Workflow
ZETA(ZETA) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2025, the company generated revenue of $264 million, up 36% year over year, with adjusted EBITDA of $47 million, up 53% year over year, both exceeding guidance [8][18][20] - The GAAP net loss for Q1 was $22 million, an improvement from $40 million in Q1 2024 [20] - Free cash flow was $28.2 million, up 87% year over year, representing a margin of 10.7% [21] 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 [18][19] - Scaled customer quarterly ARPU was $467,000, up 12% year over year, while superscaled customer quarterly ARPU was $1.4 million, up 23% year over year [19] Market Data and Key Metrics Changes - Six of the company's top ten verticals grew faster than 20% year over year on a trailing twelve-month basis [19] - The direct revenue mix in Q1 was 73%, up from 67% a year ago, resulting in direct revenue growth of 48% year over year [19] Company Strategy and Development Direction - The company is focusing on performance-based outcomes and has seen strong customer commitments, including a two-year agreement with a telecommunications customer that more than doubles their annual investment [9][10] - The launch of AI Agent Studio aims to enhance marketing efficiency and productivity through generative AI tools [11][12] Management's Comments on Operating Environment and Future Outlook - Management noted macro uncertainty but emphasized the company's resilience and strong value proposition, particularly in delivering measurable results for marketers [7][8] - The company is adopting a conservative approach to guidance for the second half of 2025, despite strong first-quarter performance [25][27] Other Important Information - The company is taking significant steps to reduce dilution and stock-based compensation expenses, with a new guidance item for stock-based compensation expected to be $190 million for 2025 [29][30] - The company plans to initiate a new share repurchase authorization after completing the current one, with approximately $38 million remaining under the current authorization [21][30] 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 commitments and use cases [34][36] Question: Thoughts on macro uncertainty and customer behavior - Management reported no client pauses or exits, maintaining strong demand and confidence in the business [42][44] Question: Independent agency opportunities and market approach - Management noted that independent agencies are onboarded with long-term contracts, providing more visibility and stability compared to agency holdcos [46][49] Question: Vertical market performance and areas of concern - Management expressed initial concerns about the automotive sector but noted unexpected growth, with no disruptions in retail observed [55][58] Question: Generative AI adoption trends - Management reported increased adoption of AI tools, with no signs of pausing initiatives, indicating a positive trend in customer engagement [84][86]