Zeta Accelerates Revenue Growth and Achieves the “Rule of 50” in 2Q’24

Rhea-AI Summary

Zeta Global (NYSE: ZETA) reported strong Q2 2024 results, with record quarterly revenue of $228 million, up 33% year-over-year and $16 million above guidance. The company achieved the 'Rule of 50', demonstrating accelerated growth and profitability. Key highlights include:

- Scaled Customer count increased to 468, up 8 quarter-over-quarter and 43 year-over-year
- Quarterly Scaled Customer ARPU rose to $479,000, up 22% year-over-year
- Cash flow from operating activities grew 51% year-over-year to $31 million
- Free Cash Flow increased 53% year-over-year to $20 million

Zeta raised its 2024 revenue guidance by $25 million to a midpoint of $925 million, representing 27% year-over-year growth. The company attributes its success to AI-driven marketing solutions and increased enterprise adoption of its platform.

Positive

• Record quarterly revenue of $228 million, up 33% year-over-year
• Scaled Customer count increased to 468, up 43 year-over-year
• Quarterly Scaled Customer ARPU rose to $479,000, up 22% year-over-year
• Cash flow from operating activities grew 51% year-over-year to $31 million
• Free Cash Flow increased 53% year-over-year to $20 million
• Raised 2024 revenue guidance by $25 million to a midpoint of $925 million
• Adjusted EBITDA of $38.5 million, increased 44% year-over-year
• Adjusted EBITDA margin improved to 16.9% from 15.6% in Q2 2023

Negative

• GAAP net loss of $28 million, or 12% of revenue
• GAAP loss per share of $0.16
• GAAP cost of revenue percentage increased 390 basis points year-over-year to 40%

Insights

Financial Analyst

Zeta Global's Q2 2024 results demonstrate impressive growth and financial performance, signaling strong momentum in the AI-powered marketing sector. The company's record quarterly revenue of $228 million, up 33% year-over-year, significantly outpaced guidance by $16 million. This acceleration in revenue growth is particularly noteworthy.

Key performance indicators show robust business expansion:

• Scaled Customer count increased to 468, up 43 year-over-year
• Quarterly Scaled Customer ARPU rose to $479,000, a 22% year-over-year increase
• Super-Scaled Customer count reached 144, up from 118 in Q2 2023

The company's profitability metrics are also improving, with Adjusted EBITDA of $38.5 million, a 44% year-over-year increase and an Adjusted EBITDA margin of 16.9%. The achievement of the "Rule of 50" (combined revenue growth rate and EBITDA margin exceeding 50) is a significant milestone, indicating a balance between growth and profitability.

Zeta's raised guidance for both Q3 and full-year 2024 reflects management's confidence in continued strong performance. The projected full-year revenue growth of 26% to 28% and Adjusted EBITDA margin expansion to 18.8%-19.2% suggest a positive outlook for the company's financial trajectory.

While the GAAP net loss of $28 million might raise concerns, it's primarily driven by $52 million in stock-based compensation, a non-cash expense. The improving cash flow from operations ($31 million, up 51% Y/Y) and Free Cash Flow ($20 million, up 53% Y/Y) are more indicative of the company's financial health and operational efficiency.

Tech Expert

Zeta Global's Q2 results underscore the growing importance of AI in marketing technology. The company's strategic focus on integrating AI and data into its core platform is paying dividends, as evidenced by the accelerated revenue growth and customer acquisition.

The increase in Scaled Customer count and ARPU suggests that Zeta's AI-powered solutions are gaining traction among larger enterprises. This trend aligns with the broader industry shift towards AI-driven marketing automation and personalization at scale.

Notably, Zeta's ability to maintain a high direct platform revenue mix (67% of total revenue) indicates strong customer adoption of its proprietary technology. This is important for maintaining competitive advantage and margins in the rapidly evolving martech landscape.

The upcoming ZETA LIVE 2024 conference focusing on AI's transformative power in marketing further reinforces the company's positioning as a leader in this space. It's an opportunity for Zeta to showcase its innovations and potentially drive further customer acquisition and engagement.

However, the slight decrease in Super-Scaled Customer count (144, unchanged from Q1'24) warrants attention. While not necessarily a negative sign given the overall growth, it's an area to monitor for potential saturation or competitive pressures in the highest tier of the market.

The company's emphasis on turning "AI into real-world results" and improving marketing ROI aligns well with current market demands. As enterprises increasingly seek measurable outcomes from their marketing investments, Zeta's value proposition becomes more compelling, potentially driving further growth and market share gains in the AI-powered marketing cloud sector.

Market Research Analyst

Zeta Global's Q2 2024 results offer valuable insights into the evolving landscape of AI-powered marketing solutions. The company's strong performance, particularly in customer acquisition and revenue growth, suggests a growing market demand for advanced, AI-driven marketing technologies.

The increase in Scaled Customer count to 468, up 43 year-over-year, indicates that mid to large-sized enterprises are increasingly adopting AI-powered marketing solutions. This trend is further supported by the 22% year-over-year growth in Quarterly Scaled Customer ARPU, reaching $479,000.

Interestingly, the direct platform revenue mix remained stable at 67% of total revenue, unchanged from Q1'24 but down from 75% in Q2'23. This could suggest a shift in the company's revenue composition, possibly due to increased adoption of additional services or changes in the competitive landscape.

The company's focus on the "marketing cloud replacement cycle" hints at a broader market trend where enterprises are looking to upgrade their existing marketing technology stacks with more advanced, AI-integrated solutions. This presents both opportunities and challenges for Zeta, as it competes with established players in the marketing cloud space.

The emphasis on generative AI tools transforming the marketing function aligns with current industry buzz. However, it's important to monitor how this translates into long-term value for customers and sustainable competitive advantage for Zeta.

Lastly, the upcoming ZETA LIVE 2024 conference focusing on AI in marketing could serve as a barometer for industry interest and potential future trends in AI-powered marketing solutions. The outcomes and discussions from this event may provide valuable insights into the direction of the market and Zeta's position within it.

• Delivered record quarterly revenue of $228M, up 33% Y/Y and $16M better than guidance
• Grew total Scaled Customer count to 468, an increase of 8 Q/Q and 43 Y/Y
• Increased quarterly Scaled Customer ARPU to $479K, up 22% Y/Y, 2x faster than 1Q’24
• Generated cash flow from operating activities of $31M, an increase of 51% Y/Y, and Free Cash Flow of $20M, an increase of 53% Y/Y
• Raising 2024 revenue guidance by $25M to a midpoint of $925M or 27% Y/Y growth

NEW YORK--(BUSINESS WIRE)-- Zeta Global (NYSE: ZETA), the AI-Powered Marketing Cloud, today announced financial results for the second quarter ended June 30, 2024.

“Investments we made over the last seven years to put Artificial Intelligence and data at the core of our platform are now helping us accelerate the marketing cloud replacement cycle and our overall growth rate,” said David A. Steinberg, Co-Founder, Chairman, and CEO of Zeta. “As the use of generative AI tools has grown, there is greater acknowledgement that marketing is among the first functions to be transformed by AI. Our ability to turn AI into real-world results has enterprises looking to Zeta to improve productivity, deliver personalization at scale, and develop marketing programs with a measurable and superior return on investment.”

“High visibility into our customers and momentum across several of our growth catalysts drove an acceleration in revenue growth, Adjusted EBITDA margin expansion, and cash conversion in the second quarter,” said Chris Greiner, Zeta’s CFO. “This gives us increased confidence to once again raise guidance.”

