Zeta Global (ZETA) Q3 2025 Earnings Transcript

Core Insights - The company reported a strong Q3 performance with revenue of $337 million, representing a 28% year-over-year growth, excluding political and live intent revenue, marking an acceleration from Q2 [1][15] - Adjusted EBITDA reached $78 million, up 46% year-over-year, and free cash flow was $47 million, up 83% year-over-year, achieving the highest free cash flow margin in the company's history at 14% [1][20] - The company raised its 2025 revenue guidance by $11 million, now expecting $1.275 billion, and provided an initial 2026 outlook of $1.54 billion, indicating a 21% growth [5][25][29] Financial Performance - Q3 revenue growth accelerated to 28% from 27% in Q2 and 26% in Q1, demonstrating the durability of growth [15][16] - Total scaled customer count grew to 572, up 20% year-over-year, with 180 super scaled customers, an increase of 25% year-over-year [16][17] - Adjusted EBITDA margin improved to 23.2%, marking the nineteenth consecutive quarter of expanding adjusted EBITDA margins year-over-year [20][22] Product Development and Innovation - The company launched Athena, an AI conversational super intelligent agent, aimed at enhancing user experience and driving greater ROI for clients [6][7] - Athena is expected to be in client beta by Q4 and fully production-ready by the end of 2026, with significant potential to improve platform utilization [9][12] - The integration of Athena is anticipated to facilitate faster onboarding and cross-selling opportunities, enhancing the One Zeta initiative [42][43] Market Position and Strategy - The company is strategically positioned to capitalize on the ongoing replacement cycle in the marketing cloud space, with a record number of RFPs and significant displacement of legacy marketing solutions [62] - The telecom vertical has shown strong growth, with the company displacing major marketing clouds, indicating a competitive advantage in cost and performance [73] - The company aims to close over $100 million in incremental business from the recent Zeta Live event, building on a successful track record from previous years [5][37] Guidance and Future Outlook - The company provided an initial organic guidance for 2026, projecting $1.54 billion in revenue and $354 million in adjusted EBITDA, reflecting confidence in continued growth [29][30] - The guidance for 2025 includes a free cash flow expectation of $157.4 million, representing a year-over-year growth of 71% [27] - The company plans to maintain a buyback strategy, utilizing over half of its free cash flow for share repurchases, indicating a commitment to returning value to shareholders [70][72]