• Revenue: $264 million, up 6% year over year.
• Adjusted EBITDA: $47 million, up 53% year over year.
• Net Cash Provided by Operating Activities: $34.8 million, up 41% year over year.
• Free Cash Flow: $28.2 million, up 87% year over year, with a margin of 10.7%.
• GAAP Net Loss: $22 million, improved from $40 million in the first quarter of 2024.
• Scaled Customer Count: 548, up 19% year over year.
• Superscale Customer Count: 159, up 10% year over year.
• Scaled Customer Quarterly ARPU: $467,000, increased 12% year over year.
• Superscale Customer Quarterly ARPU: $1.4 million, increased 23% year over year.
• Adjusted EBITDA Margin: 17.7%, 200 basis points higher year over year.
• Share Repurchase: 1.6 million shares for $25 million during the quarter.
• 2025 Revenue Guidance: $1.242 billion at the midpoint, representing 23% reported growth.
• 2025 Adjusted EBITDA Guidance: $258.5 million, representing a 34% year-over-year increase.
• 2025 Free Cash Flow Guidance: $131.5 million, representing 43% year-over-year growth.
• Stock-Based Compensation Expense: Expected to be $190 million for 2025.

• Warning! GuruFocus has detected 2 Warning Signs with ZETA.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Zeta Global Holdings Corp (NYSE:ZETA) reported its 15th consecutive quarter of beating and raising guidance, showcasing strong performance and market share gains.
• The company achieved a 6% year-over-year revenue growth to $264 million and a 53% increase in adjusted EBITDA to $47 million, both exceeding guidance.
• Zeta's AI-driven platform continues to deliver measurable ROI, with significant customer success stories in telecommunications, insurance, and finance sectors.
• The launch of AI Agent Studios and Agentic Workflows is expected to enhance marketer productivity and drive further adoption of Zeta's AI capabilities.
• Zeta's agency business is experiencing momentum, with new agreements and increased platform adoption among independent agencies and large holding companies.

Negative Points

• Despite strong performance, Zeta Global Holdings Corp (NYSE:ZETA) is adopting a conservative approach to guidance due to macroeconomic uncertainties.
• The company faces potential challenges from macroeconomic conditions, which could impact customer spending and growth projections.
• Zeta's ARPU growth is impacted by the integration of LiveIntent, which has smaller average customer sizes.
• The company is experiencing headwinds in working capital due to growth with agency clients, affecting free cash flow conversion.
• Zeta's exposure to macroeconomic risks, such as potential slowdowns in key verticals like automotive and retail, remains a concern despite current resilience.

Q & A Highlights

Q: Can you provide an update on the progress of the One Zeta strategy and its impact on cross-sell and use case expansion? A: David Steinberg, CEO, mentioned that the One Zeta strategy is ahead of schedule, with significant deals being signed. The strategy of using multiple use cases and channels is a major business driver, contributing to a 36% year-over-year growth, with 26% being organic. The company is now aiming to scale customers to $100 million annually, indicating strong progress.

Q: How is Zeta handling macroeconomic uncertainty, and what impact is it having on the business? A: David Steinberg, CEO, stated that Zeta is not experiencing any turbulence or client losses due to macroeconomic uncertainty. The company is being conservative in its guidance for the second half of the year, but so far, there have been no changes in client behavior or spending.

Q: What is the growth outlook for scale customers and ARPU for the rest of the year? A: Christopher Greiner, CFO, explained that ARPU growth was 12% year over year, aligning with their model of 12% to 16%. Scale customer count grew 19% year over year, with LiveIntent contributing to this growth. The company expects to continue operating similarly throughout the year.

Q: How is the adoption of generative AI tools, such as AI Agent Studios, progressing, and what impact is it having on the business? A: David Steinberg, CEO, reported no slowdown in AI adoption, with uncertainty actually accelerating it. The adoption of AI tools has led to higher revenue from customers, and the company continues to invest heavily in AI innovation, which is contributing to strong financial performance.

Q: What are the expectations for the agency business, and could it become a majority of Zeta's revenue? A: David Steinberg, CEO, indicated that while the agency business is growing, it would need to grow substantially faster to become a majority of revenue. The direct-to-enterprise business is still growing rapidly, and the independent agency business, which acts like the enterprise business, is expected to continue growing at an accelerated pace.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.