D.J. Hynes

D.J. Hynes inquired about sales and marketing investment and capacity build-out given strong pipeline and operating leverage, and about the gross margin degradation in the quarter.

Answer

David Steinberg (Co-Founder, Chairman, and CEO, Zeta Global) stated that sales and marketing spend decreased 'by accident' due to high productivity, and anticipates acquiring a strong sales team with Marigold. Chris Greiner (CFO, Zeta Global) attributed gross margin degradation to a strong mix of display and video channel usage, which has a lower margin profile, while noting growth in customers using four or more channels (up 44% YoY) and five or more channels (up over 60% YoY).

D.J. Hynes asked about Zeta's sales and marketing investment strategy and capacity build-out, especially given the strong operating leverage and robust pipeline. He also inquired about the slight sequential degradation in gross margins despite a stable direct revenue mix.

Answer

CEO David Steinberg noted that the sequential dip in sales and marketing was unintentional, as Zeta actively seeks to hire more salespeople, and existing reps are highly productive. He highlighted the upcoming Marigold acquisition will bring an incredible sales team. CFO Chris Greiner mentioned a material tick-up in Q4 due to Zeta Live. Chris Greiner explained that gross margin degradation was due to a mix shift within direct revenue, with strong usage in lower-margin display and video channels, but affirmed the long-term goal of 100-300 basis points of efficiency annually.