Zeta Global Holdings Corp. (ZETA) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights several positive factors: raised revenue and EBITDA guidance for 2025 and 2026, strong free cash flow projections, and strategic initiatives like the Athena AI platform and the Marigold acquisition. The OpenAI partnership and robust international expansion plans further bolster growth prospects. Despite some management ambiguity, the overall sentiment is positive, supported by a strong net retention rate, increasing RFP volumes, and a significant stock buyback program. The market cap suggests a moderate reaction, leading to a 'Positive' prediction for the stock price over the next two weeks.
Key Financial Performance
Revenue Fourth quarter revenue was $395 million, up 28% year-over-year excluding acquisition and political candidate revenue. Reasons for the increase include the compounding effect of Zeta's proprietary data system, intelligence, and the Athena interface, which drive durable and predictable growth.
Adjusted EBITDA Adjusted EBITDA was $95.1 million, up 35% year-over-year. The increase is attributed to the strong operating leverage of Zeta's model and the efficiency of its AI-driven systems.
Net Revenue Retention Net revenue retention hit a record high of 120% in 2025, up from 114% in 2024. This improvement reflects increased customer spending and faster acquisition of new prospects, driven by the effectiveness of Zeta's operating system.
Free Cash Flow Free cash flow for 2025 was $165 million, up 78% year-over-year, with a margin of 12.6%. The increase is due to improved adjusted EBITDA margins and operational efficiencies.
Super-Scaled Customers The number of super-scaled customers (spending at least $1 million annually) increased to 184, up 24% year-over-year. This growth is driven by Zeta's One Zeta initiative and the effectiveness of its customer-centric sales model.
Customer ARPU Quarterly ARPU for scaled customers was $625,000, up 8% year-over-year, and $1.8 million for super-scaled customers, up 5% year-over-year. Growth is attributed to increased adoption of Zeta's platform and expanded use cases.
Net Cash Provided by Operating Activities Net cash provided by operating activities was $199 million for 2025, up significantly from the prior year. This reflects the profitability and operational efficiency of Zeta's business model.
GAAP Net Income GAAP net income turned positive in Q4 2025, reaching $6.5 million, an improvement from a net loss of $3.6 million in the previous quarter. This shift is due to increased revenue and improved cost management.
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Operating Highlights
Athena: Introduced as a super intelligent agent for enterprise marketing, Athena is designed to transform workflows, enhance segmentation, production, and analysis, and improve ROI. Early users report significant time savings and better returns. General availability is expected by the end of Q1 2026.
Partnership with OpenAI: Announced a partnership with OpenAI to integrate large language models into Athena, enhancing its capabilities. This partnership leverages Zeta's proprietary data for improved personalization.
Marigold Acquisition: The acquisition of Marigold is progressing well, expected to be accretive to free cash flow and adjusted EBITDA in the first year. It expands Zeta's data and use cases, with strong interest from Zeta customers in Marigold's loyalty product.
Market Share Gains: Zeta is taking market share, evidenced by a 28% year-over-year revenue growth in Q4 2025 and a record net revenue retention rate of 120%.
Fortune 100 and 500 Clients: Zeta now serves 51 of the Fortune 100 and over 120 of the Fortune 500, representing significant expansion in market presence.
Revenue Growth: Achieved 18 consecutive quarters of revenue growth, with Q4 2025 revenue at $395 million, up 28% year-over-year. Full-year 2025 revenue was $1.305 billion, exceeding initial guidance by 5%.
Customer Expansion: Scaled customer count grew to 602, up 14% year-over-year, with super-scaled customers (spending $1M+ annually) now representing nearly 90% of total revenue.
Free Cash Flow: Generated $165 million in free cash flow for 2025, up 78% year-over-year, with a free cash flow margin of 12.6%.
AI Leadership: Zeta's long-term investment in AI is driving its position as a disruptor in marketing, with proprietary data and tools like Athena enhancing its competitive edge.
One Zeta Strategy: The strategy is now a repeatable sales model, with 80% year-over-year growth in scaled customers using more than one use case. It aims to deepen client relationships and expand use cases.
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Risk or Challenges
Market Conditions: The company faces risks related to economic uncertainties and market conditions that could impact customer spending and revenue growth.
Competitive Pressures: Zeta operates in a highly competitive market, and there is a risk of losing market share to competitors, especially as they innovate and improve their offerings.
Regulatory Hurdles: Potential regulatory changes or compliance requirements could pose challenges to Zeta's operations and financial performance.
Supply Chain Disruptions: Although not explicitly mentioned, the reliance on data and technology infrastructure could be vulnerable to disruptions, impacting service delivery.
