ZETA(US:ZETA)2025-05-01 20:30Financial Data and Key Metrics Changes - In Q1 2025, Zeta Global generated revenue of $264 million, representing a 36% year-over-year increase, and adjusted EBITDA of $47 million, up 53% year-over-year, both exceeding guidance [6][17][19] - The GAAP net loss for Q1 2025 was $22 million, an improvement from $40 million in Q1 2024 [19] - Free cash flow for Q1 2025 was $28.2 million, up 87% year-over-year, with a free cash flow conversion of 60% [20][27] Business Line Data and Key Metrics Changes - Total scaled customer count grew to 548, up 19% year-over-year, with 159 superscaled customers, an increase of 10% year-over-year [17][18] - Scaled customer quarterly ARPU was $467,000, a 12% increase year-over-year, while superscaled customer quarterly ARPU was $1.4 million, up 23% year-over-year [18] Market Data and Key Metrics Changes - Six of the top ten verticals grew faster than 20% year-over-year on a trailing twelve-month basis [18] - The direct revenue mix was 73%, up from 67% a year ago, resulting in direct revenue growth of 48% year-over-year [18] Company Strategy and Development Direction - Zeta's strategy focuses on performance-based outcomes and lower funnel marketing, which has contributed to market share gains [6][7] - The company launched AI Agent Studio, a suite of generative AI tools aimed at enhancing marketing efficiency and effectiveness [10][11] - Zeta is actively expanding its agency business, having onboarded two new independent agencies in Q1 and finalizing agreements with two more [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainty but emphasized the company's resilience and strong performance, raising guidance for Q2 and full year 2025 [5][26] - The company maintains a conservative approach to guidance, reflecting ongoing macro uncertainties while still expecting growth [24][26] - Management expressed confidence in the company's ability to deliver measurable ROI, which has helped maintain a net revenue retention rate of 111% or higher since the IPO [21][22] Other Important Information - Zeta plans to reduce stock-based compensation expense to $190 million for 2025, down from $195 million in 2024, and expects dilution to be 4% to 6% [28][29] - The company reaffirmed its long-term targets, projecting over $2 billion in annual revenue by 2028 with at least a 25% adjusted EBITDA margin [29] Q&A Session Summary Question: Progress on OneZeta and cross-sell opportunities - Management indicated that the OneZeta strategy is ahead of schedule, with significant growth in customer spending and use case expansion [36][37] Question: Insights on macro uncertainty and customer behavior - Management reported no client pauses or exits, with strong performance continuing into Q2 [43][44] Question: Independent agency opportunities and market approach - Management noted that independent agencies provide long-term contracts and visibility, with a focus on platforming the entire agency at once [46][47] Question: Vertical market performance and growth outlook - Management highlighted that automotive and retail sectors are performing well, with no disruptions noted [55][58] Question: Generative AI adoption trends - Management observed increased adoption of AI tools, with no signs of pausing initiatives, indicating a positive trend in revenue from AI adoption [84][85] Question: Future M&A considerations - Management remains open to M&A opportunities but is currently focused on executing the business and share buybacks [94][95]