v3.20.2

Equity-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2020

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Restricted Stock Unit Activity

Restricted Stock Unit (“RSU”) activity was as follows during the periods indicated:

			Six Months Ended June 30, 2020
			Restricted Stock Units						Weighted Average Grant Date Fair Value
Unvested at beginning of period			—						$	—
Granted			511,537						$	21.00
Forfeited			(1,124)						$	21.00
Unvested at June 30, 2020			510,413						$	21.00

Schedule of Unvested Options Activity

Unvested Options activity was as follows during the periods indicated:

			Six Months Ended June 30, 2020
			Options						Weighted Average Exercise Price
Unvested at beginning of period			—						$	—
Effect of Reorganization Transactions and IPO			576,708						$	21.00
Forfeited			(7,165)						$	21.00
Unvested at June 30, 2020			569,543						$	21.00

The aggregate intrinsic value and weighted average remaining contractual terms of Options outstanding and Options exercisable were as follows as of June 30, 2020.

			June 30, 2020
Aggregate intrinsic value (in millions)
Unit Options outstanding			$	17.1
Unit Options exercisable			$	—
Weighted average remaining contractual life (in years)
Unit Options outstanding			9.9 years
Unit Options exercisable			N/A

LTIP Unit activity was as follows during the periods indicated:

			Six Months Ended June 30, 2020
			LTIP Units						Weighted Average Participation Threshold
Unvested at beginning of period			—						$	—
Granted			47,620						$	21.00
Unvested at June 30, 2020			47,620						$	21.00

Schedule of Valuation Assumptions

The fair value of Class A stock options was determined using the Black-Scholes option pricing model with the following assumption ranges and fair value per unit:

			Six Months Ended June 30, 2020
Volatility			39.0% to 39.3%
Expected life			5.6 to 5.9 years
Risk-free rate			0.5%
Fair value per unit			$21.00

The fair value of these Class P Units was determined using the Black-Scholes option pricing model with the following assumption ranges and fair value per unit:

Six Months Ended June 30,

2020

2019

Volatility

39.9%

40.4% to 41.2%

Expected life

6.5 to 6.8 years

4 years

Risk-free rate

0.5%

1.8% to 2.5%

Fair value per unit

$21.00

$5.20 to $9.04

Equity-based Units Activity

HoldCo Units

Unvested HoldCo Unit activity was as follows during the periods indicated:

			Six Months Ended June 30, 2020
			HoldCo Units						Weighted Average Grant Date Fair Value
Unvested at beginning of period			—						$	—
Effect of Reorganization Transactions and IPO			1,332,239						$	8.98
Vested			(35,758)						$	5.43
Forfeited			(6,262)						$	12.77
Unvested at June 30, 2020			1,290,219						$	9.06

OpCo Units

OpCo Unit activity was as follows during the periods indicated:

			Six Months Ended June 30, 2020																		Six Months Ended June 30, 2019
			OpCo Units						Weighted Average Grant Date Fair Value						OpCo Units
Unvested at beginning of period			228,819						$	1.72					441,681
Effect of Reorganization Transactions and IPO			(6,909)						$	10.48					—
Vested			(162,218)						$	1.72					(118,867)
Forfeited			(59,692)						$	0.68					—
Unvested at June 30, 2020			—						$	—					322,814

Class P Units

Class P Units were issued under both the prior and current LLC agreement of ZoomInfo OpCo. Class P Unit activity was as follows during the periods indicated:

			Six Months Ended June 30, 2020																		Six Months Ended June 30, 2019
			Class P Units						Weighted Average Participation Threshold						Class P Units
Unvested at beginning of period			16,893,603						$	6.19					5,716,467
Effect of Reorganization Transactions and IPO			(1,950,930)						$	7.01					—
Granted			642,500						$	21.00					7,376,918
Vested			(3,504,844)						$	5.77					—
Forfeited			(343,289)						$	6.56					—
Unvested at June 30, 2020			11,737,040						$	6.31					13,093,385

