Zeta Global (NYSE:ZETA) 2025 Investor Day October 08, 2025 08:30 AM ET Company ParticipantsNeej Gore - Chief Data OfficerChris Greiner - CFOSteve Gerber - PresidentMarc Brodersen - Company RepresentativeAdam Potashnick - CEOPamela Lord - President of CRMJed Hartman - President of Zeta Global ActivationEd See - Chief Growth OfficerCourtney Trudeau - Company RepresentativeMatthew Mobley - COODavid Steinberg - CEONone - Video NarratorSudarshan Vig - Company RepresentativeChris Monberg - CTOConference Call Part ...

Core Insights - Kratos Defense & Security Solutions, Inc. (KTOS) shares have increased by 59.8% over the past three months, significantly outperforming the Zacks Aerospace-Defense Equipment industry growth of 2.4%, the Aerospace sector's growth of 4.6%, and the S&P 500's rise of 9.4% [1][10]. Performance Drivers - The stock performance of KTOS is attributed to strong quarterly results, new program developments, and strategic collaborations [4]. - A partnership with Airbus was signed in July 2025 to equip the Valkyrie with mission systems for the German Air Force, enhancing global presence [5]. - U.S. defense contracts and upcoming programs like Air Wolf, Athena, and a new fifth-generation jet drone reinforce KTOS's leadership in advanced UAS solutions [5]. - The establishment of a new advanced manufacturing facility in Bristow, OK, for producing the GEK turbojet engine family is expected to bolster KTOS's role in defense and aerospace propulsion [6]. Future Outlook - KTOS is positioned for sustained long-term growth, supported by a broad portfolio in unmanned systems, hypersonics, and propulsion [7]. - The company anticipates securing a sole-source contract for the Air Wolf tactical jet drone by the end of 2025, with production expected to begin in late 2026 [7]. - Advancements in hypersonic systems like Erinyes, Dark Fury, and Icarus are also part of the company's growth strategy [8]. - A $1.41 billion backlog and clear delivery schedules over the next two years position KTOS to generate consistent revenues [12]. Financial Estimates - The Zacks Consensus Estimate for KTOS's 2025 revenues indicates a 15.7% improvement from the prior year, with earnings expected to improve by 4.1% [14]. - For 2026, revenue estimates suggest a year-over-year growth of 17%, while earnings are projected to grow by 39.2% [14]. - Current revenue estimates for the current year (2025) stand at $1.31 billion, with a forecast of $1.54 billion for the next year (2026) [15]. Valuation Metrics - KTOS shares are currently trading at a forward Price/Sales (P/S F12M) ratio of 7.43X, which is below the industry average of 9.48X, indicating a potential discount [17]. - The Return on Equity (ROE) for KTOS is 4.83, which is below the industry average of 8.56, suggesting lower returns on equity compared to peers [20]. Conclusion - Kratos Defense is well-positioned for long-term growth, supported by its expanding drone portfolio, strategic partnerships, advancements in hypersonics and propulsion, and a substantial backlog [21]. - Despite strong growth prospects, challenges such as supply-chain constraints, inflationary pressures, and labor shortages remain [22].

It led the percentage gains with a 243% revenue surge, jumping from 9 million to 32.4% million in a 30-day time frame. So, that's pretty great. First of all, what the heck is Athena.Athena is a stable coin. And it is based on, you guessed it, Ethereum. Now, smartly, it is multi-chain, but I can guarantee a lot of the Well, I can't guarantee anything.I would say a lot of transactions probably on uh Ethereum, maybe on Salana, maybe Hyperlquid, but again, it's a multi-chain and uh for stable coins, I'm surpris ...

