ZETA(US:ZETA)2025-11-04 22:32Financial 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 [5][15] - Adjusted EBITDA was $78 million, up 46% year-over-year, with a margin of 23.2%, reflecting a 320 basis point improvement [5][18] - Free cash flow was $47 million, up 83% year-over-year, achieving a margin of 14%, the highest in the company's history [5][19] Business Line Data and Key Metrics Changes - Total scaled customer count grew to 572, a 20% year-over-year increase, with 180 super scaled customers, up 25% year-over-year [15][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 notable growth in telecom, consumer discretionary sectors like retail, travel, hospitality, and automotive [17] - The direct mix in Q3 was 75%, consistent with Q2 and up from 70% in the previous year, indicating successful agency direct channel adoption [17] Company Strategy and Development Direction - The company is focused on AI-powered marketing, with the launch of Athena, an AI conversational agent designed to enhance client interactions and operational efficiency [8][10] - The acquisition of Marigold's enterprise software business is expected to enhance data capabilities and accelerate growth, with a completion target by the end of the year [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a record pipeline and raised 2025 revenue guidance by $11 million, anticipating continued organic growth [7][22] - The company aims for durable, predictable, and profitable growth, with a target of over $100 million in incremental business from Zeta Live [8][41] Other Important Information - The company achieved the highest free cash flow margin in its history and is on track to meet long-term targets for Adjusted EBITDA margin and free cash flow conversion by 2030 [20][24] - The company repurchased 1.7 million shares for $28 million in Q3, continuing efforts to reduce dilution and stock-based compensation [20][21] Q&A Session Summary Question: How does Zeta's ROI compare to walled gardens? - Management stated that Zeta's platform provides a 6x return on investment, putting it on par with walled gardens, and clients are seeking new methodologies for customer acquisition [29][30] Question: What is the target for incremental business after Zeta Live? - Last year, the company closed $57 million in business post-Zeta Live and aims for $100 million this year, with a strong pipeline already in place [41][42] Question: How is the integration of LiveIntent performing? - Management expressed satisfaction with LiveIntent's performance, noting that they are accruing at 100% of their earnout and seeing new product synergies [44][45] Question: How will Athena impact cross-selling? - Athena is expected to drive significant cross-selling opportunities by simplifying client interactions and enabling easier access to multiple use cases [48][49] Question: What is the outlook for the replacement cycle opportunity? - The replacement cycle is at full scale, with an increase in RFP activity, and the company is well-positioned to capture this opportunity [80][81]