			Six Months Ended June 30, 2020
			LTIP Units						Weighted Average Participation Threshold
Unvested at beginning of period			—						$	—
Granted			47,620						$	21.00
Unvested at June 30, 2020			47,620						$	21.00

Equity-Based Compensation Expense

Including this extra charge as a result

of completing the IPO, compensation expense incurred from all the equity-based incentive awards described above was the following (in millions):

			Three Months Ended June 30,																		Six Months Ended June 30,
			2020						2019						2020						2019
			(unaudited)																		(unaudited)
Cost of service and Operating expenses include equity-based compensation expenses as follows:
Cost of service			$	15.3					$	0.7					$	17.0					$	1.9
Sales and marketing			32.0						1.4						38.4						4.1
Research and development			8.5						2.6						10.1						2.9
General and administrative			8.7						1.3						10.3						2.7
Total equity-based compensation expense			$	64.5					$	6.0					$	75.8					$	11.6

Summary of Unamortized Equity-Based Compensation Costs

As of June 30, 2020, unamortized equity-based compensation costs related to each equity-based incentive award described above is the following:

			Amount						Weighted Average Remaining Service Period (years)
Restricted Stock Units			$	10.3					3.2
Class A Common Stock Options			1.6						3.0
HoldCo Units			9.2						2.9
Class P Units			30.4						2.5
LTIP Units			1.0						4.4
HSKB Incentive Units			96.4						2.2
HSKB Phantom Units			5.7						3.0
Total unamortized equity-based compensation cost			$	154.6					2.4

DiscoverOrg Holdings

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Valuation Assumptions

The fair value of each grant was estimated on the date of the award using a Black-Scholes option pricing model with the following assumption ranges and fair value per unit:

									Year Ended December 31,
									2019						2018
Risk free rate									1.58% - 2.49%						2.49% - 2.82%
Volatility of the underlying assets									38.4% - 41.9%						39.1% - 41.2%
Expected life									4 years						4 years
Marketability discount									(A)						29%
Fair value per common unit									$5.20 - $14.36						$4.00 - $5.20

__________________

(A)In June 2019, the Company began to apply a probability weighted expected return method, where equity values were calculated using an option pricing model under an IPO and non-IPO scenarios and each value was weighted based on estimated probability of occurrence. For common units, an estimated time until a liquidation event of 1.5 - 4.0 years and a marketability discount of 13% - 25% was used, depending on an IPO or non-IPO scenarios. As of December 31, 2019, an 80% weight was applied to an IPO scenario.

Equity-based Units Activity

The number and weighted-average grant date fair value for Common Units and Class P Incentive Units for key activities are as follows:

			Common Units																		Class P Units
			Units						Weighted Avg Grant Date Fair Value/Unit						Units						Weighted Avg Grant Date Fair Value/Unit
Non-vested units at December 31, 2018			441,681						$	0.43					5,716,467						$	1.72
Granted			—						$	—					13,310,663						$	4.10
Vested			(118,867)						$	0.22					(280,563)						$	4.22
Forfeited/Canceled			(93,995)						$	0.17					(1,852,964)						$	2.08
Non-vested units at December 31, 2019 (1)			228,819						$	1.72					16,893,603						$	3.52

__________________

(1)During the year 24,872 units were modified when non-vested units were permitted to be retained by a separating employee without vesting or forfeiting as per the terms of the original agreement. The fair value of these Common units at the time of the modification was $10.48 per unit.

Equity-Based Compensation Expense

The following table summarizes equity-based compensation expense related to all employee incentive unit awards including Class P Incentive Units, DOH Phantom Units, HSKB Grants, and HSKB Phantom Units (in millions):

									Year Ended December 31,
									2019						2018
Cost of service and Operating expenses include equity-based compensation expenses as follows:
Cost of service									$	4.0					$	8.3
Sales and marketing									11.2						15.8
Research and development									4.7						1.1
General and administrative									5.2						7.5
Total equity-based compensation expense									$	25.1					$	32.7

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