Financial Performance & Guidance - Stem reported Q2 2023 revenue of $93 million, a 39% year-over-year increase[12] - The company's adjusted EBITDA for Q2 2023 was $(9) million[12] - GAAP gross margin was 13% and non-GAAP gross margin was 18% in Q2 2023[12] - Stem reaffirms full-year 2023 revenue guidance of $550 million to $650 million and bookings of $14 billion to $16 billion[65] - The company anticipates achieving positive adjusted EBITDA in the second half of 2023[13] Operational Metrics & Growth - Bookings reached $236 million in Q2 2023, a 5% year-over-year increase[12] - Contracted backlog grew to $136 billion, an 88% year-over-year increase[12] - Contracted Annual Recurring Revenue (CARR) increased by 5% quarter-over-quarter to $75 million[12] Market Outlook & Strategy - The US Front-of-the-Meter (FTM) storage market is projected to reach 51068 MWh in 2026, representing a 46% CAGR from 2022[34] - The US Behind-the-Meter (BTM) storage market is projected to reach 3132 MWh in 2026, representing a 48% CAGR from 2022[36] - US Solar market is projected to reach 33977 MW in 2026, representing a 21% CAGR from 2022[37] - Municipalities and Co-ops are expected to represent >20% of future storage deployments[40]

Financial Data and Key Metrics Changes - The company reported revenue of $229 million for Q1, representing a 23% year-over-year growth [27] - Total Annual Recurring Revenue (ARR) grew 24% to $948 million [28] - The gross margin maintained at 79%, with an operating margin improvement to negative 2% [30] - Free cash flow margin reached a record 20%, with cash and investments increasing to $1.2 billion [36] Business Line Data and Key Metrics Changes - Revenue from international markets grew 27%, accounting for 38% of total revenue [28] - Customers with ARR of $100,000 or more increased by 22% to 1,459 [29] - The data solutions segment surpassed $100 million in ARR [10] Market Data and Key Metrics Changes - The company observed elongated sales cycles due to macroeconomic uncertainty, impacting Q1 net new ARR [20] - Despite challenges, win rates remained strong, and no project cancellations were reported [20][42] Company Strategy and Development Direction - The company is focusing on a platform sales strategy rather than a product-centric approach, aiming to enhance customer engagement and adoption [24][75] - Recent innovations include the unified cloud security suite and advancements in AI capabilities, which are expected to drive future growth [9][17] - The company achieved FedRAMP high authorization for several products, enhancing its competitive position in the public sector [14][15] Management's Comments on Operating Environment and Future Outlook - Management noted improved trends in May, with expectations for year-over-year net new ARR growth in Q2 to exceed typical seasonal growth [41][47] - The company remains cautious about macroeconomic conditions but is optimistic about the strength of its pipeline and demand [52][53] Other Important Information - The company announced a $200 million open-ended share repurchase authorization, reflecting confidence in its long-term trajectory [36][37] - The company is committed to investing in AI-driven innovations and operational efficiencies to support sustainable growth [34][82] Q&A Session Summary Question: Can you discuss incremental ARR in the quarter? - Management indicated that improved trends were observed in May and expects year-over-year net ARR growth in Q2 to improve relative to Q1, attributing Q1 challenges to macro volatility and deal slips rather than elevated churn [41][42] Question: Can you clarify guidance assumptions? - Management acknowledged improved trends in May and indicated that the guidance reflects underlying new business growth while being mindful of potential external disruptions [47][48] Question: What are customers saying about slip deals? - Management noted that longer sales cycles were observed, particularly in April, but emphasized that no deal cancellations occurred and that demand remains strong [51][52] Question: How is the productivity and bundling sale progressing? - Management highlighted that the breadth of the platform is significant and that introducing flexible procurement options is expected to drive adoption [58][59] Question: What is the outlook for the SIEM market? - Management noted that there is increasing interest in cloud-native SIEM solutions and that the company is well-positioned to address real-time threats with its AI capabilities [62][64] Question: What are the hiring plans for fiscal 2026? - Management indicated that most hiring will be in R&D, with a focus on product development and sales aligned with growth areas [105][106] Question: What is the status of federal engagements? - Management reported promising growth opportunities in the federal sector, despite longer sales cycles and evolving procurement processes [109][110]

