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Zeta Global Holdings Corp. (ZETA)·Q4 2024 Earnings Summary

Executive Summary

  • Zeta delivered record Q4 2024 revenue of $315M (+50% y/y), GAAP diluted EPS of $0.06, and adjusted EBITDA of $70.4M (22.4% margin), with direct platform mix rising to 74% .
  • Customer metrics strengthened: Scaled customers reached 527 (+17% y/y), super‑scaled customers 148 (+13% y/y), quarterly scaled ARPU $577K (+27% y/y), and quarterly super‑scaled ARPU $1.73M (+31% y/y) .
  • FY 2025 guidance: revenue $1,235–$1,245M (+23–24% y/y), adjusted EBITDA $255.5–$257.5M (20.5–20.8% margin), free cash flow $127.5–$131.5M; Q1 2025 revenue $253–255M and adjusted EBITDA $44.2–$44.8M (17.3–17.7% margin) .
  • Strategic catalyst: Zeta 2028 plan targets revenue ≥$2.1B, adjusted EBITDA ≥$525M (25% margin), FCF ≥$340M (16% margin) and conversion of ~65% (FCF/EBITDA) .
  • Capital allocation: Zeta repurchased $31M of shares in Q4; management indicated buybacks could remain elevated given valuation and cash generation .

What Went Well and What Went Wrong

What Went Well

  • Record quarter and momentum: “We generated record revenue of $315 million… with record adjusted EBITDA of $70 million… both well ahead of our guidance” (CEO) .
  • AI adoption driving consumption and outcomes: 126 brands adopted Data Cloud AI; AI agent usage grew ~200% q/q in Q4; >1,000 behavioral taxonomies created via AI, supporting 40%+ growth in consumption revenue in 2024 (CFO/CEO) .
  • Agency channel and product innovation: Launch of Zeta Direct (from LiveIntent integration) enables deterministic targeting in newsletters, boosting ROI for marketers and publishers (CEO) .

What Went Wrong

  • Gross cost pressure sequentially: Q4 GAAP cost of revenue rose 60 bps q/q to 40.0% (though -20 bps y/y), reflecting mix effects .
  • Working capital headwinds: Q4 operating cash flow included a ~$22M WC headwind from agency growth/longer payment cycles; FCF conversion would have been ~76% absent this (CFO) .
  • Elevated stock‑based compensation and FY GAAP loss: FY 2024 GAAP net loss was $70M primarily due to $195M SBC (loss per share $0.38), though improved vs FY 2023 (loss per share $1.20) .
  • Non‑recurring defense costs: ~$2M related to short-seller report; Audit Committee’s forensic/accounting review and data/privacy assessment found allegations without merit (CFO) .

Financial Results

Quarterly performance trend (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$228 $268 $314.7 (press headline $315)
Adjusted EBITDA ($USD Millions)$38.5 $53.6 $70.4
Adjusted EBITDA Margin %16.9% 20.0% 22.4%
GAAP Cost of Revenue %40.0% 39.4% 40.0%
Direct Platform Revenue Mix %67% 70% 74%

Q4 2024 versus prior periods

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$210.3 $268.0 $314.7
GAAP Net Income / (Loss) ($USD Millions)$(35.3) $(17.4) $15.2
GAAP Diluted EPS ($USD)$(0.22) N/A$0.06

Segment mix

MetricQ2 2024Q3 2024Q4 2024
Direct Platform Mix % of Revenue67% 70% 74%
Integrated Platform Mix % of Revenue33% 30% 26%

KPIs

KPIQ4 2024Prior quarterPrior year
Scaled Customers (≥$100K TTM)527 475 (Q3’24) 452 (Q4’23)
Super‑Scaled Customers (≥$1M TTM)148 144 (Q3’24) 131 (Q4’23)
Quarterly Scaled Customer ARPU ($USD)$577K $557K (Q3’24) N/A
Quarterly Super‑Scaled Customer ARPU ($USD)$1.73M N/AN/A
FY Net Revenue Retention (NRR)114% (FY’24) N/A111% (FY’23)
Q4 Free Cash Flow ($USD Millions)$31.7 $26.0 (Q3’24 OCF; FCF in FY table) $18.2 (Q4’23)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025N/A – first issuance $253–$255 New
Adjusted EBITDA ($USD Millions)Q1 2025N/A – first issuance $44.2–$44.8 (17.3–17.7% margin) New
Revenue ($USD Millions)FY 2025N/A – first issuance $1,235–$1,245 New
Adjusted EBITDA ($USD Millions)FY 2025N/A – first issuance $255.5–$257.5 (20.5–20.8% margin) New
Free Cash Flow ($USD Millions)FY 2025N/A – first issuance $127.5–$131.5 New
Zeta 2028 TargetsFY 2028N/ARevenue ≥$2.1B; Adj. EBITDA ≥$525M (25%); FCF ≥$340M (16%); FCF/EBITDA ≈65% New medium‑term plan

