Zeta Global (ZETA) Q2 Revenue Jumps 35%

Core Insights - Zeta Global reported Q2 2025 GAAP revenue of $308.4 million, exceeding analyst expectations and the company's guidance, with a year-over-year growth of 35.4% [1][2][5] - Free cash flow for the quarter was $33.6 million, reflecting a significant increase of 69.7% year-over-year, prompting management to raise the full-year 2025 financial outlook [1][2][12] - The company experienced strong demand for its AI-driven products, contributing to robust customer expansion and increased revenue per customer [6][9] Financial Performance - Q2 2025 GAAP revenue was $308.4 million, surpassing estimates of $296.7 million and up from $227.8 million in Q2 2024 [2][5] - Adjusted EBITDA rose 53% year-over-year, indicating improved operating profitability alongside sales growth [5] - Management forecasts Q3 2025 revenue between $327 million and $329 million, representing a 22-23% increase year-over-year [11] Business Strategy - Zeta Global focuses on AI-based marketing technology, particularly through its Zeta Marketing Platform, which utilizes machine learning and generative AI [3] - Recent strategic initiatives include enhancing AI-powered personalization tools, investing in data privacy, and integrating the LiveIntent identity graph to improve customer targeting [4][7] - The company aims to expand its customer base by attracting more enterprise and agency clients while ensuring compliance with data privacy regulations [4] Customer and Market Dynamics - Zeta reported 548 scaled customers and 159 'super-scaled' customers, with average revenue per scaled customer increasing by 12% year-over-year [9] - The agency channel saw significant growth, with independent agency activity doubling in Q1 2025 compared to Q4 2024 [9] - The integration of LiveIntent's identity graph has enhanced Zeta's data capabilities, allowing for more targeted and privacy-compliant marketing [7] Capital Allocation and Shareholder Returns - Zeta completed a $100 million share repurchase program, with $15 million remaining as of July 25, 2025, and has authorized a new $200 million repurchase program [10] - Stock-based compensation decreased by 11% year-over-year, although it remains a significant expense at $46.5 million for Q2 2025 [10] - Management plans to further reduce stock-based compensation costs by tying leadership compensation to long-term goals [10] Outlook - The company raised its full-year 2025 guidance, projecting revenue between $1,258 million and $1,268 million, adjusted EBITDA between $263.6 million and $265.6 million, and free cash flow between $140 million and $144 million [12] - Leadership described the outlook as cautiously optimistic, with no signs of demand slowdowns despite macroeconomic volatility [12][13]