ZETA(US:ZETA)2025-11-04 22:30Financial Data and Key Metrics Changes - In Q3 2025, revenue reached $337 million, representing a 28% year-over-year increase when excluding political and LiveIntent contributions, marking an acceleration from Q2's growth rate of 27% [4][14] - Adjusted EBITDA was $78 million, up 46% year-over-year, with a margin of 23.2%, reflecting a 320 basis points improvement [4][18] - Free cash flow was $47 million, up 83% year-over-year, achieving a margin of 14%, the highest free cash flow margin in the company's history [4][19] - The company raised its 2025 revenue guidance by $11 million to a midpoint of $1.275 billion, indicating a 26% year-over-year growth when excluding political and LiveIntent [23] Business Line Data and Key Metrics Changes - The total scaled customer count grew to 572, a 20% increase year-over-year, with 180 super scaled customers, up 25% year-over-year [16] - Quarterly revenue per user (RPU) for scaled customers was $579,000, a 4% increase year-over-year, while super scaled customer RPU was $1.6 million, up 1% year-over-year [16] Market Data and Key Metrics Changes - Seven of the top ten verticals grew faster than 20% year-over-year, with telecom being a notable sector that achieved over 20% growth for the first time [17][62] - Consumer discretionary sectors such as retail, travel, hospitality, and automotive also showed strong growth, contributing to the overall positive market performance [17][63] Company Strategy and Development Direction - The company aims to close over $100 million in incremental business following the Zeta Live event, which was its most successful event to date, with a 35% increase in attendance [5][6] - The launch of Athena, an AI conversational agent, is expected to enhance customer engagement and streamline operations, positioning the company as a leader in AI-powered marketing [6][9] - The acquisition of Marigold's enterprise software business is anticipated to further strengthen the company's data capabilities and market position [12][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing a strong pipeline and positive customer feedback from Zeta Live [5][34] - The company is optimistic about achieving its long-term targets of a 30% plus Adjusted EBITDA margin and greater than 70% free cash flow conversion by 2030 [20] - Management highlighted the importance of AI integration in driving customer retention and acquisition strategies, particularly in a competitive landscape [9][62] Other Important Information - The company reported a GAAP net loss of $3.6 million for Q3, an improvement from a loss of $17.4 million in the same quarter last year, with acquisition-related expenses impacting profitability [18][19] - The company has maintained zero net dilution in stock compensation for the third quarter, with a year-to-date dilution of 1.6% [20] Q&A Session Summary Question: How does Zeta's ROI compare to walled gardens? - Management stated that Zeta's platform delivers a 6X return on investment, putting it on par with major competitors in the media space [28][29] Question: What is the target for incremental business after Zeta Live? - The target is $100 million, with a strong pipeline already in place to potentially exceed this figure [34] Question: How is the integration of LiveIntent performing? - Management expressed satisfaction with the integration, noting that it is accruing at 100% of its earnout and generating new product synergies [36] Question: How will Athena impact cross-selling opportunities? - Athena is expected to significantly enhance cross-selling capabilities by providing a seamless, voice-activated interface for clients [38] Question: What is the outlook for the telecom vertical? - The telecom sector is experiencing accelerated growth, with Zeta displacing major marketing clouds, indicating strong momentum in this market [62]