Strategic Execution Risks: The integration of Marigold and the successful rollout of Athena are critical to Zeta's strategy. Any delays or issues in these areas could adversely affect the company's growth and profitability.
Economic Uncertainties: Broader economic conditions, including customer payment cycles and spending patterns, could impact cash flow and revenue.
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Guidance & Outlook
2026 Revenue Guidance: The midpoint of 2026 revenue guidance has been raised by $25 million to $1.755 billion, reflecting a year-over-year growth of 35%. This includes a conservative estimate of $190 million from the Marigold acquisition and $15 million from political candidate revenue.
Athena Product Launch: Athena, Zeta's super-intelligent agent for enterprise marketing, is on track for general availability by the end of Q1 2026. Early users report significant time savings and better ROI, with expectations for incremental revenue upside as adoption grows.
AI and Data Investments: Zeta's AI investments, including the proprietary SuperGraph, are expected to drive better personalization and higher returns for customers. These advancements are anticipated to enhance the company's competitive edge and market share.
Marigold Integration: The Marigold acquisition is expected to be accretive to free cash flow and adjusted EBITDA in its first year. The integration is progressing well, with opportunities to expand use cases and deepen customer relationships.
2026 Adjusted EBITDA Guidance: The midpoint of adjusted EBITDA guidance for 2026 has been increased to $391 million, representing a 40% year-over-year growth and a margin of 22.3%.
2026 Free Cash Flow Guidance: Free cash flow guidance for 2026 has been raised to $231 million, reflecting a 40% year-over-year growth and a conversion of 59% of adjusted EBITDA.
Long-Term Targets (2028): Revenue target for 2028 has been increased to $2.3 billion, with an adjusted EBITDA target of $573 million (25% margin) and a free cash flow target of $371 million (65% conversion).
Market Trends and Customer Growth: Zeta expects continued growth in scaled and super-scaled customers, with a focus on expanding ARPU and adoption of multiple use cases. The company is targeting increased adoption of its One Zeta strategy and AI-driven solutions.
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Shareholder Return Plan
Share Repurchase Program: During the fourth quarter, Zeta repurchased 1.9 million shares for $35 million. For the full year 2025, the company repurchased 7.9 million shares for $120 million. Since January 1, 2026, and up until mid-February, Zeta has repurchased an additional 1.5 million shares for $25 million. The company has approximately $139 million remaining on its share repurchase authorization. Zeta expects to remain active buyers of its stock, especially at current levels.
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Key Q&A
Q:What is the status of Athena's availability and its impact on deals?
A:Athena will be generally available by the end of this quarter. Early users have provided feedback that it is game-changing for workflow management and is driving a higher return on investment than the existing 600% return on ad spend. Athena will have one agent with different feature sets, and additional functionality will be rolled out to drive utilization and adoption.
Q:What are the assumptions for the top 5 verticals and conservatism in guidance?
A:The top-performing verticals are consumer discretionary-related, with 9 out of the top 10 growing over 20% on a trailing 12-month basis. Guidance assumes growth closer to 10%, with a 2 to 5-point cushion. Political candidate revenue is conservatively estimated at $15 million, and minimal contribution from Athena is assumed, providing potential upside.
Q:What trends were observed in deals closed after Zeta Live?
A:Deals worth nearly $40 million were closed across multiple verticals, with a significant win in telecom. The Consumer Electronics Show amplified momentum, and the pipeline includes 200 opportunities valued at over $130 million, with $60 million expected to close.
Q:What is the outlook for gross margins through 2026?
A:Gross margins are expected to improve by 100 to 300 basis points annually. Marigold is a tailwind, and integrated platform revenue and direct revenue mix grew 25% year-over-year in Q4.
Q:How does One Zeta and Athena integration impact customers?
A:One Zeta has driven an 80% increase in enterprise clients using more than one use case. Customers moving to multiple use cases see a 200% to 300% revenue uplift. Athena will further enhance this by improving workflow and return on investment.
Q:What is the international expansion plan with Marigold?
A:International expansion is happening naturally through multinational clients. Marigold's international assets will accelerate this, but the focus remains on the U.S. market, which is the largest advertising market.
Q:What is the expected impact of Athena on 2026 revenue?
A:Athena could have a meaningful impact in 2026, but it is not included in current projections. Early access clients are spending more with Athena, citing improved workflow and higher ROI.
Q:What is the outlook for GAAP profitability in 2026?
A:The company expects GAAP net income to be positive in 2026, with EPS in the range of $0.02 to $0.04. Progress on stock-based compensation and adjusted EBITDA to free cash flow conversion are key factors.
Q:What is the significance of the OpenAI partnership?
A:The partnership with OpenAI is foundational to Athena and is considered one of the most important partnerships. It helps drive efficiency and revenue growth, with OpenAI's large language models being a key component of the platform.
Q:How does Disqus and data collection perform amidst AI answer engines?
A:Disqus and other platforms continue to generate real-time signals without any falloff. The company is helping publishers drive incremental traffic, even as Google answers more queries directly.
Q:What is the plan for quota carrier additions and cross-training?
A:Quota carriers increased by 15 from Marigold. Cross-training efforts involve teaming Marigold's salespeople with existing teams, focusing on the top 30 clients.
Q:What is the capital allocation preference between M&A and buybacks?
A:The company is aggressively buying back stock, with $130 million remaining in the current buyback program. M&A is also a possibility, with a focus on high-quality assets at lower prices.
Q:What drove the 120% net retention rate in 2025?
A:The 120% net retention rate was driven by new customers scaling, growth within brands in the agency ecosystem, and the success of the One Zeta strategy, which increased multi-use case customers by 80%.
Q:What is the outlook for political and advocacy revenue in 2026?
A:Political candidate revenue is conservatively estimated at $15 million, with $7 million expected in Q3 and $8 million in Q4. Advocacy is an always-on industry and is expected to grow.
Q:How does the 600% ROI impact macro resiliency?
A:The 600% ROI helps clients maximize marketing spend efficiency, making the company resilient and even accelerating growth in challenging macro environments.
Q:What is the progress with Marigold's Loyalty solution?
A:The Loyalty solution is gaining interest from existing clients and is being integrated into the One Zeta solution. Athena will also be integrated into the Loyalty program in future releases.
Q:What are the trends in RFP volumes and competitive landscape?
A:RFP volumes have more than doubled, with the company winning over 50% of engagements. Competitors include Salesforce, Adobe, Oracle, and The Trade Desk, with Zeta taking market share.
Q:How are agencies approaching AI marketing strategies?
A:Agencies are consolidating platforms and focusing on efficiency. Large language models are not used for activation but for coding and efficiency. Zeta's proprietary data and activation capabilities provide a competitive edge.
Q:What excites large enterprises about the Zeta platform?
A:Large enterprises are focused on maximizing ROI, with Zeta's attribution capabilities, proprietary data, and activation capabilities providing a significant advantage.
Q:How does the company plan to capture data from LLMs?
A:The company has built the GEO platform to help clients integrate with LLMs and learn how they operate. This strategic move enhances data collection and understanding of LLMs.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on how Athena's monetization structure will evolve, the exact timeline for international expansion's impact, and the specific contribution of AI-driven strategies to revenue growth.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI advance
AI disruptor
AI investment
AI maturation
AI model
AI personalization
AI quality
AI shift
Athena achievement
Athena agent
Athena barrier
Athena end
Athena friction
Athena model
Athena presence
Athena retention
CES
Fortune
Marketing Platform
OpenAI
Zeta AI
Zeta Live
Zeta Marketing
Zeta SuperGraph
center
client marketing
disruptor marketing
engagement
flywheel
identity
infrastructure
intelligence
interest
marketing ecosystem
momentum Zeta
return investment
scale
signal
tool
transformation
ZETA Transcript
Zeta Global Holdings Corp. (ZETA) Presents at J.P. Morgan 54th Annual Global Technology, Media and Communications Conference Transcript
Neutral5-18
Zeta Global Holdings Corp. (ZETA) Q1 2026 Earnings Call Transcript
Positive5-1
The earnings call summary highlights strong financial performance with a 20% revenue increase, improved gross margin, and a swing to positive net income. The raised revenue and EBITDA guidance for 2026 further support an optimistic outlook. Despite some risks in forward-looking statements, the overall sentiment is positive, particularly with the launch of the Athena product and the accretive Marigold acquisition. Given the market cap of approximately $3.8 billion, the stock is likely to experience a positive movement of 2% to 8% over the next two weeks.
Zeta Global Holdings Corp. (ZETA) Presents at Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript
Neutral3-3
Zeta Global Holdings Corp. (ZETA) Q4 2025 Earnings Call Transcript
Positive2-24
The earnings call highlights several positive factors: raised revenue and EBITDA guidance for 2025 and 2026, strong free cash flow projections, and strategic initiatives like the Athena AI platform and the Marigold acquisition. The OpenAI partnership and robust international expansion plans further bolster growth prospects. Despite some management ambiguity, the overall sentiment is positive, supported by a strong net retention rate, increasing RFP volumes, and a significant stock buyback program. The market cap suggests a moderate reaction, leading to a 'Positive' prediction for the stock price over the next two weeks.
ZETA Slides
ZETA Report
Frequently Asked Questions
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