Second Quarter 2024 Highlights

• Total revenue of $228 million, increased 33% Y/Y.
• Scaled Customer count increased to 468 from 460 in 1Q’24 and 425 in 2Q’23.
• Super-Scaled Customer count of 144 compared to 144 in 1Q’24 and 118 in 2Q’23.
• Quarterly Scaled Customer ARPU of $479,000, increased 22% Y/Y.
• Quarterly Super-Scaled Customer ARPU of $1.3 million, increased 18% Y/Y.
• Direct platform revenue mix of 67% of total revenue, compared to 67% in 1Q’24, and 75% in 2Q’23.
• GAAP cost of revenue percentage of 40%, increased 50 basis points Q/Q, and increased 390 basis points Y/Y.
• GAAP net loss of $28 million, or 12% of revenue, driven primarily by $52 million of stock-based compensation. The net loss in 2Q’23 was $52 million, or 30% of revenue.
• GAAP loss per share of $0.16, compared to a loss per share of $0.34 in 2Q’23.
• Cash flow from operating activities of $31 million, compared to $21 million in 2Q’23.
• Free Cash Flow¹ of $20 million, compared to $13 million in 2Q’23.
• Repurchased $2.9 million worth of shares through our share repurchase program.
• Adjusted EBITDA¹ of $38.5 million, increased 44% Y/Y compared to $26.8 million in 2Q’23.
• Adjusted EBITDA margin¹ of 16.9%, compared to 15.6% in 2Q’23.

Zeta Live

Zeta will hold its fourth annual conference, ZETA LIVE 2024, on Thursday, September 26, in New York City. Zeta Live provides a unique opportunity to gain deep insights, discover practical strategies, and take advantage of invaluable networking connections that will help brands harness the transformative power of AI. Register Now!

Guidance*

Third Quarter 2024

• Increasing revenue guidance to a range of $237.2 million to $241.2 million, up $9.2 million at the midpoint from the prior guidance of $230 million. The revised guidance represents a year-over-year increase of 26% to 28%.
• Increasing Adjusted EBITDA guidance to a range of $46.8 million to $47.3 million, up $1.8 million at the midpoint from the prior guidance of $45.3 million. The revised guidance represents a year-over-year increase of 39% to 40% and an Adjusted EBITDA margin of 19.4% to 19.9%.

Full Year 2024

• Increasing revenue guidance to a range of $920 million to $930 million, up $25 million at the midpoint from the prior guidance $900 million. Revised guidance represents a year-over-year increase of 26% to 28%.
• Increasing Adjusted EBITDA guidance to a range of $174.5 million to $176.5 million, up $4.5 million at the midpoint from the prior guidance of $171 million. Revised guidance represents a year-over-year increase of 35% to 36% and an Adjusted EBITDA margin of 18.8% to 19.2%.
• Increasing Free Cash Flow guidance to a range of $80 million to $90 million, up $5 million at the midpoint from the prior guidance of $80 million.

* This press release does not include a reconciliation of forward-looking Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow to forward-looking GAAP net income (loss), net income (loss) margin, or cash flows from operating activities, respectively, because the Company is unable, without making unreasonable efforts, to provide a meaningful or reasonably accurate calculation or estimation of certain reconciling items which could be significant to the Company’s results.

Investor Conference Call and Webcast

Zeta will host a conference call today, Wednesday, July 31, 2024, at 4:30 p.m. Eastern Time to discuss financial results for the second quarter 2024. A supplemental earnings presentation and a live webcast of the conference call can be accessed from the Company’s investor relations website (https://investors.zetaglobal.com/) where they will remain available for one year.

About Zeta

Zeta Global (NYSE: ZETA) is the AI-Powered Marketing Cloud that leverages advanced artificial intelligence (AI) and trillions of consumer signals to make it easier for marketers to acquire, grow, and retain customers more efficiently. Through the Zeta Marketing Platform (ZMP), our vision is to make sophisticated marketing simple by unifying identity, intelligence, and omnichannel activation into a single platform – powered by one of the industry’s largest proprietary databases and AI. Our enterprise customers across multiple verticals are empowered to personalize experiences with consumers at an individual level across every channel, delivering better results for marketing programs. Zeta was founded in 2007 by David A. Steinberg and John Sculley and is headquartered in New York City with offices around the world. To learn more, go to www.zetaglobal.com.

Forward-Looking Statements

This press release, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Any statements made in this press release or during the earnings call that are not statements of historical fact, including statements about our third quarter and full year 2024 guidance, the Zeta Live event and timing of such event, the Zeta 2025 plan, the financial targets of Zeta 2025 and the timing of when we will achieve the Zeta 2025 plan, the impacts of our prior investments on accelerating the timing of the marketing cloud replacement cycle, our products capabilities to provide strong investment returns to our customers, our strong competitive position, visibility of our current and new customers, expansion of existing customers, the capabilities of AI and Zeta’s platform, the acceleration of the digital transformation and our business, and the growth and expansion of AI and the Zeta Marketing Platform are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning our anticipated future financial performance, our market opportunities and our expectations regarding our business plan and strategies. These statements often include words such as “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast,” “outlook,” “guidance” and other similar expressions. We base these forward-looking statements on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances at such time. Although we believe that these forward-looking statements are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our business, results of operations and financial condition and could cause actual results to differ materially from those expressed in the forward-looking statements. These statements are not guarantees of future performance or results.

The forward-looking statements are subject to and involve risks, uncertainties and assumptions, and you should not place undue reliance on these forward-looking statements. Factors that may materially affect such forward-looking statements include, but are not limited to: global supply chain disruptions; macroeconomic and industry trends and adverse developments in the debt, consumer credit and financial services markets and other macroeconomic factors beyond Zeta’s control; increases in our borrowing costs as a result of changes in interest rates and other factors; the impact of inflation on us and on our customers; potential fluctuations in our operating results, which could make our future operating results difficult to predict; underlying circumstances, including cash flows, cash position, financial performance, market conditions and potential acquisitions; prevailing stock prices, general economic and market condition; the impact of future pandemics, epidemics and other health crises on the global economy, our customers, employees and business; the war in Ukraine and escalating geopolitical tensions as a result of Russia’s invasion of Ukraine; the escalating conflict in Israel, Gaza and in the surrounding areas; our ability to innovate and make the right investment decisions in our product offerings and platform; the impact of new generative AI capabilities and the proliferation of AI on our business; our ability to attract and retain customers, including our scaled and super-scaled customers; our ability to manage our growth effectively; our ability to collect and use data online; the standards that private entities and inbox service providers adopt in the future to regulate the use and delivery of email may interfere with the effectiveness of our platform and our ability to conduct business; a significant inadvertent disclosure or breach of confidential and/or personal information we process, or a security breach of our or our customers’, suppliers’ or other partners’ computer systems; and any disruption to our third-party data centers, systems and technologies. These cautionary statements should not be construed by you to be exhaustive and the forward-looking statements are made only as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

The third quarter and full year 2024 guidance provided herein are based on Zeta’s current estimates and assumptions and are not a guarantee of future performance. The guidance provided is subject to significant risks and uncertainties, including the risk factors discussed in the Company's reports on file with the Securities and Exchange Commission (“SEC”), that could cause actual results to differ materially. There can be no assurance that the Company will achieve the results expressed by this guidance or the targets.

Availability of Information on Zeta’s Website and Social Media Profiles

Investors and others should note that Zeta routinely announces material information to investors and the marketplace using SEC filings, press releases, public conference calls, webcasts and the Zeta investor relations website at https://investors.zetaglobal.com (“Investors Website”). We also intend to use the social media profiles listed below as a means of disclosing information about us to our customers, investors and the public. While not all of the information that the Company posts to the Investors Website or to social media profiles is of a material nature, some information could be deemed to be material. Accordingly, the Company encourages investors, the media, and others interested in Zeta to review the information that it shares on the Investors Website and to regularly follow our social media profile links located at the bottom of the page on www.zetaglobal.com. Users may automatically receive email alerts and other information about Zeta when enrolling an email address by visiting "Investor Email Alerts" in the "Resources" section of the Investors Website.

Social Media Profiles:
www.twitter.com/zetaglobal
www.facebook.com/ZetaGlobal/
www.linkedin.com/company/zetaglobal
www.instagram.com/zetaglobal/

The Following Definitions Apply to the Terms Used Throughout this Release, the Supplemental Earnings Presentation and Investor Conference Call

• Direct Platform and Integrated Platform: When the Company generates revenues entirely through the Company platform, the Company considers it direct platform revenue. When the Company generates revenue by leveraging its platform’s integration with third parties, it is considered integrated platform revenue.
• Cost of revenue: Cost of revenue excludes depreciation and amortization and consists primarily of media and marketing costs and certain personnel costs. Media and marketing costs consist primarily of fees paid to third-party publishers, media owners or managers, and strategic partners that are directly related to a revenue-generating event. We pay these third-party publishers, media owners or managers and strategic partners on a revenue-share, a cost-per-lead, cost-per-click, or cost-per-thousand-impressions basis. Personnel costs included in cost of revenues include salaries, bonuses, commissions, stock-based compensation and employee benefit costs primarily related to individuals directly associated with providing services to our customers.
• Rule of 50: We define the Rule of 50 as the combination of revenue growth percentage plus Adjusted EBITDA margin percentage adding up to 50 or more.
• Scaled Customers: We define scaled customers as customers from which we generated at least $100,000 in revenue on a trailing twelve-month basis. We calculate the number of scaled customers at the end of each quarter and on an annual basis as the number of customers billed during each applicable period. We believe the scaled customers measure is both an important contributor to our revenue growth and an indicator to investors of our measurable success.
• Super-Scaled Customers: We define super-scaled customers, which is a subset of Scaled Customers, as customers from which we generated at least $1,000,000 in revenue on a trailing twelve-month basis. We calculate the number of super-scaled customers at the end of each quarter and on an annual basis as the number of customers billed during each applicable period. We believe the super-scaled customers measure is both an important contributor to our revenue growth and an indicator to investors of our measurable success.
• Scaled Customer ARPU: We calculate the scaled customer average revenue per user (“ARPU”) as revenue for the corresponding period divided by the average number of scaled customers during that period. We believe that scaled customer ARPU is useful for investors because it is an indicator of our ability to increase revenue and scale our business.
• Super-Scaled Customer ARPU: We calculate the super-scaled customer ARPU as revenue for the corresponding period divided by the average number of super-scaled customers during that period. We believe that super-scaled customer ARPU is useful for investors because it is an indicator of our ability to increase revenue and scale our business.
• Zeta 2025: The Zeta 2025 is a long-term plan introduced by the Company in 2022, intended to drive the Company’s vision to become one of the largest marketing clouds in the industry, with targets for business, product, and industry leadership. The financial targets of this plan are to generate in excess of $1 billion in annual revenue with at least 20% Adjusted EBITDA margins by 2025. In February 2023, we added an additional financial target to the plan of Free Cash Flow with a target of at least $110 million by 2025.

Non-GAAP Measures

In order to assist readers of our consolidated financial statements in understanding the core operating results that our management uses to evaluate the business and for financial planning purposes, we describe our non-GAAP measures below. We believe these non-GAAP measures are useful to investors in evaluating our performance by providing an additional tool for investors to use in comparing our financial performance over multiple periods.

• Adjusted EBITDA is a non-GAAP financial measure defined as net loss adjusted for interest expense, depreciation and amortization, stock-based compensation, income tax (benefit) / provision, acquisition related expenses, restructuring expenses, change in fair value of warrants and derivative liabilities, certain dispute settlement expenses, gain on extinguishment of debt, certain non-recurring IPO related expenses, including the payroll taxes related to vesting of restricted stock and restricted stock units upon the completion of the IPO, and other expenses. Acquisition related expenses and restructuring expenses primarily consist of severance and other employee-related costs which we do not expect to incur in the future as acquisitions of businesses may distort the comparability of the results of operations. Change in fair value of warrants and derivative liabilities is a non-cash expense related to periodically recording “mark-to-market” changes in the valuation of derivatives and warrants. Other expenses consist of non-cash expenses such as changes in fair value of acquisition related liabilities, gains and losses on extinguishment of acquisition related liabilities, gains and losses on sales of assets and foreign exchange gains and losses. In particular, we believe that the exclusion of stock-based compensation, certain dispute settlement expenses and non-recurring IPO related expenses that are not related to our core operations provides measures for period-to-period comparisons of our business and provides additional insight into our core controllable costs. We exclude these charges because these expenses are not reflective of ongoing business and operating results.
• Adjusted EBITDA margin is a non-GAAP financial measure defined as Adjusted EBITDA divided by the total revenues for the same period.
• Free Cash Flow is a non-GAAP financial measure defined as cash from operating activities, less capital expenditures and website and software development costs, adjusted for the effect of exchange rates on cash and cash equivalents.

Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow provide us with useful measures for period-to-period comparisons of our business as well as comparison to our peers. We believe that these non-GAAP financial measures are useful to investors in analyzing our financial and operational performance. Nevertheless our use of Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow has limitations as an analytical tool, and you should not consider these measures in isolation or as a substitute for analysis of our financial results as reported under GAAP. Other companies may calculate similarly-titled non-GAAP financial measures differently than us, thereby limiting the usefulness of these non-GAAP financial measures as a comparative tool. Because of these and other limitations, you should consider our non-GAAP measures only as supplemental to other GAAP-based financial performance measures, including revenues and net loss.

We calculate forward-looking Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow based on internal forecasts that omit certain amounts that would be included in forward-looking GAAP net income (loss). We do not attempt to provide a reconciliation of forward-looking Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow guidance to forward looking GAAP net income (loss), GAAP net income (loss) margin or GAAP cash flows from operating activities, respectively, because forecasting the timing or amount of items that have not yet occurred and are out of our control is inherently uncertain and unavailable without unreasonable efforts. Further, we believe that such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP measures of financial performance.

Zeta Global Holdings Corp. Condensed Unaudited Consolidated Balance Sheets (In thousands, except shares, per share and par values)
		As of
		June 30, 2024				December 31, 2023
Assets
Current assets:
Cash and cash equivalents		$	154,704			$	131,732
Accounts receivable, net of allowance of $3,934 and $3,564 as of June 30, 2024 and December 31, 2023, respectively			182,801				170,131
Prepaid expenses			8,603				6,269
Other current assets			1,461				1,622
Total current assets		$	347,569			$	309,754
Non-current assets:
Property and equipment, net		$	7,529			$	7,452
Website and software development costs, net			29,936				32,124
Right-to-use asset - operating leases, net			6,770				6,603
Intangible assets, net			44,838				48,781
Goodwill			140,903				140,905
Deferred tax assets, net			794				728
Other non-current assets			5,525				4,367
Total non-current assets		$	236,295			$	240,960
Total assets		$	583,864			$	550,714
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	46,533			$	63,572
Accrued expenses			108,168				85,455
Acquisition-related liabilities			11,414				17,234
Deferred revenue			3,683				3,301
Other current liabilities			6,153				6,823
Total current liabilities		$	175,951			$	176,385
Non-current liabilities:
Long-term borrowings		$	184,351			$	184,147
Acquisition-related liabilities			—				3,060
Other non-current liabilities			6,516				6,602
Total non-current liabilities		$	190,867			$	193,809
Total liabilities		$	366,818			$	370,194
Stockholders’ equity:
Class A common stock $ 0.001 per share par value, up to 3,750,000,000 shares authorized, 191,931,933 and 188,631,432 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		$	192			$	189
Class B common stock $ 0.001 per share par value, up to 50,000,000 shares authorized, 27,151,106 and 29,055,489 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively			27				29
Additional paid-in capital			1,245,005				1,140,849
Accumulated deficit			(1,026,169	)			(958,537	)
Accumulated other comprehensive loss			(2,009	)			(2,010	)
Total stockholders’ equity		$	217,046			$	180,520
Total liabilities and stockholders' equity		$	583,864			$	550,714

