 million.
- The tax receivable agreements liability is expected to decrease by $11.0 million.
- Additional paid-in capital is expected to decrease by $40.5 million, retained earnings by $14.0 million, and non-controlling interests by $7.7 million.
- The adjustment is not expected to affect previously disclosed operating, investing, or financing cash flows, or historical non-GAAP financial metrics, for the three and six months ended June 30, 2020.
- The filing text does not provide clear values for September 30, 2020 revenue, profit, cash flow, margins, debt, liquidity, or third-quarter non-GAAP metrics.
Material Changes, Controls, and Outlook
- The Audit Committee concluded that the previously issued unaudited condensed consolidated financial statements for the periods ended June 30, 2020, included in the second-quarter Form 10-Q, should no longer be relied upon.
- Management and KPMG LLP discussed the accounting matter and the planned restatement.
- A previously disclosed material weakness in internal control over financial reporting remains unremediated. The weakness relates to limited accounting personnel capable of appropriately accounting for complex transactions.
- The company hired additional accounting and tax personnel during the third and fourth quarters of 2020 and stated that remediation efforts are continuing.
- The company expected to file a Form 10-Q/A amending the second-quarter filing and its Form 10-Q for the quarter ended September 30, 2020, on or before November 16, 2020.
- The filing provides no specific revenue or earnings guidance, liquidity outlook, or other quantitative forward-looking outlook.
Important Investor Verification Items
- Verify the final restated June 30, 2020 financial statements and the amount and presentation of the tax adjustment.
- Review the subsequent Form 10-Q/A and September 30, 2020 Form 10-Q for final third-quarter revenue, profitability, cash flow, balance-sheet, debt, and liquidity data.
- Assess whether the material weakness was remediated and whether additional control deficiencies or restatements were identified.
- Confirm whether the restatement affects tax receivable agreement obligations, deferred tax balances, equity balances, or future cash tax payments.
- Review Exhibit 99.1 for the complete third-quarter results and any management commentary or guidance not included in the filing text.