Financial Data and Key Metrics Changes - Revenues for Q1 2025 were $302.6 million, exceeding the estimated range of $285 million to $295 million, with notable organic revenue growth across all business lines [22][23] - Adjusted EBITDA for Q1 2025 was $26.7 million, above the estimated range of $20 million to $24 million, reflecting a favorable mix of higher-margin revenues [22][23] - Cash flow used in operations for Q1 2025 was $29.2 million, primarily due to working capital requirements related to revenue growth [23][24] Business Line Data and Key Metrics Changes - Unmanned Systems organic revenue growth was 6.2% for Q1 2025, while KGS organic revenue growth was 7.8%, excluding the impact of recent acquisitions [22][23] - Microwave products, T5ISR, and defense rocket support businesses saw organic revenue growth rates ranging from 13% to over 18% [22] Market Data and Key Metrics Changes - Approximately 68% of revenues in Q1 2025 were generated from contracts with the US federal government, including the Department of Defense [25] - Revenues from commercial customers accounted for 12%, while foreign customers contributed 20% [25] Company Strategy and Development Direction - The company is focused on expanding its hypersonic franchise, which is expected to be a key growth driver for the foreseeable future [10][88] - Investments are being made in manufacturing and production facilities to meet existing and anticipated customer orders, particularly in microwave products and hypersonic businesses [23][27] - The company is pursuing large multi-hundred million dollar single award opportunities, particularly in the drone area and integrated air and missile defense [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed increased confidence in 2025 and 2026 financial forecasts due to clearer defense funding and priorities, including a potential $1 trillion national security budget for 2026 [7][8] - The company anticipates continued organic revenue growth of approximately 10% in 2025 and 13% to 15% in 2026 [7] - Management highlighted the importance of existing products and systems in government procurement decisions, suggesting a shift away from funding new programs [9] Other Important Information - The company is experiencing a record opportunity pipeline of approximately $12.6 billion, indicating a strong demand for its products and services [9] - The Israeli-based microwave electronics business is expected to grow significantly following a facility move, which is planned to minimize disruption [19][26] Q&A Session Summary Question: How does Kratos fit into the Golden Dome program? - Management indicated that Kratos is involved in ground command and control, telemetry tracking, and control, with a focus on space domain awareness [33][34] Question: When will test flights with the new landing gear for Valkyrie commence? - Management confirmed that the landing gear capable Valkyrie is tracking to fly soon this year, but specific details could not be disclosed for security reasons [36][37] Question: What missile programs will support turbojet engine production? - Management mentioned several missile programs, including JDAM and classified projects, that would utilize their engines [42] Question: How will the production of Valkyries impact financials once contracts are awarded? - Revenue will be recorded at the time of contract award, with completed units transferring to inventory [44] Question: What is the profit contribution expectation from unmanned systems this year? - Management expects unmanned systems to continue being profitable this year, despite challenges from fixed-price contracts [51] Question: What competitive threats exist in the tactical drone market? - Management stated that there are no competitive threats keeping them up at night, emphasizing their leading position in the market [68] Question: What areas would be targeted for potential M&A? - Management indicated that microwave electronics and turbomachinery would be top targets for tuck-in acquisitions [76][78]

Financial Data and Key Metrics Changes - Revenues for Q1 2025 were $302.6 million, exceeding the estimated range of $285 million to $295 million, with notable organic revenue growth across all business lines, particularly in microwave products, T5ISR, and defense rocket support, with growth rates ranging from 13% to over 18% [21][22] - Adjusted EBITDA for Q1 2025 was $26.7 million, also above the estimated range of $20 million to $24 million, reflecting a favorable mix of higher-margin revenues [21][22] - Cash flow used in operations for Q1 2025 was $29.2 million, primarily due to working capital requirements related to revenue growth [22] - Free cash flow used in operations for Q1 2025 was $51.8 million after capital expenditures of $22.6 million [22] Business Line Data and Key Metrics Changes - Unmanned Systems organic revenue growth was 6.2% for Q1 2025, while KGS organic revenue growth was 7.8%, excluding the impact of the recent acquisition of Norton Millimeter Inc [22] - The contract mix for Q1 2025 consisted of 73% fixed-price contracts, 22% cost-plus contracts, and 5% time and material contracts [22] - Revenues from contracts with the US federal government accounted for approximately 68% of total revenues in Q1 2025 [22] Market Data and Key Metrics Changes - Kratos' opportunity pipeline reached an all-time high of approximately $12.6 billion, indicating a significant increase in available opportunities from customers and partners [6][7] - The company is seeing substantial new opportunities in integrated air and missile defense and counter UAS systems, with a focus on military-grade hardware and software [8][9] Company Strategy and Development Direction - The company is focused on making investments in core business areas to increase market share, drive revenue growth, and enhance margins, with a strong emphasis on hypersonic systems, microwave electronics, and propulsion systems [19][21] - Kratos is pursuing large multi-hundred million dollar single award opportunities, particularly in the drone sector, and is positioned to benefit from government funding priorities [6][8] - The company is also expanding its microwave electronics business, particularly in Israel, which is expected to contribute to strong organic growth and high EBITDA margins [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed increased confidence in the 2025 and 2026 financial forecasts due to clearer defense funding and priorities, including a potential $1 trillion national security budget for 2026 [6][7] - The company anticipates continued growth in its hypersonic franchise and expects to see significant contributions from its tactical drone business in the future [10][12] - Management acknowledged challenges related to increased material and subcontractor costs but is taking steps to manage these impacts [25][26] Other Important Information - The company is currently in the process of relocating its Israeli microwave production operation, which is expected to impact Q2 margins but is planned to be executed with minimal disruption [24][56] - Kratos is actively working on integrating jet engines into its drone systems and is developing new propulsion systems for classified programs [15][16] Q&A Session Summary Question: How does Kratos fit into the Golden Dome program? - Kratos is involved in ground command and control, telemetry tracking, and control, and anticipates benefits as more assets are deployed in space [32] Question: When will test flights with the new Valkyrie landing gear commence? - The Valkyrie with landing gear is tracking to fly soon this year, but specific details cannot be disclosed for security reasons [36] Question: What missile programs will support turbojet engine production? - The engines could be involved with programs such as JDAM, Mace, and Franklin, along with some classified projects [40] Question: Will unmanned systems be profitable this year? - The unmanned systems segment is expected to continue being profitable this year from an EBITDA perspective [49] Question: What is the outlook for the facility move in Israel? - The move is planned in a phased approach with close coordination with customers and the government to minimize risks [56] Question: What competitive threats exist in the tactical drone market? - Management stated that there are no competitive threats that are concerning, as Kratos has the best aircraft at competitive prices [68] Question: What areas would be targeted for potential M&A? - Microwave electronics and turbomachinery are top targets for potential tuck-in acquisitions [78]

Financial Data and Key Metrics Changes - Total revenue increased by 27% year over year, driven by strong growth across the business [19] - Software revenue rose by 17% compared to Q1 2024, reflecting continued strong performance from PowerTrack and increased storage software activations [19] - GAAP gross margin reached a record 32%, while non-GAAP gross margin was close to an all-time high at 46% [20] - Positive operating cash flow of $9 million was generated for the first time in the company's history [20] - Cash balance grew to $59 million at quarter end, with a focus on cash conservation and margin improvement [21] Business Line Data and Key Metrics Changes - Solar annual recurring revenue (ARR) increased by 10% sequentially and 24% year over year [10] - Storage ARR grew by 4% sequentially and 31% year over year [11] - Professional services are gaining momentum, establishing the company as a trusted advisor in the clean energy sector [12] Market Data and Key Metrics Changes - The company is experiencing strong momentum in utility-scale bookings, with nearly triple the bookings in Q1 compared to the same period last year [10] - The overall bookings pace and pipeline development remain robust across core offerings, with no discernible slowdown in deployments by customers [15][23] Company Strategy and Development Direction - The company has restructured into four distinct business units: software, professional services, managed services, and OEM hardware, each with full P&L responsibility [5][6] - A targeted 27% reduction in workforce is expected to yield $30 million in annual cash cost savings, with $24 million of that benefit realized in 2025 [6][24] - The strategic focus is on growing software revenue, particularly through PowerTrack, while reducing the cost structure and driving profitability [8][12] Management's Comments on Operating Environment and Future Outlook - The clean energy sector faces uncertainty due to evolving economic and regulatory policies, but the company maintains upward momentum [15] - Management expects improving profitability as the year progresses, driven by operational cost discipline and revenue growth [13][24] - The company is committed to enhancing software features and functionality to maximize customer value [29] Other Important Information - The company plans to enhance financial transparency through segment reporting, providing deeper insights into performance drivers across business lines [25] - A reverse stock split is proposed to regain compliance with New York Stock Exchange listing standards [26] Q&A Session Summary Question: How is the bookings environment evolving given the tariffs? - Management noted that OEM hardware sales are not a significant component of the business going forward, and they are actively engaging with customers despite tariff volatility [33][34] Question: What are the drivers for expected improving profitability? - Management indicated that revenue cyclicality and operational expense management are key factors, with a focus on higher-margin offerings [42][43] Question: Can you elaborate on the brownfield opportunities mentioned? - Management highlighted that there are broad-based opportunities in geographies where they already operate, with a focus on increasing profitability through managed services [50] Question: What is the rationale for deemphasizing PowerBidder Pro? - The decision was based on growth potential and the ability to execute effectively, leading to a focus on PowerTrack and associated offerings [55][57]

Financial Data and Key Metrics Changes - Total revenue increased by 27% year over year, driven by strong growth across the business [18] - Software revenue rose by 17% compared to Q1 2024, reflecting continued strong performance from PowerTrack and increased storage software activations [18] - GAAP gross margin reached a record 32%, while non-GAAP gross margin was close to an all-time high at 46% [19] - Positive operating cash flow of $9 million was generated for the first time in the company's history [19] - Cash balance grew to $59 million at quarter end, with over $2 million in net cash generated during the quarter [20] Business Line Data and Key Metrics Changes - Solar annual recurring revenue (ARR) increased by 10% sequentially and 24% year over year [10] - Storage ARR grew by 4% sequentially and 31% year over year [11] - Professional services are gaining momentum, establishing the company as a trusted advisor in the clean energy sector [12] Market Data and Key Metrics Changes - The company is experiencing strong bookings in the solar segment, with no significant slowdown noted despite macroeconomic uncertainties [36] - The pace of deployment for solar projects remains robust, with customers continuing to develop new projects [38] Company Strategy and Development Direction - The company has restructured into four distinct business units: software, professional services, managed services, and OEM hardware, each with full P&L responsibility [6][7] - A targeted 27% reduction in workforce is expected to yield $30 million in annual cash cost savings, with $24 million of that benefit realized in 2025 [7][23] - The focus is on growing software revenue, particularly through PowerTrack, and enhancing product capabilities with AI integration [15][19] Management's Comments on Operating Environment and Future Outlook - The clean energy sector faces uncertainty due to evolving economic and regulatory policies, but the company maintains upward momentum [15] - The company reaffirms its full-year 2025 financial guidance across all metrics, with no discernible slowdown in customer deployments [22] - Management emphasizes a commitment to enhancing software features and functionality to maximize customer value [28] Other Important Information - The company plans to enhance financial transparency through segment reporting following the new business unit structure [24] - A reverse stock split is proposed to regain compliance with New York Stock Exchange listing standards [26] Q&A Session Summary Question: How is the bookings environment evolving given the tariffs? - Management noted that OEM hardware sales are not a significant component of the business going forward, and they are actively engaging with customers regarding tariffs [32][33] Question: Are customers still contracting for storage projects? - Management indicated that while there is volatility, they have not seen a significant impact on bookings, particularly in the solar segment [36][38] Question: What are the drivers for expected improving profitability? - Management highlighted that improvements will come from operational expense reductions and revenue growth, with a focus on higher-margin offerings [40][43] Question: Can you elaborate on the brownfield opportunities mentioned? - Management stated that there are broad-based opportunities in core geographies where they operate, with a focus on increasing assets under management [48][49] Question: What is the rationale for deemphasizing PowerBidder Pro? - Management explained that the decision was based on growth potential and execution capabilities, focusing resources on more promising products like PowerTrack [55][56]

Financial Data and Key Metrics Changes - Total revenue increased by 27% year over year, driven by strong growth across the business [18] - Software revenue rose by 17% compared to Q1 2024, reflecting continued strong performance from PowerTrack and increased storage software activations [18] - GAAP gross margin reached a record 32%, while non-GAAP gross margin was close to an all-time high at 46% [19] - Positive operating cash flow of $9 million was generated for the first time in the company's history [19] - Cash balance grew to $59 million at quarter end, with over $2 million in net cash generated during the quarter [20] Business Line Data and Key Metrics Changes - Solar annual recurring revenue (ARR) increased by 10% sequentially and 24% year over year [10] - Storage ARR grew by 4% sequentially and 31% year over year [11] - Professional services are gaining momentum, establishing the company as trusted advisors in the clean energy sector [12] Market Data and Key Metrics Changes - The company is experiencing strong bookings in the solar segment, with no significant slowdown noted despite macroeconomic uncertainties [36] - The pace of deployment for solar projects remains robust, with customers continuing to develop new projects [38] Company Strategy and Development Direction - The company has restructured into four distinct business units: software, professional services, managed services, and OEM hardware, each with full P&L responsibility [6] - A targeted 27% reduction in workforce is expected to yield $30 million in annual cash cost savings, with $24 million of that benefit realized in 2025 [7] - The focus is on growing software revenue, particularly through PowerTrack, and optimizing capital deployment towards high-growth opportunities [9] Management's Comments on Operating Environment and Future Outlook - The clean energy sector faces uncertainty due to evolving economic and regulatory policies, but the company maintains upward momentum [15] - The company expects improving profitability as it moves through the year, driven by operational cost discipline and revenue growth [13][22] - The organizational changes are seen as a significant milestone in the company's evolution, supporting a strategy shift aimed at enhancing shareholder value [24] Other Important Information - The company plans to enhance financial transparency through segment reporting, providing deeper insights into performance drivers across business lines [24] - A reverse stock split is proposed to regain compliance with New York Stock Exchange listing standards [26] Q&A Session Summary Question: How is the bookings environment evolving given the tariffs? - The OEM hardware sales are not a significant component of the business going forward, and there is active dialogue with customers regarding the impact of tariffs [32][33] Question: Are customers still contracting for storage projects? - There has not been a significant slowdown in solar bookings, and the pace of deployment remains strong [36][38] Question: What are the drivers for expected improving profitability? - Improvement is anticipated from operational expense reductions and revenue growth, with a focus on managing operating expenses effectively [40][42] Question: Can you elaborate on the brownfield opportunities mentioned? - The company is pursuing opportunities in core geographies where managed services are already established, with a broad-based approach rather than targeting specific areas [48] Question: What is the rationale for deemphasizing PowerBidder Pro? - The decision was based on growth potential and the ability to execute effectively, focusing on PowerTrack and associated offerings instead [55]