Condensed Unaudited Consolidated Statements of Operations and Comprehensive Loss (In thousands, except share and per share amounts)
		Three months ended June 30,								Six months ended June 30,
		2024				2023				2024				2023
Revenues		$	227,839			$	171,817			$	422,786			$	329,419
Operating expenses:
Cost of revenues (excluding depreciation and amortization)			91,082				62,037				167,955				116,387
General and administrative expenses			51,159				50,715				99,965				103,316
Selling and marketing expenses			75,604				72,496				147,019				145,045
Research and development expenses			23,614				17,343				43,600				35,862
Depreciation and amortization			12,964				12,596				26,705				24,421
Acquisition-related expenses			—				—				—				203
Restructuring expenses			—				2,845				—				2,845
Total operating expenses		$	254,423			$	218,032			$	485,244			$	428,079
Loss from operations			(26,584	)			(46,215	)			(62,458	)			(98,660	)
Interest expense			2,560				2,797				5,185				5,245
Other (income) / expenses			(1,564	)			2,838				(893	)			4,702
Total other expenses		$	996			$	5,635			$	4,292			$	9,947
Loss before income taxes			(27,580	)			(51,850	)			(66,750	)			(108,607	)
Income tax provision		$	486			$	309			$	882			$	507
Net loss		$	(28,066	)		$	(52,159	)		$	(67,632	)		$	(109,114	)
Other comprehensive loss:
Foreign currency translation adjustment			(51	)			(58	)			(1	)			(205	)
Total comprehensive loss		$	(28,015	)		$	(52,101	)		$	(67,631	)		$	(108,909	)
Net loss per share
Net loss available to common stockholders		$	(28,066	)		$	(52,159	)		$	(67,632	)		$	(109,114	)
Basic loss per share		$	(0.16	)		$	(0.34	)		$	(0.39	)		$	(0.72	)
Diluted loss per share		$	(0.16	)		$	(0.34	)		$	(0.39	)		$	(0.72	)
Weighted average number of shares used to compute net loss per share
Basic			177,870,238				154,597,506				174,475,591				152,334,247
Diluted			177,870,238				154,597,506				174,475,591				152,334,247

The Company recorded stock-based compensation under respective lines of the above condensed unaudited consolidated statements of operations and comprehensive loss:

		Three months ended June 30,								Six months ended June 30,
		2024				2023				2024				2023
Cost of revenues (excluding depreciation and amortization)		$	499			$	694			$	770			$	1,552
General and administrative expenses			16,728				20,816				35,627				44,998
Selling and marketing expenses			26,947				30,631				53,497				63,667
Research and development expenses			7,985				5,471				14,903				11,857
Total		$	52,159			$	57,612			$	104,797			$	122,074

Condensed Unaudited Consolidated Statements of Cash Flows (In thousands)
		Six months ended June 30,
		2024				2023
Cash flows from operating activities:
Net loss		$	(67,632	)		$	(109,114	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			26,705				24,421
Stock-based compensation			104,797				122,074
Deferred income taxes			(67	)			(32	)
Change in fair value of acquisition-related liabilities			(1,261	)			4,265
Others, net			450				966
Change in non-cash working capital (net of acquisitions):
Accounts receivable			(13,070	)			(15,184	)
Prepaid expenses			(2,352	)			1,890
Other current assets			161				(196	)
Other non-current assets			(1,153	)			(550	)
Deferred revenue			369				954
Accounts payable			(15,406	)			20,088
Accrued expenses and other current liabilities			24,321				(8,945	)
Other non-current liabilities			(86	)			96
Net cash provided by operating activities			55,776				40,733
Cash flows from investing activities:
Capital expenditures			(12,565	)			(8,950	)
Website and software development costs			(8,212	)			(8,906	)
Acquisitions and other investments, net of cash acquired			-				(18,246	)
Net cash used for investing activities			(20,777	)			(36,102	)
Cash flows from financing activities:
Cash paid for acquisition-related liabilities			(6,952	)			(2,488	)
Proceeds from credit facilities, net of issuance cost			11,250				11,250
Issuance under employee stock purchase plan			1,525				1,567
Exercise of options			1,841				83
Repurchase of shares			(8,363	)			(7,938	)
Repayments against the credit facilities			(11,250	)			(11,250	)
Net cash used for financing activities			(11,949	)			(8,776	)
Effect of exchange rate changes on cash and cash equivalents			(78	)			101
Net increase / (decrease) in cash and cash equivalents			22,972				(4,044	)
Cash and cash equivalents, beginning of period			131,732				121,110
Cash and cash equivalents, end of period		$	154,704			$	117,066
Supplemental cash flow disclosures including non-cash activities:
Cash paid for interest, net		$	5,016			$	4,983
Cash paid for income taxes, net		$	638			$	752
Liability established in connection with acquisitions		$	-			$	5,404
Capitalized stock-based compensation as website and software development costs		$	1,712			$	1,631
Shares issued in connection with acquisitions and other agreements		$	667			$	843
Right-to-use asset established		$	1,081			$	-
Operating lease liabilities established		$	1,081			$	-
Non-cash consideration for website and software development costs		$	402			$	513

Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands)

The following table reconciles adjusted EBITDA and adjusted EBITDA margin to net loss and net loss margin, the most directly comparable financial measure calculated and presented in accordance with GAAP.

		Three months ended June 30,								Six months ended June 30,
		2024				2023				2024				2023
Net loss		$	(28,066	)		$	(52,159	)		$	(67,632	)		$	(109,114	)
Net loss margin			(12.3	)%			(30.4	)%			(16.0	)%			(33.1	)%
Add back:
Depreciation and amortization			12,964				12,596				26,705				24,421
Restructuring expenses			—				2,845				—				2,845
Acquisition related expenses			—				—				—				203
Stock-based compensation			52,159				57,612				104,797				122,074
Other (income) / expenses			(1,564	)			2,838				(893	)			4,702
Interest expense			2,560				2,797				5,185				5,245
Income tax provision			486				309				882				507
Adjusted EBITDA		$	38,539			$	26,838			$	69,044			$	50,883
Adjusted EBITDA margin			16.9	%			15.6	%			16.3	%			15.4	%

The following table reconciles Cash Flows from Operating Activities in the Condensed Unaudited Consolidated Statements of Cash Flows to Free Cash Flow:

		Three months ended June 30,								Six months ended June 30,
		2024				2023				2024				2023
Cash Flows from Operating Activities		$	31,110			$	20,629			$	55,776			$	40,733
Capital expenditures			(6,754)				(3,786)				(12,565)				(8,950)
Website and software development costs			(4,569)				(4,006)				(8,212)				(8,906)
Effect of exchange rate changes on cash and cash equivalents			35				133				(78)				101
Free Cash Flow		$	19,822			$	12,970			$	34,921			$	22,978

^{______________________________________
1} Free Cash Flow, Adjusted EBITDA, and Adjusted EBITDA margin are not measures of financial performance prepared in accordance with GAAP. See “Non-GAAP Measures” for more information and, where applicable, reconciliations to the most directly comparable GAAP financial measures at the end of this release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731621606/en/

Investor Relations

Scott Schmitz

ir@zetaglobal.com



Press

James A. Pearson

press@zetaglobal.com

Source: Zeta Global

FAQ

What was Zeta Global's (ZETA) revenue for Q2 2024?

Zeta Global (ZETA) reported record quarterly revenue of $228 million for Q2 2024, representing a 33% year-over-year increase.

How many Scaled Customers did Zeta (ZETA) have in Q2 2024?

Zeta (ZETA) reported 468 Scaled Customers in Q2 2024, an increase of 8 from the previous quarter and 43 from the same period last year.

What was Zeta's (ZETA) Free Cash Flow in Q2 2024?

Zeta (ZETA) generated Free Cash Flow of $20 million in Q2 2024, representing a 53% year-over-year increase.

Has Zeta (ZETA) updated its revenue guidance for 2024?

Yes, Zeta (ZETA) raised its 2024 revenue guidance by $25 million to a midpoint of $925 million, representing 27% year-over-year growth.

What was Zeta's (ZETA) Adjusted EBITDA for Q2 2024?

Zeta (ZETA) reported Adjusted EBITDA of $38.5 million for Q2 2024, a 44% year-over-year increase compared to $26.8 million in Q2 2023.