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
AI/GenAI adoption and monetizationStrong adoption; ~400 agents; consumption revenue +40% y/y; agent conversations +300% m/m in June 126 brands adopted Data Cloud AI; AI agent usage +~200% q/q; >1,000 taxonomies created via AI; consumption revenue +40% in 2024 Accelerating adoption and usage
Agency channel momentumBrands per top 5 holdcos up from 12→19; integrated (social) growth; direct mix 67% Agency ARPU rising; direct mix 74%; agencies adding brands; Zeta most profitable partner (CEO) Expanding wallet share; mix shifting to direct
LiveIntent integration & Zeta DirectAcquisition closed post‑Q3; synergies expected Integration completed early Jan; Zeta Direct launched; deterministic targeting in newsletters Ahead of schedule; product synergy delivered
Mobile channelAnnounced at Zeta Live; early traction Growing off a small base; could be meaningful in 2025–2026 (CEO/CFO) Early growth; medium‑term driver
Macro/tariffsHealthy vertical growth; limited macro drag Conservatism embedded; monitoring inflation/tariffs; no client challenges noted Stable; conservative guide framework
Regulatory/legalN/AAudit Committee forensic/accounting and privacy review found short‑seller allegations without merit; ~$2M defense costs Issue addressed; de‑risked
Working capital/FCF conversionWC headwind ~$10M in Q3; conversion 48% (would be 67% ex‑WC) WC headwind ~$22M in Q4; conversion would be 76% ex‑WC WC drag persists near term; improving longer term

Management Commentary

  • CEO on record performance: “We generated record revenue of $315 million, up 50% year-over-year with record adjusted EBITDA of $70 million, up 57% year-over-year, both well ahead of our guidance.”
  • CFO on consistency: “Beating and raising guidance for 14 consecutive quarters… only 8 [U.S. tech] companies are expected to expand FCF margins annually from 2021–2025; Zeta is one of them.”
  • CEO on Zeta Direct: “We can now directly target to a deterministic individual… increased ROI for the marketer and higher revenue to the publisher… a win‑win‑win.”
  • CFO on short‑seller review: “Independent forensic accounting and data/privacy reviews corroborated GAAP consistency and found allegations without merit.”
  • CFO on 2025 guide quality: “We can get to guidance at the low end of each KPI… consistent conservatism amid macro backdrop.”

Q&A Highlights

  • Agencies as growth engine: Zeta is “the most profitable partner” for agencies; bundling data lowers costs/increases agency profit (~25%), driving brand migration and volume .
  • Guidance framing: Conservatism embedded; Q1 guide reflects 30% y/y all‑in and ~20% y/y ex‑LiveIntent; multi‑paths to beat .
  • Political vs advocacy revenue: 2024 political candidate ~$44M; 2025 assumes none; advocacy modeled $20–$25M (vs $36M in 2024; $13M in 2023) .
  • Buybacks and M&A: ~$31M repurchased in Q4; management views buybacks as best current use of cash; opportunistic tuck‑ins meeting four M&A pillars (team, tech, data, cross‑sell) .
  • LiveIntent synergy: Integration complete; cross‑selling underway; Zeta Direct combines publisher network with Zeta Data Cloud for deterministic newsletter ads .

Estimates Context

  • S&P Global consensus estimates were not retrievable at time of analysis due to data access limits; as such, explicit beat/miss versus Wall Street consensus cannot be provided here. Values retrieved from S&P Global are unavailable.
  • Company‑reported “beat and raise” reflects performance versus internal guidance and cadence (14 consecutive quarters), not necessarily versus third‑party consensus .

Key Takeaways for Investors

  • Operating momentum: Multi‑quarter acceleration with Q4 revenue +50% y/y and adjusted EBITDA margin up to 22.4%, supported by AI‑driven consumption and a rising direct mix .
  • Durable growth algorithm: FY 2025 guide (+23–24% revenue; ~21% adjusted EBITDA margin midpoint) and Zeta 2028 targets signal confidence in sustaining 20%+ organic CAGR and margin expansion .
  • Agency channel leverage: Agencies are scaling brands on Zeta, shifting toward direct channels over time; expect gross margins to benefit as mix continues shifting .
  • Cash conversion path: Near‑term WC drag from agency payment cycles depresses FCF conversion; management outlines normalization and capex discipline driving FCF margin to ~16% by 2028 .
  • Product catalysts: Zeta Direct (newsletter deterministic ads) and mobile channel expansion offer incremental revenue/margin drivers over 2025–2026 .
  • Risk checks: Elevated SBC pressured GAAP results FY‑to‑date; cost of revenue can be sensitive to mix; macro/tariff uncertainties embedded in conservative guidance .
  • Positioning: AI and proprietary data native to the platform underpin competitive differentiation and customer ROI, enabling continued share gains versus legacy stacks .

Appendix Citations

  • Q4 2024 8‑K with Exhibit 99.1 press release and financial statements:
  • Q4 2024 earnings call transcript:
  • Q4 2024 press release (duplicate of Exhibit 99.1):
  • Q3 2024 earnings call transcript:
  • Q2 2024 earnings call transcript: