ZETA(ZETA) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2024, Zeta Global reported revenue of $195 million, a 24% increase year-over-year, and adjusted EBITDA of $30.5 million, up 27% year-over-year [7][19] - The adjusted EBITDA margin expanded by 40 basis points year-over-year to 15.6% [7][36] - The company raised its full-year revenue guidance for 2024 by $25 million to $900 million at the midpoint, reflecting a 24% year-over-year growth [7][38] Business Line Data and Key Metrics Changes - The number of scaled customers increased to 460, accounting for 98% of total revenue, which is an 8% increase from Q4 2023 and a 49% increase year-over-year [19][22] - The growth rate of the super-scaled customer cohort (those spending over $1 million) accelerated by 31% year-over-year, with a record increase of 13 customers in Q1 2024 [20][22] - Average Revenue Per User (ARPU) for scaled customers grew by 11%, up from 7% in Q4 2023, driven by increased usage of multiple channels [22][36] Market Data and Key Metrics Changes - The automotive and insurance sectors returned to growth in Q1 2024, 90 days earlier than expected, with both industries projected to grow double digits year-over-year [25][96] - Political candidate revenue is anticipated to be $15 million for 2024, with specific quarterly expectations outlined [26] Company Strategy and Development Direction - Zeta Global is focusing on enhancing its AI-powered Marketing Cloud, the Zeta Marketing Platform (ZMP), to provide actionable intelligence and improve customer experiences [8][9] - The company is expanding its partnerships with agencies and technology alliances to drive demand generation and improve sales productivity [10][29] - Zeta is committed to investing in innovation and product development, particularly in AI and mobile capabilities, to maintain competitive advantages [15][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing strong visibility into key revenue drivers and the need for more efficient marketing solutions [7][42] - The management team highlighted the importance of AI in driving efficiency and revenue growth, indicating that enterprises are increasingly seeking partners who can provide AI solutions [78] - The company anticipates continued growth in its direct revenue mix as it migrates agency clients from integrated to direct platforms [53][56] Other Important Information - Zeta Global was certified as a great place to work in both the United States and India, reflecting its investment in company culture [17] - The company generated $25 million in cash flow from operating activities, up 23% year-over-year, and free cash flow of $15 million, up 51% year-over-year [36] Q&A Session Summary Question: Agency business growth and direct vs integrated mix - Management noted that they are better positioned now to land larger agency clients faster due to improved recognition and efficiency in their offerings [45][46] - The direct revenue mix is expected to increase as agencies transition from integrated to direct platforms, following a similar trajectory as previous agency partnerships [53][54] Question: Intelligent agent engagement and adoption - Management reported strong uptake of the intelligent agent feature, with clients actively using the agents for various applications, indicating a positive trend in platform utilization [50][51] Question: Recovery in the insurance vertical - Management indicated that both the insurance and automotive sectors are expected to grow, with insurance potentially becoming a faster grower as the year progresses [96] Question: AI's role in pipeline conversations - AI is central to Zeta's value proposition, with enterprises increasingly seeking partners who can provide AI-driven solutions to enhance efficiency and revenue generation [78] Question: Guidance on revenue and EBITDA - Management provided clarity on the increased guidance for revenue and EBITDA, emphasizing that investments in marketing and R&D are expected to drive continued growth [90][91]