Summary of Zeta Global's Investor Day Conference Call Company Overview - **Company**: Zeta Global - **Industry**: Marketing Technology Key Points and Arguments 1. Durability and Predictability - Zeta Global aims for at least 20% organic revenue growth while enhancing adjusted EBITDA margins and free cash flow margins [1][2] - The company has consistently exceeded growth and margin expansion goals, achieving a compound growth rate of 27% from 2021 to 2022, and 26% from 2022 to 2023 despite economic headwinds [4][5] - Zeta Global is one of only eight public technology companies that have maintained a revenue growth rate of 20% or greater while expanding free cash flow margins every year since going public [3] 2. Financial Performance - Since going public, Zeta Global has increased annual free cash flow generation by over eight times, with a compound growth rate of 70% [5] - Free cash flow margins have improved from 4% to 11%, effectively doubling free cash flow conversion [5] 3. Market Dynamics and Competitive Edge - The marketing technology landscape is shifting, with a 70% increase in RFP volume indicating a move towards modularity and unbundling of cloud services [11][13] - Enterprises are increasingly focused on AI as a game changer, with 5 out of 6 CMOs viewing it as such, but many believe their infrastructure is too rigid to capitalize on AI's potential [15][16] - Zeta Global's data foundation and AI capabilities position it well to lead in this evolving market [18][24] 4. Product Innovations - Zeta Global is introducing several new products aimed at enhancing customer engagement and operational efficiency, including vertical clouds and AI-powered marketing solutions [27][28] - The company emphasizes the importance of a cohesive system that integrates data and decision-making processes across marketing channels [20][24] 5. AI Integration and Operational Efficiency - Zeta Global is becoming a fully AI-powered organization, focusing on lowering costs and increasing productivity through AI [40][41] - The company has developed an operating model that sets expectations for AI usage across all roles, aiming for a 10x return on AI investments [48][57] 6. Customer Engagement and Value Creation - Recent benchmark testing shows that Zeta's data model leads to significant improvements for customers, including a 30% to 40% increase in prospects and a 10% to 20% increase in conversion rates [61] - The company aims to create a seamless experience for customers, reducing friction in adopting new technologies and enhancing overall value [54][55] 7. Future Outlook - Zeta Global is focused on accelerating growth through AI-powered operations, innovative product offerings, and a commitment to customer success [25][30] - The company is positioned to lead the AI revolution in marketing, with a strong emphasis on data-driven decision-making and measurable outcomes [39][24] Additional Important Insights - The shift towards AI and modularity in marketing technology is creating a new category of AI-powered marketing solutions [17][12] - Zeta Global's approach to integrating AI into its operations and customer offerings is designed to enhance both internal efficiency and customer satisfaction [57][58] This summary encapsulates the key themes and insights from Zeta Global's Investor Day conference call, highlighting the company's strategic focus on growth, innovation, and customer value in the evolving marketing technology landscape.

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]

Financial Data and Key Metrics Changes - In Q2 2025, revenue reached $308 million, representing a 35% year-over-year increase, while adjusted EBITDA grew by 52% to $59 million, both exceeding guidance [6][14][20] - Free cash flow was $33.6 million, up 69% year-over-year, translating to a margin of 11% [20][26] - The company reported a GAAP net loss of $12.8 million, an improvement from a loss of $28.1 million in the previous year [20] Business Line Data and Key Metrics Changes - The total scaled customer count grew to 567, up 21% year-over-year, with 168 super scaled customers, an increase of 17% [17] - Quarterly ARPU for scaled customers was $532,000, an 11% increase year-over-year, while super scaled customer ARPU was $1.6 million, up 19% [17] - The agency business saw a 40% year-over-year increase in the average number of scaled brands per large agency holding company [18] Market Data and Key Metrics Changes - Six of the top ten verticals grew faster than 20% year-over-year, with technology and media, consumer and retail, and advertising and marketing being the largest contributors [18] - Direct revenue mix increased to 75%, up from 67% a year ago, resulting in direct revenue growth of 51% year-over-year [19] Company Strategy and Development Direction - The company is focused on AI innovation, launching Zeta Answers, a prescriptive AI framework that automates outcome-driven actions in real-time [7][9] - The One Zeta initiative aims to accelerate multi-use case adoption across acquisition, growth, and retention, leading to better ROI and customer stickiness [10][11] - The company is expanding its presence in the public sector, leveraging relationships built through its political business [92] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in capturing more market share due to strong sales pipeline and AI-driven momentum [12][24] - The company raised its full-year revenue guidance by $21 million, reflecting strong first-half performance and customer behavior consistency [24][25] - Management remains committed to reducing equity dilution and achieving long-term targets, including over $2.1 billion in annual revenue by 2028 [27] Other Important Information - The company plans to host its fifth annual Zeta Live conference on October 9, featuring prominent speakers and a dedicated stage for product showcases [12][13] - A second Investor Day will be held on October 8 to share long-term roadmap and R&D pipeline [14] Q&A Session Summary Question: Interest level from customers regarding the new AI module - Management noted good awareness and meaningful uptake of the AI suite, with plans to showcase new products at Zeta Live [30][33] Question: Linearity in the quarter and growth consistency - Management confirmed consistent growth throughout the quarter, with strong performance across key verticals [34][35] Question: KPIs and sales productivity - Management highlighted strong sales productivity and pipeline conversion, with a focus on cost of revenue and expense management [42][44] Question: Trends in marketing operations and AI - Management indicated that most enterprises still rely on agencies for marketing, but many are testing AI tools internally [72] Question: Goals for the Zeta Data and AI Lab - The lab aims to drive innovation and stay ahead of competitors in AI tools and workflows [76] Question: Success with independent agencies - Management emphasized the importance of partnerships with independent agencies, providing them access to advanced AI tools [81][83] Question: Changes in customer behavior and pipeline filling - Management noted a shift in brand recognition, leading to a stronger pipeline and higher conversion rates [87]

