ZETA(US:ZETA)2025-08-05 21:32Financial 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]