• Q4 2024 Revenue: $315 million, up 50% year over year.
• Q4 2024 Adjusted EBITDA: $70 million, up 57% year over year.
• Full Year 2024 Revenue: Just above $1 billion, up 38% year over year.
• Full Year 2024 Adjusted EBITDA: $193 million, representing a margin of 19.2% and a 49% increase year over year.
• Q4 2024 GAAP Net Income: $15.2 million, first positive GAAP net income as a public company.
• Q4 2024 Free Cash Flow: $32 million, up 74%, representing a margin of 10%.
• Full Year 2024 Free Cash Flow: $92 million, margin of 9.2%, up 69% year over year.
• Scaled Customer Count: 527 as of December 30, 2024, up 17% year over year.
• Super Scaled Customers: 148 as of year-end, up 13% year over year.
• Net Revenue Retention: 114% for the year, highest level as a public company.
• 2025 Revenue Guidance: Midpoint of $1.24 billion, growth of 23%.
• 2025 Adjusted EBITDA Guidance: Midpoint of $256.5 million, margin of 20.7%.
• 2025 Free Cash Flow Guidance: Midpoint of $129.5 million, margin of 10.4%, growth of 40%.

• Warning! GuruFocus has detected 1 Warning Sign with ZETA.

Release Date: February 25, 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 record revenue of $315 million in Q4 2024, up 50% year over year, and record adjusted EBITDA of $70 million, up 57% year over year.
• The company has consistently beaten and raised guidance for 14 consecutive quarters, demonstrating strong financial performance and reliability.
• Zeta's AI and data-driven marketing platform is gaining traction, with AI adoption across the platform surging and contributing to a 40% increase in consumption revenue in 2024.
• The company's strategic investments in AI and first-party data are expected to propel it to over $2 billion in annual revenue by 2028, with a targeted 20% organic revenue CAGR.
• Zeta's leadership in AI continues to attract top-tier talent, enhancing its team and platform capabilities, as evidenced by recent high-profile hires from Oracle and McKinsey.

Negative Points

• The company faces risks and uncertainties related to forward-looking statements, which could cause actual results to differ materially from projections.
• Zeta's GAAP cost of revenue increased by 210 basis points in 2024, driven by a higher mix of integrated revenue, which could impact profitability.
• The company incurred $2 million in additional expenses related to defending against a short-seller report, highlighting potential vulnerabilities to market perceptions.
• Despite strong growth, Zeta's free cash flow margin was impacted by a $22 million working capital headwind due to longer payment cycles in the agency business.
• The company's reliance on AI and data-driven strategies may face increased competition as other firms, including major players like Meta, explore AI-based advertising solutions.

Q & A Highlights

Q: Can you discuss the macro environment and demand-centric spending for Q1 and 2025? A: Christopher Greiner, CFO: We follow historical approaches, requiring the low end of KPIs to meet guidance, providing flexibility. We use Zeta Economic insight data to anticipate macro trends. Vertical growth from 2024 is expected to continue in 2025. We are aware of macro factors and have incorporated appropriate conservatism into our guidance. David Steinberg, CEO: We are not seeing challenges from clients and feel good about our position in the current macro environment.

Q: How is the integration of Live Intent progressing, and what are the initial customer responses? A: David Steinberg, CEO: Live Intent integration was completed by January. Customers are responding positively to Zeta Direct, which combines Live Intent's inventory with Zeta's data cloud for targeted advertising. This has shown increased ROI for marketers and higher revenue for publishers, benefiting all parties involved. We are seeing significant ARPU growth, especially in the agency business, as they add more brands.

Q: What is the growth opportunity with agencies, and how does Zeta plan to expand in this area? A: David Steinberg, CEO: Agencies find us to be the most profitable partner due to our bundled data offering, which reduces costs or increases their profit by 25%. Agencies are moving more brands and volume to us. We have strong visibility into growth from existing agreements, providing confidence in our projections. We do not intend to compete with agencies in creative work but support and optimize their creative assets.

Q: How does Zeta plan to increase wallet share with large marketing companies? A: David Steinberg, CEO: Our strategy involves consolidating use cases into one sale with the One Zeta initiative. We aim to increase our share of existing customers' marketing spend from 1% to 2% over the next few years. We have examples of enterprise clients where we capture over 5% of their wallet share, providing a roadmap for growth.

Q: How is Zeta addressing competition, especially from large tech companies like Meta? A: David Steinberg, CEO: We are not seeing competition from companies like Meta; instead, we have a strong partnership with them. We continue to grow our business with Meta and have not seen new startups challenging us due to financing difficulties in recent years. Our integrated platform offers a unique solution that traditionally required multiple vendors, and we are not seeing any organization replicating this.

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