ZETA(US:ZETA)2025-09-30 21:30Summary of the Conference Call on Zeta's Acquisition of Marigold's Enterprise Software Business Company and Industry - Company: Zeta Global - Acquired Company: Marigold Enterprise Software - Industry: Marketing Technology and Enterprise Software Key Points and Arguments Acquisition Overview - Zeta announced an agreement to acquire Marigold's enterprise software business for a total consideration of $325 million, with $200 million paid at close and an additional $125 million three months post-close, subject to adjustments [2][17] - The acquisition is expected to enhance Zeta's scale with over 100 global enterprise brands, including 20 of the top 100 advertisers and more than 40 Fortune 500 companies [5][11] - Marigold's business is over 90% subscription-based with a cost of revenue below 30%, which is expected to be accretive to Zeta's adjusted EBITDA and free cash flow in the first year [6][10] Strategic Rationale - The acquisition aligns with Zeta's strategy to expand its enterprise messaging capabilities and loyalty business, enhancing its presence in EMEA and APAC markets [11][12] - Zeta aims to integrate Marigold's products, including Cheetah Digital, Selligent, SailThru, and LiveClicker, into its existing platform to improve customer engagement and retention [7][8] - The integration is planned to be nondisruptive, with a focus on customer continuity and enhancing the existing product offerings [9][12] Financial Metrics - Marigold's revenue is expected to contribute approximately $190 million to Zeta's revenue in 2026, with a mid to high teens adjusted EBITDA margin profile [19][20] - The acquisition will increase Zeta's total recurring revenue base from approximately 50% to almost 60% [18][20] - Marigold's cost of revenue was less than 30% in fiscal 2025, compared to Zeta's 40% in calendar 2024 [18] Integration and Growth Opportunities - Zeta plans to fully integrate Marigold's products within 12 months, with initial integration of CDP capabilities expected within 3 to 6 months [25][52] - The acquisition is seen as a significant opportunity to cross-sell Zeta's products to Marigold's existing customer base and vice versa, potentially doubling revenue per customer over time [14][40] - Zeta's strategy includes leveraging Marigold's loyalty offerings to enhance customer engagement and retention, with expectations of substantial returns on investment for clients [72][101] Market Position and Competition - Zeta views the loyalty market as an area with significant growth potential, competing against existing platforms like Oracle CrowdTwist and Yotpo [95][100] - The integration of loyalty data is expected to enhance Zeta's algorithms, improving customer targeting and engagement [101][102] Conclusion - The acquisition of Marigold is positioned as a strategic move to enhance Zeta's capabilities in the marketing technology space, with a focus on integration, customer retention, and growth in new markets [12][76] - Zeta reaffirms its commitment to its existing growth plans, indicating that this acquisition will be accretive to its overall business strategy and financial targets [20][110]