Financial Data and Key Metrics Changes - In Q2 2025, revenue reached $308 million, representing a 35% year-over-year increase, while adjusted EBITDA grew by 52% to $59 million, both exceeding guidance [5][13][20] - First half revenue growth was 27% when excluding LiveIntent and political contributions, with free cash flow conversion at 59%, significantly ahead of previous targets [14][25] - GAAP net loss improved to $12.8 million from $28.1 million in the previous year, with free cash flow of $33.6 million, up 69% year-over-year [20][21] Business Line Data and Key Metrics Changes - The total scaled customer count grew to 567, up 21% year-over-year, with 168 super scaled customers, an increase of 17% [17][18] - Quarterly ARPU for scaled customers increased by 11% to $532,000, while super scaled customer ARPU rose by 19% to $1.6 million [17][18] - The agency business saw a 40% year-over-year increase in the average number of scaled brands per large agency holding company [18] Market Data and Key Metrics Changes - Six of the top ten verticals grew faster than 20% year-over-year, with technology, media, consumer retail, and advertising being the largest contributors [18] - Direct revenue mix increased to 75%, up from 67% a year ago, resulting in a 51% year-over-year growth in direct revenue [19][20] Company Strategy and Development Direction - The company is focused on AI innovation, launching Zeta Answers, a prescriptive AI framework that enhances marketing efficiency [6][8] - The One Zeta initiative aims to accelerate multi-use case adoption, leading to better ROI and customer retention [9][10] - The company is expanding its presence in the public sector, leveraging relationships built through political business [90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in capturing more market share due to strong AI-driven momentum and a robust sales pipeline [11][23] - The company anticipates revenue of $1.263 billion for 2025, a $21 million increase from previous guidance, with adjusted EBITDA expected to grow by 32% [24][25] - Management highlighted the importance of disciplined capital expenditure and reducing equity dilution as key drivers of financial health [21][25] Other Important Information - Zeta Live, the company's annual conference, will feature prominent speakers and is expected to showcase new product launches [12][13] - The company has repurchased $69 million of its shares year-to-date, with an additional $200 million share repurchase authorization approved [21][22] Q&A Session Summary Question: Interest level from customers regarding new AI module - Management noted good awareness and meaningful uptake of the new AI products, with plans to showcase them at Zeta Live [30] Question: Linearity in the quarter - Management confirmed consistent growth throughout the quarter, with strong performance across key verticals [32][33] Question: KPIs and dials being controlled - Focus is on cost of revenue and expense lines, with strong sales productivity driving margin improvements [41][44] Question: Trends in marketing operations moving in-house - Management indicated that most enterprises still rely on agencies, although testing of AI tools is common [70] Question: Success with independent agencies - Independent agencies are under pressure to partner with Zeta for AI tools, as they cannot afford the investments needed to build AI capabilities [77][79] Question: Growth in customer count - The increase in customer count is attributed to a higher sales force and improved brand recognition [95][96]

The third quarter and full year 2025 guidance and Zeta 2028 targets provided herein are based on Zeta's current estimates and assumptions and are not a guarantee of future performance. The guidance provided and Zeta 2028 targets are subject to significant risks and uncertainties, including the risk factors discussed in the Company's reports on file with the Securities and Exchange Commission, that could cause actual results to differ materially. There can be no assurance that the Company will achieve the re ...