How Zeta Global is taking the marketing world by storm!
Zeta exceeded expectations for the 15th consecutive quarter and raised its forecasts for the second quarter and full year 2025.
Dear growth investors,
AI and real revenues? Often, those two don’t go hand in hand. However, today I’m introducing an AI company that has achieved over 20% annual revenue growth over the past five years, generating $1 billion in revenue in 2024 alone. Zeta Global (Ticker: ZETA) has exceeded expectations for the 15th consecutive quarter and raised its guidance for Q2 and the full year 2025. Zeta Global delivered strong results, especially during a time of macroeconomic uncertainty.
Zeta Global operates what is known as “Customer Lifecycle Management.” Digital information and actions are analyzed by AI. Thanks to its database of over 235 million individuals, companies gain valuable insights into consumer (purchasing and online) behavior.
Through its so-called ZMP platform, campaigns reach customers across multiple channels such as messaging and social media. Zeta Global combines first-party data with proprietary AI algorithms to predict customer behavior and maximize conversion rates.
By precisely personalizing customer interactions, Zeta Global analyzes vast amounts of data to create highly targeted campaigns.
What business areas does the Zeta Marketing Platform (ZMP) cover?
Data analysis and segmentation
Personalized advertising campaigns
Omnichannel marketing
Process automation
The Zeta Global Data Cloud contains billions of data points from both proprietary and external sources. Companies use these to gain better insights into customer behavior and to develop more precise marketing strategies.
How strong is Zeta Global’s market position?
Major players like Salesforce, Adobe, and Oracle hold significant market shares. Zeta Global stands out from the competition through its advanced AI technology and its vast amount of actionable data.
With clients from various industries, Zeta Global has established a solid market position. The company serves businesses across more than 15 different sectors and works with 44% of the Fortune 100 companies.
Zeta Global has exceeded expectations for the 15th consecutive quarter. In addition, the company has raised its guidance for both the second quarter and the full year 2025.
Q1'25 Highlights
How do the key figures break down in detail?
Revenue: $264 million, +36% year-over-year
Adjusted EBITDA: $46.7 million, +53% year-over-year
Margin: 17.7%
Operating Cash Flow: $35 million (compared to $25 million in Q1 2024)
Free Cash Flow: $28 million (compared to $15 million in Q1 2024)
Scaled customers increased to 548 (up from 460 in Q1 2024).
Super-scaled customers increased to 159 (up from 144 in Q1 2024).
ARPU (Average Revenue Per User): $467,000 (+12% year-over-year).
Zeta Global continues to deliver strong results, significantly increasing both revenue and profitability. In addition, Zeta Global has outlined a plan through 2028, based on a projected compound annual growth rate (CAGR) of 20%.
Zeta Global plans to significantly increase revenue, EBITDA, and free cash flow over the next four years. The company is targeting $132 million in free cash flow for 2025, with the goal of surpassing $340 million by 2028.
What are some positive takeaways from the Q1 2025 results?
Stock-based compensation is decreasing, indicating improved cost discipline and reduced shareholder dilution.
Share buybacks totaling $25 million, demonstrating confidence in the company’s valuation and commitment to returning value to shareholders.
Key Positives from Q1 2025 Results
36% year-over-year revenue growth
53% increase in adjusted EBITDA
Adjusted EBITDA margin of 17.7%
GAAP net loss narrowed
Steady growth in both scaled and super-scaled customer segments
Free cash flow nearly doubled to $28 million
Stable operating cash flow of $35 million
$25 million in share repurchases, signaling confidence and shareholder value focus
Raised guidance for revenue and EBITDA for Q2 and full-year 2025
Key Risks and Negatives
Net loss of $22 million, primarily due to $42 million in stock-based compensation
High stock-based compensation leads to potential shareholder dilution
Valuation risk: High growth expectations may already be priced into the stock
Competitive pressure: The marketing tech and AI-driven platform space is crowded – Zeta Global must continue to innovate to stay ahead
Conclusion
Zeta Global continues its strong performance, achieving growth in revenue, profitability, and customer numbers. At the same time, the company has raised its guidance for the remainder of fiscal year 2025.
In my opinion, Zeta is in a unique position: With clients from a wide range of industries, Zeta Global has built a solid market position. The company serves customers across more than 15 different sectors and currently works with 44% of the Fortune 100 companies.
Additionally, Zeta Global is considered an acquisition target. CEO David Steinberg stated during the earnings call:
"I've spent a lot of time over the past few weeks taking calls from people who wanted to buy us."
What are your thoughts? Can Zeta compete with established marketing companies like The Trade Desk and others?
Disclaimer
The content and materials presented or linked to are for informational and educational purposes only and do not constitute financial advice or recommendations and should not be considered as such.