Zeta Global Holdings Corp. Q4 FY2024 earnings call

• 2024 was a record year for Zeta, with strong Q4 performance exceeding expectations. Marketing AI investments are driving growth, with record RFPs and pipeline growth.
• One Zeta initiative is expanding customer use cases, as seen with a Fortune 500 retailer adding a new use case. AI adoption is surging, with agentic AI in roles like QA automation, data mapping, and creative campaign generation.
• LiveIntent integration is delivering value, with Zeta Direct combining LiveIntent's publisher network and Zeta Data Cloud for enhanced marketing.
• Chris Greiner emphasized Zeta's consistency in beating guidance, momentum in the business, and outlined the Zeta 2028 plan targeting over $2.1 billion revenue by 2028 with 20% organic CAGR, margin improvements, and free cash flow targets.

In the fourth quarter of 2024, Zeta generated record revenue of $315 million, up 50% year-over-year. The full year 2024 revenue was just above $1 billion, up 38% year-over-year. Scaled customer count grew to 527 as of December 31, 2024, up 17% year-over-year. Net revenue retention for 2024 was 114%, at the high end of the 110% to 115% range. Revenue contribution details by product segment aren't explicitly broken down, but key financial metrics include strong revenue growth, increased scaled customer count, and high net revenue retention.

• 2025 guidance: Midpoint of full-year revenue $1.24 billion (23% growth), adjusting for LiveIntent and political, organic growth 21%. Adjusted EBITDA midpoint $256.5 million, margin 20.7%. Free cash flow midpoint $129.5 million, margin 10.4%.
• Zeta 2028 plan: Targets over $2.1 billion revenue by 2028 with 20% organic CAGR, adjusted EBITDA margin to at least 25%, free cash flow margin to at least 16%. Key levers include cost of revenue improvement, operating expense leverage, and free cash flow margin expansion.

• Risks include those from forward-looking statements, market uncertainties, and competition. The company faced additional expenses related to defending against a short seller report, but reviews confirmed accounting and data privacy practices were sound.

Q: Matt Swanson with RBC asked about macro environment and demand-centric spending.

A: Chris Greiner said Zeta has conservatism in guidance to account for macro, and David Steinberg noted no client challenges.

Q: DJ Hynes with Canaccord Genuity asked about agency business and new products.

A: David Steinberg talked about agency profitability and creative optimization via Zeta's tools.

Q: Jason Kreyer with Craig-Hallum asked about wallet share increase.

A: David Steinberg and Chris Greiner discussed One Zeta and wallet share growth through client spend expansion.

Q: Ryan MacDonald with Needham & Company asked about One Zeta and competition.

A: David Steinberg spoke about breaking silos with One Zeta and no significant competition concerns.

Q: Terry Tillman with Truist Securities asked about pipeline conversion.

A: Chris Greiner and David Steinberg discussed deal cycle timing and pipeline conversion consistency.

Q: Katie Keyser with Morgan Stanley asked about verticalization.

A: Chris Greiner and David Steinberg talked about vertical penetration via data and software capabilities.

Q: Koji Ikeda with Bank of America asked about guidance comparison.

A: Chris Greiner explained guidance comparison with LiveIntent and political revenue adjustments.

Q: Brian Schwartz with Oppenheimer asked about agency mix and buyback.

A: Chris Greiner and David Steinberg discussed agency mix potential and buyback strategy.

Q: Richard Baldry with ROTH Capital Partners asked about buyback and M&A.

A: David Steinberg talked about buyback strategy and M&A opportunism.

Q: Eamon Coughlin with Barclays asked about free cash flow and EBITDA levers.

A: Chris Greiner discussed levers like cost of revenue, OpEx, and working capital.

Q: Eamon Coughlin asked about post-election spending.

A: David Steinberg noted no changes in customers' willingness to spend post-election.